Crain's Detroit Business, June 12, 2017 issue by Crain's Detroit Business

JUNE 12 - 18, 2017

Eva Feldman steps down, but she’s not retiring

OT rule stall leaves employers in limbo Court battle, potential rework in offing. Page 11

Page 3

Commerce

Southeast Michigan sees slide in public companies

By Dustin Walsh dwalsh@crain.com

The ranks of Southeast Michigan publicly traded companies have been shrinking for two decades. Twenty years ago, Southeast Michigan was home to 93 companies with publicly traded stock. That’s down to just 42 today. That 54 percent slide is

slightly steeper than the 50 percent shrink that Wall Street as a whole has gone through since 1996. But the Detroit region has lost some big-name headquarters: Kmart Corp., Comerica Inc., Pulte Homes and Borders Group Inc., to name a few. The shift has many causes: companies going out of business or leaving

town, a decades-long binge in mergers and acquisitions and an IPO market that has largely passed the state by. But it also has real effects. Among them are a dampening of wealth creation and a loss of the cachet and dollars-and-cents economic impact that corporate headquarters offer. SEE PUBLIC, PAGE 18

Crain’s Michigan Business

Bridging two business worlds

Grand Rapids Inside:

 To keep up pace of growth, OST eyes acquisitions. Page 7

By Tom Henderson thenderson@crain.com

The week before Martin Luther King Jr. Day in 2015, Forbes.com ranked Grand Rapids as the second-worst city in the nation, economically, for African Americans. The city was ranked No. 51 of the country’s 52 largest cities, beating out only Milwaukee, based on four statistical measures — home ownership, entrepreneurship or self-employment, median household income and the change in the African-American population from 2010-2013. While local reaction in newspapers and on TV and radio protested the city’s ranking, two local organizations joined forces to try to figure how to make the city a place where black-owned businesses can thrive. In so doing, they’re trying to bridge a historic divide between incubators that focus on high-tech, mostly white businesses and the African American business community.

 Brewery Vivant stands out from the pack with French and Belgian beers. Page 8  Grand Rapids startup scene gets a boost from the Grand Angels. Page 9  Founded after tech bubble burst, Atomic Object grows. Page 10

Darel Ross II (left) and Jorge Gonzalez (center) of Start Garden along with Jamiel Robinson of Grand Rapids Area Black Businesses.

SEE START, PAGE 18

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GRAND RAPIDS To keep up pace of growth, OST eyes By Tom Henderson thenderson@crain.com

RapWhen Meredith Bronk joined Grand Inc. in ids-based Open Systems Technologies 1998, she was the seventh employee. be It never entered her mind that she’d of seven there 19 years later. No longer one employees, but one of 225. Not just one of the pack, but the boss. She was working at a leather company in Grand Haven, helping with an IT systems integration, when a former employee who had taken a job at OST recommended Bronk for an opening. Meredith Bronk: She was named chief Joined OST in 1998. operating officer in 2009, Now she’s CEO. president in 2014 and in CEO. 2015 replaced founder Dan Behm as named Bronk one of Crain's Last October, In 2015, 50 people to know in IT in Michigan. top 50 Inc. Magazine named her one of the women entrepreneurs in the country. IT serOST is a fast-growing provider of desoftware into out vices, having branched velopment in 2008. It now does cloud-based softdata storage, app development, custom data ware, software for the internet of things, revenue analytics and managed services, with of about $160 million. MinOST has offices in Ann Arbor, Detroit, Grand neapolis, Chicago and London, but Rapids is the largest office by far, employing but about 140. It employs about 15 in Detroit in the will soon be moving them into space Town Center in Southfield. remodOST’s headquarters is a beautifully b ildi

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three-story, OST’s headquarters is a beautifully remodeled, of the Grand River in downtown 30 000 square-foot building just west

acquisitions

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MICHIGAN BRIEFS Perrigo CEO to retire after just 14 months Perrigo Co. announced last week that its CEO, John Hendrickson, will retire after just 14 months at the helm. The Allegan-based drugmaker said Hendrickson, 54, will continue in the leadership position until a search committee selects a replacement, according to a company news release. Hendrickson was hired to replace longtime CEO Joseph Papa, who left the company in April John Hendrickson: To retire from 2016 to take the helm of CanadiPerrigo an drug giant Valeant Pharmaceuticals and adds to a period of tumult for Perrigo. “My decision to retire this year has not been an easy one, but now is the right time for me to make this change personally and professionally,” Hendrickson said in a written statement. Hendrickson started with Perrigo (NYSE: PRGO) in 1989 and became CEO last year when Joe Papa quit the job to join Valeant Pharmaceuticals International Inc. The company has since struggled to stabilize.

Hendrickson suffered a personal tragedy in November when his 21-year-old son died, the Wall Street Journal reported. Last month, the company’s offices were searched by U.S. Department of Justice agents as part of a wide-ranging U.S. investigation into possible price collusion in the generic drugs business. “We will retain an executive search firm to support our thorough search for Perrigo’s next leader who can continue to build on our upward trajectory,” Laurie Brlas, chairman of Perrigo board of directors, said in a statement.

$300,000 donated to promote Flint nutrition Tom Gores’ FlintNOW Foundation and the National Basketball

INSIDE BANKRUPTCIES

Players Association have pledged $300,000 in their second campaign to help Flint families access healthy food, the organization announced Tuesday. The Detroit Pistons, owned by Gores, will help distribute 10,000 coupon booklets to preschool and elementary students in the city. The booklets, distribution of which is to start Wednesday morning, will give families six $5 gift certificates for the Flint Farmers’ Market and a chance to win tickets to a Pistons game this fall when they begin playing in the new Little Caesars Arena. The Pediatric Public Health Initiative of the Michigan State University-Hurley Children’s Hospital will determine and direct distribution to families in need, a news release said. The initiative is headed by Mona

Hanna-Attisha, M.D., the director of pediatric residency at the hospital, to help children exposed to lead during Flint’s water crisis. Hanna-Attisha, who was honored by Crain’s in January as a Newsmaker of the Year, blew the whistle on lead exposure to Flint children caused by contaminated water. “Kids need healthy food to grow up smart and strong. More access to nutritious foods will not only help our children today, but it will make them healthy for many years to come,” Hanna-Attisha said. The healthy food program is funded equally by the NBPA Foundation and Gores, who grew up in the Flint area. Last year, FlintNOW and NBPA gave $240,000 to distribute 8,000 “nutrition backpacks,” which includ-

the School of Medicine, not the College of Engineering. J Duane McLean is the Detroit Tigers’ executive vice president of business operations. His title was misstated on Page 51 of the June 5 issue. J The Change Makers profile of Patrick Doyle on Page 12 of the June 5 issue stated that a video of a Domino’s employee putting cheese up his

nose went viral in late 2009. The video went viral in the spring of 2009. The profile also stated that an apologetic ad campaign launched when Doyle became CEO in March 2010. The ad campaign launched in January 2010, when Doyle was president of U.S. operations. J The Change Makers profile of Rip Rapson on Page 15 of the June 5 is-

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COMPANY INDEX: SEE PAGE 18 ed three $5 gift certificates to the Flint Farmers’ Market, nutrition information and a mini basketball. In the first campaign, 36 percent of certificates were redeemed, which FlintNOW wants to increase this year.

Corrections J A story on Seraph Biosciences in the May 29 venture capital special report said that Medical Engineering Partners raised seed funding of $400,000. In fact, MEP raised a first angel round of $400,00 and subsequently raised seed funding $1.4 million. Additionally, Wayne State professor Greg Auner’s smart sensors group is now under the auspices of

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Health Care

Feldman: Stepping down, not stopping

A career in social justice

Q&A with John Van Camp

Southwest Solutions CEO to cap 45-year tenure next year

By Tom Henderson thenderson@crain.com

Eva Feldman is stepping down as director of the A. Alfred Taubman Medical Research Institute at the University of Michigan, but at the age of 65, she has no intention of retiring. She was the founding director of the institute — created with tens of millions of dollars from mall mogul A. Alfred Taubman to fund research into intractable diseases like Alzheimer’s, ALS and diabetes Eva Feldman: — and ran it for No intention of 10 years. It is retiring. time, she says, for her next, but not necessarily last, 10-year plan. “I birthed a baby and it’s grown to be 10. It’s a tweener, now, and ready for someone else to take it to adolescence,” she told Crain’s, following a meeting she had with one of the finalists of a national search to replace her. Feldman said she expects a replacement to be named by the end of June. “We started with four people, and now we have more than 200 investigators,” she said. “We’re strongly established, very robust. We have the best scientist-clinicians at the university. It’s time for the next director to take over. There are other things I want to SEE FELDMAN, PAGE 17

By Sherri Welch swelch@crain.com

Southwest Solutions CEO John Van Camp plans to retire next May after 45 years with the nonprofit.

LARRY PEPLIN

Southwest Solutions CEO John Van Camp got a taste of social justice work at the early age of 10, when he and fellow Cub Scouts staged a sit-in at an ice cream parlor in his hometown of Romeo. The shop wouldn’t serve black people, so Van Camp’s mother — a founding member of the Detroit Federation of Teachers in Detroit and of the first bi-racial Cub Scout pack in Macomb County — organized the sit-in. As employees there came up to the white children to ask if they’d like something, they’d reply, “No, please, serve my friend first.” The protest lasted only a halfhour, but it caused a stir, Van Camp says. And he proudly notes that the shop changed hands three months later — and the new owner served everyone. Van Camp, who announced last week that he will retire next May to cap a 45-year career at Southwest, will tell you his parents, native Detroiters and social activists, sparked his interest in improving the world. The Van Camp family moved out to Romeo around 1948 when UAW pioneer Walter Reuther and others put up money to buy an apple farm to launch what was supposed to be a commune, but it never came to fruition. SEE SOUTHWEST, PAGE 15

Government

Foreclosures lucrative for Wayne County By Joel Kurth and Mike Wilkinson Bridge Magazine

This is what desperation looks like. A no-frills community center. Volunteers unfolding extra chairs for the parade of poor people who come clutching envelopes of tax documents in hopes of saving their homes. They’re people like factory worker Merneesha Chears. She is in the front row waiting to meet with a counselor. She needs to enter a payment plan soon on the $2,000 she owes in back taxes to prevent her foreclosed home from being sold at auction.

Her three young children are in the car outside. They don’t know what’s happening. “All they know is that I’m taking care of some bills,” says Chears, who fell behind because she has limited hours at work. The scene inside the west side Detroit community center is as depressing as it is mundane. That’s because misery is monetized by counties across Michigan, and no government relies on money from tax foreclosures as much as Wayne County. In recent weeks, nonprofits hosted

workshops before the June 7 deadline for owners of tax-foreclosed homes in Wayne County, which includes Detroit, to agree to repayment plans. If they didn’t, the homes will be auctioned this fall. The nonprofits’ efforts aim to save homeowners from losing their properties. But an investigation by Bridge Magazine and Detroit public radio station WDET reveals that tax foreclosures have paid off big-time for Wayne County and are crucial to its financial turnaround. High-interest rates imposed on SEE TAXES, PAGE 16

JOEL KURTH/BRIDGE MAGAZINE

Merneesha Chears (right) waits to meet with a counselor at a recent tax foreclosure assistance program in Detroit. She said she fell behind because of limited work hours at her job.

MUST READS OF THE WEEK Show of support

Trust and transparency

Belle Isle Grand Prix would lose more than $1 million without Penske backing. Page 19

Ron Fournier: For Gov. Rick Snyder and Mayor Mike Duggan, chasing 5,000 jobs in Asia was a noble pursuit. How they pursued it stinks. Page 6

Tech training Facebook to fund training of 3,000 Michigan workers for digital jobs. Page 4

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Facebook to fund training of 3,000 Michigan workers for digital jobs By Chad Livengood clivengood@crain.com

Facebook will fund the training of 3,000 Michigan workers for jobs in digital marketing over the next two years, the social media giant’s COO Sheryl Sandberg announced last week during a visit to Detroit. Grand Circus, a computer coding training firm that’s part of Dan Gilbert’s family of companies, will offer the 10-week training courses in Detroit and Grand Rapids in partnership with Facebook. Sandberg told Crain’s that the Menlo Park, Calif.-based company’s funding of the training is designed to help fill a growing shortage of computer coding workers and develop talent for a future possible expansion into Michigan. “Auto is a very important industry for us,” Sandberg said in a interview with Crain’s. “This is a growing part of our business and we’re hoping we can expand here because our business will demand it.” The training courses at Grand Circus’ offices in the David Broderick Tower next to Grand Circus Park will begin in the fall, said Damien Rocchi, co-founder and CEO of Grand Circus. “Facebook’s intention is to do this nationally, but this has been launched here (first),” Rocchi told Crain’s. “I think it’s an endorsement for the tech community that we’ve built here and the sort of traction we’ve been getting in Detroit over the last five or six years.” Grand Circus is about to graduate its 50th class of coders this summer and said it has 650 graduates working in 120 companies across the state. Ellen Zimmer, 55, went through Grand Circus’ 10-week training last fall for front-end website development and landed a job at Quicken Loans Inc. in February as a software project manager — after spending 10 years out of the workforce. “It enabled me to form a network so I knew who was hiring, what kind of skills they were looking,” said Zimmer, who had a previous career in early internet marketing at the former Ameritech Corp. “It brought me up to current.” During an announcement speech, Sandberg highlighted Zimmer’s story as “an example” of how training experienced workers in new skills can help get in-demand tech jobs. “The world changed an awful lot in those 10 years you were out of the workplace,” Sandberg said to Zimmer. “But it didn’t matter because what Ellen needed — she had the core skills — she needed an opportunity to learn and she got that here.” Sandberg said Facebook will work closely with Grand Circus on training workers in the areas where Facebook and other companies need help. “When we can find a great local partner like this that we can partner

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Facebook COO Sheryl Sandberg announces a partnership Thursday with Grand Circus to train 3,000 Michigan workers in social media and digital marketing jobs at the computer coding firm’s downtown Detroit office. with to help provide the training people need and we can bring them what we know, it’s just a great opportunity for us to develop people who will go to do great work with Facebook and other local companies,” she said. Facebook is adding emphasis on getting Grand Circus to train women and minorities for jobs in digital and social media marketing, Sandberg said. “We want to develop diverse talent,” she said. “And we want to make sure that we can get the talent that we need. And some of these people go on to work for other companies — that’s great.” Facebook operates a small sales office in Birmingham and Sandberg did not rule out expansion of the technical end of the website’s business in Michigan. “We always start with sales offices,” she said. Gov. Rick Snyder praised Facebook’s job training initiative. “This commitment Facebook is making to Michigan shows their confidence in the state and its residents,” Snyder said Thursday in a statement. “Convergence between the tech and manufacturing sectors is becoming more prominent throughout Michigan and the world, making this type of partnership between employers and education to grow the professional trades more important than ever before.” Sandberg visited Grand Circus’ offices Thursday morning and had a private meeting with Gilbert before announcing the job training initiative with Rocchi before a crowd of Grand Circus graduates, many of whom land jobs down Woodward Avenue at Gilbert’s Quicken Loans. In her one-day visit to Detroit, Sandberg went from Grand Circus to

General Motors Co.’s Detroit-Hamtramck plant to get a tour with GM CEO Mary Barra. Before the tour, Sandberg and Barra talked about the convergence of automobiles and computer technology in a Facebook Live video recorded at the assembly plant Barra once ran as general manager. “I think the fact that you’re giving them that core skill of coding, which is going to be necessary in every industry, is just so important,” Barra said of Facebook’s job training initiative. Sandberg later planned to speak at Facebook’s fifth annual automotive summit at the Garden Theater in Midtown. The summit focuses on the social media company’s automotive marketing business. Sandberg’s tour of a GM plant comes six weeks after Facebook CEO Mark Zuckerberg made an unannounced visit to Southeast Michigan to tour Ford Motor Co.’s Ford River Rouge Complex in Dearborn, where he said he “played a very small part” in assembling F-150 trucks. The social media pioneer also dropped into Jolly Pumpkin Pizzeria and Brewery in Detroit’s Midtown and met with Muslim students at the University of Michigan-Dearborn. Gilbert did not attend the job training announcement at Grand Circus and was not available for comment, a spokeswoman said. “We discussed everything from basketball to the work he’s doing developing Detroit to Quicken Loans and how his business is going,” Sandberg said of her meeting with Gilbert. Individuals interested in enrolling in Grand Circus’ Facebook-sponsored training courses can get more information at https://www.grandcircus. co/facebook.

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OPINION

A matter of trust and transparency

or Gov. Rick Snyder and Mayor Mike Duggan, chasing 5,000 jobs in Asia was a noble pursuit. How they pursued it

stinks. They did so in secrecy, flying to Asia sometime after the Mackinac Policy Conference with no public announcement. Even after word leaked that metro Detroit was in the running for a $4.2 billion investment by Taiwan-based Foxconn Technology Group, Snyder and Duggan aides refused for days to confirm their whereabouts. Snyder spokeswoman Anna Heaton told Crain’s, “The governor’s schedule is not a matter of public record due, in part, to security concerns.” That is absurd. If the president of the United States can travel safely on publicly announced foreign trips, so can the governor of Michigan. Snyder’s spokeswoman continued: “Nevertheless, we are very transparent with the media regarding the governor’s activities prior to occurring (i.e., media advisories for planning purposes) and with the public as they occur or very soon afterward.” That is spin. Snyder’s office provides in advance a fraction of his schedule to reporters, and only to those who commit not to share it with the public until the events are done. A broader point: Michigan’s pathetically weak freedom of information law exempts the governor, the lieutenant governor and the state Legislature. This allows them to keep private almost every piece of public business. In the case of Foxconn, not only can Snyder leave the country without notice, but the public can’t learn of the trip later by obtaining his travel documents. For some period of time last week, Michiganders didn’t even know who was running their state. Section 26 of the state Constitution puts the lieutenant governor first in line of succession. It states: “If the governor or the person in line of succession to serve as governor is absent from the state, or suffering under an inability, the powers and duties of the office of the governor shall devolve in order of precedence until the absence or inability giving rise to the devolution of powers ceases.” When Brian Calley is governor, we should know about it. As for Duggan, he is mayor of Detroit no

RON FOURNIER Publisher and Editor

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.

matter where his job takes him, but he should appreciate the public’s right to know. You might recall the Crain’s editorial in November that reprimanded Duggan for a lack of transparency. He had failed to inform the public or the City Council about the federal government’s suspension of a land bank program. His chief of staff, Alexis Wiley, said it's the mayor's practice not to disclose job-recruiting conversations until an agreement is concluded. "Any other practice would be completely unprofessional," she told me. But I'm not asking Duggan to disclose sensitive conversations, just tell Detroiters when he travels overseas. Could a nondisclosure agreement be keeping Snyder and Duggan quiet about any negotiations with Foxconn? Certainly, even likely. But an NDA does not prevent them from confirming their trips abroad and, in the case of Snyder, disclosing his succession of power. Here’s the kicker: It’s not even clear whether this is an opportunity worth chasing. As my colleague Kirk Pinho reported, Foxconn has a history of promising big jobs that never come. Some voters might wonder whether this trip is a ruse, a taxpayer-funded ploy to build support for Snyder’s business tax incentive plan. Despite the state’s rocky history with such tax breaks, Snyder says this one is needed to lure and keep big businesses in Michigan. Snyder says, trust me, to a public that has lost trust in the political system and its leaders, a public that needs and wants more transparency in government. Lindsay VanHulle contributed reporting to this column.

LETTER Conference should stay on Mackinac Keith Crain’s most recent column (“It is time to come home,” Page 8, June 5) is right on the mark in praising the Detroit Grand Prix. The economic impact on Detroit from hosting this signature sporting event, and the work behind it to enhance Belle Isle, are enormously important to the city’s continued resurgence. But in holding the Grand Prix out as an example of why the Detroit Regional Chamber’s Mackinac Policy Conference should be held in Detroit, the column misses the mark. Detroit is the city that put the world on wheels, and hosting a global event of the importance of the Grand Prix brings that heritage to the world’s attention. Similarly, Grand Rapids leaders have done extraordinary work, through ArtPrize, in making their city a destination for artistic expression.

Taking either of these events outside of their venues diminishes their relevance and importance. Similarly, taking the Mackinac Policy Conference and bringing it to Detroit will have a chilling effect on Detroit’s statewide influence in public policy. The issues discussed at Mackinac are not Detroit’s alone, yet Detroit’s business and nonprofit communities are front-and-center in bringing them to the forefront. There are plenty of examples of how intricately connected Detroit’s policy matters are to the rest of the state, and the state’s to Detroit. Each year, the Chamber hosts a Detroit-centric policy forum, the Detroit Policy Conference, which takes place at the MotorCity Casino Hotel in Detroit. It’s focused on issues impacting the city and the region specifically, and is one of the 40 events the Detroit Regional Chamber hosts in and around Detroit each year. This should continue.

But in offering a forum on Mackinac for business and civic leaders from across Michigan to consider and discuss statewide issues, the Detroit Chamber takes a leading role in aligning thought, bridging regional divides and considering broader perspectives on the policy matters that impact us all. Hosting the conference on Mackinac Island is an incentive for people to participate, and remain engaged with each other. There are few distractions. Frankly, it’s an effort to get off the island once you’re there. On Mackinac, the Chamber has created a fertile environment for substantive debate over statewide matters of importance. Why fix what isn’t broken? Daniel Loepp is president and CEO of Blue Cross Blue Shield of Michigan, chairman of the executive committee of the Downtown Detroit Partnership and a member of the Mackinac Island State Park Commission.

Now it is starting to get interesting Every week, it seems, there are a couple of new players who want to be governor of Michigan. Some seem pretty far out, and others are mainstream, but they all are going to make the primaries and then the election very entertaining. I guess you can call this democracy in action, and with the election over a year away, we are going to be seeing a lot of potential candidates enter the fray and then fall by the wayside. It takes a lot of money these days as well as an organization to put on any kind of decent chance to win the primary. A bunch of pretty ads might add to the statewide name recogni-

KEITH CRAIN Editor-in-chief

tion, but they probably won't help do anything except empty your pocketbook. It would be hard to speculate which side is going to see the most bloodletting; my own guess is that it is probably a tossup. There will be a

lot of blood spilled on either side. I have a feeling that the normal groups are going to have a more difficult time is deciding who they should support. The business community, which generally supports a Republican, will probably be in for a surprise if and when Candice Miller reluctantly announces she is entering the race. After returning to Michigan from Washington, she has been doing quite a bang-up job in Macomb County cleaning up the mess of her predecessor. If she decides to run, her recent success is going to have a big impact on the voters. Meanwhile an entrepreneur from

Ann Arbor has entered the race on the other side, making the obvious choice not so obvious. After putting up with a circus in the Republican presidential race, anything will be likely in Michigan. Interestingly, however, while all this scraping is going on for governor, our incumbent senator might just squeak by on her re-election campaign without any muss or fuss. The entire ordeal of an election these days is becoming more and more challenging and messy and ugly. I have never understood why anyone would have an interest in running for elected office, consider-

ing how ugly the entire process has become, not to mention expensive. We’ll be talking about upwards of 10 million dollars each, which I guess we can agree will help the Michigan economy, particularly broadcasters who have been hoping for something after the letdown this year. I have no idea on winners and losers, but I can guarantee an entertaining campaign. It will be interested to see how each candidate feels about business, particularly Michigan business. I, like everyone, have my favorites, but it is so early we will just have to wait and see a few million dollars from now.

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

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

GRAND RAPIDS

To keep up pace of growth, OST eyes acquisitions By Tom Henderson thenderson@crain.com

When Meredith Bronk joined Grand Rapids-based Open Systems Technologies Inc. in 1998, she was the seventh employee. It never entered her mind that she’d be there 19 years later. No longer one of seven employees, but one of 225. Not just one of the pack, but the boss. She was working at a leather company in Grand Haven, helping with an IT systems integration, when a former employee who had taken a job at OST recommended Bronk for an opening. Meredith Bronk: She was named chief Joined OST in 1998. operating officer in 2009, Now she’s CEO. president in 2014 and in 2015 replaced founder Dan Behm as CEO. Last October, Crain's named Bronk one of 50 people to know in IT in Michigan. In 2015, Inc. Magazine named her one of the top 50 women entrepreneurs in the country. OST is a fast-growing provider of IT services, having branched out into software development in 2008. It now does cloud-based data storage, app development, custom software, software for the internet of things, data analytics and managed services, with revenue of about $160 million. OST has offices in Ann Arbor, Detroit, Minneapolis, Chicago and London, but Grand Rapids is the largest office by far, employing about 140. It employs about 15 in Detroit but will soon be moving them into space in the Town Center in Southfield. OST’s headquarters is a beautifully remodeled, three-story, 30,000-square-foot building just west of the Grand River in downtown Grand Rapids. Seven years ago, OST spent $7 million to renovate the Drueke Game Building, an old factory and warehouse that had sat SEE OST, PAGE 9

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OST’s headquarters is a beautifully remodeled, three-story, 30,000-square-foot building just west of the Grand River in downtown Grand Rapids. Seven years ago, OST spent $7 million to renovate the Drueke Game Building (right), an old factory and warehouse that had sat empty for years. Originally it was the home of one of the largest makers of board games in the world, which was founded in 1917. Its workers cranked out cribbage, backgammon, chess and checker boards.

Inside:

Quick thinking: What makes the Grand Angels unique among state angel groups, which include the Blue Water Angels in Midland, the Northern Michigan Angels in Traverse City and the Detroitarea Great Lakes Angels, is that in addition to a network of high-net-worth individuals who decide whether or not to join particular deals, the Grand Angels operates two venture-capital funds with limited partners, which allows for quicker decision making on would-be investments. Page 9

Explosive growth: Founded after the tech bubble burst, Atomic Object has created more than 250 apps for more than 150 clients, including Grand Rapids-based Spectrum Health and Steelcase, Dublin, Ireland-based Eaton Corp. plc and Boston-based medical device company NeuroMetrix Inc. Revenue this year is projected to be about $10 million, up from about $8.5 million last year. Page 10

What’s brewing: Before starting their business, Jason and Kris Spaulding asked themselves an important question: Does the world really need another craft brewery? The result is Brewery Vivant, a popular brewpub in the East Hills section of Grand Rapids, between downtown and the city of East Grand Rapids. Page 8

Online:

On the grow: How can tech startups grow in Michigan? Look to Grand Rapids-based Blue Medora LLC. Its founders and investors say it is a textbook example of how Michigan’s high-tech startup ecosystem can work. Blue Medora makes software that monitors the performance of large IT companies’ cloud-based applications. Customers include IBM, Oracle and VMware. Visit crainsdetroit.com Joint replacements: Shoulder Innovations LLC, an early stage developer of shoulder replacement systems, has closed on a Series A funding round of $1.5 million. The round was led by the Ann Arbor-based Michigan Angel Fund and joined by Grand Rapids-based Start Garden; Detroit-based Invest Michigan, a nonprofit funded by the Michigan Economic Development Corp. to invest in early stage companies; Missoula, Mont.-based Genesis Innovation Group LLC and Western Michigan University’s Biosciences Research Commercialization Center. Visit crainsdetroit.com

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

CRAIN’S MICHIGAN BUSINESS: GRAND RAPIDS

Brewery Vivant stands out from the pack with French and Belgian beers By Tom Henderson thenderson@crain.com

Before starting their business, Jason and Kris Spaulding asked themselves: Does the world really need another craft brewery? Their answer was yes, thanks to a trip to Europe in 2008. The result is Brewery Vivant, a popular brewpub in the East Hills section of Grand Rapids, between downtown and the city of East Grand Rapids. That trip turned the Spauldings on to Belgian and French beers. Their brewery focuses on the farmhouse ales traditional to the small villages in northern France and southern Belgium. “People do not think of the French as having a beer culture as most people only know their wine, but they have a long tradition of making beer as well. The French are known for a style called biere de garde and the Belgians for saison, both of which we specialize in.” Brewery Vivant uses yeast that originated in Belgium to give the beer its flavor and character. With American-style beers, “flavor from the beer yeast is secondary to

hops and malt. For Belgian style beers that yeast character is part of the desired outcome. It adds spicy and aromatic qualities to the beer,” Spaulding said. Brewery Vivant also stands apart for its focus on social good. In 2012, it became the first LEED (leadership in energy and environmental design) Silver certified microbrewery in the U.S., a designation granted by the U.S. Green Building Council to businesses that use less water and energy and reduce greenhouse gas emissions. And in 2014, the brewery was designated as the first Certified B Corp. in Michigan, a designation granted by B Lab, a nonprofit based in Berwyn, Pa. About 2,200 companies in more than 50 countries, including Ben & Jerry’s and Patagonia, have been designated as B Corps. The “B” stands for benefits. One requirement of certification is providing healthcare to employees. Jason said all 41 of his full-time employees, out of a total of 64, have healthcare. Patrons likely don’t care as much about LEED and B Corps designations as they do good beer and good food in a great setting.

The Spauldings source as much of their food locally as possible, generally about 50 percent. The menu includes duck confit nachos, burgers, smoked trout and grilled lamb T-bone. The restaurant on Cherry Street, which seats 250 when the patio is open, is in the chapel of what used to be the Metcalf Funeral Home, the largest funeral home in Grand Rapids from 1894 to 1980. It has a high vaulted ceiling and big exposed beams. The brewery is in the attached building, where patrons who are eating and drinking can watch what’s going on. It was built in 1915 as an automobile garage but later turned into a stable for the Metcalfs’ 17 large white horses. Brewery Vivant currently brews about 5,000 barrels a year, with distribution throughout Michigan and in Chicago. The Spauldings don’t envision growing that much. “We’re not really trying to be big. We might get to 8,000 barrels,” said Jason. “We like being right-sized.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

ELIZABETH LIENAU

Jason Spaulding of Brewery Vivant, a popular brewpub in the East Hills section of Grand Rapids.

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

CRAIN’S MICHIGAN BUSINESS: GRAND RAPIDS

Grand Rapids startup scene gets a boost from the Grand Angels By Tom Henderson thenderson@crain.com

Entrepreneurship in Grand Rapids gets a big helping hand and, more importantly, a lot of startup funding from the Grand Angels, an active network of angel investors founded in 2004 by prominent western Michigan banker Charles Stoddard. Over the years, the Grand Angels has invested $22.6 million in 34 companies through 103 separate funding rounds as companies hit growth milestones. Last year, the Grand Angels, which has 44 active members, invested $3.65 million in 10 companies. In March, the group showed its geographic diversity by joining in an $8.2 million funding round for HistoSonics Inc., an Ann Arbor-based maker of ultrasonic medical devices aimed at shrinking or destroying cancer tumors. What makes the Grand Angels unique among state angel groups, which include the Blue Water Angels in Midland, the Northern Michigan Angels in Traverse City and the Detroit-area Great Lakes Angels, is that in addition to a network of high-networth individuals who decide whether or not to join particular deals, the Grand Angels operates two venture-capital funds with limited partners, which allows for quicker decision making on would-be investments. The funds focus on life sciences, business-to-business technologies, advanced manufacturing and advanced agriculture.

OST

FROM PAGE 7

empty for years. Originally it was the home of one of the largest makers of board games in the world, which was founded in 1917. Its workers cranked out cribbage, backgammon, chess and checker boards. The company was purchased in 1990 by the Carrom Company of Ludington, which still uses the Drueke name. When OST bought the building, the ground floor was ground — literally made of dirt. There are original big wooden beams throughout, with old barn doors and barnwood walls repurposed from other sites. OST has incorporated in Hong Kong and Singapore and plans to open offices there later this year. Bronk estimates that revenue from those markets will range between $20 million and $60 million “over the next few years.” She said headcount will grow about 15 percent this year, but revenue will be flat. That’s because OST is selling less high-margin hardware as more and more customers migrate to the cloud, Bronk said. “Where before you might have sold a customer a $1 million piece of hardware, now you might be selling them $1 million worth of service

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Tim Parker, who was an executive for 17 years at Bissell Inc., the vacuum cleaner and floor-care manufacturing company.

The $3 million Grand Angels Venture Fund I is fully deployed. The Grand Angels Venture Fund II was launched with $7 million in 2015, the same year the Angel Resource Institute named the Grand Angels as one of the top three angel groups in the Great Lakes Region based on deal flow from 2010-2015. The fund has closed on eight deals with plans for another handful. The Grand Angels expects to start raising a third and larger fund next year. Jody Vanderwel, who had been an attorney at Herman Miller Inc., the Zeeland-based furniture maker, was on a monthly basis over three years.” Two growth areas? Electronic medical record keeping and the internet of things. Carl Erickson is CEO of one of Bronk’s competitors, Grand Rapids-based Atomic Object LLC. “We don’t go head to head for contracts with OST often, but when we do, I know the client is being smart and considering the best,” he said. Robert Bell, the chief information officer at Dearborn-based Ghafari Associates LLC, said his company ran into trouble with an IT vendor and decided to look elsewhere for help on a data-center project. “From our first meeting with the team at OST to the final order and shipping, I can honestly say that OST delivered at all levels,” he said. With revenue projected to be flat, despite glowing customer reviews, Bronk said acquisitions will be key moving forward. “To keep growing at the pace we want, acquisitions will be required,” she said. In February 2016, OST bought Visualhero Design Co., a small consulting firm in Grand Rapids. “You don’t have to go far to find great partners,” she said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

recruited in 2005 to serve as president of the Grand Angels. Last June, she was named by Crain’s as one of the 100 most influential women in Michigan. She still serves on the board, but stepped down as president last November. She was replaced by Tim Parker, who was an executive for 17 years at Bissell Inc., the vacuum cleaner and floor-care manufacturing company based in the Grand Rapids suburb of Walker. Michael Jandernoa, the former chairman and CEO of Allegan-based Perrigo Co., the nation’s largest manufacturer and marketer of store-brand over-the-counter drug and nutritional products, is also on the Grand Angels’ board. Since 2011, Parker has run his own export and trading firm, Grand Rapids-based T.S. Parker Products LLC, which specializes in shipping Michigan fruit products to Asia. “I saw there was an opening at the Grand Angels and I threw my resume to them on a whim,” said Parker. He said the Grand Angels likes to lead deals and typically invests $400,000 in a round. “We prefer to lead the deals. We’ll syndicate them. We’ll bring in other angels and VC firms. One of my biggest delights is how collaborative everyone in the investing community is,” he said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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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 // J U N E 1 2 , 2 0 1 7

CRAIN’S MICHIGAN BUSINESS: GRAND RAPIDS

Founded after tech bubble burst, Atomic Object grows By Tom Henderson thenderson@crain.com

Some friends and family probably thought Carl Erickson, the co-founder and Grand Rapids-based CEO of Atomic Object LLC, was crazy. After all, he had one of the last completely secure jobs in the world: a tenured faculty position in computer science and engineering at Grand Valley State University, a lifelong post safe from politics and the vagaries of the economy. He loved the job, but Erickson says he had an entrepreneurial itch. So in May Carl Erickson: 2000, he Started firm as scratched it. tech bubble burst. There was no hint, then, that the tech bubble was about to burst. A former student of his had started an IT company in Austin, Texas, called deltamode, and Erickson took a leave of absence to join the company as a vice president. He was in charge of creating the firm’s core technology, a distributed workflow engine. A little over a year later — after Erickson had told his dean at GVSU that he wasn’t coming back —

COURTESY ATOMIC OBJECT

Atomic Object’s new home on Wealthy Street in a renovated 1924 blacksmith shop. deltamode went out of business. “I was taken by surprise,” said Erickson. In lieu of money owed him, Erickson took some equipment and furniture, and he and a partner named Bill Bereza formed their own IT company called Atomic Object to do software development and web design. (Erickson subsequently bought Bereza out.) Since then, Atomic Object has created more than 250 apps for more than 150 clients, including Grand Rapids-based Spectrum Health and Steelcase, Dublin, Ireland-based Eaton Corp. plc and Boston-based med-

ical device company NeuroMetrix Inc. Revenue this year is projected to be about $10 million, up from about $8.5 million last year. The company has been cash-flow positive almost from the start. It still does web development and custom software and has recently been working on mobile apps and embedded software for the internet of things. Clients range from startups to Fortune 500 companies, with markets including automotive, health care, financial services, education, distribution and entertainment. Heidi Koester is president of Ann

Arbor-based Koester Performance Research, which develops IT tools to help people with disabilities more readily use their computers and smart devices. In 2014, Koester hired Atomic Object to develop an appbased system. “We had a concept, we knew the things we wanted the software to do, but all we had was an idea on paper,” said company President Heidi Koester. “What Atomic Object did was fantastic. I do some software development myself, and I have a small development team and have engaged other developers before. But these guys were far and away the best team I've run across.” Atomic Object’s revenue has grown steadily, as has headcount. Atomic Object employs 45 in its Grand Rapids headquarters and 15 at its Ann Arbor office, which opened in 2012. The company’s headquarters is on Wealthy Street in a recently gentrified neighborhood between downtown Grand Rapids and affluent East Grand Rapids. The 11,000-square-foot headquarters is eye-catching, with exposed brick and beams and hardwood floors — the end result of a lengthy and expensive renovation that was completed last August. The building was built in 1924 for the Ebling Blacksmith Shop and

shortly thereafter became the home of Berger Chevrolet. Erickson, 55, is an active angel investor and a board member of the Grand Angels, a group of angel investors based in Grand Rapids. (See related story, Page 9.) He also co-founded Tappan Hill Ventures, a venture-capital firm in Ann Arbor, in 2014. His most recent investment was in Ann Arbor-based Groundspeed Analytics Inc., a company that uses artificial intelligence to provide metrics to insurance companies to help them more efficiently price risk. It closed on a funding round of $2 million in April. An early investment was in 2007 in Grand Rapids-based Blue Medora LLC, a fast-growing company he helped found that provides support services to IBM and Oracle. He was also an early investor in was Grand Rapids-based Varsity News Network, whose Web portal allows high schools around the country to post news and results of athletic events. In 2013, Varsity News won the grand prize of $500,000 at the annual Accelerate Michigan Innovation in Detroit. It has raised $6.7 million in two rounds of venture capital following the angel money that launched the company. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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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 // J U N E 1 2 , 2 0 1 7

SPECIAL REPORT: LAW

iStock

Overtime limbo By Dustin Walsh dwalsh@crain.com

The first four and half months of the Trump administration has taken aim at unraveling regulations rolled out under his predecessor. But one of the key Obama administration decisions affecting employers across the U.S. and Michigan remains in limbo. The U.S. Department of Labor under former President Barack Obama attempted to implement overtime rules that would increase the minimum pay for an employee to be considered salaried and, therefore, exempt from overtime eligibility to $50,440 a year from $23,660. But a federal judge in U.S. District Court in Texas granted a nationwide preliminary injunction that prevented the December rollout while the regulation’s legality is examined in more detail by the court. The order comes after 21 states, including Michigan, and a horde of business chambers of commerce sued the agency in two separate suits. The suits claimed the overtime rule will increase costs and force the cut of essential government services and ultimately force businesses to demote or lay off workers due to higher labor costs. After Trump’s inauguration, Department of Justice twice sought delays in a ruling so that the Depart-

“The DOL wants the judge to decide the case and give a permanent injunction, while the court is waiting for the government to defend its case, even if it was under a different administration.” Robert Boonin, Dykema Gossett PLLC

ment of Labor, including Labor Secretary Alexander Acosta, could have more time to decide if they will challenge the injunction, or, alternatively, abandon any defense of the executive order. In his confirmation hearing before Congress, Acosta declined to say whether he would defend the ruling in court. The Labor Department has until June 30 to ask for another extension or drop the case. “We’re just waiting for someone to blink,” said Robert Boonin, labor attorney and partner at Dykema Gossett PLLC in Detroit. “The DOL wants the judge to decide the case and give a permanent injunction, while the court is waiting for the government to defend its case, even if it was under a different administration.”

The Labor Department could also seek to modify Obama’s order before the court’s new deadline of June 30. But Acosta seems unlikely to make a decision because Trump has not yet nominated a solicitor of labor, whose primary function is to serve as the department’s top litigator, Boonin said. “The labor secretary usually relies on its deputies to drive these decisions, but there’s no one there to do that,” Boonin said. “That’s a huge issue and these decisions, and enforcement and opinions, on other matters won’t be made until they start filling the lower positions.” Last week, however, Acosta told the U.S. House during a budget meeting that the DOL was drafting a request for public comment on the ruling, which would be filed ahead

Court case over proposed eligibility rule change remains unresolved of the June 30 deadline, though an another extension will likely be part of the filing.

Contentious issue While the case hangs unresolved, Acosta has signaled what could happen under Trump. “Something that needs to be considered is the impact on the economy, nonprofits and geographic areas with historically lower wages, but I’m very sensitive that it hasn’t been updated since 2004,” Acosta said in his March 22 confirmation hearing before the Senate Health, Education, Labor and Pensions Committee. “I believe the salary threshold figure would be somewhere around $33,000.” The DOL raised the overtime pay threshold in 2004 under President George W. Bush to $23,660 from the meager $8,060 set in 1975. Acosta added that it was unfortunate that the threshold had gone unchanged for over a decade, but that doubling the limit to $47,476 was too much for employers to handle, saying to “does create what I’ll call a stress on the system.” The Obama overtime rules have been contentious to business owners and state leaders since floated in 2015. The Labor department estimated the rules could increase the number of

overtime-eligible employees by more than 4 million. But businesses would face higher labor costs and were using workarounds to avoid those costs. “It’s not a simple matter,” Matthew Disbrow, partner and head of the labor, wage and hour matters practice at Detroit-based Honigman Miller Schwartz and Cohn LLP, told Crain’s last year. “The large majority of owners are going to look for avenues to keep their wages unchanged.” Employers were doing this by determining whether it was cheaper to bump employees’ pay to $47,476, reduce overtime by hiring more parttime workers, eliminate those employees and put more responsibilities on higher-paid employees, or move employees from salary to an hourly compensation structure.

Impact on business The Obama ruling would negatively impact business, Sandy Baruah, president and CEO of the Detroit Regional Chamber, which is supporting the U.S. Chamber-led suit, told Crain’s last year. “People in Washington (D.C.) have clearly never run a business ... ,” Baruah said. “They assume most businesses are bad businesses, but that’s not true. This very well could SEE LIMBO, PAGE 12

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

"My children and I deserve genuine love.”

DEALS & DETAILS ACQUISITIONS & MERGERS

been named agency of record for Arbor Brewing Company, Ann Arbor; First Step Foundation, Plymouth; Brass Rail Pizza Bar, Detroit; Evan H. Kaploe PLLC, Southfield; Scandia Home, Birmingham and Stern Law PLLC, Novi. Website: nearperfectmedia.com.

at 4986 N. Adams Road, Suite G, Oakland Township and 51 S. Washington, Suite F, Oxford, owned and managed by broker/owner Andrea Esse, who also operates offices in Rochester and Troy. Websites: definedrealtors.com, remax-semichigan.com.

J Aqaba Technologies Inc., Sterling Heights, an internet marketing agency, has been retained by Venture Financial Services LLC, to launch its new website. Websites: aqabatech. com, vfsmi.com.

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J Speyside Equity Fund I LP, Ann Arbor, an investment firm in manufacturing, specialty chemicals and food ingredients businesses, acquired Avon Gear Company, Shelby Township, a design and production company of precision parts for heavy equipment. Website: speysideequity.com.

J Vector CANtech Inc., Novi, an automotive and commercial vehicle electronics company, is now operating as Vector North America Inc. Website: vector.com.

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J DTE Biomass Energy Inc., Ann Arbor, a landfill gas-to-energy company, acquired Fort Bend Power Producers LLC and Seabreeze, two landfill gas-to-energy projects in Texas. Website: dteenergy.com.

J RBD Creative, Plymouth, a marketing and design studio, announced a partnership with Michigan Reproductive Medicine, Bloomfield Hills. RBD will design a strategy for strengthening and growing Michigan Reproductive Medicine’s marketing efforts. Websites: rbdcreative. com, mireproductivemedicine.com. J Near Perfect Media LLC, Birmingham, a public relations firm, has

Robertson Larson Group, Bloomfield Hills, a residential developing firm, is planning a five-story, midrise condominium building to be located at 750 Forest Ave., Birmingham. Telephone: (248) 385-5985. Website: robertsonhomes.com. J

J Art Van Furniture, Warren, has opened a 41,857-square-foot showroom in Muncie, Ind. Website: artvan.com. J Re/Max of Southeastern Michigan opened two Re/Max Defined offices

CALENDAR

TUESDAY, JUNE 13 A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

Michigan’s #1 Financial Advisor* Charles C. Zhang CFP®, MBA, MSFS, ChFC, CLU Managing Partner

Charles has been ranked in the top 10 on Barron’s list of Top 100 Independent Financial Advisors for 2015 and 2016, and is currently the highest ranking fee-only NAPFA-Registered Financial Advisor on the list.**

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www.zhangfinancial.com Assets under custody of LPL Financial and TD Ameritrade. *As reported in Barron’s March 4, 2017. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices and other factors. **As reported in Barron’s August 22, 2015 and August 27, 2016. Based on assets under management, quality of practices, revenue that advisors generate for their firms, and other factors. For fee-only status see NAPFA.org. Minimum Investment Requirement: $500,000 in Michigan/$1,000,000 outside of Michigan.

JVS 20th Annual Strictly Business Luncheon. 11 a.m.-1:30 p.m. Tom Wilson, president and CEO of Olympia Entertainment, will talk about building the Little Caesars Arena and rebuilding Detroit. The event will also showcase success stories of people who JVS helped to overcome life challenges to find success in the workplace. MotorCity Casino, Detroit. $150. Contact: Marla Janness, email: mjanness@jvsdet.org; website: www.jvsdet. org/strictlybiz

WEDNESDAY, JUNE 14

Inside the CEO Mind. 8 a.m. Detroit Regional Chamber. Andra Rush, founder, president and CEO of Rush Group LLC, shares her perspective as a female and Native American business owner and how she has grown Rush Group LLC into three successful companies. The Rattlesnake Club. $30 members; $50 nonmembers. Contact: Marianne Alabastro, phone: (313) 596-

0479; email: malabast@detroitchamber.com Playboy’s Cooper Hefner. 11:30 a.m.1 p.m. Adcraft Detroit. Cooper Hefner, chief creative officer of Playboy who oversees company’s creative divisions — print, digital content and events — discusses Playboy’s relevance today and how the brand plans to evolve. The Reserve, Birmingham. $50 members; $75 nonmembers. Website: https://adcraftdetroit.com/events/

THURSDAY, JUNE 15

Mid-year Economic Forecast and State of the Industry Breakfast.7:30-10:30 a.m. Construction Association of Michigan. Guest speakers Jeff Nutting from SEMCOG and Eric Burris from the Michigan Department of Treasury. Suburban Collection Showplace. $50. Contact: Mary Carabott, phone: (248) 972-1108; email: carabott@cam-online.com; website: http://www.cam-online.com/

LIMBO FROM PAGE 11

drag wages down and now forces employers to track some employees’ hours rigorously and some not. What does that do to a work culture? “The intent (of the rule) is not bad, but the unintended consequences are. The federal government is not nimble; it’s not a scalpel, it’s a blunt instrument. Businesses are getting hit with blunt force by these regulations.” Gary Klotz, labor attorney and partner at Butzel Long PC in Detroit, said some of his clients were proactive and adhered to the new rule before the injunction, and now they’re paying more than they should. “I had the odd situation where an employer told me back in January of

Sandy Baruah: Unintended consequences.

Gary Klotz: Overtime bill is unlikely to pass.

2016, that he had already made changes.” Klotz said. “He was 10 or 11 months ahead, and it turned out to be a complete waste of money for him. It’s difficult to take those increases back.” Meanwhile, the U.S. House passed

J Detroit Metro Convention & Visitors Bureau, Detroit, has launched a mobile-friendly website. Website: visitdetroit.com.

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

Southwest Detroit Business Association Community Investment Breakfast. 7-9:30 a.m. Southwest Detroit Business Association. Annual gather of more than 300 community and government leaders, entrepreneurs, and residents. Motorcity Casino Hotel’s Sound Board. $80. Contact: Rebecca Gallagher, phone: (313) 8420986, ext. 1007; email: rebeccag@ southwestdetroit.com; website: www. southwestdetroit.com

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

bill H.R. 1180, mostly along party lines, in May that would allow private employers to offer employees the option of overtime pay or comp time. The White House has publicly supported the bill, but critics believe employers will pressure employees to take time off instead of the pay they earned. Klotz said the bill is unlikely to pass. Similar bills were defeated in 1996, 1997, 2003 and 2013. While it remains unclear what the DOL’s next move will be ahead of the June 30 deadline for the overtime rule, don’t expect the president to weigh in, said Boonin. “The president was never passionate about these issues,” Boonin said. “I think he’d like to see an increase of the minimum wage and getting some push for paid (family) leave.”

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

CRAIN'S LIST: SE MICHIGAN PUBLICLY HELD COMPANIES

Ranked by 2016 revenue Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

Stock Revenue Revenue Net income Exchange/ price ($000,000) ($000,000) Percent ($000,000) Ticker 52-week 2016 2015 change 2016/2015 symbol high/low Type of industry

Company Fiscal year end; website

Top executive(s)

General Motors Co. (12/2016) (313) 556-5000; www.gm.com

Mary Barra chairman and CEO

$166,380.0

$152,400.0

9.2%

$9,427.0 $9,687.0

NYSE GM

$38.55 $27.34

Automobile manufacturer

Ford Motor Co. (12/2016) (313) 322-3000; www.ford.com

Jim Hackett B CEO

151,800.0

149,558.0

1.5

4,607.0 7,371.0

NYSE F

13.98 10.67

Automobile manufacturer

Penske Automotive Group Inc. (12/2016) (248) 648-2500; www.penskeautomotive.com

Roger Penske CEO

20,118.5

19,284.9

4.3

342.9 326.1

NYSE PAG

56.05 29.29

Automobile dealerships

Lear Corp. (12/2016) (248) 447-1500; www.lear.com

Matthew Simoncini president and CEO

18,557.6

18,211.4

1.9

975.1 745.5

NYSE LEA

153.28 97.35

Automotive supplier

Delphi Automotive plc (12/2016) (248) 813-2000; www.delphi.com

Kevin Clark president and CEO

16,661.0

15,165.0 C

9.9

1,326.0 1,535.0

NYSE DLPH

90.05 58.04

Automotive supplier

DTE Energy Co. (12/2016) (800) 235-8000; www.dteenergy.com

Gerard Anderson chairman and CEO

10,630.0

10,337.0

2.8

834.0 720.0

NYSE DTE

111.18 89.66

Energy company

BorgWarner Inc. (12/2016) (248) 754-9200; www.borgwarner.com

James Verrier president and CEO

9,071.0

8,023.2

13.1

118.5 609.7

NYSE BWA

45.05 27.52

Automotive supplier

Ally Financial Inc. (12/2016) (877) 247-2559; www.ally.com

Jeffrey Brown CEO

8,305.0

9,539.0

-12.9

1,067.0 1,289.0

NYSE ALLY

23.62 14.84

Financial holding company

Masco Corp. (12/2016) (313) 274-7400; www.masco.com

Keith Allman president and CEO

7,357.0

7,142.0

3.0

491.0 355.0

NYSE MAS

37.91 29.11

Building products

CMS Energy Corp. (12/2016) (800) 477-5050; www.cmsenergy.com

Patti Poppe president and CEO

6,399.0

6,456.0

-0.9

551.0 523.0

NYSE CMS

47.95 38.78

Energy

Kelly Services Inc. (12/2016) (248) 362-4444; www.kellyservices.com

George Corona D executive VP and COO

5,276.8

5,518.2

-4.4

120.8 53.8

Nasdaq KELYA

24.70 18.01

Staffing services

Diplomat Pharmacy Inc. (12/2016) (888) 720-4450; diplomatpharmacy.com

Phil Hagerman chairman and CEO

4,410.4

3,366.6

31.0

28.3 25.8

NYSE DPLO

38.94 12.25

Drug retail

American Axle & Manufacturing Holdings Inc. (12/2016) (313) 758-2000; www.aam.com

David Dauch chairman and CEO

3,948.0

3,903.1

1.2

240.7 235.6

NYSE AXL

21.25 12.61

Automotive supplier

Cooper-Standard Holdings Inc. (12/2016) (248) 596-5900; www.cooperstandard.com

Jeffrey Edwards chairman and CEO

3,472.9

3,342.8

3.9

139.0 111.9

NYSE CPS

118.59 74.33

Automotive supplier

Meritor Inc. (10/2016) (248) 435-1000; www.meritor.com

Jeffrey Craig president and CEO

3,199.0

3,505.0

-8.7

573.0 64.0

NYSE MTOR

18.29 6.30

Commercial vehicle, heavy duty truck and defense supplier

Visteon Corp. (12/2016) (734) 710-5000; www.visteon.com

Sachin Lawande CEO

3,161.0

3,245.0

-2.6

75.0 2,284.0 E

NYSE VC

106.95 63.04

Automotive supplier

Domino's Pizza Inc. (12/2016) (734) 930-3030; www.dominos.com

Patrick Doyle president and CEO

2,472.6

2,216.5

11.6

214.7 192.8

NYSE DPZ

219.41 120.97

Restaurant franchisor

Tower International Inc. (12/2016) (248) 675-6000; www.towerinternational.com

James Gouin F CEO

1,910.0

1,955.7

-2.3

NA 194.1

NYSE TOWR

30.50 18.75

Automotive supplier

Universal Logistics Holdings Inc. (12/2016) (586) 920-0100; www.UniversalLogistics.com

Jeff Rogers CEO

1,072.8

1,128.8

-5.0

24.2 40.0

NASDAQ ULH

17.70 11.09

Transportation

Credit Acceptance Corp. (12/2016) (248) 353-2700; www.creditacceptance.com

Brett Roberts CEO

969.2

825.3

17.4

332.8 299.7

Nasdaq CACC

228.86 160.63

Financial institution

Syntel Inc. (12/2016) (248) 619-2800; www.syntelinc.com

966.6

968.6

-0.2

57.4 252.5

NASDAQ SYNT

31.38 15.82

Information technology

917.6

856.4

7.1

NA 95.4

Nasdaq THRM

39.60 26.60

Thermal technology

(248) 504-0500; www.gentherm.com

Rakesh Khanna, COO and interim president and CEO; Bharat Desai, chairman Daniel Coker president and CEO

Flagstar Bancorp Inc. (12/2016) (248) 312-2000; www.flagstar.com

Alessandro DiNello president and CEO

904.0

825.0

9.6

171.0 158.0

NYSE FBC

30.70 21.78

Financial institution

Sun Communities Inc. (12/2016) (248) 208-2500; www.suncommunities.com

Gary Shiffman chairman and CEO

833.8

674.7

23.6

17.4 137.3

NYSE SUI

89.77 67.95

Real estate

TriMas Corp. (12/2016) (248) 631-5450; www.trimascorp.com

Thomas Amato president and CEO

794.0

864.0

-8.1

(39.8) (33.4)

NASDAQ TRS

24.25 16.30

Manufacturing conglomerate

Superior Industries International Inc. (12/2016) (248) 352-7300; www.supind.com

Don Stebbins CEO

732.7

727.9

0.6

41.4 23.9

NYSE SUP

32.12 18.58

Automotive supplier

Horizon Global Corp. (12/2016) (248) 593-8820; www.horizonglobal.com

Mark Zeffiro president and CEO

649.2

600.0

8.2

(0.0) 8.3

NYSE HZN

26.37 10.60

Towing, cargo management

Taubman Centers Inc. (12/2016) (248) 258-6800; www.taubman.com

612.6

557.2

9.9

188.2 192.6

NYSE TCO

81.68 57.52

Retail real estate investment trust

Ramco-Gershenson Properties Trust (12/2015) (248) 350-9900; www.rgpt.com

Robert Taubman chairman, president and CEO Dennis Gershenson president and CEO

260.9

251.8

3.6

53.0 57.8

NYSE RPT

20.24 12.28

Real estate

Unique Fabricating Inc. (1/2017) (248) 853-2333; www.uniquefab.com

John Weinhardt president and CEO

170.5

143.3

18.9

6.7 5.0

NYSE MKT UFAB

15.93 8.90

Plastic fabrication

Diversified Restaurant Holdings Inc. (Bagger Dave's) (12/2015)

David Burke president and CEO

166.5

144.8

15.0

(6.0) (16.2)

NASDAQ SAUC

4.12 0.70

Restaurant

Edward Christian chairman, president and CEO Dean Krutty G acting CEO and executive VP, North American operations

142.6

132.9

7.3

18.2 13.4

NYSE MKT SGA

52.05 36.55

Radio and TV stations

93.0

96.6

-3.7

(2.8) (2.9)

NASDAQ ARTX

5.00 2.25

Defense and aerospace

Gentherm Inc. (12/2016)

(248) 223-9160; www.diversifiedrestaurantholdings.com Saga Communications Inc. (12/2015) (313) 886-7070; www.sagacommunications.com Arotech Corp. (12/2015) (734) 761-5836; www.arotech.com

This list of publicly held companies is a compilation of the largest companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties that have stock traded on a public exchange. 52-week highs and lows are for period ending June 7, 2017. Information is from SEC filings.

B Mark Fields stepped down as CEO on May 22, 2017. C Sold the wholly owned Thermal Systems business to MAHLE GmbH on June 30, 2015. D Succeeded Carl Camden as president and CEO on May 10, 2017. E Sold its 70 percent ownership interest in Halla Visteon Climate Control Corp. for $3.6 billion. F Appointed CEO in January 2017. Was CFO through Aug. 31, 2016 and president through January 2017. G Succeeded Steven Esses who resigned effective Dec. 31, 2016. LIST RESEARCHED BY SONYA D. HILL

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SOUTHWEST FROM PAGE 3

Instead, the farm which sat near a lake served as a retreat area for many city youth of all races, union leader Walter Reuther and his family, other activists and his parents’ African American, Latino and Arab friends. Van Camp attended the newly-founded Oakland University, earning a bachelor’s degree in political science before securing a job as a rigger on steel towers in Germany, thanks to his parents’ friends at the United Nations. He left that to travel to India with the Peace Corps, worked in Vietnam and toured through Europe before returning to the U.S. and earning a master’s in social work from Wayne State University. It was there he met Lutheran pastor Bill Mouldwin, who became chairman and then executive director of the newly founded Southwest Solutions and hired Van Camp as his assistant at the mental health agency. He was attracted to the agency’s efforts to seek social justice for the mentally ill and joined the agency in 1973, just a year after it was founded as a mental health agency, in the wake of deinstitutionalization happening at that time. He was named executive director just eight years later and set the agency on a track to delivering over 50 programs at last count. When developers wouldn’t build housing for Southwest’s mental health clients, the organization got in the housing development business, Van Camp said. With those programs in hand, it was a natural fit to move into helping house the homeless. From there, Southwest expanded into myriad programs, from helping the mentally ill, homeless and unemployed to those hoping to buy a home or launch a new business in the city’s neighborhoods. Van Camp spoke with Crain’s Senior Reporter Sherri Welch last week about the evolution of Southwest Solutions into one of the region’s largest, most complex nonprofits, the need for collaboration with others on complex problems and the biggest challenge facing his successor. His remarks have been edited for length and clarity. Southwest Solutions launched as mental health agency. How did its work expand into housing? We started in that area of treatment, but what I saw was to create that real continuum, first of all you have to be client-driven. What do clients say that they need? They said their number one need, beyond the treatment we were providing, was housing. Then we had to go out to the market to find out who is doing housing. And will they take our clients. Well, no one was offering housing to mental health clients coming out of Northville State Hospital. And no

June 12, 15 2017

’SU DETROIT USINESS C R A I N ’ S D E T R OCIRAIN T B S I N EBS S // J U N E 1 2 , 2 0 1 7

“If you’ve got a robust mental health system and you’ve got housing, then you’re primed to create a system of care for people who are homeless.” John Van Camp, Southwest Solutions

one wanted to do it. When you come back to a community-based board and you tell them (that), then they look at you in the eye and say, ‘I guess you’re going to figure out how to provide housing if that’s what they say they need.’ That was right in my sweet spot. We didn’t use the term social justice. It was opening doors, creating opportunities for the most vulnerable. Sometimes you had to build those doors, you had to knock on those doors a lot to get them to open because of the myths and the stereotypes. How did you get into working with homeless populations? If you’ve got a robust mental health system and you’ve got housing, then you’re primed to create a system of care for people who are homeless. We’re one of the largest in Detroit, if not the largest, in the area of homelessness. Over the last 10 years, we have moved 1,700 people from homelessness to permanent housing. We’ve won awards from the National Council of Mental Health because 94 percent of the clients

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are housed one year later. One of the reasons we’re good in that space is not only the support services and the housing, but over the last seven to eight years we’ve become one of Detroit’s largest workforce development providers. And from there you expanded into other areas? Health is another example. The National Institute of Mental Health said adults with mental illness die 25 years before the general population. It’s one of the largest health discrepancies there are. It’s not so much the mental illness in and of itself; it’s because as a treatment system we’re not good enough yet to manage the changes in medication, so there’s ups and downs in their lifestyle because of that. If you have diabetes or depression and you require the stability of a treatment intervention, there’s some challenges to staying on medication with mental health issues. We looked for a long time for a health partner. Some of them, quite large, ran the other way because of our clients. It was clients who told us about partner Covenant Community Care, a free clinic on West Grand Boulevard. I asked if they were aware of becoming a federally qualified health center. They said yes. But it cost around $20,000 to write a good application. I went back to our board and said we need to put up $20,000 to help them write a good application. They got the designation about 10 years ago and today operate a clinic serving 10,000 people from Southwest’s building in the Chadsey Condon neighborhood near Livernois and Michigan. Prosper Us is another example.

We’ve got the TechTowns and others at a certain level. But these are people who have a passion, a drive, but they don’t have the skill set or the business plan. We’ve had over 700 graduates. It’s very intensive training for immigrantand minority-owned businesses in the city. About 140 business we can directly attribute to the training out of Prosper Us in the last six years. There’s also a micro-loan program. Sister Pie is one of our graduates. What has changed the most during your career with Southwest in terms of your work and the things influencing it? When you’re working with people who don’t have self-sufficiency, there was the realization that treatment was not sufficient. If all you wanted to do was provide good treatment, fine. But I wanted to provide a good quality of life for that person and see how treatment is a part of that. And then, there’s the absolute necessity to partner. As much as we’re in housing, we’re only one small part of housing. As much as we’re in workforce development or early childhood, we’re only one small part. You’ve got to partner. To move the needle on things you’ve got to align, get people aligned around a common mission and common metrics and a transparency of data. What advice do you have for nonprofits working in the city right now? We started off in one lane and now we’re in many lanes. You don’t just have to stay in your lane. But if you choose to stay in one lane, see the relationship between your lane and all of the others.

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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 // J U N E 1 2 , 2 0 1 7

TAXES FROM PAGE 3

residents re-paying back taxes — as well as money made by the county on the sale of foreclosed homes — have poured $421 million into Wayne County’s coffers since the financial meltdown. Indeed, it appears the county now relies on property owners’ misfortune to balance its budget. The delinquent tax revenues helped erase a $22.5 million deficit in 2014 that forced the county into a consent agreement with the state to monitor its finances. Last year, the state relinquished oversight, and the county’s turnaround plan estimated it will collect $286 million from 2015 to 2019 from back taxes, fees and auctioned properties. “Foreclosing on people’s homes shouldn’t be a policy to sustain yourself,” said Robert Ficano, who was Wayne County’s executive for 12 years until 2014. “From a policy perspective, you hope it dries up. You don’t want to have to keep foreclosing in order to balance the budget.” County leaders say they aren’t benefiting from foreclosures and have worked hard to provide relief to homeowners, knocking on doors of 6,000 residents facing foreclosure and advocating for recent changes to state law that reduced interest on back taxes. “We would much rather have people stay in their homes paying their property taxes,” said Tony Saunders, Wayne County’s chief financial officer. By state law, properties are foreclosed after three years of unpaid taxes. Counties from Oakland to Marquette also make money off late tax fees. But the issue is more profound in Wayne County, which has foreclosed on more than 160,000 properties since 2002. That’s more foreclosures in one county than banking giant J.P. Morgan Chase executed across the country over the same time, according to RealtyTrac, a California-based mortgage data firm.

Profits from foreclosures? Fees from late taxes don’t generate many headlines. But they’ve had a profound impact in a state whose homeowners and local governments are still reeling from the aftershocks of the foreclosure meltdown that began in 2006. Tax collection plummeted as home values tanked. Wayne County alone lost more than $100 million per year. But revenue-starved Michigan counties discovered that as tax delinquencies soared, there was good money to be made off collections. Here’s how it works: Every March, all cities and townships turn over the collection of delinquent taxes to their home counties, rather than try to collect themselves. Counties buy the debts and forward municipalities money they are owed, making them “whole.” For Wayne County, that’s approached $400 million in a year. To pay that money to its local governments, the county borrows it from banks and other investors at low in-

Raymond Eric Sabree: Wojtowicz: “Did Significant the best we could.” outreach.

terest rates. It then charges the delinquent property owner an administrative fee of 4 percent on top of all unpaid taxes and between 12 and 18 percent a year in interest. That rate has dropped in recent years to 6 percent for many homeowners. Profit comes from borrowing at 5 percent or less and getting up to a 22-percent return on delinquent taxes, creating the surplus controlled by the county treasurer. The county program is hailed by advocates as a lifeline for small communities incapable or unwilling of getting into the business of debt collection. Before the delinquent tax program began in 1977, some communities had tax collection rates of less than 50 percent and undoubtedly would be insolvent now, said former Wayne County Treasurer Raymond Wojtowicz, who lobbied for the state law that created the program. “They were on the verge of it (bankruptcy) for quite a while. It was up to elected officials and administrators of local governments to take the initial steps (to collect taxes) and somehow, they just didn’t do it,” said Wojtowicz, who retired in late 2015 after nearly 40 years as treasurer. It was a modest program for years. Then, in 2003, Detroit agreed to allow Wayne County to collect its delinquent taxes, doubling the county’s surplus of fees and interest from delinquent taxes to an average of $33 million from $15 million per year. A few years later, the market crashed. Delinquencies skyrocketed as the Great Recession gutted jobs and income. Wayne County’s surplus soared to an average of nearly $48 million per year, peaking at $64 million in 2013. That was more than triple Oakland County’s $19 million tax surplus that year, even though Oakland has 33 percent more taxable value than Wayne County. In comparison, the surplus that year was $10 million for Macomb County, $7 million for Genesee County and $4.5 million for Kent County.

Immoral payments? Since 2012, Wayne County’s treasurer has pumped an extra $382 million into the county’s general fund through delinquent tax surpluses, according to budget documents. This year, the $48 million collected in fees and interest from people trying to save their homes was 9 percent of the county’s $535 million revenues. The money nearly matched the state revenue sharing payments of $50 million to Wayne County. The late tax payments are more than enough to pay for the county’s

$30 million budget for parks and roads this year — and still have $18 million left over. To critics, that’s simply immoral. Data guru Jerry Paffendorf, who campaigned unsuccessfully to be appointed treasurer after Wojtowicz retired mid-term in 2015, said the county’s reliance on late tax payments to balance its budget creates an incentive to foreclose on homes, rather than helping the residents government is supposed to serve. This year, the county has foreclosed on 25,000 homes, 18,000 of which are believed to be occupied, records show. Outreach efforts to get residents in payment plans is expected to drop that number to about 8,000, which will be sold at auction. About half of those homes are occupied by renters, most of whom would be displaced because their landlords didn’t keep up with taxes, Paffendorf said. Paffendorf said he meets regularly with city and county officials about the issue. He’s pitching a plan to suspend the auction of occupied homes. Instead, the properties would be deeded to nonprofits, which would work with occupants to become owners or renters. “This is egregious, and once you see how bad it is, you can’t let it go. We are clearly not doing enough to stop foreclosure. This goes beyond negligence,” said Paffendorf, who is co-founder and CEO of Loveland Technologies, a Detroit-based data company. He said it’s absurd that the county auctions all foreclosed properties “to strangers,” regardless of whether they’re “burned-down smoldering piles of rubble” or the homes of “grandmas” who have lived in the city for years and fallen on hard times.

ers, and says she has struggled since her husband died several years ago. She lives on Social Security. Taxes are $1,400 per year, about a tenth of her income. Perry said she has gone into bankruptcy, in part because of a tax debt county records show has grown to $4,566. More than a quarter of that, $1,208, is from interest and fees. “Oh Jesus, I’ve been going through this for so long,” Perry sighed. Her face brightened when she discussed her home near Fenkell and Greenfield. When she and her auto worker husband bought it in 1970, they were one of the first black families on the block, Perry said. They raised three children. There was a finished basement, a big kitchen and plenty of sweet potato pie, Perry said. “It was a palace. It was paradise,” Perry said. “But I’ve been paying taxes so many years and I just fell short. And I just don’t have it.” By the end of the workshop, she was on another payment plan. Perry acknowledged she’d probably not live long enough to repay the county.

‘Just pay your taxes’ Wayne County officials have argued for years about what to do with the tax surplus. At one point, a few years ago, Wojtowicz controlled a fund that was worth nearly a quarter billion dollars. The money could have cushioned a countywide financial emergency, argued Ficano, who lost re-election after fiscal and corruption scandals. “We had one hand tied behind our back financially because we never had complete access to that fund,” Ficano said. “I always had to go hat-in-hand to ask for more.”

in hard-hit neighborhoods and lowered overall tax collections, Saunders said. “If people were able to pay, we wouldn’t be where we are today,” he said. Current Wayne County Treasurer Eric Sabree said the county does significant outreach to prevent foreclosures. He said he and the city worked with lawmakers to extend a recent program that lowers interest rates on back taxes to 6 percent for homeowners. Wojtowicz noted the county’s tax foreclosure crisis began roughly three years after the mortgage meltdown — indicating that a good percentage of county foreclosures was from banks that took possession of property and failed to pay taxes. “We did the best we could,” Wojtowicz said. He and Sabree said the treasurer’s options are limited: They can hold on to the surplus or send it to the county general fund. “We can’t use that money to pay people’s taxes,” said Sabree, a former deputy of Wojtowicz. Wojtowicz has another suggestion: “Just pay your taxes on time.”

Genesee County offers another way About an hour north on I-75, Genesee County Treasurer Deb Cherry has taken a different tack. She transfers about $5 million a year in surplus from the delinquent tax revolving fund to the county general fund. But she said she’s also made sure another $1 million goes toward demolishing blighted properties in the county, mainly in Flint. Her own county commission sued — and lost — when she spent another $800,000 on securing foreclosed properties that ended up with the county land bank after going through tax foreclosure. By taking some of the money generated by the foreclosure process on stabilizing neighborhoods, the money could help avert future abandonment and foreclosures, she said. “If we can use some of the money to improve the community and make the neighborhoods better then we should do that,” Cherry told Bridge.

Playing catch-up

LAURA HERBERG

Annie Perry discusses her options with a worker from the United Community Housing Coalition of Detroit. The surplus comes from interest paid by people like Chears, the single-mother factory worker, and Annie Perry, an 83-year-old who has struggled for years to pay taxes on a three-bedroom bungalow in Northwest Detroit that she called her “empire.” Perry was at a tax payment plan workshop in late May sponsored by the United Community Housing Coalition, a Detroit nonprofit that reached out to occupants of thousands of tax-foreclosed homes before the June 7 payment plan deadline. Known as “Mother Perry,” she keeps candy in her pocket for strang-

After Ficano lost re-election, Wojtowicz transferred more than $80 million to the county’s general fund. Money from delinquent fees initially funded basic county operations. Now, the money is only earmarked for one-time purchases, said Saunders. And though the county anticipates getting more than $35 million this year from the surplus, the county expects the revenues to decline as foreclosures continue to decline. Saunders rejected the idea that the money “benefits” the county. The ripple effect of tax delinquencies have slashed overall property values

Back at the Detroit community center, Chears signed a plan to repay her back taxes and avoid losing her home to auction. It’s a routine she knows well. She’s done it before. She bought the home in the Brightmoor neighborhood of Detroit for $5,000 a few years ago. It came with back taxes that she inherited. Chears has a good job now, working on the line at a Ford Motor Co. assembly plant in Dearborn. But she’s not yet a full-time employee and the hours vary. Every time she thinks she’s about to get ahead, something else happens, Chears said. “It meant a lot buying my house. I was one of the first in the family (to become a homeowner) and to not pay rent, that’s a good feeling,” Chears said. “Hopefully, I can keep it, but it’s a lot of playing catch-up.”

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

FELDMAN FROM PAGE 3

do, now. This takes up a lot of time, and I want to spend more time on my own research.” Feldman will continue to run the ALS Clinic at UM. Each Tuesday, she and a small staff diagnose and treat patients with amytrophic lateral sclerosis, sometimes known as Lou Gehrig’s disease. The Russell N. DeJong Professor of Neurology at the U-M Medical School, she will also continue to run her own 30-scientist laboratory, the Program for Neurology Research & Discovery. She said her new 10-year plan has three major goals. J Complete stem-cell trials on early-stage ALS patients. She said the U.S. Food and Drug Administration is in the process of dotting i’s and crossing t’s on approval to begin later this year a combined Phase 2b/3 trial on 140 ALS patients at 10 surgical sites across the country. Patients get injections in their spinal cords of large amounts of stem cells, with earlier trials proving the safety of the procedure and showing efficacy in slowing the progression of the disease. This would be the last trial before the procedure is approved. J Feldman is on the planning committee of the National Academy of Medicine and wants to use her position to help researchers around the country copy her model of using philanthropy to do academic research that translates into patient care. J Get some diabetes drugs under investigation by her program for neurology into the market. A Phase 2 trial is underway on Salsalate, an old anti-inflammatory drug, for treatment of neuropathy. And her group is conducting FDA trials on three ALS drugs on behalf of different pharmaceutical companies. As soon as Feldman was done enumerating those goals, she enumerated two more. She wants to help get more women into research positions at major universities. “More women than men graduate from the medical school at Michigan, but there are just a blip of women who are full professors,” she said. Last Wednesday, she and the Taubman Institute hosted a symposium called “Strategies to Empower Women to Achieve Academic Success,” with keynote speakers on gender equality in academic medicine and a panel discussion on how to use negotiation and networking skills for career advancement. And she wants to raise the $5 million it will take to fund the large-animal studies she needs to do before she can launch FDA human trials using embryonic stem cells to treat Alzheimer’s. She said stem-cell trials with mice with dementia have been promising. Researchers injected two groups of Alzheimer’s mice, one group with a saline solution to serve as a control, the other with stem cells. Both of those groups and a group

of healthy mice were then put through three tests of cognition, including one that required finding a platform hidden in a pool of water. Previously, both sets of Alzheimer’s mice flunked the cognition tests. After the stem-cell injections, the Alzheimer’s mice injected with cells performed the tests as well as healthy mice. The Alzheimer’s mice injected with saline solution flunked the tests. “I am persistent. I will get that funded,” she said. Feldman took a sabbatical this spring to go to Australia, where she helped the Royal Children’s Hospital in Melbourne set up a neuropathy-screening program for children with diabetes, which dovetails with one of her clinical trials treating neuropathy in children. And in September she heads to Chennai, India, to set up a similar program at a hospital there. Neuropathy is a painful condition resulting from the nerve damage that diabetes can cause. Feldman has published more than 350 peer-reviewed articles, 60 book chapters and three books and has had continuous funding from the National Institutes of Health for more than 20 years, including 12 current grants totaling about $5.5 million. She is past president of the Peripheral Nerve Society and served as president of the American Neurological Association from 2011 to

2013, the group’s third woman president in 130 years. Last June, she was named among the 100 most influential women in Michigan by Crain’s.

“Papa, what’s this?” Al Taubman began funding Feldman’s neurology program in 2003 and had donated a total of $7 million to her research by 2005, when he told her he wanted to up the ante.

“More women than men graduate from the medical school at Michigan, but there are just a blip of women who are full professors.” Eva Feldman

She told him that rather than donate it all to her work, it would make more sense to come up with something more institutional, which became the Taubman Institute, to fund high-risk, high-reward translational research. The institute was launched in July 2007 with additional funding from Taubman of $15 million. In 2010, Taubman invited Feld-

man to his house for dinner. There, he handed her a check for $22 million. “‘Papa, what’s this?,’” she recounted to Crain’s. “‘You know, I’m having surgery tomorrow,’” she quoted him as saying. God forbid, in case he didn’t make it, giving her a check before surgery would make it much easier than waiting for a will to get settled after. Two years later, Taubman upped the ante, again, this time with a check for $56 million. It was also time to put his name, and the institute’s name, on a building. “He didn’t want it, but it was the thing to do,” Feldman said. While there is a brick-and-mortar building that bears his name on the school’s main campus, the institute has only a handful of employees and operates more as a virtual institute, funding researchers based in labs universitywide through a grant process. More than 200 investigators are working on a wide range of projects through about 40 active grants. Translational research is underway in neuroscience, bioinformatics, Alzheimer’s, ALS, depression, sports medicine, cancer, cardiovascular disease, diabetes and neurological disorders. The Taubman Institute funding also eventually led to the founding of the Center for RNA Biomedicine at UM and the school’s M Stem Cell Laboratory, and Taubman himself

17 was instrumental in the launch of the Forbes Institute for Cancer Discovery at UM in 2016, earlier introducing philanthropist Sidney Forbes to one of UM’s star cancer researchers, Max Wicha. “Al told Sid to step up and introduced him to Max,” said Feldman. Forbes and his wife, Madeline, donated $17.5 million for the institute. Taubman didn’t just write checks. He had an avid interest in the research and frequently called Feldman or visited. “I had the only billionaire clipping service,” she said. “I would get a stack of clippings he cut out each week. He’d go through the Sunday New York Times looking for science articles, and he clipped the London papers and financial publications. “He got so excited when he found out his secretary could do PDFs and send them instantly instead of having to wait on the mails,” she said. “There are a couple of things we are doing now that were ideas that came from him. I probably would have come across them in journals, but he got them to me first. “I really miss him,” she said. Taubman died in April 2015. “We had an extra, extra large lab coat with his name on it for him, and he’d put it on when he visited. He used to say, ‘I’ve done really well so you can do good.’” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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While much of the debate can focus on the impact the Great Recession had on Southeast Michigan, the reduction in public companies is also symptomatic of fewer companies going public in the first place. In the U.S., there were fewer than 100 IPOs this decade, compared with more than 300 annually in the late 1990s. Even with the diminished IPO market, high-profile successes that have kept Silicon Valley rolling in cash have eluded Michigan, which is lucky to see one IPO a year. Last year, there was one in Southeast Michigan: Ann Arbor-based Gemphire Therapeutics. An IPO often brings sudden wealth to more than just the company’s owners and venture capitalist backers — big IPOs often mint millionaires among rank-and-file startup employees who have received stock options as part of their compensation. The reasons for a dampened IPO market are clear: Burdensome regulations and the availability of private investing. For instance, the number of venture capital firms in Michigan increased to 25 with $2.2 billion in capital under management in 2015 from just seven in 2001 with $520 million of capital under management, according to the Michigan Venture Capital Association. Private equity and other private investing models have also contributed. On the regulatory side, Congress enacted the Sarbanes–Oxley Act of 2002 to increase investor protections after the Enron scandal in 2001. But the act, which created public account-

START FROM PAGE 1

Last December, Start Garden, an early-stage venture capital fund and startup incubator founded in 2012 by Rick DeVos — founder of ArtPrize and son of Dick and Betsy DeVos — and Grand Rapids Area Black Businesses, an organization founded in 2012 and led by CEO Jamiel Robinson, announced a partnership called GRABB 5, designed to help five black-owned businesses at a time improve their access to capital and customers. GRABB 5 is funded by Start Garden and the Grand Rapids Economic Development Corp. “The question of underserved populations is really a question of unconnected populations. Lack of funding is not the only problem; we have to overcome the systemic problem which stems from a lack of relationships with people who don’t look like each other, and GRABB 5 is designed to understand and overcome those barriers,” said Mike Morin, president of Start Garden, in a press release at the time. Also in 2016, Start Garden took on leadership of the Grand Rapids SmartZone, with a goal of expanding entrepreneurship to underserved sectors of the local economy. In January, Start Garden announced a new leadership structure, appointing Darel Ross II and Jorge Gonzalez as two of its four directors, to focus on inclusion. For nine years, Ross served as co-executive director of LINC UP, a

ing oversight, enhanced disclosures and other accountability measures, has made it more expensive and difficult for companies to go public. There were fewer than 100 initial public offerings last year, compared with more than 300 annually in the late 1990s. Companies remain private much longer — 9.4 years before going public today, where it was only four years in 1999. “With more regulations, management sovereignty, more sources of funds and activist investors threatening boards, there’s no desire to rush to go public,” said Sudip Datta, finance professor and chair of the finance department at Wayne State University. “But this isn’t necessarily good for the economy. All of these factors have created an environment where only a handful of rich folks can participate.”

Wealth creation Because most companies’ rapid growth now occurs while they are private, the wealth creation that accompanies that growth benefits only a select few wealthy enough to be considered accredited investors. To be an accredited investor, meaning able to invest in private companies, an individual must have a net worth of at least $1 million, excluding the value of their primary home, or have income at least $200,000 each year for the last two years or $300,000 combined income if married, according to the U.S. Securities and Exchange Commission. But only about 8 percent of U.S. households are even able to qualify to be accredited investors. Everybody else can invest through individual Kellogg Foundation-funded community development organization in Grand Rapids. Gonzales is executive director of the West Michigan Hispanic Chamber of Commerce. “To put it bluntly, Grand Rapids is a tale of two cities. It’s a great place to raise a family, and it’s one of the worst places for African Americans,” said Ross, who is African American, in a recent meeting he, Gonzales and Robinson had with Crain’s at Start Garden. “After the Forbes article came out, there was more of a concerted effort to figure out what was going on to perpetuate that.” They said it will be their responsibility to get the word out to people of color about Start Garden’s programs and events, including monthly 5x5 Nights, where five entrepreneurs have five minutes each to pitch their ideas to five judges, with the winner getting $5,000; and recurring presentations at Start Garden on topics such as how to get found on Google and how to do market research. Gonzales said there has been a focus on diversifying what had been a mostly white gathering at the 5x5 Nights by getting the word out and helping entrepreneurs prepare their pitches. “The last eight winners have been women or minorities,” he said. GRABB and Start Garden have been holding monthly networking dinners for more than a year. In January, they began hosting them twice a month. About 40 come out on average, a combination of entrepreneurs, investors and service providers.

stocks, mutual funds, or by rewards from public companies that met performance metrics. Working for a publicly traded company is often a path to investing. For example, many engineers at local auto suppliers are offered shares of the company as part of their compensation package. But with fewer public companies, there are fewer opportunities for employees to be rewarded with shares and fewer choices for mutual funds

“With more regulations, management sovereignty, more sources of funds and activist investors threatening boards, there’s no desire to rush to go public.”

Sudip Datta, Wayne State University

and individual investors. Since the 2001, stock ownership in the U.S. among most households has dropped, with households with income of more than $100,000 gaining only a single percentage point in ownership, according to a May survey by Gallup Inc. In contrast, stock ownership by households with income between $30,000 and $74,999 dropped 13 percent over the same period. “The stock market has performed well in 2017, but proportionately few“Grand Rapids for sure is a relationship town,” said Ross. “You need to build relationships if you’re an African American. Chances are you aren’t going to have an uncle who’s a banker you can go to. An ecosystem that provides an opportunity to everyone is a healthier ecosystem.” “It comes down to: Who do you know?” said Gonzales. Ross said there has to be a change in the traditional mindset about the startup ecosystem and what an entrepreneur’s goal should be. Traditionally, the focus, particularly of investment organizations like Start Garden, has been on high-tech/high-growth/ high-reward startups. “But what we need in the African American community is neighborhood businesses. Good businesses. They don’t have to be high growth. You can’t build successful cities with failing neighborhoods,” he said. “At Start Garden, it’s not just about diversity of ethnicity, but about diversity of the businesses we can provide wrap-around services to,” said Gonzales.

er Americans are benefiting from today’s bull market,” the Gallup survey said.

The HQ effect Erik Gordon, clinical assistant professor at the University of Michigan Ross School of Business, said the impacts of M&A activity on the public company market is most detrimental because it’s led to fewer local headquarters. “One of the ways we ended up with fewer public companies in Southeast Michigan is through acquisition, or the company going out of business,” Gordon said. “Kmart goes, and a whole lot of things go with it.” When Kmart merged with Sears in 2006, it relocated its corporate offices to Hoffman Estates, Ill., in suburban Chicago, taking with it thousands of jobs and leaving behind a mammoth building in Troy. Headquarters are important because they have an economic multiplier of 3.5, according to the U.S. Bureau of Economic Analysis. Meaning for every one job created at a headquarters, 2.5 new jobs are created in support of the headquarters, such as accountants, lawyers and other service providers. But public companies hire more than contractors, particularly when they launch an IPO earlier, Datta said. “When companies go public, they hire more workers to meet expectations of growth,” Datta said. “If they go public later, most of their growth has already happened, so the job creation is less in that process.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Robinson said cliches that might apply to white entrepreneurs don't apply to people of color. “Typically, white entrepreneurs are told, ‘Fail fast. Fail three or four times,’” he said. Having failed a few times will tell investors that you have learned your lessons and are ready for their capital. “But with minorities, that one failure is it,” said Robinson. “They have no credit, no second chance. It’s catastrophic.” “We have to decentralize where capital and resources are spent,” said Robinson. He pointed out one of the neighborhoods east of downtown that has been at the heart of recent gentrification and renovation, most of it with a white face. “Wealthy Street was once a thriving African American corridor,” he said. “But by 2012, there were only a handful of black-owned businesses. Now, there are maybe one or two. ... How do we bring black-owned businesses back, and help them sustain growth?” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Atomic Object LLC

Grand Angels

AudioNet America

Open Systems Technologies Inc.

Brewery Vivant

Southwest Solutions

Butzel Long PC

Start Garden

Detroit Regional Chamber

Taubman Institute

Dykema Gossett PLLC

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

THE WEEK ON THE WEB

RUMBLINGS

JUNE 3 - 9 | For more, visit crainsdetroit.com

Busy section of Woodward closes to make way for pedestrian plaza

busy stretch of Woodward Avenue in downtown Detroit is closing to car traffic for three months beginning today to implement a pedestrian plaza south of Larned Street. The closure could be made permanent if the city determines the new Spirit Plaza has been successful, said Janet Attarian, deputy director of the city planning department. The project to install things such as tables, benches, planters, a stage and decorative crosswalk markings is intended to create a more pedestrian-friendly way to access the Detroit riverfront and Hart Plaza. A 5-foottall QLine sign is also expected to be installed. It is expected to cost about $200,000, with funding coming from the city, the Michigan Department of Transportation and the Downtown Detroit Partnership, which will manage and program the plaza, she said. The affected stretch of Woodward has the Fifth Third Bank at One Woodward building to the west and the Coleman A. Young Municipal Center, housing city employees, to the east. Whether the plaza will be made permanent depends on how it affects traffic and “how the space is being enjoyed, the use it’s getting,” Attarian said.

Company news J Auto supplier Delphi Automotive PLC is partnering with French transport company Transdev to develop self-driving taxis and buses that will be put to the test on publicly traveled roads as early as next year in what may be the first attempt at unassisted autonomous piloting, the Associated Press reported. J Interior demolition work for Adient Ltd.’s future downtown Detroit headquarters has begun, with the nation’s largest automotive seat supplier planning an open work space inside the historic Marquette Building that will leave no room for individual offices. Adient (NYSE: ADNT) is pegging its $50 million renovation of the 111-year-old Marquette Building at 243 W. Congress St. for completion by mid-2019. J Henry Ford Health System broke ground on the $155 million Brigitte Harris Cancer Pavilion, a six-story outpatient cancer center near Henry Ford Hospital in Detroit. J TG Fluid Systems USA Corp. is undergoing an $11 million project to merge its three facilities into one by adding 62,000 square feet to a plant in Brighton to increase capacity and efficiency. J Huron Capital Partners LLC’s information technology solutions platform, InterVision Systems, has merged with Missouri-based IT company Netelligent Corp.

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

Number of Michigan Fortune 500 companies headed by women. They are General Motors Co. (CEO Mary Barra) and CMS Energy Co. (CEO Patricia Poppe).

7-2

The Detroit City Council vote authorizing a development agreement, memorandum of understanding and a $20 million brownfield redevelopment tax break for the Detroit Pistons’ planned facilities in the city.

$1.8 million

Sale price of a Westin Book Cadillac Detroit penthouse, said by the broker to be a record for a condo sale in the city.

J AccessPoint, a Farmington Hillsbased professional service organization and human resource company, has acquired YourSource Management Group in Auburn Hills. J Plymouth-based Loc Performance Products Inc. has acquired Demmer Corp.’s north Lansing operation, the companies said. J H.W. Kaufman Financial Group has acquired Chlystek & White Services Inc., a Grand Rapids-based insurance premium audit services company.

Other news J Two of the leading sites for a Taiwan-based manufacturing giant to build a plant are in Pontiac and Lyon Township. Two sources familiar with the discussions among Apple supplier Foxconn Technology Group and the state of Michigan said the two Oakland County sites being considered are: a 154-acre site in Pontiac previously owned by RACER Trust

and now owned by California-based Industrial Realty Group; and 515 acres in Lyon Township owned by Detroit-based construction giant Walbridge Aldinger Co. J City Bakery, a hot chocolate and pastry staple of New York City and Japan, plans to open a store in the Fisher Building this fall. The Detroit location will be its first outside NYC and Japan, according to a news release from Detroit-based real estate developer The Platform. J China’s largest e-commerce company, Alibaba Group Holding Ltd., tapped Martha Stewart and CNBC’s Marcus Lemonis as speakers for its upcoming procurement event in Detroit. The Gateway ’17 event June 2021 at Cobo Center in Detroit is driven by Alibaba’s need to expand internationally and provide Chinese consumers with high-quality products prevalent in this region. J The plan to build 288 apartments on the site of former Statler Hotel in downtown Detroit is getting a $1 million boost from the state. The Detroit/Wayne County Port Authority received $1 million in brownfield funding from the Michigan Department of Environmental Quality to clean up the vacant lot on Washington Boulevard and Park Avenue for a mixed-use development, according to a MDEQ news release. The MEDQ’s $750,000 grant and $250,000 loan will help make way for Jonathan Holtzman’s City Club Apartments to build the City Club Apartments CBD Detroit residential and retail complex with underground parking. J Ann Arbor businessman Shri Thanedar announced his candidacy for the Democratic nomination for governor. J The U.S. Environmental Protection Agency began cleaning up a dangerous hazardous waste site at the former Electro Plating Service Inc. facility in Madison Heights, the agency announced.

Deaths J D. Gregory Main, former president and CEO of the Michigan Economic Development Corp., died June 4 of pancreatic cancer at his home in Oklahoma City. He was 74.

Ethan Davidson releasing new album B

irmingham singer-songwriter Ethan Daniel Davidson — son of the late Detroit Pistons owner William Davidson — is releasing his next studio album, titled “Crows.” The 12-track country-inflected album is scheduled for a June 16 release and will be available on vinyl, CD, and via digital download from the album’s label, Cleveland-based Blue Arrow Records. “Inspired by a lifetime of train travel, ‘Crows’ buzzes with the intersection of feedback, fuzz guitar, and warm vocals by his wife Gretchen Gonzales Davidson and other members of Slumber Party,” Blue Arrow

COURTESY CITY OF SOUTHFIELD

Red Pole Park.

album overall. A free release party is slated for June 13 at Detroit’s Third Man Records. Details can be accessed via Davidson’s website, ethandanieldavidson.com.

Could Aetna move to Detroit? Well, not quite M

ark Bertolini, the Detroit native who is chairman and CEO of Aetna Inc., got a reaction out of a hometown crowd Monday in a speech at the Detroit Economic Club in response to a question about whether Aetna would consider moving to Detroit. After a 20-minute speech at the Townsend Hotel in Birmingham on how companies like Aetna are investing in communities and their workforce to achieve long-term financial and human capital success, Roy Wilson Jr., M.D., president of Wayne State University, asked Bertolini about whether Detroit could be the new corporate headquarters of Aetna. Last month, Bertolini announced that Aetna is looking into moving about 200 top executives to another city, leaving the majority of its 6,000-employee workforce in Hartford. New York City and Boston are under consideration, according to

the Hartford Courant. After the audience applauded Wilson’s question, Bertolini began to answer by praising Detroit-based Shinola as a great company that has a lot of cred on the East Coast. “The coolest company on the planet,” he said, adding that he and his family own many Shinola watches. “I would like to get our executives here” to Detroit, Bertolini said. “We will look for opportunities to be here, and it is on our radar.” The audience then seemed to get the joke and there was a light murmur of laughter. An Aetna spokesman after the meeting confirmed that Bertolini was speaking only in jest. “Detroit is not under consideration for a headquarters move,” a company statement emailed to Crain’s said. “However, we are always looking at potential opportunities to expand our business presence in locations across the country.”

Grand Prix would lose $1M without Penske support

A small forest of red poles would define Southfield’s new park to be built with a matching grant from the state if it meets a $50,000 crowdfunding goal on Patronicity by Aug. 4. Southfield-based Harley Ellis Devereaux created the concept for

Ethan Davidson

said in a statement. It’s Davidson’s first album s i n c e “Drawnigh” in 2015, which was released on Davidson’s own label, Seedsmen Co. It’s his 11th

ithout subsidies from its primary benefactor, Bloomfield Hills-based Penske Corp., the Detroit Belle Isle Grand Prix would lose more than $1 million, the race’s top executive said. “We support the losses incurred from the event and are its backstop, so to say,” race Chairman Bud Denker said via email. He confirmed the financial basics first reported by The Detroit News. Subsidies still are needed to cover the race’s operational costs, estimated at about $11.5 million, despite an event-record 77 corporate sponsors providing funding. Race organizers continue to seek additional corporate dollars, and from other revenue-generating sources, to cover the event’s costs.

This year’s race, run June 2-4 and won by Graham Rahal, saw about 100,000 attendees. The Grand Prix was mothballed after 1997 until Roger Penske, the Penske Corp. founder and Penske Racing team owner, championed and invested in the 501(c)(3) nonprofit race’s return to Detroit in 2007. Denker is a longtime Penske lieutenant. The race was run around the Renaissance Center downtown from 1982 to 1991, then on Belle Isle from 1992 to 1997. Penske is past chairman of the Downtown Detroit Partnership, of which the race is a subsidiary. About $13 million has been invested by the event organizers since the race relaunched in 2007.

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