Crain's Detroit Business, Sept. 12, 2016 issue

Page 1

Steve Ballmer, ‘Hamilton’ producer highlight Detroit Homecoming; watch online, details on Page 4

SEPTEMBER 12 - 18, 2016

Washington Blvd.: Building on a vision By Kirk Pinho kpinho@crain.com

A century has passed since the three Book brothers embarked on an ambitious effort to remake Washington Boulevard downtown, creating an opulent thoroughfare unrivaled by any other in the world with dazzling skyscrapers, architecture and shops. Now new developers have their own plans for the four-block stretch north of Michigan Avenue leading to

Book Tower restoration just one part of developers’ ambitious plans Grand Circus Park, amounting to at least $600 million in real estate investment on Washington and several hundred million more in projects completed or underway around it. The projects range from new apartments, to retail, to renovated housing for low-income seniors in what developers predict is going to build upon the brothers' original vision.

LARRY PEPLIN

The ornate architecture and long neglect will give the Book Tower and adjoining Book Building an estimated renovation price tag of $400 million or more.

The most ambitious and perhaps the most architecturally complex project is Dan Gilbert's restoration of the Book Tower, the haunting Italian Renaissance-style skyscraper looming over downtown with its aged copper roof and ornate details designed by architect Louis Kamper. It will almost certainly be the most expensive of the crop, with development experts saying Gilbert's overall redevelopment of the Book Tower and adjoining Book Building could cost $400 million or more (his Bedrock Real

Estate Services LLC said total cost estimates have not yet been determined, but did say that historic tax credits are expected to be part of the financing mix). But what laid the groundwork for the Gilbert project is almost certainly the renovation of the Westin Book Cadillac Hotel a decade ago, which was the first in what would be a long string of real estate acquisitions, redevelopments and renovations that have made Washington Boulevard and the area generally west of Woodward Avenue far more connected. SEE BOOK, PAGE 36

Icahn’s Federal-Mogul bid likely to end in split Experts say $281 million offer an exit play By Dustin Walsh dwalsh@crain.com

Billionaire investor Carl Icahn is taking Southfield-based auto supplier Federal-Mogul Holdings Corp. private after months of raising his offer price to the company’s other shareholders. What’s his game? He is likely to resurrect a plan scrapped last year to split the company’s powertrain and aftermarket divisions, with intentions of selling at least one. The investor also may parlay part of Federal-Mogul into his recently acquired Pep Boys auto-parts chain to create larger profit margins for both. The majority shareholder in the maker of Wagner brakes and Champion spark plugs, Icahn Enterprises LP, offered $9.25 per share for the remaining 18 percent stake it does not already own in a deal valued at roughly $281 million. Supported by the Federal-Mogul board, the deal will take the publicly traded company, which also makes pistons, bearings and aftermarket parts, private under Icahn’s control. Federal-Mogul declined to comment because the deal is not yet finalized.

Consultants and executives scrambled over the long Labor Day weekend to prepare the going-private deal because a buyer is likely waiting in the wings, said Pat O’Keefe, managing member of Bloomfield Hills advisory firm O’Keefe and Associates LLC. “Maybe he already has an exit (a buyer) in his back pocket,” O’Keefe said. “This is absolutely an exit play; why else would he offer so much so quickly?” In February, Icahn offered $7 per share for the remaining shares, then upped the bid to $8 per share in June. A deal never materialized. The $9.25-per-share bid is an 86 percent premium over the supplier’s share price of $4.98 in February. The bids show Icahn is desperate to gain total control of Federal-Mogul and to finally make a move to rid himself of at least part of the business, said Matteo Fini, senior manager of component forecasting for IHS Automotive Inc. in London. “I don’t think (Icahn) wants to continue to run an automotive business for the rest of his days,” Fini said. “Spinning off one or both of the businesses SEE ICAHN, PAGE 33

© Entire contents copyright 2016 by Crain Communications Inc. All rights reserved

NEWSPAPER

crainsdetroit.com Vol. 32 No 37

$2 a copy. $59 a year.

LARRY PEPLIN

Wayne Brown, president and CEO of Michigan Opera Theatre, sees changes in Detroit creating “an exciting climate for us.”

Masters of arts New leaders of major cultural institutions look to build audiences, revenue

By Sherri Welch swelch@crain.com

As Wayne Brown, president and CEO of the Michigan Opera Theatre, watches construction workers lay track for the M-1 Rail’s streetcar project in downtown Detroit from his office window, he’s thinking about connections. A year from now, M-1 will be transporting new patrons into the downtown corridor and cultural center. Those additional visitors might be lured by not only the opera theater, but nearby arts organizations, restaurants and boutiques. And that conjures up thoughts of how cultural groups can leverage what each brings to the table —for both mutual financial ben-

efit and a better experience for residents and visitors. A raft of leadership changes have put new faces like Brown in charge of some of the region's largest cultural institutions, including the MOT, the Detroit Institute of Arts, and the University Musical Society. And they are thinking big when it comes to collaboration and a new generation of audiences while attracting a new generation of revenue. “That’s an exciting climate for us ... as we try to advance our work over time,” said Brown, who took the reins of MOT in January 2014 after 17 years as director of music and opera at the Washington, D.C.-based SEE LEADERS, PAGE 35

Special Report: Arts & Culture The business of arts and culture is a big deal in metro Detroit, and many local institutions are working on programming and fundraising tactics that play to a more diverse audience. Stories begin on Page 11

2

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

MICHIGAN

BRIEFS Pure Michigan adds online road trip planner

It might still feel like summer, but the state isn’t waiting for cooler temperatures to launch its Pure Michigan travel marketing efforts for fall. Pure Michigan has teamed with Roadtrippers.com, an online road trip planner, to get travelers to explore what the state has to offer. Some of the highlighted areas in Michigan include the Keweenaw Peninsula, West Michigan shoreline, Sunrise Coast and U.S. 12 route. Attractions accessible along each route are also featured, allowing visitors to create custom trip itineraries. The year’s total fall advertising budget is $4.07 million, which includes $1.17 million committed by private sector partners through the Travel Michigan Ad Partnership Program. The campaign will include regional and in-state TV and radio spots, in addition to a digital campaign and Pandora streaming radio. Advertising spots will run in regional markets, and Pure Michigan billboards with images of fall in the state will be placed in many of those markets as well. Local destinations and attractions will have

the opportunity to add their markers in the database for Roadtrippers.com. Chris Ehrmann

Lawsuit asks billions in state aid shift to municipalities A lawsuit filed last week says the state is shortchanging local governments in what could amount to billions of dollars. The lawsuit, filed in the Michigan Court of Appeals, claims that the state improperly includes payments made to school districts, charter schools and other units of government in the share of state revenue constitutionally mandated to go to local governments under the 1978 law commonly known as the Headlee Amendment. That law specifies that payments made to local governments can’t fall beneath the 48.97 percent share in effect in the 1978-79 budget year. The plaintiffs include Eastpointe City Manager Steve Duchane and the nonprofit advocacy group Taxpayers for Michigan Constitutional Government. Eastpointe is one of several in-

ner-ring Detroit suburbs that have struggled with falling property tax revenue.

MICH-CELLANEOUS n Recreation apparel and gear re-

tailer Moosejaw will open a pop-up store in downtown Grand Rapids on Sept. 19, just in time for the first weekend of ArtPrize. The 4,000-square-foot store is connected to Moosejaw’s largest “High Altitude Lounge,” a place where the company plans to host events and activities. The store is part of the Madison Heights-based retailer’s new strategy to test markets and retail concepts with short-term leases before investing in a permanent space. n The U.S. Supreme Court has declined to let Michigan’s new ban on straight-party voting take effect for the November election, AP reported. The court rejected a request by state officials to halt lower court rulings that blocked the Republican-sponsored law signed by Gov. Rick Snyder. The court’s decision means Michigan voters will still be able to use the popular straight-ticket option, which allows them to support all candidates from one party with a single mark. n A bumper cherry crop this year meant a huge donation for a Grand Rapids-area food bank, MLive.com reported. Traverse City-based Shoreline Fruit LLC, Michigan’s largest cooperative of cherry growers, was to deliver 40,000 pounds of frozen cherries last week to the West Michigan branch of Feeding America, the nation’s largest domestic hunger-relief organization. n Grand Rapids-based Start Garden has spun off its venture capital funding arm as a for-profit entity, Wak-

estream Ventures. Wakestream will

make early-stage investments of $100,000 to $500,000, with a focus on high-growth technology, the convergence of hardware and software and e-commerce. Spinning off the for-profit VC fund allows Wakestream to focus solely on high-growth, high-risk financial investments. n Patrons could bring their dogs along while eating in outdoor areas of restaurants under legislation advancing in Michigan’s Legislature, AP reported. State law generally prohibits live animals at restaurants, but the legislation — which supporters say could boost tourism — was approved 32-4 by the Senate last week and sent to the House for consideration. The bill would allow dogs on restaurant patios under certain circumstances, among which would require them to be leashed and not to sit in chairs or on customers’ laps. n Michigan’s public universities collectively have the sixth-highest instate tuition rates in the country, averaging $11,991, according to a new report. The study issued by the Michigan League for Public Policy, a Lansing-based advocacy group for the poor, links rising tuition and student debt to decreased state higher education funding and state financial aid, AP reported. Sixty-two percent of Michigan college students graduated with debt in 2014; their average debt was nearly $30,000. n The Republican-led Senate will not block Gov. Rick Snyder’s pick to lead Michigan’s embattled Depart-

INSIDE THIS ISSUE

CALENDAR ........................................ 32 CLASSIFIED ADS.............................. 33 DEALS & DETAILS............................ 32 KEITH CRAIN....................................... 8 OPINION .............................................. 8 PEOPLE .............................................. 32 RUMBLINGS ......................................38 WEEK ON THE WEB .........................38

COMPANY INDEX: SEE PAGE 37 ment of Environmental Quality in the wake of Flint’s water crisis, AP reported. Heidi Grether, a former BP lobbyist whose appointment has been criticized by environmentalists and Democrats, took questions last week from the Senate Natural Resources Committee. The panel didn’t vote, which means Grether’s appointment will take effect automatically as expected. Grether began the job Aug. 1; the previous director resigned in the fallout from Flint’s lead contamination. n Rick Brenner, a veteran minor league baseball executive, has been named president of Michigan International Speedway by the owner of the Brooklyn, Mich., track, which is Daytona Beach, Fla.-based International Speedway Corp. He replaces Roger Curtis, who resigned Aug. 30. Brenner most recently spent a decade as president of Boston-based DSF Sports and Entertainment, which owns the New Hampshire Fisher Cats, the Double-A affiliate of the Toronto Blue Jays.

Nurturing rapidly growing businesses from the seeds of ideas through growth and expansion Partnering with the right law firm can provide you with legal peace of mind. We have a long and successful track record as trusted legal advisors because we listen to and understand the needs of rapidly-growing businesses, helping them every step of the way. Learn more at WNJ.com.

A BETTER PARTNERSHIP ®

By providing discerning and proactive legal counsel, we build a better partnership with clients.

WNJ.com • 866.533.3018

3

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

Lame-duck session pits Legislature against clock

Duggan Q&A: Blight, ‘community benefits’

A wealth of potential

Energy, no-fault auto insurance among bills awaiting action

Mayor likes ordinance’s Proposal B, talks schools

By Lindsay VanHulle

By Kirk Pinho

LANSING — Twenty days. That’s all the time left in the state Senate’s current term. The House will meet even fewer times — just 18 days are scheduled between now and December. Somehow, lawmakers in that time will have to adopt a comprehensive — and complicated — update to energy policy, reform the state’s no-fault auto insurance laws, compromise on stricter third-grade reading standards and revisit exemptions to Michigan’s open records law. Or they won’t. Yet if they don’t act by Dec. 22 — Dec. 15 in the House — everything left unfinished in this two-year legislative session will die. That could mean starting over after two years of work on an overhaul to Michigan’s 2008 energy law, considered one of the biggest policy priorities this term because of what it will mean for renewables requirements. “Whether or not it gets completed fully and to the governor by December, I don’t know that that is entirely possible. But it certainly is a goal to get it out of the Senate,” said Amber McCann, a spokeswoman for Senate Majority Leader Arlan Meekhof. He is looking to see movement on energy yet this year. “I think (Meekhof) would be very disappointed if we found ourselves introducing energy bills in January to have to reset everything again.” Last week was the Legislature’s first week back after a lengthy summer recess. The Senate, in particular, was quick to get back to work, approving legislation that would regulate Michigan’s startup autonomous vehicle industry, create a new licensing framework for medical marijuana in Michigan after bills stalled in committee for nearly a year and allow certified registered nurse anesthetists to practice without the supervision of a

Mayor Mike Duggan hopes Detroit’s electorate doesn’t cast votes that he believes will cost the city new jobs. Duggan said he favors what he says is the more manageable version of two proposed ordinances requiring “community benefits” be provided by would-be developers. Speaking with Crain’s reporters and editors last week, Duggan said that if a community Vote benefits ordi- What is the nance proposed most pressing by Rise Together issue facing the Detroit passes in city and Mayor the Nov. 8 gener- Mike Duggan? al election it Vote in our would “guaran- online poll. tee we never see crainsdetroit. another auto com/citypoll parts plant in this city again” because of the requirements it places on developers. In the course of the interview, Duggan went from saying he would “probably” vote for Proposal B, a less strict version of the ordinance, to saying he will vote for it. He stopped short of offering a formal endorsement. The plans are generally as follows: Proposal A, developed by Rise Together Detroit, would require that projects of $15 million or more that receive $300,000 or more in things like tax abatements or incentives enter into a legally binding community benefits agreement with a group of

Crain’s Detroit Business/Bridge Magazine

SEE BILLS, PAGE 34

kpinho@crain.com

LARRY PEPLIN

Time will polish ‘National Treasure’ Jefferson-Chalmers By Marti Benedetti mbenedetti@crain.com

Ray Cronk is a realist when it comes to improvements in the Jefferson-Chalmers neighborhood, where he owns a record store and a coffee shop. It will take time “before this becomes a walkable, destination neighborhood,” he said, even with Jefferson-Chalmers being named a National Treasure by the private nonprofit National Trust for Historic Preservation last week. That designation qualifies the neighborhood for the attention and resources of the nonprofit organization to preserve and improve its buildings, including help in qualifying for historic tax credits and turning them into cash for restoration, as well as small grants and expertise. The impact won’t be immediate. Jefferson-Chalmers is considered one of the few early 20th-century commercial districts that still survives in Detroit. Its mix of housing — from bungalows to three-story mansions — contributes to its potential to promote the city’s economic recovery. The neighborhood

MARTI BENEDETTI

The interior and exterior (above) of the Vanity Ballroom in the JeffersonChalmers neighborhood once played host to Cab Calloway and the Stooges. along East Jefferson Avenue near Grosse Pointe Park is a mix of occupied and vacant and blighted commercial buildings. It has benefited from city road improvements, which include a landscaped island and bike lanes. Neighboring residential streets range from vacant land to high-density older homes in varying states of repair. “I sure as heck hope (the designation) has a positive impact, but it needs to fill out a little more,” said Cronk, who owns Hello Again Records and Coffee and (___). “I think it

is an incredible distinction, but will (take time) before we see fruition of this recognition. There’s a music analogy: Certain artists are lauded for their talent, but they don’t sell a lot of records.” Mary Lu Seidel, National Trust Chicago field director who also is project manager for Jefferson-Chalmers, said it will take three months or so for people driving or walking down East Jefferson to start noticing improvements, including the renovation of a former Kresge

SEE DUGGAN, PAGE 37

SEE RESTORE, PAGE 33

MUST READS OF THE WEEK Lessons from the trenches

Reaching out to ITT’s stranded

Money for entrepreneurs

Pam Turkin talks

Local community colleges

MEDC expects a bigger

lessons learned from

look to help more than

budget this year for

losing ownership of Just

2,000 students locked

programs that support

Baked Cupcakes and

out of the now-closed ITT

startups in their quest to

how she’s applying them

Technical Institute — but

grow, Page 5

now, Pages 27, 28

it’s not that simple, Page 7

BLOOMBERG

Detroit Mayor Mike Duggan says he’ll vote for Proposal B, one of two “community benefits” proposals.

4

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

More than 200 Southeast Michigan “expats� plan to return home for Detroit Homecoming this week.

AARON ECKELS

3rd Detroit Homecoming set for this week

7+$1. <28 As we celebrate our 40th anniversary, we thank our clients and supporters. Our team is committed to serving you well into the future.

Member FINRA/SIPC

Investment Advisors

s

(866) 644-2701

s

www.GJSCO.com

Detroit Homecoming, which seeks to re-engage former Detroiters who have made their fortunes elsewhere with their hometown, returns for its third edition this week. More than 200 Southeast Michigan “expats� plan to attend the invitation-only event, which runs Wednesday through Friday. Major speakers this year include former Microsoft Corp. CEO Steve Ballmer; “Hamilton� producer Jeffrey Seller; and Tony Fadell, one of the creators of Apple’s iPod and founder of Nest, the maker of smart thermostats that helped pioneer the Internet of Things. WXYZ-TV will live-stream the event at http://wxyz.com/detroithomecoming. Over the past two years, the event has resulted in more than $260 million in pending investments in metro Detroit by the expats. Those outcomes have included an expansion of the Wendy Hilliard Gymnastics Foundation to the city, and the opening of the Will Leather Goods retail store in Midtown. Among the highlights of this year’s program: n A chat between billionaire entrepreneur Dan Gilbert and Ballmer, a Detroit-area native who owns the Los Angeles Clippers. n A conversation on education, race and inclusion, among other topics, between Ford Foundation President Darren Walker and Crain’s Group Publisher Mary Kramer. n A conversation with Oak Park native Seller, the Tony Award-winning producer of the hit Broadway show “Hamilton.� On Thursday evening, Seller will receive the Governor’s Arts Award. n A state-of-the-city update by Detroit Mayor Mike Duggan. Attendees will take tours of the city based on the theme of their choice including technology, art and design, sports, entrepreneurship and neighborhoods, and real estate. Each tour includes a stop at a neighborhood house. Crain’s produces Homecoming with its fiduciary partner, Downtown Detroit Partnership, with more than 20 business and community leaders

on host and steering committees. Detroit Homecoming was honored earlier this year as one of eight interna-

tional “place-making� initiatives at the international Place Marketing Forum’s 2016 awards.

A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

Michigan’s #1 Financial Advisor

&KDUOHV & =KDQJ &)3Š 0%$ 06)6 &K)& &/8 0DQDJLQJ 3DUWQHU

2QH RI WKH 1DWLRQ熎V 7RS 1$3)$ 5HJLVWHUHG )HH 2QO\ )LQDQFLDO $GYLVRUV

We Uphold a Fiduciary Standard 犇犆犇 :HVW %LJ %HDYHU 5RDG 犇犊WK )ORRU 7UR\ 0, 犊犎犆犎犊 犈犊犎 犌犎� 犇犈犋犎 RU 犎犎犎 ��� 犆犇犈犌

www.zhangfinancial.com $VVHWV XQGHU FXVWRG\ RI /3/ )LQDQFLDO DQG 7' $PHULWUDGH $V UHSRUWHG LQ %DUURQ犑V 0DUFK 犋 犈犆犇犌 5DQNLQJV EDVHG RQ DVVHWV XQGHU PDQDJHPHQW UHYHQXH JHQHUDWHG IRU WKH DGYLVRUV犑 ILUPV TXDOLW\ RI SUDFWLFHV DQG RWKHU IDFWRUV $V UHSRUWHG LQ %DUURQ犑V $XJXVW 犈犊 犈犆犇犋 7KH UDQNLQJ UHIOHFWV WKH YROXPH RI DVVHWV RYHUVHHQ E\ WKH DGYLVRUV DQG WKHLU WHDPV UHYHQXHV JHQHUDWHG IRU WKH ILUPV DQG WKH TXDOLW\ RI WKH DGYLVRUV犑 SUDFWLFHV 1$3)$ 5HJLVWHUHG VWDWXV UHSRUWHG DV RI 6HSWHPEHU 犇犎 犈犆犇犋 RQ ZZZ QDSID RUJ 0LQLPXP LQYHVWPHQW UHTXLUHPHQW 犇 犆犆犆 犆犆犆

5

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

MEDC to provide more money for entrepreneurship, innovation By Tom Henderson thenderson@crain.com

The Small Business Development Center, Invest Detroit, Automation Alley and TechTown are some of the beneficiaries of a budget increase for support of entrepreneurship and innovation by the Michigan Economic Development Corp. for the fiscal year that begins Oct. 1. According to Emily Guerrant, MEDC vice president of marketing, the budget for entrepreneurship and innovation has been increased from $19 million in the current fiscal year to $21.4 million, while the overall budget for the MEDC was cut by $1.5 million by legislators to $251.9 million. "So it’s fair to say that entrepreneurial services and programs were a higher priority in the fiscal year 2017 budget than previously," she said. According to Fredrick Molnar, MEDC vice president of entrepreneurship and innovation, the Small Business Development Center is the largest beneficiary, getting a total of $4.8 million for several of its programs, including $2.1 million for its Emerging Technologies Fund and $1.2 million for its Business Accelerator Fund. The SBDC is based at Grand Valley State University in Grand Rapids, with 11 regional offices and more than 20 satellite offices. It provides counseling, training and research for startups, existing small businesses and advanced technology companies. Two of Invest Detroit’s programs will benefit — its Hacker Fellowship Program will get $300,000 over two years, and $100,000 in sponsorship money has been earmarked for November’s seventh annual Accelerate Michigan Innovation competition at Cobo Center. “The Hacker Fellowship Program has done a great job at talent retention,� said Molnar. “We’re trying to keep our young talent here. They come out of college and all they think about is the East Coast or the West Coast. We’re saying, you don’t have to leave here.� According to Martin Dober, vice president and managing director of Invest Detroit Ventures, the investment arm of Invest Detroit, a nonprofit economic development organization, the program puts graduating computer science graduates into one-year fellowships at Michigan startup companies. “College students aren’t aware of startup opportunities in the state and often leave because of that, and startups don’t have the time to recruit for junior development talent on campuses,� he said. “We annually recruit a class of 15 computer science graduating seniors. ... In two years of running the program, all 30 fellows have received jobs at Michigan startups. Last year, we asked our 15 fellows how many of them would have been working outside of Michigan had it not been for the Hacker Fellows program. Thirteen of the 15 fellows raised their hands.� Dober said Invest Detroit will recruit the 2017 class of fellows this fall and match them with companies in the spring. The program has also received financial support from the Community Foundation for Southeast Michigan and the Ford Motor Fund.

Rumors were circulating at last year’s Accelerate Michigan event that it might be the last. The MEDC, which had allocated a total of $1.35 million for the event in 2014 and 2015, had its budget cut by 27 percent for fiscal 2016 by state legislators and laid off 65 employees. Dober said that despite the reduction in MEDC funding, this fall’s event is on solid financial footing. Invest Detroit replaced Ann Arbor Spark as the event’s fiduciary in 2013 and has taken over management of the event. He said there is $200,000 remaining from MEDC’s previous commitment that wasn’t spent; that the New Economy Initiative for Southeast Michigan

has chipped in $350,000; that he has been able to raise more in corporate sponsorships; and that he has a commitment of $250,000 by Spark to be one of the investors in the grand prize of $500,000 for the winning pitch, and a commitment of $150,000 from Detroit-based Invest Michigan. He said the prize money this year will likely surpass the total of $845,000 last year and could hit $1 million. Other recipients of support from Molnar’s budget include: n $2 million for a new fund, the First Capital Fund. While the money is allocated in Molnar’s budget, he said the Michigan Strategic Fund board has to

1& 0 * (&+$ !&Ć› "/"+ " Ç–

,,$)" 6 20&+"00Çż "10

Ç—

201,*"/ 1 %Çż )),40

approve the new fund at its September meeting, with would-be managers applying to run it in October. It would fund very-early-stage companies with investments of between $50,000 and $100,000. n $1.4 million for the Michigan Corporate Relations Network, which helps the private sector find and use university researchers. n $1.3 million for SmartZone grants. n $1.2 million for the Technology Transfer Talent Network, a program run by the University of Michigan that provides experienced business mentors to startups. n $1 million Michigan Translational Research and Commercialization

(MTRAC) grant to support the advanced transportation project at UM. n $1 million for a new Proof-of-Concept Fund. This will provide awards of between $5,000 and $30,000 to help determine if a promising idea has commercial possibilities. n $525,000 MTRAC grant for the advanced materials program at Michigan Tech University. n $500,000 for Automation Alley 7C’s Program — the seven are concept, context, community, clarity, customers, capital and commercialization — which helps startups land customers. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

6SRQVRU &RQWULEXWHG &RQWHQW

20&+"00"0 +! #/ + %&0"0 1%" "01 "5-,02/" #,/ ), )&7"! -/,!2 1 +! 0"/3& "0 0" / %"0Ç˝ 20&+"00"0 1, &+-21 1%"&/ "* &) )&01 &+1, ! ,/!0 1, 0"/3" 201,*&7"! !0 1, 1%"&/ ,+1 10ČĄ 02 0 /& "/0 0 1%"6 02/# 1%" 4" Ç˝

, & ) &!",Çż %" *,01 &*- 1#2) 0, & ) % ++") #,/ 0* )) 20&+"00 3&!",0 &0 " ,,(Çž 4&1% ,2 2 " -/,'" 1"! 1, 0"" 1%" *,01 $/,41% &+ - &! 3&!", -/,*,1&,+ 6 ,4+"/0Ç˝

ǘ

Ç™

) 1Çž *,!"/+ !"0&$+Çż

&*-)"Çž )" + 4" 0&1" !"0&$+ +! *, &)"Č’#/&"+!)6 ,!&+$ * (" 0* )) 20&+"00"0 ),,( $,,! ,+ 0* )) !"3& "0Ç˝ ,,$)" /"0 ,21 1%&0 4%"+ / +(&+$ 0&1"0Çž +! 0, !, 201,*"/0 +! -/,0-" 10Ç˝ ,4+), ! ,2/ 4%&1"- -"/ 1, )" /+ *,/"Çż

ǙǛʢ ,# 0" / %"0 ,+

,,$)" /" ), )Ç˝

$, 1, ,*-"1&1,/ &# 1%"6 % 3" -,,/ *, &)" "5-"/&"+ "Ç˝

,+"2-4" Ç˝ ,*ČĄ / &+0

4&* 4&1% 0% /(0

%" ,+)&+" * /("1&+$ 1/"+!0 1% 1 /" %")-&+$ 0* )) 20&+"00"0 ,*-"1" &+ Ç—Ç•Ç–Ç› 6 +"2-4" ,+"2-4" Ç˝ ,*

+ ,/!"/ 1, $"1 1%"&/ + *" &+ #/,+1 ,# ) /$" 2!&"+ "Çž 20&+"00"0 !,+ȉ1 +""! *&))&,+Č’!,)) / 2!$"1 #,/ + 1&,+ ) 1")"3&0&,+ ! *- &$+ +6*,/"Ç˝ % 1ȉ0 " 20" ,+02*"/0 +! !" &0&,+Č’* ("/0 /" )/" !6 ),,(&+$ ,+)&+" #,/ 1%" -/,!2 10 +! 0"/3& "0 1% 1 + %")- 1%"*Ç˝ % 1 * ("0 1%" &+1"/+"1 $/" 1 !"*, / 1&7"/Çž "3"+&+$ 1%" -) 6&+$ Ćœ ")! #,/ 0* )) +! *"!&2*Č’0&7"! 20&+"00"0 Č› 0Čœ +! )),4&+$ 1%"* 1, ,*-"1" #,/ 11"+1&,+ 4&1% "11"/Č’(+,4+ / +!0Ç˝ "/" /" #,2/ )" !&+$ 1/"+!0 #,/ Ç—Ç•Ç–Ç› 1% 1 /" * (&+$ !&Ć› "/"+ " +,4 #,/ 0 &+3"01"! &+ 1%"&/ ,+)&+" -/"0"+ "Çż

%" 0* /1-%,+" &0 1%" +"4 !"0(1,-Ç˝ " / %"0 3& 0* /1-%,+"0 ,3"/1,,( 1%,0" #/,* !"0(1,- ,*-21"/0 ) 01 6" /Ç˝ * )) 20&+"00"0 1% 1 1 /$"1 0* /1-%,+"0 4&1% *"00 $&+$ +! % 3" 4" 0&1"0 1% 1 ),,( $,,! +! #2+ 1&,+ -"/#" 1)6 ,+ 0* )) 0 /""+0 /" 0""&+$ /"02)10Ç˝ &!", &0 1%" +"4 /1& )"ČĄ ),$ -,01Ç˝ &!", % 0 +"3"/ ""+ )"00 "5-"+0&3" 1, -/,!2 " ,/ *,/" 3 )2 )" 0 ,+1"+1Ç˝ 3"/ 14,Č’1%&/!0 ,# 1%" 4,/)!ȉ0 *, &)" ! 1 1/ Ć› & 4&)) " 3&!", 6 Ç—Ç•Ç–Ç?Çž +! ,2 2 " &0 )/" !6 1%" ȹǗ 0" / % "+$&+"Ç˝ , )&7 1&,+Ç˝ " /)6 "3"/6 *"/& + % 0 3,& "Č’.2"/&"! 1%"&/ 0* /1-%,+" ,/ ("6"! &+ ČŠ-&77 &+ Č?1,4+Ȟȋ &+1, ,,$)"Çž &+$ ,/ %,,Ç˝ +6 ), ) 20&+"00"0 +!

#/ + %&0" ), 1&,+0 % 3" 1%"&/ -/,#"00&,+ ) -/"0"+ " &+ ,+)&+" ), ) )&01&+$0 1, 1% +( #,/ 1%" * ',/&16 ,# 1%"&/ /"3"+2"Ç˝ /" 1 ), ) )&01&+$0 /" )&(" % 3&+$ #/""Çž $& +1 &)) , /! ,+ Č’ÇœÇšÇ˝ "/0,+ )&7 1&,+Ç˝ 20&+"00"0 /" 0"$*"+1&+$ "* &) *- &$+0Çž /" 1&+$ 201,* ,+1"+1Çž +! 0"/3&+$ 1 /$"1"! *, &)" !0Çž /"&+#,/ &+$ 1%" &!" 1% 1 0* ))"/ 20&+"00 ,Ć› "/ -"/0,+ ) 1,2 % +! 02-"/&,/ 201,*"/ 0"/3& "Ç˝ ",-)" ),,( ,+)&+" 1, 0,)3" 1%"&/ -/, )"*0Çž +! 0 + " %&$%)6 3&0& )" 1%"/" Č• #,/ #/ 1&,+ ,# 1%" ,01 ,# 1/ !&1&,+ ) ! *- &$+0Ç˝

&RQWHQW VXSSOLHG E\ VSRQVRU QRW WKH QHZV WHDP DW &UDLQpV 'HWURLW %XVLQHVV

6

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

M-1 Rail in talks with unnamed donor that would provide $5 million in funding By Bill Shea bshea@crain.com

The M-1 Rail streetcar project in Detroit said it’s in talks with an unnamed donor that will provide an additional $5 million for the Woodward Avenue line’s funding. Project organizers are declining to name or characterize the donor other than to say it’s a single entity. “The nature of this specific contribution is not yet final, so it’s too early to say exactly how it will be characterized,” M-1 Rail spokesman Dan Lijana said via email. The money is being counted already as part of the project’s $187.3 million in funding to cover construction, administrative and operating costs. That’s nearly $8 million more than M-1’s funding total in 2014, which was $179.4 million. Also fueling the increase over the past two years is $1.4 million more from Detroit-based Quicken Loans Inc.; $1.4 million in additional proceeds from federal New Market Tax Credits; and interest. The streetcar line’s mix of private and public funding is from foundations, corporations, hospitals, universities, banks and governments. M-1 Rail also disclosed that the $5 million naming rights fee paid by Quicken Loans to brand the 6.6-mile streetcar loop as the QLine was in

place long before the deal was announced in May 2015. The money was factored into a 2014 funding source accounting provided to Crain’s at the time, but its purpose wasn’t disclosed. “The naming agreement was prior to kickoff of construction in 2014,” Lijana said. That the online mortgage lender owned by Dan Gilbert bought the naming rights wasn’t a surprise; Gilbert has been the streetcar project’s co-chairman (with Roger Penske) nearly since its 2008 inception. Quicken is the largest financial contributor, at $11.4 million, after the Troy-based Kresge Foundation ($49.6 million) and a pair of federal grants totaling $37.2 million. The streetcar project, which is expected to begin passenger service in the spring, has enough money on hand to cover its $142 million in capital costs. Operational costs remain a problem, however. M-1 executives on Sept. 1 revealed that they have $21.4 million stashed away for operations, enough to cover seven years of service, but need to find enough for three more years, which would take the system through 2027. That’s the year M-1 has agreed to turn over the system to the public Regional Transit Authority of Southeast Michigan, which will ask voters in Wayne, Oak-

Immigration Experience

In Your Corner.

®

Contact Nina Thekdi at nathekdi@varnumlaw.com

Ŷ

Detroit

Ŷ

Ŷ

Nonimmigrant visa petitions.

Ŷ

Family and employment-based permanent residence petitions.

Novi

Ŷ

Grand Rapids

Ŷ

Kalamazoo Ŷ Grand Haven

Ŷ

Lansing

Ŷ

Ann Arbor

Ŷ

Hastings

land, Macomb and Washtenaw counties in November to approve a property tax that would raise $3 billion over 20 years to pay for improved mass transit, including the QLine’s operations. The streetcar line not having the full 10 years worth of operational funds banked spooked those involved in the RTA, and that organization in recent weeks opted to push back by three years the date when it would assume control of the streetcar line. It originally intended to take the line over in 2024. M-1 estimates it will cost an average of $5.8 million to run the streetcar line during its first 10 years. M-1 Rail CEO Matt Cullen predicted that fares and other revenue, such as from advertising, will cover half of the operating costs each year, and the remainder would be paid from a reserve fund. Based on that formula, M-1 needs to raise $8.7 million for the reserve fund to cover the remaining three years of operations. That’s predicated, too, on the ridership predictions to meet or exceed expectations. To boost the reserve fund, Cullen said M-1 will approach larger employers along the route, which runs from Grand Boulevard to Congress Street, who would buy bulk passes for employees. That could include Wayne State University and the College for Creative Studies, and major employers such as hospitals and corporations. Ridership in the first calendar year is expected to reach 1.8 million, and 5 million within five years, M-1 Rail COO Paul Childs said on Sept. 1. He noted that the numbers are rides, not unique numbers of passengers. Organizers predict 5,000-8,000 riders a day, with a basic one-way fare of $1.50. Yearly and other types of passes, including fare cards that link to other transit systems, still are being worked out, Childs said. M-1’s plan is a mostly curbside fixed-rail streetcar circulator system, co-mingled with traffic, with 20 stations at 12 stops. The two-car streetcar trains, operated by drivers, will move at the speed of traffic, and an end-toend trip is predicted to take about 25 minutes, M-1 said. Detroit’s other major downtown transportation systems move millions of riders annually. Last year, the Detroit People Mover carried 2.4 million passengers along its 2.9-mile elevated downtown loop. It has 13 stops and a full loop takes 15 minutes, using two-car automated trains. Its financial report for fiscal 2015 shows that it had $15 million in revenue but $22 million in expenses. The deficit was made up via $4.3 million from the state, $6.5 million from the city, and other smaller grants and subsidies. Farebox revenue last year was $1.4 million. A ride is 75 cents. The Detroit Department of Transportation’s No. 53 bus route on Woodward carries about 3 million passengers annually, the largest total of its 25 million annual riders systemwide. That translates into nearly 12,500 riders a day. The base DDOT fare is $1.50. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

7

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

SE Mich. community colleges offer help to displaced ITT students By Chad Halcom chalcom@crain.com

Local community colleges are moving quickly to offer help for associate and vocational-technical students displaced amid the demise of ITT Technical Institute last week — but there may be only so much they can do. “It does fit into our wheelhouse quite well, and in this market there is a tremendous need to fill a skills gap. The demise of ITT only increases that gap,” said Chancellor Timothy Meyer of Oakland Community College, which is organizing a workshop event Sept. 19 at its Auburn Hills campus to orient potential ITT transfer students. “But therein lies the difficulty. Their (ITT’s) accrediting body has attested that they were not in compliance, so we cannot accept those credits those students completed as it relates to pursuing an OCC degree. And unfortunately they do not have a direct-matching capability to equate their credit value to our credit value.” With that in mind, OCC is prepared to consider scores on the College Level Examination Program, along with its own internal “Compass” placement tests in English and mathematics, among other things, to demonstrate competencies and place out of courses already taken and expedite getting a degree, Meyer said. More than 2,350 students attended Carmel, Ind.-based ITT’s three local campuses in Dearborn, Troy and Canton Township during the 2014-15 school year, based on unduplicated headcount data for those locations from the National Center for Education Statistics. Full-time equivalent enrollment was just over half that, however, and skewed about 62 percent male and more than 40 percent African-American in the region. Parent company ITT Educational Services Inc. announced Sept. 6 it had closed all 130 of the Technical Institute campuses in 38 states nationwide, laying off most of its 8,000 employees and displacing more than 40,000 students based on 2014-15 enrollment. The U.S. Department of Education announced late last month it would not allow ITT to enroll new students who use federal financial aid, since the

fast-growing careers,” WCCCD Chancellor Curtis Ivery said in a statement. “Our mission has always been to provide pathways to better lives through higher education, and we are mobilizing to help those students carry on their studies — starting today.” Wayne County Community College said it was inviting displaced ITT students to view its information-technology, computer science, business and health care course offerings, while Meyer said OCC may seek to direct some students toward its IT and health care along with skilled trades and

The ITT Technical Institute campus in Dearborn was in a 60,000-square-foot building on West Outer Drive. PHOTO BY COSTAR GROUP INC.

criminal justice programs. Macomb

Community

College,

which began full-semester fall instruction Aug. 22 but still has 12- and eightweek courses starting Sept. 19 and Oct. 17, is directing all ITT student transfer

inquiries to its dean of students via email or phone, the college said in a statement. “Macomb Community College is committed to helping our community’s displaced ITT students through

this difficult transition,” MCC provost James Sawyer said. “However, we will have to work through each student’s situation on a case-by-case basis, since there wasn’t an established transfer agreement in place with ITT.” Macomb dean of student queries should go to (586) 445-7408 or deanofstudents@macomb.edu. Wayne is directing queries to (800) 300-2118 or inquiries@wcccd.edu, and OCC is directing queries to (248) 341-2000 or ces@oaklandcc.edu. Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

PEACE OF M ND

Accrediting Council for Independent Colleges and Schools found as ITT’s

accreditor that it was not in compliance and unlikely to become compliant with its standards. Potential ITT transfers can attend the Sept. 19 meeting or make appointments with faculty advisers as schedules permit, Meyer said. Because fall semester instruction has begun, some courses may be available for late starts in the next couple of weeks but many others likely have to wait until winter semester, he said. Also offering to help ITT students is

Wayne County Community College District, which said in a statement last

week that fall 2016 registration is still available and “Flex Entry” classes begin Oct. 18. “We have committed staff to helping students displaced by the ITT Technical Institute closure to continue their education without disrupting their pathway to rewarding and

See how happy employees make for a healthy business. At Aflac, we know keeping employees engaged never goes out of style. Which is why we offer coverage that extends to family members, with flexible enrollment periods and no invasive health screenings. And with One Day Pay,SM we make it a priority to pay claims as fast as possible — in 2015, Aflac paid 1.2 million One Day Pay SM claims. Because when your employees are at their best, so is your business. See what Aflac can do for your business at aflac.com/peaceofmind

**One Day PaySM available for most properly documented, individual claims submitted online through Aflac SmartClaim® by 3 p.m. ET. Aflac SmartClaim® not available on the following: Disability, Life, Vision, Dental, Medicare Supplement, Long-Term Care/Home Health Care, Aflac Plus Rider, Specified Disease Rider and Group policies. Aflac processes most other claims in about four days. Processing time is based on business days after all required documentation needed to render a decision is received and no further validation and/or research is required. Individual Company Statistic, 2015. Individual coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, individual coverage is underwritten by American Family Life Assurance Company of New York. Worldwide Headquarters | 1932 Wynnton Road I Columbus, GA 31999. Z160115

3/16

8

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

OPINION

Revenue sharing’s ticking budget bomb

M

ichigan has been sharing sales tax revenue with local governments since the 1940s. The formulas have been tweaked over the years, and payments have been reduced occasionally to adjust to budget shortfalls and potential deficits. Today, the state distributes 48.9 percent of sales tax revenue it collects. Sounds fair, right? Almost 50-50? But in a lawsuit filed last week in the Michigan Court of Appeals, public interest lawyers argue that the state has improperly counted other payments made to local governments against their revenue-share payments, cheating locals out of billions of dollars and pushing some closer to insolvency and state emergency management. Make no mistake. This is a big legal challenge. And it starts with the late Richard Headlee, the insurance executive who successfully persuaded Michigan voters in 1978 to adopt a tax limitation amendment to the state constitution. The so-called Headlee Amendment limits state revenue to a fixed percentage of state personal income — just under 10 percent. But it also required the state to pony up dollars to pay for new programs or services it required local governments to perform. John Mogk, a professor of state and local government law at Wayne State University, started researching the potential violations, and a cohort of others joined in. This public interest team, Taxpayers for Michigan Constitutional Government, alleges that the state has been improperly subtracting payments to school districts and charter schools, for road maintenance on major trunklines and from dollars paid to meet new state mandates. What does this mean to business? On the plus side, if the challenge succeeds, it means more money to spend on local roads, public safety and other services that make communities an attractive place to do business. But if there’s a big state budget hole, it also could mean lawmakers will search for new sources of revenue — and an increase in business taxes could follow. But not anytime soon; two earlier and successful Headlee Amendment challenges took years to be decided, in part because state government has no burning desire to change a revenue formula that leaves a billion-dollar hole in its budget. So why the challenge now? Local governments need more money. When the real estate market collapsed in the late 2000s, property tax revenue nosedived, crippling many local government operations. There is no easy answer here, even if property values soared to pre-downturn levels. If the court agrees with the plaintiffs, the state will be ordered to pay back money to local governments, within a statute of limitations. As with an earlier successful challenge, the state may opt to increase the share of sales tax revenue. But it will need new tax dollars to make that work — or a substantially smaller budget. One thing is clear: Any new spending enacted in Lansing, any new mandate until this is resolved, will only dig a deeper hole. Business needs to remind lawmakers of the basics of a balance sheet until this is resolved.

LETTER

Lansing must deal with unfunded liabilities Editor: It’s time for Lansing’s policymakers to take action on unfunded pension and health care liabilities — a new redink menace that threatens to swamp Michigan’s municipal budgets. Unfunded liabilities — the gap between a pension plan’s estimated benefits and assets that have been set aside to pay for them — are poised to sap the budgets of our state’s cities, towns and villages. Consider, for example, how they would impact the city of Port Huron. Here, that gap towers at about $140 million — $103 million for pensions and $37 million for retirees’ health care costs. That means our pension system maintains a 40 percent funding level. In Port Huron, every budget deficit the city has faced and corresponding operational cuts are directly linked to our ballooning annual payments on unfunded liabilities. Because unfunded liabilities have grown so much in the past 15 years, fund managers have had to shorten amortization periods

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: jhsmith@crain.com

lion general fund deficit. The needed cuts to balance the budget would weaken our ability to deliver services, including public safety services. Indecision and inaction are not options. Reform is needed and it is needed now. We must cap the ability for these liabilities to grow, and we must restructure the amortization and debt horizons on the unfunded liabilities for communities across the state, so that they can have manageable payments to ensure both the ability to deliver quality essential services to our citizens and also fulfill the promises we made to our workers and retirees. At core, this is a fundamental moral issue. Future generations and history will judge our stewardship. I call upon the governor and Legislature to join us, work with us. Let’s solve this so that we can free the next generation from this crushing burden.

to ensure that there isn’t a liquidity issue in the coming years. But this issue is bigger than any one Michigan community; there have been fundamental flaws in the ways government pension funds were set up, and also unrealistic estimates placed on anticipated annual investment returns. A system that has been propped up with creative math is crumbling. As a result of not solving this deferred problem, annual payments to keep these government funds afloat will drastically increase while revenue stagnates, creating massive and unsustainable deficits. If nothing is done to address this issue, within three years the city of Port Huron will face a $3 mil-

James Freed City manager, chief administrative officer Port Huron

This is something that was created by my friend Jim Hayes, retired publisher of Fortune and someone who spent a lot of time in Detroit with my enthusiastic support. Together we launched Detroit Homecoming. It was a simple idea. Let’s invite back some folks who grew up here and left to make their fame and fortune somewhere else. Publisher Mary Kramer is a co-director with Jim keeping Detroit Homecoming alive and well. We invite a couple of hundred expatriates back for a few days and a new look at their city, Detroit. There have been a lot of surprises, all good.

Detroit is a Renaissance City. The changes and the investments have been significant and visible. Just about everyone who lives here knows about it and sees it every day. We’ll be hosting these ex-Detroiters, as our guests, to learn about the new Detroit. In a couple of days, they will be pleasantly surprised at what they discover. It is exciting to watch Detroit Homecoming in its third iteration; we will add this year’s guests to the few hundred or so who have experienced these changes during the past two events. Detroit is a tale of two cities. All we have to do is make sure the rest of the world knows about the real one.

A tale of two cities Everyone remembers far too vividly what this city was like a few years ago. The national economy was on fire and Detroit was in the doldrums. Dan Gilbert was still busy making his first billion, the Ilitches were busy with their hockey team and Detroit politics were a complete mess with a mayor under indictment and many of his minions heading for jail. The city was a mess, and when two of our car companies went bankrupt, the world knew all about Detroit, and it wasn’t pretty. Fast forward to today and it’s a completely different picture. The three auto companies, along with everyone

else in the auto industry, are looking at another record year. Downtown Detroit is hot. Young people are staying, not leaving, and new businesses are popping up every week. Government, with our new mayor, is actually keeping in step with Detroiters. The city is alive and well, and there is a lot of economic activity in and around the city. Local media know full well what’s going on, and stories abound on broadcasting outlets and in print every day. Sadly, the nation and the world still think that Detroit is bogged down in 2006 or 2010. Some of the national

KEITH CRAIN Editor-in-chief

journalists often write the same stories and assume that nothing has changed in our city. This week, we’ll try to change that perception with the third Detroit Homecoming.

9

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

Gemphire CEO Sooch: IPO funds will fuel research, staffing By Tom Henderson thenderson@crain.com

On Aug. 5, after a six-week delay caused by market uncertainty over the United Kingdom’s vote to exit the European Union, Gemphire Therapeutics Inc., which has licensed a cardiovascular drug called Gemcabene from Pfizer Inc., had a public offering of $30 million and began trading on the Nasdaq Global Market under Mina Sooch: the symbol Plans to double GEMP. That was company’s staff. considerably less than the $60 million the company first mentioned in regulatory filings in April and less than the target of $45 million set for the first IPO date in June. Company President and CEO Mina Sooch, named in June by Crain’s as one of the 100 most influential women in Michigan, talked about what’s next for the company. She talked from Gemphire’s spacious new offices in Laurel Park in Livonia, having moved out of cramped space in Northville.

ceutical companies. They know you’re a real company with a real team. You don’t get that as a private company. And we had built a team that was ready to run a public company. I’m glad to be on the other side of what had been a challenging process. Although we raised less than we originally anticipated, we now have enough capital to execute our plan. What kind of runway does that amount of money give you? Your SEC filings detail upcoming phase 2B trials on patients with homozygous familial hypercholesterolemia (a genetic dis-

order that causes levels of low density lipoprotein, the so-called bad cholesterol, to soar), on patients with elevated LDL levels who are already being treated with statins and on patients with severely high levels of triglycerides who are being treated with statins.

We have enough capital to get us through the first half of 2018. We’ll be able to fund all three of those phase 2B trials. Each study is a shot on goal. We don’t want to replace statins. We want to be the drug that is used as an addon. Then we’ll have our end-ofphase-2 meetings with the FDA,

where you plan phase 3 trials. You’ll need to raise more money, obviously, to fund phase 3 trials and go to market. Do you do a secondary offering in 2018?

We’ve said in our filings that we’re going to need $100 million to get to market. We could do a public financing. We’ve talked to dozens of potential strategic partners. We met in the last year with every important player in the space. Gemcabene wasn’t known out there. People didn’t know its history with Pfizer, that it’s had 18 human trials, seven of which are phase

2 trials. We’ve got a ton of data, a lot of which hasn’t been published. We were hearing, ‘Where did you people come from?’ You engage in different discussions with people about ways you can work with them. Now we’re on their radar screen. We need to commercialize Gemcabene globally, and we can’t do that alone as a small company. It could be M&A, where Gemphire gets bought. It could be a license deal, where a pharmaceutic company takes the rights and we continue developing other compounds. We can do a SEE GEMPHIRE, PAGE 10

Congratulations. I saw that Jefferies, RBC and Canaccord Genuity have all rated Gemphire as an outperform and are telling clients to buy. You’re one of the few biotechs nationally that have gone public this year that are trading above their opening price.

Thank you. You’re hiring, I assume.

We’ll be doubling our staff from nine by the end of the year, mostly clinical-related. It’s been a tough year for biotech IPOs. What was a hot sector two or three years ago has cooled dramatically. The Brexit vote and its market reaction forced you to delay your offering, and that was followed by Esperion Therapeutics, another cardiovascular drug company in Southeast Michigan, reporting news that sent its share price tumbling. Was there ever a point where you thought you wouldn’t be able to get the offering done?

Of course. But we had a lot of persistence and great anchor investors. I’m proud we’re one of the few bio IPOs to get done this year, and the only one in Michigan. It was tough, but we did it. I was on the phone with our board of directors almost every day in the month of July. Some of the discussions were around whether we should do a private fundraising round, instead, which we certainly could have pulled off. A reverse merger was another option. But an IPO was always our preferred option.

When your business grows, your expectations should, too. Experience a higher level of cash management with the leading bank for business.* Your business is growing, but so is the complexity. At your stage of growth, you need a financial partner who can help you streamline your systems and maximize your opportunities. Comerica Bank’s dedicated Business Advisors and comprehensive cash management tools go beyond payables and receivables to help you manage and grow your business. For more info, visit Comerica.com/cash today or call 888.341.6490, and Raise Your Expectations of what business banking can be.

Why not just raise a venture capital round and wait a year or so for the bio IPO market to improve?

From a shareholder perspective, you get a better valuation in a public round, as opposed to a private round. And being on a public platform gives us a larger profile with the big pharma-

®

MEMBER FDIC. EQUAL OPPORTUNITY LENDER. *Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of December 31, 2015. Data provided by SNL Financial. CBP-6105-04 06/16

RAISE YOUR EXPECTATIONS.

10

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

Allergan buys Ann Arbor-based RetroSense for $60 million-plus Wayne State spinoff’s drug uses gene therapy to restore vision to blind By Tom Henderson thenderson@crain.com

Allergan plc, a global pharmaceuti-

cal company, said it has bought Ann Arbor-based RetroSense Therapeutics LLC, a clinical-stage biotechnology company that hopes to use gene therapy to restore vision to the blind. Dublin-based Allergan (NYSE: AGN) has paid RetroSense, a 2009 spinoff from Wayne State University, a $60 million upfront payment and agreed to future payments as the company hits development milestones for

its lead drug, which has the working name of RST-001 and targets retinitis pigmentosa. “The acquisition of RetroSense and its RST-001 program builds on Allergan’s deep commitment to eye care and our focus on investing in game-changing innovation for retinal conditions, including retinitis pigmentosa, where patients desperately need treatment options,” Brent Saunders, Allergan’s CEO and president, said in a news release. Retinitis pigmentosa is a group of

rare, inherited genetic disorders characterized by progressive peripheral vision loss and night vision difficulties followed by eventual central vision loss and blindness in many cases. About 100,000 people living in the U.S. have the disorder. Currently, there are no approved therapies for the prevention or treatment of RP. RST-001 has shown in animal trials that its gene-based therapy can create new photosensors in retinal cells where previous deterioration of rod and cone photoreceptors had caused

blindness. It began human trials in March. The drug uses the same gene, channelrhodopsin-2, that helps pond scum find light for photosynthesis. RetroSense is based on the research of Zhuo-Hua Pan, a professor of ophthalmology and anatomy/cell biology at Wayne State and scientific director of the Ligon Research Center of Vision at the Kresge Eye Institute in Detroit. Subsequently, the company also licensed research by Richard Masland of the Massachusetts Eye and Ear In-

“HOW DOES DTE ENERGY KEEP NATURAL GAS SAFE?” Customer safety is our highest priority. That is why we take many precautions when delivering natural gas to over 1.2 million homes and businesses across the state. We inspect nearly 10,000 miles of pipeline each year using advanced technologies, and modernize about 100 miles of pipeline annually. We also add an ingredient that makes natural gas smell like rotten eggs, making it easily identifiable in the case of a leak. If you smell natural gas or suspect a leak, do not use electronic devices or open flames, leave the area immediately, and call DTE Energy at 800.947.5000 24 hours a day.

firmary in Boston.

In June, the MIT Technology Review named RetroSense to its annual list of the 50 smartest companies in the world. It was the only company based in Michigan to make the list. It rated RetroSense at 37th, ahead of such well-known tech companies as IBM (45), Snapchat (46) and Intel (49). In 2014, the U.S. Food and Drug Administration granted orphan-drug status for RST-001, making it eligible for various incentives, including a waiver from the FDA’s application user fees and tax incentives. In April 2015, RetroSense, which has raised $13 million in two rounds of funding, was named as the most innovative company to be launched with funding from angel investors at the annual Angel Capital Association convention in San Diego. “The RST-001 program and its optogenetic gene therapy approach could be a real breakthrough in the treatment of unmet needs across a host of retinal conditions, including RP,” said David Nicholson, Allergan’s chief research and development officer. “The team at Allergan is excited by the prospect of advancing an entirely new approach in the treatment of retinal diseases, and this technology is highly complementary to our ongoing development programs in this critical treatment area.” “Allergan was the most compelling partner and the best strategic fit to advance the development of RST-001 and maximize the potential for this technology platform,” said Sean Ainsworth, RetroSense’s former CEO, who will continue to head the RST-001 program for Allergan. RetroSense’s development team of four will continue to be based in Ann Arbor.

GEMPHIRE FROM PAGE 9

nondilutive partnership, where we get funded based on hitting certain milestones. You mentioned putting a team together that was ready to run a public company. I know Charlie Bisgaier, your chief science officer and company co-founder, is on the patent for Gemcabene and talked Pfizer into licensing the rights. Who are some more recent additions?

Seth Reno is our chief commercial officer. He has 26 years of experience and was at AstraZeneca, MedImmune and Wyeth. Rebecca Bakker-Arkema, our vice president of product and clinical experience, has 30 years of experience. She was at Parke-Davis and Pfizer. Do you feel like you put your money where your mouth is with this IPO?

Both I and Charlie made a significant additional investment into the IPO — half a million dollars each. We believe in the company’s product and prospects.

11

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

SPECIAL REPORT: ARTS & CULTURE

FALL ARTS PREVIEW

Theater, dance, opera, museums and more: Southeast Michigan cultural options are exploding. In this first-ever arts preview, Crain’s goes behind the curtain with our partner, CultureSource, to highlight some of the best cultural offerings this fall. Arts groups on these pages are reaching out to find new audiences, from millennials to wealthy potential donors. You might find a new experience within this section – for you, your employees or your customers.

Clockwise from top: “The Book of Mormon” at Fisher Theatre (photo by Joan Marcus); Eisenhower Dance presents its “December Dances” show (photo courtesy CultureSource); “Inner Core,” a solo exhibition of works by Tom Phardel at Simone DeSousa Gallery (photo courtesy Simone DeSousa Gallery); “A Christmas Carol” at Meadow Brook Theatre (illustration by Chet Johnson); conductor Simon Rattle at University Musical Society in Ann Arbor (photo courtesy CultureSource); and “Art for the Holidays” at the Detroit Artists Market (photo courtesy CultureSource).

12

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

SPECIAL REPORT: ART

‘Carmen’ and concertos: Guide The listings on this page and in a new section of CrainsDetroit.com are part of a new partnership between Crain’s Detroit Business and CultureSource, the regional nonprofit membership organization for arts and cultural organizations. Crain’s will add CultureSource’s vast listings of arts and cultural events to the CrainsDetroit.com website and will feature select listings in its “10 Things to Do” section, highlighting specific events in Crain’s e-newsletters on Fridays and Saturdays. For more information about CultureSource membership, visit culturesource.org.

B

‘Carmen’ at Fisher Theatre

Events highlighted with blue dates here were compiled by CultureSource. Others were compiled by Crain’s staff to represent a complete look at fall arts in Detroit.

Sept. 20-April 30, 2017

“I See Me: Reflections in Black Dolls.” The Charles H. Wright Museum of African American History presents African-Americans as depicted through the craft of dolls since the late 19th century . The exhibit includes the collection of Leo Moss, who made character dolls while a slave, as well as fashionable dolls all the way through the introduction of the newest American Girl doll, Motown’s own Melody. www.thewright.org

Sept. 22

“Jazz in the Streets of Old Detroit,”

Detroit Historical Museum, 6-9 p.m.

Listen and sway to the jazz tunes from the Al McKenzie Trio, native Detroit musicians who have played with the likes of Aretha Franklin and the Temptations, as the museum’s black historic sites committee takes the audience back in time with their new quarterly music series. www. detroithistorical.org

Sept. 29

“Mark Mothersbaugh: Myopia,“ 5:10 p.m. at the Michigan Theater, Ann Arbor. The Penny Stamps speaker series presents a conversation between the eclectic cult musician and visual artist Mark Mothersbaugh — lead singer of 1980s band Devo, composer for 1990s Nickelodeon cartoon series “Rugrats” and frequent collaborator on Wes Anderson films such as “Rushmore” — and Adam Lerner, director at the Museum of Contemporary Art Denver and curator of Mothersbaugh’s current museum retrospective. www.stamps. umich.edu/stamps

Sept. 29

Detroit Symphony Orchestra’s “A

Taste of Detroit” Opening Night Dinner, Max M. & Marjorie S. Fisher Music Center, 5:30 p.m. Guest chefs from Detroit restaurants Grey Ghost and Antietam and Birmingham’s The Bird & The Bread will present a three-course dinner before a concert in the adjoining Orchestra Hall. www. dso.org

Sept. 29-Dec. 17

often credited for helping Finland develop a national identity during its struggle for independence from Russia, and he is one of the first Finnish composers to reach an international audience. www. macombcenter.org

Oct. 8

The 2016 Wright Gala, 7 p.m. Last year’s celebration of the Charles H.

“Morning After Grace.” Chelsea’s

Wright Museum of African American History’s 50th anniversary, which

for a quarter-century worth of boundary-pushing works, and this fall’s world premiere comedy by Carey Crim about two people who wake up the morning after a one-night stand — and a funeral — is no exception. www.purplerosetheatre.org/ whats-on-stage/

raised more than $1 million for the museum, is a tough act to follow. But the museum’s sixth annual gala promises to entertain and enlighten — and bring patrons to the museum grounds itself. The event features a performance by Damien Escobar, an African-American violinist who was the youngest student accepted into the Juilliard School of Music, graduating at the age of 13. It also offers additional entertainment, a strolling dinner and desserts. www. thewright.org

The Purple Rose Theatre Co. is known

Oct. 5

Detroit Robot Factory opens in Eastern Market. Ann Arbor-based 826michigan opens its creative writing and tutoring lab with a month — 826 hours to be exact — of planned events. www.826michigan.org

Oct. 7-9

The Detroit Symphony Orchestra kicks off a year of George Gershwin with his iconic “Rhapsody in Blue,” featuring pianist Garrick Ohlsson, www.dso.org

Oct. 7

“Finlandia,” 8 p.m. Macomb Symphony Orchestra’s 32nd annual

concert of ethnic music is a salute to Finland, a country with a proud history that is reflected in its art and music. The Finnish American Singers of Michigan and the Macomb Symphony Orchestra will perform works by Jean Sibelius. His music is

Oct. 1: DiChiera gets center stage treatment DiChiera Legacy Ball at the Detroit Opera House, 6:30 p.m. The annual ball this fall will honor David DiChiera (left), founder and artistic director of the Michigan Opera Theatre, who is slated to retire at the end of the 2016-17 season. To celebrate DiChiera’s many accomplishments, Michigan Opera Theatre will hold its annual black-tie ball in an Italian-style celebration, with cocktails, dinner, dancing and music by Ben Sharkey and the Big Band. A highlight of the evening is a performance by Canada’s Royal Winnipeg Ballet, the longest continuously operating ballet company in North America. www.michiganopera.org/opera/dichiera-legacy-ball

‘I W

Through Oct. 8

“Ray Johnson: The Bob Boxes” at the College for Creative Studies Valade Family Gallery is the largest local show of early pop artist Neo Dada, influencer and Detroiter since 1975. Although never a member, Johnson was also long associated with the Fluxus movement, and this show is presented in honor of longtime art collector Gilbert B. Silverman. www. collegeforcreativestudies.edu/ community-outreach-and-engagement/exhibitions-public-programs/ valade-family-gallery

Through Oct. 14

“Infolding/Unfolding.” Detroit-based fiber artist and CCS Professor Emeritus Susan Aaron-Taylor’s solo exhibition at the Birmingham Bloomfield Art Center delves into the metaphysical, with her sculptural animals evoking the earth through her use of natural elements. www. bbartcenter.org

Oct. 13-15

Layla and Majnun, Mark Morris Dance Group: “The Silk Road Ensemble,” co-presented by the University Musical Society and Michigan Opera Theatre at the Power Center. Premiering just a few weeks prior, Michigan audiences are in for a visual and musical treat as dance

virtuoso Mark Morris’ lyrical choreography tells the tale of an ancient Persian love. ums.org/ performance/layla-and-majnun

Oct. 14

“Detroit Performs Live” at the

Fillmore Detroit, 8 p.m. When Detroit

Public Television debuted its live performance of Detroit talent last fall, a new tradition was born. Alexander Zonjic is back as host, with Thornetta Davis, Laith Al-Saadi and WDIV’s Devin Scillian, just a few of the Detroit-bred talent taking the stage. www.detroitperforms.org/live

Opening Oct. 14

Ed Clark retrospective at the

N’Namdi Center for Contemporary Art

in Midtown Detroit. Noted gallerist and collector George N’Namdi was an early proponent of 90-year-old abstract artist Ed Clark, whose daughter Melanca Clark recently took the helm of the Hudson-Webber Foundation. www.nnamdicenter.org

Oct. 15-23

“Carmen,” Georges Bizet’s classic opera about a gypsy and the rivals for her affection, is coming to the Detroit Opera House. www. michiganopera. org/opera/carmen.

Oct. 22

“Illuminate: The Annual Science Soiree,” 6-11 p.m. A family-friendly event at the Michigan Science Center celebrating the science of light. Enjoy hands-on activities, demonstrations, performances, food, drinks and more. www.mi-sci.org/event/illuminate

Oct. 30

The Ark’s fall fundraiser, featuring

The Milk Carton Kids. Ann Arbor’s intimate concert venue boasts more than 300 shows a year, with each of the 400 seats no farther than 50 feet from the stage. Show your support for this venue that showcases the best in folk, rock, indie and blues music from local and national performers at their 20th annual fall fundraiser. www. theark.org/shows-events/ events-workshops/fall-fundraiser

Opening Nov. 4

“Art for the Holidays” at the Detroit Artists Market. After a call to local

artists was extended earlier this year, handmade jewelry, ornaments, scarves and other treasures will fill every nook and cranny as this Midtown gallery transforms into an art-centric shopping hub. detroitartistsmarket.org/events/index/

Nov

Th win Mor

Thea

Detr broa the-

Nov

“C Ban

Mus Arts

violi foun on a the l con mus Viol

Nov

A “Ro eno with as U Univ

13

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

ORT: ARTS & CULTURE

ide to fall arts in metro Detroit ‘Bitter|Sweet’ at DIA

Berlin Philharmonic at University Musical Society

Nov. 26-27

intermingled with a new commission that shows the future of dance, “23: Deconstructing Mozart,” by Koresh and multimedia artist DJ Spooky. http://theberman.org/event/ koresh

Nov. 19

‘I See Me’ at Charles H. Wright Museum

Nov. 12-13: Ken Fischer wraps up coup-filled career The Berlin Philharmonic sets up residency with University Musical Society this season during music director and conductor Simon Rattle’s last U.S. tour — and Ann Arbor is one of only six American cities the orchestra will visit. www.ums.org/performance/berlin-philharmonic The pair of concerts is also a cap to the career of Ken Fischer (below), who shaped UMS in Ann Arbor to be a major arts powerhouse. After 30 years, Fischer will retire as UMS president on June 30, 2017. His career included such coups as luring to Ann Arbor Leonard Bernstein on his final tour with the Vienna Philharmonic in 1988 and creating a decade-long partnership with the Royal Shakespeare Co. He also attracted global programming that appealed to the Arab-American community in metro Detroit and brought Philip Glass and two other co-creators of the opera Einstein on the Beach to Ann Arbor to stage the first production in 20 years. In 2014, UMS was awarded the National Medal of Arts from President Obama, the highest award given to artists and art patrons by the U.S. government.

e y

ter

joy ns, ore.

ng

re f et for in om heir

roit

ar,

n

Hilty is a theater favorite, having appeared on Broadway in “Wicked,” “Noises Off” and “9 to 5: The Musical,” as well as the Broadway-inspired TV show “Smash.” www.cabaret313.org/ shows/megan-hilty-nov-26-2016

Nov. 1-13 The nine-time Tony Awardwinning musical “The Book of Mormon” is coming to the Fisher Theatre as part of the Broadway in Detroit series. www. broadwayindetroit.com/shows/ the-book-of-mormon

Nov. 6

“Concerto for Violin and Rock Band” with R.E.M.’s Mike Mills at

Music Hall Center for the Performing Arts, 7:30 p.m. Childhood friends, the

violinist Robert McDuffie and R.E.M. founding member Mills collaborate on a new composition that transcends the lines between classical and contemporary rock music. www. musichall.org/events/Concerto-forViolin-and-Rock-Band

Nov. 10-13

As if Shakespeare’s tragic love story “Roméo et Juliette” wasn’t filled with enough emotion, it is now imbued with the additional passion of opera, as University Opera Theatre and the University Symphony Orchestra tell

the story of the Montagues and Capulets. Music by Charles Gounod, in French with English subtitles at the Power Center. www.music.umich. edu/performances_events/productions/2016-2017/r-et-j.htm

Nov. 11-Dec. 23

It’s not the holiday season without a visit from dear ol’ Scrooge, and Meadow Brook Theatre makes sure you’ll have a chance to see “A Christmas Carol” this year. www. mbtheatre.com/home

Nov. 12

Muggles and wizards alike will appreciate the “The Music of Harry

Potter” presented by the Ann Arbor Symphony Orchestra at the Michigan Theater as they reflect fondly on their days at Hogwarts and on the Quidditch field while sipping butterbeer. www.a2so.com/events/ music-harry-potter-mugglecocktail-hour

Nov. 16

“Classic Koresh: 25th Anniversary” at the Berman Center for the Performing Arts, West Bloomfield Township, 7:30 pm. The international Koresh Dance Co. presents highlights from more than 60 works from its quarter-century of performances from Artistic Director Ronen Koresh,

The Chamber Music Society of Detroit presents Alexander Ghindin on piano in this Signature Series concert that will feature a pre-concert talk on Mussorgsky’s “Pictures at an Exhibition” and Viktor Hartmann’s drawings and watercolors that inspired the Russian composer’s showcase piano composition. At the Seligman Performing Arts Center, 8 p.m. www.chambermusicdetroit.org

Opening Nov. 19

“The Truth Is I Hear You” at

Cranbrook Art Museum. Did you

speak your truth this summer when The Truth Booth popped up throughout metro Detroit and Flint? The culmination of that interactive project is a video exhibition expected to invoke a conversation. www. cranbrookartmuseum.org

Opening Nov. 20

“Bitter|Sweet: Coffee, Tea & Chocolate” at the Detroit Institute of Arts. Beverages may not seem like an obvious choice for an art museum exhibition, but these hot drinks, suddenly en vogue in 16th-century Europe, created inspiration for metalworkers and porcelain designers, who created custom vessels used to serve. These objects contribute greatly to the decorative arts in the DIA’s pre-1850 collection, and the exhibition engages all five senses for an interactive visitor experience. www.dia.org/calendar/ exhibition.aspx?id=5809&iid=

Nov. 25-27

While we’ve yet to discover life on another planet, that doesn’t stop humans’ infinite fascination with outer space. Join the Ann Arbor Hands-On Museum for a weekend devoted to galaxies far, far away with “ScienceFest: Space Odyssey.” www. aahom.org

Nov. 26

“An Evening With Megan Hilty,” Cabaret 313 presents a special Thanksgiving weekend concert at 8 p.m. at The Music Box at the Marjorie S. and Max M. Fisher Music Center.

Music of Journey at Orchestra Hall. The Detroit Symphony Orchestra team that presented this summer’s Music of David Bowie is at it again, this time with the songs all south Detroiters know and love. The DSO will be backed by a full rock band for this event. www.dso.org/ShowEvents View.aspx?id=3013&prod=3011

Dec. 3

Noel Night, 5-10 p.m. More than 50,000 people are expected to descend upon the more than 80 cultural institutions, galleries, stores, restaurants and bars during Midtown’s 44th annual Noel Night. More than 200 performances, horse carriage rides, a beer tent by the craft beer store 8 Degrees Plato and ice sculpture challenge are some of the evening’s offerings. www.noelnight. org

Dec. 9

“Karim Nagi: Detour Guide” (multimedia storytelling), part of Global First Fridays at the Arab American National Museum, 8 p.m. Nagi uses Egyptian percussion, multimedia projections and his own words as he takes his audience on a tour through the modern Arab diaspora. www.arabamerican museum.org/gf-fall-2016

Dec. 9

Eisenhower Dance presents its annual “December Dances” program at the Seligman Performing Arts Center in Beverly Hills, which will include premieres from Princess Grace Choreography Award winner Joshua Manculich, as well as Artistic Director Laurie Eisenhower. www. detroitperforms.org/2014/10/ december-dances-eisenhowerdance-ensemble

Dec. 10

“Too Hot to Handel 15th Anniversary,” presented by Rackham Choir at the Detroit Opera House, 7:30 p.m. It’s hard to believe it’s been 15 holiday seasons of this now-classic Detroit retelling of Handel’s “Messiah,” reinterpreted through gospel, Motown, jazz, blues, swing and classical music and more than 80 musicians. www.rackhamchoir.org

Through Dec. 30

“Holocaust by Bullets,” the current exhibit at the Holocaust Memorial Center, Farmington Hills, tells the lesser-told tale of the more than 2 million Jews who perished in the Soviet Union during the Holocaust, so that we “never forget.” www.holocaustcenter.org

14

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

SPECIAL REPORT: ARTS & CULTURE

How to boost Detroit’s creative economy? First, take inventory Report: Promoting Detroit's design legacy and arts education for children are key By Marti Benedetti mbenedetti@crain.com

Michigan’s kids aren’t getting enough arts education, and the state isn’t capitalizing on Detroit’s considerable design legacy. That’s the conclusion of a comprehensive report commissioned by a statewide creative economy group. “Among our next steps is to focus on the importance of arts education for kids. CEOs are looking for skills, creativity and innovation from (college graduates),” said Jennifer Goulet, CEO and executive director of Creative Many Michigan, which commissioned the report. “And the arts are not consistently taught to kids.” The 2016 Creative State Michigan report was researched and produced by KerrSmith Design in Toronto, with additional research support from Data Driven Detroit. It recommends “access to high-quality, consistent, sequential and standards-based education in and through art, design, culture and creativity in schools at all levels.” The efforts should be a high priority from preschool to grade 12 “in partnership with the state’s arts and cultural institutions.”

The 156-page report, released in March, broke down how arts and culture are faring in Detroit, Ann Arbor, Flint and Grand Rapids. It reported that Detroit is doing particularly well in design, literary, publishing and print and visual arts and crafts. It also has a strong hand in advertising and film, audiovisual and broadcasting, which is impressive given that the state started cutting back on film incentives in 2011 and dropped them by 2015. The report noted that Detroit recently became the first U.S. city designated as a “City of Design” by UNESCO, adding: “But despite notable improvements and dedicated investment from foundations and private ventures, Detroit (remains behind) other American cities of equivalent size in terms of the overall financial and employment impact of creative industries.” The report cost $260,000 and was funded by a $100,000 grant from the

U.S. Economic Development Administration and grants from the Kresge Foundation, the Michigan Economic Development Corp., Masco Corp. Foundation, the Ford Foundation, the

Brainstorming on Detroit design Part of launching Detroit’s UNESCO designation is the first-ever Detroit Design Summit Sept. 22-23, which is part of the sixth annual Detroit Design Festival. Read more at crainsdetroit.com/UNESCO. Charles Stewart Mott Foundation, Prima Civitas, and the Detroit Creative Corridor Center, or DC3.

Michigan saw a 6 percent increase in employment in all industries from 2011 to 2014, the report says. However, state employment in the creative industries experienced only a 1.5 percent rise. U.S. creative industries employment as a percentage of U.S. total employment is nearly 3 percent compared with 2 percent for Michigan. Design represents the largest creative industry in the state in terms of employees and showed a significant upturn between 2011 and 2014. Film, audiovisual and broadcasting employs the second largest group of creative economy workers. Literary, publishing and print showed the greatest decline — 15.8 percent — in employment. Goulet pointed out that the state's

arts and cultural funding through the Michigan Council for the Arts and Culture rose significantly this year — to

$10.5 million — and will again next year due to Gov. Rick Snyder, the Michigan Legislature, the support of statewide arts advocates and the economic data from the report, which reinforced the need. By comparison, per former Gov. Jennifer Granholm's recommendation in 2009, the budget was $2.5 million. Helen Kerr, president of KerrSmith Design, said the report is useful for shaping strategy in the future. “(Participants) talked about where the system is broken and what was good,” she said. “... I feel we were a translator of the creative community in Michigan. It was a call to action.” She said the state’s furniture history — residential and office interiors — has a worldwide legacy, and that legacy “has been foundational to seed the next generation of design. And it’s not just Grand Rapids. Detroit has an incredible architectural history and creative education institutions, such as Cranbrook, the University of Michigan (and) the College for Creative Studies.” Kerr touted the state’s emerging creative technology sector, which is its fastest-growing industry. “The wages are good and the impact is really big,”

she said. “And auto industry technology is just as important as design." Researchers at KerrSmith Design found Flint’s creative leaders to be “determined to support and promote the creative industry. There was an entrepreneurial spirit there and in Detroit,” she added. Olga Stella, executive director of DC3, said her organization is working closely with Creative Many Michigan to develop a Detroit version of the report that will dig deeper into employment numbers, wages and number of establishments. She found the report to be helpful in giving her a look at the statewide creative economy. "It helps us frame what we are doing, and we appreciate that. ... We have assets here; we are just not using them." George Jacobsen, senior program officer with the Kresge Foundation's Detroit program, said the report provides a dashboard view of the state of the arts. “It provides a good look at what our base level is,” he said. The next report should reflect the impact of “a new mayoral administration, different state government and more interest in the creative economy.” Goulet said another creative industries report will likely be published in three years.

FREE FOR ALL. Admission to the DIA is free if you live in Wayne, Oakland or Macomb county!

5200 Woodward Ave.

www.dia.org

DBpageAD_DBpageAD.qxd 8/30/2016 3:12 PM Page 1

16

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

SPECIAL REPORT: ARTS & CULTURE

How to sell tickets to millennials “We know social justice and action-oriented programs speak to them, and that’s exactly what we’re trying to create.”

Cultural groups try high-tech, interactive options By Leslie D. Green

Special to Crain's Detroit Business

If the Holocaust Memorial Center can captivate 40,000 schoolchildren who think the horrifying events of the late 1930s and ’40s are as ancient as early Greece, certainly it can draw the interests of 19- to 35-year-olds. At least that was the thinking when the Farmington Hills nonprofit began reaching out to millennials. “We know social justice and action-oriented programs speak to them, and that’s exactly what we’re trying to create,” said Education Director Robin Axelrod. For the museum’s first millennial-targeted program in 2014, Pencils of Promise founder Adam Braun examined social entrepreneurship and social responsibility. Braun, a former rising star on Wall Street, wrote the book The Promise of a Pencil: How an Ordinary Person Can Create Ordinary Change, the saga of his experience creating a global nonprofit that built more than 360 schools around the world.

Robin Axelrod, Holocaust Memorial Center

The turnout was surprising. “We didn’t know if 20 people would come or 30 people would come,” Axelrod said. But “A couple of hundred young adults attended the event.” The museum has followed up with similar events, including one dedicated to the socially and politically polemical topic of refugees that, Axelrod said, drew people who normally would not step foot in the center. The idea is simple: Get them in the door for a topic they care about and then expose them to the broader exhibits and purpose. That strategy falls in line with what Sunil Iyengar at the National Endowment for the Arts understands about young adults and the arts. The director of research and analysis for the NEA, Iyengar said 78 percent of 18- to 24-year-olds cite learning, socialization and networking among the stron-

gest motivating factors for participating in arts-related events. According to an Aug. 30 NEA report, 76 million Americans, or 32 percent of the population, attended live music, dance or theater in 2015 and 19 percent, or 45 million, attended an art exhibit. Of those patrons, millennials were 17 percent more likely than any other age group to attend.

Driving engagement But 18- to 24-year-olds attend fewer fine arts events — art museum exhibits and classical music, jazz, live theater, opera and ballet performances — than they did 10 years ago, the NEA found. Iyengar puts it like this: “The strongest predictor of whether someone attends arts experiences as an adult is whether they had the experience as a child or had arts education in school.”

And there's the tech phenomenon — millennials have entertainment media of all kind literally at their fingertips on smartphones and tablets. “How do you get them to look up from all the information in the world?”asks Linda Ramsay-Detherage, development director for the Jewish Ensemble Theatre in West Bloomfield Township. “You have to get them to cry and laugh, you have to give them an emotional response.” JET’s strategy is to shorten performances and take on contemporary issues that intimately relate to the culture. Broadway in Detroit, which books touring shows for the Fisher Theatre stage, hopes to grab their attention with the edgy, gender-bending “Hedwig and the Angry Inch,” starring Neil Patrick Harris, a popular TV sitcom star who also won a Tony in the role on Broadway in 2014. This past summer, Broadway in Detroit held a Tony Awards event at the Maple Theater, with live coverage on Facebook that garnered attention. And Scott Myers, director of corporate sales and marketing for Broadway in Detroit, is looking at what theaters across the country are doing to attract millennials.

Joining in the performance?

Lindsey Pollack, a millennial workplace expert for The Hartford insurance company in New York, said what appeals to millennials can also appeal to other audiences, but if you want to attract millennials, think about participatory events and unique experiences. “Experiences have currency,” she said. Pop-up performances — where someone suddenly starts singing an aria in a public space — is one of David DiChiera’s favorite ways of reaching millennials. “Sometimes people are not sure they want to go to the Opera House, they worry about dress, etc.,” the Michigan Opera Theatre founder and artistic director said. “But when you do things in their own settings, they say, ‘Hey, I love that singer.'” Participation and experiences are the reason millennials attend more art and music festivals than other cultural events, Iyengar said. “Festivals have the immediacy of a live experience plus interaction with the artist, mobility and open air. There is a smorgasbord of options.” Already the Music Hall Center for the Performing Arts presents dance, CONTINUED ON NEXT PAGE

2016 -17 SEASON

Celebrating the DiChiera Legacy

Please join us in honoring our visionary founder, David DiChiera, in his 46th and final year as Artistic Director of Michigan Opera Theatre. For more information visit

michiganopera.org

David DiChiera Founder & Artistic Director

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

17

SPECIAL REPORT: ARTS & CULTURE

Visitors to the Museum of Contemporary Art Detroit take in an exhibition earlier this spring; a Pokémon Go promotion led to a 20 percent membership increase. FROM PREVIOUS PAGE

folk, plays, jazz and rock concerts. Yet when thinking about how to attract younger patrons, the Detroit venue diversified further. “You have to create the environment,” said Vince Paul, president and artistic director of the Music Hall. He said trustees were horrified when he suggested spending $1 million to open its 3Fifty Terrace nightclub on the roof of the Music Hall. “I said, ‘21- to 35-year-olds are a demographic, just like the Arab community. If you want to engage them, you have to speak their language.’ They think about making money, hooking up, partying and engaging socially.” Paul hopes one day the Music Hall programming and the nightclub, which boasts bottle service, beautiful people and trendy carbon dioxide cryo jets, will work together. “We can wait for them to hook up, have kids, go to college and then start enjoying our programming, or we can engage them now. Because they come to 3Fifty, they know where to park, they know where the bathrooms are, and where to find the box office," he said. And as they walk by posters promoting violin, ballet and rock band performances on their way up to 3Fifty, "There is no obstacle to buying tickets to a show. These are critical issues and they add up to sales.” Getting millennials in the building isn’t a problem for the Museum of Contemporary Art Detroit, either. Young professionals often co-work and collaborate in Café 78, a full-service restaurant and bar open six days a week, said MOCAD director of philanthropy Emily Remington. Still, MOCAD recognizes the need to create age-specific programming, like its Monster Drawing Rally. The rally gives 40 members of MOCAD’s 45 and younger New Wave group two

MUSIC HALL

Patrons at 3Fifty Terrace can enjoy bottle service — and a great skyline view. hours to create a piece of art, which goes up for sale. “It provides them an opportunity to take ownership and be a part of the museum,” said Remington, who falls in the millennial age group. The Charles H. Wright Museum of African American History in Detroit, which attracts millennials through events like its annual African World Festival and Black Women Rock concerts, has found this to be true. Museum leadership met the four millennials currently on its board when they were talking to them about the museum. “Then we started to look at them as possible board members and we approached them to help us think things through,” said president and CEO Juanita Moore, acknowledging the museum still doesn’t have enough younger board members. Nearly half of the 25 staff members at the Arab American National Museum in Dearborn are 18- to 34-yearolds. Director Devon Akmon said hav-

ing a young staff helps shape the museum’s outlook and approach with immersive, participatory programs such as workshops with musicians and culinary walking tours. Getting young people involved in the Detroit Symphony Orchestra was a mission for James Farber, chairman of the DSO’s Governing Members Executive Committee. He is also founder of Aclaimant, Bloomfield Township; chairman and CEO of American Staffing Assurance Co. and president of Executive Strategies Inc. “He said when he first came to the DSO he was the youngest person there, and 20 years later he was still the youngest member there,” Christa Hoen, 25, said with a laugh. She is cochair of Next Gen, a DSO committee of more than a dozen 18- to 34-year-olds. Hoen is academic support manager for Detroit Regional Dollars for Scholars. Essentially, Hoen boiled it down to the generation’s need for comfort and relatability. Some ways the DSO is en-

gaging millennials is with meet-andgreets with music director Leonard Slatkin and backstage brews, where they can mingle with musicians. On Sept. 22, the DSO is presenting “Mysterium,” an experimental music event where DSO musicians will perform a variety of genres in three venues at the Max to introduce younger patrons to more of what’s offered. The Dec. 14 “Home Alone with the DSO” event, where the film will play on a giant screen while the Detroit Symphony Orchestra plays the score, is a great example of relatable programming, Hoen said. “It’s something we all grew up with but you don’t realize how much phenomenal music is in the score,” Hoen said. “Those are the kinds of experiences millennials need in order to think the symphony is cool.” The DSO also created discount programs for younger generations. Those 37 and younger can participate in 37/11, where they pay $37 a year and each of their tickets will cost only $11. A sound card allows students to pay $25 a year and get in all shows for free.

High-tech features Undeniably “cool” to many 18- to 34-year-olds is technology. The Henry Ford in Dearborn, which has millennials on its board, spent $70 million in 2003 upgrading Greenfield Village to appeal to both newer and older generations, said President Patricia Mooradian. Presenters now use iPads to share more in-depth stories of artifacts not on-site, and they have added a giant-screen experience to Maker Faire, an annual innovation festival at The Henry Ford, allowing attendees to talk with an astronaut at NASA’s Johnson Space Center. Attendance rose 32 percent after The Henry Ford created a 4-D theater for the Ford Rouge Factory Tour in 2015, Mooradian said. The audience sits in a

MUSEUM OF CONTEMPORARY ART DETROIT

semicircle while music plays, a digitally mapped model of the Ford F-150 rises from the ground and robotic arms show how parts and pieces are added to the vehicle. “We use all of the social channels as well,” Mooradian said. For example, the museum used Snapchat to promote its well-attended Beatles exhibit this summer and has held Snapchat contests. Larisa Zane, senior communication specialist for the Detroit Institute of Arts and a millennial, said allowing photography in the DIA’s large-scale museum exhibitions, such as “30 Americans,” allows visitors to spread awareness via social media and engage on a digital level. “Social media is a way a lot of millennials communicate,” she said. Zane uses emojis to promote art at the museum on Twitter and used Instagram for its four-city Inside|Out project with the John S. and James L. Knight Foundation that included a photo contest and InstaMeet event. “It was the first Instagram meetup we hosted. Our goal was to have about 50 people come out. We had about 75 people,” Zane said. The museum also held a Pokémon Go meetup with local college and high school students. “It allows us to stay relevant,” Zane said. MOCAD’s Pokémon promotion on Instagram and Facebook requesting people to come out and make a donation and receive a small gift resulted in a nearly 20 percent increase in membership that period because it was shareable and timely, Remington said. “The more quickly we react to what’s going on, the better (millennials) want to be involved and have a long-term relationship. Gen Ys and millennials have always had Google and had things constantly at their fingertips. We just have to make sure we have everything they want online and interactively.”

DBpageAD_DBpageAD.qxd 9/1/2016 2:47 PM Page 1

One spark illuminates a world of possibilities. It starts with a curiosity. A “What if?” that turns into an idea. One spark that inspires an evolution. At The Henry Ford, stories of American ideas encourage tomorrow’s innovators to redefine what’s possible. Join us in building an Innovation Nation. Visit . Support . Inspire Take it forward at thehenryford.org

19

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

SPECIAL REPORT: ARTS & CULTURE

High-dollar donors earn VIP perks By Leslie D. Green

Special to Crain's Detroit Business

American Express is right: Membership has its privileges — whether with a charge card or in an elite association. “Blue card level” memberships tend to provide discounts on goods and services. Examples include: n Members of the Charles H. Wright Museum of African American History get free admission for a year

and guest passes. n Curators’ Circle members at Cranbrook Art Museum get the museum publication and invitations to the Graduate Degree Exhibition and curator-guided tours of exhibitions. n A premium Michigan Science Center donor may enjoy not only free admission but also free planetarium shows, IMAX films and special exhibits. n Cobblestone members of the Detroit Historical Society and Museum

receive a commemorative cobblestone, invitations to exclusive events and the opportunity to tour the Collections Resource Center. n Some Detroit Repertory Theatre donors can get a free ticket for every ticket they buy that season. But at a “gold” or “platinum” level,

the perks become true VIP experiences — including socializing with the “right” people, receiving advice on art acquisitions and other exclusive opportunities. Here we break down some of the perks of giving big dollars to a few area cultural institutions. While the organizations stress that they value all of their donors, the privileges prove that the more you give, the more you get. (Note that donors pay their own travel expenses for trips.)

Arab American National Museum Director Devon Akmon explained AANM is in the unique position of being the only museum of its kind that caters to patrons who more often give to their churches, mosques and relief efforts back home as opposed to cultural institutions. So, AANM is trying to create a culture of philanthropy through experiential activities, Akmon said. The museum holds VIP receptions, house parties, cultural salons with renowned Arab-Americans, such as Charles Elachi, former NASA Jet Propulsion Laboratory director. For supporters giving $5,000 or more, the museum, in conjunction with the “Little Syria” exhibit at Ellis Island National

LAURA RAISCH/MUSIC HALL CENTER FOR THE PERFORMING ARTS

Donors to the Music Hall Center for the Performing Arts are treated to a New York excursion that includes a Broadway show and a stay at The London NYC hotel. Museum of Immigration, is creating an

“immersive experience” in October that includes a gala reception and a walking tour through Little Syria in lower Manhattan.

Detroit Institute of Arts The DIA covers nearly every interest for its 28,000 members and auxilia-

ry members. Associate members, those giving about $2,000 a year, can travel every couple of years, at their own expense, to Maastricht in the Netherlands for a large exhibition of European paintings, drawings and sculpture. While there, organizers arrange entry into private homes or offices to see collections. In December,

associates have the opportunity to go to Miami Beach for Art Basel, with work from galleries in North America, Latin America, Europe, Asia and Africa. They are also invited to attend an annual North American International Auto Show preview before the blacktie Charity Preview event. In addition to tiered DIA memberships, the museum also offers 12 auxiliary memberships. Matt Mergener, president of the Friends of the Detroit Film Theatre auxiliary and an advertising sales representative for Google, said that members, depending on their levels, get a certain number of free screenings, free parking, discounts and first chance to travel to the Toronto Film Festival each September with curator Elliot Wilhelm. High-level donors can attend dinners and film get-togethers, sometimes held at a board member’s home, Mergener said.

Detroit Symphony Orchestra DSO Governing Members, at $2,500 or more, get access to the donor lounge, assistance with ticket purchases, opening season events, patron appreciation concerts, some rehearsals SEE DONORS, PAGE 21

DBpageAD_DBpageAD.qxd 9/2/2016 9:00 AM Page 1

TILING THE CITY SINCE 1903 A DETROIT TRADITION

Detroit People Mover, Cadillac Station Installed in 1987

TO LEARN MORE VISIT PEWABIC.ORG

10125 E Jefferson Avenue, Detroit, MI • 313.626.2000

HANDCRAFTED CERAMICS & ARCHITECTURAL TILE • EDUCATION • HISTORIC LANDMARK • EXHIBITIONS

21

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

SPECIAL REPORT: ARTS & CULTURE

DONORS FROM PAGE 19

and Replay, a catalogue of DSO webcasts. Cassie Brenske, director of advancement for individual giving, said most people are unaware of the DSO’s Gabrilowitsch Society, named for the DSO’s first music director. For those donating $10,000 or more, members receive invitations to a sit-down dinner at a unique Detroit location. This year, the DSO is planning a progressive private dinner going from Two James to Katoi to MotorCity Wine in Detroit’s Corktown, with DSO musicians helping to provide music along the way. Major supporters also receive invites to meet-and-greets with guest artists after concerts and trips. Brenske said they hope to travel in 2017 to Kentucky to see Teddy Abrams, the wunderkind conductor of the Louisville Orchestra who was assistant conductor at the DSO for two seasons.

The Detroit Zoo Give $2,500 and members and up to four guests can take a zookeeper-led walking tour, or give $5,000 to tour with a zoo curator and see your favorite animal close up. At $10,000, donors can take a private tour and have breakfast or lunch with Executive Director and CEO Ron Kagan; and at $15,000, they can shadow a staff member as

“They can see private collections ... stay at some of the newest and neatest hotels and build camaraderie with fellow board members.” Emily Remington, MOCAD

they feed and care for the animals. Shortly after traveling to Antarctica with Kagan, Stephen Polk, longtime donor and vice chairman of the board of directors, and his wife, Bobbi, donated $10 million to the Zoo's $30 million Polk Penguin Conservation Center, which opened in April.

The Henry Ford Since many of the museum’s major, or potentially major, benefactors are not residing in Michigan, Patricia Mooradian, president at The Henry Ford, said they do special events with artifacts, like its Lotus-Ford Indy car, in Pebble Beach, Calif., or the Goodwood Festival of Speed outside of London. “We’ll host a special dinner or lunch with donors from around the world, and they can get up close and personal with the car, the curator and with me. It’s a way to showcase what we do and our special collections for people who might not be coming to Detroit anytime soon,” she said. Donors giving more than $10,000 to

the Henry Ford also get VIP parking, complimentary ride passes at Greenfield Village, priority access to events, behind-the-scenes tours for them and 10 guests by a curator or Mooradian and a special catered dinner on a Salute to America concert night.

Michigan Opera Theatre DiChiera Society members receive a variety of benefits from complimentary drinks and parking to priority seating. At $5,000, donors are invited to exclusive meet-and-greets with guest artists and admission to the donor lounge. Those giving at $10,000 or more also receive a private invitation to a special event with MOT President and CEO Wayne Brown.

Music Hall Center for the Performing Arts President’s Circle donors, those giving $5,000 or more, are invited to travel to New York with Music Hall President and Artistic Director Vince Paul. Paul

said the excursion, where travelers stay at the The London NYC hotel, includes a reception, a free Broadway show and tour and dinner at the legendary Sardi’s restaurant in the theater district. This year the group is scheduled to see Cirque du Soleil’s “Paramour.” “Saturday is a wildcard,” Paul said. “We cut through every museum.”

Museum of Contemporary Art Detroit Philanthropy director Emily Remington said MOCAD tries to come up with unusual ideas and free opportunities for its members. Donors giving $2,500 or higher receive VIP invitations to art fairs around the world including the Paris Photo fair and the Venice Biennale. “We also try to have private dinners with artists who have shown at the museum or are in town visiting,” Remington said, adding that Jens Hoffmann, MOCAD’s Susanne Feld Hilberry senior curator at large, provides art collection advice to high-level donors. Invitations for international trips to places like Brazil, Japan and Cuba are available for donor board members. “They can see private collections of people within those places, stay at some of the newest and neatest hotels and build camaraderie with fellow board members,” Remington said.

The death of the local review Daily newspapers have been grappling with the rise of the internet and decline of print advertising — and, therefore, a business model that doesn’t work for supporting local arts and culture coverage. The result has been a re-evaluating of priorities that for the most part kicked arts coverage to the curb. Leslie Green: How did we Why coverage has get there declined. and what’s next? Read one editor’s take at crainsdetroit.com/ artsculture. Leslie Green is a former arts and entertainment editor at The Detroit News and works as a freelance writer and editor for Crain’s and others.

J

oin us at the 2016 Business Aviation Expo. This premier event offers business owners, C-suite executives and business travelers the opportunity to learn more about the affordability of business and private aviation as an alternative to commercial airlines.

KEY EVENT FEATURES: • Ability to tour more than 20 business aircraft • Engagement with aviation experts and local executives • Crain’s Cocktail Hour hosted by KC Crain from 4:30–6 p.m. BREAKOUT SESSIONS: • Getting Started in Business Aviation

J]_akl]j Yl ;jYafk<]ljgal&[ge'9naYlagf=phg

• “Ins & Outs” of Fractional Ownership • Aircraft Transactions and Other Hot Topics • When Cash is King, Leasing May Be the Answer

AHLM>= ;R

@HE= LIHGLHKL

LBEO>K LIHGLHKL

F>=B: LIHGLHK

DBpageAD_DBpageAD.qxd 8/29/2016 3:44 PM Page 1

The world is here. UMS brings over 70 professional music, theater, and dance performances to the University of Michigan campus each season. Come experience the very best performing artists that the world has to offer, right here in Ann Arbor.

Tickets are on sale now.

September Sun 9/11

Thu 11/17-Sun 11/20

portrait of myself as my Nora Chipaumire

Falling Up and Getting Down Jason Moran & The Bandwagon with Skateboard Masters

December

Sun 9/18

Sat 12/3-Sun 12/4

HD Theater Broadcast

Handel’s Messiah

Shakespeare’s Richard III Starring Ralph Fiennes and Vanessa Redgrave

UMS Choral Union Ann Arbor Symphony Orchestra Scott Hanoian, conductor

Thu 9/29-Sat 10/1

The TEAM’s RoosevElvis Directed by Rachel Chavkin

Takács Quartet

eighth blackbird and Third Coast Percussion

Dennis Russell Davies, conductor Angélique Kidjo, vocalist Martin Achrainer, baritone

Fri 3/24

Fri 2/3

Sat 3/25-Sun 3/26

Estonian Philharmonic Chamber Choir

Beethoven String Quartet Cycle Concerts 5 & 6

Mitsuko Uchida, piano

Sun 2/5

Wed 3/29

HD Theater Broadcast

M-Prize Winner

DakhaBrakha

Shakespeare’s King Lear

Calidore String Quartet

Sat 12/10

Holiday Concert

The King’s Singers Christmas Songbook

January

Fri 2/10

Budapest Festival Orchestra

Thu 3/30-Sat 4/1

The Encounter Complicite/Simon McBurney

Iván Fischer, conductor Richard Goode, piano UMS Choral Union

Directed and performed by Simon McBurney

Sat 2/18

April

Beyond Sacred: Voices of Muslim Identity Ping Chong + Company

Sat 4/1

Batsheva Dance Company

Written by Ping Chong and Sara Zatz

Michael Fabiano, tenor Martin Katz, piano

Ohad Naharin, artistic director

Sun 2/19

Wed 4/12

Jelly and George Aaron Diehl and Cécile McLorin Salvant

Sat 4/15

Sat 1/7-Sun 1/8

Sun 10/9

HD Theater Broadcast

Thu 1/12-Sat 1/14

Terence Rattigan’s The Deep Blue Sea

Idiot-Syncrasy Igor and Moreno

Starring Helen McCrory

Bruckner Orchester Linz

Steve Reich @ 80 Music for 18 Musicians

Sun 12/4

October Beethoven String Quartet Cycle Concerts 1 & 2

Thu 2/2

Sat 3/18

Takács Quartet

Starring Antony Sher

Sat 10/8-Sun 10/9

February

/EWTEVW 4YXRMĈĢ, music director

Fri 9/30 [NOTE NEW DATE]

Kamasi Washington & The Next Step

Batsheva Last Work

A Far Cry with Roomful of Teeth Sanam Marvi Fri 4/21

Thu 1/19

Thu 10/13-Sat 10/15

Prague Philharmonia

King Sunny Adé

Layla and Majnun Mark Morris Dance Group The Silk Road Ensemble

March

Emmanuel Villaume, conductor Sarah Chang, violin

Sat 3/4

Sat 4/22

Jazz at Lincoln Center Orchestra with Wynton Marsalis

Yo-Yo Ma, Edgar Meyer & Chris Thile

Thu 3/9-Sat 3/11

Tue 4/25

The Beauty Queen of Leenane Druid

Handel’s Ariodante

Sun 10/16

Denis Matsuev, piano Thu 10/20-Fri 10/21

Dorrance Dance Michelle Dorrance, artistic director

November

Fri 1/20

On Behalf of Nature Meredith Monk & Vocal Ensemble Meredith Monk, music and direction Sat 1/21-Sun 1/22

Beethoven String Quartet Cycle Concerts 3 & 4

Takács Quartet Sun 1/22

Sat 11/12-Sun 11/13

HD Theater Broadcast

Berlin Philharmonic

The Audience

Simon Rattle, music director and conductor

Sun 1/29

Tue 11/15

A Venetian Coronation 1595 Gabrieli

Inon Barnatan, piano Anthony McGill, clarinet Alisa Weilerstein, cello

Garry Hynes, director Sat 3/11

Starring Joyce DiDonato The English Concert Harry Bicket, artistic director

Beethoven’s Missa Solemnis UMS Choral Union Ann Arbor Symphony Orchestra Scott Hanoian, conductor Thu 3/16

Snarky Puppy Fri 3/17-Sat 3/18

Paul McCreesh, music director and conductor

Betroffenheit Kidd Pivot and Electric Company Theatre

Wed 11/16

Created by Crystal Pite and Jonathon Young

Jake Shimabukuro, ukulele

Opera in Concert

ums.org 734.764.2538

23

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

I

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS MARY KRAMER Publisher

mkramer@crain.com Twitter: @mkramercrain

It’s good that food economy has bugs in the system

I

ate a bug smoothie last month. On purpose. At the first-ever Crain’s Food Summit in Detroit’s Eastern Market, we invited a handful of food entrepreneurs from around the state to “pitch” to potential investors. One of them was Detroit Ento, which offers “sustainable protein” — aka bugs — that can be mixed with a number of things, from sauces to smoothies. Plus, they are “locally sourced.” Yum! But consider it’s two times the protein power of beef. Actually, the smoothie was good. The bugs added a bit of texture. And they expanded my view of how Michigan can add some badly needed manufacturing and processing jobs to, dare I say, our economic food chain. Farmers connected with restaurants that can buy their products; processors found potential retail customers or distributors as well as potential vendors who sell everything from bottles to boxes. The range was remarkable. Mary Wallace and Julie Tenbusch, retired nurses, were scouting for customers and distributors for their frozen dough that transforms into tasty scones. Their company, Wallace Scones, has a tag line: “Homemade, with a little help.” Kind of like refrigerated cookie dough. Elsewhere in this issue, we report on arts organizations trying to attract millennials. The issue in the arts is the same as in food: The quest is for authentic but “stellar” experiences, to use a word invoked at our summit by Jim Hiller, who sold his grocery stores to Kroger and has hung up a shingle as a consultant. Another trend among consumers of all ages — people want to know where the food is coming from, how it’s grown and how it’s prepared. Many consumers are cutting back on processed food; pitch competition winner Pop Daddy Popcorn Inc. boasts its basic ingredients: red-kernel, non-GMO corn grown near Ann Arbor and popped in olive oil. That’s a far cry from the microwave popcorn that leaves a visible residue inside the bag it’s popped in — and maybe inside you. Meanwhile, Detroit Ento may be riding the curve that only now is taking hold in the U.S. Many parts of the world already include crickets and other insects as a food source. Detroit Ento wants to create a facility to grow the insects and create a protein powder for food we humans eat as well as in livestock feed and even pharmaceuticals. We’re already planning for the 2017 food summit. Not sure what Detroit Ento will be cooking up by then, but we hope to be watching — and reporting on — it and the other remarkable food companies across our state.

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.

Tabletop tours

Zingerman’s offers glimpse into crop growth, food prep in northern Michigan and beyond

I

By Amy Lane

Special to Crain's Detroit Business

t’s not every day the opportunity comes along to gather wild leeks with northern Michigan local-food entrepreneur Timothy Young. And later go into the fields of a Leelanau County farm to learn methods and crop rotation and pick vegetables prepared under a chef who also will bone out a pig as a prelude to dinner. But that’s a taste of what awaits a small group of people who paid at least $1,500 apiece for a three-day excursion later this month into the Grand Traverse Bay area’s food scene — a trip that’s the latest iteration of international and Michigan food tours run under a well-known brand: Ann Arbor-based Zingerman’s. Begun years ago to take people to the European sources of foods sold in Zingerman’s Delicatessen, the food tours are a small but expanding business line in the family of food-related companies

and ventures known as Zingerman’s Community of Businesses, which operate under parent company Dancing Sandwich Enterprises Inc.

Whether destinations like Tuscany and Morocco or day trips by bike being planned into parts of Detroit’s food landscape, Zingerman’s Food Tours aim to connect people with the sources, stories, experiences and flavors of a

region. Part history, culture and learning, the idea is to promote a greater understanding and appreciation of a destination and “a much better sense of the place,” said Amy Emberling, comanaging partner of the retail and wholesale bakery Zingerman’s Bakehouse. And, she added, “just to have a really nice time.” Emberling is among Zingerman’s employees who have led international tours, and she developed tours for Hungary after visiting there to research Hungarian baking. A tour next year includes cooking lessons and demonstrations from chefs and bakers and visits to food and wine producers. “We travel, we see incredible things that are related to food, have a wonderful experience,” Emberling said. “We thought, we have these connections, why don’t we bring people to what we’re finding.” SEE TOURS, PAGE 24 TEC PETAJA

At one stop during Zingerman’s tours of the northern Michigan’s food scene, Cammie Buehler of Epicure Catering LLC hosts dinners at her event venue — a farm in Leelanau County.

24

TOURS

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

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

more temperate parts of the country during Michigan’s cold months. FROM PAGE 23 “We’re hard-core foodies,” said The international tours are about 10 Janene Centurione, who with Dan days for 15 or fewer people and are opened and owned Ann Arbor and Birpriced from $5,500 to $6,850, depending mingham bakeries of the Great Harvest on the destination and single or shared Bread Co. franchise before selling about room. Zingerman’s tour leaders join 10 years ago. As with other Zingerman’s food tours, with local guides who handle logistics the Sept. 23-25 Grand Traand are paid for helping Zingverse Bay tour is designed to erman’s take travelers into a provide access to chefs, farmregion. ers, food producers and othZingerman’s Michigan ers and convey to the 21 tour touring began with Traverse participants — most of whom City/Leelanau Peninsula-arare from elsewhere in the ea trips in 2013, 2014 and country — what it takes to 2015. Among those attending produce food and drink or last year’s trip — and now bring it to the table. leading tours — were Janene “I want them to underCenturione, then-managing Janene stand more about the chaldirector of the University of Centurione: Michigan Center for Integra- “Hard-core” foodie lenges of running a small food tive Research in Critical wants to spread business and being successCare, and husband Dan Cen- the gospel. ful, so that when they go to the turione, a principal at BAKE!, farmers market or they go to a Zingerman’s teaching bakery. farm-to-table chef or they drink a local Passport to state tastes beer, they understand more about what it took to do that,” Centurione said. The Centuriones saw tour particiMichelle Grinnell, public relations pants interested in greater interaction manager for Travel Michigan, said the with the local food community, and that focus of Zingerman’s tour fits what culiled to the more extensive format seen in nary tourists seek. “People really want that immersive the Grand Traverse Bay tour and a new relationship with Zingerman’s to create experience; it’s not that they just want to and lead what are now called Great go to a restaurant and eat great food anymore,” she said. American Food Tours. And, Grinnell said, “how people are That banner includes future tours to Grand Traverse Bay, day trips into De- more and more traveling is based on troit and possibilities being eyed for their interests and passions. Food and

culinary … is certainly a passion for cal-foods-focused Epicure Catering some travelers, (and) they want that in- LLC. Managing Partner Cammie Buehler said guests will tour the property’s sider, behind-the-scene experience.” The tour’s agenda includes a stop grounds and learn the history of its barns with the founder of The Little Fleet food and structures, see a butchery demontruck hub; brewery, winery and cidery stration by Epicure partner and chef Anmeetings, tours and tastings; a sunset drew Schudlich, go into the fields leased sail and dinner aboard the educational and farmed by 9 Bean Rows LLC owner tall ship Inland Seas, with captain and Nic Welty, and dine on locally sourced others discussing history, culture, and cuisine, among activities. Buehler said the structure of the Zingthe water’s influence on regional agriculture; Traverse City’s downtown farm- erman’s tour provides intimacy and an ers market; farm tours; and visits with educational opportunity that’s unique. “It’s not just tasting,” she said. “It’s the food producers including Boss Mouse Cheese, an artisan cheese maker in whole thing. It’s the knowledge; it’s the Grand Traverse County’s Kingsley, and food; it’s the how, the why, the where … Food for Thought Inc., the organic and they’re getting a full picture with this forwild-harvested gourmet specialty foods mat.” company founded by Timothy Young, in Buehler said she hopes guests take Benzie County’s Honor. away “just how interconnected the local Young, who will host a locally derived food system is in terms of all these relabrunch and take guests into tionships that are built and the woods to identify and dig fostered and encouraged” leeks and then pickle them in and also gain skills, knowlhis kitchen, said he wants edge or ideas that they can people “to see another model apply where they live. of how food can be made in Tour leader Centurione an authentic and sustainable said Michigan tour hosts, who manner.” are compensated for direct “Eat good, healthy sustaincosts such as meals and supable food that doesn’t exploit plies, gain exposure that could other people or the environ- Timothy Young: bring them future customers ment — that’s my baseline.” Takes guests leek- and promotion. For Zingerman’s, food picking in woods. Up close and tours have generated revenue personal of about $300,000 to $350,000 Another stop is Cherry Basket Farm annually in an enterprise that had about LLC in Leelanau County’s Omena, an $60 million in revenue in the last fiscal event-venue, farm and home of the lo- year, Emberling said.

“It’s a very small part of our business,” she said. “But it has very positive side effects. I think it builds a lot of brand awareness and loyalty. People go on other trips, and they tend to buy things from other parts of our organization because of it.” Centurione said future possibilities in the Grand Traverse Bay area include one-day tours and tours by bike — a concept also planned next spring in Detroit. She is working with community members including Wheelhouse Detroit — a bicycle rental, tour, retail and service provider — on day trips for groups of possibly about 20 people to cycle into destinations that include Corktown, Eastern Market and Hamtramck. “The idea is to showcase all kind of levels of the Detroit food system in the particular neighborhood that we go into,” including farmers, small-batch producers, farmers markets, restaurants and others that use local products, said Kelli Kavanaugh, owner and founder of Wheelhouse Detroit. Kavanaugh said that with guided tours Wheelhouse currently offers, she sees interest in Detroit’s history and culture and food-related aspects, such as Wheelhouse’s urban agriculture tour that visits several farms in the city. But the Zingerman’s tours “will be an opportunity to focus in, close range, to the food system,” Kavanaugh said. And, she said, “the food scene in Detroit is getting a lot of attention right now — rightfully so — so I think the timing to do this is great.”

ENERGIZING MICHIGAN’S

Future

Energy is essential to the way we live, work and play. ITC operates, builds and maintains the region’s electric transmission infrastructure. We’re a Michigan-based company working hard to improve electric reliability, increase electric transmission capacity, and keep efficient, reliable energy flowing to homes and businesses across the state.

Building the electric transmission infrastructure that will power the future.

www.itctransco.com

25

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

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Going local, Mich. gets into spirit of craft distilling By Seth Schwartz

Special to Crain’s Michigan Business

It has been eight years since the Michigan Legislature relaxed some regulations for distilleries. Today, with more than 35 craft distilleries, Michigan is third in the country by the number of distilleries.

Grand Traverse Distillery, Valentine Distilling and Red Cedar Spirits are

three that have put Michigan on the map as a destination for spirit aficionados. Substantial use of local grains and other farm products also has spurred the local economy. Growing up on a farm in Pinconning near Michigan’s Thumb, Kent Rabish relished taking an idea and assembling a consumable product by hand. While on vacation in 2000 with his wife, Peg, in Bend, Ore., Rabish enjoyed vodka from a local distillery. His well-seasoned palate was pleased, triggering a message to a percolating brain. “I thought, ‘Why can’t we do that right here?’ ” But as Rabish learned, making a premium craft spirit is a complex process. While attending the American Distillery Association’s first meeting in 2002, Rabish went through a twoweek internship at a distillery in Flagstaff, Ariz., and spoke with manufacturer Arnold Holstein and the Kent Rabish: The American Distillspirits moved him ery Institute foto start distillery. rum. His information-gathering paid off. Construction was completed on a 4,000-square-foot operation in Traverse City in 2006. The Arnold Holstein still from Germany was assembled, and the Grand Traverse Distillery commenced producing and disseminating spirits, earning the distinction as the first microdistillery in the state. Everything is made in-house. Grand Traverse Distillery makes more than 15 spirits, including four vodkas, six whiskeys, gin and rum with Caribbean molasses. One thousand cases of the distillery’s signature True North Vodka were sent directly to a distributor and then to 1,200 stores across the state. In 2007, the distillery released 2,000 cases of cherry vodka. The flavoring came from a cherry company in Leland, with an organic cocoa bean adding a hint of chocolate flavor. The second year in business, the distillation of whiskey quadrupled. Then, a November 2010 change in Michigan Liquor Control Commission

regulations — Act 213 — was another boon for business. Distilled products were allowed to be sold on-site. Quickly converting his 400-squarefoot office, Rabish had 50 customers coming through the door the next day. Three tasting rooms in Traverse City and one each in Suttons Bay, Leland and Frankenmuth bring in more than 5,000 customers annually. A sev-

Professor’s push for tasting rooms nets distillery Through the efforts of Michigan State University Professor Kris Berglund, Act 58 passed unanimously in the Michigan House of Representatives in April 1998. It opened the door — and bottle — for distillers to have on-site tasting rooms. The ripple effect of that legislation has reverberated across the state and into the classroom, where prospective college graduates often wonder how their major or minor translates to the job market. At MSU, Chemical Engineering 483, Brewing and Distilled Beverage Technology began with a class of 25. Today, Berglund, a distinguished professor of food science and chemical engineering, has 100 people at his lectures. Two years ago, Michigan State’s food and beverage department offered a minor in distilling for the first time. A student is required to take five classes to complete the minor. It combines the departments of chemical engineering, food science, chemistry, microbiology and biosystems engineering. The curriculum is geared toward both hobbyists who take the class as an elective and the dozen or so who complete the minor annually and go into the brewing business after graduation. Olivia Dunn, a senior from Clarkston, is a chemical engineering major with a minor in beverage and science. After three semester internships at Dow Chemical Co. (in Midland, Massachusetts and California), the thought of enth will open as part of a joint tasting room with wine maker Black Star Farms this fall in Ann Arbor. Sixty percent of Rabish’s sales come from tasting rooms. In 2012, Grand Traverse Distillery added markets in Japan, Sweden, Norway and Germany, annually sending 50 cases of Old George Straight Rye Whiskey — aged four years — and 50 cases of bourbon — aged three years. Rabish said he’ll have a second still by mid-2017 and be able to add 400 barrels to age each year. International markets will receive 100 barrels of rye and bourbon whiskey each year. “In the craft industry, we need to educate the public on what we do,” said Rabish, whose son, Landis, 31, became head distiller in 2012. “We have a large sign outside the distillery which says, ‘End Your Dependence on Foreign Alcohol.’ Customers need to find out we can distill a world-class vodka that’s better than the imports.” The spillover effect with agriculture and money into the economy is palpable. Rabish buys nearly 300 tons of grain every year from Send Bros. Farm nine miles away. “There’s never enough whiskey,” said Rabish, adding that Grand Traverse Distillery has grown 30 percent annually. “We try to produce as much as we can, but the aging process is slow. Our goal is to put up 200 barrels a year. We’ll put a note on Facebook to let people know what’s come out.”

Goal to make the best After a decade on Wall Street, Rifino Valentine noticed the frequency of manufacturing leaving the United States. When ordering martinis in New York City, he observed: “Everything was mass produced and im-

working at a distillery post-graduation is appealing. “The minor gives you a lot of hands-on experience,” Dunn said. “We learned wine production and fermentation. We went through the entire process and made a red and white wine, and we got our own bottle at the end.” Her time at Red Cedar Spirits has added to her learning curve. Beyond teaching students, Berglund has been a trouble-shooter for those seeking his counsel on the art of distillation. When wineries started distilling brandy in 1997, he helped several. Since 2008, he has advised over a dozen distillery startups. Then, in 2012, Berglund and his wife, Dianne Holman, decided to establish their own place, Red Cedar Spirits. Converting the former city of East Lansing public works building took four years of restoration. The 45,000-squarefoot facility houses the Red Cedar Spirits distillery, which opened in 2015 and is one of the largest in the state. The 30-foot ceiling is able to accommodate the two 28-foot still columns. The tasting room, including a 20-seat bar, has a family-friendly ambiance, with customers ranging from the mid-20s to the 60s. Red Cedar Spirits also is distributed in 300 stores in Michigan; vodka, for example, is used at the Kellogg Hotel and Convention Center at Michigan State’s campus.

ported. Why can’t we make worldclass spirits?” Following a four-year apprenticeship under the tutelage of Michigan State University Professor Kris Berglund in East Lansing, Valentine was armed with knowledge and eager to make a

Seth Schwartz

mark in the industry. Having grown up on a farm in Leland, Valentine also understood the importance of being locally sourced. He uses 90 percent Michigan products, from grains to T-shirts. (Berglund also has his own line of products via Red Cedar Spirits, East Lansing. (See

TOP FLIGHT BUSES... SUPERHERO SUPPORT. indiantrails.com

800-292-3831

related story, this page.) Valentine reached out to the city of Ferndale regarding setting up a commercial operation and was welcomed. Valentine Distilling opened in 2007. The moniker and label design of the spirits pay homage to Detroit’s manufacturing history. Valentine’s Liberator Gin, handcrafted from eight botanicals, was named after World War II’s B-24 Liberator Bombers, constructed by Ford Motor Co. at its Willow Run plant. Valentine’s bourbon whiskey is branded as Mayor Pingree, who was Detroit’s mayor from 1889 to 1897. The 4-year-old bourbon is in a red label; the 8- to 10-year-old is in a black label. A few barrels are released periodically and are sold out within days. In the spring of 2015, Valentine moved production to a 15,000-squarefoot, three-story building with a 45-foot ceiling to accommodate a 33-foot Christian Carl still, a former Packard body shop at 965 Wanda St. in Ferndale. Rifino’s yield has received high praise from the industry. Valentine was voted Best American Gin Distillery at the 2015 Berlin International Spirits Competition and was awarded gold medals for the Liberator Gin and Old Tom Gin. A 7-year aged bourbon also was just released, part of a Valentine’s Proprietors Select Series. Valentine’s distilling products can be found in more than 3,000 locations throughout Michigan, Illinois, Tennessee, New York, Maryland, Delaware and Washington, D.C., as well as in Italy, France and Belgium.

26

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

WORLDWATCH WHERE MICHIGAN DOES BUSINESS: INDIA

W

ith a nominal 2015 GDP of $2.09 trillion, India is the world’s fourth-largest economy. Its English-educated labor force accounts for the country’s growth as a major exporter of information technology and business outsourcing services, according to the CIA World Factbook. The country also has a large agricultural workforce, although most of India’s economic growth comes from services. India’s largest exports are precious stones, machinery, vehicles, chemicals, iron and steel, petroleum products, cereals, apparel and pharmaceutical products. Its biggest export partners are the United States (15.2 percent), the United Arab Emirates (11.4 percent) and Hong Kong (4.6 percent). India’s largest imports are chemicals, plastics, iron and steel, fertilizer, machinery, crude oil and precious stones. Its biggest import partners are China (15.4 percent), the United Arab Emirates (5.5 percent), Saudi Arabia (5.4 percent) and Switzerland (5.3 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: October: Saudi Arabia | November: Brazil

Altair Engineering Inc. Based: Troy Operations: Offices in Bangalore,

Pune, Chennai, Delhi and Hyderabad Employees: 600 Products/Services: Proprietary software and services, including software for engineering simulation,

high-performance computing and on-demand computing Clients: Tata Motors, Mahindra, General Motors, John Deere, General Electric, Hyundai, Fiat Chrysler Automobiles, Caterpillar, Airbus, United Technologies, Honeywell, Robert Bosch, Volvo, others

Autoliv Inc. Based: Auburn Hills Operations: Office, tech and

engineering centers in Bangalore, Bengaluru, Chennai and Rudrapur; manufacturing in Mysore, Manesar Employees: 1,900 Products: Airbags, seatbelts, steering wheels Clients: Suzuki, Hyundai, Tata Group, Mahindra & Mahindra, Nissan, Ford, General Motors, Toyota

Cooper-Standard Automotive Inc. Based: Novi Operations: Facilties in Bawal,

Chennai, Ghaziabad, Manesar, Mumbai, Sanand and Pune Employees: 2,020 Products/Services: Systems for fluid transfer, fuel and break delivery, sealing and anti-vibration Clients: Fiat Chrysler Automobiles, Ford, General Motors, Mahindra & Mahindra, Renault-Nissan Alliance, Suzuki, Tata Motors, Toyota,

solutions in business intelligence, big data, data engineering and advanced analytics as well as managed services Clients: Offshore services to U.S.-based clients in the retail, insurance and financial industries

Dayco Products LLC Based: Troy Operations: A manufacturing plant

in Manesar

Employees: 150 Products/Services: Torsional

vibration dampers, accessory belt tensioners, timing belt tensioners and idlers and technical support Customers: Suzuki, General Motors, Ford, FCA, Tata Cummins, Volvo Eicher, Renault Nissan, Mahindra & Mahindra

Domino’s Pizza Inc. Based: Ann Arbor Operations: 1,062 stores in 224

Volkswagen

cities; a master franchise in New Delhi Employees: 24,500 Products/Services: Pizza and side items customized to the Indian palate

DataFactZ

Dow Chemical Co.

Based: Northville Operations: Offshore services

facility in Gachibowli Employees: 150

Products/Services: Project turnkey

& 2 1 7 ( 0 3 2 5 $ 5 < $ 5 7 ' ( 6 , * 1

Based: Midland Operations: Business and

manufacturing centers in Mumbai, Chennai, Delhi, Daman and application development centers in Govandi, Kalwa, Taloja and Powai Employees: 900 Products/Services: Chemical products and plastics for use in paints and coatings, building and construction, plastics and packaging, water and health, food and pharmaceutical, automotive, electronics, agro-sciences and renewable energy applications

Federal-Mogul Corp. Based: Southfield Powertrain operations: Manufac-

turing plants,in Bangalore, Patiala, Bhiwadi, Parwanoo and Pune, a tech center in Bangalore, sales and a corporate office various Motorparts operations: One manufacturing facility in Chennai, four sales offices and a corporate office throughout India Employees: 7,000 Products/Services: Pistons, piston rings, engine bearings, sealing and systems protection products, ignition products and valve seats and guides, gaskets, brake products, spark plugs, engine valves, liners and wipers

6HSWHPEHU ([KLELWLRQ LQ WKH *DOOHU\ $GGLH /DQJIRUG $ 7LPHOHVV (OVHZKHUH

1HZ (',7,21 6SDFH &ROOHFWLEOH DQG $FFHVVLEOH $UW 'HVLJQ

6,021( '(6286$ *$//(5< DQG (',7,21 & D V V & R U U L G R U 0 L G W R Z Q ' H W U R L W 6 L Q F H : :LOOLV 6W 8QLWV DQG 'HWURLW 0, 6,021('(6286$*$//(5< &20

Herman Miller Inc. Based: Zeeland Operations: A manufacturing

facility and sales office in Bangalore and presence in 12 cities through a dealer network of 19 dealers across the country Employees: 152 Products/Services: Entire product range of Herman Miller, which

includes seating, workspace, storage, tables and accessories and services related to local planning specialists, visualization experts, strategic design consultants, shared learning programs, local account management structure, project implementation, warehousing and stock holding programs, user ergonomics training programs, and warranty and service implementation Clients: Adobe, Amazon, Apple, Accenture, Sony, Reliance, Credit Suisse, Sales Force, Johnson & Johnson, Blackstone, Microsoft

International Automotive Components Group Based: Southfield Operations: Two plants and a

technical, engineering and sales center in Chakan, and two plants in Manesar Employees: 700 Products: Components including instrument panel and cockpit assemblies, headliners and overhead systems, glove box assemblies, front grilles, doors, door trim, floor consoles, wheel liners, passenger car and heavy truck exterior trim and components

Inteva Products LLC Based: Troy Operations: One manufacturing

facility in Pune and one technical center in Bangalore Employees: 435 Products/Services: Latches, window regulators and motors, engineering support for roofs, closures, motors and electronics product lines, as well as local and global purchasing functions Clients: Hyundai, Volkswagen, Ford, Mahindra & Mahindra, Tata Group

Link Engineering Co. Based: Plymouth Operations: Sales and service

support headquarters in Chennai and sales personnel stationed in Bangalore, Pune and Delhi Employees: 15 Products/Services: Adams Technologies supports the sales and

service of Link’s precision, customized test systems for both component and full-system testing for motorcycle, automotive, aerospace, rail and civil engineering

ProQuest LLC Based: Ann Arbor Operations: An office in Delhi and

home-based direct sales representatives in Chennai, Delhi, Bangalore and Mumbai Employees: 12 Products/Services: ProQuest dissertations and theses Clients: Universities

Natalie Broda

27

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

SPECIAL REPORT: SECOND STAGE

LARRY PEPLIN

Pam Turkin shows off her fresh-baked

cookies and coffee cake. Turkin, co-founder of Just Baked Cupcakes LLC, now has an online business, Rise Baking LLC.

The right way to grow Biz owners can learn hard lessons about scaling up, strategic planning

A

By Rachelle Damico

Special to Crain’s Detroit Business

bout half of new businesses with employees survive past the five-year mark, according to a U.S. Small Business Administration report based on Bureau of Labor Statistics data. There are numerous reasons why a new business can fail — including an unfocused mission, poor management skills or a lack of financial planning. Scaling up is a tactic many business owners use to make their company successful, but it can lead to a company’s downfall if not done correctly. “It’s usually more expensive and harder to grow than people think it is,” said Dave Haviland, who runs Phimation Strategy Group, a consultancy based in Ann Arbor.

“Growth has to be funded upfront, and the return comes later.” Haviland said that in the best-case scenario it would take three to six months for companies to get a return on revenue when opening a new location, and an additional three to six months to gain profit. “That gap is the thing that can make it really hard for companies to manage,” he said. Business owners should treat growth and expansion with just as much strategic planning as managing dayto-day operations. “You have to ensure the business is profitable on a small scale before you scale it up,” Haviland said. “It’s better to think of it as a completely new animal — it’s going to take longer, it’s going to take more money, and

you’ll need to have a bigger war chest before you start that process.” Pam Turkin, co-founder of Livonia-based gourmet cupcake company Just Baked Cupcakes LLC, said strategic planning was an issue for the company when she owned it. “The driving force for us was to be able to get to a certain size, but you have to be able to maintain that size,” Turkin said. “Sometimes more is just more, not better.” In this month’s Second Stage, Crain’s talks to Pam Turkin for advice, tips and lessons learned on losing ownership of Just Baked, and why she said the experience has ultimately made her a better entrepreneur. Read Turkin’s story, Page 28

28

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

SPECIAL REPORT: SECOND STAGE

A new recipe

LARRY PEPLIN

After fall of cupcake company, baking entrepreneur works to rise again By Rachelle Damico

Special to Crain’s Detroit Business

20-GAME PLAN MEMBERSHIP Create memorable experiences for your family, friends, and clients as a Pistons season ticket member. EXCLUSIVE E EVENTS

I INSIDE ACCESS A S

B BENEFITS & AMENITIES A

PISTONS.COM/BUYNOW 248.377.8477

Pam Turkin, former owner of Livonia-based gourmet retailer Just Baked Cupcakes LLC, was devastated to lose the company she and her husband, Todd Turkin, founded. “I lost my whole life overnight,” Turkin said. Turkin started the business in 2008, baking cupcakes out of her home. Within seven years, the business grew to 17 locations in Michigan and three in Ohio, offering more than 40 gourmet cupcakes in flavors like Grumpy Cake and Red Velvet. Just Baked grew rapidly. In 2009, the company had 10 employees and about $570,000 in annual revenue. Last year, the company had 90 employees and $3 million in annual revenue. However, the company’s rapid growth became too much to keep up with. “Like anything that grows too fast, you just lose control of it,” Turkin said. “Once one domino went down, it was a chain event.” Last year, the company closed all of its stores, leaving only four franchise locations. The company then sold its assets — including recipes, trademarks and rights to future franchise locations — to Roseville-based Tubby’s Sub Shops Inc., which sells the cupcakes in Tubby’s locations. “Anybody that’s an entrepreneur and puts six to eight years into something every minute of every day, and then to have it gone the next day — it’s just devastating,” Turkin said. Pam and Todd Turkin owned 50 percent of the company along with investors Ryan and Eric Goodman of Royal Oak-based R&E Development Co. LLC.

Last year, Just Baked planned to move to a lower-cost retail strategy by

“It would have been interesting to see what would have happened if we had a little more money and patience behind us.” Pam Turkin

opening five Ohio locations in mall kiosks in lieu of stand-alone stores. But only four of the five planned Ohio locations opened, some running as short as six weeks before the doors shut. “I think we would have done very well at the malls,” Turkin said. “It would have been interesting to see what would have happened if we had a little more money and patience behind us.” Turkin said she had been taking on too many responsibilities during the expansion — including supervising building contractors, running the commissary kitchen in Livonia and many times driving back and forth from Michigan to Ohio delivering the products herself. “It was exhausting, and I was stretched too thin,” Turkin said. “It was such a huge undertaking; we really should have had a full staff.” Overwhelmed, Turkin said, she traveled to Florida to visit her mother and clear her head. She left on a Sunday, and by the time she returned on the following Friday, Turkin said the investors had closed the Livonia commissary kitchen and told employees they were being let go. “It was done before I could do anything,” she said. “I think it was a kneejerk reaction to me saying to them I

need some time to figure out what’s going on.” Ryan Goodman said it was not R&E Development’s decision alone, and that he received an email from Todd Turkin saying it was time to close the stores. “It was just too much; he thought it was time, so we agreed with him,” he said. Both Turkin and Goodman said Just Baked was undercapitalized, and it was growing so quickly the company was always chasing capital. “It wasn’t my job to keep funding it; it needed to eventually support itself and just wasn’t,” Goodman said. “Unfortunately, it wasn’t doing well — sometimes in business you have to just cut your losses and stop things.” Turkin said Just Baked would have benefited from a more strategic business growth plan. “Grow slow,” Turkin said. “There were a lot of people involved with us telling us to move into directions that sometimes seemed sexy and great, and looking back on it, it should have been 'slow and steady wins the race.’ ” Just Baked added R&E Development as equity partner after its former partner, Garden Fresh Gourmet , pulled out of the cupcake business. Just Baked then sold a stake to R&E in 2013. Garden Fresh has planned to take Just Baked into grocery stores, but Turkin said the wholesale market didn’t have enough margin in it. “It wasn’t the market for us,” Turkin said. “We were handcrafting baked goods, so that probably was a bad idea.” Turkin and Goodman both said they had planned to grow Just Baked big enough to sell it. “Sometimes you need to work on the quality of the business and not the quantity — I think that’s where we SEE RISE, PAGE 29

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

29

SPECIAL REPORT: SECOND STAGE

4 tips to grow and expand successfully Dave Haviland, founder of Ann Arborbased consultancy Phima-

tion Strategy Group, offers

tips and advice on scaling a business.

1. Have a profitable model that you’re replicating. “Make sure the model works in the current location,” Haviland said. “Then, take the time to learn the market and learn what the landscape is in that new environment. Think about how you’d make it work in this new market and how you’re going to service that.”

2. Collect a war chest, especially if you’re not profitable. “Otherwise, you’re going to have to start diverting time, attention and money from the core business,” Haviland said. “Growth costs more than you think it’s going to.”

3. Have people who are experienced in the growth process itself. “I’ve seen (business owners) going into a new market or location and say, ‘We’re going to take the person that’s always managed that, and we’re going to have them launch this new market,’ ” Haviland said. “The problem with that is that they might be good at understanding how the business operates, but the launch and growth process requires a different set of skills than sustaining something that already exists.”

4. Don’t bet the farm. “If you have a core business that’s generating profits, make sure you don’t take your eye off the ball of your core business,” Haviland said. “If you’re thinking about growing, figure out how to do it in a digestible amount to test the idea so that you’re not over-committing the company in this new area that might end up threatening the core business.”

RISE

FROM PAGE 28

missed,” Turkin said. “It would have been better to analyze the effectiveness of the stores that were there rather than grow it to a critical mass.” After the Turkins lost ownership of Just Baked, they agreed they would never start a business again, Pam Turkin said. But try telling that to a serial entrepreneur. The couple remained stagnant for about six months, until an email from a contact from New York-based Hello Fresh USA, a recipe-in-a-box subscription company she met a couple of years earlier at a trade show, expressed interest in a cross-promotion with Just Baked. That’s when Turkin decided to start an online subscription business of her own — in baking. “I needed to do something to prove to myself that I could do it again,” she said. Her monthly baking subscription company, Rise Baking LLC, went live in March of this year and already has about 110-120 ongoing subscribers.

LARRY PEPLIN

Rise Baking LLC went live earlier this

year; it has about 110-120 ongoing subscribers.

The company sold 400 boxes within the first six weeks of the website launch. Turkin said Rise is the first to bring the baking box to the market. “I realized as big as the subscription box is, nobody is doing what I’m doing,” she said. Turkin teamed up with her mother, Adele Rosen, who owns the company. Turkin is the managing member. “With everything going on (with Just Baked), it was just easier to put everything in her name,” Turkin said. “She’s the one that’s funding it and who put in all the initial investment.” As interest grew, Turkin purposely pulled back advertising for Rise to

avoid growing too fast, like Just Baked. “It’s going much slower,” Turkin said. “I’m much more patient and deliberate with it.” Turkin said an online business appealed to her because of low infrastructure costs, rather than a need to manage retails stores and a kitchen full of employees. Instead, she outsources a lot of work. She also said she will likely work with investors again, many of which have expressed an interest in working with Rise. “We will probably need funding for Rise in order to grow at the pace we think we can grow,” Turkin said. She plans to explore different funding platforms and work with Silicon Valley investors, who are skilled at growing online companies and are typically offering seed money as opposed to a traditional bank loan or line of credit. “I need to work with someone that knows more than I do,” Turkin said. “If you’re going to be bringing in an investor, you need to bring someone in that’s going to help you strategically.” Turkin reached out to her friends in Silicon Valley for advice, including Bri-

an Grassadonia, an executive management team member for credit-card processing device Square and the co-founder of Square Cash, the company’s free peer-to-peer payment app. Grassadonia offered Turkin advice on scaling as a business and how to form a growth plan. “If you don’t have a growth plan, then you’re going to be in trouble,” Turkin said. “What if something takes off — how are you going to manage?” Turkin learned some hard lessons, but she doesn’t look at it as a failure. The experience has made her a better entrepreneur, she said. “As devastating as the whole thing was, I needed to have that loss to know what I was good at and what I wasn’t, and to understand where I could have been better and what I could have done differently,” Turkin said. “Now I could look back and be proud of what we did, what we’re doing, and hope people still love the brand.” That’s why Turkin named her new company Rise — not just a play off flour rising — but for her to able to get back up again. “Cakes rise, bread rises, and I’m going to rise again,” she said.

30

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

SPECIAL REPORT: SECOND STAGE

Monday, October 17, 2016

Company’s ‘passport’ keeps new hires at home longer By Rachelle Damico

Special to Crain's Detroit Business

Problem to be solved: National Food Group is a wholesale food dis-

Hosted by Governor Rick Snyder

The Summit will feature: • Internationally recognized speakers • Experts from across the country • Presentations addressing cybersecurity issues impacting the business world • Breakout sessions on emerging trends, technology and best p practices actice

For or to visit Fo o more more information nfo o mation o o register eg stte vi is t www.michigan.gov/cybersummit www m ch h gan.g gov/ /cyyb berrsu ummitt

tributor for customers mainly in education, prisons and health care. The company had recruiting and employee turnover issues for more than 10 years. CEO Sean Zecman had issues finding qualified candidates, and employees working in the same position for two to three years would leave the company because they felt stagnant and wanted to move up within the company. “If we hired an AP clerk and they spent the rest of their life as an AP clerk, we were fine with that,” he said. Zecman said the company also hired a lot of candidates out of college who weren’t focused on their career. “Our biggest issue as a midlevel company was how to compete against General Motors Co., Fiat Chrysler and Ford Motor Co.,” he said. Employee turnover cost the company $30,000-$100,000 per employee, which includes human resources costs, lost sales while searching for

Stage Two Strategies: National Food Group Location: Novi Description: National wholesale food distributor President and CEO: Sean Zecman Founded: 1990 Employees: 95 Revenue: $100 million in 2015

new talent and time spent screening and interviewing candidates. Solution: National Food Group needed employees to feel the decisions they made within the company had an impact. New hires receive a company passport that allows them to visit and learn about different departments, and are later tested on their experiences. A mentor within the department then stamps the passport. “It excites people about other departments and they learn about other opportunities within the company,”

The Leader in Shareholder Rights

Zecman said. “Everyone we hire now, we’re thinking of their second and third position.” As a recruiting tool, the company uses Predictive Index, a software program that matches employee personality traits to the job that’s suited for them. “For an accounting person you want somebody who’s going to be diligent and more methodical, but if it’s a salesperson or a buyer, you want somebody that’s a little more aggressive,” he said. Zecman said these tactics have led to higher retention rates a n d more-qualified candidates. As a result, turnover rates “Everyone have decreased from we hire 18 percent in now, we’re 2011 to 9 percent in 2015. thinking Z e c m a n of their credits retaining talent as a second reason the and third company has grown from position.” $30 million in Sean Zecman revenue in 2009 to about $100 million in 2015. Risks and considerations: Zecman considered that a software program to match employee personality traits would narrow the pool of talent, but he now prefers to take time hiring employees rather than rush through a hire. “We would much rather go three months without a hire in a department than force a hire, because the time to go through that whole process again is so exhausting. It’s better to just wait it out,” he said. Expert opinion: Dave Haviland, founder and CEO of consultancy Phimation Ventures Inc. in Ann Arbor, has been helping second stage business owners since 2004. He said growing companies tend not to think about career path talent development activities, which puts companies at risk for employee turnover. The challenge is balancing what employees need in the short term with the path employees want to have in the long term. “Highlight more of the really great things other companies don’t have — like the ability to work on a bunch of different things — not just go to a training session or be exposed to it, but actually get involved,” Haviland said. “Second stage companies are much better opportunities generally for millennials, because they can have a bigger role and be closer to decisionmakers.”

31

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

Lease

Rental

Maintenance

Safety

Used Trucks

Service that’s off the charts. And on your map.

1-800-748-0468 | starlease.com PELOTON

The Peloton indoor exercise bike has a high-definition touch screen that can stream live exercise classes or on-demand classes.

KEEP YOUR AD FRESH

Bike maker Peloton to open store at Somerset Collection Troy store will be its first location in Michigan By Adrienne Roberts Special to Crain’s Detroit Business

Peloton, a New York City-based

company that makes indoor exercise bikes, will open a storefront at the Somerset Collection in Troy — its first location in Michigan — this week. The store will open on the first floor of Somerset North in a 1,800-squarefoot space next to the Apple store. The space used to be home to the women’s clothing retailer Cache. Cache filed for Chapter 11 bankruptcy in February 2015, and began closing all of its 153 retail locations in March 2015. The Peloton indoor exercise bike features a high-definition touch screen that can stream live cycling classes as well as on-demand classes. The bike costs $1,995. “The Peloton bike enables you to experience the entertainment and motivational power of group cycling,

all from the comfort of your own home,” Tim Shannehan, chief revenue officer of Peloton, said in a statement. “We’re also excited to join Somerset Collection, which truly creates an elevated experience for shoppers.” Peloton has retail locations in Chicago, Dallas, Philadelphia and Washington, D.C., among other cities. Peloton, founded in 2012, also has fitness studios in Manhattan and Chicago. The store is scheduled to open Sept. 15. Somerset has seen a wave of national retailers open stores in the mall this past year. In April, Danish footwear and leather goods store Ecco opened a store, and in May Vineyard Vines and Los Angeles-based contemporary clothing retailer Vince opened in the Troy mall. The fast food restaurant Chick-fil-A is set to open in the Somerset Collection in mid-October.

Huron Capital buys fire detection firm Detroit-based Huron Capital Partners LLC announced last week that its fire detection and security services platform company, Sciens Building Solutions, has acquired Boca Raton, Fla.-based WSA Systems-Boca Inc. Huron Capital formed Sciens, which is based in Detroit, in 2015 in partnership with former Siemens executive Terry Heath to pursue a buyand-build strategy in the fire detection and security services sector. This is its first acquisition. Terms were not disclosed. WSA designs, installs and provides maintenance services for fire detection and fire suppression systems in commercial, institutional and government facilities. The company has been owned and operated by Brad Golub

and Joe Del Pizzo, both of whom will remain active in the business as WSA serves customers in its regional market of southern Florida. “We are excited to partner with Terry in this initiative, and we are thrilled to add Brad and Joe to the team,” Huron partner Jim Mahoney said in a news release. “The fire detection and security services market is highly fragmented, and we believe Sciens is well-positioned to grow both organically and through further acquisitions.” Founded in 1999, Huron Capital has raised more than $1.1 billion in capital through four funds, has invested in more than 120 companies and annually is Michigan’s most active private equity company. Tom Henderson

WITH CRAIN’S BOOK OF LISTS YEAR-LONG SHELF LIFE ADDS VALUE TO YOUR ADVERTISING EFFORTS READERS REFER TO IT $// <($5 PRINT EDITION • Two-thirds of our readers say YES, they refer back to the Book of Lists • Over half of our readers consider Book of Lists a “must read” • 97% of readers refer back to the Book of Lists more than four times a year ASK ABOUT sponsored list downloads and Website section sponsorship opportunities.

Keeps fresh all year!

ADVERTISING INFORMATION: Matt Langan (313) 446-6032, advertisingcdb@crainsdetroit.com

Source: Signet Total Audience Survey – Aug. 2015 & July 2016

ISSUE DATE: Dec. 26, 2016 CLOSE DATE: Oct. 31, 2016

DON’T FORGET TO REGISTER The Consumerism of Health Care TITLE SPONSOR

Thursday, Nov. 17 Troy Marriott • 7:30 a.m.- 1 p.m.

Register at crainsdetroit.com/events, or call (313) 446-0300

32

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

CALENDAR TUESDAY

WEDNESDAY

SEPT. 13

SEPT. 14

Raising Capital and Building Capital Source Relationships. 8:30-10 a.m.

The Big Four: Brogan, Lovio-George, Muirhead, Rossman-McKinney. 11:30

Automation Alley. Topics will include developing a strategy to identify financing sources and requirements; establishing a marketing process; negotiating financing commitments; understanding the underwriting process; and interpreting financing agreements, shareholder agreements and any pre-payment terms. Speakers: David Ritter, shareholder, strategic advisory group, and Claudio Calado, managing director, both of Doeren Mayhew. Automation Alley, Troy. $20 members; $40 nonmembers; $30 walk-in members; $50 walk-in nonmembers. Email: info@automationalley.com; phone: (800) 427-5100.

a.m.-1:30 p.m. Inforum. Featuring public relations and marketing gurus who are also successful business owners: Marcie Brogan of Brogan & Partners, Christina Lovio-George of Lovio George Communications and Design, Georgella Muirhead of Van Dyke Horn Public Relations (formerly Berg Muirhead and Associates) and Kelly Rossman-McKinney of Truscott Rossman. Townsend Hotel,

Birmingham. $45 Inforum members; $65 nonmembers; $25 students; $700 table sponsor (table of 10-preferred seating; company logo recognition in event presentation and event signage). Website: inforummichigan. org.

ADVERTISEMENT SECTION

FRIDAY Entrepreneurs Forum: Where Preparation Meets Opportunity.

Noon-4 p.m. Southfield Area Chamber of Commerce. Keynote speakers include DeAndre Carter, author of Demand Greatness; and Ken Johnson, inventor of Phase 10 card game and board game. Representatives from the Small Business Administration, One Stop Shop Business Center, Oakland University Incubator, Michigan Women’s Foundation, Southfield Area Chamber of Commerce and South East Michigan Entrepreneurs Association will be available to

answer questions. Topics include funding, networking tips and help for startups. Franklin Athletic Club, Southfield. $15 members; $20 nonmembers. Contact: Tanya Markos-Vanno, phone: (248) 557-6661; email: tanya@ southfieldchamber.com.

DEALS & DETAILS ACQUISITIONS & MERGERS

Cooper-Standard Automotive Inc., Novi, a part of Cooper-Standard Holdings Inc., a global supplier

LAW Brian D. Wassom Partner

Warner Norcross & Judd LLP. Brian Wassom has joined Warner Norcross & Judd LLP as a partner practicing in the firm’s Southfield and Macomb offices. An experienced litigator, Wassom focuses his practice on complex commercial litigation and intellectual property litigation. In addition to copyright, trademark and product liability, he has developed an expertise in disputes including social and emerging media, publicity rights, defamation, unfair competition, First Amendment matters, and false and deceptive advertising.

HOSPITALITY & TOURISM Terry D’Esposito

Director, Sponsorships and Education Detroit Metro Convention & Visitors Bureau The Detroit Metro Convention & Visitors Bureau has named Terry D’Esposito as its new Director, Sponsorships and Education. The position was created to help conventions and meeting groups connect with metro Detroit’s business and nonprofit community. D’Esposito’s main responsibilities will be to create, maintain, plan and execute the overall strategy of community relations, business development, and fundraising functions. Formerly D’Esposito served as Director of Marketing at WJBK-FOX 2 Detroit.

UPCOMING EVENTS

SEPT. 16

of systems and components for the automotive industry, acquired the automotive fuel and brake business of AMI Industries, Lewiston, and related companies. Website: cooperstandard.com. Metcom Inc., St. Clair Shores, a consumables

management and technology company, acquired the inventory and order history of Forms Trac Enterprises, Troy. Website: metcom-inc.com. Interior Environments Inc., Novi, an Allsteel

dealer that offers commercial business furniture and consultation on workplace functionality, has acquired an Allsteel showroom in Denver. Website: ieoffices.com. Metaldyne Performance Group Inc., Southfield, an automotive supplier, acquired Brillion Iron Works, Brillion, Wis., a business unit of Accuride Corp.,

Evansville, Ind., a casting design and iron production company. Website: mpgdriven.com.

CONTRACTS

Shelby Township implemented the Total Response system for 911 call handling by PowerPhone Inc., Madison, Conn. It includes state-of-the-art software, processes and training. Websites: powerphone.com, shelbytwp.org. CKC Agency, Farmington Hills, a public relations

and media services firm, has added two accounts:

Elite Mr. Alan’s, Redford, a family-owned sneaker and sports apparel retailer; and Frieje Auctioneers, Terre Haute, Ind., an auction and

appraisal company. Website: ckcagency.com.

EXPANSIONS

Beaumont Hospital, Troy, opened the Moceri

Medical Intensive Care Unit, a 12-bed private room unit made possible by a gift from the Moceri family. Websites: beaumont.edu, moceri.com. Nexteer Automotive, Saginaw, a motion control

company, opened a 52,000-square-foot world headquarters housing 150 employees at 1272 Doris Road, Auburn Hills. Telephone: (989) 757-5000. Website: nexteer.com.

New Roles for Philanthropy in Metro Detroit: A Perspective From the Kresge Foundation. 8-9:30 a.m. Sept. 21. Troy Chamber of Commerce. Speaker: George Jacobsen, program

officer, Kresge Foundation. Rehmann, Troy. Free for Troy Chamber members; $10 for nonmembers. An additional $5 will be charged to those registering the day of the event. Contact: Jaimi Brook, phone: (248) 641-8151; email: theteam@ troychamber.com. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

Art Van Furniture, Warren, announced a new 4,000-square-foot PureSleep mattress showroom, at 1295 Steward Road, Monroe. Website: artvan.com. St. Joseph Mercy Oakland, Pontiac, a part of St. Joseph Mercy Health System, has opened the Clarkston Imaging Center, 7210 N. Main St., Suite

211, Clarkston. Telephone: (248) 624-0974. Website: stjoesoakland.com.

MOVES

SVS Vision, Mt. Clemens, has moved its Marine

City office from 6742 S. River Road to 36383 26 Mile Road, Lenox Township. Telephone: (586) 648-5990. Website: svsvision.com. Cooper-Standard Automotive Inc., Novi, a

supplier of systems and components for the automotive industry, moved its India headquarters and technical center to Pune, Maharashtra from Sahibabad. The 6,000-squarefoot facility employs 40 people and designs sealing components and fuel and brake delivery. Website: cooperstandard.com. Rockler Woodworking and Hardware has moved

its retail space from 29918 Woodward Ave., Royal Oak, to 26160 Ingersol Drive, Novi. Telephone: (248) 543-5110. Website: rockler.com.

NEW SERVICES

The Steel Market Development Institute, Southfield, a business unit of the American Iron and Steel Institute, released its 2016 steel

industry technology road map for automotive, detailing challenges facing automotive and steel industries. It also identifies technical gaps in application of products, identifies potential projects, and provides information on materials, joining and forming related to advanced steels. Website: autosteel.org. ProQuest LLC, Ann Arbor, has partnered with USC Shoah Foundation Institute for Visual History and Education, Los Angeles, to distribute a streaming

version of the visual history archive of genocide survivors and witnesses. Website: proquest.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.

PEOPLE: SPOTLIGHT

Neubecker named MGM Grand Detroit president MGM Resorts International has named Michael Neubecker president and COO of MGM Grand Detroit, subject to approval by gaming regulators. He will replace

Neubecker

Steven Zanella,

promoted to president of core properties, a new position that will oversee operations at five of the company’s Las Vegas resorts. Neubecker, 53, has been senior vice president and CFO of MGM Grand Hotel & Casino in Las Vegas since 2008. Before that, he was executive director of finance, assistant vice president of finance and vice president of finance and CFO at MGM Grand Detroit.

WSU law dean to leave for Ross initative Jocelyn Benson, Wayne State University’s law school dean since

2012, is stepping down to become CEO of the nonprofit Ross Initiative in Sports for Equality, founded by Wayne Law alumnus and The Related Cos.

Chairman Stephen Ross. Benson, 38, this month also becomes Benson a special adviser on philanthropic investments to Ross. She remains director of the Levin Center at Wayne Law.

Hospital foundation seeks new leader The Children’s Hospital of Michigan Foundation is looking for a new president and CEO after the resignation in July of Anthony Werner, who had served in those posts since 2013. Werner resigned for undisclosed reasons. Jodi Wong, vice president of operations, is interim president and CEO while a local search is underway.

Ignite Social Media names Bounds president Marketing agency Ignite Social Media LLC has promoted Deidre Bounds from COO to president. She replaces company founder

Jim Tobin, who is now CEO.

The agency, with offices in Birmingham and North Carolina, also promoted Misi McClelland to one of its first two senior vice president posts. McClelland had been vice president of media and analytics. She and Bounds are based in Michigan.

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

September 12, 2016

ICAHN FROM PAGE 1

is the most effective way to get value out of a complex portfolio.” The question remains whether Icahn will take either piece of the company public again — as was planned last year. Icahn scrapped that plan in January, with company officers pointing to market conditions as the culprit. It’s predicted that Icahn will vertically integrate the supplier’s aftermarket division with auto parts retail chain Pep Boys, which he acquired for $1.03 billion in a bidding war in December. Pep Boys’ 800 stores, paired with Icahn’s other parts retailer, the 278-location Auto Plus, would make up the fifth-largest retail auto parts chain in the U.S. Even with Pep Boys’ stores, Auto Plus would be significantly smaller than rivals Advance Auto Parts Inc., Autozone Inc. and O’Reilly Auto-

motive Inc.

“This looks like a backward vertical integration play,” said Steve Wybo, senior managing director for Birmingham-based advisory firm Conway MacKenzie Inc. “Federal-Mogul has strong (aftermarket) brands. If we’re going into a recession, or (auto) sales slow down, we’re going to have aging vehicles that are going to need after-

RESTORE FROM PAGE 3

store, construction of a new Caribbean restaurant in an old bank building and the beginnings of a new roof on the historic Vanity Ballroom. Credit for progress goes primarily to the long-term, ongoing efforts of Jefferson East Inc., the neighborhood's business development organization. “The National Treasure will allow the area to apply for small grants, but mostly it means its gets the National Trust’s time and talent regarding property reuse, historic preservation, national register requirements, and help with redevelopment and reuse based on other National Treasure projects,” Seidel said. This is Michigan’s first National Treasure, and just one of 70 in the United States. Jefferson-Chalmers was chosen, Seidel said, because it has good bones, a strong local partner in JEI and “is on the tipping point of becoming better or worse.” The trust has singled out the Vanity Ballroom on East Jefferson and the vacant Guyton Elementary School on neighboring Phillip Street as ripe for restoration and reuse. They may qualify for historic tax credits, and help with tax-credit financing from the National Trust’s subsidiary, the National Trust Community Investment Corp. These can be coupled with additional tax credits, Seidel said. The first idea for the Guyton school reuse is some type of housing. “In Chicago, we are turning public schools into housing. People think it’s a good idea to make these schools community centers, but those don’t make money. Senior or family housing or micro-apartments might be a better use,” she said. The next step, according to Seidel and Josh Elling, executive director of JEI, is obtaining community feedback on what

BLOOMBERG

Activist investor Carl Icahn plans to take total control of Federal-Mogul by taking it private, a move most likely part of an exit strategy. market parts.”

Ford Motor Co. chief economist Bryan Bezold said car sales have hit a plateau after steadily rising following the 2008-09 recession, Automotive News reported. The auto industry outperformed the overall U.S. economy in those years largely due to pent-up demand that has now played out. In late July, Ford was the first major automaker to confirm the lofty sales gains achieved since 2010 were at an end, even though they are still about 65

is preferred for the neighborhood. A Sept. 17 event called Jazzin’ on the River, an annual outdoor jazz festival at A.B. Ford Park, will be a forum for community ideas and concerns. “And Josh and I will be meeting to talk about next steps,” Seidel said. Other key properties for preservation on East Jefferson are a vacant bank building and an industrial building near Alter Road. “Those will have a visual impact for the neighborhood,” Seidel added. Seidel does not anticipate large grants for the area now. “The National Treasure designation provides national visibility, but doesn’t guarantee anything,” she said. So far, the Vanity has received $25,000 from the National Trust to conduct an environmental assessment and a structural study. Elling said the building, though badly deteriorated, is structurally sound but needs a roof, expected to cost $500,000 to $1 million. He thinks the building’s sentimentality with older residents (some of whom met their spouses there) could attract funding. He said the Detroit City Council approved transfer of the Vanity to JEI in July. Part of the transfer conditions included calling on local residents to help decide an appropriate use for the building. The goal is for the Art Deco-style ballroom to have a second life that celebrates a storied past that includes performances by entertainers such as Duke Ellington, Cab Calloway and the Stooges. Before getting the designation, Seidel met extensively with Detroit partners and stakeholders such as JEI, the city of Detroit, Detroit Future City, the Michigan Historic Preservation Network

and Preservation Detroit starting in February 2015 to determine the potential and impact of Jefferson-Chalmers and other Detroit neighborhoods being named a National Treasure.

33

Page 33

percent higher than the lowest sales year in 2009. Ford is predicting that the slide will continue into next year, which could be a win for Federal-Mogul’s aftermarket division. Federal-Mogul Motorparts, its aftermarket division, represents 43 percent of its $7.4 billion in revenue. However, questions remain over what Icahn would do with its powertrain division once the company goes private under his full control. The same looming auto sales recession that would benefit the aftermarket unit would plague Federal-Mogul’s powertrain division. Wybo said Icahn is likely to ditch the division in a fire sale or a small public offering. “There’s no impressive revenue growth, and he probably has a liquidation or sale in mind for that business,” Wybo said. “If I’m him, I’d say ‘it’s time to get rid of this dog that I’ve owned for too long.’ ” Following the 1998 acquisition of Cooper Industries, which manufactured its existing aftermarket brands, such as Anco wiper blades and Champion spark plugs, Federal-Mogul made a misstep that’s plagued its balance sheet ever since. That same year, Federal-Mogul acquired U.K.-based Turner & Newall — which at the time was one of largest manufacturers of asbestos-related

products, including automotive brake pads. Federal-Mogul inherited a known liability of a health crisis tied to Turner & Newall’s factory in Armley, England, which closed in 1959. Federal law prohibited the use of asbestos in brake pads for new cars in 1995 and for aftermarket parts in 1997. Asbestos dust contaminated the town and led to an outbreak of asbestos-related illnesses, including cancer. The link to the factory was established more than a decade before Federal-Mogul acquired the company. Federal-Mogul carved out an additional $2.1 billion to cover the liability. Along with Federal-Mogul’s other brake business, which also used asbestos, the company was tied to thousands of lawsuits from as many as 500,000 claims. In 2001, the liabilities pushed the company into Chapter 11 bankruptcy, where it remained for six years. “This is not something we wanted to do,” Frank Macher, then chairman and CEO of the company, told the Wall Street Journal. “The decision was based on the fact that asbestos liabilities weren’t going to diminish. In fact, they were going to grow.” Federal-Mogul held nearly $9 billion in liabilities, not all tied to the asbestos claims, at the time of the filing. Icahn, through affiliates, purchased $1.1 billion in Federal-Mogul bonds during its bankruptcy, which were con-

verted to equity when it emerged in December 2007. Months later, the investor acquired 50.1 million shares of common stock originally distributed to an asbestos trust fund for $900 million, giving him a 75 percent stake in Federal-Mogul. He later upped that to 82 percent. Federal-Mogul has struggled to stay profitable since leaving bankruptcy. Subtracting certain tax and impairment gains, Federal-Mogul has reported only two years of profitability under Icahn. Icahn initiated significant cost-cutting strategies in 2013, including the closing or downsizing of seven plants and a divestiture. In June 2014, the company sold its connecting rod and camshaft business to Addison, Ill.-based JD Norman Industries Inc. It also moved to a downsized headquarters in the former

Nancy Finegood, executive director of the Michigan Historic Preservation Network in Lansing, said the neighborhood is “an unusual treasure. (Treasures) are often sites. But we have been working with the National Trust for many years to draw their attention to Jefferson-Chalmers.” The network became a community partner with the Detroit Land Bank Authority and bought a house on Lakewood Street to rehab. It plans to buy more houses to refurbish. The designation is one of the first under the National Trust’s new “re-urbanism” emphasis. Re-urbanism refers to promoting healthy and vibrant adaptive reuse as a way to revitalize urban neighborhoods, explained National Trust spokesman Juvenio Guerra. In recent years, the National Trust’s emphasis has been on choosing sites that portray the country’s vast diversity. Among the notable choices are Music Row in Nashville, Tenn.; Fort Monroe in Hampton, Va.; Bdote Fort Snelling in Fort Snelling, Minn.; and the A.G. Gaston Motel in Birmingham, Ala. National Treasures are nationally significant historic places. With the support of thousands of local preservationists and preservation professionals, the trust is identifying endangered places and taking action to save them “to make sure icons of the past remain in the future.” Recently, the National Trust’s fifth and final study, “Unlocking the Potential of Detroit’s Neighborhoods: The Partnership for Building Reuse,” looked at the barriers to building reuse and offered solutions to help the city redevelop older buildings. “In Detroit, our analysis has shown that older, smaller buildings provide the foundation for entrepreneurs and small businesses, that commercial corridors with a mix of old and new buildings are the city’s new business hubs, and that its best restaurants and bars are

in character-rich neighborhoods and commercial districts,” the study said. The study, released Aug. 30, is the result of a partnership between Detroit Future City, Preservation Green Lab and the National Trust. Being named a National Treasure means the neighborhood will get help from Preservation Green Lab and a transformation strategy for Jeffer-

son-Chalmers by the National Main Street Center, part of a pilot program. “We hope to restore and rebuild this area without displacing people,” Seidel said. “We’ll turn it around, and the people there now will enjoy it. Jefferson-Chalmers will be a neighborhood that benefits new and current residents. They will all feel a part of this new community.”

JOB FRONT

MARKET PLACE

MISCELLANEOUS

INDUSTRIAL SERVICES

SURVEY

C.W. JENNINGS INDUSTRIAL EXCHANGE

ANALYZE MATCH

CrainsDetroit.com/JobConnect |

Call Us For Personalized Service: (313) 446-6068 CLOSING TIMES: Monday 3 p.m., one week prior to publication date. Please call us for holiday closing times. FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds Confidential Reply Boxes Available PAYMENT: All classified ads must be prepaid. Checks, money order or Crain’s credit approval accepted. Credit cards accepted.

See Crainsdetroit.com/Section/Classifieds for more classified advertisements

Blue Cross Blue Shield of Michigan

headquarters complex in Southfield in a cost-savings effort. But the supplier hasn’t kept pace with the rest of the industry, Wybo said. “There’s no impressive revenue growth in what’s been record years for the auto industry,” Wybo said. “They’ve only grown around 15 percent (revenue) since the recession. That’s just not enough. I suspect in six months we’ll see a different owner for that business. Icahn is probably fatigued from the thing.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Global Industrial Consulting Construction • Acquisitions Exporting • Financing (855) 707-1944

REAL ESTATE INDUSTRIAL PROPERTY SHELBY TWP. - 4,960 s.f. Indust. Flex Space for R&D, Hi-Tech, Lt. Assy. etc. All A/C. Exc. Cond. Great Lease Rate. Possible Sale. Benson Assoc. 248-705-0835.

COMMERCIAL PROPERTIES

FIXTURED RESTAURANT FOR LEASE 3,200 Sq. Ft. Orchard Lake Road Jonathan Brateman Properties, Inc. (248) 477-5000 jbrateman@aol.com

www.bratemanproperties.com

34

BILLS FROM PAGE 3

physician. In the Republican-controlled House, the entire chamber is up for election in November. An election year, coupled with the volatile presidential race and its potential effects on down-ticket races, means lawmakers will head into the fall without knowing what the makeup of the House will be come January. A shift in party control could affect lame-duck voting; several political analysts have told Crain’s they think Democrats will be able to pick up seats, though likely not a majority. Among the questions swirling at the end of this session, aside from whether the remaining policy issues will be resolved, is: Can the Legislature work in a bipartisan way to avoid the kind of gridlock that hindered progress on road funding last year or Detroit Public Schools reform this year? Neither legislative solution is perfect, and opponents criticized both for not going far enough to fix the problem. Energy policy might be the test.

Energy a top priority The House and Senate are floating separate bills to update the state’s energy law. Proposed legislation would replace standards for the amount of renewable energy and energy efficiency that utilities must achieve, with goals and a long-term planning process called integrated resource planning. This process, in theory, is de-

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

signed to consider all possible energy sources in a utility’s electric portfolio as part of making the plans. The bills also would require Michigan’s alternative electric suppliers to demonstrate that they have the capacity to serve the state’s 10 percent of electric customers who buy power on the retail market. Supporters of electric choice believe the provision would force some suppliers out of business, but proponents of the bill, including state Sen. Mike Nofs, R-Battle Creek, say the measure is intended in part to ensure reliability. Nofs worked this summer on several drafts of the Senate bills. He said he is still working to tweak language concerning how alternative energy suppliers could demonstrate to state regulators that they have enough electric capacity owned or under contract to meet demand, and meeting with Democrats and some Republicans on renewable energy standards. He said he intends to brief Senate Republicans on new changes yet this month, with hopes of being able to move the legislation to the House. Nofs said he doesn’t think the House would take up the legislation until after the Nov. 8 election. “The worst-case scenario is we don’t do anything,� Nofs said. “The impetus is there to get something done.� The bills were voted out of committee in May. “We’re hoping that we can reach an agreement yet this fall,� said Gideon D’Assandro, a spokesman for House Speaker Kevin Cotter. He added that

lawmakers who have led work on energy — including Nofs; Sen. John Proos, R-St. Joseph; and Rep. Aric Nesbitt, R-Lawton — continue to discuss what a compromise version might look like. Why it could pass: Hours of testimony and public hearings have occurred over the legislative term, so there is pressure to bring the bills in for a landing. Utilities have started to decommission old coal-fired power plants, and planning to build a new natural gas plant takes years. Utility executives have said the bills would ensure affordable electric rates and grid reliability. Plus, the Obama administration has released new rules to reduce carbon emissions; Gov. Rick Snyder’s administration has said the state wants to develop its own plan to comply, though work is on hold while the Clean Power Plan is challenged in court. An updated energy law could bring more certainty to the state’s compliance effort. Why it might not: Energy is a complex issue, and the bills have lots of moving parts. Lawmakers are split on a number of key provisions, especially related to renewable and efficiency mandates. Republicans oppose standards, while Democrats and environmental

groups believe utilities won’t continue to pursue renewable power sources and efficiency programs for customers without a requirement to do so. Nofs said he is trying to get the legislation to a place where interested groups could accept it, knowing it won’t satisfy everyone.

Other priorities remain Reforming Michigan’s no-fault auto insurance law remains on the to-do list, but reps for both Meekhof and Cotter say consensus hasn’t yet been found. Two bills cleared the Senate in April 2015, but haven’t seen action since. At issue is a proposal to replace the Michigan Catastrophic Claims Association, which pays for crash victims’ care, with a new fund that would pay all claims above a new $545,000 benefits cap for auto insurers. A separate plan backed by Detroit Mayor Mike Duggan would reduce Detroiters’ high insurance rates by limiting the amount of medical benefits allowed to be paid. The “D-Insurance� proposal hasn’t seen any action since it was reported out of committee in June 2015. (See Q&A with Duggan, Page 3.) McCann, Meekhof’s spokeswom-

&DUHHU 2SSRUWXQLW\

%XVLQHVV &RDFK

6XFFHVVIXO 0DUNHWLQJ 6WUDWHJLVW ORRNLQJ WR IRUP D SDUWQHUVKLS ZLWK D VPDOO EXVLQHVV FRDFK FRQVXOWDQW ,œYH GHYHORSHG D SURFHVV ZKHUH , FDQ ILQG PRUH WKDQ IRU $1< VPDOO EXVLQHVV RZQHU DQG GR VR LQ OHVV WKDQ PLQXWHV , YH EHHQ RIIHULQJ WKLV VHUYLFH WR VPDOO EXVLQHVV RZQHUV DQG LW V UHVXOWLQJ LQ PRUH EXVLQHVV WKDQ , FDQ SRVVLEO\ KDQGOH ,I \RXœUH DQ H[SHULHQFHG EXVLQHVV FRDFK RU \RXœUH LQWHUHVWHG LQ EHFRPLQJ RQH DQG \RX KDYH D VROLG EXVLQHVV EDFNJURXQG , ZRXOG OLNH WR VSHDN ZLWK \RX :LOOLQJ WR WUDLQ WKH ³5LJKW &DQGLGDWH´ LI \RX KDYH ZKDW LW WDNHV

)RU PRUH LQIRUPDWLRQ HPDLO FKXFN#.H\V %XVLQHVV FRP RU FDOO

an, said the issue was pushed aside in favor of more immediate priorities, such as the Flint water crisis and the Detroit schools restructuring. He would like to talk with Cotter “about the viability of auto no-fault getting done before the end of the year,� she said, “but he hasn’t had that conversation yet.� Peter Kuhnmuench, executive director of the Insurance Institute of Michigan and supportive of the bills, said progress also stalled in part because the insurance and health care industries have been on opposing sides of the legislation and unable to find a compromise. “With lame duck, there is an opportunity to change some minds,� he said, adding that he thinks moving the bills this term will be “a difficult accomplishment.�

What’s not on the list Don’t expect to see a push to repeal Michigan’s 50-year-old prevailing wage law this term. The House and Senate both consider it a priority to repeal the law, which requires contractors to pay unionscale wages and benefits on public projects. Yet momentum largely diminished after a ballot drive fizzled due to a lack of valid signatures from registered Michigan voters. The Senate in 2015 sent bills to repeal prevailing wage to the House, which opted to wait to see how the ballot drive would go. Snyder has said he does not support repealing the law at a time when he also is trying to drum up interest in skilled trades careers to deal with a looming labor shortage. Proponents of repeal, mostly nonunion contractors, say the law artificially inflates wages and could save local governments money on development projects. Supporters of the existing law, including labor and some contractors, say they would have to cut budgets for training and apprenticeships if it were repealed. “It’s a good thing. It would be worth doing,� D’Assandro said. “That said, the governor has made it clear what his position is on the issue, so getting those bills onto his desk is not necessarily something that we’re looking to do really quickly.�

What’s likely to pass

HIRING: i i i i i i i i i

Staffing company with a $750,000 line of credit

Helping manufacturers, service providers, distributors and more with business cash flow solutions. i A/R Financing i Lines of Credit

(248) 658-1100

www.hitachibusinessfinance.com

A four-bill package that would allow driverless cars on Michigan roads for any reason, not just while being tested, cleared the Senate unanimously last week. The bills largely are championed as a way to position Michigan as a leading state for research and development of connected and autonomous vehicles. The House’s communications and technology committee plans to take them up for the first time Tuesday. And now that the Senate passed legislation to require a license in order for medical marijuana growers, dispensaries and others in the industry to operate, the bills could be headed to Snyder’s desk after they return to the House for a final vote. Three of the five bills passed the House by wide margins in October 2015. Supporters say the legislation is necessary to clarify the 2008 voter-approved medical marijuana statute. Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

35

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

National Endowment for the Arts.

Sometimes, all it takes is a performance in a surprising place to connect with new audiences. UMS regularly sells out its events held in nontraditional spots like a skate park, beer garden, at a river or a church. Working with other cultural groups is another way to grow audiences. At UMS, Fischer forged relationships with groups such as the Arab Community Center for Economic and Social Services to help diversify his

And after settling its six-monthlong strike with its musicians in 2011, the Detroit Symphony Orchestra began performing out in the community.

105

145 ER

S

ENGINEE

RS

60

INSPIRING RESULTS NT

IE

Foundation.

and

SC

group’s programming and audience. Humility in approaching new audiences and arts groups and reciprocity in those relationships are important, he said. “That’s kind of a new way of thinking for a lot of organizations.� Up until now, broader collaborations among arts groups and other community organizations have been few and far between. More than a dozen other cultural groups and an equal number of local boutiques and restaurants hosted complimentary programming, dishes and drinks during the DIA’s Diego Rivera and Frida Kahlo exhibit last year. And in 2012, when it staged the Tony Award-winning Broadway musical “Fela!� the Music Hall found a way for more than 40 groups to benefit and to take ownership in the production. Collaboration with other arts and community groups has been episodic for MOT, Brown said. But strategic alliances are now “our default position in terms of how we do business.� Connecting with broader audiences is not only incumbent on cultural groups given their mission, it’s increasingly of interest to funders. “From Kresge’s perspective, we feel this is a time for those on the funding side to ensure that we increase opportunities for people of all backgrounds in the Detroit area to participate in artistic and cultural expression,� said George Jacobsen, senior program officer for the Detroit Program at the Kresge Foundation, in an email. “That’s particularly true for low-income individuals and people of color.� It’s a time for seeing more art and more support for art in nontraditional spaces and neighborhoods throughout the city, Jacobsen said. “The next generation of leadership has an opportunity to spur a new discussion about the role of arts, culture and creative expression across the community.� Understanding the painting on the wall, cultural organizations have begun looking for new ways to connect with their communities in recent years. The DIA began taking reproductions of its famous artwork out into the community in 2010 through its “Inside/Out,� a program replicated in Philadelphia, Miami and Akron, Ohio, last year, through a $2 million grant from the John S. and James L. Knight

Since then, the tempo of funders’ interest in inclusion has picked up. More recently, under Salort-Pons’ leadership, the DIA worked with local artists Phillip Simpson and Tony Rave to create a mural in Detroit’s northeast Osborn neighborhood, funded by a Knight Arts Challenge grant. On Sept. 12, the DIA was to welcome local artists, including Scott Hocking and Biba Bell, for a daylong conference on the intersection of contemporary art and ritual, in partnership with the Cranbrook Educational Community and UM’s Penny W. Stamps School of Art & Design. And local artists will be featured in the October photography exhibition, “Detroit After Dark.� “Advancing our relationships with the local arts community is an important opportunity as I look ahead,� Salort-Pons said in an email. MOT is also hosting programs at venues in the suburbs, tapping young professionals for those performances, with support from the William Davidson Foundation. And it plans to explore ways it can work with local costume designers and other creative businesses, bringing their work into its productions, Brown said. The support the Knight Foundation has given local artists and the arts sector has helped spur a new generation of millennial leaders in the cultural sector, said Noland, a member of the Miami-based foundation’s board. And the New Economy Initiative has supported a number of new design firms and other creative businesses. “If we can find a way to nurture these companies and individual artists so they stay here and don’t move away to New York or somewhere ... then we’re going to build out a new part of the economic life of this community.�

CONTACT: Krista Bora at kbora@crain.com

E-pmrinorets!

If you’re going to succeed in the arts, you have to widen your circle of audience members, Fischer said.

for Southeast Michigan

OF YOUR EDITORIAL COVERAGE IN CRAIN’S

Expanding audiences

Mariam Noland, Community Foundation

At the end of MOT’s 2016-17 season next May, founder and Artistic Director David DiChiera will also retire, leaving the door open for a successor for that post. DiChiera brought opera to Detroit, going against the tide when others thought MOT should make its home in the suburbs, Brown said. By bringing the historic Capitol Theatre back to life in 1996 as the Detroit Opera House, DiChiera laid the groundwork for much of the revitalization taking place in MOT’s Grand Circus Park backyard today, Brown said. A new artistic director can build on DiChiera’s success, finding opportunities to strengthen MOT’s educational programs and to further engage with the community. With the city’s rebound and increased interest in its recovery, “this is a wonderful moment for us to explore a level of cooperation and working strategically ... with our fellow arts organizations and community leaders ... that will serve us well going forward,� Brown said. “It’s a matter of not just doing business as usual, but doing things that make sure MOT resonates with the community we serve.� The MOT is just one of several cultural institutions seizing leadership changes as an opportunity to try something new. Salvador Salort-Pons has settled in at the Detroit Institute of Arts after succeeding longtime Director Graham Beal last fall. Soon, he and Brown will be joined by new leaders at the University Musical Society in Ann Arbor, where President Kenneth Fischer is winding down his 30-year career, and at the University of Michigan Museum of Art where Director Joseph Rosa is leaving after six years to lead the Frye Art Museum in Seattle. And to the north, the Interlochen Center for the Arts is searching for a successor to CEO Jeff Kimpton, who is set to retire next summer. Smaller arts organizations are also seeing changes in leadership. The venerable Scarab Club, which maintains a clubhouse for art exhibitions and provides space for artists and arts education programs, has been on the hunt for leadership for more than a year. It has selected a new executive director but not yet announced who will lead the organization next. And Living Arts in southwest Detroit, which provides youth art education programs, has launched a national search for a new leader, following late August news that Cara Graninger, executive director for nearly nine years, plans to step down to return to a teaching artist role with the organization. “New leadership always has the opportunity to take their organizations into the next direction,� said Mariam Noland, president of the Community Foundation for Southeast Michigan. “How cultural organizations engage with their communities is going to be different in the future ... and the new leaders can jump on this.�

MAKE with custom THE MOST Reprints,

N

FROM PAGE 1

IG

“New leadership always has the opportunity to take their organizations into the next direction.�

DES

LEADERS

IS

TS

),6+%(&. 7+203621 &$55 +8%(5 ,1& HQJLQHHUV _ VFLHQWLVWV _ DUFKLWHFWV _ FRQVWUXFWRUV 1RYL _ 0DFRPE _ _ IWFK FRP

36

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

BOOK FROM PAGE 1

For now, exterior restoration work is underway in what will be a detailed and painstaking process to bring the 38-story Book Tower, which briefly was Detroit’s tallest building, back from the verge of oblivion with new tenants and uses after sitting vacant and neglected for years, like so many of the other Washington Boulevard buildings.

Time’s ravages There are pink leather hair salon chairs still in the building. Old typewriters. Recording studio equipment. Documents and other miscellaneous paperwork. Open newspapers from decades ago. Personal items. In short, it’s almost like everyone who worked in the building left at once, in a hurry. “An extreme amount of clutter and damage on the inside, as far as ceilings falling in and water damage,” said John Olszewski, vice president of construction for Bedrock, which has bought more than 90 Detroit properties in and around downtown in the past five years. But the interior work, at this point however, plays second fiddle to restoring building’s elaborate exterior, Olszewski said. “The biggest and most complex.” That’s how he describes the threeyear plan to restore and preserve the Book Tower and Book Building, which the Detroit-based company bought a year ago last month, along with a squat, 30,000-square-foot community center, for a reported $30 million. In all, more than 500,000 square feet was part of the deal Bedrock completed with Milan, Italy-based Akno Enterprises, longtime owners of the buildings. Effectively, Bedrock bought the entire block between State Street and Grand River Avenue. The company says a final redevelopment plan, including specifics on the mix of uses, has not been determined, although at the time it purchased the buildings, Jim Ketai, managing partner and CEO of Bedrock, said the buildings will contain “a new innovative and unique mix of retail, office and residential tenants.” Gilbert, who is founder and chairman of Quicken Loans Inc. and Rock Ventures LLC, told Crain’s late last year that the Book Tower “was barren and empty for so long and being able to overcome that, in a way, is symbolic for downtown." “It’s a special building, a beautiful architectural gem. You can walk through it and get a feeling of what it may be one day,” Gilbert said. Currently, Bedrock and its exterior general contractor Ram Construction Services Inc. are focused on the Washington side of the Book properties, which includes masonry repairs and restoring or replacing granite, limestone and terra cotta bricks. The 6-foot-wide overhang atop the 13-story Book Building, which has been powerwashed along Washington, has been disassembled and removed, eventually to be rebuilt. Every 16 feet of it weighs about 15,000 pounds, Olszewski said. The 12 steel-

LARRY PEPLIN

Brett Yuhasz, project manager for Bedrock Real Estate Services LLC, with a replica of

one of the steel-filled terra cotta caryatids that have been deteriorating at the Book building. filled terra cotta caryatids — carvings of semi-nude female figures — with embedded steel support for the overhang have been deteriorating from rust for decades, posing a danger to passersby underneath. “It was really in jeopardy of eventually falling off in pieces,” Olszewski said. So the Book Building caryatids have been removed and will be replaced with fiberglass exact replicas, one of which sits covered by a large drape on the first floor of the Book Tower next to one of the 10 corbels that have been removed, also to be restored and replaced. One of the most notable elements of the Book Tower, its exterior fire escape, had to be incorporated that way because Kamper had never designed a skyscraper and had forgotten to put one in his original design. Today, the zig-zag staircase, going from top to bottom on the southern face of Book Tower, is “ready to fall off,” Olszewski said. “Pretty bad shape,” he said. “Attachments are rusted out, brick is blown out, and we do not see that as safe to be on at all. It probably has to be taken down, refabbed and put back up.” Yet another of the Book Tower’s key features, its aged copper Mansard roof, will be partially replaced and repaired. The copper repair material will be treated to “give it that green patina (caused by long-term oxidation) right from the getgo.” All copper flashings and water table cladding, which prevent water damage, will be replaced, along with the flat builtup roof on the Book Building. Also planned is an evaluation of the buildings’ more than 1,000 original windows, which are expected to be the subject of a Historic District Commission meeting next month. The steel frames have rusted over the years; the outdated

single-pane windows leak and are not energy efficient or durable. The evaluation will determine whether the windows can be restored or whether they should be replaced with new ones that are historically accurate. The company said it is taking careful steps in the restoration to ensure close attention is paid to historical details over the duration of the three-year exterior and interior renovation. “Just be patient,” Olszewski said. “You’re going to be surprised at the restoration of this building.” Bedrock, one of downtown’s largest property owners, has hired Detroit-based Kraemer Design Group and Cleveland-based MCM Co. Inc. to work on the historic details of the project, as well as Ann Arbor-based Walker Restoration Consultants. The company also said it has worked closely with the State Historic Preservation Office. In some ways, one of those contractors helps Bedrock come full circle back to what real estate experts widely agree jump-started the investment wave on Washington. MCM was founded by Melissa Ferchill, daughter of Westin Book Cadillac Hotel redeveloper John Ferchill.

The catalyst project The conversation surrounding Washington Boulevard's re-emergence would not have started were it not for Cleveland-based Ferchill Group’s redevelopment. More than a decade ago, the 1924 building that cost $14 million to build sat vacant and decaying. At the time, “nobody believed it was heading for anything but the wrecking ball,” said David Di Rita, principal of Roxbury Group, which has several projects com-

pleted and underway along Washington and immediately adjacent. In the early 1970s, Mayor Coleman Young wanted it demolished, as did Mayor Kwame Kilpatrick three decades later, John Ferchill says. But after a false redevelopment start and using a complex web of 22 financing layers, the Ferchills eventually completed the restoration of the 33-story hotel, also designed by Kamper. “It was a dog fight,” Eric Larson, CEO of the Downtown Detroit Partnership and Bloomfield Hills-based Larson Realty Group, said of the battle for financing the project. “And the interest in Capitol Park would not have happened.” Today it has more than 450 rooms, 35 suites, four restaurants, including Michael Symon’s Roast, three ballrooms and 16 meeting rooms. From that point, minus a lag during the economic meltdown, developers began looking west of Woodward Avenue on Washington and in the nearby triangular Capitol Park area for redevelopment opportunities among downtown’s floundering building stock. “Washington Boulevard, specifically from Michigan north, with its grandness, inventory of structures, and inherent green space, is the only obvious direction,” said Richard Karp, a downtown developer with property on Washington Boulevard and Capitol Park. Fast-forward eight years after the completion of the Westin Book Cadillac to late 2014, when Di Rita’s company finished the $94.5 million redevelopment of the David Whitney Building at the north end of the boulevard. From there, it was full-steam ahead. “At that point, you don't have to hire the Brookings Institution to figure out what was going to happen,” Di Rita said. “You have remarkable assets, capable developers, location and you have demand. I think at the end of the day, Washington Boulevard becomes Detroit's truly grand street again.” Joe Barbat is just one of the latest investors there, having purchased the Gabriel Richard Building at Washington and Michigan a year and a half ago. Barbat, the CEO and chairman of West Bloomfield Township-based Wireless Toyz who develops real estate through his Barbat Holdings LLC and Houze Living LLC, plans an $18 million to $20 million conversion of the office building into 104 apartments. “First and foremost, the Westin Book,” he said of the primary catalyst for the investment wave. “That development, with the renovations they’ve done, and the traffic that has achieved.” Other key investors along Washington include Matt Lester, founder and CEO of Bloomfield Township-based Princeton Enterprises LLC, who bought the 44-unit Claridge House apartment building for $750,000 in 2012 and spent north of $1 million on renovations. “The Book Cadillac was the catalyst and it remains the anchor,” Lester said. “But the bones of Washington Boulevard, we saw it as always having great potential for investment and for being ultimately highly desirable to run a business and reside. It’s a beautiful, wide boulevard right in the heart of things and yet has a little peace, tranquility and green space that others in the central business district don’t.”

Karp, a key developer in Capitol Park who owns the Gateway Center Building (bought for $700,000) and a handful of other Washington Boulevard properties, plans to tear down Gateway to make way for a mixed-use development with a multifamily and parking component. Karp said his new unnamed project will likely be 15 stories, with the first 10 having about 800 parking spots and the remaining five floors having about 200 residential units. There would also be 15,000 to 20,000 square feet of first-floor retail with a “larger, service-oriented (retailer) such as a grocer with prepared foods.” A project budget and timeline have not been determined. Apartment developer and manager Jonathan Holtzman, whose new company is City Club Apartments LLC, has had a big hand along the boulevard, buying the former Trolley Plaza apartments, renovating them and then rebranding the 29-story high-rise with more than 350 units as Detroit City Apartments. He is also planning the Statler City Apartments, a ground-up project expected to cost at least $35 million, on the site of the razed Statler Hotel. (“If the Statler Hotel was still standing, it would be a redeveloped building right now,” Di Rita said.) In all, the plan is for 284 apartments with 12,000 square feet of restaurant and retail space. Holtzman said in June that construction is expected to begin in the fall; he was in Europe last week and unavailable for comment.

Tipping points It’s not just Washington Boulevard with the heavy investment interest, of course. Development immediately surrounding the four-block area, including hundreds of millions of investment in Capitol Park immediately northeast of the Westin Book Cadillac, has been cropping up in recent years. Perhaps most notably are a pair of projects by Di Rita’s Detroit-based Roxbury Group, which have injected nearly $120 million in investment in the area, with the David Whitney project on Grand Circus Park just east of Washington Boulevard and The Griswold, an under-construction $24 million project a block away from the Westin Book Cadillac bringing 80 apartments atop a 10-story parking deck at Michigan and Griswold. A block away from Roxbury’s planned $10 million Industrial Bank Building (which has been renamed the Kamper Building) and Stevens Building renovations is Dan Gilbert’s as-of-yet unnamed project at 1416 Griswold to bring more than 200 so-called “micro apartments” to the site of a strip club that was demolished in March following a February 2014 fire. The total project cost is not known, but a building permit issued at the end of May says the construction cost is $18.75 million. It’s likely to well exceed that as projects continue to emerge west of Woodward, downtown’s spine. “One need not be a seasoned real estate professional to observe the path of revitalization from Capitol Park is not north, east, or south, but indeed west,” Karp said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

37

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

DUGGAN FROM PAGE 3

“representative residents, businesses and nonprofit organizations” within the “host community,” based on U.S. Census tract information. In the development community, Proposal B, which was developed by Detroit City Council Member Scott Benson and others as a less onerous alternative to Proposal A, would require community benefits agreements for developments $75 million or more and receiving $1 million or more in public incentives or on property with a cumulative market value of $1 million or more that was sold or transferred to a developer. Duggan addressed that issue and more in his conversation with Crain’s. What follows is an edited transcript. Regarding community benefits agreements, there are two pretty different proposals. Is there one you’re more in favor of?

I think my partners on council have delivered, I think, good results on community benefits for the last three years. You look at development after development and we’ve gotten commitments on hiring. Every one of our developments that we’ve done — Flex-N-Gate agreed, where they are building that manufacturing plant over on the I-94 corridor where they are going to end up hiring 600 people. They agreed 51 percent of the workers in the construction period, the hours would be Detroit jobs. Next to it, we’ve got Linc, the distribution company that has hired 80 percent Detroiters. What we have done is, in each individual deal, we have engaged the neighbors, we have entered into a binding agreement for real benefits for jobs in the city, for affordable housing, and it’s been approved by city council and they are locked contractually into it. I feel like the process that we’ve used has been effective. I think Proposal B is probably the closest to that process, if you want to make a formal (ordinance). Proposal A, on the other hand, I think will guarantee we never see another auto parts plant in this city again because the

process, the way these auto parts plants get sited, as I have learned with Flex-N-Gate and Sakthi (Automotive Group USA), they get a contract for parts for the next model for Ford or GM or FCA, and they have a very short period of time to build that parts plant and get it up and operating. We have a lot of communities around Detroit who have industrial parks with land ready to go who can give them a quick “yes” or “no.” But if Proposal A were to pass, it says if you want to put a business over $15 million in with any kind of city support, you have to send a notice to the city clerk. The clerk and the council somehow contact people in the surrounding Census tract. Those people somehow form a committee, but Proposal A doesn’t say how they form a negotiating committee, doesn’t say how many people are on the negotiating committee. They could be negotiating with 50 or 100 people. It doesn’t say how long the negotiations go on, if they go on months or even years. If the site happens to be near the city border, the neighboring Census tracts would include the suburbs and you could have suburbanites who would get to say “no” to a development in Detroit. So, as I talk to people who are trying to site manufacturing plants, you have a choice between a suburban community with a site ready to go and a yes or no approval, or put yourself in the city of Detroit in a process where you don’t know who you’re negotiating with, how many or for how long. I think we are going to get passed up and I think Proposal A would be devastating. ... Getting manufacturing jobs in the city will be over if Proposal A passes. Are you saying you don’t favor either of them?

I will probably vote for Proposal B. I think even the members of council who support this will say the agreements we have done are good and we should institutionalize this. Well, no city in America has institutionalized it into an ordinance. A lot of people have negotiated it in individual agreements. What they say is, “Well, you might not be here in five years. We need to institutionalize this.” I think there is an ar-

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: Altair Engineering ............................................... 26

Invest Detroit .........................................................5

Arab American National Museum ................17, 19

Jefferson East ..................................................... 33

Autoliv .................................................................. 26

Jewish Ensemble Theatre ..................................16

Bedrock Real Estate Services LLC ...................... 1

Just Baked Cupcakes LLC ............................ 27, 28

Charles H. Wright Museum ..........................17, 19

Link Engineering ................................................. 26

Cooper-Standard Automotive ......................... 26

M-1 Rail ....................................................................7

Creative Many Michigan .....................................14

Macomb Community College ............................. 6

DataFactZ ............................................................ 26

Michigan Economic Development ......................5

Dayco Products LLC ........................................... 26

Michigan Opera Theatre ............................1, 16, 21

Detroit Institute of Arts.......................... 17, 19, 35

Museum of Contemporary Art Detroit ....... 17, 21

Detroit Symphony Orchestra .......................17, 19

Music Hall Center for the Performing Arts .. 16, 21

Detroit Zoo ........................................................... 21

National Food Group ..........................................30

Domino’s Pizza .................................................... 26

Oakland Community College .............................. 6

Dow Chemical ..................................................... 26

Peloton .................................................................. 31

Federal-Mogul ..................................................... 26

Phimation Strategy Group ................... 27, 29, 30

Federal-Mogul Holdings ....................................... 1

ProQuest LLC ...................................................... 26

Gemphire Therapeutics ....................................... 9

Red Cedar Spirits ................................................ 25

Grand Traverse Distillery ................................... 25

Retrosense Therapeutics LLC ...........................10

gument to be made, but I think Proposal B is probably the approach that probably is the fairest balance between assuring the community there will be benefits and also assuring businesses that it’ll be done ... Why does B work when A doesn't? Duggan: B has the city planning de-

partment driving the process, with, I think, three members of the community being on the negotiating committee and a short timeline. Whereas A actually excludes the mayor or city council or city staff from participating, so the process could drag out for a year or a year and a half and there’s nothing anyone from the city could do about it. So, B is something we could work with. Developers aren’t crazy about it, but it’s something we could work with. You wouldn’t have a problem if we wrote that you’re endorsing it?

I haven’t made a decision on a formal endorsement. I’m still in the process here. I haven’t taken a position. I haven’t made a final decision. One of the things you ran on three years ago was streamlining some of the processes in city government ...

I will vote for B. Endorsing suggests a level of public campaigning that is different than a personal decision. Right now, I’m going to vote for it. What I do beyond that, I just haven’t made a decision. You ran in part on streamlining the process, cutting some of the red tape. There have been some changes to usage for restaurants with ordinances. But what more needs to be done?

I hear from businesses every day how much faster the permitting process is. I was at an event with some business folks and they told me the story of a gentleman who wanted to get his permit on Friday so he could open on Monday. Didn’t have his last repairs done by 5 p.m. on Friday and our inspector came in at 6 a.m. Monday and finished the inspection so he could open it. Where do we stand now on progress against blight? Two or three years ago, there were about 78,000 that were blighted.

We are doing a reassessment now, but my guess is we’ll probably be somewhere between 20,000 and 30,000. But we are actually going through and checking that right now. How big of a setback was it that you didn’t get the schools legislation?

It was terrible. Why did it happen?

Because you had a partisan vote in which Republicans in the House and Senate decided there was no circumstance under which they wanted to have any regulation of charter schools, which was an interesting situation because I had many Detroit charters who stood up in favor of what we wanted to do with the Detroit Education Commission. They were not afraid of being measured.

The Henry Ford ................................................ 17, 21

Rise Baking LLC ................................................... 29

Herman Miller ...................................................... 26

University Musical Society ................................ 35

Holocaust Memorial Center ..............................16

Valentine Distilling ............................................. 25

Huron Capital Partners LLC ............................... 31

Wayne County Community College District .... 6

IAC Group ............................................................. 26

Wheelhouse Detroit ........................................... 24

What’s the next step? How do you get the kind of oversight you think you need?

Inteva Products .................................................. 26

Zingerman’s ........................................................ 23

Right now, I need to see what hap-

pens with DPS (Detroit Public Schools). That’s going to be the first question. We just don’t know. The DPS officials tell me that their open houses have been very well attended, and they are hopeful that the enrollment is stabilized. That doesn’t always measure who might be going out the door. In the neighborhoods across the city, you’ve had suburban school districts fliering the neighborhoods saying, “Come to our district.” So we are going to see what shape DPS is in in the next month. If DPS enrollment is stabilized and their finances are stabilized, then they’ve got an outstanding superintendent in Alycia Meriweather, and they start talking about education instead of money, then that’s one direction. If the enrollment doesn’t stabilize and DPS is in significant financial turmoil, that’s another question. Until I know which direction that is, I’m not going to be able to figure out what to do next. One option obviously is to have better partners in Lansing. Could you see yourself spearheading a campaign that makes this an issue?

I have a whole series of strategies set up, but we are not going to talk about them before we do them. The first thing I need to see is if DPS is financially stable or is it not, and that will dictate what we do next. But I’m going to be heavily engaged in the schools issue. The question is: Is DPS in crisis or is it stable? The strategies we take will be driven by whether it’s a crisis or whether it’s financially stable. How has the city’s relationship with Lansing changed since you have been in office?

When I was a deputy county executive, we were able to get a lot of legislation through Lansing, including the legislation that led to the building of Comerica Park and Ford Field, legislation that restructured the juvenile justice program. When I was at the Detroit Medical Center, I was able to get legislation through that kept DMC in financially strong position on a bipartisan basis. And we’ve had great successes — foreclosure prevention bills, scrap metal enforcement bills. My style is not to get into the personal, to try to stick to the issues. I sat personally with about 100 of the 110 state representatives. Very disappointing that overwhelmingly they told me when I sat with them that they agreed we were trying to do the right thing on the schools, and we didn’t get the vote. But I started off with the fact that I think I have successfully raised the understanding, and the next time I go back, I’m going to go back with allies who understand what was happening in the House. But the next time we come back, we’ll come back with allies on both sides of the aisle. I started out with an agreement with the governor. I thought that counted. Now I understand that, to get things through a Republican Legislature, I need allies in addition to the governor. You going to run next year?

I’ll make that decision at the end of the year. Right now, my head is into a presidential campaign. We need to see how that plays out. We’ll worry about next year after we get through this cycle.

www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Ron Fournier, (313) 446-1674 or rfournier@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy, Audience Development Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com Digital Editor Carlos Portocarrero (313) 446-6056 or cportocarrero@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

REPORTERS Marti Benedetti (313) 446-0416 Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry, education, Macomb and Oakland counties. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, city of Detroit. (313) 446-0412 or kpinho@crain.com Adrienne Roberts General assignment. (313) 446-1612 Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and economics. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, food, retail and hospitality. (313) 446-1694 or swelch@crain. com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Advertising Director Matthew Langan Senior Account Manager Katie Sullivan Advertising Sales Gerry Golinske, Catherine Grace, Joe Miller, Diane Owen, Sarah Stachowicz, Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Meetings/Events Director Kim Winkler Events Manager Kacey Anderson Senior Art Director Sylvia Kolaski Marketing Manager Marilyn Banes Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Senior Executive Vice President William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of November, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2016 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

38

WEEK Kosch to help launch Midland eatery, beer garden

M

idland Brewing Co. has

contracted Rochester-based

Kosch Dining Solutions to help launch

and operate a new restaurant, beer garden and event space in Midland. Opening in early 2017, the new additions will be located with the microbrewery Midland Brewing has operated since 2010. Midland Brewing is investing $2 million in the project, including a $1 million renovation with upgrades to the brewery. Kosch, which will operate everything but the microbrewery, said the five-year contract is worth about $1 million in new revenue.

COMPANY NEWS n Troy-based company Rainbow

Child Care Center plans to construct a

new site in Detroit’s Midtown neighborhood to meet rising demand from families in the area. It plans to break ground on the two-story, 12,000-square-foot center in 30 to 40 days and complete it in time for a spring opening. n S&P Global Ratings upgraded Detroit-based Henry Ford Health System’s long-term bond rating to “A” with a stable outlook, while Moody’s Investors Services maintained the system’s “A3” rating and raised the outlook from stable to positive. HFHS expects to refinance a large portion of its outstanding debt when it issues fixed-rate bonds this week. The system has about $1 billion in outstanding bonds. n Southfield-based Redico LLC has sold its interest in the project for the redevelopment of the former Michigan state fairgrounds site. Dale Watchowski, Redico president, COO and CEO, confirmed the sale but did not disclose his company’s ownership stake or how much was paid. n Oak Street Health, a company founded in Chicago in 2013 to serve adults on Medicare, is to announce that it will open its first two facilities in Michigan, in Southgate and Detroit’s Rosedale Park, in October. n Southfield-based powertrain components supplier Metaldyne Performance Group Inc. acquired Wisconsin-based Brillion Iron Works, which designs and produces gray, ductile and austempered ductile iron products. Terms were not disclosed, Automotive News reported. n Chinese-owned Volvo Car Group and Autoliv, an automotive safety group with headquarters in Sweden and Auburn Hills, said they are creating a jointly owned company to develop autonomous driving software for Volvo cars that is set to start early next year, AP reported. n The Starbucks at Woodward and Mack avenues in Detroit’s Midtown district was to close Sept. 12 for several weeks of renovations. In the meantime, a walk-up service will

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

ON THE WEB SEPT. 3-9

Detroit DigitsType that A numbers-driven look at last week's headlines:

$1.4 million

The cost to build Skinner Park, an environmentally friendly area newly opened on Detroit’s east side. The project started with an idea from the 2013 Denby High School graduating class to create a safe place for recreation.

$4 million

The amount of funding the city of Detroit is receiving to revitalize the Fitzgerald neighborhood in northwest Detroit. The money is from Reimagining the Civic Commons, a national initiative that seeks to counter trends of economic and social fragmentation and disinvestment in cities.

$150 million

The estimated cost of the new Little Caesars headquarters in Detroit, the pizza chain announced at a groundbreaking ceremony for the planned 234,000-square-foot Little Caesars Global Resources Center. The building is expected to be completed by 2018.

be available for customers beginning Sept. 21. The renovated store is expected to reopen in October. n Long Point Capital, a private equity company co-headquartered in Royal Oak and New York, has sold one of its portfolio companies, New Jersey-based St. George Logistics, to Chicago-based Wind Point Partners. St. George provides container freight station services for ocean cargo imported into the U.S. Terms of the deal were not disclosed. n Southfield-based Lear Corp. announced it acquired a minority equity interest in Tempronics Inc., a Tucson, Ariz.-based startup supplier of heating and cooling systems seat technology. Details were not disclosed, but Lear gains exclusive rights to Tempronics’ technology in automotive applications.

n Canada-based Enbridge Inc. will

buy Spectra Energy Corp. in a $28 billion stock-for-stock transaction that will create the largest energy pipeline and storage company in North America, Bloomberg reported. Houston-based Spectra is in a joint-venture project with Detroitbased DTE Energy Co. to create the Nexus pipeline, a $2 billion project that will pipe natural gas sourced from Appalachia to Michigan. n PulteGroup Inc. said its president, Ryan Marshall, will take over immediately as CEO, ending a months-long campaign by the Atlanta-based homebuilder’s founder for a change in leadership. Marshall will replace Richard Dugas, who will remain as executive chairman of the board until the company’s 2017 shareholder meeting. PulteGroup was formerly based in Bloomfield Hills.

OTHER NEWS n The Detroit Federation of

Teachers said it reached a tentative agreement with the Detroit school district, AP reported. The deal, which covers more than 2,900 teachers and paraprofessionals, must be ratified in a vote by union members and approved by a review commission. Meanwhile, Norman Shy, a businessman who sold supplies to the school district, was sentenced to five years in prison in a bribery and kickback scheme involving a dozen principals and one administrator, and four more Detroit school principals were sent to prison for taking cash and gifts from the contractor. n Engineering researchers at the University of Michigan led a team that has been awarded a $3 million grant from the National Science Foundation to turn human urine into food-crop fertilizer. The team is installing demonstration toilets in a building on UM’s North Campus for use this fall. n The formal campaign to urge a “yes” vote on the regional mass transit tax on the Nov. 8 ballot kicked off with an event at Western Market in Ferndale. Voters in Wayne, Oakland, Macomb and Washtenaw counties will decide on a 20-year, 1.2-mill property tax increase to fund the Regional Transit Authority of Southeast Michigan’s master plan of

bus rapid transit and commuter rail.

RUMBLINGS

New shop sells licensed Bo Schembechler apparel

D

evotees of University of Michigan football history have a new outlet that caters to their retail needs: The “Bo” Store. The 2,000-square-foot shop at 333 S. Main St. in Ann Arbor sells Bo Schembechler-inspired apparel and merchandise under a deal with the iconic late football coach’s estate. The store, lined with images of the coach and signs of his famed sayings, is wholly owned by Ann Arbor-based Underground Printing, a custom apparel company launched in 2001 by UM students Rishi Narayan and Ryan Gregg. “Underground Printing has worked with the Schembechler estate for more than five years, and the store is a partnership based on that relationship,” Narayan said via email. The store opened Sept. 1, two days before Michigan’s 63-3 seasonopening victory over the University of Hawaii at Michigan Stadium. It employs 10. For sale in the store are T-shirts, hoodies, oxfords, jackets, vests, sweatpants, “Bo” ties and even

UNDERGROUND PRINTING

A retail shop selling licensed Bo Schembechler merchandise and apparel has opened at 333 S. Main St. in Ann Arbor. sunglasses. Narayan said the store has an exclusive license to produce Schembechler merchandise, and is collaborating with the estate. “The look and feel of the store, products and presentation are something we are working on together,” he said.

Ben & Jerry’s co-founder to speak at Entrepalooza The co-founder of Ben & Jerry’s, Jerry Greenfield, will speak Sept. 23 at the 2016 Entrepalooza in Ann Arbor. The annual event is held by the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan’s Ross School of Business. The theme this year: “Creativity Through Expression.” Entrepalooza brings together entrepreneurial leaders to share their insights and experiences with students, alumni, faculty and members of the business community.

Greenfield, from the Vermontbased ice cream maker, will be joined by Jeremy Peters, music publishing director at Ghostly International and co-founder of Quite Scientific Records; Eric Fretz, a lecturer at UM; Tom Frank, executive director for UM’s Center for Entrepreneurship; Debra Mexicotte, associate director of UM’s ArtsEngine; and Michelle Belbroad and Lakin Vitton, co-founders of CHISL Design. Admission is free. Registration is available at http:// entrepalooza.umich.edu/.

Passport Day allows simpler route to sign-up The Detroit Passport Agency will simplify the passport application process for Southeast Michigan travelers during the national “Passport Day” event Sept. 24 — a Saturday. The one-day event offers people, particularly busy workers unable to attend an appointment during regular weekly business hours, a one-stop shop to renew passports or apply for the first time with no appointment. Routine processing takes four to six weeks,

where expedited processing, with an added $60 fee, is two to three weeks. Same-day service is not available. The agency asks that applicants fill out the online application, and bring a printed unsigned copy and an accepted passport photo to expedite the process. Details of what documentation is required can be found online at travel.state.gov. The Detroit Passport Agency, at 211 W. Fort St. in Detroit, will be open 10 a.m.-2 p.m. on Passport Day.

‘Don’t Stop’ event to benefit Music Hall programs The Born and Raised Detroit Foundation is planning a benefit event Friday called “Don’t Stop the Music” to aid programs by the Music Hall

Center for the Performing Arts UNITED WAY FOR SOUTHEASTERN MICHIGAN

United Way for Southeastern Michigan’s first ever Dine United Event hosted more

than 400 guests at a 400-foot-long dinner table as the organization kicked off its 2016-18 Annual Community Giving Campaign.

promoting music education in the Detroit Public Schools, and the Reaching Higher young adult leadership program.

The event is in conjunction with

Detroit Homecoming, which brings

more than 200 Detroit area “expats” back to town to re-engage them with the community (see Page 4). The event will feature live music, art and an auction on the Music Hall rooftop. Tickets are $40 in advance and $45 at the door. Doors open at 7 p.m.

DBpageAD_DBpageAD.qxd 9/9/2016 4:32 PM Page 1

25TH ANNIVERSARY

Join Crain’s for a special 25th anniversary salute to this year’s 40 Under 40 winners. Winners will be announced Oct. 10.

WEDNESDAY, OCT. 26 5:30 – 9 P.M. ROOSTERTAIL, DETROIT Register at crainsdetroit.com/events, or call (313) 446-0300.

OF

ww

TS

CRAIN’S DETROIT BUS INES TER OF S EV PRIN IAL EN FIC

34 w.g 3.0 reko printing.com • 734.45

1

DBpageAD_DBpageAD.qxd 8/29/2016 3:10 PM Page 1

3 Ways

to Select a Network Size for Your Needs and Budget

Local provider network:

Statewide provider network:

National provider network:

offering local businesses some of the lowest rates in the area

giving you access to top doctors and hospitals across Michigan

providing the ultimate exibility to see doctors in Michigan and across the country

Let the experts at HAP help you choose what’s best for your business. Call your agent or (888) 995-8890 Or visit hap.org/network

Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.