Crain's Detroit Business, Oct. 31, 2016 issue by Crain's Detroit Business

Karmanos takes tech to Pontiac

Investment in local hotels continues

Mad Dog Technology founders discuss their move north, Page 3

N.Y. group buys Hilton Garden Inn, plans room upgrades, Page 3

OCTOBER 31 - NOVEMBER 6, 2016

Free of JCI, leaner Adient aims to grow

Election 2016: Sentiments shift gears

RTA finds backing

More poll results Highlights from the Crain’s surveys of businesspeople taken in May and again this month. More survey data at crainsdetroit.com/survey and on Page 24. HOW THEY RATE Gov. Rick Snyder’s approval rating is getting better; he’s more popular than President Barack Obama or either Hillary Clinton or Donald Trump.

Fortune 500 company’s plans include HQ move to metro Detroit, hiring 100 workers

Snyder

By Bradford Wernle and Dustin Walsh

May: 59%

bwernle@autonews.com dwalsh@crain.com

Oct.: 61% Clinton May

33%

Oct.

37%

Trump May

33%

Oct.

31%

By Bill Shea

GET OUT THE VOTE

bshea@crain.com

Which candidate would you vote for if the election was held that day? May: 41 %

Trump

36 %

Clinton October:

39 %

Clinton

35 %

Trump

Poll: 71% favor transit millage; connecting workers to jobs top reason

Sources: Crain’s polls taken in May and October of 300 Crain’s readers with margins of error of 5.7 percent

The proposed $3 billion regional transit tax on the Nov. 8 ballot is needed to help get workers to their jobs, according to the majority of respondents in a new Crain’s survey. Overall, 71 percent of the 300 Crain’s readers polled favor the 20year, 1.2-mill property tax that would fund the Regional Transit Authority of Southeast Michigan’s master plan of bus rapid transit and commuter rail in Wayne, Oakland, Macomb and Washtenaw counties. Twenty-three percent of those

Survey says Respondents strongly favored the regional transit millage: Yes: 71 % No: 23% Undecided: 6%

polled oppose the tax, and 6 percent were undecided or declined to answer. Among supporters polled, 58 percent say they plan to vote for the tax chiefly because they believe the

RTA’s plan will get more entry-level workers and others to their jobs. Another 14 percent say their “yes” vote is because the plan will reduce traffic congestion. A further 9 percent are voting for it because they believe it will increase access for the elderly and senior citizens, while 5 percent will approve it as an economic development booster. The rest of the survey respondents had other reasons for supporting the tax, such as reducing emissions and helping the region compete with cities that have better transit. SEE RTA, PAGE 24

Could Barnett give Patterson his toughest race yet? By Kirk Pinho kpinho@crain.com

It’s the middle of October, three weeks until Election Day, and Vicki Barnett sits in an Einstein Bros. Bagels shop in Farmington Hills, where she was mayor for four years. In some ways, Barnett, the Democrat looking to oust L. Brooks Patterson as Oakland County executive, faces a challenge as daunting as did Einstein himself: A mere mortal star-

ing down a force of nature. Barnett is using her broad background in politics and previous career as a financial adviser to sell an economic message to Michigan’s richest county. It’s a different kind of economic message: transit rather than expressways, urban redevelopment rather than suburban sprawl. Most agree that Barnett is still a longshot. But she could pose the

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toughest test yet for Patterson in a county that has grown increasingly Democratic, in an election year where controversies at the top of both tickets could bring unpredictable consequences in down-ballot races and where voters say they want change. Barnett knows the challenge. “He’s going to be able to outraise me,” she said, a coffee on the table in SEE OAKLAND, PAGE 25

Oakland County Executive L. Brooks Patterson faces former state Rep. Vicki Barnett on Nov. 8.

Today, Oct. 31, the largest automotive supplier nobody ever heard of is to start business, and it will be the first Fortune 500 company to move to metro Detroit in more than a decade. That would be the $17 billion Adient, which is to launch on the New York Stock Exchange as a newly independent company and the world’s No. 1 automotive seat maker. Adient is the new name for the seating business of Milwaukee-based Johnson Controls Inc., and it plans to move its operational headquarters from Wisconsin to a new location in Southeast Michigan. Adient expects to pick a building in Southfield or the city of Detroit, said David Roznowski, executive director of global external communications for Adient. The announcement is expected in the coming months. Adient is domiciled in Dublin, Ireland, which will reduce its effective corporate tax rate to between 10 percent and 12 percent and save the company roughly $150 million in taxes annually. Chairman and CEO Bruce McDonald, and up to 600 employees, will be in a new office locally that the supplier is expected to secure in the next two months. The employees will include 100 new hires in legal, accounting, audit and treasury, McDonald said. JCI’s former automotive seating business has been based in Milwaukee since 1985. Adient will be the first Fortune 500 headquarters to relocate to the SEE ADIENT, PAGE 21

Maker, co-working spaces incubate small biz Fledgling businesses increasingly ‘graduate’ from metro Detroit’s spaces to grow, Page 11

Your Strategic Advantage

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MICHIGAN BRIEFS Snyder vetoes Medicaid tax change, cites budget Gov. Rick Snyder vetoed business-backed legislation last week that would have changed Medicaid taxes, the latest twist in wrangling even among Republicans over how to help fund the government health insurance program, AP reported. The Republican governor’s move came a week after the GOP-led Senate voted overwhelmingly in support of bills that would have continued a 6 percent “use” tax on Medicaid managed care organizations, expedite the end of a health insurance tax disliked by the business lobby and change the pot of money the state uses to draw federal matching dollars. Snyder questioned eliminating the health insurance claims tax at the end of 2018 instead of mid-2020 regardless of any potential action by the U.S. government. The Snyder administration opposed the four bills during the legislative debate, but lawmakers sent them to his desk anyway. The legislation was designed to address federal concerns that Medicaid taxation in Michigan and three other states is too narrowly tailored. A spokesman for Senate Majority Leader Arlan Meekhof said he was disappointed by the veto.

BLOOMBERG

Andrew Liveris, chairman and CEO of Dow Chemical Co., said regulators’

greatest concern about a merger with Dupont Co. is agriculture.

Liveris: Dow-DuPont merger may be delayed Dow Chemical Co. CEO Andrew

Liveris said last week that his Midland-based company’s $59 billion merger with Delaware-based DuPont Co. may be delayed until February from a planned closing late this year, as European antitrust officials take more time to consider potential competition issues in pesticides and crop seeds. Regulators’ “greatest concern is agriculture,” Liveris said in an interview with Bloomberg. “One of the strongest lobbies in the world out there is the farm lobby, and in Europe, the agricultural sector is very, very critical to them, somewhat protected.” Shareholders in the two largest U.S. chemical companies approved the 50-50 merger in June. The Euro-

pean Commission this month delayed its decision deadline until Feb. 6 as it sought additional information about the transaction. Liveris said the value created by the deal made the wait worthwhile. Liveris wouldn’t say whether the companies planned to sell assets to help win approval, but Bloomberg has reported Dow is seeking a buyer for its copolymers business to ease regulators’ concerns and DuPont is planning to sell an herbicides business.

MICH-CELLANEOUS

Shares of Diplomat Pharmacy Inc. tumbled last week on news that the Flint-based company’s president and CFO will be out by the end of the year, AP reported. The specialty pharmacy announced that President Gary Kadlec will retire in December; he will be replaced by company executive Paul Urick on Nov. 1. Sean Whelan will step down as CFO and director on Dec. 31. Company shares fell 12.36 percent Oct. 26 to hit a new 52-week low following announcement of the changes, which came a week before the company releases third-quarter earnings. J Michigan won a nearly $2.5 million U.S. Department of Labor grant to increase access to apprenticeship programs in skilled trades fields, the state said. The grant, part of $50.5 J

INSIDE BANKRUPTCIES

million awarded by the agency, was part of the federal government’s ApprenticeshipUSA program. Michigan’s Workforce Development Agency was awarded the funding, to be used to create more registered apprenticeship programs aimed at women, veterans and underrepresented groups. J Grand Rapids-based Ferris Coffee & Nut Co. bought Kalamazoo-based Lush Gourmet Foods, an all-natural, handcrafted premium nut company, MLive.com reported. Terms of the deal were not disclosed by Ferris, a family-owned specialty coffee and nut roaster. J McLaren Greater Lansing has made a $1.5 million gift to Michigan State University to establish the College of Nursing’s first endowed chair position, AP reported. The East Lansing school said the donation to help create the Endowed Chair for Behavioral Mental Health Nursing Education is the second-largest gift ever given to the nursing college. J Deer hunting season is on the

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COMPANY INDEX: SEE PAGE 25 way, but fans of venison might not have to trek out into the woods this year to get their fix. Arby’s said it will be offering venison sandwiches this fall in Michigan and five other states where deer hunting is popular, AP reported. The Atlanta-based chain said its sandwich will include thickcut venison steak and crispy onions on a roll. In Michigan, the sandwich will be available Nov. 12-15 at locations in Birch Run, Cedar Springs, Clio and Plainwell.

Correction J An article on Page 128 of the Fall 2016 Giving Guide titled “Play the violin or share coffee — Small nonprofits find ways to connect with big foundations” should have said David McGhee used to work for Big Brothers Big Sisters of Greater Flint and that his title is program director.

WWW.LECTRONICS.NET

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N.Y. group buys Hilton Garden Inn, plans room upgrades Above-appraisal purchase adds to evidence of heightened investor interest in Detroit hotels By Sherri Welch swelch@crain.com

A developer of acclaimed hotels in New York, Los Angeles and New Orleans has bought the Hilton Garden Inn in downtown Detroit and is planning a room renovation and new restaurant for the 12-year-old hotel. New York-based GFI Capital Resources Group Inc. paid $25.6 million, about $4 million above the price the hotel appraised for at the end of 2015. The purchase is another sign of interest from investors in the Detroit hotel scene. Six hotel projects in de-

velopment could bring roughly 970 more rooms to the downtown market over the next few years. They include a hotel in the historic firehouse across from Cobo Center, a Shinola branded hotel, a 97-room hotel at the Wurlitzer Co. building on Broadway Street and the boutique Harmonie Club Hotel in the Paradise Valley Cultural and Entertainment District. Last month, contemporary furniture retailer West Elm announced its plans for a boutique hotel with more than 135 rooms and a retail store in Midtown. The Hilton Garden Inn had many

bidders in the online auction, said GFI’s chairman and CEO, Allen Gross. Like the late billionaire New York real estate investor Harry Helmsley, GFI felt it was worth it to overpay, Gross said. “We see the rebirth of Detroit, which everybody figured was dead ... and it’s great we can be part of it.” GFI loves the hotel’s location and what’s happening downtown, Gross said. And it’s no short-term investor. “We play for long periods,” he said. “This is a great asset in a great SEE HILTON, PAGE 23

PHOTO BY TEN-X LISTING

The Hilton Garden Inn at Gratiot Avenue and Brush Street in downtown Detroit is a 10-story, 198-room hotel built in 2004.

Bills spark debate over ride sharing at airports By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

in their Birmingham office last week. Crain’s: Talk about the business decision for going north to Pontiac rather than south to Detroit. Peter Karmanos Jr.: First of all, I have always viewed this whole area as the Detroit metropolitan area, with Pontiac being at the north end and Detroit being at the south end, with Woodward (Avenue) connecting straight out. So in the Pontiac area, there is relatively inexpensive

LANSING — A proposal to create statewide rules for upstart ride-hailing companies like Uber and Lyft in Michigan has reopened an old story: the fight between technology’s disruption and regulations that protect revenue streams threatened by it — and how to maintain a level playing field. It’s playing out this time at the Capitol between Michigan’s airports, including Detroit Metropolitan Airport in Romulus, and backers of a business model that has altered the way people get from one place to another. The legislation to create a statewide licensing system for the ride-hailing companies, which let customers summon rides through smartphone apps, has the airports fighting back to protect revenue streams from taxis and other transportation and what they say is a need for local control to respond more quickly than lawmakers can to changes wrought by technology. The rapid rise of ride-hailing companies is confronting statehouses and city council chambers across the country debating how to regulate the services. Airports from Atlanta to Albuquerque are dealing with similar choices when it comes to setting rules for companies like Uber Technologies Inc. and its main rival, Lyft Inc. Capital Region Lansing’s

SEE KARMANOS, PAGE 23

SEE UBER, PAGE 22

JACOB LEWKOW

Peter Karmanos Jr., founder of Compuware Corp. and owner of the Carolina Hurricanes, talks about his plan to move three tech companies north instead of south.

Mad Dog moves Peter Karmanos plans to relocate part of new business portfolio to Pontiac

Last week, Peter Karmanos Jr. and Mark Hillman announced they are

moving three of their tech companies to an historic office building in downtown Pontiac from their current location in Birmingham. Lenderful LLC, Deliver My Ride LLC and Perfect Realty LLC, part of the eight-company Mad Dog Technology LLC portfolio, are expected to begin moving into the Riker Building immediately and hire more than 100 over the next three years as part of an investment of more than $1.75

million. Lenderful is a cloud-based software company that allows people to search and apply for mortgages. Deliver My Ride is a car-buying software company, and Perfect Realty offers home-listing software. Karmanos, the founder of Compuware Corp. and owner of the National Hockey League’s Carolina Hurricanes who is now the chairman of Mad Dog, and Hillman, co-founder of Mad Dog, sat down with Crain's Detroit Business reporter Kirk Pinho

MUST READS OF THE WEEK Tearing down to build?

Power to strike back

In the air, on the air

If Pistons exit, replacing the Palace with a commercial mixed-use development could favor Auburn Hills, Page 4

Several small renewable power operators are at odds with Consumers Energy over contracts and rates, Page 6

The organizer of Detroit’s Thanksgiving parade — which will feature this Quicken Loans Inc. rocket and robot float — foresees a national broadcast of the event, Page 15

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

PALACE SPORTS & ENTERTAINMENT

The fate of the Palace of Auburn Hills is in question amid talks for the Detroit Pistons to move downtown.

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City manager: Commercial development of Palace site could benefit Auburn Hills By Bill Shea bshea@crain.com

Demolishing the Palace of Auburn Hills and replacing it with a thriving commercial mixed-use development could be a better outcome for the city of Auburn Hills if the Detroit Pistons leave Oakland County for Detroit. â&#x20AC;&#x153;We have estimated that depending upon what might get built at that location, and the potential is great, that the tax revenue generated could realistically be at least three times that of the revenue currently produced from the properties,â&#x20AC;? Auburn Hills City Manager Thomas Tanghe told Crainâ&#x20AC;&#x2122;s via email. Tax records show that the Palace had a $16.4 million taxable value in 2015, and related properties brought the total to nearly $27 million. That translated into $1.1 million in total property taxes paid last year, of which $265,271 went to the cityâ&#x20AC;&#x2122;s general fund. Sources familiar with the situation say the Pistons are close to a deal to move the Pistons into the new Little Caesars Arena in Detroit. No deal had been announced by press time. If it happens, the fate of the Palace has been the subject of speculation, with the likelihood being it would be demolished and the land redeveloped. By Tangheâ&#x20AC;&#x2122;s estimate, redevelopment of the land for offices, residential and retail could increase the taxes paid to more than $3 million annually. â&#x20AC;&#x153;That outcome will require corporate responsibility on the part of the ownership to make the property development ready,â&#x20AC;? he said. New tax revenue is attractive to the city because of overall declines. It has to dip into its savings this year

â&#x20AC;&#x153;Leaving a vacant, deteriorating arena to become an eyesore in the city should never be an option, and I suspect Mr. Gores will not allow that to be an option.â&#x20AC;? Thomas Tanghe, Auburn Hills city manager

to meet its $56.1 million budget, and figures provided by Tanghe show transfers from the city fund balance will put Auburn Hills just under a million dollars ahead. If the Pistons leave but Gores opts to still use the Palace for concerts and other events, Auburn Hills isnâ&#x20AC;&#x2122;t forecasting much of a change in taxes. â&#x20AC;&#x153;If the arena remains in use, we do not expect a value change that will be a significant financial detriment to the city,â&#x20AC;? Tanghe said. Tanghe hasnâ&#x20AC;&#x2122;t talked to Goresâ&#x20AC;&#x2122; camp since the spring, he said, and discussions were never about the team leaving. â&#x20AC;&#x153;We have had meetings with them from time to time over the past nearly two years,â&#x20AC;? Tanghe said. â&#x20AC;&#x153;The last one was with Palace executives and representation from Platinum Equity, among others, in May. When I attended that meeting, it was hosted by County Executive L. Brooks Patterson at his office. As it relates to the Palace or any discussion about the team considering a move to Detroit, that has not taken place with the city. Our discussions were nearly always focused on the operation remaining in Auburn Hills.â&#x20AC;?

Gores and his aides have been in talks to relocate the Pistons to the new Little Caesars Arena in 2017, and a likely outcome of that would be closure of the Palace, with the land sold to developers. Or, Goresâ&#x20AC;&#x2122; Platinum Equity firm could handle the redevelopment itself. Sources familiar with the situation have told Crainâ&#x20AC;&#x2122;s that Gores intends to seek maximum value for the Palace, and leaving it vacant like the crumbling Pontiac Silverdome three miles to the south isnâ&#x20AC;&#x2122;t an option. Gores bought the Palace, along with the Pistons and other properties, for $325 million in 2011, and has subsequently spent nearly $50 million in upgrades. â&#x20AC;&#x153;Leaving a vacant, deteriorating arena to become an eyesore in the city should never be an option, and I suspect Mr. Gores will not allow that to be an option,â&#x20AC;? Tanghe said. The Palace opened in 1988 at a cost of $90 million, funded privately by then-owner William Davidson. His 2009 death led to the sale of the Pistons and their home arena, which remains very respected in the entertainment industry. However, there is doubt that the market can support two 20,000-seat concert venues, and the aging Palace has upkeep bills that likely make it an economic drain on its owner with a team playing there. Auburn Hills, incorporated in 1983 as a merger of the village of Auburn Heights and Pontiac Township, has about 21,600 residents in nearly 17 square miles. Its major employers include FCA US LLC and automotive suppliers such as Faurecia and BorgWarner Inc., Oakland Technology Park, and Great Lakes Crossing Outlets. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

AT&T salutes Governor Rick Snyder At AT&T, we use the power of our network to build a better tomorrow. Security is at the core of our networks and central to everything we do. Thatâ&#x20AC;&#x2122;s why we were pleased to support the North American International Cyber Summit and thank Governor Rick Snyder for his leadership role in this area.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

Renewable energy coalition files MPSC complaint against Consumers By Jay Greene jgreene@crain.com

Several small hydroelectric, biogas and landfill renewable power operators have filed a complaint against Jackson-based Consumers Energy Co. with the Michigan Public Service Commission to compel the utility to sign fairly priced power purchase agreements with them. The newly formed Independent Power Producers Coalition of Michigan, whose members operate under federal legislation approved during the 1970s energy crisis, wants the MPSC to require Consumers to sign longterm contracts with sufficient rates to keep them in business and the power on for thousands of homeowners and businesses. The last time Consumers agreed to contract prices with renewable power owners was in 1982, when the MPSC set avoided costs (prices) for the renewable power operators based on the costs of coal-fired plants. It is expected that in the future the MPSC would assess avoided costs of about 7 to 8 cents per kilowatt hour based on combined cycle power plants that use gas and steam. Vic Leabu, owner of White’s Bridge Hydro Co. in Lowell, said his current 32-year power purchase agreement expires in 2016. The federal law, the Public Utility Regulatory Power Act, requires regulated utilities to purchase power from

renewable power generators under 20 megawatts and they must pay the price based on the avoided costs to generate the same amount of power used in the current standard power-generation source, which used to be coal, and now is combined-cycle gas. The MPSC has said it has authority to use PURPA as part of its decision-making in rate cases. Leabu’s current contract with Consumers pays him 7.1 cents per kilowatt hour. He said Consumers offered him 4.5 cents per kwh and only a fiveyear contract, but he wants a 17-year contract for continuity and better bank financing for capital projects. “This will pretty much put us out of business. We can’t finance capital improvement projects and pay salaries of our workers for that amount,” said Leabu, who lives in Brighton and has operated the small 750-kilowatt hydro plant on the Flat River in Ionia County since 1984. It was built by the city of Lowell in 1896. Michigan’s small renewable power facilities produce about 275 megawatts of baseload power, adding to electric reliability that the utilities contend is in jeopardy, the IPPC said. The facilities also provide hundreds of jobs and generate clean energy that doesn’t contribute to greenhouse gas and negative health effects, as does coal, natural gas and nuclear, the group said. Consumers Energy wants to cut

payments in half to independent renewable power producers to reduce its own costs, according to MPSC filings. “Consumers Energy claims it doesn’t need IPPC power or capacity, despite its obligation under PURPA, and despite forecasts from the MPSC and regional planners that Michigan will need additional baseload capacity starting in 2017,” the IPPC said in a statement. PURPA also requires states to approve contracts between “qualified” energy providers like hydro and biomass and regulated utilities. Tim Lundgren, an environmental attorney with Varnum LLP in Lansing who represents IPPC, said he believes the MPSC will set fair rates for the renewable power producers based on federal law and the true costs for utilities to generate their own power. “Certainly, the avoided cost rates that the utilities are proposing violate federal PURPA laws and are neither fair nor reasonable to these valuable facilities,” Lundgren said in an email to Crain’s. “They are clearly meant to put all of these valuable operations out of business at the very time that our utilities are claiming they need to build their own new generation facilities.” Lundgren said he expected a final commission order by next April. In an email statement, Consumers Energy said the company must pro-

tect its ratepayers by purchasing the lowest-cost electricity possible. It said it will follow federal law. “We appreciate the long-term relationships we have maintained with the members of the IPPC whom we have ongoing contracts with,” said the Consumers statement. “These agreements are routinely reviewed and examined by the Michigan Public Service Commission to ensure that customers are paying power costs that are affordable and competitive,” said Consumers, which has 1.8 million electric customers in Michigan. Consumers officials have told Crain’s that the utility can purchase excess electricity at a much lower cost from the Midcontinent Independent System Operator, a regional agency that oversees electricity production and sales of excess capacity in Michigan and 12 other states. While Darwin Baas, director of the

Kent County Department of Public Works, said its power purchase agree-

ment with Consumers expires in February 2022, the county decided to join the IPPC because it operates a 15-megawatt waste-to-energy facility that could face closure. In 1990, Kent County signed a longterm contract with Consumers for about 8.4 cents per kilowatt hour. “We wanted to reach out to Consumers to talk about renewing. They told us come back in 2019,” Baas said.

But Baas said filings Consumers has made the past two years with the MPSC about its intent to cut payments and issue one-year contracts concerned the county. “We just made a $2 million plant refurbishment and investment and you look at the window to finance projects and no one, including Consumers, would agree to a one-year contract at 4 cents or so,” Baas said. “The banks won’t finance one-year contracts.” Baas said he believes Consumers wants to run them out of business and own the generation capacity itself. “It is blatantly unfair,” he said. “There would be major repercussions. ... We have 40 FTEs with $4.5 million in salary and we generate baseload for them that they say they need.” Both Leabu and Baas said Consumers’ decision to force IPPC to hire lawyers and request a contest hearing is costing them hundreds of thousands of dollars in legal fees. “This could be a yearlong case,” Leabu said. “(Consumers) says they don’t need our energy, but they are telling the public there is a coming shortage of electricity. It doesn’t make sense.” The state Legislature is nearing completion of a two-bill energy package that is heavily supported by the state’s two major utilities, Consumers Energy and Detroit-based DTE Energy. The bills encourage, but do not mandate, increased renewable energy development and make it more difficult for alternative energy suppliers to sell lower-cost electricity to the 10 percent choice market in Michigan. IPPC’s other members include Viking Energy of McBain and Lincoln, Hillman Power Co. (biomass), Lansing-based Granger Energy Services (landfill gas) and about 22 other hydroelectric facilities, among them Boyce Hydro; Michiana Hydro Electric Co.; Tower Kleber LP/Black River LP; the city of Beaverton; and Elk Rapids Electric Power. If the MPSC fails to rule in the small renewable power operators’ favor, the IPPC said the following are likely to occur: a loss of about 25 percent of the state’s renewable power generation; abandonment of dams without revenues to maintain them, shifting the burden to taxpayers; higher operating costs for loggers and mill owners; higher costs for forest health and stewardship practices; the return of wood and other alternative fuel materials to landfills; a decrease of landfill gas capture and utilization; a less reliable and weakened electrical grid, particularly in rural parts of the state; loss of a significant tax base in rural communities; and loss of diversification of the state’s energy portfolio. Moreover, Kent County could face a $70 million stranded investment at its waste-to-energy facility, forcing higher disposal costs on its citizens, and more than $15 million in biomass fuel markets will vanish, along with the jobs and economic benefit to rural communities, including about $20 million in annual labor income. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

Bankruptcy players to open office together

Labor & Employment Experience

In Your Corner.

Ŷ Defends claims of harassment, retaliation and discrimination, as well as FMLA and whistleblower claims. Ŷ Counsels employers on hiring, discipline and performance matters, wage and hour issues, employee leaves and accommodation requests.

By Kirk Pinho kpinho@crain.com

The two federal judges widely credited with Detroit’s so-called “Grand Bargain” during its Chapter 9 municipal bankruptcy case are starting a downtown Detroit office of

Ŷ Represents employers before the EEOC and various state agencies.

Judicial Arbitration and Mediation Services in April.

Gerald Rosen, the chief judge of the U.S. District Court for the Eastern District of Michigan and mediator in the bankruptcy case, and Steven Rhodes, who oversaw the case as the federal judge and has since retired from the bench, will start the local JAMS office with Clarence “Rocky” Pozza Jr., principal of Detroit-based Miller, Canfield, Paddock and Stone PLC.

Pozza, 67, was a managing director of Miller Canfield for 10 years and head of its litigation group for eight years and worked with Rosen before the latter’s appointment to the federal bench in 1990. Rhodes, who is transition manager for Detroit Public Schools overseeing its finances and operations, leaves his position Dec. 31 following election of a new school board, which in early January will be sworn in. Rhodes, 67, said they are “discussing the opportunity with other attorneys and judges” to join their JAMS office, but he declined to discuss that further. Rosen, 65, declined to comment because of judicial ethics policies. JAMS is a national company headquartered in Irvine, Calif., and London that has about 30 offices. It offers arbitration, mediation and alternative dispute resolution services. Rhodes and Pozza declined to say how large the Detroit office will be but said they are in negotiations for space. Detroit filed for bankruptcy protection on July 18, 2013, and exited it Dec. 10, 2014. One of the key points in the bankruptcy process was the “Grand Bargain,” which raised $816 million to pay for pensions and put art from the Detroit Institute of Arts collection in a public trust, out of reach of creditors.

Contact Bethany Sweeny at bsweeny@varnumlaw.com

Novi

Grand Rapids

Kalamazoo Ŷ Grand Haven

Lansing

Ann Arbor

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BANKRUPTCIES

Dustin Walsh

Detroit

Cyber threats are constant

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The following business filed for protection in U.S. Bankruptcy Court in Detroit Oct. 21-27. Under Chapter 11, a company files for reorganization. J Charles A Knight Inc. dba Charles Knight’s Marathon Service, 3610 West Road, Trenton, voluntary Chapter 11. Assets: $497,700; liabilities: $1,046,746.16.

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

LETTERS

OPINION

Top local issues for voters to weigh

residential politics aside, voters in Southeast Michigan have plenty of reasons to head to the polls on Nov. 8. Here’s a roundup of key races and ballot questions that we think most greatly affect the economic climate in the region as a whole. Oakland County: As Kirk Pinho reports on Page 1, Republican L. Brooks Patterson is facing a formidable challenge in former state lawmaker and Democrat Vicki Barnett to retain the county executive seat he has held since 1993. Odds are that the 77-year-old Patterson will prevail, but perhaps at a slimmer margin than the last time, when he took about 57 percent of the vote. Patterson has done remarkable things in his tenure, much of it in economic development and financial administration. And there has never been a whiff of corruption. (Would Detroit and Macomb County be able to say the same?) But the reputation of Oakland as the state's economic juggernaut grew over a time when Detroit was in steady decline. Detroit's loss equaled Oakland’s gain. But the zero-sum game is an old playbook. Patterson is emblematic of an era that is being swept away by generational and demographic change. Perhaps it’s time for a new playbook. Barnett, an MBA holder and business-friendly former mayor of Farmington Hills, is hammering at his tenure, his age and his disdain for progressive regional amenities like improved public transit. Her slogan promises “21st century leadership,” implying that Patterson is a dinosaur of the past. Many businesspeople moving into this region express surprise by its political balkanization. This region needs to compete with regions all over the globe for talent and for jobs. But it’s clear that the region won’t act or behave like a region until the old politics and divisions retire. Barnett may accomplish that in Oakland. Macomb County: The race to watch is Republican Candice Miller’s challenge to another longtime incumbent, Anthony Marrocco, the county’s public works director. Miller, a former congresswoman and Michigan secretary of state, alleges a pay-to-play culture in the department. Given recent indictments in Clinton and Macomb townships and a civil lawsuit against a top Marrocco aide alleging corruption in the aide's role as an elected official, this is Miller’s time. Detroit: Voters should reject both proposed “community benefit” ordinances on the ballot; of the two, Proposal A is the most objectionable and has the greatest potential for curtailing investment in the city. The requirements are onerous and should be negotiated case-by-case on development projects. Regional transit: We support the proposal for a 1.2 mill property tax to expand public transit in Wayne, Washtenaw, Oakland and Macomb counties. It’s better for business and for job seekers. In the survey of business decision makers commissioned by Crain’s Detroit Business (See Page 1), 71 percent favored transit, and of those nearly 60 percent cited “increased access for entry-level workers and others to get to work.” People live and work in different parts of our region. We need to start acting like a region.

Address public employee pension issues with care Editor: Understanding Michigan’s municipal retirement landscape can be complex. (See “Time to focus on pension liabilities” and “Steps municipalities can take to pay pension, health care obligations,” Oct. 6, Page 6.) There are 869 municipalities across the state that offer retirement benefits to their public employees. The Municipal Employees’ Retirement System of Michigan partners with 84 percent of these municipalities to offer retirement benefits that range from traditional pensions to defined contribution plans — and a mix of both, called a hybrid plan. There is no one-size-fits-all approach to funding a secure retirement for our public servants. The retirement needs of a police officer in the western Upper Peninsula and a wastewater treatment plant worker in the Thumb can differ greatly. Yes, pension unfunded liabilities exist; however, having unfunded liability is like having a mortgage. In our 70-year history, our municipalities have made their “mortgage” payments every month while prefunding a portion of their entire mortgage. While paying off the en-

“Having unfunded liability is like having a mortgage. ... While paying off the entire mortgage might be desired, having a mortgage is not a crisis.” Chris DeRose, Municipal Employees’ Retirement System of Michigan

tire mortgage might be desired, having a mortgage is not a crisis. Some municipal plans are very well funded, some are poorly funded and most are somewhere in the middle. In fact, 40 percent of the total pension liability in our state is from only 10 plans. State law requires pensions to be prefunded, and most are proactively managing their retirement plans. In the past five years, 73 percent of our customers have taken steps to reduce unfunded liabilities; this includes a quarter choosing to make

additional payments. By far, unfunded liabilities from retiree health care plans, commonly known as Other Postemployment Benefits, or OPEB, remain the biggest challenge facing Michigan municipalities. Unlike retirement plans, municipalities are not required to fund OPEB. A recent study by Michigan State University Extension found that OPEB liabilities are three times larger than pensions, and almost half the plans have no assets set aside. This is a complicated public policy issue that needs to be addressed with great care to maximize taxpayer dollars while protecting public retiree benefits. The focus should be on the communities that have both poorly funded pension and health care plans and have a significant portion of their budget going to these costs. We believe requiring a consistent set of assumptions will lead to more transparency and accountability. Our taxpayers and dedicated public servants deserve no less. Chris DeRose CEO Municipal Employees’ Retirement System of Michigan, Lansing

Remake the Joe into a multiuse facility Editor: I’ve been kicking around this draft letter for two years, thanks to your article that prompted me to move it from “drafts” to “send.” (“Let’s save the Joe,” Keith Crain, Oct. 17.) Clearly, Joe Louis Arena isn’t an architectural gem. However, it is connected to the riverfront, has a People Mover stop and could be considered an adjunct space to the strategic and stunning Cobo Center. My idea has no analysis of financial or structural viability; it is merely a “what if?” concept to add to the current energy and potential of downtown. For what it’s worth, I think another hotel might be excessive at this point. A mixed-use space “Joe” could offer amenities, services

and activities to residents, convention attendees and riverfront visitors that are not currently available downtown. So let’s remake the Joe into a 24/7 Motown-in-motion center. Replace the exterior shell with glass and light and create a multiuse facility where all activities are visible. It could include a golf driving range and putting greens (possibly adding a clear bubble on top), and an Olympic-size pool, a velodrome and/or a casual bike riding area around the perimeter of the building. In addition: tennis and pickleball courts, rock climbing, areas for go-karts, fowling, bowling, an ice rink, family center, etc. This multiuse facility could bene-

fit downtown and the region by offering year-round activities, be available for conventions and sports leagues, and more. Maybe these ideas are a bit “out there,” but how could a center of more action, more energy, more year-round activity options hurt? Kathleen Alessandro Allen Park

ratings on Fox since 2009’s contest between the Yankees and Phillies. Maybe people are also tired of the unending political noise about facts and figures none of us care about. Regardless of who you’re rooting for, quietly or not, in the Series, we can all root out loud for the Detroit Lions. The team has surprised everyone but the faithful who have known the Lions would be going to the Super Bowl for the past 50 years. Winning is bound to help TV audience numbers as well. And maybe sell some more Ford Field seats. For the faithful, and there are lots of

them in Detroit, this is the year. That’s a cry they yell every year, so sooner or later, they are going to be right. Give Martha Ford lots of credit. She’s not going to settle for anything but a winner. You can bank on that. Detroit is a crazy sports town. With college sports, and baseball, football, basketball and hockey, we have just about everything anyone could want. And there is a move afoot to add soccer as well. If you like sports, there is no other city in the nation. It is just too bad we weren’t playing the Cubs.

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

We get a little of the glory As I watched the Cleveland Indians battle the nation’s favorite, the Chicago Cubs, I realized that by all rights, Detroit should have been in the World Series. As I watched the feared and hated players take their turns at the batter’s box, I wished it were us that would be playing the Cubs in a railroad series where fans and teams could take the train back and forth between Chicago and Detroit. Chicago was my boyhood hometown. My dad always promised to take me to every game of the World Series if the Cubs won. As a boy, we would listen to and watch Jack Brick-

KEITH CRAIN Editor-in-chief

house do play-by-play on WGN. The last time the Cubs were in the World Series was 1945, and guess who they played then? Detroit, I hasten to add, won. But in 1908, the

Cubs won — also against the Tigers. The Cubs haven’t won since. For Cleveland, the dry spell dates to 1948. Everyone has a piece of history. Somehow, the Cubs have become the nation’s team. It seems everyone outside of Cleveland is rooting for Chicago. Maybe it’s the fact that it’s been 108 years since the Cubs won the World Series. Maybe it’s something else. But it’s clear, they have the nation on their side. So more people are watching the games; television audiences are up. The first two games of the series, played in Cleveland, had the best

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

Community benefits ordinances will weaken people’s power Remember this: Proposal A is awful, and B is just as bad. Both proposals to create “community benefits ordinances” that would put new requirements on developers in the city make things worse for people in a city where we have seen government rendered powerless in the past. Detroiters have been abandoned and in the dark about decisions that affect them directly. The city’s financial woes that led to bankruptcy and emergency management fostered an environment of recurring missteps that could be easily swept under the rug. This cannot and must not be repeated. First, let’s not blame developers for seeking incentives to make a project financially feasible in the

OTHER VOICES Eric Means

Means is a native Detroiter and president of Means Group, a real estate development firm. first place. Detroit is bouncing back, but it still presents challenges to de-

velopers trying to raise project capital. And it’s not the fault of developers that people in neighborhoods feel like they aren’t being heard. Every significant development already is presented at public hearings before it is approved by the city. Adding new obstacles for developers is not the way to revitalize neighborhoods. Second, let’s ensure our votes create the checks and balances we want. Detroit’s elected leaders have taken significant steps toward creating an environment better than yesterday’s. They are well equipped to talk with constituents and make

good deals benefiting the community. Let’s keep it that way by putting the pressure on them. Proposals A and B let them off the hook. Not only do they twist the development process into hundreds of knots, but they don’t allow our elected officials to be accountable to do their work and report back to all of us. Like Pontius Pilate washing his hands, the language in both proposals washes the hands of accountability and threatens responsibility for governing. The two proposals are like a game of Three-Card Monte. They say, “Pick Prop A and win. Or

pick Prop B and win.” But just like a street hustler charming another sucker, the prize of good decisions is not in the cards either way. Both Props A and B will weaken people’s political power instead of strengthening it. Under either one, “the community” will be used as cover to dodge tough votes, avoid contentious public hearings and give up accountable oversight of projects. Make our politicians do the jobs they were elected to do. I encourage business professionals to vote no on Proposal A and Proposal B. Remember this: A is awful and B is just as bad.

TALK ON THE WEB Re: Mad Dog to move tech companies into Pontiac Cool for Pontiac — another downtown with some possibilities. But I wonder why he chose it over Detroit when his move to Detroit with the Compuware Building was such a big deal. He seemed very much “into” Detroit. I wonder what happened. E M Parmelee

Re: Small nonprofits connect with foundations Interestingly, small nonprofits are some of the most innovative “small businesses,” because we do not have the resources to afford adequate development departments capable of fundraising sufficiently to sustain programs “seeded” by foundations that really don’t offer operating and long-term grants. Our reality is that unless a significant player adopts us and uses his or her personal connections to raise the major gifts, we do not see much real individual philanthropy. Fundraising from our clientele (i.e., homeless, impoverished, etc.) is much more challenging than for universities, for example, because our alumni’s success is finding a livable wage, rather than launching an IPO, and a $50 check is considered a “major” gift for most of them. Nathaniel Warshay

Re: Arby’s to sell venison sandwiches in Michigan Ignoring the market for this sand-

wich here in Southeast Michigan is one big dunderheaded move. funwithknives

Re: Obamacare premiums to rise 25 percent It’s killing small businesses that are trying to attract, retain and take care of their employees. Coverage costs are up, deductibles and co-pays are up, and coverage is greatly reduced. Utterly useless. GStano

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â&#x20AC;&#x153;Michigan organizations were not as aggressive in plan design changes and modification.â&#x20AC;? Jerry Konal, Mercer

Mercer survey: Mich. employer health costs up 3.2% this year GLOBAL TRAVEL. LOCAL CONNECTIONS.

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By Jay Greene jgreene@crain.com

Employer health benefit costs for active employees increased in 2016 by 3.2 percent in Michigan with plan changes and 2.4 percent nationally, one of the lowest increases in decades, according to a new survey by Mercer, a human resource consulting firm based in New York City. For 2017, 82 Michigan employers, including 40 in metro Detroit, predicted their health care costs would increase by 3.6 percent with plan changes. If no changes are made, health care costs could rise by 6.3 percent, said Mercerâ&#x20AC;&#x2122;s 2016 National Survey of Employer-Sponsored Health Plans. â&#x20AC;&#x153;Michigan organizations were not as aggressive in plan design changes and modificationâ&#x20AC;? as employers in other states, said Jerry Konal, Mercerâ&#x20AC;&#x2122;s principal business leader in Detroit. As a result, Michiganâ&#x20AC;&#x2122;s average health care cost increases were nearly 1 percentage point higher than national averages. Michigan employers â&#x20AC;&#x153;did not adopt as much of the emerging solutions around care management, telemedicine and some of the other solutions that help reduce trend costs,â&#x20AC;? Konal said. Employers in other states have already made tough decisions to change plan designs or change health payers and reaped the benefits in 2016, Konal said. â&#x20AC;&#x153;They have moved from a $500 deductible plan (to a $1,300-ormore deductible plan) and have changed (employeesâ&#x20AC;&#x2122; health purchasing) behaviorsâ&#x20AC;? to drive down costs, Konal said. For 2017, national employers project total health benefit costs per employee will rise by 4.1 percent on average. But if companies make no changes to plans, costs would rise by 6.3 percent. Costs include both employer and employee contributions for medical, dental and other health coverage for all covered employees and dependents. Those costs rose nationally 4 percent in 2016 and 3.8 percent in 2015, Mercer said. Mercerâ&#x20AC;&#x2122;s health benefits report surveyed 2,544 companies, including 82 in Michigan. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT

Brenna Lane, a partner at Detroit Denim Co., works on a pair of jeans. The business recently moved into its own facility after “graduating” from the maker space Ponyride. PHOTOS BY HAYDEN STINEBAUGH

Co-working, maker spaces offer businesses a place to incubate By Marti Benedetti mbenedetti@crain.com

Detroit Denim Co. founder Eric Yelsma gets nostalgic thinking about how Detroit-based Ponyride helped him launch and grow his custom-made blue jean business. In fact, the maker and co-working space with the funny name was so comfortable and affordable during Detroit Denim’s five years there, it was difficult to leave. But it moved out this year, into a historical industrial building in Detroit’s Rivertown. It has grown to eight employees and experienced 50 percent sales growth between this year and last. Detroit Denim makes from scratch blue jeans for men and women. Jeans are priced at $250. The shop also does denim repairs. The jeans maker is one of dozens of growing businesses that have “graduated” from maker and co-working spaces in Detroit and its suburbs. Space in these venues is easy to move into, provides a fledgling business with a degree of professionalism, is conducive to collaboration with other small businesses, often costs less than $200 a month, and provides access to business re-

Pockets cut from denim are ready to be sewn onto jeans at Detroit Denim. sources such as funders. Yelsma said the company’s location now is more suited for him and his partners to focus on the business. “We could not have been successful without Ponyride,” he said. “Maker

spaces are advantageous to small business.” Ponyride, at 1401 Vermont St., is 30,000 square feet of co-working, maker and dance space for 50 tenants, 14 of which make tangible things.

Amy Kaherl, Ponyride director of curation and programming and executive director of Detroit Soup, said Detroit Denim and The Empowerment Plan, which is still housed in Ponyride but is looking for a larger

space, are success stories, but so are many of the smaller makers housed in the center. A couple of those makers include Naturalicious, a producer of nontoxic hair products that are sold globally, and The Lip Bar, maker of highly pigmented, gluten-free, paraben-free lip color, which sells its products nationally in retail stores such as Target. Space there rents for 65 cents a square foot, which means a 300-square-foot space costs $195 monthly. What worries Kaherl is the tenants’ ability to find affordable office or industrial space near the city’s core. Veronika Scott, CEO and president of The Empowerment Plan, a nonprofit that employs homeless women to make sleeping-bag coats for the homeless, has not found rent in the city to be unreasonable. Scott has been looking for 15,000 to 20,000 square feet of space for the last nine months and is getting close to finding a new location. She prefers a spot near bus lines and day care to accommodate her employees’ needs. She said the space she is looking at SEE MAKERS, PAGE 12

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SPECIAL REPORT: THE MAKERS

MAKERS

J Daily Detroit, an online publication highlighting Detroit news and happenings that grew and opened its own office in Midtown. J M3D Experiences, a design company that left to grow into a larger studio office in Corktown. J Denovo Real Estate, a real estate development company that moved to its own space in New Center.

FROM PAGE 11

ranges from $10 to $12 a square foot, a price she is prepared to pay. Scott said her company occupies 3,500 square feet in Ponyride now and it has off-site space for warehousing and cutting. “We want to grow smart, and we’ve hit a point where we have to move out of Ponyride because we need more space,” she said. Amanda Lewan, co-founder and CEO of Bamboo Detroit, a co-working Amanda Lewan: and maker space Smaller tenants at 1442 Brush St., starting to grow. keeps statistics on who is coming and going in Bamboo. After three years in operation, she said, 30 percent of the members have left Bamboo. Of those, 15 percent left to move out of Detroit or took a full-time position with another company. The other 15 percent outgrew their Bamboo space and moved into a larger spot. Bamboo Detroit has a mix of 115 “startups and creatives,” and 40 percent to 45 percent are minorities. Women comprise 35 percent to 40

Fresh start

COURTESY BAMBOO DETROIT

Various startups and creatives develop their projects inside Bamboo Detroit, a 3-year-old co-working hub. percent of the tenants. She said business is so brisk the company recently announced it will open a second location in January in the Julian C. Madison Building in downtown Detroit. “Our smaller tenants are starting to grow,” Lewan said. “This new of-

fice will have dedicated desks and private offices.” Once the build-out of the new space is completed, it is expected to accommodate up to about 300 entrepreneurs. Like a parent watching a child

leave for college, Lewan has witnessed several small companies leaving their first home. Among those: J Original Stix, which needed maker space for its hockey-themed iPhone cases and moved to the Russell Industrial Complex.

Yelsma started Detroit Denim by himself in 2011 in a “300-square-foot postage stamp” in Ponyride. During the next four years, he moved four times in the building, getting up to 1,200 square feet. He hired his first employee, Brenna Lane, a college student who could sew. She is now a partner along with Steve Wisinski. “It was a good starting place,” Yelsma said, adding that it had a friendly social environment that was ideal for collaboration with other tenants. For example, Detroit Denim made a large cloth banner for tenant Beard Balm’s advertising campaign. But in 2015, Yelsma said, it became clear to him the company needed its own home. “In Ponyride, we were on the second floor, and it was hard to run a retail operation from there,” he said. He looked for lease property for a year and a half. “It was a discourag-

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SPECIAL REPORT: THE MAKERS Guide to local co-working and maker spaces Maker and co-working spaces are becoming increasingly popular in and around Detroit and its suburbs. Here are some of the offerings: An Office in Detroit: Co-working space, 2727 Second Ave., Suite 126, and 8679 Rosa Parks Blvd., Detroit, $40 a month. Bamboo Detroit: Maker and co-working space, 1442 Brush St., Detroit, $200 a month. Entrepreneurs Hub: Co-working space, 1400 Woodbridge St., Fourth Floor, Detroit, $200 a month. Detroit Kitchen Connect: Space for food entrepreneurs who are scaling and need assistance with licensing and going through certification processes, 2934 Russell St. Detroit, $10 to 18 an hour. Grand Circus: Co-working space along with classes for coding and community events, 1570 Woodward Ave., Detroit, $250 a month.

GRAND CIRCUS

Grand Circus’ community table provides a collaborative environment for staffers to meet, enjoy lunch and brainstorm their best ideas. month for co-working space.

Grand River WorkPlace: Co-working incubator and pop-up retail space that also provides entrepreneurial training and programs for small-business growth, 19120 Grand River Ave., Detroit, $300 per month for private space, $75 a

Green Garage: Co-working and maker space community supporting the development and growth of small business, 4444 Second Ave., Detroit, $65 to $200 a month for an individual membership. Mash Detroit: Retail, pop-up, meetings and events space and co-working options, 14711 Mack Ave., Suite B, Detroit, $2 per square foot for pop-ups and $100 an hour for private events. Ponyride: Maker and co-working space also offers workshops and lectures and shared resources for socially conscious entrepreneurs and artists, 1401 Vermont St., Detroit, 65 cents per square foot. TechShop Detroit: Membership-based workshop and prototyping studio providing access to tools, equipment, design software, fabrication/prototyping space and skill-based instruction, 800 Republic Drive, Allen Park, $150 a month. TechTown Detroit: Helps both tech and neighborhood businesses develop, launch and grow through support, workshops and events. Programs include Junction 440 co-working space, Retail Boot Camp and DTX Launch Detroit, 440 Burroughs St., Detroit, $150 to $200 monthly.

ing process. You hear about vacancies in 10 buildings, but they are already purchased by speculators who are sitting on them.” In spring 2015, he found the 1905 Dongan Building, which was used to manufacture military parts during World War II on behalf of the Dongan Electric Co. Its 4,300 square feet was the perfect size.

Suburban makers Maker and co-working space tends to be in the city center, but TechShop Detroit and a few others are exceptions. In fact, this shop in Allen Park is a maker’s dream. Will Brick, general manager of TechShop Detroit, cited two highly specialized businesses that have grown out of TechShop. Detroit-based Red Panda owner Curt Malouin makes guitar special-effect pedals that allow musicians to customize their sound. Guitarists from bands such as the Red Hot Chili Peppers and Wilco use the pedals. Singing Tree Rope Runner originated in TechShop Detroit and is the brainchild of tree climber Kevin Bingham of Detroit. The device al-

lows him to ascend trees and swing to nearby trees with greater ease and more quickly. Brick said Bingham is able to swing from tree to tree “like a spider monkey.” The tree climber is building the devices and selling them around the world. “And he’s still a member of our shop.” Malouin said he was a little different than other TechShop Detroit users. He operated his company out of his garage and spare bedroom before using TechShop. But TechShop Detroit gave him access to advanced manufacturing equipment to develop new products without investing in his own equipment. He used the shop to fine-tune his designs so he could manufacture them more efficiently. He is no longer a member of TechShop. “Now I outsource that work to local factories in the U.S. and Canada,” Malouin said. He has set up his business in 600 square feet of private workspace in the Green Garage. “It’s nice being here because it allows us to focus on our work, and it is centrally located if bands want to tour our space while they are performing in Detroit,” he said. CONTINUED ON PAGE 14

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SPECIAL REPORT: THE MAKERS FROM PAGE 13

Headquartered in California, TechShop ended up opening a shop in Michigan as a Ford Motor Co. initiative. The automaker wanted a fully stocked shop to encourage Ford employees to invent things that could become intellectual property for the company. The shop is now used by about 400 Ford employees, and 400 members of the public. “It’s a gym for people who want to make things,” Brick said.

Innovation powerhouse Ned Staebler, vice president for economic development at Wayne State University and president and CEO of its TechTown, said co-working and maker spaces are ideal for small business because they reduce operating costs and barriers to entry. “A small-business person can act like

a big business professional,” he said. Te c h Tow n ’s Junction

440

co-working space charges $150 to $200 a month. That includes 24-hour Ned Staebler: access to conferSpaces reduce ence rooms, cofcosts, enable entry. fee, Wi-Fi and desks. It encourages collaboration between businesses, a process Staebler calls “serendipitous collision.” “People sitting near each other tend to connect. You don’t get that working in your basement or being in a coffee shop.” He said research shows people are not wired to work alone. They work best in a collaborative environment. TechTown has 160 members on

the main floor of its five-story building. The other floors contain suites, laboratories and large spaces to create. Among TechTown’s businesses that keep growing is Social Coop Media, a digital media company that has grown from two to 17 employees during its year in Junction 440. It has been moved upstairs to an office of its own. Manulith/MakerOS, a 3-D printing enterprise, started in Junction 440, but today is operating out of Detroit and Brooklyn, N.Y. It still maintains space in TechTown. Patrick Thompson Design left TechTown, moved into The Auburn in Midtown and, more recently, spread out in the Grand Circus Park neighborhood. Are there any downsides to shared workspaces? “Sometimes it gets loud, and seeing people coming in for conferences can be distracting,” Staebler said.

HAYDEN STINEBAUGH

Eric Yelsma, founder of Detroit Denim, works with the hem on a pair of jeans. Detroit Denim makes from scratch blue jeans for men and women. Jeans are priced at $250.

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National broadcast of Detroit parade in sight, organizer says By Sherri Welch swelch@crain.com

The Parade Co. plans to pursue national broadcast of the Detroit Thanksgiving Day parade within the next couple of years.

America’s Thanksgiving Parade presented by Art Van currently is syndi-

cated for airing in a growing number of markets around the country, said Tony Michaels, president and CEO of the parade’s nonprofit organizer. A deal with one of the broadcast networks would increase that exposure. “I’m confident that we’re very close to reaching a level that a network would be very interested in airing it on a national basis,” he said. Michaels compared the parade with the Chevrolet Detroit Belle Isle Grand Prix, the Detroit Jazz Festival presented by Quicken Loans, the North

American International Auto Show

and the Ford Fireworks. “The parade is right in that group and draws as many, if not more, than anything we do in this city. ... We just view this as very important to put Detroit on that national stage,” he said. Even if a national network picked up the Detroit parade, it would continue to air locally on WDIV-Channel 4, Michaels said, given that the local station is the media partner for The Parade Co. The Detroit Lions play a nationally televised game every Thanksgiving afternoon. “How great would it be,” Michaels said, “to have Detroit on the national stage” in the morning as well? The Detroit parade will celebrate its 90th anniversary this year, not counting two years (1943 and 1944) it took off during World War II. Since the recession, The Parade Co. has made a concerted effort to improve the parade every year, adding bigger and more animated floats, costumed people on the floats, and more celebrities and entertainment, Michaels said. It’s been able to do that because of a 68 percent increase in sponsorship dollars since 2008, he said. Last year, Ray Harris, CEO of Fisher Theatre owner Nederlander Entertainment and a member of The Parade Co. board, was able to bring the actors from the hit Broadway show “Jersey Boys” to perform in the Detroit parade, Michaels said. Cast members of an undisclosed Broadway show that has been performed at the Fisher in Detroit and is expected to return will open this year’s parade. Comedian Keegan-Michael Key, a metro Detroit native, will serve as co-grand marshal with Judge Damon Keith, the Parade Co. announced last week. Last year’s grand marshal was actor Tim Allen, who grew up in Birmingham. Such efforts have helped The Parade Co. grow the number of mar-

THE ADVISOR

“We just view this as very important to put Detroit on that national stage.” Tony Michaels, The Parade Co.

kets that air the parade from about 135 six years ago to 170 last year, Michaels said. Five of the top 10 markets in the country — Dallas-Fort Worth, San Francisco-Oakland-San Jose, Atlanta, Houston and Washington, D.C. — have picked up the Detroit parade. And over the past month, Austin, Texas; San Antonio; and Columbus, Ohio, have also signed up. The two-hour Detroit parade will feature 62 or more units this year, including 26 floats, eight of them new this year. Sherri Welch: (313) 446-1694 Twitter: @sherriwelch

Sponsor-Contributed Content

is not the future. This is now. It’s a manufacturing revolution so significant experts have coined it Industry 4.0.

Tom Kelly

Executive Director Automation Alley kellyt@automationalley.com

We must prepare SMBs for Industry 4.0 Imagine a factory where robots and products communicate on the assembly line. Or one where workers are able to predict when a machine will fail. This

These smart factories already exist around the globe, and even right here in Southeast Michigan. But while large corporations have the resources and expertise to adopt these new technologies on their own, smaller companies will need assistance. And in order for our manufacturing industry to thrive, we must get small and medium-sized manufacturers to recognize the benefits of these new technologies. That’s where we come in. Starting this winter, Automation Alley is

launching a new committee structure, comprised of members and recognized thought leaders who will develop a strategy to help local companies adopt Industry 4.0 technologies. By joining an Industry 4.0 committee, you have the opportunity to influence our efforts, position your brand alongside other key players and shape the future of manufacturing. Interested? Call 248-457-3302 or email kellyt@automationalley.com.

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CRAIN'S LIST: LARGEST MICHIGAN MANUFACTURERS

Ranked by 2015 revenue

Top executive(s)

Employees Revenue Jan. 2016 Number of ($000,000) Revenue Michigan/ plants 2015/2014 % change Worldwide in Michigan Michigan plant locations

General Motors Co. 300 Renaissance Center, Detroit 48265 (313) 556-5000; www.gm.com

Mary Barra CEO and chairman

$152,400.0 $155,900.0

-2.2%

48,594 215,081

Ford Motor Co. 1 American Road, Dearborn 48126 (313) 322-3000; www.ford.com

Mark Fields president and CEO

149,558.0 144,077.0

3.8

NA 199,000

FCA US LLC 1000 Chrysler Drive, Auburn Hills 48326-2766 (248) 576-5741; www.fcanorthamerica.com

Sergio Marchionne chairman and CEO

76,469.1 B 83,057.0

-7.9

34,040 81,865

Detroit (5), Sterling Heights (2), Trenton Automotive (2), Warren (2), Dundee

The Dow Chemical Co. C 2030 Dow Center, Midland 48674 (989) 636-1000; www.dow.com

Andrew Liveris chairman and CEO

48,778.0 58,167.0

-16.1

5,974 49,500

Midland, Harbor Beach, Hillsdale, Hemlock, Auburn

Packaging and plastics; automotive and transportation; building and construction

Whirlpool Corp. 2000 N. M-63, Benton Harbor 49022 (269) 923-5000; whirlpool.com

Jeff Fettig chairman and CEO

20,891.0 19,872.0

5.1

NA 97,000

None

Household appliances

Johnson Controls - Automotive Experience D 49200 Halyard Drive, Plymouth 48170 (734) 254-5000; www.johnsoncontrols.com

Bruce McDonald, chairman and CEO, Automotive Experience/Adient; Alex Molinaroli, chairman and CEO Matthew Simoncini president and CEO

20,079.0 22,032.0

-8.9

NA 139,000

Detroit, Holland, Lansing, Warren, Auburn Hills

Automotive

18,211.4 17,727.3

2.7

3,891 136,000

Auburn Hills, Traverse City, Roscommon, Farwell, Rochester Hills, Detroit (2), Taylor, Southfield (HQ)

Ford, GM, BMW, VW/Audi/ Porsche, FCA

15,165.0 E 17,023.0

-10.9

1,451 173,000

None

Automotive

14,000.0 11,300.0

23.9

3,250 375,000

St. Joseph, Kentwood, Bridgeport, Buchanan

Automotive, industrial

13,525.0 14,600.0

-7.4

3,591 33,000

Battle Creek, Grand Rapids, Wyoming

Food products

13,280.0 F NA

4,500 138,000

Fenton, Fowlerville, Livonia, Marysville, Automotive Lapeer

11,184.2 G 9,281.8 H

20.5

2,103 215,000

Auburn Hills, Brimley, Dearborn, Rochester Hills, Troy

Automotive OEM

9,946.0 9,675.0

2.8

NA 27,000

Kalamazoo, Portage

Health care

9,900.0 8,000.0

23.8

4,052 151,775

Battle Creek

Automotive

9,500.0 10,800.0

-12.0

5,000 19,000

Ada

Consumer products, agribusiness, logistics supply chain

Company Address Rank Phone; website

6 7

Lear Corp. 21557 Telegraph Road, Southfield 48033 (248) 447-1500; www.lear.com

Delphi Automotive plc 5725 Delphi Drive, Troy 48098 (248) 813-2000; www.delphi.com

9 10 11 12 13 14 15

Mike Mansuetti Robert Bosch LLC 38000 Hills Tech Drive, Farmington Hills 48331 president (248) 876-1000; www.boschusa.com John Bryant Kellogg Co. CEO 1 Kellogg Square, Battle Creek 49016 (269) 961-2000; www.kelloggcompany.com Franz Kleiner ZF CEO 12001 Tech Center Drive, Livonia 48150 (734) 855-2600; www.zf.com Samir Salman Continental Automotive Systems U.S. Inc. CEO, NAFTA region 1 Continental Drive, Auburn Hills 48326 (248) 393-5300; www.conti-online.com Kevin Lobo Stryker Corp. chairman and CEO 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.com Kenichiro Ito Denso International America Inc. CEO, Denso North America, 24777 Denso Drive, Southfield 48033 chairman and CEO of Denso (248) 350-7500; www.densocorp-na.com International America Inc. Steve Van Andel Amway chairman and Doug DeVos 7575 Fulton St. E., Ada 49355-0001 president (616) 787-1000; www.amwayglobal.com BorgWarner Inc.

James Verrier president and CEO

8,023.2 8,305.1

-3.4

NA NA

Cadillac, Livonia, Marshall

Automotive tier-one supplier

Federal-Mogul Holdings Corp. 27300 W. 11 Mile Road, Southfield 48034 (248) 354-7700; www.federalmogul.com

Rainer Jueckstock, co-CEO, cochairman and CEO, powertrain; Daniel Ninivaggi, co-CEO, co-chairman and CEO, motorparts Keith Allman president and CEO

7,419.0 7,317.0

1.4

1,494 53,000

Greenville, Sparta

7,142.0 8,521.0

-16.2

NA NA

Ann Arbor, Adrian, Novi, Brownstown, Lapeer, Taylor

Automotive, commercial, aerospace, marine, rail and offroad vehicles; and industrial, agricultural and power generation equipment Home improvement, construction

Faurecia North America 2800 High Meadow Circle, Auburn Hills 48326 (248) 724-5100; na.faurecia.com

Mark Stidham president

6,400.0 6,200.0

3.2

4,610 103,000

Fraser (2), Lansing, Saline, Sterling Heights (2), Taylor

Automotive

International Automotive Components

Robert Miller president and CEO

5,900.0 5,900.0

0.0

2,810 32,000

Alma, Mendon, Port Huron, St. Clair, Warren

Automotive

Dow Corning Corp.

Mauro Gregorio CEO

5,650.0 6,220.0

-9.2

NA NA

Auburn, Bay City, Thomas Twp. (2), Midland (2)

Construction, personal care, automotive, electronics, health care and packaging industries

Guardian Industries Corp. 2300 Harmon Road, Auburn Hills 48326-1714 (248) 340-1800; www.guardian.com

Ron Vaupel president and CEO

5,600.0 I 5,600.0 I

0.0

NA 17,000

Albion, Carleton

Commercial and residential construction, automotive, electronics

Perrigo Co. plc

John Hendrickson CEO

5,350.3 4,171.6

28.3

3,900 13,000

Allegan, Holland

Pharmaceutical

Hamlin Road, Auburn Hills 48326 16 3850 (248) 754-9200; www.borgwarner.com

Masco Corp.

Van Born Road, Taylor 48180 18 21001 (313) 274-7400; www.masco.com

Telegraph Road, Southfield 48034 20 28333 (248) 455-7000; www.iacgroup.com W. Salzburg Road, Midland 48686 21 2200 (989) 496-4000; www.dowcorning.com

Kevin Clark CEO and president

Clients/industries served

Bay City, Detroit/Hamtramck, Flint Automotive assembly, Flint engine, Flint metal, Grand Rapids, Lansing Grand River, Lansing Delta Township, Milford, Orion, Pontiac, Romulus, Saginaw, Swartz Creek, Warren, Ypsilanti, Wixom Dearborn, Flat Rock, Wayne, Automotive Woodhaven, Romeo, Sterling Heights, Livonia, Ypsilanti

Eastern Ave., Allegan 49010 23 515 (269) 673-8451; www.perrigo.com

This list of manufacturing companies is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. Actual revenue figures may vary. NA = not available.

B Figure is based on Dec. 31, 2015, euro to dollars rate of 1.0858. C The Dow Chemical Co. is expected to merge with DuPont Co. in early 2017. D The new seating and interiors business is spinning off, will be named Adient (NYSE: ADNT) and will begin trading on Oct. 31. E Completed the sale of the wholly owned Thermal Systems business to MAHLE GmbH on June 30, 2015. F TRW Automotive Holdings Corp. merged into ZF Friedrichshafen in May 15, 2015. The 2015 revenue represents North American revenue of ZF TRW, a ZF Friedrichshafen division (May 2015 until December 2015), combined with the 2015 revenue of ZF North America, a ZF Friedrichshafen subsidiary.

G Figures represent NAFTA sales of Continental AG, based on a Dec. 31, 2015, euro to dollars rate of 1.0858. H Figures represent NAFTA sales of Continental AG, based on a Dec. 31, 2014, euro to dollars rate of 1.2101. I From Forbes. LIST RESEARCHED BY SONYA D. HILL

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

CRAIN'S LIST: LARGEST OEM PARTS SUPPLIERS

Ranked by 2015 automotive original-equipment parts sales Rank

Company Address Phone; website

Johnson Controls - Automotive Experience 49200 Halyard Drive, Plymouth 48170 (734) 254-5000; www.johnsoncontrols.com

Top local executive(s) B

Bruce McDonald, chairman and $23,589.0 $20,071.0 CEO, Automotive Experience/ Adient;Alex Molinaroli, chairman and CEO Matthew Simoncini 18,211.0 C 17,727.0 C president and CEO

Lear Corp. 21557 Telegraph Road, Southfield 48033 (248) 447-1500; www.lear.com

Magna International of America Inc. 750 Tower Drive, Troy 48098 (248) 631-1100; www.magna.com

Don Walker CEO

Delphi Automotive plc 5725 Delphi Drive, Troy 48098 (248) 813-2000; www.delphi.com

Kevin Clark CEO and president

ZF 12001 Tech Center Drive, Livonia 48150 (734) 855-2600; www.zf.com Denso International America Inc. 24777 Denso Drive, Southfield 48033 (248) 350-7500; www.densocorp-na.com

OEM sales OEM sales ($000,000) ($000,000) Percent 2015 2014 change

-14.9%

Products

Automotive seating systems and interiors

2.7

Seating and electrical

17,759.0

19,616.0 D

-9.5

Body, chassis, exterior, seating, powertrain, electronic, active driver assistance, vision, closure and roof systems

15,165.0 D

16,002.0

-5.2

Global supplier of electronics and technologies for automotive, commercial vehicle and other market segments

Franz Kleiner CEO

12,803.0

Automotive braking products, transmissions, suspension, electronicics

Kenichiro Ito CEO, Denso North America, chairman and CEO of Denso International America Inc. Mike Mansuetti president

9,000.0

7,169.0 D

25.5

Automotive air conditioning and engine cooling components and systems, including condensers, radiators, CRFMs (condenser, radiator and fan modules), heater cores, evaporators and HVAC units

8,965.0 D

8,406.0 D

6.7

Automotive brake components; diesel and gasoline fuel injection systems; linear motion and assembly technologies; range of automotive spare parts as well as diagnostic and repair shop strategies

Robert Bosch LLC 38000 Hills Tech Drive, Farmington Hills 48331 (248) 876-1000; www.boschusa.com

Continental Automotive Systems U.S. Inc. 1 Continental Drive, Auburn Hills 48326 (248) 393-5300; www.conti-online.com

Samir Salman CEO, NAFTA region

8,185.0 C

7,916.0 C

3.4

Tires, stability management systems, electronic chassis systems, brake systems

BorgWarner Inc. 3850 Hamlin Road, Auburn Hills 48326 (248) 754-9200; www.borgwarner.com

James Verrier president and CEO

8,023.0 C

8,305.1 C

-3.4

Engine and drivetrain systems and components

Faurecia North America 2800 High Meadow Circle, Auburn Hills 48326 (248) 724-5100; na.faurecia.com

Mark Stidham president

6,100.0

6,200.0

-1.6

Automotive seating, emissions control technologies, interior systems.

International Automotive Components 28333 Telegraph Road, Southfield 48034 (248) 455-7000; www.iacgroup.com

Robert Miller president and CEO

5,900.0

0.0

Instrument panels and consoles, door systems, headliner and overhead systems and flooring and acoustic systems

Mobis North America 23255 Commerce Drive, Farmington Hills 48335 (248) 426-5577; www.mobis.co.kr

Chung Myung-Chul president and Young Deuk Lim CEO

5,491.0 C

5,541.0 C

-0.9

Chassis, cockpit and front-end modules; ABS, ESC, MDPS, ASV parts, LED lamps, sensors, electronic control systems, airbags, hybrid powertrains, parts and power control units

Aisin World Corp. of America 15300 Centennial Drive, Northville 48168 (734) 453-5551; www.aisinworld.com

Scott Turpin president and CEO

4,974.0 C

4,722.0

5.3

Body, brake and chassis systems; electronics; drivetrain and engine components

Federal-Mogul Holdings Corp. 27300 W. 11 Mile Road, Southfield 48034 (248) 354-7700; www.federalmogul.com

Rainer Jueckstock, co-CEO, cochairman and CEO, powertrain; Daniel Ninivaggi, co-CEO, cochairman and CEO, motorparts Yutaka Inagaki president and CEO

4,450.0

4,400.0

1.1

Engine bearings; pistons; piston rings; sealing systems; ignition products; systems protection products; valvetrain products; braking, lighting and wiper products

3,963.0 D

3,800.0

4.3

Connection systems, electrical distribution systems, electronic components, instrumentation

3,903.0

3,696.0

5.6

Driveline and drivetrain components and systems

14 15

Yazaki North America Inc. 6801 Haggerty Road, Canton Township 48187 (734) 983-1000; www.yazaki-na.com

American Axle & Manufacturing Holdings Inc. One Dauch Drive, Detroit 48211 (313) 758-2000; www.aam.com

David Dauch chairman and CEO

Valeo Inc. 150 Stephenson Highway, Troy 48083 (248) 619-8300; www.valeo.com

Francoise Colpron president, Valeo North America

3,539.0 D

2,800.0

26.4

TI Automotive Ltd. E 1272 Doris Road, Auburn Hills 48326 (248) 494-5000; www.tiautomotive.com

Bill Kozyra chairman, president and CEO

3,400.0 D

3,300.0

3.0

Electrical, transmission, engine management and air management systems; hybrid and electric vehicle systems; climate control, powertrain thermal systems; compressors; front-end modules; driving assistance; interior controls and wiper systems; others Automotive fluid storage, carrying and delivery technology

Nexteer Automotive 1272 Doris Road, Auburn Hills 48326 (989) 757-5000; www.nexteer.com

Michael Richardson COO

3,360.5

Automotive systems

Cooper-Standard Holdings Inc. 39550 Orchard Hill Place Drive, Novi 48375 (248) 596-5900; www.cooperstandard.com

Jeffrey Edwards chairman and CEO

3,343.0 D

3,244.0 D

3.1

Sealing and trim, fuel and brake delivery, fluid transfer and anti-vibration systems

Visteon Corp. 1 Village Center Drive, Van Buren Township 48111 (734) 710-5000; www.visteon.com

Sachin Lawande CEO

3,245.0 C

7,509.0 C

-56.8

Autoliv North America 1320 Pacific Drive, Auburn Hills 48326 (248) 475-9000; www.autoliv.com

Dan Garceau president

3,210.0 C

3,142.0 C

2.2

Airbags, inflators, seatbelts, electronics, steering wheels

Mahle Industries Inc. 23030 Mahle Drive, Farmington Hills 48335 (248) 305-8200; www.us.mahle.com

Scott Ferriman president

2,829.0

2,664.0 C

6.2

Engine components, filter systems vehicle air conditioning and engine cooling

JTEKT Automotive Group Cos. 47771 Halyard Drive, Plymouth 48170 (734) 454-1500; www.jtekt-na.com

Koichi Yamanaka president and CEO

2,684.0 D

2,576.0 D

4.2

Bearings, steering systems, driveline

Dow Automotive/Related Businesses 1250 Harmon Road, Auburn Hills 48326 (248) 391-6300; www.dowautomotive.com

Steve Henderson president

2,660.0

2,800.0

-5.0

Composites, structural and elastic adhesives, acoustic-management systems, chassis applications

Climate controls, electronics, interiors

This list of automotive suppliers is an approximate compilation. For companies based in Detroit and divisions of U.S.-based companies in Detroit, figure is for worldwide OEM sales. For divisions of foreign-owned companies, figure is for North American OEM sales. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Actual revenue figures may vary. NA = not available.

B The new seating and interiors business is spinning off, will be named Adient (NYSE: ADNT) and will begin trading on Oct. 31. C From Automotive News. D Automotive News estimate. E Acquired by private equity firm Bain Capital LLC in June 2015. LIST RESEARCHED BY SONYA D. HILL

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

Special Advertising Section

Gestamp to invest $158.7M into Michigan operations By Dustin Walsh dwalsh@crain.com

Gestamp North America Inc. will invest $158.7 million into its Michigan operations as part of the auto supplier’s broader expansion plan. The subsidiary of Madrid, Spainbased Gestamp Automoción SL plans to invest $158 million to expand its plants in Chelsea and Mason and invest $700,000 at its North American headquarters in Troy. Its plans include a new chassis assembly line, paint line and press-hardening line in Chelsea and a new 150,000square-foot facility to house a new laser-cutting cell in Mason, near Lansing. The plants will gain 235 jobs, and the project in Troy will create 60 jobs. The Michigan Strategic Fund approved $1.575 million in performance-based grants toward the project, including $400,000 for the Troy expansion. The cities of Mason and Chelsea approved property tax abatements for the expansions. Troy will provide marketing and promotion to the Troy project, the Michigan Economic Development Corp. said in a news release.

Gestamp supplies parts for automotive doors and bumpers to Ford Motor Co., General Motors Co. and FCA US LLC. In August, Gestamp announced plans to open a research and development center in Auburn Hills, at 1600 Harmon Road near I-75, in 37,000 square feet of space. Gestamp is expanding globally, including a recent expansion at its plant in Chattanooga, Tenn., and in Europe. In 2020, the company expects North American sales will total $2.2 billion, up from $1.6 billion last year, according to Automotive News. Also last week, MSF approved Flex-N-Gate Detroit LLC as a qualified business in the Next Michigan Development Corp. in Detroit. The designation classifies Flex-N-Gate’s proposed plant as a Renaissance Zone, effective Jan. 1. Renaissance Zone designations allow for full relief from personal, real and municipal corporate income taxes for 10 years, with the exemptions being phased out in the seventh through 10th years. Urbana, Ill.-based Flex-N-Gate Corp. will invest $95 million and buy 30 acres of city land for $1.3 million to build a new plant that will create up to 750 jobs in Detroit.

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DEALS & DETAILS CONTRACTS

University of Michigan Comprehensive Cancer Center, Ann Arbor, contracted with Tempus, Chicago, a

health tech company focused on personalizing cancer care, to bring the gene sequencing technique MI-ONCOSEQ to patients and health care providers. Websites: mcancer.org, tempus.com. Health Alliance Plan, Detroit, has a contract with ProgenyHealth, Plymouth Meeting, Pa., a neonatal intensive care unit case management firm, to allow providers access to Progeny-

Health’s research, best practices, knowledge and digital tools. Websites: progenyhealth.com, hap.org. Reach | influence, Detroit, a retail digital marketing firm, announced a relationship with Unified Grocers, Commerce, Calif., a wholesale grocery distributor, to provide Unified retail customers with a digital coupon program. Websites: reach influence.com, unifiedgrocers.com.

EXPANSIONS

Faurecia North America Inc., Auburn Hills, an automotive supplier,

ADVERTISEMENT SECTION

unveiled its 400,000-square-foot manufacturing plant in Columbus, Ohio. It will produce a high-tech emissions control product for the commercial vehicle industry. Website: faurecia.com.

NEW PRODUCTS

Meritor Inc., Troy, announced the

Opti-Lite brake drum, offering cost-conscious consumers a new lightweight drum option. Website: meritor.com. SISU Mouthguard, manufactured by Akervall Technologies Inc., Saline,

NOV. 1

Functional Framework for Business. 8:30-10

a.m. Automation Alley. Learn to create a functional framework to excel and beat the competition. Speaker: Pavan Muzumdar, founder and managing director of PCS Insight LLC. Automation Alley, Troy. $20 members; $40 nonmembers; $30 walk-in members; $50 walk-in nonmembers. Email: events@automationalley.com; phone: (800) 427-5100.

WEDNESDAY NOV. 2

Darlene Celusnak Benefit Consultant Benefit Review Services Inc Sterling Heights based Benefit Review Services Inc. announced that Darlene Celusnak has joined the company as a benefit consultant. Celusnak brings experience within the managed healthcare insurance industry. Celusnak spent the last fifteen years in Sales at Aetna, Inc. along with ten years’ experience at Selectcare where she served in a management role leading successful customer focused service teams. BRSi is a benefit consulting firm offering employers a full suite of products and services

TECHNOLOGY Sarah Doppelberger

Senior Alliance Manager Rightpoint Sarah Doppelberger has joined Rightpoint, a leading national digital agency. Based out of its Detroit office, Sarah will drive the agency’s strategic partnership effort throughout the eastern half of the U.S. Sarah comes to Rightpoint with extensive experience overseeing national partner relationships including partner-to-partner selling, incentive programs, and extensive work with Microsoft, a significant Rightpoint alliance partner.

PEOPLE: SPOTLIGHT

Custom BioGenic Systems, Bruce Township, a maker of patented liquid nitrogen freezers and inventory systems, announced VersAlert, a remote monitoring system of laboratory freezers and other sensitive equipment. Website: custombiogenics.com.

Diversified promotes Burke to president, CEO

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

CALENDAR TUESDAY

INSURANCE

announced the NextGen mouthguard, meant to offer more protection and comfort. Website: sisuguard.com.

Leading to Win in a Complex World. 4-5 p.m. Center for Positive Organizations. David Perkins, commanding general, U.S. Army Training and Doctrine Command, will discuss his philosophy on leadership and how the Army, and any organization, can grow leaders who thrive in a complex world. Ross School of Business, University of Michigan, Ann Arbor. Free. Contact: positiveorgs. bus.umich.edu/positive-links-speaker-series. Networking Reception with Mayor Mike Duggan. 5:30 p.m. Detroit Regional Chamber. Duggan will share brief remarks and introduce his key staff. Ford Field, Detroit. $25 members. Contact: Marianne Alabastro, phone: (313) 596-0479; email: malabast@detroitchamber.com.

FRIDAY NOV. 4

Oakland University Women’s Leadership Institute. 8 a.m.-5 p.m. Conference will feature lead-

ers from business, higher education, nonprofits and government who will speak on subjects related to the conference’s title: “Asking for More: Positive Strategies for Change.” Featured speaker is Sara Laschever, author, editor and cultural critic. Detroit Economic Club President and CEO Beth Chappell, Plante Moran audit partner Sue Novak, Beaumont Health Senior Vice President Mary Zatina and BW Limited President and CEO Barbara Whittaker will tell their stories of negotiation in a panel discussion moderated by Crain’s Editor Jennette Smith. The conference will also feature breakout seminars called “Matilda Talks,” a nod to university founder Matilda Dodge Wilson. Oakland University, Rochester. $100. Website: wwwp.oakland.edu/diversity/ouwli.

UPCOMING EVENTS

APACC Women’s Leadership Conference. 11 a.m.-3:30 p.m. Nov. 9. Asian Pacific American

Chamber of Commerce. Topic: “Leading With Purpose.” Greektown Casino-Hotel, Detroit. $35 members; $45 nonmembers; $10 students. Contact: Van Nguyen, email: van@apacc.net. 5th Annual Michigan CEO Summit. 8 a.m.-2 p.m.

Nov. 10. Business Leaders for Michigan. Discus-

sion on how industries are being disrupted here and across the globe. Speakers include Patrick Doyle, president and CEO of Domino’s, and William Taylor, co-founder and founding editor of Fast Company. Westin Book Cadillac Detroit. $125. Contact: businessleadersformichigan. com/event/2016-michigan-ceo-summit. Ask Me Anything with Jason Mendelson. 3-5 p.m. Nov. 10. Ann Arbor Spark. Mendelson is co-founder of Foundry Group, an early-stage venture capi-

tal firm in Boulder, Colo. Previously, he was a managing director at Mobius Venture Capital, an attorney at Cooley LLP and a software engineer at Accenture. He has co-written the book Venture Deals, Be Smarter Than Your Lawyer and Venture Capitalist and is an adjunct professor at the University of Colorado Law School. Ann Arbor Spark. Free. Email:: phillip.coleman@annarborusa.org. November Economic Development Forum. 8-9:30 a.m. Nov. 16. Troy Chamber of Commerce. Hear from local industry experts as they recap the year and discuss opportunities and challenges they will face in the future. Speakers: Lindsey Williams, vice president of government affairs, Delphi Corp.; Thomas Shafer, president and COO, Talmer Bank & Trust; Chuck Ruiz, executive vice president, Basso Design Group; Stephanie Bergeron, president, Walsh College. Rehmann, Troy. Free for members; $10 nonmembers. $5 extra for same-day registration. Website: troychamber.com. The National Conversation on Board Diversity. 7:30-9:30 a.m. Nov. 17. Inforum. On the same day in cities across the nation and throughout the world, business leaders will discuss one strategic question: “How can we harness investor influence, legislation, targeted publicity and other means to accelerate progress for women on boards?” Speaker Nancy Gioia, formerly Ford Motor Co. director of global connectivity, electrical and user experience, serves on corporate boards at Exelon Corp., where she is on the finance and risk committee and the generation committee, and Brady Corp., where she is on the compensation and management development committee and chairs the technology committee. Michigan First Credit Union, Lathrup Village. $35 Inforum members; $45 nonmembers. Website: inforummichigan.org.

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

Southfield-based Diversified Restaurant Holdings Inc. named CFO and Treasurer David Burke as president and CEO, consistent with a succession plan announced in May. Burke, 44, who had held his previous David Burke roles since 2010, succeeds T. Michael Ansley, 45, who will continue as executive chairman of the board of Diversified, the largest franchisee of Buffalo Wild Wings restaurants. Ansley said in May that the change would free him to focus on the broader, longer-term strategic plan for DRH and alternatives for its Bagger Dave’s Burger Tavern business. Succeeding Burke as CFO and treasurer is Phyllis Knight, 53. Most recently, she was executive vice president and CFO of Minnetonka, Minn.-based tank trailer manufacturer Polar Corp.

Proppe named Plante Moran managing partner Jim Proppe was announced as the new managing partner of Southfield-based accounting and consulting firm Plante Moran PLLC. He was elected to a four-year term by the 270 partners and will replace Gordon Krater July 1. Krater, 58, will remain Jim Proppe as a partner. He will focus on Plante Moran’s mergers and acquisitions business and diversity issues from the downtown Detroit office and will remain vice chairman of Praxity, an international association of accounting firms to which Plante Moran belongs. Proppe, 54, has been at Plante Moran for 32 years. He has been a partner for 21 years and most recently oversaw industry-focused practice areas.

Rehmann names region managing principal Troy-based accounting firm

Rehmann LLC announced that Ryan Krause will become its man-

aging principal for Southeast Michigan. He will replace Steve Maltzman following the latter’s retirement at the end of the year. Krause will lead Rehmann operations in Ann Arbor, Detroit, Farmington Hills, Troy and Toledo. He joined the firm in 1998 and most recently served as a principal in the region, leading the assurance department.

October 31, 2016

ADIENT

Markets Freed from its industrial conglomerate parent in a spinoff, Adient wants to use leaner operations and tax breaks to assert its primacy in seating for a new era of automaking. It retains 34 percent of the global seating market. But competitors such as French supplier Faurecia, Southfield-based Lear Corp. and Canada’s Magna International Inc. have moved aggressively for a piece of that amid the uncertainty that has hung over JCI’s automotive businesses since CEO Alex Molinaroli decided to bail out of the cyclical automotive business and concentrate on JCI’s building controls systems and batteries. “We made up half the revenue and a third of the profits of that company,” said Byron Foster, Adient executive vice president, speaking of automotive’s share of JCI, where he has worked 19 years. As Molinaroli took over in late 2013, “he made it pretty clear he had a different vision for JCI. We’ve been in front of customers the whole time through that transition as to what they should expect.” Those automaker customers should expect a new company focused on seats and not forced to compete for the resources of the big industrial parent company. Under JCI, capital investment was constrained during the previous couple of years, averaging $3 billion to $3.5 billion per year. Now the shackles are off, Foster said. “We booked $5 billion in sales the last fiscal year. We’re projecting we’ll have another strong year in fiscal 2017. “We’ll be focused on growth,” Foster said.

Why the change? Adient was created as a result of a

Page 21

Health Care summit focus: ‘Consumerism’

FROM PAGE 1

area since auto supplier BorgWarner Inc. moved to Auburn Hills from Chicago in 2004. It’s currently unknown whether Adient’s move will be supported by state grants, local tax incentives or property abatements from whichever community it picks. Smaller suppliers have moved headquarters to the area in recent years, including Superior Industries International Inc.’s move to Southfield from Van Nuys, Calif. in 2015. Mike Wall, director of automotive analysis at Southfield-based IHS Inc., said that with the separation of Adient from JCI’s non-automotive business, it no longer makes sense to be based in Milwaukee. “While the company has always had a very strong presence on the east side of the state, this would effectively unite higher-level corporate leadership with the operational side of the business,” Wall said. “To be sure, this is a global industry, and as always, efforts will be made to ensure global alignment across regions and customers, yet aligning the operational headquarters to be closer to both operational activities and many of its customers would seem to be a natural positive.”

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6 CRAIN’S DETROIT BUSINESS

ADIENT

Adient is the new name for the seating business of Milwaukee-based Johnson Controls Inc., and it plans to move its operational headquarters from Wisconsin to a new location in Southeast Michigan.

“We think the interior space is ripe for redefinition.” Byron Foster, Adient EVP

convoluted series of events that transformed JCI. When Molinaroli became JCI’s CEO, he moved to separate the company from its major automotive businesses, including interiors and seats. JCI’s automotive arm had grown in diversity, ranging from seat structures to headliners, instrument clusters, door panels and consoles. JCI first spun off the interiors business into a joint venture, Yanfeng Automotive Interiors, in 2014, with JCI retaining a 30 percent interest. Then came JCI’s merger this year with global fire alarm and security company Tyco International, during which JCI’s headquarters moved to Cork, Ireland, from Milwaukee. That move became part of a political firestorm over American companies moving abroad to get lower tax rates. Some competitors have charged that Adient’s tax break from domiciling in Ireland gives it an unfair pricing advantage. But Foster said: “I wouldn’t say it’s a price play. It is a cash flow benefit. In our business we have to be competitive on all fronts,” and take advantage of its status as a “truly global company.” The tax advantage will help the company to pay down its debt and invest more, he said.

The autonomous play Like its competitors, Adient has big plans to become a major player in the burgeoning autonomous vehicle seating arena. “As we think about the future of interiors, and new environments such as autonomous come on line, we think the interior space is ripe for redefinition,” Foster said. That means working closely with its new partner, Yanfeng Automotive Interiors. Yanfeng, of Shanghai, makes door panels, instrument panels and consoles. Adient inherits JCI’s 30 percent stake in Yanfeng. The two companies will display separate concept vehicles outlining their visions of an autonomous vehicle future in January at the North

The 2016 Crain's Health Care Leadership Summit will focus on how the sector is changing as the industry focuses more on consumers. The “consumerism” of health care will be discussed in three parts: for employers, doctors and health systems. The keynote speaker will be Ben Umansky, managing director of the Health Care Advisory Board, who will speak on the industry's big-picture changes. Also on tap are breakout sessions focused on providers, employers and physicians; an innovation challenge in which entrepreneurs will

American International Auto Show at Cobo Center.

JOB FRONT

“We’re like first cousins,” Foster said of Yanfeng. “I think that’s going to create a pretty unique set of opportunities for both companies.”

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ARCHITECT

Birth pains Adient’s separation from JCI was not painless. The new company was saddled with $3.5 billion in debt to fund a $3 billion cash payout to JCI. McDonald has said the new company has a debt load of 1.9 times earnings before interest, tax, depreciation and amortization. He expects to whittle that ratio to 1-to-1 within three years. Competitors see that leverage as an opportunity to reach for Adient business. Matthew Simoncini, president and CEO of Lear, one of Adient’s main rivals, has been critical of the new company. He has said Lear expects that the “irrational, unsustainable price quotes coming out of” Adient will have no impact on Lear. Speaking in a recent interview, Simoncini said: “Whenever there is uncertainty, that’s usually bad for a supplier. When a competitor’s future is uncertain, or highly leveraged, that is usually a benefit to a stronger company. I can’t wait until Adient comes out. I want to compete with them head to head.” With projected consolidated revenue of $17 billion in this fiscal year, Adient would be the eighth-largest manufacturer in Michigan, by revenue, behind Lear, according to Crain’s research. Adient will operate 230 locations in 33 countries with about 75,000 employees. Adient has said it will deliver 25 million seating systems used on 330 vehicle nameplates around the world. The new company is counting on its leading market position in China, where it had $7 billion in unconsolidated revenue. Adient is counting on its non-North American revenue — 70 percent of the total — to help it weather a possible North American downturn. The company is particularly dominant in China. Though “Adient” is a new name, don’t expect an avalanche of ads to promote it. Said Foster: “You’ll see a little bit more publicity advertising around the Adient brand as we launch. The industry knows us. The industry has caught on to our story very quickly.”

pitch ideas on how employers can engage millennials in the health care discussion; and a political analysis panel featuring Jared Bernstein, former economic adviser to President Barack Obama, on the implications from the election on Detroit-area health care companies. The event will also honor Crain's 2016 Health Care Heroes honorees. The summit runs 7:30 a.m.-1 p.m. Nov. 17 at the Troy Marriott. Tickets are available at crainsdetroit.com/events and are $125 for individual tickets or $1,300 for a reserved table of 10 if purchased by Nov. 8.

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UBER FROM PAGE 3

International Airport recently signed

its first agreements with the San Francisco-based companies and said the one-year deals will be evaluated once data are available to show how they worked. In Michigan, action on legislation that helped to stall contract negotiations with Uber at Detroit’s airport has resumed in the Senate after idling for more than a year. It’s possible the Legislature could vote on the bills after the Nov. 8 election and before the two-year term ends in December. The latest incarnation has airports across the state lobbying for an exemption to rules they say would prevent a local government from enforcing its own ordinances on not just ride-hailing companies, but also on taxi carriers and limo services. A provision that would ban local governments from imposing a tax, fee or license or imposing regulations appears in revised bill language that a Senate committee chairman said was presented less than two hours before his panel met this month to consider the bills. Airport executives consider the language too broad, arguing it wouldn’t distinguish between municipalities that regulate taxi stands and local airport authorities that are subject to federal aviation rules. They believe a provision that says local governments “may” enter into an agreement with Uber or Lyft, taxis or limos, would not require the transportation companies

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

to join an airport at the bargaining table and, in essence, give them the ability to operate as they please. That raises a host of security concerns, from loitering vehicles to traffic congestion at curbsides, said Brian Sadek, vice president of legal and authority affairs for the Wayne County Airport Authority, the governing body for Metro Airport and Willow Run Airport in Ypsilanti Township. It’s also about money: Detroit Metro routes taxis, limos and other for-hire vehicles through its ground transportation centers at McNamara and North terminals, where the airport charges a $10 access fee each time a vehicle arrives to meet a passenger. Ground transportation is a roughly $5 million operation at the airport each year, and Sadek said the airport could lose revenue if it no longer can execute the rule for transportation companies. “We’re talking millions of dollars,” he said. “Any significant decrease in revenue runs the risk of making us less competitive to airlines ... in a very competitive industry.” Atlanta-based Delta Air Lines, Metro’s largest carrier, also opposes the new bill language. In a statement, the airline said it “fully supports the ability of Uber and Lyft to operate” at Metro and other airports, but not at the expense of an airport being able to enforce its own ground transportation rules or collect local revenue. Delta and other airlines are required to cover the operating budget gap that remains after the airport collects all revenue from ground trans-

portation, parking, concessions and other non-airline sources, so more ground transportation revenue collected would mean less money that the airlines have to pay. Both Delta and Metro Airport say any decrease in local revenue, such as from ground transportation, could make the airport less competitive when it comes to such things as flight schedules, connections and fares. Supporters of the bills, including Uber and Lyft, say airports’ concerns are overblown. The revised legislation doesn’t prevent airports from making deals with ride-hailing companies, Funsho Owolabi, Lyft’s public policy manager who testified before the Senate committee, said in an interview. Lyft says the company benefits from deals with airports because it can negotiate staging areas or signs marking pickup points. Sen. Tory Rocca, R-Sterling Heights, said members of the Senate’s regulatory reform committee have had concerns about the legislation. The panel could amend the legislation when the Senate reconvenes after the election. Lyft has operating agreements with more than 70 U.S. airports, Owolabi said; it says the only Michigan airports it serves are in Lansing and Grand Rapids. The goal of Michigan’s legislation is to avoid a patchwork regulatory system, he said. “As a company, we’re always willing to work with our regulators in coming up with sensible language” that works for all sides, Owolabi said. “At the end of the day, we’ll all have to negotiate still.”

Level playing field? The bill package would require transportation network companies to get state permits to operate in Michigan and spells out requirements for background checks, vehicle inspections and insurance. A version that passed the House in June 2015 would require a driver to display a state-approved decal or sign on his or her vehicle while driving on behalf of the company. “I’m trying to bring Michigan into the world of Uber, and thus far we’ve been opposed,” said Rep. Tim Kelly, R-Saginaw Township, who sponsored the lead bill in the package. “I keep telling people: Whether or not you want to pass this law or not, it’s not going to stop Uber.” Ride-hailing companies generally employ drivers who use their personal vehicles to transport passengers, which has generated criticism about insurance protection and security. Uber and Lyft also won’t operate in markets with fingerprinting requirements; both companies recently pulled out of Austin, Texas, when voters supported a city ordinance that requires fingerprinting as part of drivers’ background checks. Michigan airport administrators argue that the proposed state legislation doesn’t create a level playing field for all transportation operators, regardless of whether they’re ride-hailing companies or other for-hire providers. Jonathon Vrabel, acting president and CEO of the Capital Region Airport Authority that oversees Lansing’s airport, testified that the legislation could

cause airports to run afoul of requirements for airports that receive federal grants, including that airports be self-sustaining and not charge discriminatory fees to vendors. Vrabel and other airport administrators say that if they aren’t allowed to enforce their own ground transportation ordinances — particularly the ability to collect fees from taxis, limos and transportation network companies — then they also would have to eliminate fees for such services as rental car agencies and parking. At Detroit Metro, Sadek contends any company that moves passengers should use its ground transportation centers and pay an access fee. That is fair to all operators, reduces congestion and keeps drivers from loitering curbside, he said. He added that airport police have reported seeing passengers get into the backseat of a vehicle with a smartphone clipped to the dashboard, which could suggest it’s a ride-hailing service, but it’s difficult to catch drivers who don’t follow the rules. “They say this (is) for security purposes,” said Kelly, who questions how airports would be able to determine who is driving for Uber and who is driving a passenger vehicle to pick up a relative or friend. “I think that they use this cover of security to obfuscate the mere fact that it’s dollars that they want more than anything.” Kelly believes much of the consternation about this issue is held by other industry players — taxi and limo carriers, public transportation — worried about new competition. “The airports have said that the language here would impact their operations negatively,” Sagar Shah, a general manager for Uber in Michigan, testified this month before the Senate committee. “The language here is critical to ensuring that ride sharing actually remains an option at Michigan airports across the state.”

Deals being struck Delta Air Lines, in a statement, said recent agreements at other airports it uses as hubs show “it is possible to create a level playing field so all forms of ground transportation can compete

while ensuring safe, efficient and fiscally smart airport operations.” One example is Minneapolis-St. Paul International Airport, a connecting airport for many Michigan travelers flying out of regional airports such as Lansing, Grand Rapids and Flint. The airport’s board two weeks ago unanimously approved new contracts for ride-sharing companies, along with agreements for taxi operators and other commercial transport. Contracts with transportation network companies at Minneapolis’ airport include $500 annual license fees and a $3 per-trip fee to be charged for each pickup or dropoff. Uber and Lyft won’t have to fingerprint prospective drivers when conducting background checks, airport spokesman Patrick Hogan said. “It’s really our responsibility to ensure the best possible customer service to the people who want to use (the airport) and, to me, that means having this choice,” said Steve Cramer, a member of the Metropolitan Airports Commission that manages the Minneapolis airport, before voting Oct. 17. “I happen to be a cab guy. My daughters are Uber and Lyft people.” Deals are being struck close to home, as well. In Lansing, airport executives signed their first deals with Uber and Lyft within the past two months, said Nicole Noll-Williams, marketing and passenger development director. Uber is charged a flat rate of $800 per month, while Lyft pays $1.50 for every passenger picked up or dropped off. In contrast, taxi companies pay a flat monthly rate of $525. Noll-Williams said she believes the higher rate for Uber anticipates that the company will generate more traffic than taxis. When the one-year deals expire, airport administrators will determine how much activity the companies generated and, for instance, whether a flat-rate or per-trip fee makes more sense. “For us, it was necessary,” Noll-Williams said. “We just need to make sure we’re adapting and providing those types of services at the airport. We feel this is a positive change.” Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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KARMANOS FROM PAGE 3

space that is more accessible by people that live around there. Our target market for employees, with better school systems surrounding it. It just was a natural place if you want to build a high-tech center and you want to be competitive to get somebody who would have to drive 20 minutes on a winter day to get to work — and we have parking where we are at — versus having to drive an hour and a half to go to work with no parking. Mark Hillman: In the last three or four years, the whole region has absolutely lit up on all this self-driving car stuff. The auto industry is absorbing in the thousands software engineers, cars are having millions and millions of lines of code in them, so there is this mass transformation. For us, it was a huge strategic decision saying, “How do you compete?” Well, where do the people live? Ten minutes from anywhere, Pontiac has this mass base of all this top talent, and that’s how you compete. We can draw the best of the best into this nice little town. It’s convenient. How good does it get? From a work/commute standpoint, it’s great. Crain’s: What’s the overall investment? Hillman: It’s a lot. There are eight companies in our total portfolio. We are just moving three companies. But these three businesses in particular are in industry segments that are huge, so we have collectively put many millions of dollars already to date in our forward plans, let alone the Pontiac move, and that investment requirement. But the industry segments — take a look at the mortgage business, which will (have) $1.8 trillion in residential mortgages written, so (there’s) the ability to have an online platform where people can go and do this like they do everything else. Create that software platform that will be available to thousands and thousands of lenders. That business is completely changing, so that will become an enormous business, so we are investing in that appropriately. Same with our car sales business and real estate sales business. Us and some of our investors in our venture capital fund are putting a lot of money into it. Crain's: In the last five years, everyone has talked about Dan Gilbert and his real estate investments downtown. But you were really kind of first. Do you ever feel left out of the discussion? Karmanos: Not at all. Not at all. I often said to people, “Listen, here are the people that called me when I was thinking about coming downtown: Jack Smith, the CEO at that time of General Motors, who had moved downtown; Eugene Miller of Comerica Bank, who just built a new building downtown. Mike Ilitch didn’t call me, but they were already downtown; John Rakolta of Walbridge was downtown. We sort of piled in there in a significant fashion, moved thousands of people down there. But even as we were doing that, if you remember the Free Press was wondering, they actually thought maybe we had dug the basement as a ruse — I remember

John Rakolta telling the one reporter, who was editor of the business section, that you don’t usually spend $150 million trying to fool a newspaper, OK? So it was just an interesting time. We got a lot of publicity, I think, because we moved so many people. It was the right location for us. We had one of those things where if you put a pin in a map where everybody lived, it was like a rainbow around the outside of downtown, and right in the middle, that’s where our building was. We were able to buy that land for $1. It just made good economic sense. We had people working all over. It was fair to everybody, and it worked out well from that point of view. Danny moved down there, and he loved it. He did something extremely unusual, which I think is a real catalyst to whatever else is going on. He bought every bloody building down there, said we were having a (building) sale, which was true. Crain’s: Anything you can say about what’s going on at the cancer institute since your son left? (Karmanos' son, Nick Karmanos, last month left the Barbara Ann Karmanos Cancer Institute, where he was in charge of strategic development, gift solicitation and managed corporate relations.) Karmanos: The development guy left, the fundraiser. People still give money to the cancer institute. Crain's: What's your take on the Michigan Court of Appeals decision earlier this month? (The court ruled in favor of Karmanos Jr., letting him keep a $16.5 million arbitration award from a bitter three-year court battle between him and Compuware.) Karmanos: It’s been the largest award in Michigan history, unemployment claim. That’s how bad the board of Compuware screwed up. You don’t mess with the founder and then try to cheat him. They knew who I was. I think maybe they thought that since I retired I was going to go home and sulk. I hadn’t retired at that point in time. What they did was really bad, and they paid for it. Crain’s: What’s new on the hockey front? Karmanos: I’m pissed off. Our team (the Carolina Hurricanes) started six games on the road and we only won one. We’re going to be a very good team. The Red Wings are playing really well, surprisingly. Crain’s: What other companies are in your crosshairs for Mad Dog? Hillman: There are eight companies in our current portfolio; half of them are ones we started from scratch, organically, and half of them are companies we invested in that others have started. We also started a venture capital fund and we’ll invest in other things, in addition, so we get people coming in all the time. Crain’s: It’s election season. Care to chime in? You were at the Republican fundraiser downtown a few weeks ago. Karmanos: I've been to Democratic fundraisers, too. We have a choice between crude and corrupt. Take your pick. Crain’s: Any advice for the mayor of Detroit? Karmanos: No. (Mike) Duggan is a great guy. What does he need advice on?

HILTON FROM PAGE 3

location. ... We’re looking to take it to the next level.” Located at Gratiot Avenue and Brush Street, in Detroit’s central business district near Ford Field, Comerica Park and Greektown Casino-Hotel, the Hilton Garden Inn went up for auction in July. Citigroup, the lender on a $20 million loan to DHG Associates, an affiliate of The Ferchill Group, took possession of the property after it transferred to special servicer CW Capital in 2010. The Ferchill Group, which built the 10-story hotel in 2004 for $28 million, missed a single payment on the mortgage after finding out a manager had been stealing money, John Ferchill said. Ferchill’s company, which owns the Westin Book Cadillac in Detroit, requested a 90-day forbearance on the loan to stabilize its finances and put things in order again at the hotel, he said. But its understanding was that option couldn’t be discussed unless the property was in default. “As soon as we went into default, they took the property,” Ferchill said. “It’s hard to believe with all the stuff we had done, we were naive,” but The Ferchill Group had never had a commercial mortgage-backed securities mortgage before, he said. “Out of 91 projects, I lost two. That was one of them. ... That’s why we never do mezzanine lenders now. We learned that the hard way.” GFI, which also owns Providence at Harbour Club apartments in Bel-

“We’re very excited about everything happening there.” Allen Gross, GFI Capital Resources Group Inc.

leville, is no stranger to the hotel business. Its Ace Hotel New York and Ace Hotel Palm Springs — which is in a former Howard Johnson hotel — have both been recognized among the top 10 trendiest hotels in the world by Travel & Leisure. Its portfolio also includes The Beekman and The Nomad, high-end hotels in Manhattan and New York City, respectively; and the boutique-like hotels Bond Street in downtown Brooklyn and Old No. 77 Hotel & Chandlery, a joint acquisition with Provenance Hotels, near New Orleans’ art warehouse district. GFI Hospitality LLC, which has also operated Marriott and Starwood properties in the past, serves as asset manager for the hotels. Each hotel creates an experience for guests, Gross said. For example, no two rooms at the Ace Hotel in New York are alike. With the Hilton Garden Inn, “We don’t just want to get by with brand standards. We want to make it a great experience.” A 114-space parking lot that is leased until March 2019 to an undisclosed parking lot operator came with the hotel. GFI is still getting to know its new Detroit hotel, he said. “It’s like you just got married and (you’ve) got to get used to seeing her without her

makeup.” A $1.4 million renovation of the lobby, American Grill and Chrome Grill restaurants, its 3,500 square feet of meeting space and certain guest rooms was completed in 2012. GFI plans to build on that with a renovation of the 198 guest rooms, but it’s too early to know exactly what that will entail and what the needed investment will be, Gross said. It has kept Fairfax, Va.-based Crescent Hotels and Resorts LLC on to oversee the day-to-day operations of the hotel, which has maintained an average daily occupancy of about 75 percent, he said. “Our job is to see with our knowledge what we can add to the equation ... to get the guest rooms a little more sharp (and) get the market to understand who we are. We run a class operation.” GFI also plans to open a new restaurant at the hotel, preferably one featuring a local restaurateur offering first-class food and drink, Gross said. That’s something it’s done at its hotels in New York and Los Angeles, which include Michelin-starred restaurants today. Still, GFI understands who its audience is with the Detroit hotel, he said. “We’re very excited about everything happening there,” with the new Red Wings arena, Comerica Park nearby and possibly basketball and soccer coming into the city. “I’m also very excited about Paradise Valley … if you have a restaurant row ... (that) will get people to stay in the city.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

Survey: Support for Trump cools as election nears By Dustin Walsh dwalsh@crain.com

Support for Republican presidential candidate Donald Trump from metro Detroit business owners and managers is cooling ahead of the Nov. 8 election, according to an October Crain’s survey. Despite Republicans outnumbering Democrats in the survey by a 44 percent to 31 percent margin, more plan to vote for Hillary Clinton than Trump, according to the survey conducted by Lansing-based polling firm Epic-MRA. The survey of 300 business owners and managers, commissioned by Crain’s Detroit Business, reveals that 39 percent plan to vote for Clinton, while 35 percent plan to vote for Trump. Those figures reflect the impact of two of the three presidential debates and evolving scandals involving both candidates. In a similar survey in May, 41 percent planned to vote for Trump, while only 36 percent planned to vote for Clinton. The softening of those identifying as Republican is further demonstrated in the favorability to President Barack Obama. A majority, 52 percent, of respondents viewed Obama favorably, just below the state average of 54 percent found in another Epic-MRA survey. “Maybe there’s a ‘cut the guy some slack’ mentality because he’s in the last few months in office,” said John Cavanagh, founding principal of Epic-MRA. “Or contrast that with the vitriol in the current campaign, Obama looks like the adult in the room.” Marilyn Trent, principal at Rochester-based Trent Creative, is voting for Clinton. A self-identified independent, though a registered Democrat, Trent said Clinton is best suited to lead the country and further the Obama administration’s platform. Trent Creative, a brand agency, worked with Midtown Detroit Inc. coming out of the recession as it sought economic development projects in the city, Trent said. “(Midtown Detroit) had some

RTA

FROM PAGE 1

Sharon Banks, 66, founder and CEO of Detroit-based Bankable Marketing Strategies, is a “yes” vote on the RTA tax because she said she believes it will spur neighborhood economic development and hiring among small businesses, and because residents need the additional transit options. “As I look at the opportunity for people who live in the city to have access to reliable, on-time, safe transportation options, I think the RTA platform offers that,” said Banks, a former spokeswoman for ex-Wayne County Executive Robert Ficano. “It’s about how people can get to and from work, doctor’s appointments, whatever their needs are for their quality of life. We need to make sure we have options available.”

Hillary Clinton and Donald Trump speak during the third U.S. presidential debate in Las Vegas on Oct. 19.

BLOOMBERG

shovel-ready projects ready to go, but there wasn’t any funding,” Trent said. “Obama’s American Recovery Act really jump-started those projects and Detroit. I think people are going to miss him because he turned this country around.” She also believes Trump’s mentality of running the country like a business will not benefit the middle class. “He understands there’s pain; middle-class America has been squeezed by the housing market and jobs and the price of a college education,” Trent said. “But he doesn’t have a clue in how to fix it.” However, not all voters are wishing for a third term for Obama. Patricia McDonald, an independent voter and president of Detroit-based McDonald Wholesale Distributor Inc., said she is staunchly against the Obama administration, citing race relations and religious motives. “I feel he’s trying to turn us into a

Muslim country,” said McDonald, a Wayne County resident. “The guy is more Irish than I am, yet he never mentions that. That’s called racism.” McDonald is voting for Trump because she does not trust Clinton but isn’t completely content with the Republican candidate. Trump “may suffer from foot-inmouth disease, but I think he does a lot behind the scenes ... for veterans and others,” McDonald said. “I would have liked to see someone more smooth on the Republican side, but Trump as a businessman will add a different atmosphere to Washington.” Of those respondents that are planning to vote for Trump, a majority, 54 percent, said the vote is really

a vote against Clinton. Denis Couture, project management consultant and founder of Rochester-based The PCI Group LLC, said Clinton’s scandal involving the use of a personal email server for confidential government documents is enough to push him to vote for Trump. “What she’s done is put our national security at risk,” Couture said. “It’s such a criminal act and doesn’t compare to what Trump has said and done.” While Couture doesn’t like Trump, he does believe his business background would be good for the nation. “Trump is a pretty bombastic and vulgar guy, I don’t like that about him,” he said. “But I’m a businessman, and so is he. We need more business sense brought into the U.S. government.” McDonald said she hopes Trump will make tough decisions and cut federal spending, but indicated in

Opponents of the tax cited three primary reasons for the likely “no” vote: It’s too large of a tax increase (28 percent); it doesn’t benefit them personally (22 percent); and the plan isn’t inclusive enough geographically (20 percent). Another 8 percent of respondents are voting against the proposal because they believe the federal government should fund it entirely. For survey respondent Tom Donnellon, the RTA plan is premature because of rapidly changing transportation technology, such as driverless vehicles, and that is fueling a “no” vote. “I truly do believe the technology in urban transportation is going to change dramatically in the next decade,” said Donnellon, founding partner of Maestro Media Print Solutions in Bloomfield Hills. “I don’t think we have a game plan for the future and where we’re going.”

Donnellon, 68, also distrusts government to operate the regional system. “I think it should be outsourced. I believe other cities have done that successfully. We don’t have a great history of bureaucracy and government running much of anything,” he said. If approved, the RTA tax is estimated to generate $3 billion locally, and would leverage another $1.7 billion in state and federal funding. The property tax would pay for a system of bus rapid transit, new traditional bus routes, commuter rail between Detroit and Ann Arbor, and other transit improvements that have been absent in 40-plus years of failed attempts to create an RTA and regional plan. It also would fund operations of the M-1 Rail streetcar in Detroit. Backers say the plan is needed as an economic booster and to give in-

creased and improved mobility to seniors, people with disabilities and the poor. The Citizens for Connecting our Communities ballot committee is the formal “yes” vote campaign, and Lansing-based political public relations firm Truscott Rossman was hired to run a $6 million campaign that has included rallies, events, TV and radio spots, print ads, social media elements and other tactics to get media and voter attention. Creation of the RTA plan had to overcome opposition from the Wayne and Macomb county executives over the summer, and eventually a compromise was reached that’s intended to boost service to outlying areas and ensure the tax can be spent only as advertised. The chief organized opposition now to the tax is led by Leon Drolet, a Macomb Township Republican who is chairman of the anti-tax Mich-

Online Take an interactive look at the survey results: crainsdetroit. com/survey

the survey that improving the country’s infrastructure as her top influencer for deciding which candidate to vote for. Trump’s infrastructure plan, announced last week, includes spending $1 trillion on infrastructure over 10 years through the use of tax credits. The plan was reportedly drafted by Trump economic advisers Peter Navarro and Wilbur Ross. Billionaire investor Ross is the majority shareholder of Southfield-based auto supplier IAC Group. Infrastructure spending was the second-greatest concern of survey respondents at 11 percent, behind national security and terrorism at 22 percent. In Oakland County, Republican L. Brooks Patterson received overwhelming support to remain the county’s top executive. Patterson is supported by 68 percent of respondents to the survey, compared to 20 percent for former Democratic state representative Vicki Barnett. William Moylan, an independent voter in Oakland County and professor of construction management at Eastern Michigan University, supports Gov. Rick Snyder, like the vast majority, 61 percent, of survey respondents. As a former construction manager for Aramco in Saudi Arabia, Moylan said he plans to vote for Clinton for president because of her “world view.” “She understands the world and how the United States fits in it,” said Moylan, who voted for Sen. John McCain in the 2008 election and Obama in 2012. The business climate is also seen positively from local owners and managers. When asked how the U.S. and Michigan economy is faring, 40 percent and 59 percent say it’s getting stronger, respectively. Yet 59 percent said they only planned to maintain the same employee headcount in the next 12 months, with 40 percent saying they planned to hire over the same period of time. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

igan Taxpayers Alliance. He’s running

a ballot question committee called NoMassiveTransitTax.org that includes a calculator that purportedly allows voters to see what the property tax would cost them. The site is also soliciting donations for its novote campaign. NoMassiveTransitTax.org said it’s a coalition that includes the MTA and the Wayne County Taxpayers Association. The Crain’s survey was conducted by Lansing-based Epic-MRA. In addition to the RTA tax, the survey asked questions about the local economy and other election issues. It was a random survey of 300 business owners, operators, officers and managers in Southeast Michigan. The live survey, with a 5.7 percent error margin, was conducted from Oct. 17-19. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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“It’s possible Brooks loses, but it’s going to require a Trump collapse the likes of which we may not really see.” Joe DiSano, DiSano Strategies LLC

FROM PAGE 1

front of her a few hours before a candidate forum in Pontiac. "Every dollar I raise, he's going to be able to raise $2 or $3 or $4." (It's more like $7, at least as of campaign finance filings through Aug. 22. The Friends of L. Brooks Patterson committee reported a $142,333 balance as of Aug. 22 and having raised $793,378 this election cycle. The Vicki Barnett for Oakland County Committee reported a balance of $20,571 ending Aug. 22, with $22,436 raised this election cycle.) A former state lawmaker whose committee work focused on tax policy and business issues, Barnett notes that the Democratic water resources commissioner, Jim Nash, toppled Republican political mainstay John P. McCulloch four years ago despite being vastly outraised. "Money isn't everything," she said. On Nov. 8, Patterson, 77, who has easily fended off largely sacrificial Democratic challengers for more than two decades, has the political chops and the trappings of incumbency in his favor, but Barnett isn't deterred. She believes her vision for Oakland County is far more in sync with millennials, who she says will make up half of the workforce by 2020. "It's all intertwined with public transit and reinvesting in our already developed cities, not investing in sprawl. This all ties together," she said. "They are looking for robust public transit. Our seniors need public transit, and we have an aging population. And we want disabled citizens to be able to get to and from work and live their lives in dignity." But the challenge for Barnett, 62, who has an MBA from the University of Michigan-Dearborn and worked as an investment consultant for LPL Financial in Farmington Hills, is making sure voters understand where she stands on the issues. And that's where voters like Joy Santiago Clark, 48, come into play. Santiago Clark, the president of Farmington Hills-based real estate company Dwellings Unlimited LLC, is voting for Patterson, although unenthusiastically. "As far as Brooks is concerned, he is OK. I just don’t know about Vicki Barnett one way or the other.” Clark, who described herself as a conservative but independent voter who cast her ballot in favor of Mitt Romney and Patterson four years

“Thinking in terms of the kind of rhetoric that has gained so much attention nationally ... might make (Patterson) more vulnerable.” Marjorie Sarbaugh-Thompson,

Wayne State University

ago, said she “would love to see some change.” That change in Oakland County is possible, though not likely, said Joe DiSano, owner of Lansing-based political consulting firm DiSano Strategies LLC, which largely advises Democratic candidates. “It’s possible Brooks loses, but it’s going to require a Trump collapse the likes of which we may not really see," said DiSano. “Barnett has to chip away at Patterson, who is a known brand name. People made their decision on Patterson decades ago.” Case in point: Four years ago, Patterson was in a coma for 17 days after an August car crash that shattered his legs, wrists and ribs. He returned to work 2½ months later, frail and thin, yet cruised to a 17-point election victory while doing virtually no campaigning. For his part, Patterson, who said he is voting for controversial Republican presidential nominee Donald Trump, says he is hitting the campaign trail hard. “We are campaigning whether he was kicking butt or not,” he said. Patterson, who is widely credited with Oakland County's financial stewardship during his 23-year tenure as its CEO, at first opposed the RTA ballot language before concessions were made, allowing the ballot language to go forward. If approved, the levy would pay for bus rapid transit lines on the Woodward, Michigan and Gratiot avenue corridors plus Washtenaw Avenue between Ann Arbor and Ypsilanti. The 1.2-mill tax would also create a commuter rail service between Detroit and Ann Arbor and cover annual operating expenses. The pair also disagree on the wid-

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: Adient ...................................................................... 1

Green Garage ........................................................ 13

Bamboo Detroit ................................................... 12

Hilton Garden Inn ..................................................3

Capital Region International Airport .................3

Lenderful LLC .........................................................3

Consumers Energy ............................................... 6

Mad Dog Technology LLC .....................................3

Deliver My Ride LLC ...............................................3

Michigan Public Service Commission ............... 6

Detroit Denim .......................................................11

The Parade Co. ..................................................... 15

Detroit Metropolitan Airport ...............................3

Perfect Realty LLC .................................................3

Detroit Pistons ..................................................... 4

Ponyride .................................................................11

The Empowerment Plan ......................................11

Red Panda ............................................................. 13

Epic-MRA ............................................................. 24

Singing Tree Rope Runner .................................. 13

The Ferchill Group .............................................. 23

TechShop Detroit ................................................ 13

Flex-N-Gate Detroit LLC .....................................19

TechTown ..............................................................14

Gestamp North America ....................................19

Wayne County Airport Authority ..................... 22

ening of I-75, an estimated $1 billion project underway on the freeway between M-59 and Eight Mile Road. Barnett, who calls the widening a shortsighted policy that promotes sprawl and siphons away critical transportation dollars, would like to renegotiate the later phases of the project to redirect the funding for other transit purposes; Patterson calls the project "well worth it" because of the concentration of employers and residents immediately surrounding it. He has long promoted suburban development, while Barnett argues that development philosophy flies in the face of generational trends. Patterson's party as a whole also flies in the face of them, if recent elections are any indiciation. Once a bastion of Republican politics that has helped Patterson thrive, Oakland County has been increasingly shifting Democratic, voting for Barack Obama, John Kerry, Al Gore and Bill Clinton in the past five presidential elections. In many ways, Patterson, who has caused controversy with comments about Detroit and immigration in the past few years, is an anomaly: One of the few Republicans left standing. Even the shifting county politics and a controversial Republican presidential candidate behind in the polls having negative down-ballot effects don’t appear to be enough to cause a Patterson defeat, said David Dulio, chairman of the political science department at Oakland University. “There is no doubting that the county has been moving over to the Democrats in the last 10, 15 years at least, but at the same time, (Patterson) has a political organization, the powers of incumbency, can point to a lot of successes, and I think that’s a big factor,” Dulio said. In the past eight years, four of the six countywide elected positions have been taken over by Democrats: Prosecutor Jessica Cooper, Treasurer Andy Meisner, Clerk/Register of Deeds Lisa Brown and Water Resources Commissioner Jim Nash. Other than Patterson, who said he largely gets along with his countywide Democratic colleagues, the only other Republican is Sheriff Michael Bouchard. The Board of Commissioners is heavily Republican, with a healthy 15-6 GOP majority in part being

owed to a redistricting process following the 2010 U.S. census that prompted lawsuits from county Democrats. “I’ve heard those concerns (about 2016 voting), and it could be true because down-ballot benefited from Obama’s landslide,” Patterson said last week as he sipped from a coffee mug in his Waterford Township office adorned with photos and awards. He speaks confidently, but also almost ruefully: “I lost four colleagues up here. I’m probably the only optimist out there who still thinks Trump has a chance. There might be some surprises on Election Day. But I’m the only guy that advocates leaving the landing lights on for Amelia Earhart.” That's typical Patterson: Biting, off-the-cuff, sometimes inflammatory — as comfortable joking about medical marijuana and historic, ill-fated female pilots as he is bond ratings and public policy. That makes him a favorite of the local media: Serious yet quotable, like a straight-laced portfolio manager by day who is the life of the party at family barbecues on the weekends. Barnett doesn't have the same aura as Patterson. But she appears far more at ease challenging him than previous Democrats, having spent more than two decades in local and state politics. It's not just the policy issues that will decide the election. The tone of the presidential campaign will also play a role, said Marjorie Sarbaugh-Thompson, a political science professor at Wayne State University. “Just looking at the trends in the elections and the voting and thinking in terms of the kind of rhetoric that has gained so much attention nationally that has sensitized voters in ways they haven’t in the past, and combined with the changing demographics, might make (Patterson) more vulnerable,” she said. And the business community strongly favors Patterson, according to a Crain’s poll conducted by Lansing-based Epic-MRA. Of the 141 Oakland County respondents, 68 percent said they will vote for or are leaning toward voting for Patterson, who was first elected as county executive in 1992 after four terms as county prosecutor dating back to the mid-1970s. Twenty percent said they will vote for or are leaning toward voting for Barnett, who served three terms in the state House of Representatives from 2009 to 2014. An additional 12 percent are undecided or declined to answer. William Moylan, an independent voter in Oakland County and professor of construction management at Eastern Michigan University, said he supports Patterson because of his record. “He’s continually done a good job and seems to have a good sense of what the county needs,” Moylan said. “He also thinks regionally and is working more to become a partner with other counties in Southeast Michigan.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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 General assignment (313) 446-0416 or mbenedetti@crain.com 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, retail. (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 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 Christine Galasso, Gerry Golinske, Diane Owen, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Marketing/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 Financial Officer Bob Recchia 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. Contents copyright 2016 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 3 1 , 2 0 1 6

THE WEEK ON THE WEB OCTOBER 22-28

AARON ECKELS/CRAIN’S DETROIT BUSINESS

Alumni from past 40 Under 40 classes joined this year’s winners during a 25th anniversary celebration at the Roostertail in Detroit on Oct. 26. This year’s winners used Crowdrise to raise money for their favorite charities; overall, they raised more than $56,000. Jeffrey Schostak, vice president of Schostak Bros. & Co., raised the most money — more than $22,500 — for his chosen charity, the Reuben Phoenix Schostak Congenital Heart Fund at C.S. Mott Children’s Hospital.

Parker Street Market closes in West Village

arker Street Market in De-

troit’s West Village neighborhood has closed after two years in business. Owner David Kirby opened the small business in 2014 as a neighborhood essentials store.

COMPANY NEWS J Advance Plumbing and Heating Supply Co. was set to close its location at

2984 Grand River Ave. in Detroit after 97 years and open a new sales office and warehouse in Midtown on Monday. The family-owned company plans next spring to open a showroom in the Midtown building, at 150 Parsons St. J Automotive seatbelt and safety systems supplier Key Safety Systems Inc. plans to expand its headquarters in Sterling Heights and hire 50 employees in a $1.5 million expansion. The project is supported by a $200,000 performance-based grant from the Michigan Strategic Fund. J Chuck Rizzo Jr., longtime president and CEO of Sterling Heights-based Rizzo Environmental Services Inc., resigned his position at the 18-yearold company he co-founded after federal officials brought a second case in what is expected to be a wide-reaching public corruption investigation of local communities. J The supplier fallout continued after FCA US LLC’s discontinuation of production of its Chrysler 200 and Dodge Dart models, as Warren-based assembler Avancez LLC will lay off 87 at its plant there beginning Dec. 2. According to a notice filed to the state of Michigan under the Worker Adjustment and Retraining Act, the layoffs will be permanent, but the company will not close the plant.

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

The number of Michigan nonprofits among the 2015 Philanthrophy 400, an annual list of nonprofits raising the most money, compiled by The Chronicle of Philanthropy. Tops in the state: the University of Michigan, which ranked 58th and raised $394.4 million.

$250,000

The goal of the Detroit Police Athletic League’s new fundraising campaign, the One Thousand Kid Challenge, to support an additional 1,000 city youths in Detroit PAL programs.

$15 million

The donation announced by Quicken Loans Inc. founder Dan Gilbert and his wife, Jennifer, to Michigan State University to help pay for a renovation of the Breslin Center and a resource center for people with disabilities, among other projects. Gilbert is a 1982 MSU graduate. J The Detroit Free Press is expected to avoid the newsroom layoffs that the newspaper’s corporate owner, Virginia-based Gannett Co. Inc., ordered across its publications nationwide last week, according to the local Newspaper Guild. Reporters and editors at the Freep’s sister papers in Michigan, among them the Gannett-owned Observer & Eccentric weekly papers in suburban Detroit, reportedly lost nearly 20 employees to layoffs. J Local chef Zack Sklar plans to open a second location of his modern Mexican restaurant, Mex, at Great Lakes Crossing Outlets in Auburn Hills in December. Sklar operates the

flagship Mex in Bloomfield Hills and other restaurants under the Peas & Carrots Hospitality banner. J Restaurant chain P.F. Chang’s, sports apparel chain Campus Den and breakfast restaurant The Jagged Fork are among six new tenants to open locations soon at The Village of Rochester Hills outdoor mall. Also slated: Soft Surroundings, a clothing-and-jewelry retailer; Toyology, a Michigan-based toy store; and Blossom Collection, an office for developments by Moceri Cos. geared for residents 55 years old and up. J Rojo Mexican Bistro and its affiliates filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Detroit. The restaurants and bars are owned by Daniel Linnen, who launched the Rojo concept in 2008 and became the sole owner of them in 2014. Linnen filed petitions for locations in Birmingham, Novi, Rochester and Sterling Heights.

OTHER NEWS J A planned $200 million redevelopment of the Lee Plaza building on West Grand Boulevard in Detroit appears dead after the developer failed to purchase the property. An official of the Detroit Housing Commission, which owns the building, said the commission could put out a request for proposals to developers or simply sell the building. J The familiar 45-foot-tall beer bottle at the former Big Buck Brewery building along I-75 in Auburn Hills was taken down and purchased by Orion Township-based Powers Distributing, which has plans to restore it. The H.U.B. (Home of Urban Bowling) is slated to open in November in the former Big Buck building, pending city approval. J Former Detroit City Council President Charles Pugh pleaded guilty to criminal sexual conduct with a teen more than a decade ago, AP reported. The plea deal calls for a sentence of 5½ to 15 years; Pugh also must register as a sex offender.

RUMBLINGS

Pistons owner’s new master bedroom is bigger than a basketball court

A basketball court is 4,700 square feet. The master bedroom suite in Detroit Pistons owner Tom Gores’ new Los Angeles mansion is 5,300 square feet. The private equity billionaire, in the process of finalizing the possible move of his basketball team to downtown Detroit, on Oct. 20 closed on a $100 million deal for the new-construction mansion in Los Angeles’ tony Holmby Hills neighborhood. That’s $50 million less than the original asking price, and Gores swapped other area properties he owns as part of the deal instead of paying all cash, the Los Angeles Times reported. He traded developed and undeveloped land and will retain a profit interest in them, the newspaper said. The 30,000-square-foot mansion on 2 acres just off Sunset Strip is the picture of L.A. opulence: 10 bedrooms, 20 bathrooms, 10-car garage, pools, indoor waterfall, beauty parlor, nail salon, wine and massage rooms, hiking trail, sports courts and — because it’s not far from Hollywood — the requisite movie theater. Whether Gores will live in the sprawling estate or if it’s merely an investment property isn’t clear. The property, built on the site of Barbra Streisand’s former home, went on the market for $150 million

COLDWELLBANKERHOMES.COM

Detroit Pistons owner Tom Gores bought this mansion in Los Angeles’ Holmby Hills neighborhood in a $100 million deal.

in April. Nearby are the Playboy Mansion and former estates of the late Walt Disney and Frank Sinatra. The neighborhood — part of the so-called Platinum Triangle along with Beverly Hills and Bel Air — has been home over the years to the entertainment industry’s giants, including Humphrey Bogart, Gary Cooper, Bing Crosby, Aaron Spelling, Claudette Colbert, Sonny Bono and Cher, and Michael Jackson. It was listed by Coldwell Banker Previews International. Gores, 52, has a Birmingham condo for when he’s in Michigan. The Israel-born Gores grew up in Flint, and after building his fortune through his Los Angeles-based Platinum Equity, bought the Pistons for $325 million in 2011.

Pistons share ride deal with Uber The Detroit Pistons and Palace Sports & Entertainment signed a deal last week to make Uber the team’s official ride-sharing provider. Financial terms of the deal were not disclosed. Under the agreement, the north entrance at The Palace of Auburn Hills will be a designated pick-up and drop-off zone for Uber customers attending games or shows and will include special in-arena

perks for mobile app users, Palace Sports said in a press release. “Uber is now a great option for fans who want their trip to and from The Palace to be hassle free,” said Sagar Shah, Uber’s general manager for the Michigan region. “Pistons fans can skip the parking lot — just push a button and get a ride.” The Detroit Lions announced a similar deal in September.

Carhartt covers Chevy

CHEVROLET

Carhartt and Chevrolet unveiled a concept truck themed around the venerable Dearborn-based maker of work clothing last week at Carhartt’s store in Midtown. The truck, to be displayed at the SEMA show in Las Vegas this week, features a custom tonneau cover made out of Carhartt’s signature fabric.

e h

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Plus Healthy@Work Innovation Challenge with live voting

R A C H

S T N L COF HEA

AND

Awards Presentation Read about this yearâ&#x20AC;&#x2122;s honorees at crainsdetroit.com/heroes

KEYNOTE SPEAKER

The industryâ&#x20AC;&#x2122;s big-picture changes Ben Umansky, Managing Director, Health Care Advisory Board

BREAKOUT SESSIONS INCLUDE

How consumerism impacts physicians: Ways to think about running a practice

Changing the way health systems and hospitals think about the consumer

MODERATOR:

Yusuf Hai, Managing Director, Business Advisory Services/ Alternative Investments, CIG Capital Advisors

Ben Umansky, Managing Director, Health Care Advisory Board

Jennifer Aloff, Family Physician, Midland Family Physicians

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THURSDAY

NOV. 17

Laura Appel, Senior Vice President and Chief Innovation Officer Michigan Health and Hospital Association

Mary Beth Bolton, Medical Director, Blue Cross Blue Shield of Michigan

Andrea Carr, R.N., Vice President of Professional Nursing Practice Beaumont Health

Vik Reddy, Medical Director of Quality and Clinical Integration, Henry Ford Macomb Hospital

Jean Meyer, President and CEO St. John Provdence

PANEL DISCUSSION

After the election, changes in store for Detroit-area health care MODERATOR: Marianne Udow Phillips, companies

TROY MARRIOTT

7:30 A.M.- 1 P.M.

Executive Director, Center for Healthcare Research and Transformation

Jared Bernstein, Former Economic Adviser to President Barack Obama

Naomi Lopez Bauman, Director of Healthcare Policy, Goldwater Institute

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