Crain's Detroit Business, July 3, 2017 issue by Crain's Detroit Business

JULY 3 - 9, 2017

ACLU’s Moss responds to rapid growth.

Fairgrounds plan evolves with assist from Cox. Planners hope to break ground in spring. Page 3

Page 3

Auto Suppliers

Oakland County

Key Safety’s long road to Takata win

By Dustin Walsh dwalsh@crain.com

Key Safety Systems’ headquarters on 19 Mile in Sterling Heights is unremarkable — a drab two-story building hidden in an industrial park, outfitted with washed-out beige carpet, rows of filing cabinets more common to neighborhood garage sales than international corporations, and the same hollow wood-

en doors found in aging doctors’ offices. But behind those doors, a small, focused executive team spent the past nine months working to show how important the relatively obscure seatbelt and airbag supplier, which reported $1.8 billion in revenue last year, is to the global supply chain. Key Safety beat out its biggest competitor, Sweden’s Autoliv Inc.,

which recorded nearly 10 times more revenue last year, and other suitors to acquire the embattled Japanese airbag supplier Takata Corp. in a $1.59 billion deal that includes a prepackaged bankrtuptcy. Early in the process, its executives told Crain’s they had confidence in their ability to secure Takata, even against larger competitors. Now, the supplier has slogged through nego-

tiations and come out on top, but there are still risks, and the goal of bringing Takata under the Key Safety umbrella still isn’t quite a done deal. “We started this process as a dark horse ... we had something to prove,” said Joseph Perkins, senior vice president and CFO for Key Safety. “The mental strength it has taken to get us SEE KEY, PAGE 17

Sports Business: Social Media Power Index

Center of the Twitterverse

#Surprise! The biggest social media force in Detroit sports isn’t Miggy or JV or Stafford — it’s this guy

CRAIN’S PHOTO ILLUSTRATION; GETTY IMAGES

By Bill Shea bshea@crain.com

When it comes to social media, the most powerful Detroit professional athlete is not who you might initially expect. The local pro with the most Twitter and Instagram followers is Detroit Pistons center Andre Drummond with a combined 1.9 million. After him, in Crain’s first Pro Athlete Social Media Power Index, comes a pair of Detroit Tigers: Slugger Miguel Cabrera with 1.8 million total followers, and pitcher Justin Verlander with 1.7 million. Detroit Lions wide receiver Golden Tate was fourth on the list, and represents a major drop-off from the first three spots. He has nearly 480,000 total followers, which is light-years beyond mortal social media users but is 1.3 million fewer than Verlander one spot above him. The index represents the online reach for these athletes, which is increasingly important for both players and companies to build their brands, i.e. make money. By team, the list includes eight Lions, seven Tigers, six Pistons and four Red Wings.

Pair of HQs in Pontiac a big boost for city By Kirk Pinho kpinho@crain.com

In 48 hours last week, Pontiac residents learned their city would be home to another 3,300-plus workers as two major companies revealed major plans to move to the Oakland County seat. The headquarters moves for Commerce Township-based Williams International Co. LLC and Troy-based United Shore Financial Services LLC represent a shifting and diversified economy for Pontiac and its 60,000 residents. Williams International, a defense industry contractor, and United Shore, a wholesale mortgage provider, bring to the city industries that did not have a notable presence there in the past. “It’s the transformation from the old blue-collar economy into being an active member of our knowledge-based growth,” said Matthew Gibb, deputy Oakland County executive to L. Brooks Patterson. “They are recognizing their past, but in a way that is capturing the cutting edge of the future growth.” “We finally hit the stride that I had dreamed about five years ago for Pontiac,” said Bob Waun, a real estate investor who owns several buildings in the city’s downtown centered around Huron and Saginaw streets. Waun, formerly of Bingham Farms-based Core Partners LLC, said the availability and inexpensiveness of real estate in Pontiac likely lured the two companies. According to the Southfield office of Newmark Grubb Frank (formerly Newmark Grubb Knight Frank), Pontiac has 1.92 million square feet of office space and a 29.9 percent vacancy rate in the first quarter, the second-highest rate in the region. The average rent is $16.15 per square foot. Neighboring Auburn Hills has 2.33 SEE PONTIAC, PAGE 15

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MICHIGAN BRIEFS Snyder to recruit teachers from private sector People with private-sector expertise in the skilled trades would be able to earn an expedited teaching credential to teach vocational courses in Michigan schools under a plan Gov. Rick Snyder’s administration announced. The state also intends to allow teachers and school counselors to earn required professional development and continuing education credit through externships with local employers or at career-technical centers, according to proposals being jointly rolled out by the Michigan Department of Education and the Michigan Department of Talent and Economic Development. The goal is to create more pathways for K-12 students to explore careers, including skilled trades fields and opportunities outside of a fouryear university. Enlisting the business community to partner with public schools is one strategy Snyder’s administration has proposed to not only lessen the teaching shortage in vocational classrooms, but also to involve more students in job-shadowing visits, internships and apprenticeships. The project, which is being called the Michigan Career Pathways Alli-

INSIDE

ance, is recommending proposals to help K-12 students explore career options, including involving employers in developing career-tech courses that lead to industry-recognized credentials that students can earn.

Rossman-McKinney to run for Senate Kelly Rossman-McKinney, CEO of Lansing-based public relations firm Truscott Rossman, said she plans to retire next year from the company she helped create as she explores a run for state Senate. Rossman-McKinney, 62, said she has not yet formally filed to run for the 24th District seat held by term-limited Sen. Rick Jones, R-Grand Ledge. But she formed a campaign committee this spring and has started to circulate fundraising emails. Truscott Rossman has offices in Detroit and Grand Rapids, along with Lansing. The company was formed in 2011 when Rossman-McKinney and John Truscott, the firm’s president, joined forces.

State sues Flint over failure to OK water deal The state of Michigan sued Flint

CALENDAR

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KEITH CRAIN

OPINION

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RUMBLINGS

WEEK ON THE WEB

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State and federal officials do not want Flint to change water sources a third time after a fateful 2014 switch resulted in lead contamination and other issues. last Wednesday, alleging that the city council’s refusal to approve a broadly backed deal to buy water long term from a Detroit-area system is endangering public health in the wake of a man-made crisis that left the supply contaminated with

lead, the Associated Press reported. The Department of Environmental Quality had threatened legal action if the council did not approve Mayor Karen Weaver’s recommendation or propose a reasonable alternative by last

Monday. The council instead OK’d a short-term extension of its contract with the Great Lakes Water Authority. “Ensuring that the residents of Flint have drinking water that meets public health standards is our primary concern,” DEQ Director Heidi Grether told the Associated Press in a phone interview. State and federal officials do not want Flint to change water sources a third time after a fateful 2014 switch resulted in lead contamination and other issues. The federal lawsuit says Flint has no other currently available water source. It seeks an order barring Flint from switching again and requiring it to enter the 30-year contract to comply with federal and state drinking water laws.

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Nonprofits

Health Care

State ACLU sees surge in members, requests By Sherri Welch swelch@crain.com

Dr. Nashwa Khogali-Jakary (right) goes over medical information with patient Marie-Jose Alce at Authority Health last week.

LARRY PEPLIN

Addressing the doctor shortage More than 1,500 medical residents complete training in Michigan By Jay Greene jgreene@crain.com

Nashwa Khogali-Jakary just completed her three-year residency in internal medicine at Detroit-based Authority Health and will start a new job in September at Oakwood Health Center in Dearborn Heights. Tony Abood, a fourth-year geriatric fellow, spent his first three years in a family medicine residency with Authority Health. He will report for work on July 10 at a ConcertoHealth clinic at the Albert Kahn Building in

Detroit. Khogali-Jakary and Abood are two of more than 1,500 medical residents in Michigan who have finished their training and are off to join the full-time physician workforce. About 1,500 more are now taking their place. The trick in a state with a doctor shortage? Keeping them here once their training is done. It’s unknown how many of the residents will stay and practice in Michigan. No organization keeps

track of that statewide. But Authority Health sees progress at keeping the physicians it trains in the state. Nearly half of Authority Health’s 21 residents have accepted jobs in Michigan and will stay, said John Sealey, D.O., the program’s director of medical education. “This program has done exactly what it was supposed to do; place doctors in underserved areas,” said Sealey, who also is associate professor with Michigan State University College of Osteopathic Medicine

and oversees Authority Health’s 71 residents at four Southeast Michigan hospitals, two federally qualified health centers and several private physician practices. Of the nearly 300 graduate medical education programs in Michigan, Authority Health GME is one of the newest. Authority’s first class completed training in 2016 with seven of 21 residents staying in Michigan. Its second class held its commencement program at the Detroit Athletic Club on June 17 and will send 10 doctors to practice in Michigan. SEE DOCTORS, PAGE 18

Development

Plan for former state fairgrounds site gets an urban vibe By Kirk Pinho kpinho@crain.com

It’s been more than five years since developers first floated an enormous re-envisioning of the former Michigan state fairgrounds site in Detroit. Since then, various incarnations of the plan have been proposed, but the principals behind the 157-acre project say the current version is better than it’s ever been. And they credit Maurice Cox, the city’s planning director, for moving it in a direction that’s less suburban

A rendering of the mixed-use development project proposed for the former Michigan state fairgrounds in Detroit.

shopping complex and more walkable, bikeable and urban. In development circles, Cox, who was recruited to the city in 2015, is known as a hands-on planning director with a “world class” reputation. “We didn’t know how sick we were,” said Joel Ferguson, one of the members of Magic Plus LLC, which is proposing the mixed-use development with residential, retail, entertainment, transit and education uses, among others. SEE URBAN, PAGE 17

MAGIC PLUS LLC

MUST READS OF THE WEEK Flint legal billings

One foundation

Tackling talent gap

Law firm billings to state hit $14 million and rising. Who’s getting the business? Page 4

Beaumont foundations combine three years after mega-merger of three systems. Page 5

Ron Fournier: DTE Energy amps up internship program. Page 6

The American Civil Liberties Union of Michigan, which has been in the national headlines this year for its legal challenges to federal immigration and refugee policies, now faces a challenge of its own: how to take advantage of a burst of interest. Since the presidential election last fall, the civil rights group seen a record surge of new members, from 9,000 to 43,000, echoing a national trend for the civil rights advocacy organization. At the same time, 2,500 new volunteers, including 500 attorneys, have connected with the Detroit nonprofit, and new contributions are flowing in to the American Civil Liberties Union Fund of Michigan. Now, in between courtroom battles and growing demand for its assistance, the Detroit-based affiliate is faced with the challenge of figuring out how to retain the new members, volunteers and donors. “People want to do something and they’re looking to us as a kind of trusted partner or leader to be able to respond to what they feel are threats to our deKary Moss: mocracy,” ExecuPeople look to tive Director Kary ACLU as partner. Moss said. The new memberships and contributions are expected to add $1 million to its budget this year, bringing it to $4.5 million — double its budget five years ago — and putting it among the 10 largest ACLU affiliates in the nation. “Our work is being validated by a far broader segment of the public, and we’re in a greater, better position to meet the demand,” Moss said. The nonprofit industry benchmark for retaining membership is usually a 20 percent return of newly acquired members, she said. The ACLU of Michigan’s goal is to hit at least that. But it’s developing a strategy to fill the gap for those who may not come back. Nationally, according to an article in the Chronicle of Philanthropy, the ACLU is working to convert one-time donors into monthly contributors, following up with big donors who gave SEE ACLU, PAGE 15

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By Chad Livengood clivengood@crain.com

Law firms have billed state government agencies $14 million for the criminal investigation and legal defense of state employees ensnared in the Flint water crisis â&#x20AC;&#x201D; and the costs to taxpayers arenâ&#x20AC;&#x2122;t expected to subside anytime soon. A Crainâ&#x20AC;&#x2122;s analysis of state agency expenditures found 31 individual law firms have joined the fray in defending 33 state officials ranging from Gov. Rick Snyder to low-level epidemiologists in the state health department. State agencies have capacity in current contracts to spend at least another $6 million for private law firms defending employees, records show. The law firm thatâ&#x20AC;&#x2122;s been paid the most to date is the one conducting a lengthy criminal investigation of how Flintâ&#x20AC;&#x2122;s municipal water system became tainted with lead and may have been a breeding ground for a deadly bacterial outbreak. Attorney General Bill Schuetteâ&#x20AC;&#x2122;s office has paid the Royal Oak-based Flood Law PLLC more than $4.2 million to date for a criminal investigation that has resulted in felony charges against 15 state and Flint officials, including new charges leveled last month against Michiganâ&#x20AC;&#x2122;s top two public health officials. Snyder has racked up the largest criminal and civil litigation defense bills of any single state official, spending $4.5 million for a team of lawyers from three law firms to represent him and his former chief of staff. The $3.6 million Snyderâ&#x20AC;&#x2122;s office has paid Warner, Norcross & Judd LLP for criminal defense and document production is the largest single amount for any law firm. Snyder has not been charged criminally. Snyderâ&#x20AC;&#x2122;s $868,000 in legal bills from Detroit-based Barris Sott Dean & Driker PLLC for defense in a plethora of lawsuits filed by Flint residents is the third-highest amount paid to the law firms involved. â&#x20AC;&#x153;The biggest expense in all of this has been the production of emails and documents,â&#x20AC;? Snyder spokesman Ari Adler said. State records show some of the biggest bills from law firms are for representing state officials who havenâ&#x20AC;&#x2122;t been charged criminally. Outside of the governorâ&#x20AC;&#x2122;s attorneys, Detroit-based Clark Hill PLC has been paid the most of any law firm representing individual state employees, records show. Clark Hill attorneys have been paid more than $1.36 million to date for representation of former Department of Environmental Quality Director Dan Wyant and Wyantâ&#x20AC;&#x2122;s former communications director, Brad Wurfel. Wyant and Wurfel resigned from the DEQ in late December 2015 in the wake of revelations about the stateâ&#x20AC;&#x2122;s mishandling of Flintâ&#x20AC;&#x2122;s April 2014 switch to Flint River water from Detroitâ&#x20AC;&#x2122;s Lake Huron pipeline. Even though theyâ&#x20AC;&#x2122;re no longer state employees, the DEQ is paying

Firms involved in Flint crisis The top 10 legal firms involved in the Flint water crisis ranked by fees. Law firm

Legal fees

Flood Law PLLC

$4,202,165

Warner, Norcross & Judd LLP

$3,611,704

Clark Hill PLC

$1,362,295

Barris Sott Dean $868,243 & Driker PLLC Kotz Sangster Wysocki P.C. Foster Swift Collins & Smith P.C. Fraser Trebilcock Alane & Chartier PLC

$827,555 $694,795

$358,735 $259,102

Dykema Gossett PLLC

$227,358

Varnum LLP

$185,370

Source: Gov. Rick Snyderâ&#x20AC;&#x2122;s office; state departments of environmental quality, health and human services and treasury.

their legal bills because the lawsuits and criminal investigations involve their work for the state. â&#x20AC;&#x153;Dan Wyant, Brad Wurfel and all of the other state employees have the same right to a good legal defense as the governor does â&#x20AC;Ś and as Bill Schuette and his huge prosecution team has,â&#x20AC;? said Michael Pattwell, an attorney in Clark Hillâ&#x20AC;&#x2122;s Lansing office who is representing Wyant and Wurfel. Pattwell said seven attorneys and several associates at his law firm have been working at â&#x20AC;&#x153;significantly reduced hourly ratesâ&#x20AC;? in defending Wyant and Wurfel, who were collectively named in 110 lawsuits, most of which have already been dismissed. In Pattwellâ&#x20AC;&#x2122;s case, he said his $415 hourly rate has been reduced to $300. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve got no shortage of work and people willing to pay me that,â&#x20AC;? Pattwell said. Clark Hillâ&#x20AC;&#x2122;s criminal defense attorneys, Marty Crandall and John Dakmak, have represented Wurfel and Wyant whenever theyâ&#x20AC;&#x2122;ve been â&#x20AC;&#x153;hauled in to be interrogated by the Schuette investigation,â&#x20AC;? Pattwell said. â&#x20AC;&#x153;It is an interrogation, and sometimes itâ&#x20AC;&#x2122;s less than civil,â&#x20AC;? Pattwell told Crainâ&#x20AC;&#x2122;s.

Different rates Snyderâ&#x20AC;&#x2122;s legal bills dwarf what has been spent to date defending individual state employees who have been under intense public scrutiny for their roles in Flintâ&#x20AC;&#x2122;s foul water until the discovery of lead that caused the city to switch back to the Great Lakes Water Authority in October 2015. Law firms representing eight current and former employees of the Michigan Department of Environ-

mental Quality and the department itself have racked up legal bills exceeding $3.7 million, records show. Stephen Busch, the water quality supervisor blamed for not requiring corrosion control chemicals be added to Flintâ&#x20AC;&#x2122;s water, has received nearly $850,000 in legal services since being charged criminally by Schuette 15 months ago. The DEQ suspended Busch with pay while he awaits his day in court for criminal charges that include involuntary manslaughter, misconduct in office and tampering with water sample evidence. Buschâ&#x20AC;&#x2122;s main law firm representing him in various civil lawsuits is Detroit-based Kotz Sangster Wysocki P.C. Philip Grasshoff Jr., a Bloomfield Hills-based environmental attorney at the firm who is representing Busch, declined to comment on the bills. Tiffany Brown, a spokeswoman for the DEQ, said each law firmâ&#x20AC;&#x2122;s bills are reviewed, but the actual services provided â&#x20AC;&#x153;is confidential due to attorney-client privilege.â&#x20AC;? â&#x20AC;&#x153;The law firms have incurred costs at different rates for various reasons depending on the specific circumstances associated with their clients,â&#x20AC;? Brown said in an email to Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;Each invoice is independently reviewed by contract attorneys for reasonableness and appropriateness before being paid.â&#x20AC;? The Department of Health and Human Services has spent nearly $1.1 million to date on private attorneys for 21 individual employees and the department itself, state records show. DHHS also has spent $224,806 on a document-processing service called Ldiscovery to produce records requested by prosecutors and plaintiffs attorneys in the lawsuits, records show.

Expected to escalate The bills from private law firms are expected to escalate as the lawsuits and criminal cases grind toward trials or settlements. None of the defendants have gotten preliminary examinations yet to determine if Schuette has enough evidence for them to stand trial. The State Administrative Board voted Tuesday in favor of DEQâ&#x20AC;&#x2122;s request to spend another $4 million on contracts with private law firms, allowing for up to $8.5 million in the legal defense of its employees. In January, the Treasury Department said it would reimburse the city of Flint for the criminal defense of former emergency managers Darnell Earley and Gerald Ambrose, both of whom were appointed by Snyder. To date, the state has reimbursed Flint for $90,000 in legal bills. â&#x20AC;&#x153;If additional invoices are submitted, they will be considered for reimbursement,â&#x20AC;? Treasury spokesman Ron Leix said in an email. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Beaumont, Oakwood, Botsford hospital foundations merge By Sherri Welch swelch@crain.com

Three years after the merger of Beaumont Health System, Oakwood Healthcare Inc. and Botsford Hospital, the fundraising arms of the three health systems have legally merged, creating a foundation with $100 million in assets. The Beaumont Health Foundation became a legal entity effective July 1. It was always the plan to merge the three foundations, said Beaumont Health Foundation Chair Geoffrey Hockman, managing partner of Pelota LLC, an Birmingham-based investment consulting company and the chair of the former Beaumont Foundation board since 1992. The only question was the amount of time it would take to merge them and the structure on how that merger would take place, he said. Those can be tricky questions if the concerns of donors, board members or the health system are at odds. For a year following the merger of the three health systems, the foundation boards continued to operate separately, the Oakwood Foundation an independent 501(c)3 nonprofit, and the foundations at Beaumont and Botsford as units of those systems. Each was entrusted with investing endowment funds on behalf of donors. A year later, Beaumont Health System CEO John Fox challenged the foundation boards to look at how they could have the greatest impact in supporting the health system. And they came to the conclusion that they were stronger together than apart. “The thought was that the foundation should serve as its own legal organization (and) also provide the ability to attract ... members of the community who would feel it was more prestigious to be involved on the board of a separate 501(c)3,” said Margaret Cooney Casey, foundation president. “It gives them a little more influence in the organization when they’re not treated as a business unit and almost like a subcommittee of a board. And it gives them a little more say into the direction of how philanthropy might be used or how they might choose to raise funds and what they’d raise it for.” Aside from efficiencies gained from not having three separate, paid leadership structures, merging also provided a logical way to avoid multiple requests to funders, Casey said. The merged foundation’s assets include over 600 restricted funds totaling $55 million to be spent down over three to five years after the gifts were made and a $45 million endowment. Its board currently has 11 members from the three predecessor foundations, with the former chairs of the Oakwood and Botsford foundations serving as vice chairmen on the merged board. The plan is to add a handful of additional directors from the communities to bring it to a maximum of 16 people, Casey said.

Geoffrey Hockman: Tricky questions.

Margaret Cooney Casey: There were early concerns.

The foundation operates on an annual budget of about $8 million and employs 62 people, after eliminating a few duplicate positions, Casey said. The combined foundation has raised $90 million over the past two years, about $6 million to $10 million more each year than the foundations had raised separately, Casey said. Board members of the predecessor foundations, who all came from very different communities in terms of demographics and income levels, had early concerns about merging, Casey said. “Each board had the same concerns: will our needs be properly represented, will our communities trust that they can continue to give to our needs at our hospital, and trust that they will stay there,” Casey said. There were also some donor concerns about whether the gift they’d make would fund what they intended at the hospital they intended, she said. The foundation’s assurances to donors included educating donors on the merged organization’s restricted funds that are audited and the stewardship reports produced for large gifts (typically six figures and above) on how their gift is used. Beaumont Health Foundation is one of only a few remaining, independent health system foundations in Southeast Michigan. The Crittenton Hospital Medical Center Foundation’s board was downgraded into a hospital board advisory committee following Ascension Health Michigan’s 2015 acquisition of Crittenton, and oversight for the foundation was transferred to the hospital board. Conversely, following the merger of Ascension’s subsidiary, St. John Health System, and Providence Hospital and Medical Centers late in 1999, the boards of the St. John Hospital Foundation and Providence Health Foundation elected to continue to each operate as independent, 501(c)3 nonprofits. St. John Hospital Foundation had assets of just over $43 million for fiscal 2016 ended June 30, and Providence Health Foundation $21.7 million. Henry Ford Health System Foundation is the largest health care foundation in the region by assets, with $283.7 million in net assets/ fund balances at the end of 2015. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

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OPINION

DTE tackles the talent gap

iane Antishin was driving to work one day in January when her cell phone rang. She recognized the number. Her boss, DTE Energy Chairman and CEO Gerry Anderson, was calling out of the blue to ask his vice president of human resources about DTE’s summer jobs program for 35 college students. She told him what she knew. Anderson wanted more. “The scale of the problem is bigger than that, Diane,” he said. “How can we grow and still stay at this quality?” Antishin gulped, surprised by the question, her mind racing with panicked thoughts: Doesn’t he know what a hassle it is to employ 35 college students? Now he wants more? “I’ll get back to you, Gerry,” she replied. “Let me think about it.” Antishin urgently met with her team and returned the next day to Anderson Gerry Anderson with an audacious plan. DTE would triple the size of its program. In addition to hiring 35 college students this summer, she said, the energy giant would introduce 70 high school-aged Detroiters to DTE’s culture and careers. Most would be African-Americans from disadvantaged homes. Anderson signed off. To the CEO and his team, the program attacks a problem nagging DTE and virtually every major Michigan employer: a lack of young talent to fill jobs that are particular to a modern workplace, including skilled trades. It’s no coincidence that DTE’s vice chairman and chief administrative officer, Dave Meador, chairs Mayor

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.

Mike Duggan’s Workforce Development Board, which has pledged to create 100,000 new jobs in the city. For tens of thousands of Detroiters, the workplace feels so far out of reach that they’ve stopped looking for jobs. One way to end that cycle is to catch Detroiters early in life and show them a clear and credible path to employment. “If we’re going to declare this city truly on the road to recovery, we have to solve this issue of workforce engagement,” Anderson told me. “That can’t happen unless the private sector pushes into this, and it’s companies like us that have to do it. And we have to do it at scale. It can’t be symbolic. We have to do it at the scale of the problem.” And so, less than six months after Anderson’s telephone call, nearly 70 Detroit high schoolers filed into a large conference room at the DTE headquarters in downtown Detroit. Antishin’s staff walked through the orientation in front of a crowd youths dressed in suits, button-down shirts and dress slacks. “Please pay attention to the master schedule,” instructed Tracy DiSanto.

LARRY PEPLIN

DTE’s Deborah Majeski speaks with student John Spencer at an orientation event for Detroit high school students who will be working at DTE this summer. “If you don’t have your badge, the show stops,” warned Deborah Majeski. Half of the high schoolers will work in an office setting at DTE. Half will work in the field with warehouse workers, linemen, cable splicers, gas technicians and substation operators — mostly skilled trades that can pay six figures with overtime. The youngsters will earn far less than that, of course, but they will be get exposure and training in real-work settings. As I wrote a few weeks ago in a column called “Make plumbers sexy again,” not enough high schoolers recognize the value of a non-college career path: good pay and an abundance of skilled jobs that will survive

the shift to a tech economy. Dante Simpson gets it. The 16-year-old from the west side is already studying heating and air conditioning systems in school, and applied for the DTE job for a ruthlessly practical reason. “I’m hoping to get a career out of it.” Shayla Durr, 18, graduated from Cody High School last month with little experience in the workplace. “I just want to see what it’s like to have a job,” she said. Another recent graduate, John Spencer, 18, is an aspiring lawyer. “I want to meet people, networking,” he said. “I love talking to people.” One of the people Spencer will talk to this summer is DTE senior

LETTERS

Glad it’s not my job It seemed a forgone conclusion that they’d finish the Gratiot jail, and we’d see everything sort of stay where it is. Then Dan Gilbert threw a monkey wrench into the whole mix. He has given Warren Evans a real dilemma. Now he has a couple of not-wonderful choices. And the Gilbert plan doesn’t guarantee a soccer stadium. He and Tom Gores would still need to get a team. That road seems to rely on a lot of hope. And meanwhile, we would be moving the entire criminal compound to another area, which is bound to raise a whole new bunch of screams and protests from neighbors who aren’t going to like the idea. This is not something that you can simply look at and weigh the pros and cons and find a right answer. The other force in these choices that

KEITH CRAIN Editor-in-chief

will be raising its ugly head is politics. The minute you add politics into the equation, then the outcome has to be completely unpredictable — particularly by me, because our office is kinda across the street from the existing jail and would simply add another stadium to an area that is full of all of our sports stadiums. Or if they don’t get the soccer stadium, we would have another bunch of high-rise office towers that will probably block out the sun.

project manager Jay Williams, a graduate of Detroit’s public schools who serves as mentor in the program. “I think it’s important for them to see people who came from the same background and the same place as they did working at DTE,” said Williams. “A lot of people in our community haven’t had a chance to see people like them have success.” For Anderson, this is just the start. He wants to grow the program. “This isn’t charity,” he said. “We are building the (DTE) workforce of the future. In the process, we’re also building our city because there’s nothing more vital that our city needs now” than a more engaged workforce.

The trouble with this whole deal is the county cannot afford to pay any more money for this jail complex. Sadly, due to mismanagement and corruption on the part of too many people, it has already cost more than it should have. We will be more than glad to put that responsibility right at the foot of Warren Evans’ predecessor. But that really doesn’t matter. When Evans was elected, he inherited this mess. He has to resolve what seems to be an almost impossible situation. Either choice is going to make a lot of people mad, and there is no easy solution. Heads you lose, tails you lose. A tough spot to be in for any politician. The simple answer is for Gilbert to pony up a few hundred more million, and then everyone will be happy. I am glad I am not in Evans’ shoes. There is no right answer. The guy will get beat up regardless of what he decides.

Blaming teachers for staff shortages wrong To the editor: The headline “Union Rules of Teacher Pay Contribute to Shortages” could not be more misleading to readers. Blaming teachers unions for staff shortages borders on the absurd. The rules have been designed to benefit school districts by making it virtually impossible for teachers with more than five years of experience or advanced degrees to leave. Districts that don’t have contractual policies against granting pay for experience make it their stated policy not to grant pay for experience except in “extreme” cases — usually when they need a basketball or football coach. The truth is that Detroit and other districts with challenging

teaching environments would face even greater shortages if their teachers were able to leave and obtain even partial credit for service elsewhere. What currently exists in the teaching profession is similar to baseball’s old “Reserve Clause” where the employee is tied to the employer for the entirety of their career. To suggest otherwise, and that teachers unions are at fault, is just plain wrong. Don Ukrainec Trenton Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: rfournier@crain.com

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

Part-time Legislature won’t lure in the best and the brightest Lt. Gov. Brian Calley’s proposed constitutional amendment to downgrade Michigan's Legislature to parttime status would cut legislators’ annual pay to roughly half the statewide average for public school teachers. That comes out to less than $31,000 a year in compensation to take a pause in a professional career or personal responsibilities and do the state’s business for 90 consecutive days each year. AT&T Michigan President Jim Murray, a former longtime Republican legislative aide in Lansing, sees Calley’s part-time proposal as a talent train wreck waitJim Murray ing to happen that ignores the actual long hours involved in governing. “I don’t see how you could have this part-time Legislature, cut the pay and still have term limits,” Murray said. The reality is, if Calley’s proposal makes the 2018 ballot and wins likely support from an angry electorate, the Michigan Legislature will soon be populated with more retirees, wealthy people and young attorneys trying to make partner at their firms. “How many lawyers really want to spend three months of their lives away from their practice to make $31,000? Not the good ones,” Murray said. “We’re going to get the government we pay for." Murray thinks the current $71,685 annual salary for legislators is not enough given the year-round demands involved in a job that can only be held for six years in the House and eight years in the Senate because of voter-imposed term limits. “I just want to make the job attractive to people,” Murray said. “I don’t think it’s attractive when we tear it down and talk about slashing people’s pay.” While it’s easy to castigate the Legislature, this is a serious job with serious issues that affect Michigan’s 10 million residents. Reducing the role of the Legislature to part-time status while the other two branches of state government are always on duty will likely diminish the legislative branch. And limiting the work and compensation of legislators to three months a year ignores the reality that being a representative or senator can be a seven-days-a-week job filled with community meetings, phone calls and constituent issues. Calley would know. He spent two two-year terms in the House before being elected lieutenant governor in 2010. Now his wife, Julie, is the state representative from Ionia County. Calley rolled out his part-time Legislature plan on May 30 at the start of the Detroit Regional Chamber’s annual Mackinac Policy Conference. At the time, Calley portrayed a parttime Legislature as more conducive for working professionals to participate in governing. He said he had “field tested” the idea with unnamed employers who were receptive to

CHAD LIVENGOOD clivengood@crain.com

granting employees leaves of absence. “When I was in banking, I know for certain that I could have gone to my employer and said, ‘I want to do this,’ and they would have worked with me,” Calley told Crain's.

But this probably won't work for every profession, especially the one Calley is using to set the part-time legislator salary. “I worry how logistically it would play out for a former teacher like myself,” said state Rep. Jim Tedder, who left a teaching career in Clarkston to become a full-time legislator in 2014. “It would perhaps be easier for an administrator because you don’t have 120 kids in the course of a day coming in and out of your classroom.” Like Murray, Tedder worries what the Legislature will look like if Calley’s proposal is adopted. “You’re going to have a lot of retired

people, 22-yearolds out of college or quite a few more attorneys who can step away from their practices to participate in a 90day session,” Tedder said. Jim Tedder Calley’s proposed use of teacher pay to set the compensation of legislators comes as Michigan schools are experiencing a worsening shortage in educators. Stagnant compensation and cuts in retirement ben-

CRAIN CONTENT STUDIO is the business solutions arm of Crain’s Detroit Business. We’re a team of storytellers, visionaries and creators. We work with your brand to deliver your message in a customized way that gets results. One popular approach: Our Executive Insights roundtable report, where you give us the guest list and we invite those business and civic leaders into one room to talk about the issues your business aligns with most.

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efits are among many reasons why. In the 2015-16 school year, Michigan’s $61,875 average teacher pay was $1,149 less than what teachers earned on average in the 2009-10 school year at the height of the state’s fiscal crisis. It’s possible the lieutenant governor has gotten his wires crossed about the actual problem that needs solving. Instead of trying to cut legislator pay by $40,000, perhaps Calley and the full-time Legislature should spend more time and treasure boosting the compensation of teachers who are central to the state’s economic future. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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

SPECIAL REPORT: FINANCE

The individual deal Born of the recession, Strength Capital’s business model remains successful By Tom Henderson thenderson@crain.com

Necessity born of the Great Recession was the mother of a new and better business model for Strength Capital LLC, a Birmingham-based private equity firm. The firm was founded in 2000 by Mark McCammon and Michael Bergeron and raised its first fund of $30 million that year. It raised a second fund of $140 million in 2006 and was rapidly deploying it when it started planning in 2007 for a third fund of $250 million. But before Strength Capital could raise that fund, the recession hit in full fury. There were deals to be made, and bargains galore at the bottom of the market as business owners hoped to salvage something before the recession evolved into depression. But with no fund available, what to do? They decided to try to fund acquisitions on a deal-by-deal basis, finding limited partners for each deal instead of finding them for a large fund. “It was like a funny thing happened on the way out of recession,” managing partner McCammon said. Bergeron is still a managing partner, too, running the Cincinnati office. “We found ourselves not able to raise a fund, but there was a lot of deal flow and a lot of interest from individual investors. So we

“We started doing individual deals. It’s a model we’ve grown to like, and it’s worked out well for us.”

the sale price couldn’t be disclosed; and there was one initial public offering, in 2015, of Conifer Holdings Inc., a Birmingham-based insurance company.  He can find limited Mark McCammon, Strength Capital LLC partners with an interest in a particular instarted doing individual deals. It’s a model dustry and expertise they can lend to manwe’ve grown to like, and it’s worked out well agement, who aren’t interested in investing for us.” across the swath of businesses that a fund Though the economy has recovered, there would invest in. is no need, he says, to go back to the original  He can do bigger deals, now. A fund model fund model. Strength will continue to do strictly limits how much the company can indeals on an individual basis. vest per deal. Now, if a deal warrants, it can McCammon said there are several bene- raise far larger sums of cash. For example, the fits, now that the model has been proven out $95 million recapitalization of Livonia-based through recent successful exits — Smith Arch Global Precision LLC in 2015, which Mountain Industries Inc., a Virginia candle paid off original investors and brought in new company known for its WoodWick brand, investors. “Our checkbook is a lot bigger than was sold to New Jersey-based Newell Brands it used to be,” said McCammon. Inc., the owner of Yankee Candle, last De-  He has more flexibility in how long he can cember for $100 million; Ohio-based Robert hold on to a portfolio company, not being Rothschild Farm, a maker of dips, sauces and under the time constraints of a fund for other food products, was sold to Ohio-based cashing out its limited partners. Strength Clearbrook Farms in May, which was a 2.3X Capital did a recapitalization of Romureturn for Strength Capital investors, though lus-based Propane Services LLC, paying off

PRimageFactory via iStock fund investors and leaving it free to keep a company it has now owned for 17 years and is happy to keep owning until the price is right for a sale. Though they do deals on an individual basis, now, McCammon and Bergeron did raise a third fund in 2013, a $60 million fund called Strength Capital Partners III-Special Situations. The purpose was to pay back fund one and fund two investors and provide a limited amount of new capital. To date, Strength Capital has invested a total of about $420 million, half from funds and half via the new model, with gains to date of about $300 million. It has done 59 separate deals across 22 platform companies and now has 10 portfolio companies, three of them remaining from its fund days, with total revenue of about $630 million and more than 2,000 employees. Currently, it has seven investment professionals and two support staff, with plans to add one investment professional a year for the foreseeable future. Strength stumbled onto the non-fund model as necessity required, but serendipitously it turned out to be ahead of the curve, says Rajesh Kothari, managing director of Cascade Partners LLC, a Southfield-based investment banker. SEE MODEL, PAGE 9

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

MODEL

Trenton gets $3.2M state loan to buy former McLouth site

“This is a big trend in the industry, but these guys were pretty early doing it,” he said. “It's been an evolution. The interest by investors, now, is less around funds and more on deals. Strength Capital has been able to find good deals. It’s been a win-win for them. It’s worked out great. “Investors say, ‘Let's not invest in a blind pool, let’s invest in what we like.’ The negative is, before, you were getting a portfolio of companies, so a bad deal could be offset by a good one. But if you are only investing in one company, all your eggs are in one basket.” In 2011, Kothari’s former company, Birmingham-based Seneca Partners Inc., was the investment banker on the deal that sold three business units of Bloomfield Hillsbased TriMas Corp. to Livonia-based Arch Global Precision, a platform company created for that and subsequent deals. In March 2012, Crain’s named that the best deal of 2011 under $100 million at its annual M&A awards. McCammon said Strength Capital has grown Arch Global from EBIDTA (earnings before interest, depreciation, taxes and amortization) of $8 million a year to more than $30 million, and the 2015 recapitalization allows it to continue expanding the company without time constraints to pay off fund investors. Strength was also honored by Crain’s for the best deal under $100 million in 2007 and for the best deal above $100 million in 2013. In 2004, McCammon was named as one of Crain’s 40 under 40. Kothari said the growth of Arch Global is testament to Strength Capital's management style. It named Eli Crotzer, one of the CEOs of the TriMas companies it bought, as Arch Global’s CEO and, says Kothari, “gave him a lot of faith and the freedom it takes to take it to the next level. Which he did.” Rob Parker is president of American operations for Quarton International AG, an investment banking firm with headquarters in Birmingham and Munich, Germany. He said he has pitched deals over the years to Strength Capital, none of which were ultimately successful, but hopes that will change soon. “We’ve got a couple now that are getting pretty hot and heavy,” he said. Parker said that when Strength Capital first went to its deal-by-deal model, it was looked at askance in the investment community. “At one point, you’d discount an unfunded partner in a deal process. Now, that’s not the case. Money is no longer hard to find. There’s so much money out there, and Strength Capital is so well connected and so well regarded that you no longer worry about whether or not they’ll be able to raise money for a deal. They have such a track record and such a reputation, they’ll find the money they need.”

By Kurt Nagl

FROM PAGE 8

Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

knagl@crain.com

The city of Trenton on Tuesday got approval for a $3.2 million loan from the Michigan Strategic Fund to purchase the former McLouth Steel site, which has been an eyesore for the community for 24 years. The plant, at 1491 W. Jefferson Ave. on the north side of Trenton, closed in 1996. The 180-acre industrial property includes a 1 millionsquare-foot blighted building. Wayne County foreclosed on the property in March for unpaid property taxes amounting to $3.7 million. Developers have showed interest in it, but have been wary of unknown costs for environmental cleanup, the release stated. “From the county’s perspective, this is the first real opportunity to do something with this site in I don’t know how long,” Wayne County Executive Warren Evans said. In exercising its right of first refusal and intentions to purchase the property from the county, the city requested the loan from the state to cover cost of purchase, expected to be $2.5 million after factoring in the city’s portion of outstanding taxes. The remaining $700,000 will be used for environmental investigations. The city originally had until last Friday to decide whether or not to purchase the land, but Wayne County has granted a month extension,

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The 180-acre former McLouth Steel industrial property includes a 1 million-square-foot blighted building. said Jim Wagner, city administrator for Trenton. He said he expects the city to come to a decision in the next couple of weeks and that the decision is incumbent on conversations with the Michigan Department of Environmental Quality and Michigan Economic Development Corp. “We are all looking for a good solution to the site and making sure (potential) developers know exactly what is expected of them, especially as it relates to environmental cleanup,” Wagner said.

The city has had discussions with the state DEQ and Environmental Protection Agency, an MEDC news release said. It is likely to also apply for other state and federal assistance and market it to developers. Wagner said the site is not suitable for mixed-use or residential development, and it won’t provide the jobs it once had. “Five hundred to 1,000 jobs would be gravy,” he said. Khalil Rahal, Wayne County’s economic development director, said multiple offers already have

been received for the site in response to a recent request for qualifications. The offers are being vetted, he said, declining to discuss specific details. While contamination at the site is a major issue, it does have some appealing aspects, Wagner said, including proximity to the planned Gordie Howe International Bridge, rail access and 1,600 feet of deepwater port on the Detroit River. Crain’s reporter Lindsay Van Hulle contributed to this report.

Leaders in Complex Business Lawsuits and Class Action Litigation www.millerlawpc.com (248) 841-2200/ www.millerlawpc.com 950 West University Drive / Suite 300 / Rochester / Michigan / 48307 / (248) 841-2200

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 LY 3 , 2 0 1 7

CRAIN'S LIST: LARGEST OEM PARTS SUPPLIERS

Ranked by 2016 automotive original-equipment parts sales Rank

Company Address Phone; website

Top local executive(s)

OEM sales OEM sales ($000,000) ($000,000) Percent 2016 2015 change

Products

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

Don Walker CEO

$19,381.0

$17,759.0

9.1%

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

Matthew Simoncini president and CEO

18,557.6

18,211.4

1.9

Seating and electrical

Adient plc B 49200 Halyard Dr., Plymouth 48170 (734) 254-5000; www.adient.com

R. Bruce McDonald chairman and CEO

16,837.0

Automotive seating systems and interiors

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

Kevin Clark president and CEO

16,661.0 C

15,165.0 C

9.9

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

ZF 12001 Tech Center Drive, Livonia 48150 (734) 855-2600; www.zf.com

Franz Kleiner CEO

10,386.0 D

12,803.0

-18.9

Automotive braking products, transmissions, suspension, electronics

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

James Verrier president and CEO

9,071.0

8,023.2 D

13.1

Engine and drivetrain systems and components

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

Mike Mansuetti president

8,835.0 C

8,965.0 C

-1.5

Denso International America Inc. 24777 Denso Drive, Southfield 48033 (248) 350-7500; www.densocorp-na.com

Kenichiro Ito, chairman and CEO and CEO, Denso North America

8,708.0 C

9,000.0

-3.2

Fuel injection, hybrid/electric, and other powertrain components and systems; ECUs; steering systems; ABS; stability control systems; electronic components; car multimedia systems; sensors (MEMS, radar, camera, ultrasonic, etc.); automated driving systems; cybersecurity solutions; electrical drives and actuators. Automotive air conditioning and engine cooling components and systems, including condensers, radiators, condenser, radiator and fan modules, heater cores, evaporators and HVAC units

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

Samir Salman CEO, NAFTA region

8,497.0 D

8,185.0 D

3.8

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

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

Steve Miller president and CEO

6,000.0

5,900.0

1.7

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

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

Mark Stidham president, Faurecia North America

5,800.0

6,100.0

-4.9

Automotive seating, emissions control technologies, interior systems.

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

Scott Turpin president and CEO

5,650.0 D

4,974.0 D

13.6

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

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

Chung Myung-Chul, president; Young Deuk Lim, CEO

5,556.0 D

5,491.0 D

1.2

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

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

Rainer Jueckstock, co-CEO and cochairman and CEO, Federal-Mogul Powertrain; Brad Norton, co-CEO and co-chairman and CEO, FederalMogul Motorparts Yutaka Inagaki president and CEO

5,159.0

5,077.0

1.6

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

4,056.0 D

3,963.0 C

2.3

Connection systems, electrical distribution systems, electronic components, instrumentation

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

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

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

David Dauch chairman and CEO

3,948.0

3,903.0

1.2

Driveline and drivetrain components and systems

Nexteer Automotive 1272 Doris Road, Auburn Hills 48326 (248) 340-8200; www.nexteer.com

Michael Richardson president and board executive director

3,842.2

3,360.5

14.3

Automotive systems

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

Francoise Colpron president, Valeo North America

3,824.0 C

3,539.0 C

8.1

Panasonic Automotive Systems Co. of America 26455 American Drive, Southfield 48034 (248) 447-7000; www.panasonic.com

Scott Kirchner F president

3,716.0 C

2,896.0 C

28.3

Electrical, transmission, engine management and air management systems; hybrid and electric vehicle systems; climate control, powertrain thermal systems; compressors; front-end modules; driving assistance; interior controls and wiper systems; others Automotive multimedia products and components

Cooper-Standard Holdings Inc. 39550 Orchard Hill Place Drive, Novi 48375 (248) 596-5800; www.cooperstandard.com

Jeffrey Edwards chairman and CEO

3,472.9

3,343.0 C

3.9

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

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

Dan Garceau president

3,425.0 D

3,210.0 D

6.7

Airbags, inflators, seatbelts, electronics, steering wheels

TI Automotive 2020 Taylor Rd, Auburn Hills 48326 (248) 296-8000; www.tiautomotive.com

Bill Kozyra chairman, president and CEO

3,300.0

3,400.0 C

-2.9

Automotive fluid storage, carrying and delivery technology

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

Scott Ferriman president

3,165.0 D

2,829.0

11.9

Engine components, filter systems vehicle air conditioning and engine cooling

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

Sachin Lawande CEO

3,161.0

3,245.0

-2.6

Climate controls, electronics, interiors

Inteva Products LLC 1401 Crooks Road, Suite 100, Troy 48084 (248) 655-8886; www.intevaproducts.com

Lon Offenbacher president, CEO and founder

2,800.0

2,600.0

7.7

Closure systems, interior systems, motors and electronics, roof systems

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

B Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. C Automotive News estimate. D From Automotive News. E Formerly Federal-Mogul Holdings Corp. Acquired by Icahn Enterprises L.P. on Jan. 23, 2017, and is now a wholly owned subsidiary. F Succeeded Tom Gebhardt as president in February.

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

DEALS & DETAILS

J QuickCall, Troy, a telecom company, has launched Pathway, a platform that helps aid organizations manage refugees and migrants in the assimilation process. Websites: quickcall.com; https://pathway. quickcall.com

Moss & Colella P.C., Southfield, a law firm specializing in personal injury and civil rights, announced a new website, that includes a detailed list of the firm’s legal services. Website: mosscolella.com. J

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J SME Education Foundation, Dearborn, an organization for advanced manufacturing programs, has partnered with Shape Corp., Grand Haven, a tier-one automotive and industrial component supplier, to expand its manufacturing program for high school students in the Grand Haven Area Public Schools. Websites: sme.org, shapecorp.com.

J Federal-Mogul Motorparts, Southfield, a division of Federal-Mogul Holdings Corp., launched The Garage Forum, an online community where automotive service professionals can share technical tips, ask and offer advice. Website: fmmotorparts.com.

2017 IT

Y I O N N O VA T I

CALENDAR UPCOMING EVENTS

Failing Your Way to Success Seminar with Dave Coulier. 2-4 p.m. July 9.

Coulier, who has appeared on “Full House,” “Fuller House,” “America’s Funniest People,” “The Tonight Show with Jimmy Fallon (and Johnny Carson),” “The Today Show,” “Good Morning America,” “American Dad,” “The Muppet Babies,” “The Real Ghostbusters” and “How I Met Your Mother,” talks about his career starting as a standup comedian at the Comedy Castle in Detroit to Hollywood stardom. $25. Mark Ridley’s Comedy Castle, Royal Oak. Contact: Mary Coyle, phone: (248) 542-9900; email: laura@comedycastle.com

How the Industrial IoT Can Transform Business. 8:30-10:30 a.m. July 12. LHP

Engineering Solutions. The speaker is Michael King, president, Data Analytics & IoT at LHP Engineering Solutions. Topics will include: The business value of IIoT, case studies of successful IIoT implementations and predictive maintenance solutions and how IIoT can help manufacturers meet ISO 26262 Automotive Functional Safety standards. Automation Alley, Troy. Free for members. $20 nonmembers. Phone: (800) 427-5100; website: automationalley.com Pandora CEO Tim Westergren. 11:30 a.m.-1:30 p.m. July 13. Adcraft Detroit. Westergren shartes his vision for Pan-

dora and point of view on the platform’s future. The Reserve, Birmingham. $50 member; $75 nonmember. Website: adcraftdetroit.com Detroit ‘67: Looking Back to Move Forward. 11:30 a.m.-1:30 p.m. July 17. De-

troit Economic Club. Business leaders will discuss diversity, economic inclusion, and engaging the next generation of leaders. Panel includes: Tim Ryan, U.S. chairman and senior partner of PwC and chairman of The CEO Action For Diversity & Inclusion; La June Montgomery Tabron, president and CEO of W. K. Kellogg Foundation; Wright Lassiter III, president and CEO of Henry Ford Health System. Moderator: Ron Fournier, publisher and editor, Crain’s Detroit Business. MotorCity Casino Hotel. $45 members; $55 guests of members; $75 nonmembers. Phone: (313) 963-8547; email: info@econclub.org; website: econclub.org Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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J Aqaba Technologies Inc., Sterling Heights, an internet marketing agency, has been retained by Pari Robotics, Rochester Hills, and Kimberly Lighting LLC, Clarkston, to create custom online platforms. Websites: aqabatech.com, parirobotics.com, kimberlyled.com.

NEW SERVICES

LIFE REMODELED would like to thank all of our Detroit 10 0 sponsors for their commitment to the future of Detroit’s neighborhoods. A special thanks to Ron Fournier, of Crain’s Detroit Business, for joining us as the event’s guest speaker.

DTE Energy Music Theatre, Auburn Hills, a Palace Sports & Entertainment company, announced a partnership with Union Joints, Clarkston, a food service company, to present Honcho Outpost, a new food and beverage location in DTE. Websites: palacenet.com, unionjoints.com. J

THANK YOU “DETROIT 100”

CKC Agency, Farmington Hills, a public relations and media services firm, has added three accounts: Art Van Furniture, Warren; Star Line Mackinac Island Hydro-Jet Ferry, Mackinaw City; and Skinnytees, Birmingham. Website: ckcagency.com.

J 1st Call Home Healthcare, Clinton Township, a telemedicine program, announced a partnership with CAREnQ, Milwaukee, Wis., a telemedicine program, for its VirtualDoc service. CAREnQ will provide the platform and physicians for VirtualDoc. Websites: 3firefighters. com, carenq.com.

LIF

CONTRACTS

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 LY 3 , 2 0 1 7

CRAIN'S LIST: TOP-COMPENSATED CEOS

Ranked by fiscal 2016 compensation 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 34 35

Total compensation 2016/2015

Salary 2016/2015

Bonus 2016/2015

Stock awards 2016/2015

Nonequity incentive/ retirement 2016/2015

Other compensation 2016/2015

Option awards 2016/2015

Company's net income 2016/2015

Mary Barra General Motors Co.

$22,582,059 $28,588,663

$2,000,000 $1,750,000

$0 $0

$13,000,036 $12,000,004

$6,941,777 $3,074,512

$640,246 $597,118

NA $11,167,029

$9,427,000,000 $9,687,000,000

Mark Fields B Ford Motor Co.

22,102,498 18,576,946

1,787,500 1,750,000

NA 0

14,298,356 12,133,338

5,581,003 4,323,157

435,639 370,451

0 0

4,607,000,000 7,371,000,000

Matthew Simoncini Lear Corp.

14,443,535 13,612,393

1,354,500 1,306,125

0 0

8,524,711 8,149,840

3,837,667 3,487,680

726,657 668,748

0 0

975,100,000 745,500,000

Gerard Anderson DTE Energy Co.

12,498,939 10,174,183

1,293,519 1,268,269

NA 0

7,141,380 6,299,250

3,919,689 2,472,414

144,351 134,250

NA 0

834,000,000 720,000,000

James Verrier BorgWarner Inc.

12,367,516 17,420,632

1,245,000 1,150,000

NA 0

9,316,086 12,136,267

984,732 3,458,301

821,698 676,064

NA 0

118,500,000 609,700,000

Sergio Marchionne C FCA US LLC

12,000,000 10,959,298

4,000,000 3,939,750

7,000,000 6,881,190

NA NA

1,000,000 138,358

NA 0

NA NA

Mark Malcolm D Tower International Inc.

11,413,791 3,699,665

840,000 840,000

6,000,000 0

732,121 744,042

3,802,428 2,076,648

39,242 38,975

NA NA

38,579,000 194,052,000

David Dauch American Axle & Manufacturing Holdings Inc.

11,102,320 13,215,216

1,150,000 1,150,000

0 0

5,617,069 5,348,595

4,260,652 6,649,490

74,599 67,131

0 0

240,700,000 235,600,000

Kevin Clark Delphi Automotive plc

10,366,792 12,196,319

1,175,000 1,066,667

0 500,000

7,044,063 9,112,214

1,962,000 1,353,000

185,729 164,438

0 0

1,326,000,000 1,535,000,000

Keith Allman Masco Corp.

9,765,728 8,342,419

1,126,654 998,461

NA 0

2,442,825 2,376,001

4,258,176 3,051,000

611,019 321,407

1,327,054 1,595,550

491,000,000 355,000,000

Sachin Lawande Visteon Corp.

8,724,572 11,245,493

1,022,500 507,576

0 3,250,000

3,868,842 5,845,106

1,700,000 921,387

883,234 84,453

1,249,996 636,971

75,000,000 2,284,000,000

Patrick Doyle Domino's Pizza Inc.

8,636,303 8,977,413

1,015,192 965,385

0 0

1,888,923 2,894,463

3,292,300 2,669,550

338,268 400,489

2,101,620 2,047,526

214,678,000 192,789,000

Jeffrey Brown Ally Financial Inc.

7,531,261 8,483,540

1,000,000 924,992

2,400,000 1,649,425

3,974,140 5,876,445

NA 0

157,121 32,678

NA 0

1,067,000,000 1,289,000,000

Gary Shiffman Sun Communities Inc.

6,681,207 7,387,893

691,837 691,418

NA 0

5,193,750 6,381,000

791,837 272,959

3,783 42,516

NA 0

17,369,000 137,325,000

Roger Penske Penske Automotive Group Inc.

6,537,331 6,533,691

1,200,000 1,200,000

NA NA

5,000,000 5,000,000

NA NA

337,331 333,691

NA 0

342,900,000 326,100,000

Jeffrey Craig Meritor Inc.

5,513,133 6,208,432

891,667 733,333

0 0

3,499,998 3,500,000

954,900 1,833,030

166,568 142,069

NA 0

573,000,000 64,000,000

Jeffrey Edwards Cooper-Standard Holdings Inc.

5,384,421 6,550,967

899,231 849,712

0 0

1,733,050 1,553,052

1,522,620 3,310,870

518,480 165,530

711,040 671,803

139,000,000 111,880,000

Robert Taubman Taubman Centers Inc.

4,908,330 4,829,909

928,818 928,818

0 0

2,923,032 2,669,611

1,025,000 1,200,000

31,480 31,480

0 0

188,151,000 192,557,000

Donald Stebbins Superior Industries International Inc.

4,018,675 3,676,625

900,000 900,000

0 0

2,194,234 1,765,204

894,690 983,256

29,751 28,165

0 0

41,381,000 23,944,000

Mark Zeffiro Horizon Global Corp.

3,739,102 3,206,460

600,000 536,335

600,000 0

1,190,700 1,476,204

957,000 599,200

128,902 112,950

262,500 481,771

(12,360) 8,300,000

Joey Agree Agree Realty Corp.

3,696,630 2,389,665

414,064 405,563

750,000 350,000

2,499,992 1,600,001

0 0

32,574 34,101

NA 0

45,797,000 39,018,000

David Wathen E TriMas Corp.

3,581,377 4,817,852

444,289 753,850

0 0

2,677,602 3,424,970

316,682 574,881

142,804 64,151

0 0

(39,800,000) (33,400,000)

Patricia Poppe F CMS Energy Corp.

3,482,555 0

775,000 NA

NA NA

1,627,067 NA

923,544 NA

156,944 NA

NA NA

551,000,000 523,000,000

Dennis Gershenson Ramco-Gershenson Properties Trust

3,456,205 3,323,284

703,269 675,000

0 0

1,763,406 1,541,679

979,800 1,096,875

9,730 9,730

0 0

52,963,000 57,771,000

Alessandro DiNello Flagstar Bancorp Inc.

3,445,766 13,018,426

1,000,000 1,552,500

0 0

900,000 11,226,400 G

1,258,000 0

287,766 239,526

NA 0

171,000,000 158,000,000

Carl Camden H Kelly Services Inc.

3,421,658 5,329,637

1,000,000 1,000,000

0 0

2,274,600 2,651,200

NA 1,539,200

147,058 139,237

0 0

120,800,000 53,800,000

Daniel Coker Gentherm Inc.

3,350,580 3,345,142

750,000 700,000

637,500 682,500

731,520 750,420

386,584 378,457

94,646 96,105

750,330 737,660

76,598,000 95,393,000

Edward Christian Saga Communications Inc.

3,218,937 2,773,899

990,938 956,938

0 0

1,229,288 1,182,014

850,000 500,000

148,711 134,947

0 0

18,186,000 13,414,000

Philip Hagerman Diplomat Pharmacy Inc.

1,511,578 1,322,950

388,461 307,692

0 0

1,102,897 0

0 0

20,220 21,350

NA 993,908

28,273,000 25,776,000

Steven Esses I Arotech Corp.

1,401,627 929,173

414,288 324,060

0 160,496

164,335 0

0 0

823,004 444,617

NA 0

(2,848,256) (2,945,026)

Thomas Amato J TriMas Corp.

1,395,203 0

257,212 NA

0 NA

901 NA

1,137,090 NA

(39,800,000) (33,400,000)

Brett Roberts Credit Acceptance Corp.

1,033,092 1,033,092

1,025,000 1,025,000

NA 0

8,092 8,092

NA 0

332,800,000 299,700,000

Jeffrey Armstrong K Perceptron Inc.

924,163 1,197,405

215,452 350,000

0 50,000

144,083 92,920

0 124,250

179,957 31,267

384,671 548,968

(22,113,000) (461,000,000)

James Petcoff Conifer Holdings Inc.

766,500 1,646,660

500,000 500,000

20,000 140,000

200,000 1,000,000

NA NA

46,500 6,660

NA NA

8,437,000 NA

Jeff Rogers Universal Logistics Holdings Inc.

731,990 742,084

426,362 418,865

150,000 150,000

155,500 173,100

0 0

128 119

NA 0

24,244,000 40,001,000

Name Company

Top compensation for CEOs at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available.

B Fields who stepped down as CEO on May 22 and was succeeded by Jim Hackett. C Marchionne is CEO of both FCA US LLC and Fiat Chrysler Automobiles N.V., London, England. D Stepped down as president effective Sept. 1, 2016, and retired as CEO effective Dec. 31, 2016. E The company replaced Wathen as president and CEO, effective July 25, 2016. Succeeded by Thomas Amato. F Succeeded John Russell as president and CEO who retired July 1, 2016, but still serves as chairman. G Stock awards include equity granted under ExLTIP in the amounts of $10,626,400. Stock awards also include bonus shares with an economic value of $600,000. H Retired in May 10, 2017. Former COO, George Corona succeeds him as president and CEO. I Resigned effective Dec. 31, 2016. Dean Krutty was named acting CEO. J Succeeded David Wathen as president and CEO, effective July 25, 2016. K Resigned in January 2015. Succeeded by W. Richard Marz who was then succeeded by David Watza in November 2016.

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

Novi-based ITC to build transmission line under Lake Erie By Jay Greene jgreene@crain.com

Novi-based ITC Holding Corp. is embarking on a new path in its 14-year history to build a 73-mile, $1 billion high-voltage direct current transmission line under the waters of Lake Erie that will connect the energy markets of Pennsylvania with Ontario. This week ITC received one of its last remaining permits and will begin construction of the line next year with electricity service commencing in 2020, said Terry Harvill, ITC president of grid development. “This is the first time we have pursued a non-regulated project,” said Harvill, adding that ITC acquired the rights to the three Terry Harvill: First project years ago from non-regulated the original deproject. velopers, the Lake Erie Power Corp. “We hadn’t found any with the economics to sustain it. We found one in the Lake Erie Connector Project, moving power through the market to connect Canada” to the U.S. electricity network in Pennsyvlania, Harvill said. “We don’t see a lot of parties doing something like this.” Harvill said unlike a regulated electricity project, where customers such as DTE Energy Co. or Consumers Energy Co. would pay for the line through rate filings through the Public Service Commission, ITC is paying for the line itself. “We will find customers to take long-term contracts” of 10 to 15 years, Harvill said. “It is like building a private toll road” where a company then charges users for the use of the roadway. Harvill said ITC chose Pennsylvania instead of Michigan because the energy market located in Pennsylvania is the largest in the world, the PJM Interconnection LLC network. PJM is a 13-state regional transmission organization that covers such states as Illinois, Indiana, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. “PJM is the world’s largest market and has a variety of non-emitting resources and renewables,” Harvill said. “It probably won’t help Michigan with (potential electricity shortfalls) because it is far away,” he said. Harvill said in the early years the U.S. and PJM will probably export electricity to Canada. “It depends on the prices of energy. Now Ontario sells capacity to the U.S., but they are refurbishing their nuclear power fleet and may shut down gas plants. Ontario wants to get to zero emissions,” Harvill said. “They will need electricity during the transition.”

ITC HOLDING CORP.

Novi-based ITC has begun preliminary work in Lake Erie for the ITC Lake Erie Connector, to connect the energy markets of Pennsylvania with Ontario through an underwater transmission line.

The ITC Lake Erie Connector, which will be managed by ITC Lake Erie Connector LLC, a wholly owned subsidiary of ITC, will provide a bi-directional underwater

transmission line to connect the energy markets of the Ontario Independent Electricity System Operator at a converter station in Nanticoke, Ontario, with a PJM converter station in Erie, Pa. Harvill said the connector will allow ITC’s transmission customers to more efficiently access energy, capacity and renewable energy credit opportunities in both markets. “The idea of building a line across Lake Erie has been talked about for 20 years,” Harvill said. “The Lake Erie Power Corp. did early development work to see if it was feasible. They approached us after they exhausted their resources to take it further.” Permits included a certificate of public convenience and necessity by Canada’s National Energy Board and Canada's Governor in Council. The Pennsylvania Department of Environmental Protection issued two permits: the State Water Obstruction and Encroachment Permit, and a National Pollutant Discharge Elimination System Permit for Stormwater Associated with Construction Activities. ITC also was required to receive a presidential permit from the U.S. Department of Energy because it involved an international border crossing project.

ITC HOLDING CORP.

The route of the planned transmission line under the waters of Lake Erie that will connect the energy markets of Pennsylvania with Ontario. ITC was born in February 2003 when a group of New York-based private equity investors acquired DTE Energy’s transmission subsidiary in Michigan for $621 million. In 2016, ITC was acquired by Fortis Inc. of Canada. ITC has several regulated operating subsidiaries that include ITC Michigan, ITC Transmission, Michigan Electric

Transmission Company, ITC Midwest and ITC Great Plains. Through those subsidiaries, ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma. It serves a combined peak load exceeding 26,000 megawatts along 15,000 circuit miles of transmission line.

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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 LY 3 , 2 0 1 7

Marcie Brogan to retire, sell Brogan & Partners By Kurt Nagl knagl@crain.com

Marcie Brogan, the founder of Brogan & Partners Convergence Marketing Agency, is retiring and selling the company to its president. In transition to retirement, Brogan, 73, is passing the reins of the 33-year-old Birmingham-based advertising agency to Ellyn Davidson, who has been with the company for 23 years. The deal was finalized last month. Financial terms were not disclosed. Under the deal, Davidson, 46, takes ownership of

ADVERTISEMENT SECTION

ACCOUNTING Bryan Welsh Leader of Plante Moran’s Manufacturing and Distribution Industry Group Plante Moran

Plante Moran is pleased to announce that, effective July 1, Bryan Welsh will become the firm-wide leader of its Manufacturing and Distribution Industry Group. In this role, Welsh will be responsible for developing and executing on various practice area strategies, including the industry group’s global focus on client service and talent development initiatives, and growth of the firm’s manufacturing and distribution practice. Welsh is a Partner in the Plante Moran’s Detroit office.

25 percent of the company immediately, and full ownership will be transferred by January 2019. The company’s name will not change, and it will be “business as usual,” said Davidson, adding that she aims to preserve the agency’s reputation and keep it independent and woman-owned. Davidson said the deal had been on the horizon for a couple years, and she has been running the 30-employee company for several years. She became president of the company in 2010, when Marcie Brogan: Deidre Bounds left to head up Birmingham-based Retiring from firm Ignite Social Media. she founded.

Henry Ford Health System adds executives

Ellyn Davidson: Became president of firm in 2010.

MANUFACTURING

Doug Ross Vice President of Operations

Ramachandra - (Dr. Ram) Canumalla, PhD Vice President of Technology

Weldaloy Weldaloy named Doug Ross VP of Operations. He brings extensive experience in improving supply chain, business processes, evaluating strategic initiatives, and IT implementations. He will be managing Weldaloy’s continuous improvement efforts. Prior to joining Weldaloy, Ross was a Global Director for Federal Mogul, and also served as a Vice President at Blue Fountain Technologies and Qualitest Pharmaceuticals. He has an MBA from Brenau University. Weldaloy named Ramachandra (Ram) Canumalla, Ph.D., V.P. of Technology. Ram brings decades of research on materials and processes for the Aerospace and related industries. He has been lead researcher or coauthor on studies of titanium, aluminum and nickel-based alloys and steels. Dr. Ram earned degrees from the renowned National Institutes in India and was named Metallurgist of the Year 1997 by the Government of India.

FINANCIAL SERVICES

REAL ESTATE

PEOPLE ON THE MOVE

provides an opportunity to announce the selection, promotion, appointment, leadership or role responsibility expansion of an employee, colleague or team member across industries and sectors. For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

SPOTLIGHT

Henry Ford Health System has added several new senior executives to CEO Wright Lassiter III’s management team. Two of the three positions are newly created. Seth Frazier has been hired for the newly created role of chief strategy officer and executive vice president. Frazier had been chief transformation officer at Arlington, Va.-based Evolent Health. He will be responsible for overall system strategic planning and work with clinical staff and administrative leaders. Michelle Johnson Tidjani has been named system general counsel, a new position, and senior vice president for business integrity, tax, privacy and security, governance, and risk finance and insurance. Tidjani was deputy chief legal officer with the Cleveland Clinic. She also previously worked for Tenet Healthcare Corp., which owns the Detroit Medical Center. Nina Ramsey has been named chief human resources officer and is a senior vice president. Ramsey was human resources officer with Kelly Services Inc. She replaced Kathy Oswald, who had been with Henry Ford the past nine years.

Vesco Oil names co-owner as new president Family-owned Vesco Oil Corp. named co-owner Lilly Epstein Stotland as its new president, assuming the title from her father, Donald Epstein, the Southfield-based lubricant distributor announced. The elder Epstein will maintain his role as CEO. Lilly Epstein Stotland, 38, joined Stotland the business in 2004 and became co-owner with her sister, Lena Epstein, who is now running for U.S. Senate as a Republican. The company is now in its third generation of family ownership. Stotland’s late grandfather, Eugene Epstein, started the company in 1947.

Airport appoints first woman as aviation manager Daniel E. Seder President

Abir Ali Director of Design and Culture

CFA Society of Detroit

The Platform

The CFA Society of Detroit, an association of local investment professionals consisting of portfolio managers, security analysts, investment advisors, and other financial professionals, proudly announces the appointment of Daniel Seder, CFA as President of our society. The Chartered Financial Analyst (CFA) credential is the among the most respected and recognized investment management designations in the world. Mr. Seder has served on the CFA Society of Detroit’s board for the past five years.

Abir Ali is the Director of Design and Culture at The Platform, leading the strategy in the role of design across developments. Ali’s career spans architecture, furniture design and other special projects, including work with NEIdeas: Rewarding Ideas for Business Growth and the Detroit Architecture Pilot. Featured on Crain’s Detroit’s 40 under 40, Ali’s work has graced the pages of leading design publications, and she holds degrees from the University of Michigan and the University of Toronto.

Oakland County International Airport has appointed a new manager of aviation and transportation. Cheryl Bush, 62, starts in the role July 12, replacing Karl Randall, who retired earlier this year, according to a county news release. Bush is the first Cheryl Bush woman to head up management of the airport in Waterford Township, the release said. Most recently, she was general manager of Signature Flight Support in Grand Rapids and a managing member of Commerce Township-based Adieu Consultant Services LLC.

July 3, 2017

PONTIAC

ACLU

million square feet, 9.9 percent of which is vacant, and the average rent is $19.75 per square foot; the Bloomfield Hills area has 3.03 million, 7.9 percent of which is vacant, and the average rent is $23.34, according to Newmark Grubb. All told, the Williams International and United Shore investments are expected to be almost $415 million: $334.5 million for the defense contractor and $80 million for the mortgage lender. Williams International has about 500 Michigan employees with plans to hire about 400 more; United Shore has 2,100 employees currently and expects to have 2,350 by the time it moves to the 600,000-square-foot Hewlett Packard Enterprise building at 585 South Blvd. next summer. It plans to hire 200-400 per year for the foreseeable future, said Mat Ishbia, its president and CEO.

after the election, emailing petitions and updates around 13 major causes including immigration and abortion access and testing direct-mail approaches. The ACLU of Michigan is in the midst of developing ways to engage volunteers and retain members and new donors, Moss said. Among them, it plans to look for opportunities to engage new members and supporters on actionable issues such as voting rights through things like legislative visits, online action alerts and local house parties and forums. It also plans to ramp up its storytelling, of both successes and defeats, through quarterly mailings and social media platforms. “It’s a wonderful challenge, a wonderful opportunity. ... It doesn’t come around very often, so how do you do that well?” But the current demand is unprecedented. Last month, the ACLU of Michigan and a team including Miller, Canfield, Paddock and Stone PLC attorneys, local and national ACLU staff and a University of Michigan law professor were in court to fight the deportation of 114 local Iraqi nationals who were detained the second weekend in June as part of a national sweep of 200 people by the federal Immigration and Customs Enforcement agency. Within 24 hours of being asked by community leaders, the ACLU assembled the team and filed a class-action lawsuit in U.S. Federal District Court in Detroit to halt the federal Immigration and Customs Enforcement from deporting them and to secure an individual hearing for each. While the government claimed those detained are criminals, the ACLU suit argued each person is enti-

FROM PAGE 1

One location Williams International, currently at 2280 E. West Maple Road at Welch Road, has been exploring a relocation from Commerce Township, where it has made its home base for decades, for months. Crain’s reported in March that the company was considering moving to the Michigan Motion Picture Studios building at 1999 Centerpoint Parkway. A deal approved last week by the Michigan Strategic Fund gives Williams a $4 million performance-based grant and a 15-year state Renaissance Zone designation for the property. The company — a developer and builder of small gas turbine engines for cruise missiles, planes and drones — is also buying vacant land totaling about 120 acres and the nearby building at 2001

FROM PAGE 3

A rendering of the United Shore plan for the 600,000-square-foot Hewlett Packard Enterprise building at 585 South Blvd. next summer. Centerpoint for expansion, which is expected to create 400 jobs by 2022. The adjacent vacant parcels are intended to support a future 800,000-square-foot to 1 millionsquare-foot factory within six or seven years to make new products. The company had $11.5 million in U.S. Department of Defense contracts in 2015 and $16.4 billion last year. It began in 1955 after Sam Williams, its founder, left Chrysler Corp. as an engineer and started the company using $3,000 in savings. Less than five years ago, United Shore purchased its current 275,000-square-foot building at 1414 E. Maple Road in Troy for $3 million from New York-based Lehman Bros. Holdings Inc., according to CoStar Group Inc., a Washington, D.C.-based real estate information service. It is paying $40 million for the Hewlett Packard building and plans $40 million on improvements. According to Ishbia, the Troy building is not large enough to accommodate planned future growth. “We have this building and we are bursting at the seams,” he said. “We are not the type of company that puts 500 in one building and 500 in another. It’s important to our culture and team” to be in one location. United Shore had about $687 mil-

lion in revenue last year and projects over $1 billion this year, Ishbia said.

Silverdome demolition It’s not just the big relocations and investments like Williams International and United Shore that are making a splash in Pontiac, which for years had suffered from disinvestment, poor public services and a financial emergency. In fact, even demolition is a sign of momentum as the process of razing the dilapidated Pontiac Silverdome is expected to begin this summer. Compuware Corp. founder Peter Karmanos Jr. announced last year he was moving three of his Mad Dog Technology LLC firms into the Riker Building downtown. Pontiac-based general contractor George W. Auch Co. also plans to build a 20,000-squarefoot headquarters downtown. Following a $20 million renovation of the former Strand Theatre, the Flagstar Strand Theatre for the Performing Arts opened this year, as did the nextdoor Slows Bar BQ. The M1 Concourse also opened this year, with additional phases of development to follow. “This allows us to finish changing the narrative,” Gibb said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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tled to a hearing to determine if they should be deported and to give those detained — many Chaldean Christians — the opportunity to prove that they could face torture and death if they are returned to Iraq. “For many of the people picked up the criminal conviction was minor and years ago,” Moss said, for offenses here in the U.S. including writing bad checks or driving under the influence. The case sparked a protest outside of the Detroit courthouse before a June 21 hearing and coverage in national media. U.S. District Judge Mark Goldsmith halted the deportation of the Iraqis for at least two weeks the following day, as he decides whether he has jurisdiction over the matter. Last week, he expanded the order nationwide. It’s the latest high-profile case the ACLU of Michigan has filed. Earlier this year, it challenged President Trump’s executive orders blocking and limiting refugee admission from many Muslim countries and temporarily halting the refugee resettlement program. And last year, an investigative reporter it hired, Curt Guyette, ended up helping to uncover the tainted water crisis in Flint. The ACLU of Michigan is taking a cautious approach to growth, Moss said. It’s investing the roughly $1 million in new revenue it projects for this year to expand its team of 23 by nine people. About half the new hires will be temporary. Among the planned hires: people to work on voting rights, a federal civil rights litigator, a public engagement strategist to manage volunteers, a communications strategist and an immigration attorney to address the rise in deportations and ICE raids and to engage volunteer lawyers.

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SOCIAL FROM PAGE 1

Social media is many things for pro athletes: A series of platforms for personal brand-building, a way to directly reach fans and other celebrities, a method to promote charity work and a tool to endorse products. So the more followers, the more reach, and more reach means more money for the player and potentially more product moved for the brand. Some athletes choose to largely ignore social media. Those atop the Crain’s index do not. For example, Verlander on June 17 posted a photo of his Lamborghini with a message promoting Firestone’s automotive service centers. The post had the hashtag #ad to denote it was a paid promotion, and it had more than 6,300 likes and nearly 50 comments. Drummond promotes a burger chain, and Cabrera lately has been posting about his own snack food line. How much do these guys earn for peddling products on social media? Details about the local athletes aren’t available, but some general terms show that it can be a nice payday. A sports star with 3 million to 7 million followers can charge $75,000 for an Instagram post or $60,000 for a tweet, according to a report from The Economist reported in 2016 based on data from social analytics and brand firm Captiv8. Other platforms are even more lucrative: $187,500 for a post on YouTube or $93,750 for a post on Facebook. It doesn’t appear that Detroit’s team sports stars have reached that compensation level yet — they’re a long way from the type of reach that global sports stars can deploy for a brand. The monthly global athlete social media engagement index published by Solana Beach, Calif.-based Hookit.com shows only two Michigan-linked athletes in the top 100: Former University of Michigan quarterback Tom Brady, now of the New England Patriots, at No. 67 for total followers with 6.9 million and Olympic multi-medalist Michael Phelps, who trained at UM but didn’t swim for the Wolverines, at No. 46 with 14.4 million followers. The list also tracks interactions, posts, and other data based on an athlete’s Twitter, Instagram, and Facebook use. Atop the rankings is global soccer star Cristiano Ronaldo, who is approaching 300 million social media followers, and brands such as Nike, Castrol, KFC, and Tag Heuer paid him $35 million last year to endorse their products in various campaigns that included social media posts. Why such spending? One marketing industry insider explained: “Third-party endorsement from credible sources is something that brands and their agencies covet these days,” said Bob Williams, CEO of Evanston, Ill.-based Burns Entertainment & Sports Marketing Inc., which represents companies that want to hire athletes to endorse products. In the past, Burns has brokered deals involving Detroit stars such as Barry Sanders, Isiah Thomas and Kirk Gibson. One of the reasons brands love to use athletes and celebs to peddle their wares on social media, especially with hashtags and links, is the immediate trove of data available. The ROI can be

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

Detroit Athlete Social Media Power 25 The top local athletes ranked by their total followers on Twitter and Instagram Name

Team

Andre Drummond Pistons

Twitter

Followers

Instagram

andredrummond

1,205,939 andredrummondd 1,109,211 miggy24

Followers

Total

781,346 1,987,285

Miguel Cabrera

Tigers

MiguelCabrera

Justin Verlander

Tigers

JustinVerlander

1,420,404 justinverlander

746,643 1,855,854

Golden Tate

Lions

ShowtimeTate

298,406 showtimetate

179,450

477,856

Stanley Johnson

Pistons

iamsj

66,784 omostanimal

315,573

382,357

Daniel Norris

Tigers

DanielNorris18

95,656 danielnorris18

187,806

283,462

96,893

272,413

262

263,639

111,732 tomastatar_21

140,129

251,861

131,704

231,038

368,483 1,788,887

Ameer Abdullah

Lions

Ameerguapo

175,520 ameerguapo

T.J. Lang

Lions

TJLang70

263,377 tjlang70

Tomas Tatar

Red Wings Trto90

Reggie Jackson

Pistons

reggie_jackson

99,334 reggie_jackson

Justin Upton

Tigers

JUST_JUP

221,521

Reggie Bullock

Pistons

reggiebullock35

79,695 y0bull

120,772

200,467

Dylan Larkin

Red Wings Dylanlarkin39

44,634 dylanlarkin71

148,145

192,779

J.D. Martinez

Tigers

JDMartinez14

61,339 jdmartinez28

125,822

187,161

Marcus Morris

Pistons

mookmorris2

65,934 foestar13

107,769

173,703

Tobias Harris

Pistons

tobias31

91,804

158,449

Eric Ebron

Lions

Ebron85

103,201

151,417

Brad Kaaya

Lions

kaaya323

100,178 kaaya

46,671

146,849

Jose Iglesias

Tigers

JoseIglesias_SS

48,532 joseiglesias_ss

91,018

139,550

Mike Green

Red Wings GreenLife52

101,714 mikegreen25

35,277

136,991

Taylor Decker

Lions

TDeck68

82,342 __tylerdexter

41,375

123,717

Marvin Jones Jr.

Lions

MarvinJonesJr

44,988 marvinjonesjr

72,254

Mikie Mahtook

Tigers

MikieMahtook8

114,401

Justin Abdelkader Red Wings justinabss Jared Abbrederis

Lions

abbrecadabra

66,645

221,521

tobiasharris

48,216 ericebron

117,242 114,401

75,201 justinabdelkader8 64,955 abbrecadabra

37,531

112,732

37,496

102,451

Source: Accounts provided by the teams. Follower totals as of June 1-8.

DETROIT TIGERS

Detroit Tigers slugger Miguel Cabrera is second on the list. measured via real-time analytics, whereas measuring effectiveness of broadcast and print campaigns takes time and sometimes guesswork. “That’s one of things that brands love about social media is the more immediate and definitive results,” Williams said. Social media also is one direct path to the most coveted demographic for many brands: millennials. The data backs up the thinking behind using athletes and celebs on social media: Forty-seven percent of all millennial consumers use social media as part of how they spend while just 19 percent of non-millennials use such platforms, according to a 2015 Deloitte study on consumer spending. A variety of sources put millennial annual consumer spending at $200 billion to $600 billion. Another factor for brands: Many athletes are non-white, and that’s another sweet spot for marketers because 42 percent of millennials are of African American, Asian American or Hispanic heritage — and they rep-

DETROIT TIGERS

Detroit Tigers pitcher Justin Verlander is third on the list.

resent $65 billion in annual consumer spending, according to a January report from Nielsen. Millennials are savvy, insiders say, so just posting a photo of a product isn’t often enough, said Sam Tilton, CEO of Hookit.com. The firm, which connects athletes to brands, has done work with Andre Drummond and several prominent Detroit Lions such as tight end Eric Ebron and running back Ameer Abdullah. “We always stress how engagement is the currency of social media versus making assumptions around impressions, eyeballs or potential followers who may have seen a post. Engagement is tangible action that can be effectively measured,” he said. Hence, you increasingly see athletes talking to each other on social media about a product, or involved in content beyond just a “buy this widget” caption. Drummond’s Halo Burger post used the #TagAFriend hashtag to get fans to link their friends to the post, and increase its reach. Data from Hookit.com that shows that Drum-

mond’s typical social media post — he made 834 of them — drew an average of 5,100 user interactions (comments or video views) over the past year. By contrast, a bigger star like Miguel Cabrera averaged more than 21,000 interactions, data shows, and Ronaldo in May alone had 193 million interactions on 106 social media posts. The athlete-brand relationship is a two-way street beyond an endorsement check, said Tim Smith, owner of Skidmore Studio, a Detroit-based marketing firm that focuses on millennial branding. “We’ve found that athletes are ideal to endorse products or services using their social channels — as long as the products or services they endorse are seen as authentic reflections of their own brand perception and reflect what would likely be their own purchasing habits,” he said. Skidmore did work in recent years for Flint-based Halo Burger chain, and Drummond was part of that effort. His March 18 Instagram post for Halo Burger, which used a text-based

promotion for a ticket giveaway, drew nearly 7,300 likes and 72 comments. Drummond, who is just 23 despite having already played five seasons for the Pistons, can be viewed as a near ideal endorsement figure for a brand. “Andre is a big name in Detroit, has a loyal and strong social following and the Halo target audience is a really good fit,” Smith said. “Athletes in general also tend to have a tremendously high following in terms of sheer numbers and thus can impact a real influence. These athletes also tend to be in the millennial age range which means they are already in the social media space.” “So, the language they use, the way the communicate and use the channels, and the tone they strike is easy for the target audience to consume. The athletes are users of the social media, so they create content that is naturally consumable.” Of course, brands are at the mercy of these young people, too. A misguided tweet, errant racy photo or arrest mugshot can wreck a social media campaign in seconds. “With social media in general, it’s far less controllable from a brand’s perspective,” said Williams. “Increased reward comes with increased risk.” Sports stars are getting increasingly sophisticated in their social media endorsement work. The candid photos of family, pets, and games remain, but now handlers often are running the accounts and uploading content that comes from professional agencies. “(Athletes) have always been at the focus of sports content, but only now do they have the power to distribute and monetize it,” said Sam Weber, marketing coordinator for Lincoln, Neb.-based Opendorse. com, another firm that links athletes and brands. “But to really win, athletes need to act like media companies. They need to share content that grows and engages their audience — think high quality multimedia, authentic, and personable content.” It isn’t always clear when an athlete is being paid to post online about a brand they’re being paid to endorse versus a post that is simply a player freely touting something, or thanking a brand for free swag — although it’s supposed to be clear under Federal Trade Commission rules. The brand gets some level of marketing value either way. The Lions’ Golden Tate, for example, thanked newish golf lifestyle brand G/Fore in a Feb. 4 Instagram post for a batch of hats they sent him. The post drew more than 1,000 likes. At Christmas, he posted a photo on Instagram of himself holding a pair of personalized video game controllers from Scuf Gaming and he wrote: “Huge shoutout to @scufgaming for my custom controllers. If you are looking to take your gaming to the next level you gotta check out their products!” Absent from the list is Tate’s teammate, the one athlete with the potential to top them all: Lions quarterback Matthew Stafford. The veteran passer deleted his @Staff_9 Twitter account some time ago, opting for online privacy instead of wading into the social media universe where everyone is a fan or critic, and sometimes both. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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

KEY

FROM PAGE 1

this far, none of us knew ... it’s been a grueling, winding road. And it’s not over.” That road mostly included the sky for Perkins, who walks with all the confidence of a deal closer, but his eyes reveal the exhaustion of nearly a year spent in business class alongside CEO Jason Luo; Ron Feldeisen, senior vice president of global sales and marketing; and a group of advisers. The group logged hundreds of hours inflight on more than two dozen trips to Takata’s headquarters in Tokyo and New York for negotiations. Once on the ground, Perkins and company pitched Key Safety to an audience of roughly 100 that included Takata’s executive team, including the Takada family, fourteen automakers, and Takata’s expansive group of legal and financial advisers. “The sheer magnitude of the room ... we were put on this big stage in front of the customer group, Takata management and advisers to show them what we had planned,” Perkins said. “In all my years in this business, it was unsettling in a way I’ve never seen.” The power brokers gathered because the Takata situation was, and still is, dire. The company’s malfunctioning airbag inflators, which have sent shards of metal into drivers and passengers and are linked to at least 17 deaths globally, have plagued it for more than eight years. With pressure mounting, the 84-

URBAN FROM PAGE 3

Bounded by Woodward Avenue to the west, Eight Mile Road to the north, railroad tracks to the east and State Fair Avenue to the east, construction on the project could begin in the spring, said Christopher Stralkowski, executive project manager for Ferguson’s Lansing-based Ferguson Development LLC. “The original plans were a suburban development in an urban setting — a sea of parking, mid box, big box, outlot stores,” Stralkowski said. “You go there and do your grocery shopping, go to Lowes, get a cup of coffee at Starbucks. (Cox) took a site plan and really energized the plan. He created an urban retrofit.” Developments of this scale take time, Marvin Beatty said during a tour of the site last month, noting that the Gateway Marketplace development immediately to the north, which has the city’s first Meijer Inc. store, took about eight years; and that the former J.L. Hudson’s department store site on Woodward Avenue downtown remains vacant, even though Rosko Development LLC, which is tied to Dan Gilbert, was awarded development rights to the 2-acre parcel as part of the incentive package to move his Quicken Loans Inc. downtown from the suburbs in 2009 (the move occurred in 2010). “The development plan for this proposal significantly changed from what was originally presented, based on a collaborative design process with the City of Detroit Planning Department,” said Glen Long Jr., interim

CEO Jason Luo and Joseph Perkins, senior vice president and CFO of Key Safety Systems, which spent nearly a year negotiating to buy Takata. JACOB LEWKOW

year old Takata filed for bankruptcy protection in Japan and its U.S. subsidiary, Auburn Hills-based TK Holdings Inc., filed Chapter 11 in Delaware on June 25 in a prepackaged agreement to sell to Key Safety. “We were facing a severe situation and we weren’t able to wait any longer,” Takata Chairman and CEO Shigehisa Takada said at a briefing in Tokyo on Monday, Bloomberg reported. The 51-year-old executive, whose family has run the company over multiple generations, will step down when Key Safety takes over, expected in the first quarter of 2018. “Everyone told us it was impossible for us to be selected,” Luo said. “But everyone was looking at this deal the

The current plan According to Christopher Stralkowski, executive project manager, Lansing-based Ferguson Development LLC, current estimates for the usage mix at the fairground property include: n 1.1 million square feet of anchor retail space. n 250,000 square feet of historic rehabilitation. n 136,000 square feet of other retail. n 45,000 square feet of office space. n A transportation hub. n 156,000 square feet of commercial space. n 55,000 square feet of entertainment space, including a movie theater. n 100,000 square feet of medical office space. n 240,000 square feet of educational space. n 975,000 square feet of residential space, which amounts to almost 700 apartments, townhomes and stacked flats.

president and CEO of the Detroit Economic Growth Corp., in a statement. “In the fall, the developer presented the updated plan to the community for feedback and comment. As a result of that process, the developer needed to conduct additional due diligence to determine the most appropriate phasing for infrastructure and

traditional way. We told them we’re here to make a decision on not what’s going to happen next month or next year, but much further in the future. We’re here to work together to restore the reputation of (automotive) safety.” Takada called Key Safety “the ideal sponsor” when the deal was announced, but the supplier was far from ideal at the start of the negotiations last summer. Key Safety was bought by China’s Ningbo Joyson Electronic Corp. in a $920 million deal only days before Takata began negotiating with potential buyers. Historically, Japan and China have a long history of competition and sometimes hatred, and foreign acquisitions, particularly by a vertical construction, based on site, economic, and current market conditions. Detroit Economic Growth Corporation (DEGC) is monitoring the developer’s progress adapting to the new requirements. When the developer completes its new plans, it will present them to DEGC and the City for additional review and evaluation.” A message left for Cox was not returned, but developers have been open about how Cox’s hands-on approach has affected projects in the city. “He has absolutely pushed developers to step up their design game,” Sonya Mays, CEO of Develop Detroit, a nonprofit housing developer, told Crain’s when Cox was named a Change Maker last month. “ … He’s been pretty forthright about his expectations and his vision.” Gov. Rick Snyder transferred the state fairground site to the Fast Track Authority board in April 2012. The authority still owns the site, but Magic Plus LLC has development rights to it. Ferguson is a member of the Michigan State University board of trustees and owner of Ferguson Development. Beatty is chief community officer for Greektown Casino-Hotel and an investment partner in Dan Gilbert's planned 8.4-acre mixed-use development in Detroit’s Brush Park neighborhood called City Modern with approximately 400 residential units. NBA legend Earvin “Magic” Johnson is also part of the development group. He played 13 seasons for the Los Angeles Lakers and attended Michigan State University. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Chinese company, are as rare as a Japanese white strawberry. “A Chinese company buying a Japanese company was a major cultural gap we had to work through,” Perkins said. “But ultimately, our businesses go together. It’s intuitive ... and that’s hard to ignore.” And Key Safety had an X-factor in Luo. Luo’s family hails from Manchuria, a region in Northeast China controlled by the Japanese until the end of World War II. His father spoke Japanese and worked on the Japan-owned South Manchuria Railway. “I understand a lot about Japan,” Luo said. “I can speak to the food, the culture, the way they do business. To make a deal, you have to communicate and understand how (the other side) is thinking. This shortened the distance between us. The cultural gap was almost not there.” But the linchpin to winning the deal was Key’s ability to win over Takata’s customers with its promise to maintain the business, preventing an interruption to the supply chain. Key Safety’s management vows to maintain Takata’s 45,000-person employment base, with the exception of its problematic ammonium nitrate airbag inflator business, which is expected to end operation after the sale. The acquisition will make Key Safety one of the largest players in the safety market, with more than 60,000 employees in 23 countries and more than $3 billion in revenue. Matteo Fini, director of supplier relations for Southfield-based IHS Markit, said the combined entity keeps

17 open a choice for automakers. “While the OEMs don’t have a crazy amount of choices, the combined entity could be a serious challenger in both areas,” Fini said. While Takata’s airbag inflator market share has plummeted — analysts project it to drop to 5 percent in 2020 from 22 percent in 2015 — competitors Autoliv, Daicel, ZF TRW and Key Safety have picked up the slack. Key Safety plans to boost inflator production by more than 30 million units to about 60 million units by 2020, which may grow with the addition of Takata. But it was never Takata’s airbag business that Key Safety lusted after. It was seat belts — which accounted for 33.5 percent of Takata’s $6.6 billion in revenue in 2016. “We’re already an airbag company. Seat belts are key to our growth,” Feldeisen said. Connections are the silver lining to the months spent traveling, Perkins said. “What we learned was, even if we weren’t selected, we were building our brand, which wasn’t incredibly wellknown, with OEMs in Japan, Detroit and Europe,” Perkins said. Yet, potential pitfalls remain — including legal disclosures, intellectual property hurdles, regulator oversight and further financial details. “We hit a big milestone, but there’s a lot of work to do,” Perkins said. “We’re not going to screw this up now; we’re in too deep.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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

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“While we feel good about the quality of your training experience, we also feel good that nearly half of you are establishing your practices in Michigan and most of you will be working in medically underserved areas. This is exactly what the teaching health center program is about,” said Chris Allen, Authority Health’s CEO, in an address to the 2017 class. Approved initially in 2012 through a $21 million grant from the Affordable Care Act, Authority Health has four primary care specialties — family medicine, pediatrics, internal medicine and psychiatry — and a geriatric fellowship program. The GME teaching health center program is co-sponsored by MSU’s osteopathic medicine school. In 2013, when the Authority Health GME program began, only 30 percent of medical students came from Michigan. This year, 60 percent are from Michigan, a number that vastly increases the chances more will stay in the state after their training, helping to alleviate the state’s primary care physician shortage, he said. “The program was new and nobody knew much about it, so we accepted people from all over the country. As word has gotten around, more students in Michigan want to stay close to home,” Sealey said. “We want to train students from the area and put them back in to our communities. Some students from other states train here and as they learn about Detroit, they want to stay here.”

Practicing in Michigan After sifting through more than a dozen job offers, Khogali-Jakary said she agreed to practice at the Oakwood Health Center, which is part of Molina Healthcare of Michigan, the state’s second-largest Medicaid health plan with 391,000 members. She starts work in September. “I am very surprised” to be working at a health plan, she said. “But I am very excited about what they stand for. In my mind they are serving the underserved. These are people who don’t have access to health care like private insurance. ... We are taught to offer comprehensive care.” Born in Sudan, Khogali-Jakary moved to Lansing with her family when she was 6 years old. “It’s always been my dream to go into medicine,” she said. “I was the oldest of four kids. We were immigrants. ... We lived in communities like where I am serving now. It is very important for me to give back to the communities that gave me so much.” Abood, who was born in Missouri, moved with his family to Michigan in 2003 and graduated from Michigan State University, didn’t go on many interviews the past few months as he was winding down his medical training. He knew he wanted to start his practice in geriatrics at a clinic where he could spend more time with patients. So, Abood accepted the job with ConcertoHealth, an Irvine, Calif.-based primary care clinic operator with four clinic sites in Southeast Michigan, including the one in New Center where he will practice.

Training doctors

Number of teaching hospitals and other residency program sites in Michigan.

7,200+

The number in training in residency programs, the seventh-largest number in the nation.

12%

The percentage increase in primary care physicians Michigan may need by 2030, according to Citizen Research Council of Michigan.

“I was familiar with Concerto because I did a month there and you can spend more time with patients,” said Abood, noting that Concerto specializes in complex patient populations who are primarily on Medicare and Medicaid. “I was looking for a place like Concerto,” Abood said. “If a patient is not receiving care as they should be, with multiple hospital admissions, they send them to us.”

Big business Graduate medical education is big business in Michigan with more than $1 billion in state and federal funds going to the state’s 88 teaching hospitals. Medicare funds about $850 million and Michigan’s Medicaid program funds about $163 million. The past several years the Legislature has considered ending Medicaid residency funding. The state also has the nation’s seventh-largest number of residents with more than 7,200 in more than 200 hospital and other residency programs. Nationally, 1,100 teaching hospitals train about 110,000 residents and fellows each year at a cost of about $14 billion. Additional funding for residents come from hospitals, donations and grants. In 2013, Southeast Michigan’s top three hospitals for total GME payments received were University of Michigan with more than $129 million, Henry Ford Hospital in Detroit with $96.2 million and Beaumont Hospital in Royal Oak with $57.8 million, according to a 2015 analysis by Crain’s. At UM, about 300 residents complete their training each year with about 310 incoming interns, a number that has been growing at an annual 4 percent clip based on clinical and program needs, said Joe Kolars, M.D., UM’s senior associate dean for education and global initiatives. Overall, UM has about 1,407 residents and fellows in training in 105 programs, the largest in Michigan. About 33 percent of its residents come from Michigan and about 50 percent of its medical students, Kolars said. Only about 5 percent of its residents are international medical graduates. “We have a little lag time, but the most recent numbers last year is 42 percent stay in Michigan. It has been increasing, not dramatic but an uptick in the numbers,” said Kolars, adding that UM has been beefing up its primary care programs the past several years.

Shortage easing? On July 1, as hundreds of medical school graduates start their three- to seven-year hospital and clinic residency programs, almost simultaneously hundreds of other residents in Michigan have completed their training. There also appears to be a slight uptick in residents staying in the state after their training ends, several experts told Crain’s, although no hard survey data exists. Many residents like Khogali-Jakary and Abood who completed their training are off to join the full-time physician workforce in Michigan. Others will continue their training in a subspecialty fellowship or second specialty residency program either in Michigan or another state, Sealey said. But most of the young physicians going into practice in Michigan are expected to help replace some older doctors who are nearing or at retirement age. They will help ease the predicted coming shortage of physicians, especially in primary care. On the 11 other residents at Authority Health who decided to leave Michigan or continue their training elsewhere, Khogali-Jakary said she believes some of her friends will return to Michigan. “The majority are interested in serving the communities they trained in.” Sealey said the goal of Authority Health’s teaching health center residency program was twofold. First, to contribute to the effort to reduce the estimated 2,000 shortage of primary care physicians in Michigan. Second, to provide skilled medical practitioners to care for an expanded Medicaid population under Obamacare and alleviate access problems through community health clinics. Because of an aging population, retiring physicians and Medicaid and private insurance expansion, Michigan may need 12 percent more primary care physicians by 2030 than the 16,200 it currently has, according to a 2015 report by the Citizen Research Council of Michigan. Atul Grover, M.D., executive vice president with the Association of American Medical Schools, said data show the primary care shortage does appear to be easing — especially in states like Michigan that have expanded medical school enrollment and have large residency programs — but worsening for some specialty services like surgery, dermatology and oncology. “There has been an increase in the proportion of primary care physicians. We still have shortages, but smaller than in the specialties,” Grover said.

By 2030, however, the U.S. is projecting a shortage of 60,000 to 100,000 physicians, with primary care shortfalls pegged at 35,000, the AAMC said in a recent workforce report. But in 1997, Congress capped federal funding of residency positions to slow the federal deficit. Hospitals such as the University of Michigan, Henry Ford and Beaumont self-fund residency positions when they exceed their cap, which differs from hospital to hospital. Currently, the nation’s teaching hospitals are 13,000 residents over the federal funding cap. UM currently is about 240 residents over its cap, Kolars said. Current bills in the U.S. House and Senate call for expanding graduate medical education funding through Medicare by 3,000 additional residents annually for the next five years. Most experts are pessimistic about the chances for Congress this year to spend $1 billion on 15,000 resident doctors, regardless of the need. But because teaching hospitals hire only about 27,000 first-year positions, about 9,000 medical school graduates each year fail to match in a residency program. Many try the next year, but a large number go into other fields with six-figure student loans to pay off. “If we don't get the cap raised,” Grover said teaching hospitals will continue to match only about half of the U.S. IMGs, or about 2,500. “We need more doctors and adding 3,000 per year will help make a dent” in the projected shortages, he said. In Michigan, a 2015 federal report concluded that there are 299 physician shortage areas in the state and that Wayne, Chippewa, and Montcalm counties have the highest number of shortage areas in the state, according to the U.S. Health Resources and Services Administration. Creating greater access to care for patients and addressing the shortage of primary care physicians are the two main problems the Authority Health teaching health center program seeks to address, Sealey said. Primary care specialties include pediatrics, family medicine, obstetrics and gynecology, internal medicine and psychiatry. While most residency programs are incorporating more community medicine into their curricula, Sealey said Authority Health does more because it is designed as a teaching health center program. “When I was in training I would come in the back door of the hospital, stay on duty for two days and when I was done go back out the door and go home. I wouldn’t stay in the community,” Sealey said. “Our program really is a reversal of that.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: American Civil Liberties Union of Michigan 3

Henry Ford Hospital

Authority Health

ITC Holding Corp.

Magic Plus LLC

Beaumont Health Foundation Beaumont Health System

5, 18

Molina Healthcare of Michigan

3 18

Detroit Lions

Strength Capital LLC

Detroit Pistons

United Shore Financial Services LLC

Detroit Red Wings

University of Michigan

Detroit Tigers

Williams International Co. LLC

18 1

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

THE WEEK ON THE WEB

MONTH JUNE 23-29 | For more, visit crainsdetroit.com

Amazon gets $5 million grant for Romulus facility

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

he Michigan Strategic Fund approved a $5 million grant for Amazon.com’s planned $140 million package fulfillment center in Romulus — the second state subsidy for the world’s largest online retailer in the past seven months. Amazon is promising to create at least 1,600 new jobs, but needed state assistance to help pay for “substantial road and other infrastructure improvements,” according to a Michigan Economic Development Corp. memo to Strategic Fund board members. The company plans to use 84 acres north of Detroit Metropolitan Airport, bounded roughly by Smith, Vining and Ecorse roads — with quick acccess to I-94. “That’s the attractiveness of this site — it’s less than a quarter of the mile from the building and they’ll be on a major east-west highway,” said Rob Luce, executive director of the Detroit Region Aerotropolis Development Corp. When it opens, the facility will be Amazon’s third in Wayne County, after a distribution warehouse under construction in Livonia. Together, the two fulfillment centers are expected to create about 2,600 jobs in the county. Khalil Rahal, Wayne County's economic development director, said $13.5 million in infrastructure work will include expanding Vining Road — it currently ends south of Ecorse — and widening Ecorse Road. Wayne County’s aerotropolis district plans to create a tax-capturing district in the footprint of the Amazon facility that will capture 50 percent of the company’s 6-mill state education tax to dedicate $7 million over 15 years to paying for the infrastructure improvements, Luce said. Luce said the city of Romulus plans

$5 million

The amount new superintendent Nikolai Vitti aims to save Detroit Public Schools Community District by cutting more than 70 jobs.

400

The number of jobs Williams International Co. LLC plans to create when it moves its headquarters from Commerce Township to a former movie studio in Pontiac.

85 percent

The reduction in energy costs Downtown Boxing Gym Youth Program expects to see per year with a new renovation project.

to issue $13.5 million in bonds to pay for the improvements to the roads and street signals along Ecorse Road from Wayne Road to Middlebelt Road.

BUSINESS NEWS A large portion of the century-old former Budd Wheel plant on Detroit’s east side was imploded to expand a new vehicle shipping logistics hub adjacent to FCA US LLC’s Jefferson North Assembly Plant. J NextEnergy’s second NextChallenge: Smart Cities competition to take place in December will offer up to $100,000 to innovators who suggest technology-focused solutions to problems created by rising urban populations. J The city of Trenton got approval for a $3.2 million loan from the Michigan Strategic Fund to purchase the former J

Dan Gilbert is proposing a different 13-acre site in Detroit to house a new consolidated criminal justice complex for Wayne County that would help pave the way for a Major League Soccer stadium and three high-rises downtown. The change in proposals came last week as Walsh Construction also submitted its plan to complete the half-built Wayne County Consolidated Jail on Gratiot Avenue at I-375. The site is generally bounded by the Chrysler Service Drive, East Warren Avenue, East Ferry Street and Russell Street.

McLouth Steel site, which has been an eyesore for the community for 24 years. J The Ferndale Brownfield Redevelopment Authority received approval of a $2.4 million local and school tax capture to help Wolf River Development LLC deal with asbestos and demolish three blighted structures for a four-story, mixed-use development downtown. J Autoliv ASP Inc. plans to invest $22.6 million to consolidate four Southeast Michigan operations into one location in Southfield. J The Kroger Co. plans to open a nearly $25 million dry-goods distribution center in Chesterfield Township with a $2.1 million performance-based grant from the Michigan Strategic Fund. J Radio One Detroit has sold its WCHB AM 1200 NewsTalk station, and “The Mildred Gaddis Show” — a staple of the station — is moving to WPZR 102.7 FM. J The Detroit Regional Convention Facility Authority extended SMG’s contract to continue its management of Cobo Center for another three years in a deal worth $1.2 million. J Investor and AOL co-founder Steve Case will travel to Ann Arbor to hand a startup $100,000 as part of his 2017 Rise of the Rest tour. J The vice president of corporate communications for Dan Gilbert’s Jack Entertainment LLC, Gayle Joseph, is leaving to return to her own marketing firm, the gaming company announced.

OTHER NEWS The Michigan Opera Theatre and Detroit Tigers are collaborating on a yearlong project called Take Me Out to the Opera that highlights the roles the arts and sports have played in improving race relations. J An attorney for Detroit’s Downtown Development Authority asked a federal judge last week to toss a lawsuit seeking to block taxpayer support of the Detroit Pistons’ move back to the city on grounds that serial litigant Robert Davis had no right to sue in the first place. Attorney David Fink said Davis had not cast a ballot in the primary election in question. Davis told Crain’s he did vote in the primary. J A bill under consideration in the Michigan Senate would rename a section of Woodward Avenue near Comerica Park after Mike Ilitch. J Eastern Michigan University is increasing undergraduate tuition by 3.9 percent after its board of regents voted unanimously to approve the hike. J In another move last week, Eastern Michigan University named Scott Wetherbee, a 42-year-old native of Kalamazoo, as its new athletic director. J Detroit Public Schools Community District hosted a job fair last week, looking to fill 100 teaching positions across all grade levels and disciplines. J Fireworks in downtown Detroit last week with a theme of “Detroit! Right Now!” featured new technology that enables the creation of longstanding letters in the sky. J

RUMBLINGS

CNN (VIA @JOSH_FRYDMAN ON TWITTER)

President Donald Trump called Quicken Loans chairman Dan Gilbert “ a great friend of mine” during Gilbert’s impromptu appearance with the Chicago Cubs at the White House.

Gilbert gets pulled into Trump-Cubs photo op Detroit businessman Dan Gilbert surfaced at the White House on Wednesday in the middle of a reception President Donald Trump was having for the Chicago Cubs, honoring the baseball team's 2016 World Series championship. In the middle of the meet-andgreet, Trump looked around the room and repeatedly asked: "Where's Dan Gilbert?" Gilbert, owner of the Cleveland Cavaliers, came into the Roosevelt Room for photos with the Cubs — immediately setting off social media speculation that the Detroit billionaire might be eyeing a baseball team. But Gilbert quickly tamped down the speculation. On Twitter, the Quicken Loans chairman and Detroit real estate developer said he met with Trump to update the president and his team on "progress & challenges" in Detroit and Cleveland. Gilbert later tweeted he would have preferred to have been celebrating a Cleveland Indians victory

instead. "Being drawn into @Cubs visit was quite interesting...," Gilbert said. Trump called the fellow billionaire a "great friend of mine, a supporter, a great guy." Gilbert donated $750,000 to Trump's inauguration after not financially supporting the New York billionaire real estate tycoon during the presidential election last year. Cleveland.com reported Wednesday that Gilbert was joined at the White House with Jay Farner, CEO of the Detroit-based mortgage company. Gilbert released a statement about the visit. "Today we met with President Trump to update him and his team on the positive transformations that are taking place in Detroit and Cleveland. We also informed the President of some of the existing challenges that remain, as well as opportunities to solve them through public/private cooperation and/or partnerships," Gilbert said in a statement.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

The former Budd Wheel plant at 12141 Charlevoix St. on Detroit’s east side was imploded at 6:30 a.m. June 24 by Crown Enterprises Inc., the real estate development arm of trucking mogul Manuel “Matty” Moroun’s companies. It will make room for an expanded logistics center near FCA US LLC’s Jefferson North Plant.

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