April 17, 2017 by Crain's Detroit Business

APRIL 17 - 23, 2017

Endeavoring for growth

City eases burden on sudden spikes in drain fees after backlash.

Latest additions to entrepreneur program plan expansions.

Page 3

Development Public relations

Avoiding the crisis trap Lessons from a week of PR disasters: Act quickly, and don’t make it worse

By Kirk Pinho kpinho@crain.com

By Bill Shea bshea@crain.com

Veterans crisis management handlers across metro Detroit were not surprised to watch a couple of major brands soil their reputations in recent weeks by bungling incidents that could have been largely resolved with a simple apology. Pepsi drew scorn for a baffling online advertisement that trivialized the Black Lives Matters movement. But United Airlines bookended the soft drink maker with a pair of incidents, the second of which saw a 69-year-old passenger bloodied by authorities and has cost the brand not only goodwill and credibility but more than a billion dollars in share value. Atlanta-based Delta Air Lines Inc. also took heat for days of delays and canceled flights stemming from storms that affected its Atlanta hub. Companies must be prepared to handle a crisis in an instant because the pervasiveness of social media means an incident can go viral quickly, and poor handling compounds the problem just as fast,

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public relations insiders say. That’s a huge change from when social media just meant reporters in a bar. “A decade ago, the crisis happened in a 24-hour news cycle; now it happens in real time,” said Darci McConnell, president and CEO of Detroit-based McConnell Communications Inc. “It’s important to have a plan before a crisis happens, and it’s equally important to be swift and contrite with your response. But the response has to be much more ambitious in reaching all the channels where a bad story can take on a life of its own.” SEE CRISIS, PAGE 17

ILLUSTRATION FOR CRAIN’S BY ANDREA LEVY

A large, skyline-changing residential development is under consideration for the southwest corner of Woodward Avenue and West Grand Boulevard. Nothing is finalized and any possible groundbreaking would be months away, or even longer, but if it is a development of the magnitude being discussed — 20 stories or more — it would be another cornerstone cementing the QLine’s draw for large mixed-use development along its 3.3-mile route. A high-rise is just one of the possibilities for the site, said David Grasso, CEO of Grasso Holdings Inc., which is behind an entity called 6565 Woodward Holdings LLC that is under contract to purchase the property from Midtown Detroit Inc. It was registered in January. “I am considering a number of different development plans for that property,” he said last week. “I’m also considering developing just the existing building, and not something large. I’m studying all the options.” According to a 2016 story in Philadelphia magazine, Grasso’s wide-ranging business interests include restaurants, apartment hotels and coworking space. He said he has been in real estate for 25 years and has developed projects in Philadelphia; New York City; Washington, D.C.; Baltimore; New Jersey; and Florida. This isn’t his first foray into the city, which he likened to his hometown of Philly. “Detroit reminds me of Philadelphia 15 years ago,” he said. “There are so many similarities. It started with arts and culture, then empty-nesters started moving in, and young people started moving in.” SEE HIGH-RISE, PAGE 16

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MICHIGAN BRIEFS Report: Entrepreneurial landscape declining Despite improvements in business conditions, spinoffs and federal grants, Michigan's entrepreneurial landscape is declining, according to the Michigan Entrepreneurship Score Card released by MiQuest. The report indicates fewer new businesses are being established while existing businesses are growing and improving. “In a healthy economy, entrepreneurship competes with other career and employment options,” Rob Fowler, president and CEO of the Small Business Association of Michigan, said in a news release. “With Michigan’s low unemployment and many growing firms, those opportunities become more numerous and attractive. For example, nearly a hundred thousand men and women were forced by economic circumstances to become sole proprietors in the 2007-2009 era. They have now left entrepreneurship to become employees.” The Score Card assesses 137 metrics to determine the health of the state's entrepreneurial ecosystem, including climate, change and vitality. Michigan’s entrepreneurial climate, which measures innovation,

capital and business conditions, is outperforming other state’s. Michigan now ranks 16, up from 23 in last year's report. The state's entrepreneurial vitality ranks 32nd, up from 35th. Metrics in that index include university company spinoffs and grant awards. But the state continues to struggle with growth as Michigan drops to 46 from 23 last year. Basically, those who have created small businesses are doing very well — Michigan ranks third in proprietor income growth and fourth in favorable business taxes — but entrepreneurs aren't starting businesses like they did in early years postGreat Recession.

Hundreds turn out for Nestle water hearing Hundreds of people turned out for a public hearing on a company's proposal to boost the volume of groundwater it pumps for bottling in West Michigan. Nestle Waters North America wants to withdraw up to 400 gallons per minute from a well in Osceola County — up from 150 gallons per minute. The request is pending with state regulators. The Michigan Department of Environmental Quality says it has a

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Nestle wants to withdraw up to 400 gallons per minute from a well in Osceola County.

COMPANY INDEX: SEE PAGE 18

large amount of information to consider. Following Wednesday night's hearing at Ferris State University in Big Rapids, public comments are being accepted through April 21. Environmentalists critical of the request say the plan could hurt wetlands if the company were permitted to drain more underground water for its Ice Mountain bottling operation. Nestle representatives say the increase wouldn't hurt the environment.

August 2014 that led to flooding of Southeast Michigan freeways; $1.8 million for replacing the Cathedral Street pedestrian bridge over the Southfield Freeway that collapsed in September 2014 when it was hit by a waste-hauling truck, the driver of which later died; and $2.9 million for local projects on roads eligible for federal aid in Gogebic County after July 2016 storms that produced a tornado and flash flooding.

BLOOMBERG

Federal funds to fuel emergency road repairs The Federal Highway Administration approved nearly $4.8 million in emergency transportation aid for Michigan, which will be used to reimburse the state for costs related to

flooding on Detroit-area freeways and the collapse of a pedestrian bridge on the Southfield Freeway. The funding from the agency's emergency relief program is part of a $768.2 million award for emergency road and bridge repairs in 40 states. Funding is awarded to roads or bridges that were damaged either by natural disasters or external "catastrophic" events. Michigan received $72,496 in reimbursements for heavy rains in

Correction JJA story on Page 5 of the April 10 issue incorrectly characterized where online gambling would be allowed under the proposed bill. It would be allowed anywhere in the state, but only brick-and-mortar casinos could be licensed to offer it and bets would be legally considered to have taken place within casino walls.

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Entrepreneurship

Endeavoring for growth

E-commerce furniture maker Floyd and raw juice maker Drought are the two most recent additions to the Endeavor program, and aim to use it as a springboard to the next level.

Raw juice maker sees fruits of its labors By Chad Livengood clivengood@crain.com

LARRY PEPLIN

Kyle Hoff, co-founder and owner of Floyd Design LLC, at Evans Distribution in Melvindale. Floyd Design became the eighth company from metro Detroit to join the nonprofit Endeavor’s global entrepreneurship network.

Bed maker Floyd aims to use exclusive program to plot expansion course By Chad Livengood clivengood@crain.com

What started as a $18,000 Kickstarter campaign to fund the development of a minimalistic set of table legs has morphed into a Detroit e-commerce company selling $600 bed frames for big city millennials. Last month, Kyle Hoff and Alex O’Dell’s Floyd Design LLC became the eighth company from metro Detroit to join the nonprofit Endeavor’s

global entrepreneurship network. Endeavor provides assistance and strategic advice to entrepreneurs looking to scale and grow their businesses. Hoff and O’Dell’s apartment furniture products firm sells an American-made wood bed frame with steel legs designed for the transient urban dweller who wants a durable piece of furniture. Sales of the Floyd Bed grew by 250 percent from March 2016 through last

MUST READS OF THE WEEK

Make plumbers sexy again Everybody agrees: We need more people in the skilled trades. How do you get young people there, Ron Fournier asks. Page 6

Rumblings: Belle Isle garden dreams Backers aim to get world-renowned designer to plant a flag on Detroit jewel. Page 19

month and the company expects sales revenue to top $5 million this year, Hoff said. Floyd’s investors include Airbnb co-founder Joe Gebbia and LZB Investments, the investment arm of Monroe-based La-Z-Boy, Hoff said. Floyd Design began in 2014 with Hoff and O’Dell’s invention of the Floyd leg, a steel leg that can be used to convert any flat surface object into a table. SEE FLOYD, PAGE 16

Cold-pressed raw juice maker Drought is preparing to quadruple its production space and open a second store in Royal Oak as wholesale and retail customer demand rises for its fresh drinks. Drought plans to move its production space from a 3,500-squarefoot kitchen in Ferndale to a 15,000-square-foot former broom factory in Berkley within the next six months, said Julie James, co-founder and chief marketing officer of the company. The Royal Oak-based raw juice company run by James and three of her sisters has plans to open a second store in Detroit and two stores in Ann Arbor later this year. The bigger kitchen production and new retail stores come as the sixyear-old organic juice company is planning to expand its scope and reach into new markets. Drought’s plastic bottled raw juice is now sold at 32 retailers in five Midwest states. Drought projects it will sell 400,000 bottles of its juice in 2017, a 40 percent increase from 2016. The bottles sell for $9 to $11 each. The privately held company does not disclose total sales data, James said. In December, the company became a member of Endeavor, a global nonprofit that assists entrepreneurs with scaling and growing their businesses. James said the company was subjected to a “very serious vetting process” to get accepted into Endeavor’s program, which now has eight companies under its Endeavor Detroit

COURTESY OF DROUGHT

Cold-pressed raw juice maker Drought is moving to a larger production space and plans new stores. wing since launching its sought-after entrepreneurship program in Southeast Michigan two years ago. Other local companies that are part of the Endeavor program include McClure’s Pickles; financial and stock news website Benzinga; chickpea pasta maker Banza; digital products company Vectorform; high school sports broadcaster Varsity News Network; e-commerce furniture maker Floyd; and Algal Scientific Corp., a developer of animal and human health products. SEE DROUGHT, PAGE 16

Business and government

Detroit scales back drain fees after outcry from businesses, churches By Chad Livengood clivengood@crain.com

Detroit’s water department is preparing to scale back a controversial storm water drainage fee after backlash from businesses and churches that got hit with the hefty $750-peracre monthly charge. The city’s Board of Water Commissioners will vote Wednesday on a plan to reduce the drainage fee to $125 per acre until July and then phase in increases over the next five fiscal years to $677 by July 2022, said Detroit Water and Sewerage Department Director Gary Brown. Detroit began imposing the fee in July 2015 on the owners of 22,000 par-

“This essentially is giving them an opportunity to have five years to build green infrastructure projects and get a credit to permanently reduce their costs.” Gary Brown, DWSD

cels with impervious surfaces such as roofs and parking lots that “weren’t paying anything at all,” Brown said. “This essentially is giving them an opportunity to have five years to build green infrastructure projects and get a credit to permanently reduce their costs,” Brown told Crain’s. Mayor Mike Duggan, who is facing re-election this year, has taken

heat from the city's politically-influential pastors over the fee and the financial burden it has placed on their congregations. “They say it’s not taxation, but to me it’s a way to tax the church,” said Everett Jennings, pastor of New Providence Baptist Church on Plymouth Road. SEE DRAINAGE, PAGE 17

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AK Steel tax credits are $60M question for state, drawing backlash

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By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

LANSING — The state’s economic development agency is trying to figure out how it legally can allow an Ohiobased steelmaker to claim business tax credits it believes it inherited when it bought the former Rouge steel plant in Dearborn nearly three years ago. The Michigan Economic Development Corp. won’t confirm how far along it is in the process with AK Steel Corp., saying only that it’s still researching legal options. But AK Steel says the state is on board, rankling environmental groups and lawmakers from both parties over what they perceive as closed-door bargaining. The transparency questions are swirling as the MEDC and AK Steel discuss job retention and brownfield credits that now total $50 million to $60 million, by one estimate. AK Steel, which bought the Dearborn operations of Russian steelmaker OAO Severstal in 2014 for $707 million, believes the tax credits originally awarded to Severstal are among the assets it now controls. Here’s the rub: Michigan’s tax code prohibits AK Steel from claiming the credits because the company pays its business taxes under the state’s new 6 percent corporate income tax, not the old Michigan Business Tax that carved out the credits. The MEDC says there’s no precedent for what happens to tax credits when the two companies involved file under different tax codes. “We are pleased that the state has agreed to deliver on its promise under the contract,” AK Steel spokeswoman Lisa Jester said via email. “This tax credit, as permitted under our contract, is important to help us manage our business and continue to support jobs and the economy of southeastern Michigan.” Jester declined additional comment. The MEDC would not confirm Jester’s account. In dispute are a 20-year credit under the old Michigan Economic Growth Authority program, which was awarded to Severstal in 2005 and worth an estimated $55 million to $60 million, and a 10-year brownfield credit against the Michigan Business Tax approved in 2011 and worth an estimated $40 million, according to AK Steel and the nonpartisan House Fiscal Agency in an analysis of legislation that failed to advance in last year’s session. Severstal’s MEGA credit was set to expire in 2026 at an original estimated value of $48.6 million, according to the MEDC. While West Chester, Ohio-based AK Steel is believed to be the first company seeking to do this, it’s possible that a favorable outcome for AK Steel could set a tax precedent for other companies that wind up in a similar scenario through a merger or acquisition. AK Steel’s request has unleashed criticism over the steelmaker’s environmental violations in Michigan, a lack of transparency surrounding

talks and the belief among some that a deal to transfer credits would amount to an expansion of an expensive and unpopular — not to mention, defunct — tax credit program that will cost the state billions of dollars in payouts by the time it ends. “Someone has set this up as a curtain where I can’t look behind,” state Rep. Peter Lucido, R-Shelby Township, told Crain’s. “If I’m giving away something, I want all my colleagues — both in the House and the Senate — to make that decision.” Lucido and a handful of House colleagues — including Republican Martin Howrylak of Troy and Democrats Stephanie Chang, of Detroit, and AbdulAbdullah lah Hammoud, Hammoud: of Dearborn — Opposed to tax issued a news recredit transfer. lease in March citing concerns with the MEDC’s process. Michigan’s liability under MEGA topped $9 billion, largely because the program was expanded to include incentives for retaining jobs during the recession. The state’s payouts created budget holes in recent years because of volatility stemming from when companies chose to redeem the credits, and have made some legislators gun-shy to approve new incentives. Legislators in the House and Senate last year attempted to change the state’s tax laws to allow a company to claim a credit that had been awarded to a company it acquired, but the efforts failed. Short of a legislative fix, “we’re evaluating the situation,” MEDC spokeswoman Emily Guerrant said. “We would prefer the Legislature weighing in and creating a clear interpretation.”

Different tax structures AK Steel (NYSE: AKS) bought the plant it calls Dearborn Works in 2014 from Severstal as the Russian company sold off its U.S. facilities. The purchase was part of a plan to locate its carbon steelmaking business near its large automotive customers. The plant traces its roots to the 1920s, when it was part of Ford Motor Co.’s iconic Rouge plant. Severstal bought it out of bankruptcy from Rouge Steel Co. in 2004 for $285 million. Roughly 1,500 employees work there today, AK Steel said. The company since has spent more than $30 million at the Dearborn plant to expand a steel production line, Jester said via email. AK Steel reported a net loss of $7.8 million in 2016 on sales of $5.9 billion. Allan Thompson, AK Steel’s corporate tax manager, told lawmakers in November that the company is committed to its Dearborn operations despite pressure from foreign producers,

which has led to operating losses. A company the size of AK Steel presumably would have had tax advisers who were aware of the conflict between the corporate income tax and the Michigan Business Tax, said Gina Staudacher, a partner in the corporate tax group of Howard & Howard Attorneys PLLC in Royal Oak. Standard MEGA agreements might allow credits to transfer as part of a merger or acquisition, she said, but the language does not specify that the exchange is allowed when the two parties in the transaction file under different tax structures. “It happens rather routinely in the M&A world that (tax credits) are transitional items that can be carried forward to the resulting company,” she said, and it likely influenced the price. A solution that might satisfy both the state and the company could be to budget Severstal’s credits as part of the current business development program within the MEDC, and include requirements for environmental upgrades, Staudacher said.

Environmental issues AK Steel’s environmental record is one reason cited by some opponents to transferring the credit. The plant is located near an industrial cluster Gina Staudacher: that has contribTax credits likely uted to pollution influenced price. and public health concerns, such as asthma, in portions of Dearborn and southwest Detroit. Thompson said AK Steel increased its environmental compliance staff at the Dearborn facility from two under Severstal to five after the purchase closed, and spent $29 million in 2015 on pollution control equipment. He also said Severstal had 23,896 reported air permit deviations in 2013, a number that fell to 33 in 2016 under AK Steel’s ownership. AK Steel has received four violation notices since Jan. 1, 2016, according to Michigan Department of Environmental Quality spokeswoman Melody Kindraka, including one issued Feb. 23 this year for fallout from a large brown plume that spilled over from the Dearborn property in December 2016. Hammoud, a first-term Democrat from Dearborn, has asked that AK Steel and MEDC include plans for capital improvements during the next five to 10 years that could lead to fewer emissions and environmental violations in an agreement, but said he has heard the provision so far has not been included. Neither the MEDC nor AK Steel have disclosed details of the ongoing legal review. Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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OPINION

Make plumbers sexy again

e were gathered around a table in a glass-walled conference room at the Shinola factory, seven business leaders and their host, Suzanne Clark, senior executive vice president of the U.S. Chamber of Commerce. I kicked off the conversation with two sets of statistics: J Michigan’s unemployment rate is 5.3 percent, a slight incline this year after being at historic lows during 2016. J By 2020, the U.S. is predicted to be short 5 million workers with skills in high-growth industries like manufacturing and IT — both at the heart of Michigan’s economy. “What is the single biggest barrier to economic growth?” I asked Lori Blaker, owner and CEO of Rochester Hills-based TTi Global, a global staffing/training company she began 40 years ago in her parents’ garage. “There is such a significant lack of skilled trade workers here in the state,” she replied. “It’s difficult for our customers to expand. We’re not attracting young people into the industry. We’re not making it sexy.” And so began a meandering conversation about the barriers to growth in Michigan, including globalization, trade agreements, stiff competition for talent from other states, lack of social graces and other so-called soft

RON FOURNIER Publisher and Editor

skills among Michigan’s young workers, and the need for high-speed rail that would link Detroit to Ann Arbor like San Jose is tied to San Francisco. All good points. But the business leaders kept returning to Blaker’s questions: How do we make skilled trades sexy to millennials? “I can hire a body shop technician today repairing new aluminum vehicle frames, and that individual can be making $100,000 a year,” Blaker said. “What marketing major do you know that could come out of MSU and making $100,000 out of the gate?” Across the table, Rita Nelson nodded her head. The manager of Fairlane Town Center in Dearborn said she’s part of the problem. “I’m the mom of two boys, and when they were 12, I told them, 'You’re going to college.' My husband, who did not go to college, says, ‘Why not a vocational school? You know how much an electrician makes?’ But I say, ‘No, they’re

going to college.’” She smiled at Blaker. “Moms like me are making your job tougher.” Nelson is right, but Michigan parents were prodded by politicians. As my colleague Dustin Walsh reported in January, legislators and education advocates began devaluing vocational education and skilled trades decades ago in favor of pushing students into four-year colleges. The goal was noble: Increase the pipeline of students going to four-year institutions to prepare them for a global economy. The tactic was short-sighted: Skilled labor is a building block of the 21st century. The number of students taking vocational education classes statewide dropped from 136,000 in the 2006-07 school year to 108,000 during the 2015-16 school year, widening the gap between supply and demand. Skilled labor includes plumbers, welders, electricians and other sorts of trades you might remember from shop class. But it now includes advanced aspects of industry, such as green building standards in construction alongside carpentry; agricultural sciences including hydroponics; robotics and design; and computer networking and development. According to Walsh’s reporting, there is a need for 15,000 new skilled trades workers annually through the

next decade with average annual wages of $51,000, according to the Michigan Labor Market Information & Strategic Initiatives. “We created a mentality that every single student is a college student,” Joseph Cipriano, founder and president of Constructeam, a water and fire damage restoration company, told our group at Shinola. “We wiped out the trades.” “The pipeline is drying up,” added Chuck Dardas, president of Alpha USA, a family-owned company in Livonia that makes fastener assemblies, clamps and stampings for the medical, military and infrastructure industries. To make the work sexy, Dardas invites young students and their parents to his company, where they experience life in the trades. He proudly recalled the day when some of the kids sat on the shop floor during a demonstration, a scene captured by a local newspaper photographer with this caption: “Modern-day manufacturing so clean, kids can eat off the floor.” Nelson said businesses should work together to market skilled trades, offering Dardas and others the use of her mall to stage demonstrations. I liked another idea Nelson had, one that ended the hourlong discussion: What if the makers of the “Pure

Michigan” advertising campaign created a marketing drive that sold millennials on the merits of skilled labor? Down the hall in another conference room, the U.S. Chamber hosted a second group of business leaders as part of its cross-country “listening tour” focused on economic growth. Paul Glantz, founder of Emagine Entertainment, was part of that discussion, and the business leaders at that table suggested that a “Pure Michigan” approach to skilled trades could be broadcast inside Glantz’s theaters. Emagine that. Promoting tourism is nice, but there might be a bigger return on taxpayers’ investment if Michigan’s marketers put the sizzle back in skilled trades. We need to make plumbers sexy again. EDITOR’S NOTE: The U.S. Chamber of Commerce hired Crain Content io, the custom content division of Crain’s Detroit Business, to plan and manage the event at Shinola. This column was not part of that agreement, and none of the parties had prior knowledge or approval of its content. Ron Fournier is publisher and editor of Crain’s Detroit Business. Catch his take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760.

It is a noble ambition Our new administration in Washington is putting a lot of pressure on U.S. companies, particularly Detroit automotive companies, to build everything in KEITH the United States. It’s CRAIN a noble thought, but Editor-in-chief hugely impossible. For quite a while, American industry has used parts from all over the world. Manufacturers have assembled cars and trucks that are primarily American with hundreds of parts from all over the world. While it may be possible to create a product with all American products, it would tend to be a very simple, basic product and not have the complexity of say, an automobile. If President Donald Trump wants to encourage the purchase of American-made products, the best way to accomplish that would be to convince folks here to buy American. There is a great deal of nationalism around the world in other countries, where there is a strong feeling about buying locally made products. That is a far more effective strategy than beating up U.S. manufacturers to make products

with a higher local content. For economic and political reasons, imported vehicle brands have set up shop in the United States and spent billions of dollars on facilities as well as hiring thousands of U.S. factory workers. They understand it is important to have a local presence where they sell hundreds of thousands of their vehicles. American companies do the same in overseas markets where they do business. In most products more complicated than a pencil, there are lots of components from all over the world. Mexico has been popular for its low-cost labor, and NAFTA made it more attractive. But the real challenge is to convince customers in America that they want U.S. products. Locally, our own Shinola has been unbelievably successful by marketing a product assembled in Detroit. Shinola uses parts from all over, but the assembly has always been right here in the Motor City. Trying to convince folks to pay a bit more for American products could be difficult or impossible. It will take a massive public relations campaign to convince even a small number of citizens. That journey could take decades. But it is it a worthy endeavor to try to find what works.

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

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 1 7 , 2 0 1 7

Advocacy groups believe HMOs would fail on behavioral health An April 2 Other Voices column by MeridianHealth’s Jon Cotton had fascinating comments on the question of whether Michigan should turn Medicaid behavioral health funding and clients over to the state’s Medicaid Health Plans (MHPs). This issue began February 2016, when Gov. Rick Snyder proposed such action take place by September 2017. The state has subsequently taken three major reviews of the issue; at each stage, the governor’s proposal was rejected. First, Lt. Gov. Brian Calley appointed a large workgroup in early 2016. Then the state’s Department of Health and Human Services held affinity groups last fall, involving over 1,000 people. Finally, a 23-person DHHS Section 298 Workgroup issued reports to the Legislature in January and March. The author of the April 2 column complained the state’s MHPs had “a difficult time winning a seat at the table.” Representatives of those plans were on the lieutenant governor’s workgroup and the smaller DHHS Workgroup that followed. DHHS also assured that one of its affinity groups was for service payers. In fact, the Michigan Association of Health Plans co-drafted most of the key recommendation adopted by the Section 298 Workgroup in December, and the MAHP voted for the final version of that recommendation. That recommendation stated that Michigan should retain a Community Mental Health system to lead behavioral health care and a Medicaid health plan system to lead other medical care. The recommendation ended by saying proposals for care coordination models or pilots could come from “competent, public, risk-based configurations.” (In making this recommendation, the Section 298 Workgroup didn’t accept everything as is today. Over 70 other recommendations were sent to the Legislature. Many called for improvements to the publicly funded behavioral health system. There was also a recommendation for expansion and broadening of joint programs between Medicaid health plans and community mental health programs.) The April 2 column also claimed that behavioral health interests opposed to the governor’s recommendation must “believe that not only would managed care organizations succeed in managing the behavioral health benefit, but that we would be better at it.” Speaking for the state’s leading behavioral health advocacy organizations, that is completely untrue. Advocacy groups, who were outnumbered 15-8 by providers and payers in the DHHS Section 298 Workgroup, and who have no financial stake in where money gets appropriated, aren’t afraid of HMO success. Rather, we and the beneficiaries and families we represent believe the HMOs would fail: J Medicaid health plans have been responsible for a limited “mild-to-moderate” mental health benefit for 20 years, and have done a poor job with it. J Community mental health pro-

OTHER VOICES Mark Reinstein and Dohn Hoyle

Reinstein is president and CEO of the Mental Health Association in Michigan. Hoyle is public policy director for the Arc Michigan.

grams, being directly connected to government, are more transparent with greater public accountability. J MHPs have limited experience with severe behavioral disorders or concepts like beneficiary involvement in planning; consumer self-determination; and social supports. J Michigan has run a financial integration demonstration project in four regions for persons with both Medicaid and Medicare. Eligible people are automatically enrolled in MHP-like entities, with the option to subsequently un-enroll. After almost two years, over 60 percent of those the state automatically placed with MHP-

like entities have disenrolled. J Service coordination isn’t achieved by financial integration at macro-administrative levels. It happens at local provider levels, and those providers will have contracts with CMH programs and MHPs, regardless of where the state first sends its money. Most important are the voices of service recipients and their families. Last fall, 31 of the 45 statewide affinity groups involved consumers and families (767 people out of 1,113 total affinity group attendees). The consumers and families couldn’t have been clearer that, overwhelmingly, they didn’t want Medicaid health plans

managing their behavioral health care. Those who comment on Section 298 for their own purposes conveniently omit this information. They also fail to acknowledge that no affinity group, including the ones for providers and payers, recommended adoption of the governor’s proposal. Legislators must ask if their responsibility is to the public or to well-funded and lobby-heavy private insurers who seek to control more money. Advocates bring the unified voice of Medicaid beneficiaries and their families, whose lives are on the line. Where Michigan goes will speak volumes about our state.

CALLING LOCAL TRAILBLAZERS! Crain’s Detroit Business is now seeking nominations for its 2017 class of 40 under 40. We’re looking for today’s brightest under 40 who continue to make their mark within their company, their industry and their community. Winners will be profiled in the Oct. 2 issue of Crain’s and honored at an awards event in November. If you consider yourself a trailblazer or have been inspired by one, we invite you submit a nomination to Crain’s 40 under 40.

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SPECIAL REPORT: HEALTH CARE

JACOB LEWKOW

Trevor Ripley, M.D., a family physician at Beaumont Hospital Troy and clinical faculty member at Oakland University William Beaumont School of Medicine, was part of a telemedicine pilot program to test how electronic medical visits can be incorporated into Beaumont’s online patient portal, MyBeaumontChart.

Some physicians slow to adopt telemedicine But Michigan’s laws encourage use Inside: n Trinity to expand advanced home

health telemedicine system, Page 9

n Blues look to expand telemedicine payments to physician organizations, Page 11

By Jay Greene jgreene@crain.com

Physicians in Michigan appear to be slow in adopting telemedicine, despite state enabling laws and growing reimbursements from private, Medicare and Medicaid payers. Some of their patients are reluctant to try high-tech medical visits, too. That's an obstacle to a practice that advocates say could be more convenient for patients, eliminate expensive emergency room visits and bring patients in for visits they might otherwise have skipped. Initiatives from Blue Cross Blue Shield of Michigan and Priority

Health, hospital systems like Beaumont Health and consulting firms like Bloomfield Hills-based My ePhysicians are helping physicians get started and become proficient in communicating and conducting online electronic visits with their patients through telemedicine. Physicians are reluctant to offer telemedicine services for many reasons, ranging from competing priorities to lack of uniform reimbursement from payers, said Alicia Majcher, quality and operations director with Ann Arbor-based Huron Valley Physicians Association, a 30-physician independent practice association. Patients may be reluctant because of additional costs, she said. “They have good reasons for not

adopting. Not all payers pay well for it and don’t offer it with same level of copay,” Majcher said. “Some patients are used to calling in to physicians for a free consult. This would replace ‘free,’ and patients would have to pay a copayment. There is education (required) on both sides.” Jeff Burton, a nurse, is also business development lead and co-owner of My ePhysicians. His company is working with physician organizations like Huron Valley to help primary care physicians and specialty practices adopt telemedicine in their practices, through education, training and software. The company offers a comprehensive software platform that allows physicians to conduct e-visits with

patients through two-way video and audio communication, Burton said. The company sells licenses to physicians for E-Visit, a Mesa, Ariz.-based telemedicine software firm. My ePhysicians also provides strategic advice to physician organization on how to integrate telemedicine into their practices. The other co-owner is Kimberly Coleman, a pediatrician who is also chief medical officer with United Physicians, a Bingham Farms-based physician organization. Burton said many physicians don’t understand the potential clinical uses of telemedicine. He said they don’t know how to fit telemedicine into their daily work flow. SEE LEADS,PAGE 10

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SPECIAL REPORT: HEALTH CARE

Trinity to expand advanced home health telemedicine system By Jay Greene jgreene@crain.com

A Trinity Health program aimed at helping patients get care remotely is growing beyond its Michigan test bed into six other states, part of a growing move toward telemedicine by an industry looking to save money and improve care. It’s also a way to take advantage of a home health care, an industry projected to grow more quickly than any other, fueled by aging baby boomers. Like most home health agencies affiliated with hospitals, Trinity is seeking to avoid costly, unnecessary hospitalizations or emergency department visits by using technology to assist nurses and home health aides. Trinity Health At Home’s two-way video from Texas-based Vivify Health allows patients at home to communicate directly with nurses any time of day. Each Trinity Home Care Connect telemedicine kit includes a wireless-enabled tablet and devices that let patients collect weight, blood pressure and other vital information. After brief training by a home health nurse, patients turn on the device and begin to share vital information through voice and text instructions. The patient’s data is monitored, in real time, by medical staff. If necessary, nurses can get doctors to consult with the patients through the tablet connection. “It’s part of our strategy for delivering people-centered care,” said Erin Denholm, president of Trinity Health At Home, a division of Livonia, Mich.based Trinity Health, one of the nation’s largErin Denholm: est not-for-profit Can help seniors health systems living alone. with 86 hospitals, including 12 in Michigan. In Southeast Michigan, Home Care Connect will launch April 17, with patients expected to receive their devices the next week. Clinical teams are being trained using the new remote monitoring devices and referring hospitals and doctors also are being consulted. Nationally and in Michigan, home health, like many outpatient services, is booming, primarily because of the aging population but also because of the effort by hospitals and health insurers to reduce costs of care. By 2029, when the last round of baby boomers reaches retirement age, the number of Americans 65 or older will climb to more than 71 million, up from about 41 million in 2011, a 73 percent increase, according to U.S. Census Bureau. A huge proportion of seniors will switch from commercial plans to Medicare, which provides the bulk of funding for home health care. SEE TRINITY, PAGE 10

LARRY PEPLIN

Trish Bindus, registered nurse/case nanager from St Joseph — Mercy Home Care & Hospice, demonstrates home health monitoring gear with patient Richard Smith at his home in Brighton.

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SPECIAL REPORT: HEALTH CARE

LEADS FROM PAGE 8

“There is a large knowledge gap with telemedicine because it is so brand new,” Burton said. “We can evaluate practices and help them with adoptions.” Michigan is one of the more advanced states to encourage telehealth. Since 2006, when Medicaid began offering limited video telemedicine services, telehealth laws have gradually expanded to allow the use of telemedicine services. Landmark telehealth legislation approved in 2012 stimulated coverage by banning the requirement that physicians have face-to-face contact with patients to qualify for treatment coverage. Covered video-based telehealth services include the following: inpatient and outpatient consultations, psychiatric diagnostic procedures, diabetes training services, end stage renal disease (ESRD) services, mental health or substance abuse treatment and health education. In 2015, Medicare expanded the

TRINITY FROM PAGE 9

Under Medicare rules, physicians must write a prescription or order for home health services when a patient is discharged from a hospital. Medicare pays for up to 60 days of home health services if a physician certifies the patient needs the services and submits a plan of care. Patients may be recertified for another 60 days if physicians believe it is necessary. In a study released in December 2015, the U.S. Bureau of Labor Statistics concluded the compound annual growth rate for home health services over the next decade could be 5 percent, the highest among all industries. Last year, Trinity conducted a pilot program with the two-way Connect telemonitoring system with 62 seniors with an average age of 75. None of the patients, including those with a high risk of hospital readmission such as congestive heart failure were readmitted to a hospital within 30 days of discharge to their home. “The evidence shows remarkable decreases in admissions,” Denholm said. “For patients with chronic diseases like congestive heart failure,

types of telehealth services it pays for; many payers, including Blue Cross, follow Medicare’s lead and pay for the same services that Medicare covers. Medicare covers wellness, behavioral health and extended-care telehealth visits. Michigan Medicaid covers services that include consultation, office visits, psychotherapy, pharmacologic management and end stage renal (kidney) disease related services. Majcher said Huron Valley is contracting with My ePhysicians to integrate telemedicine into its 18-clinic network. Initially, three offices and 13 physicians will participate, using eVisit as the software platform, she said. “Our plan is to begin this all around behavioral health integration with two psychiatric offices doing collaborative care with primary care physicians,” said Majcher, adding that the video conferences will be reimbursed. Besides fee-based consultation services, Burton said My ePhysicians also charges each physician who uses telemedicine a licensing fee for

YO U

the eVisit software. "Each physician who uses telemedicine can cover the cost of licensing by about four e-visits per month," he said. "You have to do a handful of visits to cover the costs." Burton said there are several advantages to physicians who use telehealth: most e-visits are reimbursed by payers and physicians can capture visits that patients may never physically come into a practice for; patient satisfaction goes up because they avoid ER or urgent care visits. Huron Valley also is one of about 20 physician organizations in Blue Cross’ fledgling telemedicine workgroup that begin meeting in January. Blue Cross is encouraging physician organizations to develop more sophisticated telemedicine and care management programs and is expected to eventually integrate telemedicine into value-based payments and its physician group incentive program, Majcher said. Trevor Ripley, M.D., a family physician at Beaumont Hospital Troy and clinical faculty member at Oakland University William Beaumont

School of Medicine, was part of a telemedicine pilot program to test how electronic medical visits can be incorporated into Beaumont’s online patient portal, MyBeaumontChart. The Beaumont telemedicine program has since been expanded to at least 1,000 of its physicians, who use MyChart electronic health record software by Epic Systems Corp. “I get maybe two visits per week” from some of his 1,000 patients, Ripley said. The patients have registered for an e-visit, submitted a 12-question form about their symptoms and have been screened by a nurse. “If I feel it is safe enough, generally I can treat them” with an e-mail, Ripley said. “I have seen many of these patients in person for the same issue, like chronic sinusitis. It is a nice option for them. They don’t have to call or schedule an appointment. It streamlines the process for patients.” Ripley said he does not bill patients for the service because he doesn’t offer video telemedicine services, which is required for billing.

O MPL S A OYEES A RE

you’d expect a 5 percent rate. ... They can call every hour and see a nurse if they have problems or questions.” National data shows that 20 percent of all Medicare patients are re-admitted to hospitals within 30 days and 33 percent are readmitted within 90 days, costing Medicare more than $17 billion annually. Cutting readmissions to under 5 percent could save billions of dollars, experts say. From a satisfaction standpoint, the Trinity pilot study also showed that 90 percent of patients felt more comfortable knowing a nurse was checking vital signs every day. And 100 percent of patients found using remote monitoring technology helpful to more clearly understand their conditions. Most large home health agencies, including Jackson-based Great Lakes Caring Home Health and Hospice and Troy-based Residential Home Health, use a variety of telemedicine mobile remote monitoring devices. Great Lakes has one of the nation’s most sophisticated information technology systems. It features two-way patient-to-clinician video communication, a wireless patient care reporting system, patient education videos,

telemedicine systems for medical monitoring of patients and a 24-hour nursing call center. “Telemonitoring is a critically important component of any worldclass telehealth program,” said CEO William Deary of Great Lakes Caring. “Telemonitoring technology has advanced significantly in the past three years.” For example, Great Lakes Caring uses communication portals for the patient’s primary care or specialty physicians and family care-givers. This addresses care coordination problems between providers and can help to reduce duplicative services. The recent introduction of advanced predictive software technology for computer-based telemonitoring also alerts nurses to risks that could lead to hospital readmissions, unnecessary ER visits and changes in chronic disease conditions, he said. “The most important capability of our telemonitoring program is our ability to immediately triage a patient’s health status (24 hours a day) to provide the best clinical intervention, as soon as we identify the patient’s change in condition,” Deary said.

O T N

Other Beaumont physicians using video are billing when patients use the software, said a hospital official. “It supplements what we do in the office and if we do it right, I can see doing it for 10 to 15 patients per day,” Ripley said. “You have to do it with the right patients and the right symptoms, but it is the future."

Telemedicine services confirmed for mental health patients Last month, Gov. Rick Snyder signed Senate Bill 213, which clarifies that state law allows physicians and mental health providers to prescribe controlled substances through telehealth services. The bill was supported widely by hospital and physician organizations and ensures timely access to care and medication for mental health patients, regardless of where they live. Mark Lezotte, a health care attorney with Butzel Long, said SB 213 fixed problems in SB 753, a telehealth bill that was approved last fall and went into effect last month. The

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TRINITY HEALTH

Over the next several months, Trinity Health At Home will deploy its Home Care Connect remote care management technology to all its agencies in Michigan, Indiana, Iowa, Illinois, California, Maryland and Ohio, where it cares for about 10,000 home health patients. Because elderly patients who live by themselves can get lonely, this fea-

The Trinity Home Care Connect telemedicine kit includes a wireless-enabled tablet and devices that let patients collect weight, blood pressure and other information.

ture also can help seniors with depression, said Denholm, who also is a nurse. “This allows for a safety net for people who are living alone.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: HEALTH CARE

bill also requires the prescribing provider to make sure the patient knows where to go in an emergency and that a referral for follow-up care is available, he said. Telemedicine improves access to care for people who live in remote areas and enhances psychological services by allowing psychiatrists to support clients between visits and write prescriptions, he said. Lezotte said the recent expansion of telehealth laws in Michigan is helping to shorten the distance between patients and physicians or other health care providers, increasing access and making the customer experience more convenient and effective. “There are still some issues out there, like licensure across jurisdictions. The doctor has to be in the same state where the patient is,” Lezotte said. “That is the next (bill) pending. Michigan wants to allow” physicians to prescribe across state lines in co-licensure agreements with other states. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Blues look to expand telemedicine payments By Jay Greene jgreene@crain.com

Blue Cross Blue Shield of Michigan and Blue Care Network are working with 23 physician organizations to encourage the use of telemedicine services. The Michigan Blues also are expected to create additional financial incentives under their physician group incentive program, a quality improvement program for medical groups. In a meeting earlier this year, Blue Cross officials discussed plans to expand such telemedicine services as electronic visits initiated by patients, urgent care visits and other online reimbursed services like scheduled primary care visits, specialist consultations, care management and behavioral health, Blue Cross officials told Crain’s. “We found a great deal of interest in telehealth after including a series of questions about it in our 2016 PGIP Physician Organization sur-

“The physicians recognize the need to incorporate telehealth into their primary care practices to avoid the fragmentation of care and overuse of antibiotics...”

Margaret Mason, Blue Cross health care value business consultant

vey,” Margaret Mason, Blue Cross health care value business consultant, said in a statement. “In our meetings with providers, we discussed reimbursement and the type of technology required to implement telehealth in their offices,” Mason said. “The physicians rec-

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ognize the need to incorporate telehealth into their primary care practices to avoid the fragmentation of care and overuse of antibiotics that could occur if their patients use stand-alone urgent care telehealth centers.” So far, 17 physician organizations have submitted telemedicine plans that could lead to additional payments in May, officials said. Six of the groups have launched telehealth services in some of their practices and another six groups are assessing options. Blue Cross’ PGIP program includes more than 40 physician organizations and 19,000 doctors in Michigan. They are paid to meet nearly 30 initiatives or measurements that includes offering evening and weekend hours, disease registry, quality and cost measures and the patient-centered medical home program. While details on the measurements for telemedicine are under development, PGIP will help quali-

fying practices pay for contracts with vendors for technology platforms, educating staff or physicians on use of telemedicine technology or services. In 2012, Michigan legislation vastly expanded the types of telehealth and telemedicine video services reimbursed by private payers. Medicare and Medicaid already pays for a wide range of services, although it limits payment to specific health care sites, excluding home use. On the other hand, private payers like Blue Cross pay for privacy-compliant video encounters and telephone encounters from their home or another originating site. Patients can participate using their smartphones or tablets, a Blue Cross official said. Services include e-visits for urgent care initiated by patients, scheduled primary care visits, specialist consultations, care management and behavioral health, Blue Cross said.

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Michigan rolls out new automated online prescription system By Jay Greene jgreene@crain.com

As the number of heroin overdoses and drug poisonings have quadrupled in Michigan since 1999, Michigan has launched an improved system that doctors and other controlled substance providers are encouraged to use to more accurately track prescription drugs in an effort to combat rising overdose deaths. But only an estimated 30 percent of physicians who prescribe opioid-based painkillers used the old Michigan Automated Prescription System, a percentage that Lt. Gov Brian Calley, State Sen. Toyna Schuitmaker and other supporters of the new tracking system hope to change. Reluctance of doctors to use MAPS primarily has been the 10-minute wait to verify prescriptions and the difficulty in reading data as it was presented, said David Krhovsky, an anesthesiologist and president of the Michigan State Medical Society. “The new system provides detailed information about patient prescription history as well as analytical re-

“The data is in real time versus 24 hours it took to upload to the system. The data is more readily available to practitioners.” Kim Gaedeke, state director of the bureau of professional licensing

ports that really streamline the interaction doctors have with the current system versus the prior platform,” Krhovsky said. “The accuracy of the data and the speed at which the information can be obtained by the prescriber is vastly improved over the previous iteration.” With the system up and running since April 4, Krhovsky said physicians are telling him and the society that the new system is an upgrade. In 2014, the number of drug overdose deaths in Michigan rose 14 per-

cent to 1,745, according to a report by the Michigan Department of Health and Human Services. Nationally, opioids, including prescription opioid pain relievers such as hydrocodone and morphine, as well as illegal drugs such as heroin, killed more than 28,000 people in 2014, more than any year on record. At least half of all opioid overdose deaths involve a prescription opioid. Under the new MAPS, physicians are required to first enroll in the program before checking patients and reporting prescriptions filled. The state spent $2.47 million to replace the old MAPS system and another $2 million for ongoing maintenance. Kim Gaedeke, state director of the bureau of professional licensing, said 17,000 prescribers have registered during the first week, which is 36 percent of the 51,000 licensed prescribers for Schedule 2-5 controlled substances. Last year, about 30 percent of prescribers were registered, but there were duplicate registrants. “The data is in real time versus 24 hours it took to upload to the sys-

tem,” Gaedeke said. “The data is more readily available to practitioners.” Providers can also view alerts on patients, Gaedeke said. Alerts could tell a provider if the patient has a substance abuse problem or that treatment isn’t working. For example, an alert could show a provider that a patient has seen more than six doctors in last 60 days, a sign they could be shopping for prescriptions. “The provider can ask questions of patients, maybe look to see if there is a problem, a substance abuse program, or treatment not addressing the pain,” she said. The MAPS system, however, does not mandate the provider report data to the state or law enforcement, she said. Over the past two months, Schuitmaker, R-Lawton, and a dozen other lawmakers introduced several bills to require doctors who prescribe Schedule 2-5 controlled substances prescriptions dispensed by pharmacies and practitioners to use MAPS. Senate Bills 166 and 167 would

require doctors to use MAPS when prescribing controlled substances on schedules 2 through 5. SB’s 236 and 237 would facilitate the development of a lesson plan that outlines the dangers of prescription drugs to be used in stateschools. The bills are in the Senate Committee on Health Policy. Last year, Schuitmaker introduced similar legislation that died. Some legislators wanted to wait until the MAPS system was up and running before approving the bill. Gov. Rick Snyder has said he supports the four-bill package. Brad Bauer, an executive with Louisville-based Appriss Health, which is the state’s MAPS vendor, said the company is in 43 states with similar online systems. “Every state is different,” he said. “In voluntary states, 30 percent to 40 percent of providers are registered. In states mandated by state law, you see a spike ... up to 80 percent are registered.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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CRAIN'S LIST: LARGEST STAFFING-SERVICE COMPANIES

Ranked by 2016 revenue Company Address Rank Phone; website

Top local executive(s)

Revenue ($000,000) 2016

Revenue ($000,000) 2015

Average daily employment 2016

Annual payroll 2016

No. of W-2 forms issued 2016

No. of offices in metro Detroit 2016

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

Carl Camden president and CEO

$5,276.8

$5,518.2

150,000

500,000

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

Cynthia Pasky president and CEO

350.0

303.0

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

David Barfield CEO

345.0

305.5

2,200

130.0

3,400

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

Ron Shahani president and CEO

331.8

318.3

4,023

150.0

13,665

AccessPoint LLC 28800 Orchard Lake Road, Farmington Hills 48334 866-513-3861; apteam.com

Greg Packer CEO and chairman

229.3

227.4

5,634

195.2

12,869

Stefanini Inc. 27335 W. 11 Mile Road, Southfield 48033 (248) 357-2866; www.stefanini.com

Spencer Gracias CEO

221.0

220.0

1,401

0.0

2,078

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

David Segura CEO Christine Rice president Raju Dandu founder and chairman

210.0

251.0

85.0

118.2

203

20.2

240

7 8

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

TTi Global Inc. 3903 W. Hamlin Road, Rochester Hills 48309 (248) 853-5550; www.tti-global.com

Lori Blaker president and CEO

82.7

82.4

280

15.4

336

Rapid Global Business Solutions Inc.

Nanua Singh chairman and CEO

71.8

69.0

815

64.9

2,211

Epitec Inc. 24800 Denso Drive, Suite 150, Southfield 48033 (248) 353-6800; www.epitec.com

Jerome Sheppard CEO Josie Sheppard president Ravi Vallem, CEO; Sridhar Kodati, CFO; Venkat Gone, president

68.0

67.5

900

48.0

1,800

63.2

58.0

614

696

Scott Baker CEO David Kosuth president Kouhaila Hammer chairman

58.0

51.0

56.0

585

850

W3R Consulting

Eric Hardy chairman, president and CEO

49.0

57.0

390

18.0

627

Modis Inc.

Carl Lucke vice president

48.0

42.0

650

34.0

960

Kyyba Inc.

Thiru Ganesan president and CEO

42.6

39.2

31.4

679

CrossFire Group 691 N. Squirrel Road, Suite 118, Auburn Hills 48326 (248) 364-0007; www.xfiregroup.com

Deborah Schneider co-founder and CEO Martin Rosenau co-founder and COO Larry Malace president

36.0

41.0

34.1

33.1

1,080

25.0

2,130

Contract Professionals Inc.

James Cowper president

32.5

500

800

Brightwing 431 Stephenson Highway, Troy 48083 (248) 585-4750; www.gobrightwing.com

Aaron Chernow CEO George Opitz president Sangeeta Ahluwalia CEO

29.4

30.5

297

24.7

509

28.0

24.0

Blue Chip Talent

Nicole Pawczuk CEO

14.5

11.0

7.6

ASG Renaissance LLC C 22226 Garrison, Dearborn 48124 (313) 565-4700; www.asgren.com

Lizabeth Ardisana CEO

13.6

15.3

135

10.6

323

Human Capital Staffing LLC

Mary Oxendine Adams president

5.8

7.7

125

5.8

441

Stephenson Highway, Troy 48083 10 1200 (248) 589-1135; www.rgbsi.com

Reliable Software Resources Inc.

Haggerty Road #285, Northville 48167 12 22260 (248) 504-6869; www.rsrit.com

13 14

The Dako Group 2966 Industrial Row Drive, Troy 48084 (248) 655-0100; www.dakogroup.com G-TECH Services Inc. 17101 Michigan Ave., Dearborn 48126 (313) 441-3600; www.gogtech.com

Town Center, Suite 1150, Southfield 48075 15 1000 (248) 358-1002; www.w3r.com Town Center Drive, Suite 2600, Southfield 48075 16 3000 (248) 357-4200; www.modis.com Orchard Lake Road, Suite 130, Farmington Hills 48334 17 28230 (248) 813-9665; www.kyyba.com

Malace & Associates Inc.

Crooks Road, Suite 112, Troy 48098 19 5700 (248) 720-2500; www.malacehr.com W. Walton Blvd., Waterford 48329 20 4141 (248) 673-3800; www.cpijobs.com

Automotive Quality & Logistics Inc.

Jib St., Plymouth 48170 22 14744 (734) 459-1670; www.aql-inc.com

Woodward Ave., Suite 240, Bloomfield Hills 48302 23 43252 (248) 858-7701; www.bctalent.com

Adams Road, Suite 208, Bloomfield Hills 48304 25 6001 (248) 593-1950; www.hcsteam.com

This list of temporary-employer/staffing-service companies and companies that provide such services is an approximate compilation of the largest companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. Tata Technologies Inc. which was No. 2 on last year's list was not able to submit data before publication. Technical Engineering Consultants which was No. 10, Millennium Software Inc. which was No. 15, Arrow Strategies which was No. 19 and Industrial Control Repair which was No. 20 on last year's list all declined to participate this year. NA = not available.

B Acquired by the U.K. staffing company Impellam Group plc in December 2015. C Kyyba Inc. purchased all staffing contracts belonging to ASG Renaissance in January. LIST RESEARCHED BY SONYA D. HILL

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

CALENDAR WEDNESDAY, APRIL 19 Who Do You Trust? Leading in an Era of Populism. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Richard Edelman, president and CEO of Edelman, will discuss the 2017 Edelman Trust Barometer and actions business leaders can take to climb back Richard Edelman from a position of deteriorated trust, and ultimately restore belief in a system that too many believe has failed them. MotorCity Casino Hotel, Detroit. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org.

FRIDAY, APRIL 21 CyberSecurity: Are You Keeping Your Customers as Safe as You Think? 8-10:30 a.m. Marketing and Sales Executives of Detroit. Jamie Tomasello, manager of trust and compliance, Duo Security, will present a workshop on cyber security awareness which includes best practices on how to improve security hygiene, reduce risks, and build trust with customers through security practices. Original Equipment Suppiers Association, Southfield. $40 member; $55 nonmember. Website: www.msedetroit.org

UPCOMING EVENTS Positive organization development: A new change equation thatâ&#x20AC;&#x2122;s changing everything. 4-5:30 p.m. April 24. Center for Positive Organizations. Speaker: David Cooperrider, university distinguished professor and Fairmount Santrol Professorship, Weatherhead School of Management, Case Western Reserve University. Ross School of Business, University of Michigan. Free. Website: positiveorgs.bus.umich.edu Starting Up: An Introduction to Michiganâ&#x20AC;&#x2122;s Entrepreneurial Ecosystem. 9:30-11 a.m. April 25. Macomb-Oakland University Incubator.

John Eaton, client strategist for the Macomb-Oakland University Incubator, will discuss resources the state of Michigan offers including: business incubators, SmartZones, various support services, university technology acceleration and commercialization, and funding programs. Velocity Center, Sterling Heights. Free. Contact: Joan Carleton, phone: (586) 884-9324; email: macinc@oakland.edu. How to Use Social Media to Grow Your Business. 8-11 a.m. April 27. National Association of Women Business Owners. Best practices to promote a business; tips and tricks to maximize exposure; how to stay on top of the ever changing social mediums; key to personal vs. business use. Presenter is Deidre Bounds, CEO of Ignite Social Media. Bank of America, Troy. Free members; $15 nonmembers. Website: nawbogdc.org 13th Annual MHCC Public Policy & Economic Forum Breakfast. 7:3010 a.m. April 28. Michigan Hispanic Chamber of Commerce. Topic: â&#x20AC;&#x153;Growing Hispanic Influence in America: From the Ballot Box to the Grocery Store.â&#x20AC;? Speakers include Stacie de Armas, vice president of Strategic Initiatives & Consumer Engagement at Nielsen; and producer and media strategist Jenny Alonzo, who serves as the co-chair of the Nielsen Hispanic Latino Advisory Council. Also featured will be HBE owner and CEO Anita-Maria Quillen from Diversified Engineering & Plastics. MGM Grand, Detroit. $100. Contact: Laura Bates, email: policy@mhcc.org Fixing Michiganâ&#x20AC;&#x2122;s Talent Crisis. 11:30 a.m.-1:30 p.m. May 1. Detroit Economic Club. Learn how employers are closing the gap between the skills they need to run their businesses and the skills available in todayâ&#x20AC;&#x2122;s workforce. Speakers include: Timothy Meyer, chancellor, Oakland Community College; Cynthia Pasky, founder, president and CEO, Strategic Staffing Solutions; Andra Rush, founder, president and CEO, The Rush Group LLC. Moderator is Nolan Finley, editorial page editor, The Detroit News. MotorCity Casino Hotel, Detroit. $45 members; $55 guests of members; $75 nonmem-

bers. Website: econclub.org. Hacking Health Windsor-Detroit III. 5 p.m. May 5 to 4 p.m. May 7. WEtech Alliance and TechTown Detroit. A weekend-long cross-border hackathon for healthcare innovation with IT and healthcare professionals across the U.S.-Canada border to collaborate, dream up and design apps for patient-centric care. TechTown, Detroit. $35 Canadian. Website: https://www. eventbrite.ca/e/hacking-health-windsor-detroit-iii-tickets-32057192927 Inforum 55th Annual Meeting Featuring Mae Jemison. 11:30 a.m.-1:30 p.m. May 25. Astronaut Mae Jemison, a scientist, doctor and crew member on Space Shuttle Endeavour, is the speaker. The Henry, Dearborn. $50 members; $75 guests. Website: inforummichigan.org. Gender Equality in the U.S. and the Workplace. 11:30 a.m.-1:30 p.m. June 12. Detroit Economic Club. In the U.S., there is a $2 billion opportunity if women were to participate more equally to men in the workplace. That is the equivalent of adding an economy the size of Texas to the U.S. Carl Camden, president and CEO, Kelly Services, Inc. and Kweilin Ellingrud, partner, McKinsey & Company, will discuss: the social barriers which hold women back from participating more fully in the workplace, and where progress has been made; what the talent pipeline looks like across Fortune 500 companies in the U.S., and how it differs by industry and how leadersâ&#x20AC;&#x2122; talent decisions impact gender equality in the workplace. MotorCity Casino Hotel, Detroit. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org. Calendar guidelines. Visit crainsdetroit.com and click â&#x20AC;&#x153;Eventsâ&#x20AC;? near the top of the home page. Then, click â&#x20AC;&#x153;Submit Your Eventsâ&#x20AC;? from the drop-down menu that will appear. Fill out the submission form, then click â&#x20AC;&#x153;Submit eventâ&#x20AC;? at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

Qualitech, Bingham Farms, a technology integrator and software reseller, was selected by York Properties, Southfield, and The Hayman Company, Southfield, to provide its hosted phone system. Website: qualitech.net. J

EXPANSIONS

Fresh Start Homes Michigan, Rochester Hills, has opened at 1029 N. John R, Rochester Hills. The location will house its construction company. Phone: (248) 413-5201. Website: freshstarthomesmi.com. J

Warren, a flooring retailer, opened a 6,200-square-foot showroom at 1445 N. Rochester Road, Rochester Hills. Phone: (248) 7102400. Website: motorcitycarpet. com.

MOVES

Booth Patterson, P.C., Waterford, a law firm, is moving from 1090 W. Huron St., Waterford Township to 4139 W. Walton, Suite F, Waterford. Telephone: (248) 681-1200. Website: boothpatterson.com.

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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 // A P R I L 1 7 , 2 0 1 7

Benzinga says it was among victims in pump-and-dump schemes By Dustin Walsh dwalsh@crain.com

Detroit-based financial and stock news website Benzinga found itself among several caught up in an announcement this week of federal charges of illegal stock promotion by outside writers and companies who plied the sites. None of the sites, including Benzinga, or their employees were charged with wrongdoing. But they were identified as publishing content from outside contributors that the U.S. Securities & Exchange Commission alleges were paid by publicly traded companies to play up stocks as part of pump-anddump schemes. The cases highlight the risks to media sites that offer a forum for such contributed content. In a statement, Anthony LaVerde, Benzinga’s chief content officer, said Benzinga is a victim, not a culprit. “Indeed, we are victims as well, as we were unaware that the writers had been compensated for these stories, which also appeared on multiple, well-respected financial websites,” LaVerde said in the statement. On Monday, the SEC charged 27 individuals and companies with fraud as part of a scheme to publish favorable articles with the aim of inflating stock prices. Overall, 17 have agreed to settlements, the SEC said. Litigation is continuing against 10. The SEC alleges communications compa-

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“Indeed, we are victims as well, as we were unaware that the writers had been compensated for these stories, which also appeared on multiple, well-respected financial websites.” nies and writers were paid to pen flattering stock commentary under the guise of impartiality on popular stock news sites. In a lawsuit, the SEC claims 494 articles written about stocks between 2011 and 2014 omitted or misled readers about whether the author got paid by a third-party source for the coverage. Benzinga published seven of these articles, according to the filing, which amounts to a small blip compared to other sites like Seeking Alpha. Benzinga operates on a different business model than Seeking Alpha, Forbes and Motley Fool, also tied to the suit. Benzinga’s news team reports on financial and stock news, where the others primarily publish contributor content with no inhouse reporting staff.

Jason Raznick, CEO of Benzinga, said its contributor site is now curated, vetted and edited internally — a move that occurred in 2015 after the site was overrun by spam. “Anyone could post there; we got no money from it,” Raznick said. “We’re of the belief that we’re not the smartest people on stocks, so we felt (that site) was a way to get outside ideas. We’re better off this way, and we don’t run the risk of something like this happening again.” During the time of the scheme, Benzinga published third-party contributor content on a section of its site where anyone could publish. It ran the disclaimer, “The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.” The SEC alleges the writers were involved in a scheme, where insiders and the authors would buy up shares, publish especially flattering stories urging investors to buy, then sell them for a profit. The authors were allegedly paid as much as $200,000 a year to publish dozens of stories a month, according to the lawsuit. The authors used aliases and fictional credentials to appear legitimate to the sites and readers. The conspirators were linked to public companies, such as Galena Biopharma, ImmunoCellular Therapeutics and Lion Biotechnologies, which agreed to pay more than $4.8 million in settlements and fines.

ARCHITECTURE

MANUFACTURING

Anthony LaVerde, Benzinga

Amy Chesterton Director of Urban Planning ROSSETTI

ADVERTISING & MARKETING Jeff Marston Vice President

Comcast Business Jeff Marston has been promoted to vice president of Comcast Business’ Heartland region, which includes Michigan, Indiana and Kentucky. In this role, Marston is responsible for all general management of Comcast Business’ Heartland region, including sales, cash flow, revenue, P&L, operations and marketing. He leads an organization of more than 200 individuals across the three states.

For more information about advertising in this section, contact Lynn Calcaterra at (313) 446-6086, or email lcalcaterra@crain.com

Amy Chesteron, AICP, RLA joins ROSSETTI as their Director of Urban Planning, after 15 years at Hamilton Anderson Associates. At ROSSETTI, Amy will lead the firm’s urban planning services, addressing complex urban challenges with intelligent, creative solutions and will strengthen ROSSETTI’s abilities in research, mapping, policy, transportation, retail environments, community and stakeholder engagement that enable their clients to experience new possibilities.

BOARDS Ingrid Tighe

Executive Director Birmingham Shopping District The Birmingham Shopping District Board of Directors recently announced the appointment of its new Executive Director, Ingrid Tighe. Tighe brings 12 years of experience in economic development, business development, commercial real estate and federal/state government. Her professional experience, in combination with her Master’s Degree in Public Administration, will be invaluable in serving the Birmingham Shopping District.

Steve Brennan

Vice President of Data Strategy and Analytics Carhartt, Inc. Carhartt has hired Steve Brennan as its vice president of data strategy and analytics. Brennan will aid various business functions in their decision-making processes and improve customer experience by driving an enterprise data management strategy.

ENGINEERING & CONSULTING Susan A. Cook

Technical Director, NEPA Services Partner Engineering and Science, Inc. (Partner) Partner has warmly welcomed Susan Cook to the firm as Technical Director of National Environmental Policy Act (NEPA) Services. Ms. Cook provides technical oversight and assistance to staff and clients on projects nationwide. Formerly a division manager for ATC Group Services, she brings 20+ years of experience and leadership in transactional due diligence and NEPA services. Partner provides engineering, environmental and energy assessments and solutions for the commercial real estate industry.

SPOTLIGHT Karmanos names development chief

Barbara Ann Karmanos Cancer Institute named Katrina Studvent its new chief development officer, a position created in the wake of Nick Karmanos’ departure in September. Studvent, 41, will oversee the cancer research and provider network’s philanthropy and fund Katrina Studvent development, reporting to President and CEO Gerold Bepler, M.D. Studvent, who has been at Karmanos since 2010, previously served as director of breast cancer special programs at Karmanos and director and race chair of the Susan G. Komen Detroit Race for the Cure, Michigan’s largest breast cancer event, according to the news release. She will step down as race chair after this year’s event on May 13 at Comerica Park in downtown Detroit.

Diplomat Pharmacy hires new CFO

Atul Kavthekar has been named the new CFO and treasurer of Diplomat Pharmacy Inc., an independent Flint-based specialty pharmacy. He will assume his post May 1. Kavthekar, 49, will be responsible for the financial operations and investor relations by managing liquidity, balance sheet Atul Kavthekar risk and capital market transactions. He will report to CEO and Chairman Phil Hagerman. Sean M. Whelan stepped down as CFO, effective Dec. 31, as part of other leadership changes last year.

Gleaners names CFO, development officer

Gleaners Community Food Bank of Southeastern Michigan has hired Ryan Hoyle as chief development officer and Linda Makris as CFO. They replace Gleaners leadership members who left for other opportunities. Hoyle, 41, replaces Doug Czajkowski, who took a post as associate dean for development at Western Michigan University in Kalamazoo. Hoyle, a Rutgers University graduate, comes to Gleaners from a previous position as vice president of business development and talent acquisition for New Jersey-based consulting firm GalaxE. Solutions Inc. Before taking the position of CFO, Makris was chief financial specialist for Plymouth-based Financial One Accounting, Inc. She replaces Michelle Sherman, who is now CFO at Detroit-based Southwest Solutions. Markis is a certified public accountant and graduated from the University of Michigan.

April 17, 2017

Page 1515

’S U DETROIT BUSINESS C R A I N ’ S D E T R OCIRAIN T B SINE S S // A P R I L 1 7 , 2 0 1 7

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CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Fewer than eight flights depart on an average daily basis from Detroit’s Coleman A. Young International Airport on Conner Street.

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Detroit seeks nonaviation uses for city airport clivengood@crain.com

Mayor Mike Duggan’s administration is seeking proposals from real estate developers about how the 264acre Coleman A. Young International Airport could be used for nonaviation purposes amid continued operating losses and limited use. The City of Detroit’s Office of Contracting and Procurement issued a request for proposals Thursday seeking plans from development firms and land use consultants that would create the most “economic impact and job creation in either aviation or no-aviation capacity.” Detroit’s RFP seeks proposals for redeveloping the airport land for an industrial or mobility park, which could effectively end private and corporate aviation at the east side airport that has just 66 full-time workers. City officials also want proposals about what it would cost to increase aviation use of the airport, which hasn't had commercial passenger airline service since 2000 when Pro Air discontinued service. “We haven’t done a study of the airport of this nature in a very long time – and a lot has changed in the city,” said Jed Howbert, executive director of the mayor’s jobs and economy team. “We need someone to look at the facts, walk us through the options and help us come up with a set of proposed recommendations.” Any attempt by the Duggan administration to shut down the airport would have to be approved by City Council, whose members have passed resolutions in recent years calling for more investment in the facility to lure more private and commercial planes to land in Detroit. “I believe that this is a viable asset that needs to be invested in and it could be a huge revenue generator, a job creator in the city of Detroit,” said Councilman Scott Benson, whose 3rd District includes the airport along Conner Street. “I do not support shutting the airport down." Redevelopment of their airport land for industrial uses could be linked with the nearby I-94 Industrial Park, where Urbana, Ill.-based supplier Flex-N-Gate Corp. is building a 500,000-square-foot manufacturing plant on 30 acres of land the

company purchased from the city. “Industrial users like being near other industrial users, so there may be some rationale for that,” Howbert said. “But we need the consultant to go through that in detail.” Coleman A. Young International Airport, which was formerly called Detroit City Airport, has two runways that are 5,090 feet and 4,025 feet long. The Duggan administration’s new openness to redeveloping the airport comes as the facility continues to mount losses that city taxpayers ultimately shoulder. The airport is expected to generate $819,824 in revenue this year, but cost $2,124,195 to operate — a $1.3 million operating loss. It posted operating losses of $736,751 in the 2016 fiscal year and $396,132 in 2015. For the 2018 fiscal year, the airport’s operating loss is estimated to be $885,000. There are fewer than eight departures at Coleman A. Young International Airport on an average daily basis. The airport directed the takeoff of 2,085 flights in 2016, according to the city's RFP. Federal Aviation Administration regulations have prevented the city from simply closing the airport or ceasing taxpayer support without alternative financial support. “Other communities around the country have chosen to shut down airports and have found ways to navigate that,” Howbert said. “We want the consultant to help us understand that to inform the decision.” On the capital expense, the cost to city taxpayers for continued maintenance of the airport escalates. “Airport management has requested $29,658,620 in capital expenditure funding for FY18,” according to the city’s RFP. Ann Arbor-based Avflight Corp. has a contract with the city through June 30, 2019, to provide aeronautical services, manage the main terminal building and provide day-to-day maintenance of the airport, its parking lots and aircraft taxi areas. The city’s Office of Contracting and Procurement has set a June 8 deadline for firms to submit proposals for future use of the airport. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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The City of Detroit has two distinct and separate retirement systems: the General Retirement System; and the Police and Fire Retirement System. The legal and fiduciary responsibility for the general administration, management, and proper operation of the Retirement Systems, and for making effective their provisions, is vested in each Retirement System’s Board of Trustees. The Retirement Systems provide services and benefits to approximately 9000 active members and 12,000 retirees and beneficiaries. Currently, combined Retirement System assets are in excess of $4 billion. Each Retirement System is comprised of two distinct plans: a legacy traditional defined benefit plan and a new hybrid defined benefit plan. Information about each Retirement System is available on the RSCD website at www.RSCD.org. Please refer to the website for the full job description and benefits. Submit information for this job posting to: jobs@rscd.org

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HIGH-RISE FROM PAGE 1

Grasso Holdings had the Gabriel Richard Building on Michigan Avenue downtown under contract but it ultimately was purchased by Joe Barbat. A source said he also had a pair of apartment buildings at Martin Luther King Jr. and Cass avenues and on Charlotte Street totaling about 90 units but never closed on them. If a new development there happens to the scale being discussed, it would rival 15-story Cadillac Place and the 28-story Fisher Building for prominence along the Grand Boulevard corridor, where developers like The Platform LLC, run by Peter Cummings and Dietrich Knoer, have staked a claim to large residential projects capitalizing on new streetcar transportation coming to the area as well as demand for new apartments. The project faces any number of potential snags, the largest of which is securing financing in a greater downtown market that has seen lots of development interest from local, national and international players but still almost always requires gap financing and incentives to make projects work financially. Perhaps most immediately, a purchase agreement for the property could fall through, as well. Multiple messages to Midtown Detroit were not returned. Midtown Detroit purchased the property in 2015 as part of a broader strategy to reshape the streetcar

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 1 7 , 2 0 1 7

path’s northern edge. It was part of a large deal that included 11 buildings totaling about 64,000 square feet along Woodward between Milwaukee Street and Grand Boulevard. Sue Mosey, executive director of Midtown Detroit, said two years ago that the buildings, which range from 1,072 to 25,092 square feet, were expected to be converted into mixeduse with retail, multifamily residential and perhaps even boutique hotel space.

The QLine effect The QLine, set to begin operations next month, has been one of the driving forces behind new investment along Woodward downtown north to New Center. In particular, a new 52-story residential tower on the former J.L. Hudson's department store site is planned by Dan Gilbert. The Platform has a bevy of new apartment projects in the construction or development phases on and immediately surrounding Grand Boulevard. Gilbert also has a residential tower planned to the east of the QLine route on a two-block area in the central business district known as The Monroe Block. The Roxbury Group, a Detroit-based development company, is redeveloping the 12-story former Professional Plaza building in Midtown in a $22 million project that will bring 72 apartments and 2,000 square feet of retail space to the market by the end of the year.

And those are just a handful of the projects being spurred forward by the incoming transportation system, which is expected to open in less than a month. Maurice Cox, the city’s planning director, said he has not been briefed on Grasso’s plans and cautioned that he “can’t count the number of speculative development projects that come on our radar and amount to nothing.” “I think we get about a dozen a week,” he said. But he also said the QLine has been a key factor in boosting development interest along the streetcar’s route. “There is no question that the QLine, with that singular, 3.3-mile investment, all of the neighborhoods to the east and the west of it have become transit-oriented development opportunities,” he said. “That’s a good thing for Detroit, and it talks about the power of that fixed transit investment that developers can count on being in place in perpetuity.” Grasso, adding that he wouldn’t demolish the existing building on the site, said the QLine is a key reason for him looking to develop in Detroit. “If it wasn’t for the QLine, I probably wouldn’t be considering it, honestly, because if there was no rail line coming in, I would have to build a lot more parking.” Reporter Annalise Frank contributed to this report. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

KIRK PINHO/CRAIN’S DETROIT BUSINESS

A large, skyline-changing residential development is under consideration for the southwest corner of Woodward Avenue and West Grand Boulevard.

FLOYD FROM PAGE 3

Beet juice is bottled at Drought, a raw juice maker.

DROUGHT FROM PAGE 3

Drought hopes to use Endeavor’s network of entrepreneurs to help build a national presence in the raw juice market, James said. “They’re opening you up to a community of very serious businesspeople who could take you to the next level,” James said. “We realized that wholesale is probably the quickest way to get there, in terms of reach,

but also we’d like to see more of our namesake stores.” James’ sisters who run the juice maker include: CEO and co-founder Caitlin James; COO Jenny James; and Jessie James, head of new business. Their company began with a $13,000 Kickstarter campaign in 2011. Drought’s other three stores are in Bloomfield Hills, downtown Plymouth and inside the Chrysler House building in downtown Detroit. The new Royal Oak store will open

COURTESY OF DROUGHT

in the next few weeks on the west side of Woodward just south of 14 Mile Road, James said. Drought’s other Royal Oak store is south of 12 Mile Road on the east side of Woodward. “We’re going to capture northbound (Woodward Avenue) traffic, which we already have, and southbound traffic with this new location,” James said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

From there, they began developing a three-piece wood bed frame and steel legs that could be shipped by mail. More than 50 percent of the company’s sales are in Chicago, New York, Los Angeles, San Fransisco and Washington, D.C., Hoff said. “Our core market is a millennial who lives in a city,” he said. Hoff said he wants to use Endeavor’s network of business owners who mentor young entrepreneurs to expand the company’s sales and distribution reach into Europe and develop a fulfillment center on the West Coast. The company currently packages and ships its bed frame sets through Evans Distribution Systems in Melvindale. “A lot of the network that Endeavor brings to the table … is applicable to us, thinking about growth,” Hoff said. “We have a lot of pull to go into international markets.” Metro Detroit companies in Endeavor’s entrepreneurship program include raw juice producer Drought, McClure’s Pickles, financial and stock news website Benzinga, chickpea pasta maker Banza, digital products company Vectorform, high school sports broadcaster Varsity News Network and Algal Scientific Corp., a developer of animal and human health products. Hoff said he was inspired to

“A lot of the network that Endeavor brings to the table … is applicable to us, thinking about growth.” Kyle Hoff

build furniture that could be ordered online after struggling to furnish an apartment in Chicago when he worked for an architecture firm there. “Getting out to the Ikea in the suburbs was looking like it was going to take my entire weekend,” Hoff said. “That was the beginning and the impetus of thinking about furniture and how could we build a better furniture company.” The company is named Floyd in honor of Hoff’s father, grandfather and great grandfather, all of whom were steelworkers named Floyd in Youngstown, Ohio. The bed frames are entirely made in the U.S. The steel feet are fabricated in Akron, Ohio, and powder-coated and shipped from suburban Detroit. The wood planks are manufactured in Virginia and Indiana. Floyd has a six-person office in Corktown, but will be moving to Eastern Market in the coming months, Hoff said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 1 7 , 2 0 1 7

CRISIS FROM PAGE 1

Brands build their reputation partly on powerful images. Now, negative images can have the same power. “It can take years to build a brand, but only one second to lose it. And this is amplified by citizen journalists with phones in hand capturing every moment and posting instantly on social media,” said Rich Donley, a senior vice president at Detroit-based MCCI. “Public opinion from seeing these imRich Donley: ages says ‘guilty’ Need to respond and negatively immediately. impacts a brand. Companies need to respond immediately and sincerely.” Donley has witnessed the same cycle repeat itself over the past 20 years, only now brands can make things worse instantly with a misguided tweet. And it puts a premium on preparation. “Many companies and individuals are not well-equipped to anticipate and respond in a crisis. They are not prepared. (They’re) insensitive, impersonal, become defensive and usually make comments based on emotions and limited information, not facts,” he said. “And then they defend, and that only makes it worse. Ultimately, they may backtrack and give in due to the pressure. “The initial statements and first 24 hours are the most crucial. It sets the tone,” Donley continued. “Show empathy and sincerity, but don’t force it. Learn the facts and tell the truth. Don’t blame. Don’t downplay the incident or speculate — this will help avoid backtracking and correcting errors. Address what is being done and steps being taken to prevent an incident from happening again.” Despite being able to peddle products and services with expensive, sophisticated marketing campaigns, large brands often remain inept at handling a crisis in the age of Twitter and Facebook. “The omnipresence of social media has dramatically changed the way companies handles crises — and for whatever reason some of the biggest haven’t quite caught on,” said Kelly Rossman-McKinney, CEO at Lansing-based political public relations firm Truscott Rossman. “As a result, bad news stories go viral before the company even appears to respond — which is a death knell to its reputation.” Responding to an incident with jargon instead of clear language is another PR mistake, Donley said. “In the case of United Airlines, using words like ‘re-accommodate these customers’ and that the booted passenger was ‘disruptive and belligerent’ were out of touch,” he said. “The company is now paying the price. They are not alone — look at the #DeleteUber campaign over its labor practices and then again after sexual harassment allegations.” Donley said the best companies

and organizations conduct issues and risk management regularly before a crisis ever emerges — identifying and analyzing potential or emerging issues and risks, taking corrective action and properly preparing response plans. “Being prepared in the thick of a crisis requires investing now in issues management and crisis training,” he said. “There are early warning signs, you just need to look for them and act upon them. Pay a little now or pay a big price later.” PR cost cutting by big brands locally and nationally fueled some of the wave of crisis communication bungling in recent years, said Matt Friedman, co-founder of Tanner Friedman public relations firm in Farmington Hills. “They disinvested in PR during the Great Recession. To the accountants who had to order cuts, PR was seen as an expendable luxury item,” he said. “The budgets were slashed and communications became a department of low priority. Post-recession, some of the budgets have returned, but PR has lost an important seat at the executive table in too many companies and is no longer a part of the culture, which is ruled by finance people and lawyers.” Friedman’s take on the Pepsi and United incidents is that the damage could have been ameliorated with better, faster handling. “All of the recent corporate situations have something in common. None started as PR issues. They became PR issues after the companies allowed them to quickly escalate,” he said. Michael Bsharah, owner of Bsharah Public Relations LLC in Dearborn, said four fundamentals will always be relevant in managing a crisis: 1. Plan as well as possible. 2. Use good judgment. 3. Tell the truth. 4. Follow through with/ for your audience. “The real issue is not so much preventing crises — though doing so is important with some structured forethought — but, the real question is how to prevent crises from exacerbating or getting out of control, whether it’s being played out through social media or otherwise,” he said. Peter Van Dyke, CEO and co-owner of Detroit-based Van Dyke Horn Public Relations (formerly Berg Muirhead and Associates), said a company of any size can be prepared to handle an incident. “You cannot plan for a crisis, but you can certainly prepare for one,” he said. “To start, you need to understand there is an 24/7 instantaneous news cycle and in the digital age, anyone can play the role of media.” That means brands, especially big ones, must be ready at all times for an incident. “This doesn’t mean you need to have all of the answers right away, but it does mean you need to know how to position an immediate response with confidence, yet repentance if appropriate, and to communicate a sense of expectation for next steps,” Van Dyke said. “You have then displayed leadership and responsibility, and allowed for some time to develop a response or solution that speaks directly to the situation at hand.”

DRAINAGE FROM PAGE 3

Jennings said the monthly water bill for his northwest side church skyrocketed from $650 per month to $7,500 per month after the city began assessing the storm water drainage fee. The drainage fee and how it was assessed has been a constant headache for Phil Cifuentes, owner and CEO of Omaha Automation Inc., a small automotive and military manufacturing supplier near the Detroit-Hamtramck border. “I came into a system that wasn’t charging anyone,” Cifuentes said. “And then I came into a system that, two years later, was charging the largest water sewerage rates in the country.” Omaha got billed $15,630 in 2015 and the assessment dated back several years, Cifuentes said. “If they come down through this new rate, how does that affect everyone who owes them outstanding charges like the $10,000 I owe?” Cifuentes asked. Property owners will still owe the water department past-due charges at the higher rate, but get relief for the next few years, Brown said. The new phased-in rate structure going before the city water board Wednesday will start at $125 effective April 1, double on July 1, increase to $375 in July 2018, $500 in July 2019 and $626 in July 2020. In July 2021, the per-acre fee will increase to $651, followed by a final hike of $26 in July 2022. “By having a longer five-year opportunity to phase in, it gives them an opportunity to better budget for the new cost and also to go out and

have a green infrastructure project designed,” Brown said. Water department customers that were originally being charged $852 per impervious acre will see their rate gradually reduced to $677 by July 2022 to match the rate charged to the 22,000 parcels in the new five-year phased-in plan, Brown said. “This all goes away and everybody goes to one flat rate at the end of five years,” Brown said. The water department is going to offer grants of up to $50,000 for half of the cost of water retention projects on the sites of large churches and businesses to reduce the amount of storm water and impervious surfaces, Brown said. Brown has budgeted $5 million for the grants. Cifuentes said the drainage fee has been “a real deterrent” to his plans to buy an adjoining 2.5-acre parcel and build another 40,000-square-foot manufacturing facility. “Until this all gets figured out, this is just staying idle,” Cifuentes said. The drainage fee was partly a response to a 2015 class action lawsuit Michigan Warehousing Group LLC brought against the city and its water department for charging some property owners the $852 per acre monthly fee and others nothing or as little as $20 based on the size of their water meter pipe. “We’re trying to settle that lawsuit by getting everyone on to a more fair and equitable rate system by putting them on the same rate,” Brown said. Omaha Automation is part of the class action lawsuit, Cifuentes said. The nonpaying customers included industrial parcels, commercial buildings, churches and residential

parcels where Detroiters have bought vacant side lots and built additional parking spaces, Brown said. “Parking lots were a big part of it — and they weren’t getting a bill because they didn’t have an account,” Brown said. Churches in Detroit got big bills because of their large parking lots. Shield of Faith Church, 13600 Van Dyke, has racked up a $65,000 bill with the city water department because the storm water drainage fee costs the 300-member congregation nearly $5,000 per month, according to Pastor James Jennings. “It’s actually causing us not to be able to meet our expenses, and we’re about to go under unless God works a miracle,” Jennings said last week before the rollback was unveiled. The drainage fee also was imposed to pay for needed sewer infrastructure upgrades and try to reduce the city’s overall storm water runoff that causes combined sewage water outflows to discharge into the Detroit River and River Rouge in violation of state and federal environmental laws. The U.S. Environmental Protection Agency has required Detroit to eliminate all sewage discharges by 2022, Brown said. The sewage releases vary depending on heavy rainstorms. Last year, the city released 800 million gallons of combined sewage and storm water, according to DWSD. In 2014, a torrential August rain storm contributed to 6.8 billion gallons of untreated sewage and storm water being released — and widespread basement flooding in the city and northern suburbs. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Kelly Services CEO Watkins to resign from Detroit to step down to Wayne Mental Health Authority become finalist for OU president By Jay Greene jgreene@crain.com

By Annalise Frank afrank@crain.com

Oakland University announced one of two finalists in its search for a new president: Carl Camden, who will step down as president and CEO of Kelly Services Inc. Camden, 62, has been with the Troy-based staffing company for 22 years and will leave effective May 10. Current Executive Vice President and COO George Corona will replace him, Camden said. Camden will visit Oakland University on Monday for interviews and a Carl Camden: forum open to Leaves Kelly the public at 10 Services. a.m. at the Oakland Center, university spokesman Brian Bierley said. The university is naming its finalists one to two days before they visit the campus, Bierley said. The second finalist, to be announced Tuesday morning, is scheduled to host a forum 10 a.m. Thursday, he said. Camden previously worked as a department chair at Cleveland State University. He earned three degrees by the age of 25: a doctorate from The Ohio State University, a master’s degree at Central Missouri State University and a bachelor’s from Southwest Baptist University, according to a news release. “I had long communicated that I wanted to return ultimately to public service after I left the business world and would be open to the right opportunity, and Oakland University became that opportunity,” he said. Camden hasn’t secured the position, but he said it would not have been “ethical” to remain CEO and president while a finalist for another job. Returning to academia has always been a priority, Camden said, but he is also open to jobs in government or philanthropic organizations. “In our conversations with Carl, he has a unique view of the confluence of higher education and jobs,” said Ric DeVore, chair of OU’s board of trustees and regional president of PNC Bank. “It wasn’t really that he’s a CEO of a public company (as much) as it was that he’s a CEO of a public staffing company. If you think about where the economy is going in the jobs area, he has a pretty competent background.” The university’s board of trustees formed a committee to search for a new president in October, after it decided to replace outgoing president George Hynd upon completion of his three-year contract that ends in August. Hynd is a finalist for the chancellor position at Southern Illinois University’s flagship Carbondale campus.

Detroit Wayne Mental Health Authority CEO Tom Watkins has resigned from his job, effective Aug. 31, after a tenure marked by the transformation of the agency and a series of disputes with the organization’s board of directors. Most recently, the board went against recommendations from Watkins and his staff that the authority attempt to claw back add-on fees that had been collected by InTom Watkins: Oversaw transition tegrated Care Alliance, accordat agency. ing to three sources close to the matter who requested anonymity. Watkins told Crain’s he didn’t want to discuss the March 15 board meeting, where his administrative staff presented a report and recommendations to the board that the authority attempt to collect from ICA about $1.4 million in unauthorized payments over the past two years, according to DWMHA documents. The DWMHA board instead voted 6-5 to forgive ICA and not request repayment, the sources said. Authority staff found out that ICA had tacked on a 1 percent to 2 percent additional administrative fee over the last decade for quality assurance activities, the sources said, and those payments had not been approved by the authority. Sources said those payments amounted to 35 percent over the contracted fees. Watkins has often butted heads with the authority’s board on provider contract issues, primarily Watkins’ decision in December 2015 to terminate a contract with Integrated Care Alliance, a provider agency in Detroit that shortly before had been acquired by Long Beach, Calif.-based Molina Healthcare Inc. In early 2016, the DWMHA board, in a 7-2 vote, reversed Watkins’ ICA decision and then changed the authority’s bylaws to strip Watkins from termination decisions and instituted a new policy to require board approval for contract changes. On Thursday, Watkins, a former state school superintendent from 2001 to 2005, submitted his resignation when his current three-year contract expires. In his resignation letter to DWMHA Chairman Herbert Smitherman Jr., M.D., board members and employees, Watkins didn’t specify a reason he turned down a new contract from the authority. “While I originally accepted a three-year contract that was extended an additional year and I appreciate the board’s confidence expressed in offering me yet another contract extension while we explore a new contract, I have decided to resign when my present contract expires

August 31,” Watkins wrote. “Be assured, I will work with the board and our great staff to facilitate a smooth transition.” Contacted by Crain’s Friday morning, Smitherman said he was in meetings and would comment later in the afternoon on the circumstances surrounding Watkins’ resignation and the future of DWMHA. Watkins, in a short interview Friday, declined to elaborate on his reasons to leave the authority. He said he plans to work through Aug. 31 and then will assess his future plans. The DWMHA has called a special board meeting for Monday. Molina has offered to cover the $1.4 million payments in question, two sources told Crain's. Molina officials were unavailable for comment. When the two other networks under contract with the authority — Consumer Link Network and Community Living Services — learned about the 1-2 percent add-on reimbursements, they also requested the payments, the sources said. But the DWMHA board said it could not act on the request immediately because Watkins and staff had not requested the add-on payments for them, sources said. If approved, the sources said, it would cost DWMHA about $10 million.

Detroit Wayne growth under Watkins In 2013, Watkins oversaw the transition of the Wayne County Mental Health Authority from a county agency to an independent authority. As one of the nation’s largest county mental health organizations, with more than 100 employees and a budget of $730 million, the Detroit Wayne County Mental Health Authority funds four managed care provider networks that serve more than 80,000 people with mental health and other developmental disabilities. Before taking his current job, Watkins was founding CEO of TDW and Associates, a Detroit-based global consulting and education business. He has since closed the company. In his resignation letter, Watkins cited many accomplishments during his four years with the authority. They include retiring $30 million in legacy debt, generating more than $30 million in new revenue, increasing direct care staff wages by more than $2 per hour, reducing administrative costs and standardizing provider rates, according to the authori-

ty’s 2016 annual report. On the clinical side, Watkins said DWMHA helped to establish 23 crisis mobilization teams, trained thousands of first responders and others in mental health first aid training, which saved more than 30 lives with Naloxone First Responder training.

Dispute with ICA, DWMNA board In December 2015, Watkins moved to terminate a contract with ICA, which provides developmental disability services, over breach of contract issues. In terminating the $48 million contract, Watkins had contended ICA was in violation of four contractual terms, including failing to notify the authority of an ownership change to Molina. Watkins cited terms of his employment contract as CEO as the basis to sever the ICA pact, according to documents obtained by Crain’s. But the board disagreed. A 2016 report by Allen Brothers PLLC, which the board had hired to render a legal opinion on Watkins’ right to terminate ICA, concluded that ICA did not breach its contract. The board also voted that all future proposed contract terminations must be presented to the board for approval. In investigating ICA, Watkins cited a report that found that Detroit Wayne board had authorized $17.5 million in additional funds to ICA in addition to contracted payments from 2010 to 2015, according to documents on the authority’s website. ICA was the lowest-ranked of the three developmental disability service providers under contract with the authority. The other two contracted providers are Consumer Link Network and Community Living Services. Because of ICA budget issues and low ranking, Watkins and management did not want to offer a contract with ICA for 2015. However, the authority board voted last year to offer ICA another contract. Despite the board's legal opinion, it is unclear why it took action on Watkins’ ICA decision. Watkins previously had terminated several contracts, including ones with Wayne State University, Western Michigan University and Wayne County Retirement System, without board objections, according to authority records.

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

MCCI

Blue Cross Blue Shield

McConnell Communications

Bsharah Public Relations

Trinity Health

Detroit Water and Sewerage Department

Truscott Rossman

Drought

Van Dyke Horn Public Relations

Woodward Holdings LLC

Floyd Design LLC Kelly Services

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 1 7 , 2 0 1 7

THE WEEK ON THE WEB

RUMBLINGS

APRIL 8-14 | For more, visit crainsdetroit.com

Florida company gets state deal for pot-tracking software system

Florida-based software company has been chosen for a nearly $450,000 contract to manage Michigan’s new medical marijuana tracking system. Lakeland, Fla.-based Franwell Inc. has been recommended for a $447,625 award from a pool of 11 companies that bid to run Michigan’s statewide tracking system, which was created through legislation Gov. Rick Snyder signed into law last year. A formal contract has not yet been completed, according to a spokesman for the Michigan Department of Licensing and Regulatory Affairs. The system will require the “seedto-sale” tracking of marijuana products. It was part of a three-bill package that also creates a new tiered licensing system for various segments of the state’s medical marijuana industry, including growers, provisioning centers or dispensaries and compliance testing labs. Franwell’s proposal includes a hosting charge to the state of $35,000 per year for the first two years, as well as in each of five annual contract extension options. The company also noted an additional cost of required tags for tracking plants and packages. The state licensing department will oversee the medical marijuana program through LARA’s new Bureau of Medical Marihuana Regulation. Franwell will run Michigan’s program through a software program it developed called METRC, which stands for Marijuana Enforcement, Reporting, Tracking and Compliance, said Scott Denholm, executive director of METRC for Franwell. The products will be able to be traced back to the grower and the plant from which they are sourced.

Business News: Max Broock Realtors, a Birmingham-based residential real estate brokerage, has been retained to sell 98 condominiums planned for downtown Detroit. J Kathy Wendler, longtime president of the Southwest Detroit Business Association, plans to retire from the organization after leading it for more than 35 years. She will continue to lead the association until her successor is in place. J Several businesses opened in metro Detroit in the past week: Slows Bar BQ in Pontiac, Atomic Chicken in Detroit’s New Center area, La Lanterna in the city’s Capitol Park neighborhood, and Under Armour and Avalon International Breads’ new café in downtown Detroit. J Nexteer Automotive Corp. has signed an agreement to form a joint venture with China-based Dongfeng J

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

$8 million

The cost of the North American headquarters Hutchinson plans to build in Auburn Hills’ Oakland Technology Park.

180 acres

The size of a massive site along the Detroit River in Trenton that is now in the hands of the Wayne County treasurer after the owner failed to pay millions in taxes, according to The Associated Press.

$34.6 million The operating income deficit the Detroit Tigers ran last year — the biggest loss in all of baseball that season.

Motor Parts and Components Group Co. Ltd. to produce electric power steering systems for Dongfeng Motor Corp. J Two metro Detroit companies, DiverseNote LLC and Universal Tool Equipment and Controls Inc., are planning expansions that would generate a collective $7.3 million in private investment and create 105 jobs. J Lyft is the latest business to offer benefits to Detroit residents through the Detroit ID program launched in December. Residents who sign up for the ride-share service using their Detroit ID will receive a $25 credit. J Longtime Detroit developer Joel Landy has sold a 60,000-square-foot Cass Avenue building to Detroit-based Sterling Group for an undisclosed price. J Re:purpose, a tech recruiting marketplace website, is the first startup to launch from the Detroit branch of WeWork LLC, an international workspace chain with locations in Detroit. J Radio One Detroit has agreed to sell its WCHB AM 1200 NewsTalk station to Birmingham, Ala.-based Crawford Broadcasting Co. for an undisclosed amount.

The Henry Ford has put on display a “cognitive dress” created by IBM Corp. and high-end New York womenswear brand Marchesa that uses IBM Watson technology to change color based on emotions used in social media posts. J Fiat Chrysler is planning to move the U.S. headquarters for its Maserati brand from New Jersey to the former Walter P. Chrysler Museum on the grounds of FCA’s headquarters in Auburn Hills, Crain's sister publication Automotive News reported. J Detroit’s three casinos had an aggregate revenue of $131.2 million in March, a 5 percent increase from the same time last year and an 11.9 percent rise from February, the Michigan Gaming Control Board reported. J The city of Windsor is renewing its partnership this year with the Chevrolet Detroit Grand Prix to make it easier for Canadian fans to enjoy the June 2-4 festivities on Detroit’s Belle Isle. J Detroit Medical Center hospitals are now considered in good standing with state and federal regulators after DMC Children's Hospital of Michigan passed an unannounced follow-up inspection. J

Other News: The city of Detroit and three major Detroit health systems — Detroit Medical Center, Henry Ford Health System and St. John Providence Health System — will team with Focus: Hope and Oakland University to provide training to city residents for entry-level health care jobs in high demand. J Democrat Gretchen Whitmer told Crain’s that she would not close Detroit’s persistently failing schools if elected governor, and instead would push to financially punish government entities that don’t shut down poor-performing charter schools. J The Waterford Township Board of Trustees gave the unnamed potential buyers of the Summit Place Mall site more time to finalize new development plans. J

Obituary: Taft Wallace “Wally” Wrathall, a former executive at Comshare Inc. previously based in Ann Arbor, died Monday at a nursing home in Livonia. He was 80. J

Slows Bar BQ plans to open its fourth location, in downtown Pontiac. SLOWS BAR BQ PONTIAC

ROBIN CARLSON/LURIE GARDEN

A Piet Oudolf-designed garden at the Lurie Garden in Chicago.

Renowned Dutch garden designer eyes Belle Isle D

etroit’s Belle Isle could see a garden designed by internationally renowned garden designer Piet Oudolf. At the Garden Club of Michigan’s request, Oudolf visited Detroit recently to tour a bit of the city, the riverfront and Belle Isle. The Dutch designer — who has been likened by some to the late famed landscape architect Frederick Law Olmsted who designed Central Park in New York City and Belle Isle — was charmed by the island and said it’s there that he can see one of his famed gardens. Oudolf is a rock star in his world,

according to the Garden Club’s immediate past President Maura Campbell. He designed the Lurie Garden in Millennium Park in Chicago, several gardens at Battery Park in New York City and the full design of the High Line park in Manhattan. He is known for designing yearround gardens that look good even when the plants are dormant. The Garden Club has yet to talk numbers with Oudolf but already, individuals, foundations and companies like Penske Corp. have expressed interest in supporting the new garden, Campbell said.

Court: Colorful 9-story mural to stay on Milwaukee Junction building A Detroit-based artist and a Bloomfield Township-based real estate company have reached an agreement that will allow Katherine Craig’s colorful “The Illuminated Mural” to remain in place on the side of a Milwaukee Junction building. In a joint statement provided to Crain’s, Princeton Enterprises LLC’s law firm in the case, Southfield-based Jaffe Raitt Heuer & Weiss PC, said the building at 2937 E. Grand Blvd. is under contract to Detroit-based The Platform LLC, which “has agreed to honor — and extend — a previous agreement allowing ‘The Illuminated Mural’ to stay on the side of the building for several years to come.” Crain's reported last month that The Platform — founded by Peter Cummings and Dietrich Knoer — has the building under contract. The building, built for the Detroit Storage Co. a century ago, sits just east of the northern terminus of the QLine streetcar project. That makes it a prime redevelopment prospect in a neighborhood just east of the New Center area, which has attracted considerable real estate invest-

AUCTION.COM

Katherine Craig’s “The Illuminated Mural” was painted on this building at 2937 E. Grand Blvd. in 2009.

ment recently due to the rail project and a shortage of quality multifamily rental housing in the greater downtown area. Craig, whose nine-story mural adorns the western wall of the 73,000-square-foot building, sought an injunction in a January 2016 lawsuit under the federal Visual Artists Rights Act of 1990 barring the destruction of the mural, created in 2009.

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