Crain's Detroit Business, Feb. 13, 2017 issue by Crain's Detroit Business

FEBRUARY 13 - 19, 2017

NAFTA opportunities?

Research bucks rise

Ways companies, workers might benefit from Trump’s push to rework treaty, Page 3

Local hospitals, universities gain from focus on studying new treatments, Page 8

Media

Gilbert-backed TBD magazine focuses on Detroit stories

Obituary

Education

School closings come with economic risk

By Kirk Pinho kpinho@crain.com

Dan Gilbert, perhaps the city’s biggest booster, is bankrolling a new quarterly magazine about Detroit. Called TBD, the magazine publishes features on Detroit businesses, artists and trends, launched its website in November and published its first printed issue, which clocks in at a hefty 114 pages of thick paper and has no advertising, last month. It is loaded with rich photography and magazine pieces from veteran local writers. Experts are still figuring out where in the metro Detroit media ecosystem Bedrock LLC’s TBD magazine fits. “I don't think it will tip the market,” said Jack Lessenberry, the head of the Wayne State University journalism faculty and senior news director for Michigan Public Radio, adding that magazines like Hour Detroit generally have a lock on the metro Detroit features niche. “It looks to me like some kind of promotional vehicle in some way, which doesn’t mean it’s not going to be legitimate.” Bedrock says its $15-per-issue magazine is about publishing “a collection of inspiring people, stories, and ideas defining Detroit today” and is “one more way to spark curiosity about the city.” “We want people inside and SEE MAGAZINE, PAGE 18

Bill Shea

bshea@crain.com

CHAD LIVENGOOD PHOTOS

The new Mumford High School in Detroit, rebuilt in 2012, might be on the list of schools to be closed under a new plan.

State plan to shut struggling sites could slow Detroit’s turnaround By Chad Livengood clivengood@crain.com

AT&T retirees Nancy Pickett and Kimberly Harrington opened a small vocational training school last August, thinking they had the perfect location on Wyoming Street in northwest Detroit. Pickett and Harrington’s Phlebotomy Express Training Center is across the street from Mumford High School, which they thought would give them a pipeline to recruit recent graduates with the promise of $15-an-hour jobs drawing blood in medical facilities. “I told Nancy this kind of opportunity needs to be available in the city, and what better place than across the street from this school?” said Harrington, a 1983 Mumford graduate. Five months after they opened their doors, Harrington and Pickett’s business plan is threatened after the state’s School Reform Office announced Mumford as one of 25 Detroit schools that may be closed in June due to per-

sistently low student test scores. “To find out they may be closing, that’s devastating to me,” Harrington said. With focus on Detroit’s revitalization shifting from downtown and Midtown to the city’s vast neighborhoods and commercial corridors, some business and community leaders are concerned about the impact mass school closings could have on efforts to turn around pockets of the city that are showing signs of rebirth. SEE SCHOOLS, PAGE 17

Kimberly Harrington is student services coordinator and co-founder of Phlebotomy Express Training Center.

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Detroit pizza, sports baron Mike Ilitch dies at 87

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Nir Saar (center) is principal of Mumford Academy, the ninth- and 10th-grade classes at Mumford High School on Detroit’s northwest side. He posed for a photo Thursday morning with freshmen Lashonna Merritt (left) and Tai’mae Jenkins.

Detroit-born billionaire Mike Ilitch, the former minor-league baseball player and U.S. Marine turned global pizza baron who came to own the Detroit Tigers and Red Wings, died Friday at the age of 87. Ilitch died at a local hospital, according to a statement from the Ilitch organization. Ilitch reportedly had health troubles since the late 1990s, fading in and out of the spotlight at this team’s public events in recent years, with every absence fueling speculation about his fate. The family said in a statement it will hold a private funeral service. A public event is being Mike Ilitch planned Det. The Detroit native parlayed modest roots into a business empire with $3.3 billion in annual revenue, led by the Little Caesars pizza chain he co-founded with wife Marian Ilitch as a $10,000 Garden City startup in 1959. The chain today has more than 4,000 locations and is the world’s largest carry-out pizza chain, generating a fortune that Ilitch has used since the late 1980s to invest in his downtown Detroit business and real estate ventures that admirers say helped make him a key figure in the city’s slow renaissance. "My father was a kind-hearted family man, a big-idea businessman, a hands-on leader and a devoted philanthropist who created opportunity and pride for everyone around him," his son, Christopher Ilitch, president and CEO of Ilitch Holdings Inc., said in a statement. "He was one-of-a-kind, and I’m honored to have worked with him to grow our organization and our hometown. We will never forget his dedication to his employees, players and franchisees, his passion for Detroit, his giving and generous spirit, and his SEE ILITCH, PAGE 16

2/10/17 7:47 PM

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MICHIGAN BRIEFS Snyder’s $56.3B budget targets retiree plans Gov. Rick Snyder has proposed tackling the state’s unfunded retiree obligations by using a more conservative estimate for investment returns, a move that would require higher annual contributions from Michigan’s general fund. Addressing legacy debt is among the spending priorities Snyder outlined last week in his 2018 fiscal-year budget, which proposes increased spending in such areas as infrastructure, education, economic development and skilled trades training. Snyder proposed a general fund budget of $10.1 billion for the fiscal year that starts Oct. 1, out of a total $56.3 billion statewide budget. The Legislature will work to adopt a final 2018 budget in the next several months. Under Snyder’s spending plan, the state would lower its estimated rate of investment returns for statewide retirement systems from 8 percent to 7.5 percent. The estimate would be effective immediately to all state employee retirement systems except for school employees, for whom the rate would be lowered over two years. Besides teachers, the state administers retirement plans for general state employees, state police, judges and Michigan National Guard members.

INSIDE

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Kellogg cuts more costs as cereal sales slump Kellogg Co. is slashing more costs as it works on improving slumping cereal and snacks sales, AP reported. The Battle Creek company’s latest move includes ending its direct delivery of snack products to supermarkets and big-box retailers, and instead shipping those products to warehouses before they move to retailers’ distribution centers. Kellogg already uses the warehouse distribution system for the majority of its products, but the company says doing so for all its products will free up critical resources to invest more in activities like advertising that help the image of snacks like Rice Krispies treats and Cheez-Its. Kellogg last week reported improving trends for final three months of 2016, but full-year sales dipped for the U.S. Morning Foods unit, which

J Dow Chemical Co. and DuPont said they’re willing to make more business divestments as a way to nudge European regulators who remain wary of their proposed merger, AP reported. A Dow spokesman said last week that among the concessions that Midland-based Dow and Wilmington, Del.-based DuPont are willing to make are the sale of part of DuPont’s crop protection business — along with its associated research and development — and the sale of Dow’s acid copolymers and ionomers business. Dow Chemical and DuPont plan to join in a $62 billion deal and then break apart into three publicly traded companies, but antitrust regulators remain hesitant. J The state of Michigan plans to provide Flint residents with water filters and replacement cartridges for about three more years amid the city’s crisis with lead-tainted water. The timeline was noted in a letter to a Flint official from Richard Baird, a senior adviser to Gov. Rick Snyder. The letter also gave the city notice that credits to ease the cost of Flint water bills will end at the end of this month and the

state will stop funding the city’s $1.2 million per month water payments to the Great Lakes Water Authority, the Flint Journal reported. J A newly announced three-year strategic plan by Grand Rapids-based regional economic development group The Right Place Inc. calls for $500 million in new capital investment, MiBiz reported. The organization’s new strategy includes a focus on tracking its business support systems and more focus on measuring success in assisting small and medium-sized companies. J Kalamazoo-based Bell’s Brewery Inc. named Laura Bell to the newly created role of CEO, effective Feb. 1. Her father, company founder Larry Bell, will continue as president and remain active in various projects. Laura Bell, 31, previously was vice president. Bell’s is Michigan’s largest independent craft beer company. J Michigan’s solar industry work-

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OPINION

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PEOPLE RON FOURNIER

WEEK ON THE WEB

COMPANY INDEX: SEE PAGE 18 force grew by 48 percent — to 4,118 solar-related jobs — in 2016 over the previous year, according to the Solar Foundation’s National Solar Jobs Census. The improvement in the rankings by the Washington, D.C., nonprofit came mostly from strong growth in project development jobs and the declining cost of solar power, energy labor experts said.

Corrections J A story on Page 1 of the Feb. 6 issue reported an incorrect number of refugees taken in by U.S. Committee for Refugees and Immigrants Detroit in January. The Dearborn-based agency helped resettle 16 refugee families last month. J In the Feb. 6 issue, a Week on the Web brief should have made clear that Jane Kay Nugent’s $1.5 million donation to the University of Detroit Mercy is a planned gift.

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Analysis

Reworking NAFTA to be balancing act Details range from used cars to talent pool The U.S., Mexico and Canada are preparing to begin renegotiating the North American Free Trade Agreement — a move likely to create odd alliances as governments, manufacturers, farmers and labor vie for new benefits. The focus, of course, will be between Mexico and the U.S. because of President Donald Trump’s ultimate aim to increase U.S. manufacturing and build a wall between the two nations. The details will be scrutinized and the outcomes uncertain, but a difficult balance must be struck to keep the whole agreement from falling apart. At the center of the risks and opportunities is Southeast Michigan’s automotive industry. Some potential changes could benefit Southeast Michigan companies or workers, but what might be good for, say, a manufacturer might be bad for organized labor.

Where you from? The Trump administration is likely to focus on the country-of-origin rule in NAFTA — which states a new vehicle must have 62.5 percent content made in the NAFTA region to cross

DUSTIN WALSH dwalsh@crain.com Twitter: @DustinPWalsh borders tariff-free. Given the White House’s push to increase domestic manufacturing, it’s probable it will push for a U.S.-specific content requirement on cars imported to the U.S., which would lead to higher car prices for consumers, but support more U.S. jobs. In theory, a high U.S. content requirement could force manufacturers to produce more domestically. However, country of origin is difficult to assess. The American Automotive Labeling Act was enacted alongside NAFTA in 1994 and requires automakers to provide information on the label detailing the amount of U.S. and Canadian parts content, the country of

BLOOMBERG

The Trump administration is likely to focus on the country-of-origin rule in NAFTA — which states a new vehicle must have 62.5 percent content made in the NAFTA region to cross borders tariff-free.

SEE NAFTA, PAGE 15

Education

Snyder plan boost for skilled trades $20M grant program would help vocational schools buy equipment By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

LANSING — Gov. Rick Snyder is taking his campaign to increase Michigan’s skilled trades employment to high school, and put more up-to-date equipment used by real employers in the state’s vocational classrooms. The proposal is one part of a bigger plan to support the skilled trades and shatter stereotypes that they are dirty jobs. It comes the same week that Oakland County Executive L. Brooks Patterson extolled the virtues of “shop class” in a speech. The pushes could be good news for employers struggling to fill open positions because of a shortage of trained workers in the pipeline to replace an aging workforce nearing retirement. The $20 million competition grant program Snyder proposed last week in his 2018 budget is modeled after a similar program in 2015 for community colleges that Snyder’s administration said led to 91 new or expanded programs at 18 schools.

Michigan Gov. Rick Snyder is taking his campaign to increase skilled trades employment to high schools by proposing a competition grant program. If the Legislature approves the program, K-12 districts and regional intermediate school districts that offer career and technical education programs would be eligible to apply for funding to offset the cost of buying new machinery. A grant program would be a boon for Michigan’s public vocational education system, in which funding varies by county and many needed equipment upgrades are deferred

due to a lack of money for big-ticket purchases. The idea is pending budget approval, but districts chosen to receive funding would be expected to work with nearby employers to identify the types of equipment and skills in the highest demand in the workforce, said Dave Murray, a spokesman for the Michigan Department of Talent and Economic Development. The state’s talent department is working with the Michigan Department of Education on the program. The grant program is one piece of the Snyder administration’s plan to support its emphasis on skilled trades with more money, centered on a $40.9 million statewide education and promotional campaign it’s branding “Going Pro.” The campaign folds in the state’s existing Skilled Trades Training Fund, which offers grants to employers to help cover training costs. Snyder is recommending a one-time funding increase of nearly a third, or $10 million, over current levels to support Going Pro in the 2018 fiscal year that starts Oct. 1. “We’re renaming it the Going Pro program because we want people — young people and parents in SEE TRADES, PAGE 18

MUST READS OF THE WEEK

Help us celebrate Change Makers Ron Fournier: We’re looking for Michigan’s agents of change, and my vote goes to Sandy Baruah, Page 6

Conventional destination? Cobo redo, downtown resurgence help Detroit, but more hotel rooms could help more, Page 11

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Custom Home Health grows amid a tough industry By Jay Greene jgreene@crain.com

Custom Home Health and Hospice, a Royal Oak-based health company founded in 2011, is hiring employees, adding patients and growing at a 20 percent clip in an industry that has been stung by reimbursement declines and cases of fraudulent billing. Chris Tillotson, Custom’s president, knows his company is tarred somewhat by the dozens of home health owners and employees in Michigan over the years who have faced charges of fraud, paid fines and gone to jail for a variety of scams. Since 2010, more than 200 people have been indicted or jailed for a total of $745 million in fraudulent billings in Southeast Michigan, much of that in home health, according to 2016 data from the Detroit-area Medicare Fraud Strike Force. But Tillotson and co-founder Sean Fossee are sending a different message to doctors and hospitals in Southeast Michigan that refer patients to Custom for home health or hospice services. “There is a lot of fraud in the industry. Detroit is a top-five market for fraud. That creates a major stereotype for our industry,” Tillotson said. “We pride ourselves in doing it the right way. Providing high-quality outcomes is where we make a difference and comes back to you in the long haul.” Tillotson said Custom’s relentless effort the past five years to improve quality and outcomes, take care of its patients, referring doctors and hospitals, and employees will ultimately pay off for the company in higher growth. “We are focusing on building a foundation based on integrity, excellence, empowerment and fun,” said Tillotson, adding that the company has secured a trademark under the tagline of “Elevated Expectations. Elevated Care.” Despite payment cuts totaling 14 percent since 2014 mandated by the Affordable Care Act and a moratorium on new home health company licenses in Michigan because of continued fraud, the number of home health agency licenses in the state has stayed steady at about 648 Medicare-certified agencies, according to the Centers for Medicare and Medicaid Services. That figure may be higher than reality, however, because many agencies have been absorbed through mergers or acquisitions by larger agencies yet retained their individual Medicare licenses. The state doesn’t track numbers of active agencies because there is no licensing requirement. More than half of the agencies are based in Southeast Michigan and serve the surrounding six-county metropolitan Detroit area with its 4.3 million population, “We’ve seen many mergers and acquisitions” in Michigan, said Barry Cargill, executive director of the

Michigan Association for HomeCare and Hospice. “A reduction in reimbursement does force efficiencies and the agencies find ways to change their business model to ensure there is a continued margin for the company.”

Challenging business As one of the largest home health, palliative and hospice companies in Michigan, Great Lakes Caring in Jackson continues to grow in the 12 states in which it does business, said CEO William Deary. It has 59 offices, 9,150 employees and 23,500 patients. Great Lakes projects revenue to grow 8 percent to $562 million this year from $520 million in 2016. “Our goal from when we started 23 years ago is to be the best home care and hospice company in the Midwest, focusing on simple things: regulatory compliance, quality, and exceeding expectations for employees,” Deary said. But he said the last five years under Obamacare have challenged even the most integrated home health company, as Medicare reimbursement has declined 27 percent since 2010, Deary said. “You now have to help hospitals reduce readmission rates, be a better partner to doctors hit their quality metrics and coordinate with skilled nursing homes,” he said. “Less reimbursement means I have to be more efficient and use technology and analytics more effectively.” Mark Lezotte, a health law partner at Butzel Long in Detroit, said opportunities for home health industry growth are coming as Medicare moves to bundled payments between outpatient surgery centers, hospitals and home health agencies. “Home health companies that are well run and have the technology and care coordination will be in a good place when (Medicare and commercial payers) move more into

bundled payments,” Lezotte said. “There will be less hospital care and more facility-based care (to reduce costs).”

Custom Home’s growth Nearly six years ago, Tillotson and Fossee decided to leave their jobs as vice presidents in sales and marketing at Troy-based Residential Home Health to start their own company. They acquired the license of a near-defunct home health company, Patient Home Health Services, for $335,000, and successfully navigated the state transfer process. Last year, Custom acquired a small hospice company, Advanced Pro Hospice, for $400,000. Now, both Custom’s home health and hospice businesses are booming. Annual revenue continues to grow at double-digit rates, from $12 million in 2016 to a projected $14.5 million this year, he said. Tillotson said the company still makes the bulk of its profits on traditional Medicare. Home health visits per week are up this year, averaging about 1,500 this month with a total of 75,000 visits last year, or about 1,450 per year. Services include skilled nursing, physical therapy, occupational therapy, speech therapy, medical social work and other home health aide services. Projected growth in hospice for this year is expected to care for 70 patients, up from 35 patients now, with revenue expected to be close to $2 million, up from $1.2 million, Tillotson said. Last year, Custom hired 99 new employees, bringing the company’s workforce to 190. This year, Tillotson said, Custom expects to hire 40 to 60 new employees in the home health division and 30 to 40 more for hospice care. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Grand Ventures I is Michigan’s newest VC fund By Tom Henderson thenderson@crain.com

A filing scheduled for Monday with the U.S. Securities and Exchange Commission will announce the formation of the state’s newest venture capital fund, Grand Rapids-based Grand Ventures I LP, which is raising a maximum of $50 million to invest in very early-stage companies in Michigan and the Midwest. Fund partner Tim Streit hopes to have a first close on the fund in the first quarter this year. Streit, 39, has been a partner in Huron River Ventures, an Ann Arbor-based venture capital firm. Huron River will be run by Streit’s co-founder, Ryan Waddington, and Streit will continue as a partner and board member on some of the fund’s existing portfolio companies. Huron River has raised $16 million since being founded in 2010, including a $6 million investment from the Michigan Economic Development Corp. as part of a program to support early-stage VC firms in the state. Huron River has invested in 20 leading technology companies, including Ambiq Micro Inc., a spinoff from the University of Michigan now based in Austin, Texas, that makes ultra-low power integrated circuits; and Ann Arbor-based FarmLogs, a fast-growing provider of cloud-based data and services to farmers. Its companies have raised more than $200 million in follow-on funding from VC firms around the nation. “Huron River is a healthy, ongoing concern. Grand Ventures is just the next chapter for me,” said Streit, who has long been based in Grand Rapids. His co-founder at Grand Ventures is McKeel Hagerty, 49, the CEO of Traverse City-based Hagerty Insurance, which has more than 840 employees and offices in Canada, Germany and the United Kingdom and claims a total insured coverage value of more than $36 billion. Streit said Grand Ventures will provide seed-stage capital and operational support to startup companies, with a focus on agriculture, manufacturing and transportation. “McKeel brings capital to the table, he can help build awareness of the fund, and by virtue of his success, he can offer operational help to portfolio companies,” said Streit, who said the fund is also raising money from limited partners. “We’ve evaluated a couple of hundred companies already, and we hope to announce a deal by the time we have our first close,” said Streit. He said the fund will look to lead seed-round investments of $1 million to $3 million, investing in larger follow-on rounds as warranted.

Tim Streit: Hopes McKeel Hagerty: to have first close Co-founder at Grand Ventures. in first quarter.

“The creation of Grand Ventures is great news,” said Chris Rizik, CEO and fund manager for the Ann Arbor-based Renaissance Venture Capital Fund, a VC firm affiliated with the Business Leaders for Michigan. “The Grand Rapids area is one of the state’s most promising for the growth of tech and health care companies, and more capital is definitely needed there to help push those opportunities forward. I think Tim and the team there will be in the right place to see some strong startup companies,” he said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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OPINION

Help us celebrate the Change Makers

hese are times of epic change: an economic transition atop a technological revolution amid a new demography that is literally transforming the face of our nation. This confluence of transformative events, the magnitude of which has not been experienced since the RON FOURNIER beginning of the 20th century, creates a particular challenge for lead- Editor/Publisher ers. Some run from change. Some run toward it, embrace it and even ing a very good job of embracing exploit it. These are the great positive change that is being driven by nontraditional actors. So, for exChange Makers. ample, in Old Detroit, the renaisDo you know one? Later this year, Crain’s Detroit sance must be driven by the auto Business will celebrate the state’s companies and list of usual suspects. most innovative public, private and Dan Gilbert is not on the list. A lot of nonprofit executives who are help- the other companies and instituing their companies and communi- tions and individuals that have drivties navigate the harsh currents of en the change don’t quite follow into change. We’re accepting nomina- that category. So that is a trementions at CrainsDetroit.com/nominate, dous positive. We are diversifying our change or call Keenan Covington at 313agents? 446-0417. Yes, exactly. We are open to the Sandy Baruah would get my vote. He is president and CEO of the De- diversification of change agents. We troit Regional Chamber, an Oregon have recognized the paradigm shift native who worked for Sen. Bob of a renaissance is not based on a silPackwood before serving in both ver bullet. That there is no one thing that a region, a city, a Bush administrations. state can do that will Now he herds cats. “When we I’m being sarcastic. look at what solve the problem. Whatever the problem Now he’s using his is. platform to encourage Columbus Why do you call it a fellow civic leaders to did (on a paradigm shift? Was pull together and ply there a time when we their resources toward mobility were in love with the greater good. grant) ... it bullet theory? When I invited him frankly blew silver Yes, absolutely. to Crain’s to help me The Renaissance puzzle through this Detroit out Change Makers con- of the water.” Center was a silver cept, Sandy was blunt bullet. The Tigers’ (“I am slightly frustrat- Sandy Baruah new stadium was a ed with the impact I silver bullet. That if have been able to make here”), hon- we just do those things or that est (Columbus “blew Detroit out of thing, all will be well, and it will the water” on an autonomous vehi- serve as a catalyst. The casinos, if cle pitch. “We didn’t have our act to- we just get the casinos in — it was gether”) and inspiring (he called for always one silver bullet after anoth“collective thought and collective er. Once you realize the number of silver bullets that you need to imaction for collective gain”). This is an edited transcript of my pact real change in a city the size of Detroit or the region the size of the chat with Baruah. You just heard my theory of the Detroit region, you realize it’s more case. How does it apply here in Deof a shotgun as opposed to a pistol. troit? One of the key things that we I think we’re struggling with that. struggle with in this region, and Really? why I am slightly frustrated in the Yes. In the sense that your prem- impact I have been able to make ise is one I share: That change is here, is that (the) idea of collective coming faster than it ever has in his- thought and collective action for tory, and the change is almost differ- collective gain is something we ent than it was at any point in histo- continue to struggle with. I think we ry, because it is changing not just know it like we read it in a textbook, what we do, but how we live, and but we don’t necessarily know how that’s having an impact on values to put it into practice. Some of them and on … organizational ethoses. So are very obvious things: We still we are capitalizing on some things have more competition between SEE BARUAH,PAGE 7 really well. For example, we are do-

LETTERS TO THE EDITOR Refocus debate on immigration

I believe the majority of Americans, myself included, welcome immigrants, rich and poor, educated and uneducated, young and old, who are willing to adhere to the immigration process and American democracy and liberties, while retaining the vibrancy of their birthplace cultures. However, these same Americans oppose people trying to bypass the immigration process for whatever reasons and those who desire to live in enclaves that marginalize American democracy and liberties, never mind people seeking to inflict mayhem. This is where the

debate should be focused and not at the xenophobic and “all borders are bad” margins. Tom Doran Plymouth

Deal with autism positively Thank you for Ron Fournier’s recent piece on Brian Calley (“Calley's journey: From denial to regret to autism advocacy,” Jan. 30). I am the parent of a 22-year-old young man who was diagnosed with autism at age 3. Today, he is a senior at Oakland University and hopes to enter law school after graduation. Articles

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: rfournier@crain.com like yours show that autism is something we can deal with positively as a nation. These young people are capable. We can’t set limitations on them. We need to put them in a position to achieve everything that’s possible for them. Mark Marrymee West Bloomfield Township

A great choice for business Earlier this month, the mayor of Detroit announced he is running for re-election. He wants a second term. Some folks have filed to run against him, but my guess is that this time, there won’t be a serious challenge. That’s a good thing for our city, and it’s a very good thing for our business community. Mike Duggan has done a very good job since he was elected to run a dysfunctional city. With lots of help, he has brought the city out of darkness, literally. The streetlights now work. We are all seeing the light. Businesses, both big and small, have prospered since his election. Remember, city government had been a mess, to put it kindly, until he came along. About the same time, we elected a new Wayne County executive, Warren Evans. Both he and Duggan deserve plenty of bouquets. I happened to be on the board of

KEITH CRAIN Editor-in-chief

the Detroit Medical Center when we hired Duggan. Our governor at the time was willing to give us millions of dollars in much-needed aid — if we would hire Mike. She gave us the money, and we got Mike, a hire that none of us were excited about at the time. To say Duggan was a pleasant surprise would be an understatement. He was a breath of fresh air. A prosecutor turned hospital administrator, he did a great job, surprising many of us. He did a good job at the Detroit Medical Center, and he’s done a

good job as our mayor. No doubt he deserves another term. The city is on a roll, but there is a lot of unfinished business to be done, and we should let him continue doing his job. The thing I marvel at is that the entire attitude of the city toward business is different. Our mayor understands that business means jobs, and if we attract business, we’ll get jobs. Detroit still needs lots of jobs. So far, no well-known candidates have filed to run against him. (Last time around, a barber named Dugeon ran against him.) But maybe we need a couple of contenders to keep it on the up and up. Heck, I’d even be delighted to have a barber in the race. Mayor Duggan’s accomplishments aren’t perfect, but his record sure beats anything that has come before. He deserves to be re-elected, and the Detroit business community should be happy to support him.

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State leaders’ smart compromises on clean energy key to industrial future These days it can seem as though compromise is a lost art. For years now in Washington, political parties have drawn hard lines they’ve refused to cross, and the sides look even further apart with the new administration and Congress. Yet in the Midwest, three states recently bridged differences to forge energy policies that modernize the grid, cut pollution and position the region as a major competitor in the 21st century clean energy economy. As foundation leaders dedicated to policy solutions that advance our collective well-being, we’re proud that our lawmakers were able to see past partisan politics and craft policy that moves our region forward. In Michigan, two years of contentious negotiations went down to the wire in December, when lawmakers worked through the night on the last day of the session to pass a bill that delivers real benefits to citizens in

BARUAH FROM PAGE 6

our geographic entities within our region than is necessarily beneficial for the collective good. It’s better than it was before, and I am gratified by that, but we need to do more. You mean the famous east-west divide in Michigan?

I’m talking about east-west, northsouth, urban-suburban, black-white, rich-poor, you name it and we can slice-dice ourselves in a multitude of ways (including in) economic development. “I want the plant to come here and not there.” And that creates a challenge for us as we go to the international marketplace. The more we’re able to present (Michigan) as a cohesive picture to the outside world, the more comfort businesses will have investing here. Everyone will win. We all know that next-generation

OTHER VOICES Ellen Alberding and Ridgway White

Alberding is president of the Chicagobased Joyce Foundation. White is president of the Flint-based Charles Stewart Mott Foundation. the state — boosting renewable energy, increasing energy efficiency and paving the way to replace the state’s old, dirty, coal-fired power plants. “It was a great bipartisan effort and a great case of watching coalitions coming together,” said Gov. Rick Snyder, who was instrumental mobility is hot. It is something that if we don’t do right here in Michigan, particularly in the Detroit region, it’s going to be a real problem for us going forward. We have to be overly competitive in this area, but the federal grant that was let last year for the big challenge grant, went to Columbus. When we look at what Columbus did in terms of their public-sector and private-sector collaboration, their unity of purpose, the amount of private-sector leverage that they had, it frankly blew Detroit out of the water. [T]he signature effort for next-generation mobility has to be Detroit. But we didn’t have our act together. Now we are learning from that, but there are … all the organizations and entities that are doing something around mobility — I am talking especially in the nonprofit space — we need their help. Everyone needs to be rowing in this direction. The question is how well coordinated are we to actually get the maximum impact as opposed to what are you doing, what are you doing? The daily challenge that we face is, how do we get people coordinated so we are not duplicating efforts? We don’t have (enough) resources; nobody has the resources to duplicate efforts. When you think about this confluence of change that is bigger and more impactful than anything we’ve seen in our lifetimes, give me examples of people or entities that are doing it right — who are leaning into change, who are Change Makers.

PHOTO BY LARRY PEPLIN

“The more we’re able to present (Michigan) as a cohesive picture to the outside world, the more comfort businesses will have investing here. Everyone will win.” Sandy Baruah

The first example that comes to mind, and this might sound kind of strange, are our automotive companies. When I look at what companies like Ford, General Motors and Lear are doing, and I could go on and on and on, in terms in really understanding the revolution that is coming in this mobility space, I think it is an industry that wouldn’t be recognizable 10 years ago. Who else?

When I look at nonprofit institutions, one phenomenal is (the Detroit) RiverFront Conservancy. They own or manage the entire RiverWalk. Faye (Nelson) used to run it. Now

in brokering the deal. The deal was Michigan’s first energy overhaul in eight years. It increases the amount of clean energy utilities must use, from 10 percent in 2015 to 15 percent by the end of 2021, and creates new incentives for utilities to help customers cut energy waste. It also preserves fair electric rates for households with solar panels. That’s critical to ensuring solar power remains financially viable for residents. These are smart moves for Michigan — not only to reduce pollution but also to stimulate the economy and save consumers money. Clean energy currently employs nearly 90,000 people in the state. It’s estimated the current clean energy requirement has spurred $3 billion in investments and has the potential to attract another $4.3 billion by 2021. The energy efficiency programs are estimated to save customers over $1

billion a year. Earlier proposals to freeze the clean energy requirement would have caused the state to lose out on future investments. Perhaps more important, failing to ratchet up the state’s commitment to clean energy would have sent a signal that Michigan is not serious about clean energy in general — or the innovation and opportunity that go with it. The clean-energy transformation is today’s industrial revolution. Wind turbines, solar power arrays, electric cars — these are industrial products that come with industrial-scale wages and profits. To ignore this would be to ignore one of the greatest opportunities for wealth creation in the modern economy. Seizing this opportunity is what leaders in Ohio and Illinois had in mind when they also took steps late last year that were favorable to clean energy.

Mark Wallace runs it. What’s the ethos of today’s young people? It’s about walkable spaces. It’s about a sharing economy, shared public places that are attractive and user-friendly and its multi-used, it’s taking advantage of natural assets and diversity — of welcoming of all. The riverfront really hits all those fronts, and they have capitalized on those trends, I think, very well.

the governments they run for the future, I think they are operating within their construct as well as they can. I think the broader question you are asking is, is government today structured in a way that truly meets the needs of society today? And it’s not. You’ve got a platform here. What would your message be to Michigan leaders in these times of change?

That’s a nonprofit change maker. How about a government entity?

There are several. It’s hard not to talk about the mayor (Mike Duggan) and the governor (Rick Snyder). Both have been transformative figures, and even though they’re vastly different personalities and they come from different parties, at the core, they share a common set of attributes. They are more action-oriented than politically oriented. They both have the ability to prioritize what’s best for the long-term interests of the population they represent and they’re both willing to, in fact, more than willing to share credit. When you look at how Mike Duggan has built a personal relationship with Brenda Jones, and the City Council, and has worked very, very hard to never really overtly oppose them on their initiatives, even though they have done things he’d rather they didn’t, but he’s maintained his discipline to honor the relationship because he knows longterm that is the best thing. You can say the same thing for the governor. He is willing to submerge his own political standing or personal standing in order to (serve) what he believes is the greater good.

Ohio Gov. John Kasich vetoed a bill that would have extended a freeze on the state’s clean energy requirement. In Illinois, Gov. Bruce Rauner signed comprehensive energy legislation in December to keep existing nuclear plants in operation while dramatically expanding investments in energy efficiency and renewable energy. In the last presidential election, much was made about creating jobs, especially in the industrial Midwest. That debate continues in Washington, with the two sides as far apart as ever. Here, on the ground, we’re compromising, and we’re passing sound policy to create jobs and wealth in the new clean-energy economy. Let’s recognize the steps our leaders took — and demand they go further in the months and years ahead.

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“There is plenty of work to go around.” Sandy Baruah

name to it, you would not print it. Now you have to own what you say. Not good or bad, it’s just very different. Mike Duggan and Rick Snyder, they strike me as the United States Senate when I grew up in the Senate back in the ’80s and I was studying it in the ’70s — that we can get things done if we can find common ground. It’s almost a throwback. When you think about what they are doing to position

We have a unique moment in time right now in Michigan and Detroit where the world’s attention is on us. The world is rooting for our success, and we have the opportunity to fundamentally transform this region. However, if we are not smart about allocating our resources, we will be less optimal in our success. There is plenty of work to go around. The amount of work that needs to be done here both in terms of taking advantage of opportunities like next-generation mobility and addressing our challenges — vast numbers of people who are unemployed and underemployed need to have gainful employment and a positive path forward, public safety, there are lots of challenges to address. There is plenty of work to go around from a nonprofit standpoint, from a governmental standpoint. The question is, how do we want to allocate those resources?

How does that make them Change Makers?

In the 18th century, when we were writing the Constitution, we were still officially in the Enlightenment period, and how did people behave during the Enlightenment period? It wasn’t about credit, in fact, our founding fathers … they used to write papers under pen names, because the idea was supposed to stand tall. The idea needs to speak for itself. That was the Enlightenment ethos. Now, if I sent a letter to an editor, and I did not sign my

To make a nomination, contact Keenan Covington at (313) 446-0417.

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SPECIAL REPORT: HEALTH CARE JAY GREENE jgreene@crain.com Twitter: @jaybgreene

Trump supports giving terminally ill access to experimental drugs After a meeting earlier this month with pharmaceutical executives, President Donald Trump announced his administration would move to allow terminally ill Americans access to experimental drugs that are still under review by the Food and Drug Administration. Over the past several years, more than 33 states, including Michigan, have passed so-called “Right to Try” experimental drug bills. An additional 17 states have pending legislation. Congress also is reviewing a proposed bill by Sen. Ron Johnson of Wisconsin (S. 2912) that would give federal blessing to right to try. Despite the state laws, it is not clear how many patients — possibly just a few hundred — have received approval from drug companies to receive the drugs outside of clinical research trials. But Trump can sign an executive order that would allow the FDA to loosen the policy that requires full FDA approval before patients outside of clinical trials can gain access to experimental drugs. If he did, he could also use his bully pulpit to press drug companies to allow access to the drugs. Right now, drugmakers are reluctant to participate in the programs because they worry the FDA might shut down a trial or make it more difficult to gain final approval. “We do know that some patients are being helped,” said Starlee Coleman, vice president of communications with the Phoenix-based Goldwater Institute, which crafted the model policy adopted in the 33 states. “There’s a doctor in Texas, for example, who has treated nearly 100 terminal pancreatic cancer patients.” Under right-to-try laws, terminally ill patients are allowed to request permission from drugmakers to purchase or receive free experimental drugs that are in phasetwo or phase-three trials, Coleman said. “Vice President Mike Pence signed a right-to-try law in Indiana when he was governor,” she said. “He got to know patient families involved in the law and brought the issue to the president's attention.” An overwhelming percentage of the public supports such laws. Researchers and health policy experts, however, believe they can be harmful because they can raise false hope and sometimes cause suffering. But the Goldwater Institute has argued that people should have the right to attempt to save their own lives. More than 1 million people die from a terminal illness every year, and only 3 percent enroll in clinical trials. Expanding the number of people who use experimental drugs could help hospitals and medical schools involved in clinical trials by giving them additional guidance on reactions from the patients, Coleman said. Drug companies also could benefit by gaining more information to place on FDA warning labels, she said.

Benefits of research

LARRY PEPLIN

Patient Greg Labancz from Sterling Heights (left) consults with Dr. James Snyder, director of national outreach for the Hermelin Brain Tumor Center at Henry Ford Hospital Department of Neurosurgery, over Labancz’s MRI scans.

Clinical trials give patients access to cutting-edge treatments, help hospitals recruit Inside: n What is clinical trials research?

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n Medical schools steadily improve clinical care with research, Page 10 n Karmanos expands research reach by joining McLaren, Page 10

“Research sometimes gives alternatives and hope to patients after you have exhausted a second line of therapy, as in oncology.” David Svinarich, St. John Providence Health System

By Jay Greene jgreene@crain.com

Clinical researchers at St. John Providence Hospital in Southfield are testing a medical device that helps lower blood pressure in patients with uncontrolled hypertension. The research could prove life-saving as more than one-third of adults in Michigan — and half of all African-Americans — have high blood pressure, considered to be above 140/90. “Uncontrolled high blood pressure is one of the greatest threats to patients in metro Detroit,” said Shukri David, M.D., chief of cardiology at the Providence Heart Institute. “We ... look forward to helping identify which patients might be the most appropriate for this investigational treatment.” St. John is one of many hospital systems in metro Detroit where the research budget as been on the upswing, especially in oncology, heart disease, internal medicine, surgery and studies to improve patient safety and outcomes. Clinical trials at hospitals and outpatient centers can offer many patients greater access to cutting-edge pharmaceuticals, medical devices and therapies. They

also can help hospitals recruit top physicians and researchers. “By doing clinical research, we can bring in novel cutting-edge medical technology to a local hospital and give patients access to that service they might not otherwise have,” said David Svinarich, vice president of research at five-hospital St. John Providence Health System in Warren. “Research sometimes gives alternatives and hope to patients after you have exhausted a second line of therapy, as in oncology.” Since 2014, St. John’s clinical research department budget — what the health system collects from funding sources and spends on administering and subsidizing research — nearly doubled to $3.1 million last year from $1.7 million. Clinical trial participants for approximately 737 studies also increased to 1,470 in fiscal 2016 from 1,409 in 2014. Over the last 30 years, Henry Ford Health System has averaged an 8.5 percent annual increase in research funding that totaled $82.5 million in 2016, said Margot Lapointe, Henry Ford’s vice president of research. “The biggest increase over (15 years) has been the clinical research dollars coming from indus-

try,” she said. As of last July, Henry Ford had 1,973 active studies, which included 761 clinical trials, 158 epidemiological studies, and 1,054 chart reviews and surveys involving thousands of patients. “We are working on serious health care problems such as the diagnosis and treatment of cancer, heart failure,” Lapointe said. “Our public health sciences is strong, looking at traumatic brain injuries and bone and joint injuries.” Henry Lim, M.D., Henry Ford’s senior vice president for academic affairs, said all clinical department chairs recruit physicians who are equally good at clinical care and research. “Funding has snowballed over the years as more people come here who are attracted to research, and that creates more research,” said Lim, who compared the system's culture to a university academic medical center in that physicians want to do research, teaching and clinical care. Competition among physicians at Henry Ford has increased the amount of research, Lim said. With 80 scientists and dozens of physician researchers, Henry Ford has SEE TRIALS,PAGE 9

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SPECIAL REPORT: HEALTH CARE

TRIALS FROM PAGE 8

the fourth-largest biomedical research budget in Michigan, behind the University of Michigan, Wayne State University and Michigan State University. Henry Ford ranks 231st among 2,469 health care institutions receiving funding from the NIH. "We have put a lot of emphasis on cancer and neuroscience," said Lim, noting that Henry Ford is building a new outpatient cancer center in Detroit that will help expand clinical trials. At Flint-based McLaren Health Care Corp., clinical trials research has increased 15 percent to $89.2 million in 2016 from $77.6 million in 2014 with more than 93 percent of funding for oncology through Karmanos Cancer Institute in Detroit (see story, Page 10). The number of clinical trials also has grown 36 percent to 741 last year from 543 in 2014. While 93 percent of clinical trials research at McLaren are for cancer, Michael McKenna, M.D., McLaren’s chief medical officer and executive vice president, said McLaren is Michael McKenna: expanding all reEffort tied to search areas. The education. 11-hospital system has created the McLaren Center for Research and Innovation to centralize hospital, community-based research sites and provide management and research administration services to office-based physicians. “We have committed as an organization that research is a major part we need to develop to get the outcomes we need,” McKenna said. “It ties into the educational commitment with graduate medical education and thousands of medical students in rotations. ... We have been working on how to manage it and make it easier to physicians to do research.” For example, the McLaren Cardiovascular Institute was created last year in Southeast Michigan to expand heart services at McLaren Macomb in Mt. Clemens and McLaren Oakland in Pontiac. The cardiovascular network is expanding throughout the McLaren hospital network. “We have created a structure in cardiovascular research where groups of doctors, interventional cardiologists, will review protocols and identify types of programs to manage care and research across our networks,” McKenna said.

Expansion under ACA Over the past five years under the Patient Protection and Affordable Care Act and stimulated by payers and business groups to improve quality, hospitals have been conducting a larger number of research projects to improve patient safety and reduce medical errors, said Richard Kennedy, vice president of the Beaumont

What is clinical trials research? Clinical research gives the health care system critical information on the safety and effectiveness of drugs, medical devices and diagnostic equipment. Research can take several forms. One is through observational studies, which are sometimes reviews of patient charts, analysis of blood, tissues and other samples to determine how well treatments or procedures were conducted. Another major form of clinical research is through the use of clinical trials, where patients enroll in studies to test experimental treatments, devices or drugs, and researchers monitor the outcomes. Most often conducted at hospitals, universities, doctors’ offices, outpatient centers or commercial research sites, clinical trials help physicians, scientists and health care organizations directly assess the impact of new medical innovations. Many large hospitals, especially those with teaching physicians and medical residency programs, participate in clinical research trials. Most also receive grants to Research Institute. “We have put a lot of emphasis on patient safety and outcomes because of continued clinician concern over patients," Kennedy said. "Some of it has to do with the need to contain costs and give patients the best chance of recovery.” One clinical research funding component of the Affordable Care Act, which raised $1.1 billion through a health insurance tax, allowed researchers to apply for grants to study comparative effectiveness of drugs, devices and medical procedures. Comparative effectiveness research is intended to advise doctors, nurses and administrators what health care interventions pose the greatest benefits or harms to patients, according to the Institute of Medicine, which estimates there are 90,000 preventable deaths per year at hospitals. Under Obamacare, funding for the research is handled by the Patient-Centered Outcomes Research Institute, a nonprofit organization appointed by the NIH, the Government Accountability Office and the Agency for Healthcare Research and Quality. Of Beaumont’s 10 comparative effectiveness studies, Beaumont has received one grant through Obamacare's PCORI. Ongoing studies include: comparing the relative effectiveness of proton versus photon radiation therapy for patients with breast cancer that has not spread to other body locations (Obamacare) and reducing major cardiovascular events and the use of neuromuscular blocking drugs for post-cardiac arrest care. President Donald Trump and

conduct patient safety and outcome studies. Since 1995, research funding from the National Institutes of Health has risen 190 percent from $11.3 billion to $33.1 billion this year. The NIH is the premier federal biomedical research facility based in Bethesda, Md. It is an agency of the U.S. Department of Health and Human Services. Besides the NIH and other federal agencies such as the Department of Veterans Affairs, funding for clinical trials comes from multiple sources, including drug companies, device makers, foundations and medical institutions. A recent study found that drug companies and device makers contribute six times more to clinical research than the NIH, researchers at Johns Hopkins University said. Clinical trials begin as an idea by a physician or scientific researcher based on a fundamental need to improve patient care. The steps to enrolling patients in trials are critical to ensure the study is both ethical and safe, within federal regulations. Congressional Republican leaders have threatened to “repeal and replace” Obamacare, which could cut comparative effectiveness research funding. “We understood that PCORI was potentially limited in duration,” Kennedy said. “Because of this ... (research organizations) have been considering the issue of sustainability if PCORI support is not continued.” Kennedy said concern is rising among researchers that Obamacare could be repealed. “The diminished support would no doubt limit well-designed CER studies that focus on improving patient and population health, while also reducing the costs of health care,” Kennedy said. “I hope that the health outcomes and economic impact of this type of research will be thoroughly considered before decisions are finalized. I believe my concern would be echoed by most patients, families, health care professionals and caregivers.” Lapointe at Henry Ford said the six-hospital system has four active comparative effectiveness grants underway and other proposals awaiting consideration. “It would be unfortunate if PCORI funding were not renewed, and our government affairs office is looking into ways to lobby for its renewal. We believe it is a very valuable funding source,” Lapointe said. Svinarich said Ascension officials are meeting with the Trump administration to provide it with guidance on the future of health reform and continued federal research funding. “We don’t know what to expect, but I don’t expect clinical research to go away. It is important to maintain

Steps include clinical researchers receiving institutional review board approval, securing funding and approval by the Food and Drug Administration to begin the trial. Once those steps are secured, a clinical trial can begin. They are conducted in four phases. J Phase I: Researchers test a new drug or treatment in a small group of people for the first time to evaluate its safety, determine a safe dosage range and identify side effects. J Phase II: The drug or treatment is given to a larger group of people to see if it is effective and to further evaluate its safety. J Phase III: The drug or treatment is given to large groups of people to confirm its effectiveness, monitor side effects, compare it with commonly used treatments, and collect information that will allow the drug or treatment to be used safely. J Phase IV: Studies are done after the drug or treatment has been marketed to gather information on the drug's effect in various populations and any side effects associated with long-term use. Jay Greene research, for (residency and program) accreditation, recruitment and services,” Svinarich said. “There may be greater emphasis on using community hospitals. I hope not more offshore research continues. Important to keep it in the U.S. in our postACA world.”

Benefits for patients Hospitals also use clinical research to recruit and retain doctors, comply with accreditation rules for medical school and residency program accreditation and attract future business. “It helps us retain patients,” said Svinarich. David Svinarich: “Patients are Research helps in more inclined to patient retention. stay with you after the trial is completed. We are usually close to breaking even on research, but overall we generate more money by doing a lot more labs and covered services. There are downstream benefits.” Hospitals with research studies underway also become safer places to work, visit and receive care, said Svinarich. “Patients tend to fare better at hospitals with robust clinical programs,” he said. “They may have better doctors and patients undergoing studies get more scrutiny from clinicians, maybe more than they want.” Lapointe said research helps Henry Ford improve its reputation in the community as many top researchers

are well-known both locally and nationally. For example, urologist Mani Menon is the originator of robotic surgery for prostate cancer surgery, and William O’Neill, an interventional cardiologist, pioneered the use of angioplasty for treating heart attacks. O’Neill recently has been working on new catheter-based treatments of structural heart disease. Other researchers with local name recognition are Christine Cole Johnson, Stuart Gordon, Ian Lee, Joseph Miller, Lamont Jones and Maureen Connolly. “Mike Chopp is world-renowned and is looking to develop exciting treatments in stroke and TBI using vesicles released by cells that contain cellular macromolecules to stop disease processes,” Lapointe said. But researchers readily acknowledge one of the limiting factors in research is the ability to enroll patients in studies. Because research has become so specialized with precision and genomic medicine, making sure your hospital has access to the right patient population to support the project is critical. “You are always balancing picking a study with the motivation of investigators and the availability of patients,” Svinarich said. "Researchers want to do studies based on their interest. But if you can’t recruit, you can't do the study." Aiding in finding and attracting patients for clinical studies is the growing use of specialized information technology, hospital electronic medical records, social media and mobile applications. “We have a number of databases that help us make a determination,” Svinarich said. “We are setting up the Ascension Clinical Research Institute across the country to bring all 140 hospitals into the database. We want to make sure the IRBs (institutional review boards) function as a single IRB. We can go to sponsors and say we have a consolidated IRB and can bring you greater number of patients.” Lapointe said Henry Ford's medical record system contains much data to identify patients who might fit research studies. But the system is looking for IT improvements. “We also have HAP (Health Alliance Plan HMO) to mine for data,” she said. “We are having conversations with IT to develop protocols for interfaces with electronic medical records so we can pull out more data.” Lim said sometimes studies are not conducted because of lack of data. For example, a recent melanoma study needed to be shelved because of a lack of patients for the trial. “We can negotiate with patients. Research can improve patient care. In Dr. O’Neill’s area, he performs delicate procedures on patients for heart disease who have been rejected by others,” Lim said. “They come here, and we improve quality of care they get. It enhances our academic reputation, we perform cutting-edge research and patients get good care.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Medical schools steadily improve clinical care with research By Jay Greene jgreene@crain.com

Clinical trials research at the University of Michigan and Wayne State University, which operate the two largest medical schools in Southeast Michigan, offers a wide array of basic science, clinical trials, specialty medicine and patient-centered research that benefits thousands of patients. Hundreds of university faculty physicians and scientists test novel drugs and medical devices that range from UM’s study on whether intravenous delivery of nutrients into the first part of the intestine or stomach will reduce eating and improve weight-related conditions to Wayne State’s novel gene therapy research for blinding eye disease, which affects 100,000 Americans each year. UM has by far the largest research budget of any university in Michigan, spending last year $670 million, up 2.6 percent from $653 million in 2014 at its five health science schools. By far, research spending at UM’s medical school is the largest of the five

schools, last year totaling $443 million, an 8 percent increase from $410 million in 2014. The other four health schools are public health, nursing, dentistry and pharmacy. But UM is undergoing a clinical research administrative restructuring that officials believe will improve results and increase funding opportunities. “We are having an enterprise-wide transformation at the medical school where we are moving from an environment of individual investigators to integration of research across departments and disciplines,” said George Alexander Mashour, M.D., UM’s associate dean for clinical and translational research. Mashour said UM this year is integrating seven major clinical research units, including oncology, children’s health, heart vessel and blood, acute and critical surgical care, neuroscience and chronic and ambulatory diseases, to share infrastructure and larger scientific research themes. “We began this process three years

ago, and in January we became open for business,” Mashour said. “Clinical trials networks tend to be departmentally based. We will facilitate new grant awards, do more clinical trials and operate as a team across the enterprise.” At Wayne State University School of Medicine, total clinical research, excluding $36 million of oncology research conducted at Karmanos Cancer Institute by WSU faculty, increased to $140 million in 2016 from $117 million the year before, said Linda Hazlett, interim vice dean of research at Wayne State. Clinical trial research specifically conducted at hospitals increased in 2016 to $57.1 million from $10.2 million in 2015, Hazlett said. “It grew across the board. We had a lot of clinical trials growth in the clinical areas of oncology, perinatal research, pediatrics and psychiatry,” Hazlett said. Most of Wayne State’s research is conducted at Detroit Medical Center, but a growing number of projects are at its new bioresearch facility — the

$90 million Integrative Biosciences Center — at its downtown Detroit campus near TechTown. For example, Hazlett noted that two projects at IBio are having immediate impact on health disparities affecting many Detroit residents. The first is a WSU startup company sold recently for $60 million to Allergan PLC that is developing novel gene therapy for patients who have degenerative retina, or blinding eye disease. The second project is based on a $15.7 million grant from the National Institutes of Health to address HIV prevention among youth. “We are really focused on research focused on urban clinical excellence,” Hazlett said. “It is becoming more collaborative and team-oriented. We are involved in many approaches from diabetes, cardiovascular and cancer research.” Hazlett said Wayne State also is engaged in various comparative effectiveness research to analyze how drugs, medical devices and medical procedures benefit patients.

“We are absolutely doing that. That is the whole ballgame,” Hazlett said. At UM, clinical research funding awarded for patient trials at hospitals increased to $74.5 million in 2016 from $48 million in 2014. The numbers of clinical trials and participating patients also grew to 165,812 patients and 1,636 clinical trials in 2016 from 132,826 participating patients and 1,396 clinical trials in 2014. Mashour said UM also has received funding from the Affordable Care Act to conduct comparative effectiveness studies through the federal Patient-Centered Outcomes Research Institute. “We are part of the PCORI network. We are waiting to see what happens with that network,” he said. “We do many clinical trials and also look back retrospectively to see how a drug (previously approved) is working back in practice. These effectiveness studies are very large and help guide future studies.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Karmanos expands reach of research by merging with McLaren Health Care A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

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By Jay Greene jgreene@crain.com

Two of the stated benefits Detroit-based Karmanos Cancer Institute gave the community in 2013 for its decision to merge with McLaren Health Care Corp., an 11-hospital nonprofit system based in Flint, were the ability to increase its cutting-edge clinical research with statewide access to patients and to gain access to capital for growth. McLaren’s deep pockets have enabled Karmanos to hire nearly 40 researchers, expand its geographic reach for patients enrolled in clinical trials, and tap into lower-cost purchasing contracts that have helped stabilize rising operating costs, said Gerold Bepler, M.D., Karmanos’ CEO. Despite ongoing funding cuts from Medicaid and Medicare, Karmanos continued to operate in the black in 2015 with a $6.8 million total profit, which includes investment income and non-patient revenue, according to Cost Report Data, a Louisville, Ky.based research firm. Annual operating losses have averaged $14 million since 2013. “We are being paid substantially less by Medicaid than in the past, and this current year we took a very substantial hit, several million less,” said Bepler. “We still take care of the same number of Medicaid patients. Medicare is still underpaying us. We are in the black simply because we are part of McLaren and get better contracts for services purchased.” Karmanos is located on the campus of Detroit Medical Center in downtown Detroit. DMC sued McLaren over the merger, claiming unsuccessfully that it had first refusal over McLaren to buy Karmanos. The two health companies settled the dispute

in 2015 and have agreed to work more closely together on cancer care. As part of the merger, McLaren pledged to spend $100 million to improve Karmanos and expand outpatient centers in Southeast Michigan, sources have told Crain’s. “Since we joined McLaren, we have been able to put more money into cancer research efforts than we had before, about $50 million, the vast majority in Detroit. Some of it goes to the community sites (to fund study coordinators),” Bepler said. All in all, the McLaren partnership has proven its worth, Bepler said. “You have to keep in mind that when we joined McLaren, the number of patients (at Karmanos) that participated in (interventional) clinical trials was 1.5 percent,” said Bepler, who said that is an average percentage for community hospitals. “Last year, we went up to 3.7 percent,” he said. “We more than doubled that number, which is of course not where we want to be. We want to get that number to 5 to 6 percent.” Each year, the number of patients treated by Karmanos has increased. In 2016, 13,900 patients received care at Karmanos, up from 12,000 in 2013, Bepler said. “This is important because patients in clinical trials do better than patients that don’t participate in clinical trials,” Bepler said, noting that Karmanos cannot develop new treatments without people participating in trials. Because of the newly hired researchers and McLaren’s developing statewide oncology network, Bepler said, Karmanos has increased clinical trials research funding by 11 percent to $82.4 million in 2016 from $74 million in 2014. Karmanos now has 170 cancer re-

searchers, up from 130 in 2012. Clinical trials have increased 34 percent to 655 from 488 during that period. But participants in Karmanos trials have grown more slowly, by 8 percent to 3,370 in 2016 from 3,105, because the bulk of new studies now require only 50 to 100 patients, down from the several hundred per study as in the past. “What has happened nationally is that the number of large trials has gone down because of molecular studies on tumor specimens,” Bepler said, noting that researchers need to enroll patients in studies with specific gene requirements. But Karmanos also is drawing about 240 patients each year from McLaren’s eight community care sites, excluding Farmington Hills, in Michigan to its downtown hospital. McLaren plans to add two more sites this year in unspecified locations. Education of patients, physicians and nurses is the key to increasing the number of clinical trial participants, Bepler said. “We have (begun) a special program for the process of getting informed consent of patients,” he said. At the point of patient care, Bepler said, “we stress the importance of clinical trials and provide educational materials for staff and nurse practitioners.” Karmanos has also developed policies for how oncology care is delivered at each McLaren community and hospital site. “We have specialized tumor boards where patients’ care is discussed with specialized doctors,” he said. “Overall, the care in the system is much more akin to academic medical. The care is simply better for the patients.” 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 // F E B R U A R Y 1 3 , 2 0 1 7

SPECIAL REPORT: MEETINGS AND CONVENTIONS

Conventional destination?

Cobo Center was renovated to include a glass atrium with views of the Detroit RiverWalk and Windsor, Canada. COBO CENTER

Groups laud improved Detroit experience, but there’s room(s) to grow Inside: See Crain’s list of Largest Meeting Facilities, Page 13

By Sherri Welch swelch@crain.com

Detroit took a huge step forward as a meeting and conference destination with its recent expansion and renovation of Cobo Center. But the city is lagging behind its competitors in one important area: the number of downtown hotel rooms it can offer. Combined with elevated perceptions of safety downtown, good airline connections, more affordable food and hotel rates than many cities and the revival taking place downtown, Detroit has become more attractive to meeting planners. The city has 4,600 downtown hotel rooms, according to the Detroit Metro Convention & Visitors Bureau. That’s just 64 percent of the 7,159 rooms in the central business district in the Cleveland area, according to STR, a Hendersonville, Tenn.based data and analytics specialist. The numbers STR collects for Cleveland and other cities that compete with Detroit may include some rooms from surrounding suburban areas, but they don’t include entire metropolitan areas, STR said. The gap between the number of downtown hotel rooms in Detroit and competing cities is even wider when you look beyond Cleveland at the data to get a sense of the number of downtown rooms. According to STR, Indianapolis has 7,514 rooms in its central business district, Pittsburgh has 7,797 and Minneapolis

has 8,612. Outside of the Midwest, the differences are even more dramatic. Detroit has only 59 percent of the rooms Houston has in its central business district, 26 percent of those in Dallas and 10.5 percent of the rooms in Chicago, STR said. “The beauty of Detroit ... is that second-tier cities are attractive because you can get the room blocks, and in many cases, avoid busing” attendees from hotels in outlying areas, said John Graham IV, president and CEO of the Washington, D.C.based American Society of Association Executives. ASAE brought its annual conference and 5,300 meeting planners and association executives to Detroit in August 2015 for the first time in its 95-year history. Though Cobo Center can accommodate larger groups, conferences with larger numbers of attendees, in the range of 5,000-7,000, are often forced to book rooms in the suburbs. “When you have to start to go out to Dearborn to get people to the convention center, it gets less and less attractive,” Graham said. The city has done a very good job of positioning with sports teams, the coming of light rail and the development of areas like New Center, which is quite a change from 2009, when ASAE booked the conference, Graham said. “... People asked, ‘What the hell were you thinking?’” Graham said.

“Now people have been there, have seen it and have come to say it’s becoming a vibrant, welcoming city with a great waterfront, a great convention center and a renewed automotive (industry).” Detroit is riding a rising tide, but to truly compete, it still needs more hotel rooms in the central business district within walking distance to Cobo or a five- to 10-minute taxi ride, Graham said. It’s a thought the Detroit Metro Convention & Visitors Bureau has been echoing for years. Cobo Center’s renovations and the city’s comeback are giving meeting planners a reason to look at Detroit, said Michael O’Callaghan, executive vice president and COO of the visitors bureau. “But the one area we are lacking is in the number of available rooms in the convention district.” The opening of the Aloft Detroit in the historic David Whitney Building brought 136 rooms in December 2014, and the Foundation Hotel in the historic firehouse across from Cobo is expected to provide an additional 100 rooms when it opens in the spring. The Foundation Hotel is one six hotel projects in development that could bring roughly 970 more rooms to the downtown market over the next few years. Since then, contemporary furniture retailer West Elm announced its plans for a boutique hotel with more than 135 rooms and a retail store on Cass Avenue in Mid-

town, which brings the total number of hotel rooms in development or planned to 1,105 through multiple boutique projects. Additionally, the Crowne Plaza Downtown Detroit Riverfront is considering a plan to build another tower, which could bring another 400 rooms online. The boutiques are nice, but adding that second tower to the Crowne Plaza or developing another 500- to 700-room hotel downtown would give the city more room blocks and make it even more competitive, Graham said. Occupancy, average daily rates and revenue per available guest room point to rising demand for hotel rooms in the downtown area. Occupancy for Detroit’s downtown hotel rooms was 68.2 percent in 2016, up from 65 percent the year before, O’Callaghan said. The average daily rate was $151.63 last year vs. $147.01 in 2015, and revenue per available guest room was $103.41 versus $95.60. With the hotel rooms downtown running at higher occupancy levels, it’s likely to become tougher for hotels to reserve large blocks of rooms for groups, he said. A balance is needed to sustain a larger number of hotel rooms, but the prevailing thought is that if the hotels are built, the conferences will come. Experts told Crain’s last September that the market demand could SEE VISIT, PAGE 12

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SPECIAL REPORT: MEETINGS AND CONVENTIONS

VISIT FROM PAGE 11

support 800 to 1,000 more rooms downtown in the next two to three years. But beyond that, hospitality expert Ron Wilson, CEO of Troy-based Hotel Investment Services Inc., cautioned against adding additional rooms to the downtown market until more conventions or other demand materializes to absorb the new supply. In addition to the number of hotel rooms downtown, the airlift into Detroit and the costs of hotel rooms and food, planners are scrutinizing convention center offerings, Graham said. Cobo’s recent renovation and expansion is in keeping with updates happening at many other convention centers around the country, he said. “I remember the days when you walked in and faced a cement wall facing the river,” he said. Following the $279 million renovation and expansion project, which wrapped up in August 2015, Cobo’s views, layout and amenities are excellent, Graham said. Today, visitors can see views of Canada and the Detroit RiverWalk from the 30,000-square-foot, glasswalled atrium and access the Detroit RiverWalk directly across from it. Among other things, the upgrades, which added about 30,000 square feet, increased parking and improved

Comparing convention cities Cobo Center and venues in some of the top competing cities, ranked by exhibit hall space

. Exhibit hall space

Meeting space

Flex space

Number of central business district hotel rooms

Convention center name

City

McCormick Center

Chicago

2,600,000

600,000

43,669

International Exposition Center

Cleveland

1,050,000

53,900

7,159

George R. Brown Convention Center*

Houston

771,000

185,000

129,000

7,814

Kay Bailey Hutchison Convention Center Dallas

Dallas

724,526

98,778

86,419

17,390

Cobo Center

Detroit

723,000

255,000

155,000

4,600

NRG Park

Houston

706,213

Indiana Convention Center & Lucas Oil Stadium

Indianapolis

Pennsylvania Farm Show Complex & Expo Center

Pittsburgh

America's Center

St. Louis

Minneapolis Convention Center Music City Center Gaylord Opryland Resort & Convention Center

566,600

173,785

7,514

534,627

41,618

7,797

502,000

155,557

8,936

Minneapolis

475,000

123,000

Nashville

353,000

90,000

Nashville

263,772

341,000

28,000

8,612 9,806

* space following renovations to have been completed by Q4 2016 Source, convention center space: Trade Show Executive; Source, hotel room data: STR

traffic flow, upgraded infrastructure, enclosed loading docks and redeveloped the former Cobo Arena as a 40,000-square-foot grand ballroom. Today, Cobo offers 723,000 square feet of space, ranking it among the top 20 convention centers in the U.S., according to Trade Show Executive. That footprint allows it to host large trade shows and events like the North American International Auto Show as well as multiple events at the same time, said Cobo General Manager

Claude Molinari. This past weekend, Cobo hosted five events at the same time, including the Motor City Classic gymnastics event, the Michigan Democratic Party state convention and the Detroit Boat Show. A $2 million technology upgrade at Cobo completed in mid-December now allows 32,000 people to access Cobo’s Wi-Fi network at the same time. Labor costs at Cobo were fairly high in the past, Graham said, making it more expensive, from that standpoint, to hold a meeting in Detroit than it is in nonunion cities like Nashville or Indianapolis. “You had to have an electrician to plug a plus in or to move a chair,” he said. “There were strict rules that drove exhibitors crazy.” Lower hotel, food and airfare costs, however, helped mitigate that to bring the total cost of the event down somewhat, Graham said. Labor rules have changed along with everything else at Cobo, Molinari said. “You can always find a cheaper place to do business; it doesn’t necessarily mean you’re going to find a better place,” he said. Right-to-work cities don’t always offer the same skilled labor pool as Detroit can offer Claude Molinari: with its union Cobo Center is members, Molicompetitive. nari said. The cost for drayage — paying one price to unload freight, help set it up on the show floor, store the shipping containers and reverse that process after the show — is influenced by the labor rates in each city, Molinari said. The labor rates charged by Cobo are set annually through collective bargaining with the unions representing employees there. The lore of the past that exhibitors needed a union electrician to plug in plugs or other union labor to move chairs in their own booths is not true today, he said.

“The change from when we left in the early 2000s to today is just remarkable. … It was just a very different environment than what we would have had 10 years ago.” Debbie Holton, Society of Manufacturing Engineers

“Sometimes the lingering perception is difficult to overcome,” Molinari said, but Cobo’s management company has worked with the unions to remove mandatory minimum labor calls, reduced the rate on Sundays and holidays, expanded the straight time hours from 6 a.m. through 10 p.m. for the first eight hours and expanded the exhibitor rights to allow for greater do-it-yourself work where appropriate, Molinari said. There’s a lot more leeway for exhibitors to do things themselves that they couldn’t in the past, like moving chairs in their booths and plugging in simple extension cords, he said. “The union leadership was very progressive in working with us, and that has led to more shows, which in turn led to more work for the membership.” In 2016, the event center hosted 16 citywide conventions, quadruple the number held at Cobo in 2012, Molinari said. “So it is evident that we are competitive,” he said. The Dearborn-based Society of Manufacturing Engineers, which holds events across North America, brought its inaugural Big M Manufacturing Convergence to Cobo in 2014 after taking its predecessor, the SME International trade show, to what was then the Novi Expo Center in 2003 before ceasing the event in 2007. “When we brought our audience back in ’14 to Detroit, they were skeptical. They didn’t know what to expect,” said Debbie Holton, vice president of events and industry strategy for SME. About 4,000 people attended the show, with a number of them booking a total of 2,500 room nights at downtown hotels across the three-day event.

“Our folks were pleasantly surprised,” she said, from the VIP treatment and top-notch services they received at Cobo to the feeling of being safe in Detroit, an abundance of things to do, the views from Cobo’s riverfront ballroom and the ability to do an event out on the riverfront where locals were strolling by. “The change from when we left in the early 2000s to today is just remarkable. … It was just a very different environment than what we would have had 10 years ago,” Holton said. One thing SME has heard from its members attending Detroit events is that they knew there was lots to do downtown, but they wish there was an easier way to find the things they could do downtown, whether through more concierge services at area hotels, materials people can print out or an app, Holton said. SME plans to bring its Rapid+TCT, a 3-D printing show that launched in Detroit in 1991 and took place in Orlando, Fla., last year, back to Detroit in 2019. This year, it is expected to draw 4,000 to 5,000 people to Pittsburgh. SME hosts events ranging from 500 attendees to its Fabtech event, which draws 50,000, Holton said, and requires the space of McCormick Place in Chicago or the Las Vegas Convention Center. “I would say there’s potential for larger events with more people if there were more hotels” downtown in Detroit, she said. “But it is a delicate balance. You don’t want all these hotel rooms sitting empty. ... It’s hard for hotels to expand without a reliable source of business all the time.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // F E B R U A R Y 1 3 , 2 0 1 7

CRAIN'S LIST: LARGEST MEETING FACILITIES

Ranked by total square feet of meeting space

Square feet of largest meeting space

Capacity of largest theater/ classroom banquet/ cocktail style

Top executive(s)

Total square feet of meeting space

Cobo Center 1 Washington Blvd., Detroit 48226 (313) 877-8777; www.cobocenter.com

Claude Molinari general manager

940,000 623,000 12,000 / 6,000 9,000 / 15,000

100

Free Wi-Fi, broadcast studio, over 100 digital signs, 2,200 on-site parking spots, concierge and business center, on-site catering

The Henry Ford 20900 Oakwood Blvd., Dearborn 48124 (313) 982-6001; www.thehenryford.org

Patricia Mooradian president

544,020 22,000

Horse-drawn carriages, Model T rides, historic carousel, steam locomotive, historic re-enactments, tours, curators, gardens and private courtyards with most venues, organic and local menus available

Joe Louis Arena 19 Steve Yzerman Drive, Detroit 48226 (313) 471-3333; www.olympiaentertainment.com

Tom Wilson, president/ 439,380 30,197 20,000 / 10,000 CEO, Olympia 2,500 / 3,500 Entertainment/Red Wings

120

Unique event location for meetings, events, fundraisers, private ice-skating parties and corporate experiential opportunities

Ford Field 2000 Brush St., Detroit 48226 (313) 262-2000; www.detroitlions.com

Rod Wood president

375,000 100,000

65,000 / 500 1,200 / 3,500

Caterer, stadium tours, on-field activities, attached parking structure; the 65,000 capacity theatre-style is using the stadium seating; capacity for cocktail/strolling supper-style includes the field

Ultimate Soccer Arenas 867 South Blvd., Pontiac 48341 (248) 648-7000; www.ultimatesoccerarenas.com

George Derderian, president and managing partner

365,000 100,000

6,000 / 120 600 / 600

Full service bar, restaurant and coffee shop

350,000 215,000 12,000 / 6,000 6,000 / 6,000

Attached 126-room Hyatt Place Hotel, 25,000 square feet of pre-function space, wireless internet access, more than 5,700 parking spaces

200,000 19,500

4,404 / 650 1,144 / 1,144

Space for corporate functions with two theaters, break-out rooms, two ballrooms, full-service catering and valet or self-parking options

200,000 20,000

9,500 / 350 1,000 / 1,500

Atrium area, full-service catering, eight furnished luxury suites, ample on-site parking, private meeting rooms

125,000 20,305

5,000 / 400 800 / 1,000

Offers several event spaces for corporate receptions, galas, meetings and award ceremonies. Can accommodate an intimate reception for 50 to 5,000

Rank

6 7 7 9

Facility Address Phone; website

Blair Bowman Suburban Collection Showplace owner and president 46100 Grand River Ave., Novi 48374 (248) 348-5600; www.suburbancollectionshowplace.com Roger Sobran The Masonic of Detroit president 500 Temple St., Detroit 48201 (313) 832-7100; www.themasonic.com Mark Monahan Eastern Michigan University Convocation Center director 799 N. Hewitt Road, Ypsilanti 48197 (734) 487-5386; www.emutix.com Tom Wilson, president/ Fox Theatre CEO, Olympia 2211 Woodward Ave., Detroit 48201 Entertainment/Red Wings (313) 471-3333; www.OlympiaEntertainment.com

600 / 200 600 / 5,000

Number of meeting rooms Amenities

Detroit Marriott Renaissance Center 400 Renaissance Drive, Detroit 48243 (313) 568-8000; www.detroitmarriott.com

Shonda Johnson area general manager

100,240 25,801

2,100 / 1,200 1,800 / 2,200

Wheelchair access, internet access, self or valet parking, fitness center, concierge lounge, movie theater, food court, shops, People Mover station

Macomb Community College, south campus 14500 E. 12 Mile Road, Warren 48088 (586) 498-4198; www.macomb.edu/eventservices

James Jacobs B president

100,000 61,000

4,000 / 300 300 / 7,000

Sports & Expo Center, John Lewis Conference Center, free parking and internet, catering services

Michigan Science Center 5020 John R St., Detroit 48202 (313) 577-8400; www.mi-sci.org

Tonya Matthews president and CEO

85,000

8,700

300 / 300 300 / 2,000

Wheelchair access, event management team, special exhibits, nine hands-on activity galleries, four theaters including two dome theaters, 4-D theater and meeting space, large science stage, limited VIP parking

Emagine Canton 39535 Ford Road, Canton Township 48187 (734) 721-3456; www.emagine-entertainment.com

Paul Glantz, chairman

80,000

183 / 183 250 / 600

Movie theaters that have 18 screens with seating for 30-183; spacious lobbies for strolling dinners and cocktail parties

Emagine Novi 44425 W. 12 Mile Road, Novi 48377 (248) 468-2990; www.emagine-entertainment.com

Paul Glantz, chairman

80,000

475 / 475 250 / 600

Movie theaters that have 10-18 screens with seating for 100-475; spacious lobbies for strolling dinners and cocktail parties

Macomb Community College, center campus 44575 Garfield Road, Clinton Township 48038-1139 (586) 498-4198; www.macomb.edu/eventservices

James Jacobs B president

75,000

21,000

1,271 / 250 250 / NA

Macomb Center for the Performing Arts, University Center/Professional Development Center, Lorenzo Cultural Center, free parking and internet, catering services

Emagine Royal Oak 200 N. Main St, Royal Oak 48067 (248) 414-1000; www.emagine-entertainment.com

Paul Glantz, chairman

71,000

350 / 350 250 / 700

Three private event areas: seats up to 250. All areas combined (including restaurant area) can host up to 600 people on two levels

Palace of Auburn Hills 6 Championship Drive, Auburn Hills 48326 (248) 377-0100; www.palacenet.com

Bob Wentworth, Platinum 70,000 Equity partner; Arn Tellem, Palace vice chairman

30,000

1,600 / 150 750 / 1,000

LCD projectors, private entrance, catering, natural stone and marble, granite surfaces, show kitchens with open stone ovens, guided tours, custom menus

MotorCity Casino Hotel 2901 Grand River Ave., Detroit 48201 (866) 752-9622; www.motorcitycasino.com

Marian Ilitch owner

67,000

19,604

2,200 / 1,379 1,500 / 2,200

Teleconferencing capabilities, individualized HVAC meeting rooms, dedicated meeting concierge, pre-function areas, wireless internet, automobile accessible

Crystal Park 17099 Champaign, Allen Park 48101 (313) 388-9001; www.crystalgardensonline.com

Roger Roels president

65,000

5,500

450 / 300 325 / 325

Newly remodeled, on-site catering services

General Motors Heritage Center 6400 Center, Sterling Heights 48312 (586) 276-1498; www.gmheritagecenter.com

Greg Wallace manager

64,500

64,000

500 / 240 500 / 500

Edward Hotel & Convention Center C 600 Town Center Drive, Dearborn 48126 (313) 592-3622; www.hotel-dearborn.com

Richard Hazem, managing 64,000 director, Edward Hotel Group

17,100

2,500 / 1,050 1,200 / 3,800

Showroom capacity is 500 and features 165 historic vehicles and a presentation area with computer-controlled lighting, 16'x 9' retractable screen, projector, internet, wireless microphones, other. Separate conference room that seats 15 Free parking, valet parking, high-speed internet access, wheelchair access, business center

Deborah Duyck district executive

60,000

6,000

800 / 130 NA / 200

Heinz C. Prechter Educational and Performing Arts Center 21000 Northline Road, Taylor 48180 (734) 374-3512; www.wcccd.edu/about/ PerformingArtsCenter.htm

Free parking, wireless internet, large theater, exhibit gallery and enclosable rehearsal space

Music Hall Center for the Performing Arts 350 Madison Ave., Detroit 48226 (313) 887-8500; www.musichall.org

Vincent Paul, president/ artistic director

60,000

15,000

1,731 / 100 300 / 500

Full lighting and sound and video capacity

Emagine Macomb 15251 23 Mile Road, Macomb 48042 248-703-4735

Paul Glantz, chairman

55,000

136 / 136 200 / 200

Washtenaw Farm Council Grounds 5055 Ann Arbor Saline Road, Ann Arbor 48103 (734) 429-3145; www.washtenawfarmcouncil.org

Craig Moody general manager

55,000

9,000

600 / 900 600 / 400

20 acres of parking, off-premises catering permitted, banquet facility, 400-foot track area with bleachers and sound system, 62 electrical campsites, dump station on grounds

Walsh College-Troy campus 3838 Livernois Road, Troy 48083 (800) 925-7401; www.walshcollege.edu

Jenny Carson conference coordinator

55,000

3,900

300 / 180 120 / 100

Full-service catering and high-tech rentals; single classroom and campuswide rental; free parking; computer lab, meeting rooms and multimedia conference rooms; free Wi-Fi

Reclining seats, full-service cocktail bar and display kitchen, 9 stadium-style auditoriums

This list of meeting facilities is an approximate compilation of the largest such facilities in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Information is provided by the venue unless otherwise noted. It is not a complete listing but the most comprehensive available. NA = not available. An expanded list is available with a Crainâ&#x20AC;&#x2122;s data membership at crainsdetroit.com/lists

B To be succeeded by James Sawyer IV as president, effective July 1, 2017. C Formerly known as the Edward Village Michigan, Royal Dearborn Hotel & Convention Center, Hyatt Regency Dearborn and Adoba Hotel Dearborn/Detroit.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 3 , 2 0 1 7

DEALS & DETAILS ACQUISITIONS & MERGERS

Premier MRI/CT, Southfield, a diagnostic imaging center, acquired BioMagnetic Open MRI, Madison Heights, and The Imaging Center, Allen Park. Website: premiermri.us. 

 Pinkerton, Ann Arbor, a global risk management agency, acquired Seccredo AB, Stockholm, Sweden, a risk and security consulting services provider. Website: pinkerton.com. 

Stoneridge Inc., Novi, an automo-

tive designer and manufacturer of electrical and electronic components, modules and systems, acquired Orlaco Products B.V., Barneveld, Netherlands, a supplier of vehicle camera solutions. Website: stoneridge.com.

CONTRACTS

HBPO, Lippstadt, Germany, an auto supplier of modular front-end systems, has selected AutoCom Associates, Bloomfield Hills, as its North American public relations agency of record. Websites: 

usautocom.com, hbpogroup.com.  P2R Associates, Livonia, was named public relations agency of record for nonprofit Life Directions, Detroit. Website: p2rassociates.com.  Morpace Inc., Farmington Hills, a marketing research and consulting firm, and Marketing Evolution, New York City, a marketing analytics company, , are partnering to bring automotive clients ROI Brain, a marketing tool. Websites: morpace.com, marketingevolution.com.  kVA, Royal Oak, a technical and management consulting group, an-

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CALENDAR TUESDAY FEB. 14

Giving Up the Wheel: The Future of Mobility and Its Impact on Michigan. 11:30 a.m.-1:30 p.m. De

troit Economic Club. David Dauch, chairman and CEO, American Axle & Manufacturing Holdings; Matt Simoncini, president and CEO, Lear Corp.; and James Verrier, president and CEO, BorgWarner Inc., will dissect current mobility efforts and share insights on the rapidly evolving road ahead. Westin Book Cadillac, Detroit. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org.

WEDNESDAY FEB. 15



Digital Marketing Boot Camp. 8-11 a.m. Detroit

Regional Chamber. Learn the latest innovations in social media, how to digitally tell a brand’s story, and trends and tips to improve digital marketing strategy. College for Creative Studies, Detroit. $55 members; $95 nonmembers. Contact: Marianne Alabastro, phone: (313) 5960479; email: malabast@detroitchamber.com; website: detroitchamber.com/digital-marketingboot-camp.  Importance of Workforce Development in Michigan. Noon-1:30 p.m. Home Builders Associa-

tion of Southeast Michigan. Lt. Gov. Brian Calley will address attendees of the Great Lakes Builders Show on the importance of workforce development in Michigan. Suburban Collection Showplace, Novi. $40 lunch; show entrance free for HBA members, additional $40 for nonmembers. Contact: Susan Adler Shanteau, phone: (248) 862-1016; email: susanas@ builders.org; website: greatlakesbuildersshow. com.

UPCOMING EVENTS

Young Professionals Panel — The Changing Face of Leadership. 7:30-9 a.m. Feb. 21. Leadership 

LAW

NONPROFITS

Matthew C. Herstein

Tamera Kiger

Deneweth, Dugan & Parfitt, P.C.

The Senior Alliance, Area Agency on Aging 1-C

Principal Member

Deneweth, Dugan & Parfitt, P.C., located in Troy, Michigan, is proud to announce its newest principal member, Matthew C. Herstein. Mr. Herstein joined the firm in 2005 and specializes in construction, surety and commercial litigation, as well as real estate and corporate transactions. He is a graduate of the University of Michigan, with honors, and the University of Nebraska College of Law, with distinction; and currently serves on the board of the Michigan Supreme Court Historical Society.

Executive Director

The Senior Alliance enthusiastically welcomes Tamera Kiger to the agency. Tamera brings over 25 years of experience and leadership working to improve the health care delivery systems for individuals with needs in our state. As a pioneer for community based living facilities in Michigan, she has been on the forefront of developing solutions for at-risk populations. Recently she led the implementation of an integrated care delivery model for dually eligible individuals with Medicare and Medicaid.

Oakland. Moderator: Jennifer Korman, Mercedes-Benz Financial Services. Panelists: Talisa Norton, co-owner/COO, All Pro Color; Sara Stoddard, chief of emergency management, Oakland County Homeland Security Division; Jordan Twardy, community and economic development director, city of Ferndale. MSU Management Education Center, Troy. $32 members; $36 nonmembers. Website: leadershipoakland. com. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

PEOPLE: SPOTLIGHT Posthumus named Snyder’s chief of staff Gov. Rick Snyder has named former Lt. Gov. Dick Posthumus as his chief of staff, AP reported. Posthumus, an adviser to Snyder since 2011, was lieutenant Dick Posthumus governor under Gov. John Engler and lost a race for governor in 2002. Posthumus fills a vacancy created by the resignation of Jarrod Agen, who is leaving Lansing to work for Vice President Mike Pence. Posthumus, a Republican from the Grand Rapids area, was a state senator for 16 years.

Detroit health chief to resign, run for governor Detroit’s public health director, Abdul El-Sayed, M.D., told Crain’s he will resign and run for governor of Michigan as a Democrat in 2018. El-Sayed said his last day with the Abdul El-Sayed city will be Feb. 17. He will officially announce his candidacy in the upcoming weeks. El-Sayed, 32, was appointed executive director of the Detroit

Department of Health & Wellness Promotion in 2015 by Mayor Mike

Duggan. He was recognized in Crain’s 40 Under 40 class of 2016.

Entrepreneur Stoliker joins MSU program Travis Stoliker, an angel investor and co-owner of Saddleback Barbeque in Lansing, has been named entrepreneur-in-residence for Michigan State University’s Con-

quer Accelerator. Stoliker is former chief marketing and sales officer for Lansing-based Liquid Web Inc. and current entrepreneur-in-residence at Spartan Innovations, where he helps MSU faculty and student businesses and technologies into the market. At Conquer Accelerator, he will be responsible for guiding and mentoring five early-stage and startup companies participating in a 10-week accelerator program, next slated for June 2-Aug. 18. Travis Stoliker

February 13, 2017

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CRAIN’S DETROIT BU I N E SBS // F E B R U A R Y 1 3 , 2 0 1 7 CRAIN ’S SDETROIT USINESS

infrastructure projects and expansion of temporary work visas, CBC News reported. The mobility of Canada’s labor force, particularly those looking to travel from Windsor to metro Detroit, is now constrained by NAFTA provisions as industry has become more technical. When the agreement was drafted, a list of job categories was drafted to allow temporary work visas for certain industries, including automotive.

BLOOMBERG

A renegotiation of NAFTA could change the country-of-origin rules for automakers.

NAFTA FROM PAGE 3

assembly and the engine and transmission’s country of origin. Yet, even those figures are not clear. U.S. and Canadian content are combined into one number, and automakers are allowed to round up totals on parts that are more than 70 percent made in U.S. and Canada to 100 percent made in those countries. Ford Motor Co. confirmed it does not currently track the percentage of U.S. content on its vehicles, only adhering to the AALA guidelines of the combined U.S.-Canadian content. General Motors Co. did not respond to requests on whether it tracks all U.S. content. FCA US LLC declined to provide detail. If production of certain parts does shift across the border, small increases in employment could result in a win for Southeast Michigan’s workforce.

The used car conundrum For Southeast Michigan automakers and suppliers, used cars could spark a battle between the U.S. and Mexico as a provision looms to open the floodgates on used cars from the U.S. Mexico banned used car imports from the U.S. for decades, which constrained the used car market from imports and pushed new car sales. From 1996 to 2007, new car sales in Mexico spiked from 331,614 units to 1.1 million units, according to research from Ann Arbor-based Center for Automotive Research. But the country was required, per NAFTA, to begin easing restrictions in 2009. New car sales plummeted, partially due to the Great Recession that bled across the border, from 1.04 million units in 2008 to 756,555 in 2009. That figure has recovered and new car sales in 2016 nearly reached 1.6 million in Mexico last year, but by 2019 Mexico must eliminate tariffs on used vehicle imports from the U.S. and Canada, per NAFTA. This could suppress new car sales, and Mexico could push to extend the used car restrictions in renegotiation. U.S. automakers on the other

U.S. automakers would love to see used cars migrate across the border to constrain the U.S. used car market. The average age of used cars on U.S. roadways hit a record in 2016 at 11.6 years old, driven by the manufacturing of higher-quality vehicles, according to Southfieldbased IHS Markit. hand, would love to see used cars migrate across the border to constrain the U.S. used car market. The average age of used cars on U.S. roadways hit a record in 2016 at 11.6 years old, driven by the manufacturing of higher-quality vehicles, according to Southfield-based IHS Markit. A reduction in the supply of used cars would raise prices and turn more buyers toward new vehicles — which are projected to begin slipping from last year’s record high of 17.6 million units. This would be a big win for Southeast Michigan’s auto industry and could result in sustaining or creating new jobs in the region as well as boosting revenue.

The question of wages The Mexican government may cede one or both of those U.S. asks, but it will want something in return. While NAFTA boosted exports to the U.S. — exports to the U.S. grew from $39.9 billion in 1993 to $294 billion in 2016 — it failed the people of Mexico. The average annual wages in Mexico dropped nearly 12 percent between NAFTA’s enactment in 1994 and 2015, according to data from the Organization for Economic Cooperation and Development, using 2015 exchange rates. Comparatively, average annual wages in the U.S. increased 32 percent in the U.S. and 38 percent in Canada during the same period. Corn is to blame ... sort of. While NAFTA removed agriculture tariffs, it did not restrict U.S. subsidies — the government heavily subsidizes the farming of corn and other crops. Subsidized, cheaper U.S. corn flooded into Mexico and routed Mexican

farmers, ultimately claiming roughly 2 million agriculture jobs, according to a 2014 report from the Center for Economic and Policy Research. Unsurprisingly, Mexicans poured over the Rio Grande into the U.S. — rising by 79 percent between 1994 and 2000. Immigration has since dropped off from its peak in 2000 of more than 770,000 Mexican immigrants crossing the border to a low of 140,000 in 2010, thanks to stricter immigration policy and the effects of the Great Recession. Mexico will look for ways to further boost its middle class without drowning out foreign investment from automakers. One way to accomplish this is to establish higher minimum wages at auto plants in the country — a move that may garner support from unlikely partners: the UAW and President Trump. The UAW has blamed NAFTA for many of its woes, including its diminishing ranks across the country. UAW President Dennis Williams plans to host a roundtable for media in the coming weeks to discuss its position on the renegotiation, but wouldn’t comment for this analysis. The Trump administration could push for this as well, as it could create a more compelling reason for manufacturers to produce in the U.S. Think about that. A Republican president, labor unions and the Mexican government joining sides against the U.S. auto industry.

MARKET PLACE LEGAL NOTICES

NOTICE OF PUBLIC HEARING All Citizens are advised that the Detroit Transportation Corporation (DTC) has prepared an application for State of Michigan financial assistance for fiscal year 2018 as required under Act 51 of the Public Acts of 1951, as amended, and for federal assistance as required under the federal transit laws, as amended. The DTC is requesting estimated total capital funding through the following sources: Section 5307 for DTC Infrastructure and Equipment Upgrades $452,000; Section 5337 DTC Infrastructure and Equipment Upgrades, $1,377,920; Section 5310 DTC Infrastructure and Equipment Upgrades,$440,625 and (MI) Act 51 Operating Assistance, $5,100,000. Notice of these federal funds has been previously published in the Transportation Improvement Plan prepared by SEMCOG. The DTC ensures that the level and quality of transportation service is provided without regard to race, color, or national origin in accordance with Title VI of the Civil Rights Act of 1964. For more information regarding our Title VI obligations or to file a complaint, please contact the DTC at the address listed below. The proposed application is on file at the DTC and may be reviewed from Wednesday, February 15, 2017, through Wednesday, March 15, 2017 between the hours of 9 a.m. and 4:30 p.m. Written comments or requests regarding the application and/or written requests for a public hearing to review the application must be received by Thursday, March 30, 2017. If a hearing is requested, notice of the scheduled date, time and location will be provided at least 10 days in advance. Submittals should be sent to Mr. Oliver Lindsay, Grant Manager, Detroit Transportation Corporation, 535 Griswold Street, Suite 400, Detroit, MI 48226 or 313-224-2160. Barring any changes made in response to the written comments, this document will become final.

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Oh, Canada Let’s not forget the 800-pound maple leaf in the room. Canada is expected to push for its own set of new provisions, including a more open government procurement system for companies to compete on

However, rapid technology advancements have changed the labor needs of the industry, and NAFTA has not adjusted. Canada’s desire to expand that list could lead to new temporary workers crossing the border into Southeast Michigan, which could expand the talent pool. It’s unknown whether the Trump administration, which has sought to restrict temporary visas, will be receptive to Canada’s wish list.

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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 // F e b r u a r y 1 3 , 2 0 1 7

ILITCH FROM PAGE 1

devotion to my mother Marian and all of his loved ones. My father truly lived his life well, and we will work hard to uphold his spirit, his values and his remarkable legacy.” Ilitch is just as well known as owner of the Detroit Tigers, for whom he was a minor-league infielder in the 1950s, and of the Detroit Red Wings, a hockey team that has won four Stanley Cups under his tenure and made the players for 25 consecutive years. The son of Macedonian immigrants Sotir Ilitch and Sultana Ilitch, Mike Ilitch — known affectionately as “Mr. I” to family, friends and many employees — was born in Detroit on July 20, 1929, just three months before the infamous Wall Street crash that spun the nation into the Great Depression. He graduated from Detroit Cooley High School in 1947, and served four years in the U.S. Marine Corps. After the military, he reportedly worked for a cement company, sold dinnerware and aluminum awnings, and in a foreshadowing of things to come, made pizzas. But his first love was baseball. His father, a tool-and-die worker for Chrysler, frowned on his son’s baseball career, calling it a “bum sports” according to a 1992 New York Times profile of Mike Ilitch. Ilitch appeared in 336 games during his four seasons in the minors, during which he was a career .280 hitter. His best full season was 1953 with the Tampa Smokers of the Florida International League, where the 23-year-old Ilitch, who played second base, appeared in 115 games and was second on the team with a .310 batting average. He also played for the Jamestown Falcons, a Detroit Tigers affiliate in Pennsylvania-Ontario-New York League in 1952. His other farm team stops included the Hot Springs Bathers of the Cotton States League in 1952; the Miami Beach Flamingos of the Florida International League in 1953-54; the St. Petersburg Saints of the Florida State League, Norfolk Tars of the Piedmont League; and Charlotte Hornets of the old South Atlantic League. A knee injury ended his baseball career in 1955. With $10,000, Ilitch opened the family’s first pizza store on May 8, 1959, in Garden City. They sold their first franchise in 1962 for $5,000, and Little Caesars Enterprises Inc. now has more than 4,000 around the globe. Little Caesars had more than 5,000 locations in the 1990s but financial troubles and squabbles with franchisees forced about half of them to be closed. The company subsequently rebounded after several business strategy changes, including the $5 “Hot-N-Ready” concept in 2004. It is the world’s largest carry-out pizza company. The chain moved its headquarters from Farmington Hills to Detroit in 1989 after renovating the Fox Theatre and its 186,000-square-foot office space in a process that took 18 months and cost $12 million. Its re-

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ILITCH HOLDINGS

Mike Ilitch’s love of the Red Wings, and his willingness to spend money on the best players, helped bring the Stanley Cup back to Hockeytown after a decades-long drought. opening was marked with a concert by Smokey Robinson and the Count Basie Orchestra, and then Frank Sinatra, Sammy Davis, Jr. and Liza Minnelli a few weeks later. In 2014, the Ilitches announced a new $150 million headquarters, called the Little Caesars Global Resource Center, now under construction next to the Fox Theatre. The nine-story, 240,000-square-foot facility at Woodward Avenue and Columbia Street will include a restaurant on the ground floor. Its front windows will be shaped to resemble pizza slices — emblematic of what some say is the kitschy style of Comerica Park, the home ballpark of the Tigers that’s adorned in nostalgia. Little Caesars had $3.5 billion in 2016 gross sales via its 4,078 locations, according to data from industry magazine Pizza Today. It has stores in all 50 states and in 18 international markets. The chain is the third largest in sales and number of stores after Plano, Texas-based Pizza Hut (16,063 locations) and Ann Arbor-based Domino’s (13,000 locations). Pizza Hut has 25.1 percent of the $22 billion U.S. pizza market, followed by Domino’s at 18.8 percent and Little Caesars at 14.7 percent. A significant portion of the Ilitch family’s $3.3 billion in 2015 revenue was generated by the pizza chain, and is helping to pay for the 50-block redevelopment around the $635 million hockey arena that will open this fall for the Red Wings. The project, known as The District Detroit, is a $2.2 billion plan of residential, retail, restaurant and office space, along with public gathering areas and green spaces, in an area that sprawls from around the new arena across I-75 to around the Fox Theatre and Comerica Park. Ilitch companies are spending more than $1 billion on The District Detroit, with the remainder expect-

ed to come from third-party investors. Pizza money previously fueled the $8 million purchase of the Red Wings in 1982 and the $85 million purchase of the Detroit Tigers in 1992 (from rival Tom Monaghan, founder of Ann Arbor-based Domino’s). Ilitch’s sports team investments proved wise: The Tigers are valued at $1.15 billion and the Red Wings at $625 million, according to Forbes. com. The Red Wings, a moribund franchise when Ilitch bought it from the Norris family, began to improve in the 1980s and eventually won Stanley Cup championships in 1997, 1998, 2002 and 2008. They’ve made the playoffs every season since 1991. The team will move in September from city-owned Joe Louis Arena to what is now called Little Caesars Arena. They’ll share the venue with the Detroit Pistons, who agreed in November to relocate to the arena from the Palace of Auburn Hills. To get the new arena built, Ilitch struck a deal to get certain downtown property taxes earmarked to pay off $250 million in state-issued bonds to pay for the new hockey arena, while revenues generated by events at the arena will be used to pay the reminder of the capital cost — a deal critics call unfair corporate welfare for a billionaire family. Son Christopher Ilitch, who has led the family businesses’ day-to-day operations for many years, was the quarterback of the both the arena project and the Pistons deal. Mike Ilitch contributed $145 million of the $326 million cost of Comerica Park that opened in 2000 as the Detroit Tigers’ new home. He’s certainly been willing to open his checkbook for players: He’s spent $1.8 billion on Tigers player salaries since buying the team, including eye-popping contracts for superstars such as Miguel Cabrera

and Justin Verlander — moves that gave Ilitch a reputation as an owner willing to spend large-market money for a mid-market franchise. However, Ilitch’s spending didn’t result in the World Series he was vocal about coveting. The team won the American League pennant in 2006 and 2012, but lost both World Series. Ilitch was inducted into the NHL Hockey Hall of Fame in 2003; the Michigan Sports Hall of Fame in 2004; and the U.S. Hockey Hall of Fame in 2004. His other sports ventures over the years included successful youth hockey and adult softball organizations, and the Detroit Drive of the Arena Football League. The Drive were the AFL’s most successful team, winning four titles, until Ilitch sold them after buying the Tigers in 1992. Ilitch surprised many with his announcement in 2010 that he was pursuing an ultimately unsuccessful bid to buy the Detroit Pistons. Such a move was possible only because of the vast fortune he’d amassed. Forbes.com estimates he and Marian Ilitch are worth $4.9 billion. They have used some of that money to help others over the years. Ilitch’s philanthropy has included the Little Caesars Love Kitchen created in 1985 to aid the hungry and people amid disasters. Little Caesars also provides deep discounts for veterans who want to launch a franchise. Ilitch Charities, launched in 2000, has given millions in cash and inkind donations to various causes, according to the family. In 2015, he gave $40 million to Wayne State University for what will be the Mike Ilitch School of Business. The school will be built next to the new Red Wings arena. Wayne State said the donation, which is $35 million toward the

building construction and $5 million for an endowment, is the largest in the history of the university and ranks as one of the top 10 gifts ever to a public business school in the United States. Critics have noted that Ilitch, despite being a billionaire, has received taxpayer subsidies for his sports stadiums, and some have accused him of allowing some of his real estate properties to crumble. He also was a target of ire for having some older buildings razed to make way for Little Caesars Arena. The Little Caesars name was born out of Marian Ilitch’s admiring nickname for her husband. They met on a blind date when she was a Delta Air Lines reservations desk clerk who had taken a single accounting class, according to the family’s official biography. She also is of Macedonian descent. Marian Ilitch has long been known as the financial mind behind the family’s business holdings, while Mike had the ideas and visions. They had seven children: Atanas (born Thomas), Chris, Denise, Ron, Michael, Jr., Lisa Ilitch Murray, and Carole Ilitch Trepeck The family issued a statement in May with a basic outline of its succession plan that says the sports teams and pizza business will remain Ilitch-owned, and Chris Ilitch will eventually follow his parents in managing everything. Chris Ilitch has been president of the family’s management umbrella company, Ilitch Holdings Inc., since 2000. His sister Denise for a time was co-president, but after a sibling dispute, Chris in 2004 assumed full dayto-day oversight alone of all the family’s holdings and president and CEO. Mike Ilitch was chairman of Ilitch Holdings, and Marian Ilitch was vice chairman. It wasn’t immediately clear if she would assume the chairmanship. The family’s succession statement didn’t specifically outline ownership details, or address Major League Baseball’s prohibition against ownership of teams and casinos. Marian Ilitch solely owns MotorCity Hotel Casino, and has pursued gaming interests elsewhere. MLB has acknowledged in the past that it is aware of succession plans for all of its clubs. Under tax laws, Marian Ilitch can inherit her husband’s assets without any estate tax liability. Generation-skipping assets can be shielded to some degree by trusts, which Mike Ilitch is known to have used, according to public records. The Ilitches have declined to discuss the intricacies of their succession ownership strategy. That strategy has fueled media and public scrutiny in recent years because Ilitch was seen less and less in public, looking frail when he did show up on TV during sports-related events. It’s known that in he underwent triple heart bypass at Beaumont Hospital in Royal Oak in January 1998, and reportedly underwent treatment for a subsequent undisclosed bout with cancer. He’s believed to have had at least two bypass surgeries.

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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 // F E B R U A R Y 1 3 , 2 0 1 7

SCHOOLS FROM PAGE 1

“I don’t want to see neighborhoods that are on the early path to recovery be dealt a setback,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber, who worries that abruptly closing two dozen schools could “create other crises” in city neighborhoods. In Detroit, “schools are the mainstay of any neighborhood,” said Gregory O’Neal, owner of O’Neal Contracting Group, a commercial construction company with an office two blocks from Mumford. O’Neal moved his business from his home in the University District neighborhood to a Wyoming Street storefront in September. “We’re a stable area, and to have an empty high school in our community, that would bring down all of the values of properties, residential and commercial,” O’Neal said. Mumford borders the Bagley neighborhood — where blight is spotty — and is within two miles of Marygrove College, University District, the University of Detroit Mercy and the re-emerging Livernois Avenue of Fashion. Business owners around Mumford also question the financial wisdom of the state shuttering a $50 million school building that was completely rebuilt just five years ago with proceeds from a 2009 voter-approved bond. “Why would you close this facility?” asked Keith Harrington, owner of the Mustangs snack shop located across Wyoming Street from Mumford High School. “A lot of people bought these homes because of the school.” The School Reform Office’s school closing plan has reignited debate in Detroit over how to fix the city’s fractured system of public schools, less than seven months after the Michigan Legislature spent $617 million relieving Detroit Public Schools of crushing debt that threatened to bankrupt the state’s largest school system. Mayor Mike Duggan has injected himself into the battle, calling the school closings “irrational” because many of the other nearby public schools in Detroit are on the brink of being deemed failing schools. “You don’t throw people out of the boat without looking out to see if there’s a life raft,” Duggan said at his Feb. 4 campaign re-election kickoff. Duggan and the newly elected Board of Education for the Detroit Public Schools Community District have threatened to sue Gov. Rick Snyder’s administration to stop the closures. State officials are evaluating whether closing the schools would create unreasonable hardships for students — such as distance to other schools with capacity — if the buildings are shuttered. “Getting into a debate over individual schools is premature because we are still waiting on the (School Reform Office’s) review of all the data and the potential hardship of school closures on a community and its families,” Snyder spokesman Ari

CHAD LIVENGOOD

Steve Hachigian, a ninth grade English teacher at Mumford High School in Detroit, leads a classroom discussion on the “Watchmen” graphic novel the students are reading.

“I think taxpayers want to know that the children we are matriculating into society are employable ... (and) have the skills to fill the many jobs and the many vacant college seats that are now available.” Natasha Baker, Michigan school reform officer

Adler said. “So should these failing schools be closed or aggressively reformed? We don’t know just yet. But the focus needs to stay on the most important thing in this discussion: saving children.” The Snyder administration is facing pressure from school leaders, parents, businesses and civic groups to consider the impact that another round of school closings will have on Detroit neighborhoods and commercial corridors ravaged by decades of abandonment and disinvestment. “It will cause disruption in the neighborhoods,” said Veronica Conforme, chancellor of the Education Achievement Authority, the Snyder administration’s school reform entity that has operated Mumford for the past five years. Community pushback has Michigan’s school reform officer, Natasha Baker, on the defensive as she tries to

force major changes in the state’s worst-performing schools under a 7-year-old law that has never been fully enforced as its authors envisioned. “I think the taxpayers want a return on their investment,” Baker said. “I think taxpayers want to know that the children we are matriculating into society are employable ... (and) have the skills to fill the many jobs and the many vacant college seats that are now available.” Baker’s office announced the 25 school closings in Detroit — 38 total statewide — on Jan. 20, initiating a 45-day review period that will include visits to the schools and interviews with teachers, parents and other stakeholders. “We want to hear what’s been working, what’s not been working, but we need people to be honest,” Baker said. “If we go in and we know the data is 0 percent of kids are proficient in any content area and you’re telling me on another end that all children are learning, there’s a disconnect there.” Other options for schools facing closure include replacing half of the teaching staff, converting the school into a charter school run by a private management company or turning over operations to a state-appointed CEO to serve as an academic emergency manager.

Missing a turnaround? Samuel C. Mumford High School has been on the state’s list of the bottom 5 percent in academic performance since its was created in 2010. In 2012, Snyder’s emergency

manager of Detroit Public Schools transferred the newly rebuilt school into the EAA in an effort to try a different academic turnaround approach. But the EAA, under previous leadership, was rocked by organizational problems, intense political scrutiny from Democratic politicians and scandal. Mumford’s first principal, Kenyetta Wilbourn-Snapp, is serving a one-year jail sentence at a federal prison in Kentucky for taking a $58,000 bribe from a tutoring vendor. Academically, Mumford students have continued to perform poorly on state-sanctioned tests since the EAA takeover. In the 2015-16 school year, just 14 percent of the 11th graders were proficient in reading on the SAT. Fewer than 5 percent of 11th graders were proficient in science and social studies. Those students in this year’s graduating class scored an average of 396 on the SAT; the statewide average was 494 out of 800 points. Like many schools, Mumford has been through a series of different kinds of academic intervention measures in an effort to boost test scores. Last year, under Conforme’s leadership, the EAA split the 800-student school into two smaller 400-student schools within the 1,500-student building — one called Mumford Academy and the other called Mumford High School. Nir Saar, the principal of Mumford Academy, said the ninth-graders last year advanced more than two grade levels in reading under the new learning model. But their academic growth isn’t

part of the state’s closing criteria, which focus solely on 11th-grade test scores, Saar said. “All of that innovation and all of that growth is not captured in the test scores for juniors,” Saar said. “So I think that is a flaw.” News of the potential closure has left students feeling dispirited, said Andria Bellamy, a special education teacher at Mumford High School. “Every time we make a little bit of progress, it’s always being shaken up,” said Bellamy, who has worked with students with learning disabilities for the past two years. “Their spirit is being broken up. It’s very frustrating.” Closing Mumford before allowing school leaders to prove how their small-schools model works for students living in poverty would be disruptive to their academic progress, Conforme said. “In a high school, when you’re restarting and rebuilding a high school grade by grade, it takes four years to take effect,” Conforme said. “We can’t just reinvent a new strategy every year. You have to give it time.” But in Lansing, patience is growing thin for turning around schools like Mumford that have been at the bottom rung of the student achievement ladder for this entire decade. “The schools on the list of low-performing schools are negatively impacting the lives of thousands of children every year,” Adler said. “Gov. Snyder wants people to work together and find the best path to take so we can finally end that cycle of failure.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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outside the city to get a feel for all that is going on here,” said Whitney Eichinger, director of communications for Bedrock, which was co-founded by Gilbert, the founder and chairman of Quicken Loans Inc. and Rock Ventures LLC who has amassed a 15 million-square-foot real estate portfolio in the past fiveplus years, largely in and around downtown Detroit. “All of us who are doing business in the city want to see more companies moving downtown, more retail options, and more people moving downtown to live, (so this is) giving those who are not here a glimpse into all the activity that is going on.” Holly Shreve Gilbert (no relation to Dan Gilbert), a journalist and journalism professor at Oakland University, said it remains to be seen what niche TBD will fill. “That's a question mark right now,” said Shreve Gilbert, who praised the publication for design, writing and photography. “What it looks like to me is they are trying to tell stories of Detroit that don’t get told.” That’s important in a Detroit media market that has suffered layoffs

TRADES FROM PAGE 3

particular — to view becoming a skilled tradesperson as becoming a professional,” Snyder told lawmakers last week as he unveiled his budget proposal in Lansing. “We’ve got the opportunities, folks. We need our young people to go into them.” Enrollment in high school vocational programs has not returned to where it was just a decade ago as Michigan adopted a more rigorous college-prep high school curriculum, and the recession caused some labor unions to scale back or stop apprenticeship programs — leaving them with a talent shortfall as manufacturing and construction industries began to recover. More than 41,000 jobs requiring an associate degree or less were posted last week on the state’s talent portal, mitalent.org. That gap is one reason Snyder is looking to high school as an opportunity to expose younger students to the trades before they make their college or job decisions. Oakland County Executive L. Brooks Patterson weighed in during his recent State of the County ad-

and cutbacks for years, she said. “The Detroit Free Press and Detroit News don’t have the luxury to do this kind of thing anymore.” Gilbert’s team, primarily Nick Penrod, vice president of marketing for Bedrock, quietly launched the TBD website in the fall. It has published a stream of generally positive feature articles online since. Story ideas are generated internally by Penrod and other Gilbert employees across his dozens of companies (known internally as the Family of Companies, or FOC), as well as the magazine’s freelance writers, Eichinger said. “Its brand and editorial content is intentionally independent from Bedrock,” she said. To be sure, none of the stories in the first edition have overt ties to Gilbert’s vast business empire, which includes the billionaire’s massive Detroit real estate portfolio, one of the nation’s largest online mortgage lenders and dozens of other businesses (not to mention the Cleveland Cavaliers; a gaming/casino business, JACK Entertainment; and philanthropic and community engagement initiatives). Among its stories in the first few months of operation: a profile of Wallace Detroit Guitars, which is

run by Detroit RiverFront Conservancy President and CEO Mark Wallace; a look at a Museum of Contemporary Art and Design exhibition on architecture; a piece on Antietam restaurant in the Eastern Market district; and a profile of Airea Matthews, the Detroit-based writer who won the prestigous Yale Younger Poets prize. Apart from TBD, another publishing venture is the Robb Report, which was purchased by Rockbridge Growth Equity LLC, a company Gilbert co-founded. Robb Report covers luxury lifestyles through magazines, websites, smartphone apps, events and a private club. TBD and Robb Report do not share any resources, Eichinger said. Gilbert didn’t come up with the idea for TBD, but he signed off on the concept, Eichinger said. “The philosophy is simple,” she said, adding that the plan is to remain a features-only publication, not transition to breaking or hard news coverage. “TBD seeks to expose the inspirational stories and people we come into contact with in the work we do every day.” TBD’s inaugural print edition was published last month. Bedrock declined to disclose circulation numbers, but an employee of Troy-based

Tepel Brothers Printing Inc., which produced the first edition, said 5,000 were made. Bedrock, which is paying for TBD, also declined to disclose sales and budget figures. Its masthead bears the names of some seasoned journalists who have written for the Detroit Free Press, The Detroit News, Crain's Detroit Business, BLAC and Hour Detroit magazines, and even national newspapers like USA Today and The Washington Post. Eichinger said freelancer pay is “competitive and market rate.” Social media accounts for TBD like Twitter, Facebook and Instagram are all handled by Bedrock staff, Eichinger said. Issues are available for purchase in various Plum Market locations, Viola Boutique in Grosse Pointe Farms and Birmingham, Fresh Farms Market in Grosse Pointe and some locations in the city, Eichinger said. As for the $15 per-issue purchase price, Lessenberry and Shreve Gilbert were skeptical that it is sustainable. “You’re never going to have a lot of people paying $15 for a magazine, even if it had the secret to eternal life to it,” Lessenberry said.

dress, suggesting a rethinking of high school career planning to encourage students who like working with their hands to consider skilled trades. It could be as simple, he said, “as reinstituting in grade school or high school what we all knew as shop class.” “We are very pleased at the resurgence and a focus and an importance that’s being placed on career and technical education,” said Shannon Williams, who last month took over as regional administrator for career-technical education at the Macomb Intermediate School District after working as the career-technical education coordinator for Utica Community Schools. “If (funding is) there,” she said, “we will find useful ways to use it.”

would apply for a new K-12 equipment grant, with a focus on advanced manufacturing, health sciences, transportation, construction skills and science, technology, engineering and math (STEM) fields. Macomb County’s ISD coordinates career-tech programs offered within 21 local school districts in the county, Williams said. Vocational programs get some extra state funding to offset higher operating costs than in general education, but several administrators said the funding isn’t designed to cover large capital equipment costs. Macomb County instructors have requested such equipment as 3-D printers, construction equipment, medical devices and mannequins and welding simulators, Williams said. Welding is a high-demand field at the William D. Ford Career-Technical Center in Westland, with 32 students enrolled in each of two shifts during the school day, said Michele Harmala, superintendent of Wayne-Westland Community Schools, which runs the vocational center. The welding program can’t support any more students per shift than 32, Harmala said, because to do so would require additional welding booths and ventilation systems — equipment that the district hasn’t been able to afford. In the 2013-14 school year, the Westland center considered adding 12 more welding stations to include more students who aren’t able to get into the program, Harmala said, at a cost of $350,000. The upgrade hasn’t yet happened. When the district talks to business leaders along the I-275 indus-

trial corridor, Harmala added, “welding always comes up as an area that people are needed.” In 2015, the community college program awarded a total of $50 million to 18 colleges, which used the new equipment to support programs in such fields as welding, water resource management, CNC machining, craft brewing, automotive repair, 3-D printing and health care, Murray said. The colleges contributed $21.5 million in matching funds. Henry Ford College in Dearborn received $4.5 million in grant dollars toward a $6.7 million equipment purchase, according to the state. The college has partnered with the Downriver Career Technical Consortium, based in Flat Rock and serving students from nine mostly Downriver school districts, and Ford Motor Co.’s Flat Rock Assembly plant to offer a program in mechatronics for high school juniors and seniors, said Mary Brockschmidt, the Downriver consortium’s director. Henry Ford College supplied the equipment and the consortium provided the instructor and curriculum, Brockschmidt said. The consortium’s top program needs include new auto lifts for its automotive technology program — “some of them are so old they can only align cars made prior to the year 2000,” said Jackie Leonard, its project coordinator, adding that one lift could cost more than $20,000 and the consortium runs three auto programs. Also needed are a tractor and greenhouse for an agriscience program, robotic welders and plasma cutters.

County programs Macomb County, like Wayne County, doesn’t have a countywide millage to support vocational education. In contrast, neighboring Oakland County has a millage that supports four technical campuses run by the regional intermediate school district, Oakland Schools. The Oakland district said it

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Beaumont Health

Karmanos Cancer Institute

Bedrock LLC

McLaren Health Care

Custom Home Health and Hospice

10 9, 10

Rock Ventures LLC

Detroit Metro Convention & Visitors Bureau 11

St. John Providence Health System

Detroit Public Schools Community District 16, 17

Society of Manufacturing Engineers

Grand Ventures I LP

University of Michigan

Great Lakes Caring

Wayne State University

Henry Ford Health System

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 3 , 2 0 1 7

THE WEEK ON THE WEB FEBRUARY 4-10

Quicken Loans names Farner as CEO

uicken Loans Inc. has promoted Jay Farner to CEO as part of multiple leadership changes, the Detroit-based mortgage loan company announced Friday. Farner has been with Quicken Loans for 21 years, most recently as president and chief marketing officer. Longtime CEO Bill Emerson will transition to vice chairman of Rock Holdings Inc., the parent company of Quicken Loans, and Bob Walters, Quicken’s chief economist, will now serve as president and COO.

COMPANY NEWS

J Troy-based Penske Vehicle Services will lay off up to 166 employees at its Warren, Detroit, Milford, Pontiac, Grand Blanc and Lansing sites, effective April 1, according to a notice filed with the state. The notice said the permanent layoffs resulted from loss of a contract with General Motors to provide fleet and transportation services. J Sterling Heights-based Key Safety Systems Inc. has been selected as the favored buyer for embattled Japanese airbag supplier Takata Corp., the Nikkei Asian Review reported. Key Safety is a manufacturer of airbags and seatbelts owned by China’s Ningbo Joyson Electronic Corp. J Birmingham-based Soaring Pine Capital said it acquired ETI Tech Inc. of Dayton, Ohio, a maker of more than 200 hardware parts for fixed and rotary wing military aircraft and unmanned aerial vehicles. Soaring Pine is a business unit of Taylor-based Simon Group Holdings. Terms of the deal were not disclosed. J United Kingdom-based RPC Group plc continued a buying spree in the U.S. with a deal for Rochester-based Letica Corp. that is valued at up to $640 million, Plastics News reported. The deal adds 13 plants that make rigid plastic packaging and food service products. J Supino Pizzeria in Detroit’s Eastern Market reopened after expanding into the space next door formerly occupied by La Rondinella Italian restaurant, which closed last month. J The Neighborhood Service Organization, a Detroit homeless shelter, plans to move from the Midtown area to a new $20 million center on the city’s east side. Construction on the new center, tentatively called The Sanctuary, is set to begin early next year, the Detroit Free Press reported. J A judge in Washington state ordered the makers of the 5-Hour Energy drink, Farmington Hills-based Living Essentials LLC and Innovation Ventures LLC, to pay nearly $4.3 million in penalties and legal fees over deceptive advertising. J Domino's Pizza Inc. is rolling out a wedding registry in hopes of making the big day a bit saucier. The Ann Ar-

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

34.4 million The number of passengers that traveled through Detroit Metropolitan Airport terminals last year, according to the Wayne County Airport Authority. That was DMA’s highest total since 2008, and passenger traffic increased 2.9 percent over 2015.

$52.1 million The sale price for the 328-unit Chimney Hill Apartments in West Bloomfield Township, as purchased by the New Jerseybased Solomon Organization.

$307 million The amount, in U.S. dollars, agreed on by Southfield-based supplier Lear Corp. to buy Spain-based Grupo Antolin’s automotive seating unit. Lear expects to close on the acquisition by midyear.

bor Township pizza chain announced a program that will offer the registry to soon-to-be brides and grooms. J Zipcar Inc. recently closed its Detroit workspace as part of the Massachusetts-based car rental company’s move to reduce what it called its “physical presence.” Zipcar intends to focus more on digital transactions, a spokesman said. J International Specialty Tube, a subsidiary of Livonia-based Crowne Group LLC, will lay off almost 50 workers, or about 40 percent of its workforce, over the next two months and close its Detroit facility by November, according to a state notice. J Construction began on a new Cabela’s store in Chesterfield Township, the anchor to a $100 million open-air mall development announced in July. It will be the fourth Michigan store for Nebraska-based outdoor gear retailer Cabela’s Inc. J Troy-based Rivore Metals LLC completed an agreement with RACER Trust to purchase vacant property in Pontiac. Sale price and closing date were not disclosed. The metals trading company plans to use the 41.9-acre property as an outdoor scrap metal storage facility during its initial phase.

J BorgWarner Inc., the Auburn Hillsbased supplier of turbocharger and emissions systems, reported a net loss of $293 million in the fourth quarter of 2016 as it announced a one-time asbestos-related charge of $411 million, Automotive News reported. The company said adjusted earnings were up 8.7 percent to $339 million. J The Detroit Lions are again hosting “Taste of the Lions” at Ford Field, with a silent auction added to the fifth annual strolling food and wine fundraiser. Tickets for the May 17 event will go on sale at 10 a.m. Feb. 24 at detroitlions.com/tickets/ tasteofthelions. Proceeds will benefit Eastern Market Corp. and its community outreach programming. J The Old Newsboys’ Goodfellow Fund of Detroit announced it surpassed its 2016 fundraising goal of $1.1 million by about $25,000.

OTHER NEWS

J In his annual State of the County update on Oakland County’s successes, longtime Executive L. Brooks Patterson lauded economic progress in the long-neglected county seat of Pontiac, and hinted at two new multinational defense companies moving to the county. He did not identify the defense companies but said they would bring about 1,000 new jobs, with an announcement coming in “the next couple months.” J Three trade union locals struck a deal with the city to triple the number of trained carpenters in Detroit by 2027. The Michigan Regional Council of Carpenters and Millwrights, the largest skilled trades union in the state representing 14,000 workers, will participate in the Detroit Skilled Trades Employment Program to cultivate carpentry opportunities for residents. J Applications for the 10-week DTX Launch Detroit program are being accepted through April 22 with two information sessions set for 6-8 p.m. Feb. 21 and March 21 at TechTown Detroit. The goal of the program, entering its fifth year, is to recruit and develop talent in tech entrepreneurship to promote Detroit-based technology startups. J Third-term state Rep. Brian Banks, D-Harper Woods, resigned from office as part of a deal to resolve charges alleging he submitted fraudulent pay stubs to secure a $3,000 loan in 2010, AP reported. Banks could face up to a year in prison when sentenced Feb. 17.

TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS

New York-based shake and burger chain Shake Shack will open Feb. 23 in the First National Building at 660 Woodward Ave. in Detroit. The opening will be the first in Michigan for lovers of the chain’s famous shakes and burgers, plus local craft beers and Detroit-inspired products.

RUMBLINGS

LAURA RAISCH

Complexions Contemporary Ballet performs “Star Dust,” a ballet tribute to late rocker David Bowie, during the June 2016 world premiere at Music Hall Center.

Music Hall hopes Bowie ballet is Broadway-bound A ballet commissioned by Music Hall Center for the Performing Arts in Detroit to pay tribute to the late rocker David Bowie could be the theater’s ticket to Broadway. “Star Dust,” a 35-minute ballet set to nine of Bowie’s songs, has gone on a world tour after two weeks of sold-out performances at New York’s Joyce Theater. With Music Hall’s help in raising $50,000, Complexions Contemporary Ballet in New York, led by choreographer Dwight Roden, created the ballet and premiered it at Music Hall last June. It’s not the first production Music Hall has commissioned. The Detroit cultural nonprofit has commissioned five works in the past year, including: “Dance: 313 to the 213,” a collaboration with three Los Angeles dance companies, last April; “The Osiris Legend,” in October; and “The Roland Hayes Story: First of His Kind,” in November. But “Star Dust” is the first work Music Hall has commissioned that’s gained worldwide attention, said director Vincent Paul, a former agent for Complexions and longtime friend of Roden. Music Hall’s collaboration on the creative parts of the ballet, as well as the financial end, puts it on the na-

tional stage, he said, which could at some point help it attract support from national foundations. Separately, Paul said he and Roden are talking about taking “Star Dust” to a full-evening story ballet, with added scenery and other elements they couldn’t afford with the bare-bones production now touring. Lengthening the ballet would cost about 10 times as much as the initial production, he said, given the need to fund scenery design and construction and pay performers more conventional salaries. “The final product we see in our mind’s eye, it might take us 10 years to get there, unless (we) get an angel ... who says, ‘Here’s $500,000 to get it done,’ ” Paul said. If all goes well, the full ballet would premiere in Detroit, too, before going on to Broadway, Paul said. In a new, for-profit venture, Music Hall would produce it, raising the money to fund production through investors. “It’s in our strategic plan to look for properties that are viable to go to Broadway,” Paul said. Fisher Theatre owner Nederlander Entertainment is currently the only Detroit entity “in the Broadway game,” he said. If things go as planned, soon, Music Hall will be, too.

Border tax plan sobering for tequila maker For Southfield-based Blue Nectar Spirits Co. LLC, the Trump administration’s “big border tax” would be “mucho sad,” to use two descriptions lately in the news. Last month, the White House floated a 20 percent border adjustment tax that could fund construction for a wall on the U.S.-Mexico border. The administration believes the plan, first introduced by the House GOP last summer, could also spur manufacturers to move production stateside and provide a revenue source for the impediment to illegal immigrants from Mexico. It’s still murky if such a tax will happen, but Blue Nectar CEO Nikhil Bahadur fears his small company could end up as collateral damage. “We don’t know if it’s rhetoric or policy to come,” said Bahadur, who co-founded the company in 2011 with his father and founder of the

former advisory firm BBK Ltd., B.N. Bahadur. “Call it a border adjust or a tariff, but it’s really a tax, and one that could lead to increased costs for us, distributors, bars, restaurants and, ultimately, consumers." Blue Nectar and other premium tequila brands would have no choice but to accept the tax, if it happens. To use the tequila name, it must be produced within five municipalities in Mexico. The border adjustment tax would immediately raise Blue Nectar’s prices — $39.99 for its Silver blend, its lowest cost — by $2 to $5, Bahadur said. “While we’re competitively priced for the quality of our products, if the prices go up, consumers might start trading down,” he said. “Maybe they go into a liquor store with $40 in their pocket and now they won’t be able to afford Blue Nectar.”

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