Crain's Detroit Business, Aug. 7, 2017 issue

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AUGUST 7 - 13, 2017

Minor league finds major success with technology.

Garden Fresh founder to offer preservation technology to other companies.

USPBL evaluates pitchers with software. Page 4

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Workforce

Old fines strand drivers, crimp region’s workforce

By Chad Livengood clivengood@crain.com

Tens of millions of dollars in traffic fines that lawmakers began phasing out five years ago continue to haunt Michigan drivers and are blamed for putting a crimp on the Detroit region’s workforce. State data shows more than 113,000 drivers statewide owe nearly $147 million in Driver Responsibility Fees, a widely unpopular system of fees, amounting to a state tax on traffic tickets, that keeps people from

By Dustin Walsh dwalsh@crain.com

Three years ago, the concept of developing a state-of-the-art, state-run nonprofit connected and autonomous vehicle test site at the polluted, long-vacant grounds of a former General Motors plant at Willow Run airport seemed like a moon shot. Despite rapid technological development, self-driving technology was a fringe investment for the auto industry. Federal funding seemed necessary to jump-start private buy-in. It was unknown whether suppliers and automakers would share their visions for mobility — or share work space. Last week, many of those questions were answered with a $5 million investment from Toyota Motor North America and the Toyota Research Institute to become a founding sponsor, and the first automaker to make a contribution, to the American Center for Mobility in Ypsilanti Township. ACM’s total fundraising to date is $91 million of the $110 million needed, with more funding announcements expected in the coming weeks. ACM will reach its target to build three phases of testing infrastructure — without any federal funding.

driving legally when not paid. In Detroit, 21,539 motorists owed the state $27.1 million in fees in June for past traffic violations that usually result in a suspended driver’s license. Driving is a necessity in a city where 64 percent of employed residents trek to the suburbs each day for work. The burden of unpaid driver responsibility fees has caught the attention of Detroit’s Workforce Development Board, a panel of mostly corporate CEOs who are trying to

address deep-seated problems that hinder the employability of Detroiters and a growing labor shortage. Incarcerated Detroiters in employment-training programs often return to the city with newly acquired job skills, but are saddled with hundreds and sometimes thousands of dollars in driver responsibility fees that may have escalated while they were imprisoned, said Cindy Pasky, president and CEO of Strategic Staffing Solutions. SEE FEES, PAGE 18

Driver debt, by the numbers

State data shows more than 113,000 drivers statewide owe nearly $147 million in Driver Responsibility Fees. Here’s how those numbers break down:

$146.9 million

Unpaid Driver Responsibility Fees owed by 113,776 Michigan drivers

$27.1 million

Unpaid fees owed by 21,539 Detroit drivers

$1,258

Average fees owed by Detroit drivers

11

Number of ZIP codes in Detroit where the number of drivers who owe fees exceeds four for every 100 residents.

Source: Crain’s Detroit Business and Bridge Magazine analysis; Michigan Department of Treasury data

Transportation

American Center for Mobility nears fundraising target

A girder is installed on a bridge at the American Center for Mobility’s autonomous vehicle test track.

SEE MOBILITY, PAGE 15 AMERICAN CENTER FOR MOBILITY © Entire contents copyright 2017 by Crain Communications Inc. All rights reserved

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MICHIGAN BRIEFS ‘Uncertainty’ delays premium posting Michigan on Tuesday delayed posting premium increases proposed by health insurers that sell coverage on the state’s federally run marketplace due to uncertainty over President Donald Trump’s threat to stop billions of dollars in payments to insurers. The state Department of Insurance and Financial Services was supposed to publish the proposed 2018 rate hikes Tuesday. But it secured a 30-day extension from the federal government, citing “uncertainty� over whether insurance companies will be reimbursed for providing required financial assistance to low-income consumers. Open enrollment begins Nov. 1 and continues through Dec. 15. Nine insurers — one fewer than this year and five fewer than in 2016 — want to participate in the Michigan Health Insurance Marketplace next year. DIFS Director Patrick McPharlin required the companies to submit two rate filings — one that assumes no “cost-sharing� reductions and another that factors them in. The payments to Michigan insurers, which help subsidize “silver� plans for people

making up to 250 percent of the poverty level, totaled $166 million in 2016. “If rates do not account for such expenditures, these issuers could suffer significant financial losses. Unfortunately, this means higher premiums will be charged,� McPharlin wrote in a June 1 bulletin. As Crain’s reported in June, health insurance companies participating in Michigan’s individual market are asking for record-high average rate increases for 2018 — premium increases that range from 19 percent to 60 percent, primarily because the Trump administration had delayed a decision on whether it intends to continue Obamacare’s so-called “cost-sharing reduction� subsidies to help certain lower-income people pay for out-of-pocket expenses. For months, Trump has been threatening to stop payments that reimburse insurers for reducing copays and deductibles for lower-income people. The cost-sharing subsidies are under a legal cloud because of a dispute over whether the Affordable Care Act properly approved the payments. Other parts of the health care law, however, clearly direct the government to reimburse insurers.

INSIDE ment of Environmental Equality said lead levels in the city’s water were below federal limits but has recommended that residents continue to use filtered or bottled water for drinking and cooking as pipe replacement continues. The registry effort is being led by Mona Hanna-Attisha, M.D., who was instrumental in bringing the city’s water crisis to light. Hanna-Attisha, the director of the MSU-Hurley Children’s Hospital Pediatric Public Health Initiative, was named a Crain’s 2016 Newsmaker for her efforts.

U.S. Department of Health and Human Services is granting Michigan State University $14.4 million to create a registry of Flint residents who were exposed to lead-contaminated water from the Flint water system

Mediation ordered over Flint water crisis

MSU gets grant for Flint water registry The U.S. Department of Health and Human Services is granting Michigan State University $14.4 million over four years to create a registry of Flint residents who were exposed to lead-contaminated water from the Flint water system in 2014 and 2015, The Associated Press reported. The university is receiving $3.2 million for the first installment, according to a government news release. Funds will be used in partnership with the city of Flint, area clinics, educators and community stakeholders. In January, the Michigan Depart-

A federal judge has ordered the state of Michigan and the city of Flint into mediation to try to resolve their differences regarding the future of Flint’s drinking water, The Associated Press reported.

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WEEK ON THE WEB

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U.S. District Judge David Lawson last week appointed Troy-based attorney Paul Monicatti to facilitate an agreement between the city and the Michigan Department of Environmental Quality. The department sued Flint in federal court in June, claiming the Flint City Council’s refusal to approve a long-term deal to buy water from a Detroit-area system is endangering public health in the wake of a lead-contamination crisis that has largely been blamed on the state itself.

Corrections J A story on Page 4 of the July 31 issue did not make clear that the Dresner Foundation Allegro Ensemble, a free, entry-level instrument program set to launch this fall, is a Detroit Symphony Orchestra program, not a program

of the Michigan Opera Theatre. J A Fast 50 profile of Meridian Health Plan on Page 8 of the July 31 issue should have said the insurer is expanding into more counties, not countries.

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Food

Bringing Garden Fresh technology to others Programs help Processing operation to be available to up-and-coming food producers locally

Michigan food, ag companies to expand

By Sherri Welch

By Lindsay VanHulle

Garden Fresh founder Jack Aronson is bringing to metro Detroit the preservation technology that enabled him to take his salsa global — and offering an avenue to similar success to other food makers. That will help companies like Ferndale juice maker Drought, which now has to ship its products to Milwaukee for processing. Local processing will make national expansion more affordable. Aronson and a minority partner are investing $5.5 million to install the state’s first high-pressure processing operation open to other companies, in a former Garden Fresh Gourmet building in Taylor. It will be only the 13th such line in the country, according to the state. The process subjects fresh, refrigerated foods to extreme pressure, which kills germs and extends shelf life by months without cooking or preservatives. That helps fresh producers capitalize on growing consumer demand for fresh food. It’s the technology that made Garden Fresh more similar to homemade salsa than its jarred counterparts. The $5.5 million project operating as Great Lakes HPP will include a new innovation center and lab to help up-and-coming fresh food producers decide if high-pressure processing is right for their product, and access to the expertise Aronson and his team have developed from experience at Garden Fresh.

LANSING — Steve Cooper recently added a butter production line at the dairy processing facility in Ottawa County where he is general manager, a $50 million project. He hired 10 people. To keep pace as Michigan farmers produce more milk each year, Cooper’s company, Continental Dairy Facilities LLC, needed more wastewater treatment capacity to handle the increased volume. It can churn out 300,000 pounds of milk powder and 42,000 gallons of cream every day. Continental Dairy and neighboring Fairlife LLC, which share a 100acre dairy campus on a former General Motors facility in Coopersville, sought funding for their business expansions through traditional means, which generally means applying for incentives from the Michigan Economic Development Corp. But their project got a boost from another source — the state Agriculture Department, which is piloting its own business development incentives program this year to help food-related companies achieve growth in smaller projects that won’t create enough jobs to meet MEDC requirements. That boost is about to get bigger. The program will expand to $4.7 million starting Oct. 1 after funding was inserted into the department’s 2018 budget.

swelch@crain.com

SEE PROCESS, PAGE 16

Crain’s Detroit Business/Bridge Magazine

Garden Fresh Founder Jack Aronson is bringing the preservation technology that enabled him to take his salsa global to Taylor. CRAIN’S DETROIT BUSINESS

A high-pressure processing tolling operation will cut costs for Clean Planet Foods (left) and raw juice maker Drought (right).

MIKE GRIFFIN

SEE EXPAND, PAGE 16

Insurance

New course for Marsh & McLennan as clients seek well-being By Jay Greene Jgreene@crain.com

Becky McLaughlan is rolling out several new programs as new CEO of Troy-based insurance broker Marsh & McLennan Agency Michigan LLC as its employer clients seek more than just health insurance and more than “wellness” programs that help employees improve their health and productivity. It’s part of a trend aiming to train companies in improving

MUST READS OF THE WEEK

“Paying attention to employees has always been a part of (MMA Michigan’s) mission and we wanted to share our experiences.” Becky McLaughlan

their employees’ “well-being” — going beyond their physical health to areas such as family, social and financial issues.

Studies at Harvard University show that when individual employees experience well-being, they consistently apply their skills

Insurance rates Chad Livengood: How Detroit factory workers pay more than lawyers for auto insurance coverage. Page 6

and hearts in service of company goals and customers, adapt more flexibly to change, and are more creative and proactive problem solvers. For Marsh & McLennan, the most comprehensive offering is MMA Michigan’s Wellbeing University, an educational program for human resource executives that piggybacks on an emerging national trend that calls for companies to expand traditional wellness programs and provide non-

traditional support services for employees that can help organizations succeed. Bret Jackson, president of Economic Alliance for Michigan, said many large companies like Ford, GM, Quicken, Dow, Meijer, Amway, Google, Aetna and Microsoft have adopted health and well-being philosophies to improve their workforce and make impacts in their communities through financial investments. SEE CLIENTS, PAGE 18

Surviving the sinkhole Creativity and grit are keeping area businesses from going under. Page 13

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Birmingham-Bloomfield Beavers pitcher Randy Wynne has used the Delivery Value System.

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USPBL, pitchers find success with delivery analysis program By Bill Shea bshea@crain.com

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DAVE COHEN

When Kevin Matthews took the mound for the Triple-A Gwinnett Braves on July 25, it represented a double victory. First, the left-hander’s appearance was as close as an alumnus of the Utica-based United Shore Professional Baseball League has yet come to the major leagues. Second, it was a bit of vindication for Delivery Value System, the North Carolina-based firm that since 2014 has used a detailed analysis of a pitcher’s mechanics to both improve velocity and arm health. USPBL founder and owner Andy Appleby calls DVS “the X-factor” in the success of the baseball side of his $16 million investment in creating a developmental league and ballpark in downtown Utica. He said he intends to invest more in DVS, which will be available to youth pitchers beginning in September at a local sports fitness chain. Much has been written about the success of the USPBL and Jimmy John’s Field with fans, who have packed the 1,900-seat ballpark nightly since the league launched in May 2016. But the baseball side of the business has been more successful sooner than Appleby expected. So far, Major League teams have bought the contracts of 18 USPBL players. They’re sprinkled across the farm systems of MLB teams, and Appleby has said getting his first player to the majors will be the ultimate success benchmark to legitimize his already-profitable baseball business. Matthews has come the closest, and USPBL credits the DVS system for resurrecting the 24-year-old’s career. A No. 1 draft pick of the Texas Rangers in 2011, Matthews struggled in the minors and had shoulder troubles and off-field issues that led to his release in 2015. With the USPBL, where most of the players are not former draft picks, he found a second chance. He

Andy Appleby: Intends to invest more in DVS.

Justin Orenduff: Founded DVS system.

pitched in five games for the Birmingham-Bloomfield Beavers this season and recorded a 2-1 record with a league-best 1.80 ERA. His 43 strikeouts also led the league. Those numbers caught the Atlanta Braves’ interest, and they signed him to a minor-league contract in June. Matthews pitched well enough to get a start with the Gwinnett Braves, Atlanta’s top affiliate. In his four innings of a 5-0 loss to the Lehigh Valley Iron Pigs, he gave up a run, four walks and struck out three, good for a 2.25 ERA. After his start, he was sent to the Braves’ Single-A Advanced team, the Florida Fire Frogs. Brian Berryman, the USPBL’s former executive director of baseball operations who is now an associate MLB scout and consultant for the league, credits DVS for helping Matthews. “Kevin Matthews, he came out (to the USPBL) and he was terrible. But he committed, and next thing you know, he got it,” Berryman said. DVS founder Justin Orenduff in April replaced Berryman as the USPBL’s top baseball mind, and said Matthews was a good student of the DVS system. The pitcher’s tweaks included a bigger leg kick and delivery. Berryman and Orenduff sold Appleby on DVS before the league began in 2016. “I had to rely on Brian’s judgment, as I had to for much of the baseball side. It turned out to be an outstanding decision,” Appleby said. “We have this program that could

potentially revolutionize baseball in many respects. The results are not just that virtually every pitcher that has come to our league is at their alltime (fastest) in velocity, but few have had sore arms. It’s served to underscore the fact we our different from other leagues. Players come here to get better.” Orenduff ’s system is biomechanics. The DVS staff measures six phases of a pitcher’s delivery mechanics and scores each, with a cumulative scale of that tops out at 24. The higher the score, the better and the less likely a pitcher is to sustain arm soreness or injury, according to the DVS ideology. Pitchers are filmed from different angles and the DVS instructors use that tape to diagnose delivery problems. Players are given instructions for a daily training regimen and arm care programs that should increase their pitch velocity while reducing the likelihood of injury. They’re measured when they join the league, then regularly during the season. “We don’t look at things we cannot objectively evaluate,” Orenduff said. So far this season, about half of the league’s 40 pitchers have added at least 1 mph to their fastball, and six added at least 3 mph — significant improvement in a game where a couple miles per hour on a fastball can be the difference between pitching in the hinterlands or Comerica Park. Randy Wynne, a 24-year-old lefthander from San Diego, is pitching this season for the Beavers and he’s bought into the DVS philosophy because of its results: His first DVS score was a 15. He’s now up to an 18, and has added 2 mph to his fastball, bringing it to 94 mph, he said. “(DVS) helps me in how I think about my approach to mechanics,” said Wynne, who has a scar on his pitching elbow that marks where he had ligament replacement — commonly known as Tommy John surgery SEE USPBL, PAGE 5

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USPBL FROM PAGE 4

— in 2012. “DVS reinforces a lot of what I was doing.” Another USPBL pitcher who praises DVS is Devin Alexander, 25, of the Eastside Diamond Hoppers. “I’ve never thrown that hard before,” he said. And the arm health element of the program has led to less soreness after games, he added. The DVS analytics showed Alexander how to better position his ankle to launch into his delivery, he said. That’s not something he would have known to work on without help, and that sort of granular instruction wasn’t available elsewhere during his career, he said. Devin Alexander: “It really “I’ve never thrown clicked for me that hard before.” and brought my whole body in a better position to throw,” the California native said. Odds are, it’ll be a USPBL pitcher that makes it first to the majors. “Major league teams are always looking for pitchers more than positional players,” Appleby said. “If you were pitching at 88 or 89 mph and now suddenly you’re at 93-94, you’re an entirely different prospect for major league teams.” While not disclosing specific costs, DVS is part of the $1 million that Appleby said he’s spent on baseball development within the USPBL. DVS is a vendor, but that could soon become a deeper relationship. “We’re investing in his system,” Appleby said. He said the talks are still in the works, but he wants USPBL to be the platform to launch DVS to a wider audience, including the major leagues. Orenduff, 34, was a first-round draft pick of the Los Angeles Dodgers in 2004, and spent years in that team’s minor-league system. He retired in 2009, and again after a brief comeback attempt in 2011. He uses what he learned as a pitcher, but also from his academic schooling and experience working in other baseball systems to create DVS in 2014. He lives in North Carolina, where DVS is based, but spends the USPBL season in Michigan working with players. He said he studied images of pitchers who were able to throw thousands of innings, trying to crack the code on what allows those hurlers such long careers versus players who suffered from debilitating injuries. “It hit me when I started to see correlation in body patterns with guys who could throw a large number of innings,” he said. “The way the body moves to throw the baseball over and over and over again is directly correlated to how you get hurt.” He took his findings and used them in youth instruction, and said he found success in preventing sore arms while simultaneously improving pitch velocity. Shoulder function and range of motion are key, he said, in improving pitch mechanics and arm health. “Over time, I said I think I have an

pretty air-tight way of evaluating a pitcher,” he said. He began working with a friend versed in statistical models to help prove the relevancy of his findings and system. They applied the system to current and former major league pitchers and their injury history. “What we found was pitchers with a higher DVS score could pitch a higher number of innings,” Orenduff said. Berryman, drafted out of the University of Michigan in 1998 by the San Diego Padres and a minor-leaguer until 2000, said he found Orenduff online several years ago while digging for tips on helping his own son improve his pitching. After the 2016 season, Berryman left his USPBL job to concentrate on his full-time insurance work and to spend more time with his kids. He remains a league consultant and scout for a major league team. He recommended Orenduff as his replacement. It remains to be seen if DVS catches on in the baseball ecosystem outside of the four-team USPBL. Orenduff and Berryman are hopeful because they’re sending pitchers into the affiliated minor leagues who have experienced DVS. The competition is thick. “It’s tough selling a new concept in baseball. It’s like trying to turn the Titanic on a dime. You’re going against 100 years of philosophy or gimmicks,” Berryman said. “The scouts that really take the time to understand how these players got better, they like it.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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OPINION

How Detroit factory workers get charged more for auto insurance

I

t costs more for the undereducated working poor or unemployed who rent homes to buy auto insurance in Michigan than homeowners with white collar careers living and driving in the same city. That’s the charge from a new study by a California insurance researcher who has examined the impact on quotes insurers give Michigan motorists based on their job title, level of education and whether they rent or own a home — factors that have nothing to do with whether they’re safe drivers. Los Angeles-based insurance researcher Douglas Heller found that a factory worker in Michigan without a college education who rents a home pays an average of $233 more annually than a highly educated lawyer who owns a home to cover the same car at the exact address. Heller’s study compared online quotes from six national insurance carriers using a 30-year-old unmarried woman with a perfect driving record and the same 2007 Ford Fusion S that’s driven 10,001 miles annually. The study was paid for by the Coalition Protecting Auto No-Fault, a powerful group of medical providers and attorneys that is battling insurers over reforming Michigan’s costly auto insurance. Heller’s study underscores CPAN’s long contention that Michigan’s unlimited medical coverage for auto accident victims isn’t the only factor that forces some Michigan drivers to pay the highest rates in the country. Heller obtained 240 online insurance quotes using the same person with the same address in Detroit, Flint,

It sure isn’t just the automotive industry I have been struck recently with how much discussion is going on about how the au t o m o t i v e industry is in the midst of a r a d i c a l change that will last many decades but change the KEITH landscape CRAIN completely. Editor-in-chief Just recently Volvo, now owned by a Chinese company, announced that it will no longer make any vehicles that use petroleum. Both France and Great Britain have said that by the year 2040, you will no longer be able to buy a

CHAD LIVENGOOD clivengood@crain.com

Grand Rapids, Howell, Iron Mountain, Ludington, Owosso and Warren. In each city, drivers at the bottom of the economic ladder were quoted the highest insurance rates, according to the study. In Detroit, not surprisingly, the gap between the top and bottom of the economic ladder was the widest in Heller’s study. The lawyer would be charged an average $643 less per year than the unemployed Detroiter without a high school diploma — at the same address, driving the same 10-year-old car. Dyck Van Koevering, general counsel for the Insurance Alliance of Michigan, panned Heller’s study as “a distraction” that doesn't propose any solution to taking costs out of the auto insurance system associated with Michigan’s unique unlimited medical benefits. “Companies use rating factors that correlate to loss,” Van Koevering said. “If they didn’t correlate to loss, they wouldn’t use them.” Factoring a driver’s education level, job title or home ownership status into what they’re charged for auto insurance is legal under Michigan’s insurance laws, Van Koevering said. “If a

petroleum-powered engine. And we’ve heard a lot about driverless cars in the not-too-distant future. Just in case you smile because you are not in the automobile industry so none of this will have anything to do with you, think again. We are going to have economic disruption all across our lives and our businesses. We are going to have to learn very quickly to adapt, or we simply won’t be able to survive. It all started with the computer, and it will increasingly affect our businesses. Retailers have already found their business taken by companies that offer everything on your computer and deliver it to your home. Smart retailers are trying to offer such an appealing environment that customers simply cannot stay away. They will also have a substantial online business, but they will have just as much foot traffic as before, perhaps even more. And they will be able to do it quite possibly in smaller space. People will still be buying as much

company uses those factors, they have actuarial justification for using them,” he said. The Heller study did not take into account credit scores, a controversial factor that can be used to levy higher insurance premiums on drivers deemed less reliable to pay their monthly bill because of a poor borrowing history. Insurers can legally pick and choose which nondriving factors to bake into their premium calculations. Heller’s study points out that State Farm Mutual Automobile Insurance Co. and Allstate Insurance Co. don’t consider a driver’s job title or education level in their insurance rates. This is a result of competition in Michigan’s auto insurance market, said Lori Conarton, communications director for Insurance Alliance of Michigan, the auto insurance industry’s Lansing-based lobbying group. “They have that as a business decision — which rating factors they use, what they linked to get to those rating factors — based on their own experience,” Conarton said. It’s easy to dismiss Heller’s study as a one-time snapshot of insurance quotes that can vary wildly based on the number of paying drivers and auto accident claims in a particular ZIP code — until you try getting similar insurance quotes.

'Socioeconomic surcharges' I went to Esurance.com and plugged in Heller’s 30-year-old unmarried female under my wife’s name

as before, but it will be different. And if you thought you would at least have the same environment in your office as before, I would not count on it. Office hoteling has not worked so well, but we will see all sorts of other ways of making your office space smaller, but at the same time, more effective. Even restaurants are changing the way they deliver a dining experience. Fewer waiters, and you might just order on your handheld computer. And although it has not caught on yet, it is just a matter of time until you stop using cash. That handheld computer will take care of that for you, all in a very trouble-free manner. Some of us may not be around to see all of this happen, but our children and grandchildren will all be a part of this revolution. It will be disruptive, but we already see glimpses of what will happen over the next decade. So hang onto your hat, if you have one, fasten your seat belt and enjoy the ride. It will be breathtaking.

and got quotes for the same 2007 Ford Fusion S at my home address in St. Clair Shores and a random address on Woodingham Drive in Detroit’s Bagley neighborhood, a stable middle-class enclave. For my address, the single female with a perfect driving record, a bachelor’s degree, no job and Medicaid personal health insurance got a quote of $170 a month. The same female driver without a bachelor’s degree was quoted $196 per month. At the north side Detroit address, Esurance quoted the same female driver with a bachelor’s degree and no job $314 per month — an 84 percent increase from my house in St. Clair Shores. The jobless uneducated female driver at the Woodingham Drive address was quoted $473 per month — an increase of 141 percent from her suburban twin in southern Macomb County. What’s more striking is the difference between the two drivers at the same address: a $25 monthly gap at my house in St. Clair Shores and a $160 difference each month at the Detroit address. “The reality in Detroit is more and more people are suffering these socioeconomic surcharges because more and more people find themselves in these penalized categories, even though they bring no new risk to the insurance company,” Heller said in a phone interview. “If you lose your job, you don’t become a worse driver. And in fact, you probably drive less because you’re not going to work every day.” Heller contends nondriving factors

used to set auto insurance rates are pricing working-class, underemployed and unemployed Detroiters out of the traditional market. But they still have to get to work, take their kids to school and drive long distances across Detroit for groceries and medical care.

7-day insurance plans Unaffordable auto insurance, like the $5,682 and $3,766 annual policies Esurance quoted me for the single female in the Bagley neighborhood in Detroit, have given rise to seven-day auto insurance plans. Seven-day insurance plans have recently come under scrutiny by state insurance regulators because they’re used as a legal loophole for drivers to get their vehicles registered, let the coverage lapse and then drive without insurance the other 51 weeks of the year. And drivers without insurance create added burdens on the rest of the motoring public, through higher rates and unpaid medical costs that get passed through the health care system, Heller said. Heller, who has spent 20 years studying auto insurance across the country, said he’s never seen seven-day auto insurance plans anywhere else. “What the major insurers have done is effectively turned their back on low-wage workers in Detroit and they’ve forced people to buy what’s little more than desperation policies,” Heller said of seven-day insurance plans. “And that’s bad for all drivers.”

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

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CRAIN’S MICHIGAN BUSINESS: KALAMAZOO

Southwest Michigan First makes impact nationally

Investing in Kalamazoo

By Tom Henderson thenderson@crain.com

Kalamazoo-based Southwest Michigan First, an economic development nonprofit, has created a national footprint, despite its regional name. When SWMF was founded 19 years ago, its mission was to provide economic development services to cities and towns in 17 counties in the southwest corner of the state. Since then, the organization has nurtured a national clientele through economic development and leadership conferences, private consulting and webinars. It also works to connect economic development agencies around the country with site-selection professionals looking for the right place to locate a business. In late July, it hosted an economic development webinar for some 60 communities nationwide. And in November, SMWF will host a sold-out site-selection conference in New Orleans for 200 economic development officials from around the country. “We need to be the teaching hospital equivalent for economic development,” said Ron Kitchens, SWMF’s senior partner and CEO. “Three hundred economic development officials around the country are our clients.” All of which helps SWMF stay true to one of its founding tenets. “We were founded with the idea we wouldn’t take public funding, and less than 1 percent of our budget comes from public funding. Sixty percent of our annual budget comes from earned revenue,” said Kitchens, who said his agency employs 34 and has an annual budget of $7 million. “I first met Ron in 2006 or 2007 and he told me he was going to build a national organization. I told him, ‘Good luck with that. You’re in Kalamazoo,’” said Brad Midgal, a senior manager and site-selection consultant in the Chicago office of Cushman & Wakefield. “But he has taken a small corner of Michigan and put it on the national map.” The national focus doesn’t mean SWMF has overlooked southwest Michigan. In January it hosted its seventh annual Catalyst University leadership conference before a sold-out crowd of 2,800 at Wings Stadium in Kalamazoo. It will host an IT vendor roadshow in Portage in September and an area leadership summit in October in Battle Creek. SEE SOUTHWEST,PAGE 10

“We need to be the teaching hospital equivalent for economic development.” Ron Kitchens

In this package  Small Kalamazoo-based pharma

development, this page.  Grand Angels start affiliate

company strikes a $40 million deal, this page.

investment group in Kalamazoo, Page 9.

 Southwest Michigan First makes

 Why Ablative Solutions is rooting

national impact on economic

for its competitor, Page 9.

 Maker of cancer-detecting test

considers selling the company, Page 10.  Q&A with former Western

Michigan University President John Dunn, Page 11.

MICHAEL LANKA/WESTERN MICHIGAN UNIVERSITY

Small Kalamazoo-based pharma company strikes a $40 million deal By Tom Henderson thenderson@crain.com

Octeta, a small Kalamazoo-based pharmaceutical company, hit the $40 million jackpot last fall at an annual meet-andgreet in Ann Arbor. Octeta is testing a molecule that helps fight a fatty liver disease known by the acronym NASH, or nonalcoholic steatohepatitis. About 16 million Americans suffer from NASH, a progressive form of liver disease caused by a buildup of fat in the liver, which causes inflammation and can rapidly progress to cirrhosis and liver cancer. At the event, which brings in about 100 national venture capitalists to hear pitches from Michigan-based tech companies that have been flying below their radar, Octeta hoped to match the $16 million they had raised in a first round of funding. Frazier Healthcare Partners, a large healthcare VC based in Seattle with nearly $3 billion under management, liked the market opportunity Octeta pitched and the development work Jerry Colca and his R&D team had done. But Frazier wasn’t interested in what was a small fund raise by its standards. What transpired after the meetand-greet would become one of the largest funding rounds in state history. Colca was a longtime scientist and researcher in Kalamazoo with Upjohn, then Pharmacia and then

Jerry Colca, founder of Octeta, now Cirius Technologies. Pfizer as large pharma companies bought each other up. He had been working on molecules to fight diabetes and related diseases like NASH since the early 1980s. After being laid off from Pfizer in 2003 and then from a job in St. Louis in 2005, he moved back to Kalamazoo and founded Metabolic Solutions Development Co. to pursue the commercialization of several molecules. He raised money from angel investors — Hopen Life Science Ventures and Charter Capital Partners, both of Grand Rapids — and from Southwest Michigan First, an economic development nonprofit in Kalamazoo. In May 2016, Colca spun out

SUSAN ANDRESS

Octeta as a separate company to focus on a drug with the working name of MSDC-0602K, which is something called a next-generation insulin sensitizer, intended to make NASH patients more responsive to insulin therapy. In essence, the molecule limits excess sugar intake by mitochondria in liver cells, which is generally caused by overeating and high-fat, high-sugar diets. Colca raised $16 million in venture capital to fund R&D and started enrolling patients last September in a Phase 2 trial of 340 patients at 50 sites in the United States. About a third of the patients were enrolled, but much more funding was needed to finish the study,

which is expected to end in early 2019. So Colca was happy to get the invite from Rizik to meet potential investors. To his surprise, Frazier wanted to lead a much bigger round and syndicate it to co-investors. “In two weeks, they had the whole thing syndicated,” said Colca. In April, after all the t’s were crossed and contracts signed, Frazier announced it had raised $40 million. And it had brought a major name in pharma on as an investment partner: Denmark’s Novo A/S, the investment arm of Novo Nordisk, a trillion-dollar pharmaceutical company. Hopen also joined the round, as did another new investor, Adam Street Partners of Chicago.

Historic funding round According to the Ann Arbor-based Michigan Venture Capital Association, this round would rank among the top 15 largest rounds ever for a state company. It is believed that the $62 million raised for Ann Arbor-based Millendo Therapeutics Inc. in 2016 was the largest. The investments by Frazier and Novo A/S were particularly meaningful for Dale Grogan, managing director at Charter Capital Partners, which was an early investor in Octeta and has invested $4 million over the years. SEE PHARMA,PAGE 10

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CRAIN’S MICHIGAN BUSINESS: KALAMAZOO

Why Ablative Solutions is rooting for its biggest competitor By Tom Henderson thenderson@crain.com

Tim Fischell, founder, CEO and chief medical officer of Kalamazoo-based Ablative Solutions Inc., is rooting for his company’s chief competitor, Medtronic Inc., to do well in its human trials. But not out of generosity. Medtronic’s success is crucial, perhaps even necessary, for Ablative Solutions’ survival. Both companies are hoping to get approval from the U.S. Food and Drug Administration for procedures that deactivate renal artery nerves without damaging the artery. People with hypertension often have renal artery nerves that send false signals from the kidney to the brain. Though they have high blood pressure, the signals tell the brain that their blood pressure is low, which causes the brain to release chemicals and constrict blood vessels, raising blood pressures to dangerous levels. Cut off the faulty signals, the theory goes, and blood pressure gets reduced. In 2011, Minneapolis-based Medtronic bought Mountain View, Calif.-based Ardian Inc. for $1.2 billion. Ardian was developing catheter-based therapies to treat hypertension, and the move by Medtronic served as validation for others pursuing similar technologies, including

Ablative Solutions, which was founded that year and now employs 10. But in January 2014, Medtronic announced poor results for human trials involving its Tim Fischell: use of radio freHopes to start quency waves to trials soon. kill the nerve cells. Those results caused investors, who had been flocking to the field, to abandon it. Money that Ablative Solutions needed to fund human trials dried up. Ablative’s technology uses pure ethanol administered through a device called a Peregrine. Named for the falcon’s three talons per claw, the device injects alcohol into the nerve through three needles, each eight-thousandths of an inch in diameter, to kill it. Fourteen patents have been issued to the company with 11 more pending, according to Fischell. “You know how venture capital works,” said Fischell. “We have the better mousetrap, but they say, ‘If Medtronic can’t do it, how can a little company like you do it?’ Raising money has been a struggle, as you might imagine.” Even so, the company has raised

Grand Angels start affiliate in Kalamazoo The Grand Rapids-based Grand Angels, one of the state’s most active angel investor groups, has launched an affiliate group in Kalamazoo known as the Ka-zoo Angels. Tim Parker, Grand Angels president, said the affiliate group will increase deal flow and strengthen ties to Western Michigan University. “To date, we have 10 members, and membership will continue to grow in the coming weeks,” Parker said. The members “bring expertise in the areas of finance, banking, manufacturing, life sciences, medical, software, consumer products, food and other industries.” Parker said his group had taken an increased interest in the Kalamazoo area and has made investments in two companies there: $200,000 in Armune BioScience Inc., which makes tests to detect prostate cancer (see related story, Page 10); and Micro-LAM Technologies, which has developed laser-assisted machining for manufacturing. The angels directly invested $550,000 in Micro-LAM and syndicated the deal to outside investors, bringing in an additional $1.6 million. As part of the investment in Micro-LAM in March, the company moved from Battle Creek to Kalamazoo. —Tom Henderson

started some 18 companies.

Ablative facts n Ablative Solutions Inc. is a family

affair. Tim Fischell, M.D., is the founder and CEO of the company. His brother, David, who has a Ph.D. in physics and is based in New Jersey, is chairman of the company. n Offering advice and expertise is their father, Robert, who has degrees in engineering and physics and for whom the Robert E. Fischell Institute for Biomedical Devices at the University of Maryland was named. n In May 2016, President Barack Obama awarded Robert Fischell the National Medal of Technology and Innovation, the highest honor for technological achievement bestowed by the president. n The three of them have more than 250 patents between them and have

$34 million in three rounds. At least another $20 million will be needed to fund a Phase 2 FDA trial of 120 to 140 patients at 20 sites in the U.S. and seven in Europe. The trial will take about two years. “We hope to start soon,” said Fischell, an interventional cardiologist at the Borgess Heart Institute in Grand Rapids and a professor of medicine at

n One was Ostial Solutions LLC, a Kalamazoo company that made a catheter used to implant coronary artery stents. It raised $3 million from angel investors and was sold for $30 million in 2012 to South Jordan, Utah-based Merit Medical Systems Inc. n Another was Kalamazoo-based Afmedica Inc., which was founded in 2002 to develop a process for preventing excess scarring in blood vessels following vascular surgery. It sold for an undisclosed amount in 2005 to Angiotech Pharmaceuticals of Vancouver, B.C. n An investor, the Apjohn Group LLC of Kalamazoo, reports on its website that the deal returned more than seven times its original investment.

both Michigan State University and Western Michigan University. If the trial is successful, the company likely will be bought before it gets to market, Fischell said. Current investors include Grand Rapids-based Charter Capital Partners, which has invested $3.5 million in the company, and BioStar Ventures of Petoskey, which has invested $2.6

million. Preliminary data from Medtronic’s trials have been promising, and Fischell expects good news when it releases data on Aug. 28 at the European Society of Cardiology. “The market just died after Medtronic announced its first trials. The companies doing this went from 70 to seven. A lot of them just closed their doors and went home,” said Steve Almany, a partner at BioStar and director of the catheter lab at Beaumont Health. He serves Ablative Solutions’ board. “It was good news, bad news for us. We had less competition, but no VCs were going to put money in when the biggest company in the world failed, even through we got good data in pigs.” “This could be the thaw in the nuclear winter for renal innovation,” said Dale Grogan, managing director at Charter Capital, who has been on the board of Ablative Solutions since 2012. “It gives people with the disease real hope.” Twenty-seven percent of U.S. population has hypertension, so the market is huge, said Almany. “But if Medtronic fails, all we’ll have is a fishing lure,” he said, jokingly referring to an alternative use for the Peregrine. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAIN’S MICHIGAN BUSINESS: KALAMAZOO

Maker of cancer-detecting test considers selling company By Tom Henderson thenderson@crain.com

Kalamazoo-based Armune BioScience Inc., the winner of the grand prize of $500,000 at the first annual Accelerate Michigan Innovation Competition in 2010, is actively pursuing a sale of the company, which uses biomarkers from the body’s immune system to detect prostate cancer. A biomarker is a substance or a process that points to the presence of disease in the body, like the mutation of a certain gene. The company, which currently employs 10, is now raising an equity round of $2 million to ramp up marketing and R&D into tests for lung cancer and breast cancer. It has raised about half of that funding, termed a bridge round, but CEO David Esposito said he is seeking to raise much more, either through a venture capital round with a target of $25 million, licensing deals with other companies or an outright sale of the company. Esposito said the company has engaged EMA Partners LLC, an investment banker with offices in Ann Arbor

David Esposito: Seeking to raise more money.

Eli Thomssen: False positives made case.

and Denver, to investigate those funding options. He was in Boston in late July to discuss a possible deal and says he hopes to have one in place by the end of the third quarter. “We’ve been entertaining all of the above and seeing active interest in all three options,” he said. “It’s been a long journey. Diagnostics is a tough field to raise money in, now. The sizzle is around genetics. The traditional VC market has been tough.” In 2015, the company raised a Series A round of $9.2 million in venture

capital, of which $4.2 million was used to turn convertible notes raised in 2009 into equity. The remaining $5 million was in new capital to fund growth. The round was led by Maverick Capital of Dallas, with the Grand Angels Venture Fund II of Grand Rapids investing $200,000. Armune was founded in 2008, based on research at the University of Michigan. The licensing deal with the school allows it to develop tests for prostate, lung and breast cancers based on eight biomarkers from the body’s immune response to cancer. For now, the company is focusing on tests for prostate cancer at its laboratory in Ann Arbor, which are generally ordered by primary care physicians and urologists. Armune is paid between $225 and $275 per test. Because they are cancer-specific, the tests, marketed under the brand name Apifiny, are more accurate than the prostate-specific antigen (PSA) tests more commonly used to diagnose prostate cancer. The PSA test responds to prostate conditions that can

PHARMA FROM PAGE 8

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“We’ve been believers in the technology for a long time. We’ve seen the market in favor of drugs to treat fatty liver disease, we’ve seen the market out of favor, and now it’s back in favor,” he said. “Having someone like Frazier come in is so important. They have a reputation for knowing what they are doing.” Renaissance, Rizik’s fund, is normally a fund-of-funds, investing in venture-capital firms willing to invest in Michigan companies, but it liked Octeta’s market opportunity enough to make an exception and made a direct investment of an undisclosed amount in the company. “The occurrence of NASH is approaching epidemic proportions in the U.S. and has tragic consequences,” said Rizik. “What excited us was their work on developing therapeu-

SOUTHWEST FROM PAGE 8

Recurring events include Leadership Kalamazoo, an annual leadership skills series; the First Leadership program, which help s emerging business leaders network; and the First 50 program, which pairs 25 emerging leaders with 25 mentors. The national events do more than generate income for SWMF While Kitchens is happy to help other communities land businesses, he is also keeping SWMF front of mind for site-selection folks. “I never travel anywhere without selling southwest Michigan,” said Kitchens. “If I can help someone form a relationship with an economic development official in Alabama, they might also have a client who might want to come to Michigan.”

be caused by a variety of factors unrelated to cancer. Armune’s tests produce far fewer false positives, reducing the need for followup tests and invasive biopsy procedures. Esposito said the company had revenue of $2 million last year and is on track for $5 million this year. The company hopes to launch commercial testing for lung cancer next year and for breast cancer in 2019. Eli Thomssen is an associate director of the Kalamazoo-based Apjohn Group LLC, an investment and consulting group that helped launch Armune. In 2007, the tech transfer office at UM alerted him to an interesting technology developed by UM researcher Arul Chinnaiyan, whose research had been published in the New England Journal of Medicine. After due diligence, Apjohn helped raise seed money from family offices and angel investors in the Kalamazoo area. The company took the first two letters of its name from the first two letters of the UM researcher, and

“mune” from the last four letters of immune. Thomssen said the market advantage that made the business case for founding the company was the high level of false positives caused by the PSA. Though the PSA test was the gold standard for prostate-cancer detection in 2008, “It wasn’t detecting cancer antibodies and Armune was,” he said. The company also got startup funding of $200,000 from the Michigan PreSeed Fund administered by Ann Arbor Spark, $100,000 from the Michigan Strategic Fund of the Michigan Economic Development Corp. and an undisclosed amount from the MINTS program at UM, which stands for Michigan Investment in New Technology Startups. Thomssen was CEO of the company until Esposito, a graduate of West Point who was at the pharmaceutical giant Merck for 16 years, was recruited in the fall of 2014.

tics that could effectively treat NASH without the accompanying side effects that have plagued other treatments. It could change the trajectory of the illness for literally tens of millions of people.” Frazier also announced it had brought in three experienced health care executives with a track record of growing and selling pharmaceutical companies to run the business. The three pharma executives had spent 16 months scouting deals for Frazier as entrepreneurs-in-residence at the firm. Bob Baltera was named CEO, Howard Dittrich chief medical officer in charge of clinical trials and Brian Farmer as chief business officer. The three will remain based in San Diego, where the company is now headquartered. Colca, his R&D team of three, contract research partners and manufacturing

partners remain in Kalamazoo. Frazier renamed the company Cirius Therapeutics Inc. “This is a good story for Michigan and the Midwest. I have so much respect for Jerry, who spent so many years fighting this fight,” said Baltera. “Frazier and Novo are two blue-chip venture firms that saw value in what Jerry built and had what it takes to get the next round of investors to invest. But it wasn’t just money they were able to bring to the table. It was skill sets.” And the promise of more money. If, as hoped, good Phase 2 trials are reported in late 2018 or early 2019, Frazier will need to raise much more money to fund the larger, confirmatory Phase 3 study that will be needed before the drug gets FDA approval. Frazier plans to lead that round, too.

A small portion of SWMF’s revenue comes from a glossy publication SWMF launched a year and a half ago called 269 Magazine (named for the region’s area code). Kitchens said they launched the magazine to fill the void left by the demise of the region’s newspapers, including the once prosperous Kalamazoo Gazette. The downtown building that once housed the paper was demolished in January. 269 Magazine’s circulation is more than 9,000 — ahead of projections — and is modestly profitable. It will publish seven editions this year and 10 editions next year. Until a year ago, SWMF ran a tech incubator in a building it owned at Western Michigan University’s Business Technology and Research Park. For the last year, WMU has been running it as the Homer Stryker School of Medicine Innovation Center.

“Western needed an incubator and it didn’t make sense for us to be in competition with them,” said Kitchens. SWMF leases another building in the park to Newell Rubbermaid Inc., an Atlanta-based company that opened its 40,000-square-foot design center there in 2014. The project is a collaboration between WMU’s engineering and business schools, the local fine arts community and SWMF. With Whirlpool, Stryker and Steelcase nearby, the region has the third largest concentration of industrial design professionals in the U.S., Kitchens said. “It says a lot that a publicly traded company in Atlanta wanted to move its design center here. It shows what we have to offer,” said Kitchens.

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

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

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

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CRAIN’S MICHIGAN BUSINESS: KALAMAZOO

Q&A: John Dunn, former president of Western Michigan University By Tom Henderson thenderson@crain.com

We first met five or six years ago at an editorial board meeting you had with Crain’s. One of the things we talked about, and you were very animated about it, was Western being excluded from the University Research Corridor that was formed by Michigan State University, Wayne State University and the University of Michigan in late 2006 to seek out large grants and work on major collaboration efforts. That was just before you took over as president at WMU. Ron Kitchens [senior partner and CEO of Southwest Michigan First, an economic development organization in Kalamazoo] told me folks here lobbied hard and long to be included but to no avail. I thought it was a real bad mistake not to include Western. If you want to have a research triangle like North Carolina’s, have a real one. Take it from Detroit to Kalamazoo to Houghton and Michigan Tech. I don’t know why you (wouldn’t) include Tech with everything they have going on. I never understood why they took the position they did. For some reason they felt it had to be just the three of them. The irony was at the time, Wayne State’s office of the vice president of research and its tech transfer office were considered to be underperformers. The Michigan Economic Development Corp. eventually gave the school a large grant that required it to bring in a consultant from Chicago to tell to them what they were doing wrong and how to right it. And they have. You had to include Wayne State. You had to include Detroit. I get that. But they should have included other top research universities, too. I’m a big believer in partnerships. The way the world is changing, it’s all about partnerships. Take Aquinas College. It’s a great school, but it doesn’t have

Your trust. Your triumphs. We care about both. John Dunn COURTESY WESTERN MICHIGAN UNIVERSITY

an engineering school. So 18 months ago, we worked out a deal where students go there for two years and get an associates degree and then the come here for their engineering degree. Kalamazoo College, which sits right there, we entered into an agreement with them so their students can take selected courses here. How can we figure out strategies that are good for students? Another interesting partnership is that between the school and Newell Rubbermaid, a New York Stock Exchange company based in Atlanta that in 2014 opened its 40,000-square-foot design center in your tech park. Quite a coup. It’s a collaboration between Newell, the engineering school, the business school, the fine arts community and Southwest Michigan First. It’s an example of how to use the strengths and capabilities of all your resources. You don’t want to keep things in silos, which is what we used to do.

school is the medical examiner for eight counties here. We’re expanding our research profile at the medical school, bringing in lab scientists. You’ll see our profile changing dramatically. So what’s next for you? I have emeritus status at the medical school and will have an office there. The trustees have asked me to do some things. There are some gifts and donations we need to close on. And I want to keep focusing on our international students. We had 967 international students when I came here. We’re north of 1,800, now, from 100 different countries. I want to write about the importance of having international students. There’s this perception they’re taking a seat at the table from someone else or are somehow trouble. They aren’t. They add to our culture. They make our community better.

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John Dunn retired as the eighth president of Western Michigan University on July 31 at the age of 71. He was succeeded by Edward Montgomery, a labor economist who served in prominent positions in both the Clinton and Obama administrations and most recently was a dean at Georgetown University. Six days before Dunn’s last day in the president’s office, he sat down with Crain’s reporter Tom Henderson — boxes on the floor in the midst of being packed, shelves on the wall empty — to discuss his 10-year tenure, which saw outreach to foreign students, the creation of a medical school, a wide range of efforts on behalf of technology transfer and research commercialization and continued construction of the school’s Business Technology and Research Park at the 265-acre Parkview Campus west of the main campus.

Another irony about the research corridor is that Western has made tech transfer and the commercialization a big focus — tech transfer projects at WMU include the Homer Stryker School of Medicine Innovation Center, the Center for Entrepreneurship and Innovation, the Business Technology and Research Park, the Starting Gate, the Biz Connection and the Biosciences Research and Commercialization Center. The campus is also home to the $70 million College of Engineering and Applied Sciences building, operates as a SmartZone and has attracted more than 50 privatesector businesses, eight of which have built buildings. University presidents and provosts have to be cognizant of the way research can impact people. A lot has happened here. You never used to hear terms like “venture capital� on campus. When I came here, we didn’t have a medical school. We started the medical school in 2011. At the time, there wasn’t a medical examiner in Kalamazoo. If you lost a loved one in Kalamazoo, you had to go to Lansing for the autopsy at Sparrow Hospital. Now, the medical

Ron Kitchens told me the thing he most respects you for is the Seita Scholars Program, which helps kids aging out of the foster program at age 18 get into school. John Seita was a foster kid who ended up getting three degrees here. We started the program in 2008 and named it for him. About 500 kids a year age out of foster care in Michigan. Seventy percent of them want to continue their education, but only 5 percent do. The state gives them a little bit of money and tells them to find a place to live and get a job. And it’s going to be a low-wage job. We decided if these kids are admissible to the university, we’ll make sure we work with them to get them the resources they need. We have foundations and people willing to give, and we make sure their education is paid for and they have a place to live and something to eat. We now have more than 100 of these kids who have walked across the stage diplomas in hand, and the state has asked us to take the lead in encouraging other state universities and colleges to set up similar programs. Read more about John Dunn’s experiences as a marathon runner at crainsdetroit.com. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAIN'S LIST: LARGEST LOCAL AUTO DEALERS Company Address Rank Phone; website

Top executive(s)

Ranked by 2016 revenue

Revenue ($000,000) 2016

Revenue ($000,000) 2015

Percent change

Number of dealerships

Number of new vehicles sold, leased 2016/2015

Number of used vehicles sold 2016/2015

1

The Suburban Collection 1795 Maplelawn Drive, Troy 48084 (877) 471-7100; www.SuburbanCollection.com

David Fischer chairman and CEO

$2,130.4

$2,001.5

6.4%

38

35,578 33,818

22,063 20,202

2

Victory Automotive Group Inc. 46352 Michigan Ave., Canton Township 48188 (734) 495-3500; www.victoryautomotivegroup.com

Jeffrey Cappo president

1,567.6 B

1,223.7 B

28.1

41 B

31,336 B 24,718 B

18,312 B 15,202 B

LaFontaine Automotive Group 4000 W. Highland Road, Highland Township 48357 (248) 887-4747; www.thefamilydeal.com

Michael LaFontaine chairman/owner Maureen LaFontaine president/owner Chris Snyder general manager

816.8

768.4

6.3

15

13,865 12,853

7,577 8,170

446.2

484.5 C

-7.9

3

8,967 NA

3,301 NA

360.7 B

379.4 B

-4.9

4B

6,094 B 6,905 B

1,910 B 2,081 B

3 4

Southfield Chrysler Dodge Jeep Ram 28100 Telegraph Road, Southfield 48034 (248) 354-2950; southfieldchrysler.com

5

Prestige Automotive 20200 E. Nine Mile Road, St. Clair Shores 48080 (586) 773-2369; www.prestigeautomotive.com

Gregory Jackson chairman and CEO

6

Stewart Management Group Inc. 20844 Harper Ave., Suite 100, Harper Woods 48225 (313) 432-6200; www.gordonchevrolet.com

Gordon Stewart president

338.3

329.7

2.6

5

6,595 B 6,534

4,184 B 3,726

Elder Automotive Group 777 John R Road, Troy 48083 (248) 585-4000; www.elderautogroup.com

Tony Elder president Robert Elder vice president James Riehl Jr. president and CEO

326.5

287.1

13.7

NA

NA 3,966

NA 2,163

283.7

235.9

20.3

3

5,618 NA

3,636 NA

260.0 C

260.0

0.0

4

NA NA

NA NA

7 8

Jim Riehl's Friendly Automotive Group Inc. 32899 Van Dyke Ave., Warren 48093 (586) 979-8700; www.jimriehl.com

9

Snethkamp Automotive Family 16400 Woodward Ave., Highland Park 48203 (313) 868-3300; www.snethkampauto.com

Mark Snethkamp president

Buff Whelan Chevrolet

Kerry Whelan president

224.8

208.0

8.1

1

5,761 5,084

1,157 1,268

Royal Oak Ford/Briarwood Ford

Eddie Hall Jr. president and CEO

202.9

197.1

3.0

3

4,704 4,510

1,927 2,000

Matick Automotive D 14001 Telegraph Road, Redford 48239 (313) 531-7100; www.matickauto.com

Karl Zimmermann owner and operator

192.1

NA

NA

3

4,065 NA

2,314 NA

Pat Milliken Ford Inc. 9600 Telegraph Road, Redford Township 48239-1492 (313) 255-3100; www.patmillikenford.com

Bruce Godfrey chairman Brian Godfrey president Bill Perkins president

186.0

173.0

7.5

1

4,743 4,567

821 635

175.6

157.8

11.2

2

3,625 3,282

3,416 3,202

Jeffrey Tamaroff, chairman and CEO; Marvin Tamaroff, chairman emeritus; Eric Frehsee, vice president; Jason Tamaroff, vice president Jeff Laethem president

149.0

148.1

0.6

2

3,772 3,639

2,300 2,486

144.5

148.0

-2.4

2

3,353 3,432

632 609

144.4 C

144.4 C

0.0

1

NA NA

NA NA

Van Dyke Ave., Sterling Heights 48313 10 40445 (586) 939-7300; www.buffwhelan.com Woodward Ave., Royal Oak 48067 11 27550 (248) 548-4100; www.royaloakford.com

12 13

Bill Perkins Automotive Group

Gratiot Ave., Eastpointe 48021 14 21800 (586) 775-8300; www.merollischevy.com

15

Jeffrey Tamaroff Automotive Family 28585 Telegraph Road, Southfield 48034-1928 (248) 353-1300; www.tamaroff.com

Ray Laethem Inc.

Mack Ave., Detroit 48224 16 1677 (313) 886-1700; www.raylaethem.com

17

Milosch's Palace Chrysler-Jeep-Dodge Inc. 3800 S. Lapeer Road, Lake Orion 48359 (248) 393-2222; www.palacecjd.com

Donald Milosch president

Gorno Automotive Group

Ed Jolliffe president

134.0

117.6

13.9

1

NA NA

NA NA

Avis Ford Inc. 29200 Telegraph Road, Southfield 48034 (248) 355-7500; www.avisford.com

Walter Douglas Sr. chairman Mark Douglas president James Seavitt president and CEO

131.0

123.8

5.8

NA

NA NA

NA NA

124.8

122.2 C

2.1

1

NA NA

NA NA

Roseville Chrysler Jeep Inc.

Michael Riehl president

110.9

99.6

11.4

1

2,554 2,263

726 814

Rodgers Chevrolet Inc.

Pamela Rodgers president

86.1

77.6

11.0

1

NA 1,605

NA 482

Bob Jeannotte Buick GMC Inc.

Robert Jeannotte CEO

69.0

53.0

30.2

1

1,449 1,100

378 316

Glassman Automotive Group Inc.

George Glassman president

65.2

52.7

23.6

1

NA 1,542

NA 857

Allen Road, Woodhaven 48183 18 22025 (734) 676-2200; www.gornoford.com

19

Village Ford Inc.

Michigan Ave., Dearborn 48124 20 23535 (313) 565-3900; www.villageford.com Gratiot Ave., Roseville 48066 21 25800 (586) 859-2500; www.mikeriehls.com Allen Road, Woodhaven 48183 22 23755 (734) 676-9600; www.rodgerschevrolet.com Sheldon Road, Plymouth 48170 23 14949 (734) 453-2500; www.jeannotte.com Telegraph Road, Southfield 48034 24 28000 (248) 354-3300; www.glassmanautogroup.com

This list of local auto dealers is an approximate compilation of the largest such businesses in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Dealership companies must have local stores to be included on this list. Penske Automotive Group is not on this list because, while it is locally headquartered, it doesn’t have local car dealerships. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Actual revenue figures may vary. NA = not available.

B Automotive News. C Crain's estimate. D Includes George Matick Chevrolet, Matick Toyota and Matick Auto Exchange. LIST RESEARCHED BY SONYA D. HILL

13

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

SPECIAL REPORT: SMALL BUSINESS

Surviving the sinkhole Creativity and grit are keeping area businesses from going under By Kurt Nagl knagl@crain.com

It’s a slow morning for George’s Flower Shoppe at 15 Mile and Utica roads in Macomb County. The store’s manager Andy Petrone, 48, is working on floral wedding arrangements for a young couple, among a total of five or six customers for the day. His parking lot, however, is busy with cars speeding through to skirt construction. But nobody is buying flowers. Business has been bad, Petrone said last month, since a football field-sized sinkhole opened up at the doorsteps of dozens of local stores and houses this past Christmas Eve. It’s been more than half a year since it swallowed two homes, shut down a major road to through-traffic and disrupted the lives of shop owners and residents. Many local business owners agree this is the worst year they have had,

George’s Flower Shoppe manager Andy Petrone outside the store at 15 Mile and Utica roads in Macomb County. “Everybody avoids the area,” he said. KURT NAGL/CRAIN’S DETROIT BUSINESS

and they can’t afford it much longer. Petrone said sales are down by a third from the same time last year. He’s cut shifts and inventory and rarely sees his regular customers

JOIN THE FIGHT FOR ALZHEIMER’S FIRST SURVIVOR.

anymore. “Everybody avoids the area,” he said. Workers in hard hats seem to outnumber patrons. In addition to other

closures, 15 Mile Road was blocked to through traffic in both directions, which meant an average of 40,000 cars per day turned to virtually zero overnight, said Wayne O’Neal, Fras-

er’s city manager. Business owners and affected cities — primarily Fraser and Clinton Township — along with Macomb County scrambled to keep storefronts visible by putting up countless signs reminding motorists: “All Businesses Open.” Fundraisers were organized to benefit shops that have lost customers. Despite the community effort to keep local business alive, it has been hurting badly. Bob Cannon, supervisor of Clinton Township, estimates business has been down a collective 40 percent around the sinkhole and related construction sites. “It’s very important to us they stay in business. … It’s a source of pride that we can help them get through this,” Cannon said. Candice Miller, who took office as Macomb County Public Works commissioner a few days after the sinkhole opened up, said the new sewer line should be replaced by Labor Day. Completion of the entire project — including a repaved and passable 15 Mile Road — is pegged for Christmas, pushed back from an earlier projection of Thanksgiving. SEE SINKHOLE, PAGE 14

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

SINKHOLE

SPOTLIGHT

FROM PAGE 13

“We are well aware and sympathetic of the economic impact (of the sinkhole),” Miller said. “There’s no question there has been some impact on businesses to various degrees.” Sinkholes are nothing new for the area, going back to the 1970s and requiring tens of millions of dollars to fix. The most recent sinkhole — 320 feet long, 60 feet deep and 30 feet wide — is expected to cost $75 million. Retail and restaurant owners, who rely on the holiday season and winter months for the bulk of revenue, are holding their breath for that to be finished. In a way, the flower shop has been lucky. First, the aroma of roses and daisies for the most part masks the scent of raw sewage that often hangs thick in the air, Petrone said. Second, even though its corner location is abused by motorists, its entrances are still open. Green Lantern pizzeria’s driveway has also been preserved but, at the very end of a closed street crammed with cranes and industrial construction equipment, it is the last one on 15 Mile before cars are diverted via a temporary dirt road. Pizzeria owner T.J. Spreitzer, 31, said his store is on pace to lose about $750,000 to $1 million in revenue this year. He said sales dropped 60 percent in the first week after the sinkhole formed and have been down 20 or 30 percent each week from the same time last year. He said he panicked at first and burned nervous energy by hustling pizzas out to construction workers so they’d remember him for the next year’s worth of lunch breaks. Renovation plans were immediately put on hold at the pizzeria. Four weeks ago Spreitzer upped his advertising budget 400 percent and

New CEOs of DMC Sinai Grace, Huron Valley hospitals named

KURT NAGL/CRAIN’S DETROIT BUSINESS

Green Lantern pizzeria is at the very end of a closed street crammed with cranes and industrial construction equipment. Theirs is the last driveway on 15 Mile before cars are diverted via a temporary dirt road. rolled out a $25,000 campaign aimed at delivering 11-by-11-inch doorhangers to nearby residents. “We’re lucky enough that we have a solid following,” he said. “If we were new there’s a really good chance this would have failed.” Across the street from the flower shop, Josh Jankiewicz, 29, and his wife Crystal Mielcarek, 34, hang out in Nerdtopia video game and hobby shop, thinking back to Black Friday, when they first opened. “We were doing great,” Jankiewicz said, pointing out all the areas of the store he had been planning to expand during the high of holiday sales. “Now, basically nobody knows

we’re here.” Sales at Nerdtopia have slipped 30-40 percent, Jankiewicz said. He’s improvised to try to keep them up. “I’ve never taken a woodshop class, but I built a T-frame sign and the city let me put it out by the corner,” he said. “But signage doesn’t really help if you can’t get into the parking lot.” Back at the flower shop, Petrone has plenty of time between customers to stare outside and reflect on what went wrong. “The county and the city need to do their job like everybody else and make sure this time it’s done right,” he said. “Nothing comes out of this store until it’s done 100 percent perfect.”

members; $20 nonmembers. Contact: Leonie Teichman, phone: (248) 430-5855; email: leonie@apacc.net; website: apacc.net

Info session to discuss Industry 4.0 trends, address systems integration challenges and offer solutions to issues impacting the current business climate. Speakers include: Tim Finerty and Sarah Russell, CPA shareholders, Clayton & McKervey. Automation Alley, Troy. Members free; nonmembers $20. Phone: (800) 427-5100; email: events@automationalley.com

CALENDAR TUESDAY, AUG. 8

Paul Singh Fireside Chat. 5-7 p.m. Ann Arbor

Spark. Paul Singh is an entrepreneur, speaker, investor, and Airstreamer. Two years ago, Singh decided to buy a custom Airstream trailer and travel the United States in search for entrepreneurs and startups where the coastal VC’s were not looking. Singh will present his lessons learned on traveling tens of thousands of miles to more than 65 cities and meeting with thousands of entrepreneurs, startups, incubators, and investors. Ann Arbor Spark. Free. Email: techtour@thirdrail.co; website: nvite.com/ rjtechtour/4o9l1o

UPCOMING EVENTS

Asian Pacific American Chamber of Commerce Symposium. 7:30-9:30 a.m.

Peter Sorrentino

Aug. 17. APACC. Peter Sorrentino, Comerica’s chief investment officer, talks about current economic trends with a focus on the changing nature of the U.S. global trade and its impact on currencies, commodities and productivity. Comerica Bank, Livonia. $10

American Society of Employers Employment Law Workshop. 7:30 a.m. - 3:30 p.m. Aug. 17.

ASE. Workshop will address employee relations. Attorney-led panels and specialized breakouts will review a number of everyday laws and regulations that impact the employer-employee relationship. Schoolcraft College VisTaTech Center. $159 members; $179 nonmembers. Contact: Wendy LoCicero, email: wlocicero@aseonline.org Filling the Supervisory Gap. 8:30-10:30 a.m.

Aug. 22. Michigan Manufacturing Technology Center. Event discusses effective leadership and bridging the gap between newer and seasoned workforces, senior and junior staff, and front office and plant floor associates. Free, but registration required. Michigan Manufacturing Technology Center, Plymouth. Contact: Gary Marley, email: gmarley@the-center.org Trends Impacting Automation Companies.

8:30-10:30 a.m. Aug. 23. Automation Alley.

Executive Briefing: Cybersecurity and Third Party Providers. 8-9:30 a.m. Aug. 23. UHY LLP.

Norman Comstock, managing director, and David Hartley, principal of UHY Advisors, will lead a discussion. Free. UHY, Sterling Heights. Contact: Chris Clark, phone: (586) 843-2637; email: cclark@uhy-us.com. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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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, call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

Detroit Medical Center has named Karima Bentounsi CEO of Huron Valley-Sinai Hospital in Commerce Township and Conrad Mallett as CEO Sinai-Grace Hospital in Detroit. The appointments are effective Aug. 14. Bentounsi replaces Karen Fordham and Mallett replaces Paula Autry. Both Fordham and Autry left this year for other opportunities, DMC said. Bentounsi was CEO of Weiss Memorial Hospital in Chicago. She holds an MBA from the Keller Graduate School of Management and is a member of the American College of Healthcare Executives. Mallett was interim CEO at Huron Valley-Sinai Hospital since March 2017. He had held multiple positions at DMC since 2003, most recently as DMC chief administration officer. He also served as president of Sinai-Grace Hospital from 2003 to 2011.

Arwood joins new Miller Canfield consulting business Steve Arwood, former CEO of the Michigan Economic Development Corp., has been named CEO of a new consulting subsidiary of Detroit-based Miller Canfield Paddock and Stone PLC. Arwood will lead the newly created Miller Canfield Consulting LLC to assist the firm’s clients in Steve Arwood identifying tax incentives, financing and public-private partnership opportunities, the firm said in a news release. Arwood resigned from the MEDC on June 30 after 2 1/2 years as its leader. He previously served as the executive vice president and COO of the MEDC. Before that, Arwood was the director of the state Department of Licensing & Regulatory Affairs.

Detroit Economic Club promotes Grigorian to top job The Detroit Economic Club has named COO Steve Grigorian as its next president and CEO. He will take the helm at a date yet to be determined this fall, succeeding President and CEO Beth Chappell. Chappell plans to leave the organization by the end of the year Steve Grigorian to become executive chairwoman of RediMinds Inc., a data strategy, engineering and innovation firm she co-founded in 2016. Grigorian, 59, has served as COO of the Detroit Economic Club since 2004. In that role, he’s built the club’s Young Leader and student programs and managed dozens of events each year. Before his tenure at the club, Grigorian was director of marketing and regional sales manager at Thomson Reuters for 19 years.

August 7, 2017

MOBILITY FROM PAGE 1

“Our original model, getting the state to provide the spark and initial seed funding then going after industry, appears to be working,” said John Maddox, president and CEO of ACM. “The interest in the site has been picking up.” The state approved $35 million for the nonprofit controlling ACM, Willow Run Arsenal of Democracy Landholdings LP, to support the construction of the first phase of the project — which includes a 2.5-mile highway loop, a 700-degree curved tunnel, garage and operations center. Maddox said the state’s involvement triggered private investment, including AT&T signing on as the mobility center’s first corporate partner earlier this year. It will be the sole provider of cell network service through 2020, investing $4 million. Egil Juliussen, director of research for automotive technology at Southfield-based market research firm IHS Markit, said experts initially believed the market adoption would be too slow and the project too expensive for the test site. “Three years ago, we didn’t know how fast autonomous was going to happen,” Juliussen said. “But, today, the real need is for testing.” Autonomous vehicles present a significant risk to the traditional Southeast Michigan automotive market, making the creation of a test site like ACM a vital part of saving the local economy, said Doug Rothwell, president and CEO of the Business Leaders for Michigan and chairman of ACM’s board. “This technology posed a hell of a lot of risk to this state,” Rothwell said. “I’m heartened that everyone pulled together — state government, the private sector, universities — so that we could solidify our role in this growing part of the industry.” However, an important player is missing: The federal government. Early on, ACM and its board believed federal money was required for the site plans to survive. It hasn’t happened ... yet. Maddox said investment from the federal government would make the country, as well as Michigan, more competitive in advancing autonomous technology than other nations, but the political struggles embroiling Washington, D.C., are slowing its involvement in ACM and elsewhere. “We’re being outspent 10-to-1, maybe even 50-to-1, in some parts of the European Union,” Maddox said. Also missing is buy-in from the Detroit 3 automakers, Ford Motor Co., General Motors Co. and FCA US LLC. Though both Rothwell and Maddox believe Toyota’s investment will cause the others to sign on. “We thought Ford, GM and Toyota would be most interested,” Rothwell said. “I think it’s just timing. A matter of months, not years, really.” Maddox said more investment announcements are expected in the coming weeks, but did not confirm who. Phase one of the project is expected to open on Dec. 1. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Page 15 1

RAIN C R A I N ’ S D E T R O ICT B’SUDSETROIT I N E BSUSINESS S // A U G U S T 7 , 2 0 1 7

YOU MADE NEWS IN CRAIN’S

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MARKET PLACE REQUEST FOR PROPOSALS REQUEST FOR QUALIFICATIONS - PROFESSIONAL SERVICES The Detroit-Wayne Joint Building Authority (D-WJBA) owns and operates the 745,000 square foot Coleman A. Young Municipal Center (CAYMC). They are considering investing $120 million in capital improvements and are exploring funding by issuing bonds. The D-WJBA is seeking the following professional services to assist in this initiative: ∂ Legal Service - Bond Counsel ∂ Bond Underwriting Services ∂ Municipal Advisory Services Interested parties who desire to provide one (1) of the services referenced above should provide the DWJBA with the following information: 1. Brief history of your firm. 2. A summary of your firm’s transactional experience including projects in Detroit, Wayne County and Michigan. 3. Names and titles of the firm’s staff that will be assigned to this engagement. 4. Any additional information that you believe is relevant to this assignment.

Please transmit, in PDF form, a copy of your completed document to commissioners@dwjba.com. We request that you not use the e-mail address for any other purpose than to send the requested document. Deadline: Friday, August 11, 2017 at Noon. The Detroit-Wayne Joint Building Authority reserves the right to request additional information, require an interview of the team members indentified in the submission and can withdraw this RFQ without advance notice or explanation and at no cost to the D-WJBA.

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Senior Product Engineer for Maxion Wheels, in Novi, MI. Duties: Serve as key cust liaison for design, eng’g, production, & delivery of Maxion Wheels passenger car & light truck wheel systems & programs. Coord design validations & alternatives & product timeline creations, as well as customer fit, form, & functional eng’g req’s through serving on Integrated Product Teams. Ensure successful & timely launch of program production operations, incl’g technology transfers & eng’g changes. Coord customer product design & eng’g devel activities, incl’g design reviews of new programs, introducing new products & technologies, & eng’g changes. Lead internal product design validation & eng’g devel activities, including design reviews of new programs & production launch operations. Support product trials & launches, & liaise between customers & company global design centers to resolve product design & eng’g issues. 25% travel, both domestic & intern’l. Req’s: Bach Deg in Mech, Ind, or Manuf’g Eng’g, or foreign equiv. 2 yrs exp in auto wheel product devel eng’g pos. 2 yrs exp w/ each of the following: eng’g & product devel processes for steel & aluminum wheels for passenger cars & commercial trucks, incl’g devel new integrated wheel designs & technologies, welding solutions for assemblies between wheel discs & rims, casting & machining processes, & stamp-based wheel manuf’g processes; coord’g the devel of quotations for auto wheels, incl’g analyzing customer req’s, tooling designs & costs, timing calculations, packaging definitions, & production capacity & capability analyses; performing packaging evaluations for new auto wheel products, incl’g analyzing packaging & transportation-related defects; supporting suppliers in devel steel & aluminum wheel components & specifications, incl’g cladding & adhesives, & monitoring component testing & validation; defining & validating new wheel specs in accordance w/ IMMETRO, JWL, & CONTRAN requirements; measuring & analyzing individual wheel critical characteristics using uniformity & imbalance gauges & measuring devices. Exp can be acq’d concurrently. Mail resumes: Kelsey Stalk, HR, Maxion Wheels, 39500 Orchard Hill Place, Ste 500, Novi, MI 48375. Ref Senior Product Engineer pos. EOE

RETIREMENT SYSTEMS OF THE CITY OF DETROIT Invites applications for

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The Chief Accounting Officer - Controller is a newly established position that will be appointed by and accountable to the Executive Director and both Boards of Trustees of the Retirement Systems. This position will direct the daily accounting operations of the RSCD under the direction of the Executive Director and with the assistance of a staff of approximately 4 to 6 employees. Information about each Retirement System is available on the RSCD website at www.rscd.org. Please refer to the website for the full job description and benefits. If you are interested in this career opportunity, please apply at http://www.rscd.org

RETIREMENT SYSTEMS OF THE CITY OF DETROIT Invites applications for ASSISTANT EXECUTIVE DIRECTOR POLICE AND FIRE RETIREMENT SYSTEM Salary Range $100,000 to $150,000 The Assistant Executive Director is responsible to oversee the day-to day business and affairs of the PFRS under the direction of the Executive Director and with the assistance of a Chief Investment Officer and a staff of approximately 35 employees. Information about the Police and Fire Retirement System is available on the RSCD website at www.pfrsdetroit.org Please refer to the website for the full job description and benefits. If you are interested in this career opportunity, please apply at: http://www.rscd.org

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

PROCESS FROM PAGE 3

Having the operation nearby will cut processing costs for Aronson’s own Clinton Township-based Clean Planet Foods meat company and others like raw juice maker Drought by nearly half by eliminating the shipping fees they now pay to have their products processed in Milwaukee, the nearest similar operation. Aronson expects the innovation center to open in a month and the processing line to be up and running by Nov. 1. “I had HPP with Garden Fresh, which helped us grow not only regionally and nationally but globally,” he said. “We were the largest fresh salsa company in the world right out of Ferndale, and HPP made that possible.” Two HPP lines at Ferndale-based Garden Fresh transferred to New Jersey-based Campbell Soup Co. (NYSE: CPB) with the 2015 sale of the company. But even Campbell is sending some of its fresh products to Wisconsin to go through HPP because it doesn’t have the capacity it needs here, Aronson said. “I love what’s been happening in food processing, and I feel like we (Garden Fresh) have been a small part of that,” he said. The new operation, which is expected to create 25-30 jobs, garnered a $150,000 grant from the Michigan Commission of Agriculture and Rural Development in July, as one of the first incentives in a pilot incentive program launched by the state agriculture department (see story Page 3). “There’s literally hundreds of thou-

EXPAND

BEHIND THE SCENES:

FROM PAGE 3

FILMMAKING IN DETROIT Comedy Central is back in Detroit for a second season of “Detroiters,” thanks to the Detroit Film Initiative and the incentives offered by local businesses. Learn how the initiative is working to support filmmaking in the city – and how your business can be part of a directory of film-friendly vendors.

FREE WEBINAR 12 – 1 p.m. Wednesday, August 30 • Register at: crainsdetroit.com/PMBC FEATURING:

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sands of dollars a month leaving Michigan, going somewhere else,” Aronson said. “Now we can bring this all in-state.” He owns 90 percent of Great Lakes; a silent partner owns the rest. A 30,000-square-foot building on Trolley Industrial Drive near I-94 will house the HPP line. It was formerly a distribution site for Garden Fresh products, and Campbell Soup continued to operate from there for a time after it bought Garden Fresh. Campbell vacated the building recently after constructing a new warehouse in Ferndale, leaving two “football-field-sized” walk-in coolers that are perfect for storing food going through the HPP process, Aronson said, and four loading docks. The site has space for four HPP lines, but initial plans call for installation of a single line that would have capacity to process 45 million pounds of food per year. When complete, the HPP line will be able to take small runs as well as large runs, given that it uses only cold water to process foods and won’t need to go through costly cleanings in between product runs, Aronson said. The process does change some some attributes of the food, he said. “What we noticed is it makes jalapenos hotter, so I had to put less in (salsa.) And it made garlic weaker. I had to put more garlic in.” The process can’t be used for products in glass and doesn’t work well for breads and breakfast sandwiches, Aronson said. Dips work great, but after they go through HPP, they may leach a little liquid around the edges. “That’s what I’ll help them with. I’ll tell them here’s the food starch you want to use because it’s all natural,

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Most of it will go to companies wanting to expand their food and agriculture businesses, Holton said, Money also will be used to fund competitive grants for companies that want to add equipment or training, for instance, and to help companies export products. State agriculture administrators believe the new incentives will deliver a level of flexibility to help businesses the department didn’t have. “MEDC does what it can, and then we can plug in on top,” said Jamie Clover Adams, director of the Michigan Department of Agriculture and Rural Development. “MEDC really looks at projects that bring a lot of jobs and a lot of investment. For agriculture, that’s not always the case. But in a small community, 20 jobs is a huge deal.” A $225,000 grant from the department to Continental Dairy and Fairlife, which makes filtered milk products, was among the first such awards this year. With its expansion, Continental Dairy now makes five products at its Coopersville location — nonfat dry milk, cream, condensed milk, butter and buttermilk powder, Cooper said. The processed products are sold as commodities that become the base for such foods as chocolate bars, ice cream, cheese and yogurt.

and it’s really attractive on your label. ... You don’t want to add something with five ingredients. We can help them that way without having to experiment at Jessie James: home for a Process helped month or five Drought expand. months.” The process has helped Drought expand its distribution throughout the Midwest over the past eight months, said Jessie James, chief business development officer of Drought and one of the four sisters who founded the company six years ago. Aronson gave the fledgling company the opportunity to experiment with his HPP machines at Garden Fresh, and testing showed the process extended the shelf life of its products from three to five days to 75-90, she said, though the company doesn’t sell products past 40 days. Between the addition of a new, 15,000-square-foot production site now under construction in Berkley and reducing costs with Great Lakes HPP, the company expects to increase its revenue by 40 percent in the coming year. Over 80 retailers nationally are interested in selling Drought, James said. And Aronson’s new line will make that possible. “You’re able to make a really fresh, great product without adding any preservatives,” she said. “This technology is revolutionary.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

While the Agriculture Department has had funding for several years to run a competitive grant program for food and agriculture projects, the Legislature authorized $1.5 million for incentives this fiscal year, including $475,000 to test an incentives program that doesn’t use a competitive process, Agriculture spokeswoman Jennifer Holton said. Companies looking for state help to expand their operations often turn to the MEDC, which has a cash pool it uses to help companies expand. But the agency generally requires those employers to create at least 50 jobs, 25 if a company is in a rural county. That can be a high benchmark for a smaller company, particularly agriculture businesses, said Cooper, who also is president and general manager of dairy manufacturing operations for Dallas-based co-op Select Milk Producers, Continental Dairy’s parent company. Agriculture job creation often is thought of along the entire supply chain. The dairy project and two others received $475,000 in pilot incentives funding for investments in food and agriculture projects in the state, including Herbruck’s Poultry Ranch Inc. in Ionia County and Great Lakes HPP LLC, a new high-pressure processing line in Taylor led by Garden Fresh Gourmet founder Jack Aronson (see related story, Page 3). Crain’s senior reporter Sherri Welch contributed to this report.

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MLS: Detroit makes progress on expansion effort Bristol-Myers By Bill Shea bshea@crain.com

Detroit was mentioned this week by Major League Soccer Commissioner Don Garber as one of four cities that have advanced their efforts over the summer to secure an expansion team. His comments came during a webcast news conference before the MLS All-Star Game in Chicago on Wednesday. The league, which is in final talks to add Miami as a market, plans to expand to four more cities in coming years, and Detroit is one of 12 cities that are part of the formal expansion bid process. Garber had specific praise for the efforts by Detroit, Cincinnati, Sacramento and Nashville. Locally, billionaires Dan Gilbert and Tom Gores are jointly seeking the Detroit team, and made progress in securing their preferred location — the unfinished downtown jail site — when Wayne County announced on July 31 that it intends to work with them on a deal instead of finishing the justice facility. “Detroit just got one step closer to having access to the jail site,” Garber said. “That got a lot of energy and attention in Detroit.” The league has told Crain’s that it has monitored the success of high-profile soccer events in the

ROSSETTI ASSOCIATES INC.

This rendering shows the interior bowl of a proposed Major League Soccer stadium in Detroit. Billionaires Dan Gilbert and Tom Gores are jointly seeking the Detroit team, and made progress in securing their preferred location — the unfinished downtown jail site. market, including the recent International Champions Cup match that drew 36,000 fans last month, crowds of more than 100,000 at Michigan Stadium for ICC matches, and the ongoing crowds of 5,000-plus for semi-pro Detroit City FC in Hamtramck. MLS intends to award two expansion teams during its league meeting in December, then two more some

time after that. “We’ll conduct lots of meetings and have got an enormous amount of work over the next couple of months to get to the final two,” Garber said. The other cities with formal expansion bids, which had to be submitted by Jan. 31, are St. Louis, Tampa Bay/St. Petersburg, San Antonio, Raleigh, Charlotte, Indianapolis,

Phoenix and San Diego. Ultimately, MLS will have 28 teams. Los Angeles FC begins play next year as the 23rd club and the unnamed Miami team launches for the 2019 season. After that, the next two expansion teams are expected to begin play in 2020. It’s unclear when the final two expansion clubs would formally launch. The expansion teams awarded in December will pay $150 million each to join the league. A fee for the final two clubs hasn’t been formally announced. New MLS owners aren’t buying franchises. Instead, MLS is a single-entity business, meaning all teams are owned by the league and all players are its employees rather than employed by the club. MLS pays the players. Team “owners” pay an investment fee to MLS for the right to operate a team in a geographic area. They become league shareholders rather than franchise owners in a league that has publicly acknowledged it remains unprofitable. Teams keep their own books and budgets. Gilbert and Gores unveiled a $1 billion plan in April 2016 to build a 22,000-25,000-seat soccer-specific stadium on the jail site, and the project would include towers for residential, retail, and office use.

Squibb to acquire IFM Therapeutics By Dustin Walsh dwalsh@crain.com

Multinational biopharmaceutical company Bristol-Myers Squibb Co. plans to acquire immunotherapy startup IFM Therapeutics in a deal worth up to $2.32 billion. Gary Glick, a University of Michigan researcher, is CEO of the Boston-based startup. Under terms of the definitive agreement, Bristol-Myers will pay $300 million upon closing of the deal with additional contingent payments to Glick and other shareholders worth up to $1.01 billion when the company’s products reach certain milestones. Further payments are also possible under the deal if new products are formed, according to a news release. The deal is expected to close in the third quarter of this year. IFM is developing a portfolio of drugs to fight diseases, such as cancer, autoimmunity and inflammatory disorders, by either boosting or dampening the immune system. Bristol-Myers will retain all of IFM’s current employees and facility in Boston.

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“They could be the perfect hire, but they can’t get that driver’s license because they have these fees,” said Pasky, who co-chairs of the Workforce Development Board. The most common driver responsibility fees stem from a lack of auto insurance — a symptom of the Motor City’s highest-in-the-nation insurance premiums that force an estimated half of all Detroit motorists to drive without insurance. “Typically, a person can’t afford the insurance, so they’re driving around without the insurance and then they get pulled over and incur these points and more driver responsibility fees,” said Marcus Jones, president of the Detroit Training Center. Jones said the fees are the “biggest problem we have” when screening applicants to be trained for jobs as commercial truck drivers, heavy equipment operators and other positions requiring a driver's license. “If you can’t pay your driver responsibility fees, then it’s going to impact your ability to get the job,” Jones said. “It’s huge.” The city’s Workforce Development Board and Mayor Mike Duggan’s administration are starting to lobby lawmakers to forgive some of the fees, which aren’t scheduled to be fully eliminated until 2019. Driver responsibility fees also are the target of a federal lawsuit filed in May against Secretary of State Ruth Johnson that contends the fees and suspensions amount to “wealthbased discrimination.” “Folks are really being trapped in a cycle of poverty,” said Phil Telfeyan, executive director at Equal Justice Under Law, a Washington, D.C.-based civil rights group.

Revenue source In 2003, the Legislature created the Driver Responsibility Fees, and they

CLIENTS FROM PAGE 3

In the 1950s and 1960s, “we had a culture across companies in Michigan where the well being of individuals was important to companies,” Jackson said. “Some companies still have that. ... They invest in employees and have a great community to live in.” Jackson said more companies have adopted this mindset to refocus their values and invest in employee and community well-being. “If you have a happy and healthy employee, productivity increases,” he said. Jerry Konal, senior consultant in health and benefits with Willis Towers Watson, said larger companies have been moving toward well-being benefit plans for several years. “The focus should be on offering effective programs, working collaboratively with vendor resources, and providing the right education to help employees and family members navigate all of the resources available to them today," Konal said. Over the past year, McLaughlan said MMA Michigan has been creating a comprehensive approach to

quickly became a $100 million annual revenue source of revenue in the midst of a state budget crisis. Drivers were levied new fees ranging from $150 for driving with an expired license and $200 for driving without insurance to $500 for drunken driving and $1,000 for causing injury or death. The fines were levied for two consecutive years. When they went unpaid, the Secretary of State’s office suspended violators’ licenses. To get a license reinstated, drivers have to pay off the old fees in full, plus an additional $125 “reinstatement fee.” Lawmakers faced years of backlash from motorists over the fees and in 2012 began a seven-year reduction. Any driver fees assessed before October 2015 are not eligible for reduction. The ongoing reduced fees remain a sizeable chunk of revenue for the state’s $10 billion general fund. For the current fiscal year, the state expects to collect $62.5 million, most of which goes to the general fund. As the fees slowly go away, revenue is projected to decline to $43.5 million in the 2018 fiscal year, followed by a drop to $25.5 million in the 2019 fiscal year, according to the nonpartisan House Fiscal Agency. “These fees on the books will never go away — they’ll always be there unless the state acts,” said Jeff Donofrio, executive director of workforce development for Duggan. Duggan and the co-chairs of his workforce development board are proposing lawmakers reinstate a community service option in lieu of payment and at least waive the fees for anyone who goes through a state-approved worker training program. They’re emphasizing the fees aren’t just a Detroit problem — a hurdle that often has to be cleared in the Republican-controlled Legislature. A Crain’s analysis of state Treasury Department data shows the average unpaid fee for Detroiters is $1,258, while the overall statewide average is slightly higher at $1,292 per driver.

Dan Varner, president of Goodwill Industries of Greater Detroit, said lawmakers should consider some level of fee relief. “There are a number of folks who are so deep in the hole that getting out is a real challenge,” Varner said. Each year, Wayne County circuit judges refer 45 to 50 probationers to Goodwill Industries for job-training and placement services. Using money from its retail second-hand stores, Goodwill helps pay off unpaid driver responsibility fees of less than $1,000 for those probationers, Varner said. But with more than 21,000 Detroiters saddled with unpaid driver fees, helping up to 50 people get back on the road is “a drop in the ocean every year,” Varner said.

group benefits consulting to help the firm’s midsized employers attract and retain talent, encourage employee satisfaction and reduce absenteeism. “Wellbeing University is an extension of HR,” said McLaughlan. “Paying attention to employees has always been a part of (MMA Michigan’s) mission and we wanted to share our experiences” with clients. At MMA Michigan, McLaughlan said co-founders Tom McGraw and Bill Wentworth built a collaborative workplace culture that remains strong after 20 years for its 102 employees. “We use a company improvement tool and do a lot of testing in our hiring practices,” said McLaughlan, who recently was appointed CEO of MMA Michigan. “It is done to make sure we have smart people with the right attitude. (Prospective employees go through) a half-day test with an industrial psychologist.” MMA Michigan recently scored a 100 percent in satisfied or very satisfied client satisfaction, 98 percent in client retention and has scored in excess of 90 percent in employee core engagement satisfaction, she said. Earlier this year, MMA Michigan

launched its Wellbeing University and recently completed its first two classes of 30 clients each. During this series of three sessions for clients, HR professionals gained a better understanding of their organization’s goals, how to redeploy and add to tools already in place, and benchmark the outcomes. McLaughlan said over the last three years employers have been broadening their worksite wellness programs to help their employees manage their family, social and financial issues. “The market has evolved. It’s not called wellness, but more health and well-being,” she said. “It is the same premise — to help companies manage their health care costs. But also because the economy has improved, it is used to recruit and retain employees. You engage employees and they are less likely to leave, more likely to work harder and make fewer mistakes. Businesses and more successful when they pay attention to this.” Sixty MMA Michigan clients completed the program this year. Next year, MMA Michigan plans to supplement the training with onsite and webinar classes on financial wealth,

Seeking class action status In May, Equal Justice Under Law and the Detroit-based Sugar Law Center filed a federal lawsuit in U.S. District Court in Detroit behalf of two Detroit women living in poverty who can’t afford their driving fees. The plaintiffs are seeking class action status to add thousands of other Michigan drivers whose licenses have been suspended by Johnson through state court orders for unpaid fees, Telfeyan said. “In Michigan, suspension is the default,” Telfeyan said. “In other states, community service is an alternative.” State attorneys have sought to beat back the lawsuit, arguing that there’s no violation of constitutional rights in the way the Secretary of State and Michigan traffic courts revoke licenses. “Those who commit an offense and are in the system, moreover, consume the system’s resources,” Assistant Attorney General John G. Fedynsky wrote in a July 17 court filing. “Recouping some of those costs is long-standing, reasonable and permitted under the law.” One of the plaintiffs in the lawsuit is 32-year-old Adrian Fowler, a single

mother who lives on Detroit’s west side and works a minimum-wage $8.90-an-hour security guard job in the city. Fowler said she’s passed on better-paying jobs because of the hours it takes to navigate the city’s bus system to get to work. “I had to let good jobs go,” she said. State records filed in court by the Attorney General’s office show Fowler has been stopped by police in Ferndale, Eastpointe and Oak Park over the last four years for making prohibited turns and disobeying stop signs — each time while driving on a suspended license from Georgia. All three cities have issued bench warrants for Fowler’s arrest for missed court dates and a total of $2,100 in unpaid fees. During one of the stops in Ferndale in 2013, Fowler said she was rushing her infant daughter to a hospital because she had a fever of 103 degrees. Fowler acknowledges she drove without a license in a vehicle insured by her mother after moving back to Michigan from Georgia in 2012. Her license was suspended in Georgia for similar traffic violations there, according to the state. Fowler said she just wants a reasonable payment plan, which judges are allowed to grant. “It’s not like I’m trying to stick my hand out to drop money in my hand and take care of my ticket. I know what I did, and I’m responsible for what I did,” she said. “I’m trying to get things going in the right direction. It’s hard enough being a single parent, trying to juggle these things and what not.” Telfeyan said low-income residents who owe the fees can never be expected to pay them off when they can’t access better-paying jobs due to their inability to drive to work. “This is the irrationality of the law — if you want people to repay their debt, you shouldn’t make it harder for them to do so,” Telfeyan said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

health benefit compliance, incentives and communication strategies. At Community Financial Credit Union, a Plymouth-based employer with 250 employees, Laura Stone, supervisor of total rewards, said her participating in MMA Michigan’s Wellbeing University helped in two ways. “We have a basic wellness program and want to expand it and learned if we have a low participating 401(k) plan or have high number of ER visits that aren’t (emergencies), we can do something about that,” Stone said. Stone said Community Financial plans to return next year to Wellbeing University for lessons in offering additional personal financial training for employees. The company also wants to add more wellness challenges to encourage better health and teamwork, she said. “Health and well-being is vital to the culture of the organization,” said Denise Christy, MMA Michigan’s vice president of health benefits’ sales and marketing. “It is not just about expertise. It is also about wealth and life, social, help clients build a culture.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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THE WEEK ON THE WEB

JULY 28 - AUGUST 3 | For more, visit crainsdetroit.com

Fellowship program moves accelerator to Detroit

L

ocal funding has driven Venture for America, a fellowship program that places recent college graduates in cities with emerging startup scenes, to move its accelerator to Detroit. The New York-based nonprofit has been organizing paid fellowships in Detroit and other cities since 2012. But its younger initiative, an accelerator program for fledgling businesses, has been based in Philadelphia for its past two years. For its third year, the Venture for America Accelerator has moved to Detroit — specifically, the Dan Gilbert-owned Madison Building at 1555 Broadway St. — after receiving funding from the William Davidson Foundation, Quicken Loans Inc. and Detroit Venture Partners. Sergei Revzin, VFA’s entrepreneur in residence and accelerator program director, declined to disclose specific funding numbers. He said the William Davidson Foundation donated the bulk of the accelerator program’s costs for 2017 and 2018; Quicken Loans, of which Gilbert is founder and chairman, and Detroit Venture Partners have also provided funding, as well as the space in the Madison Building. Quicken Loans has provided support since VFA’s founding in 2011 and helped build VFA’s Detroit operations into “one of our largest markets,” Revzin said. The three-month accelerator program is open to VFA fellowship alumni. Accelerator participants often first conceive of their own startup idea while on a VFA fellowship, Revzin said. Though fellows are stationed working for another, already-established startup, they are also given the opportunity to work on their own side projects at the same time, he said. Those fledgling businesses created by fellows are often the ones that get chosen for the accelerator.

BUSINESS NEWS Wayne County will focus on wrapping up a deal with Dan Gilbert to build a new jail complex, Executive Warren Evans said, though an option to finish the existing jail remains on the table. That puts Gilbert closer to getting the incomplete Wayne County Consolidated Jail site at Gratiot Avenue and I-375 for a $1 billion-plus mixed-use development with Detroit Pistons owner Tom Gores. The two billionaires plan a Major League Soccer stadium and three high-rises for office, residential and hotel uses. J DTE Energy Co. plans to build a 1,100 megawatt natural-gas-fired power plant in East China Township, a move that company executives say will help reduce carbon emissions J

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

65 million

The number of passenger trips the Detroit People Mover has made since its debut 30 years ago.

100

Miles per day Wayne State President M. Roy Wilson hoped to travel on his statewide bike tour to hear from residents outside Detroit, according to the Detroit Free Press.

$29

Starting price for tickets to the 2017 Quick Lane Bowl, Dec. 26 at Ford Field.

and make up for power lost from closing three aging coal-fired plants. J Building products maker Masco Corp. has opened its new corporate headquarters in Livonia. An event Monday marked the opening of the 91,220-square-foot facility on a 12acre site between Six and Seven Mile roads, adjacent to Schoolcraft College. About 220 employees recently moved to the facility from a more than 400,000-square-foot building in Taylor, where the company spent nearly 50 years. J Denso International America Inc. plans to invest $75 million by 2021 to expand its Southfield headquarters. The U.S. subsidiary of Japan’s Denso Corp. will create 120 new jobs as part of the project. J Ascension Health in Michigan will spend $63.1 million in capital projects starting this year on two of its Southeast Michigan hospitals — St. John Macomb-Oakland Hospital in Warren and Providence-Providence Park Hospital in Southfield. J Rachel Lutz is expanding her women’s boutique footprint in Detroit with a second Peacock Room set to open in the Fisher Building this fall. The new Peacock Room will join Lutz’s upcoming 2,000-square-foot Yama boutique in the Fisher Building, announced in May.

Molina Healthcare Inc. plans to close Midwest Health Center in Dearborn. Beaumont Health owns the Dearborn building where the Midwest Health Center clinic is located and leased it to Molina. A Beaumont official said the health system hasn’t yet determined a future use for the building. J The Oakland Press is moving to the Butterfield Office Center in Troy. The newspaper, which has made its home in downtown Pontiac for decades, is moving into just less than 7,000 square feet in the 112,000-squarefoot building off Big Beaver Road west of Crooks, according to Allan Adelson, a co-owner of the property.

RUMBLINGS

J

OTHER NEWS Wayne State University’s Oakland Center is closing in January. The Detroit-based university’s satellite at 33737 12 Mile Road in Farmington Hills will be shuttered and put up for sale by the end of the year, said Ahmad Ezzeddine, WSU’s associate vice president for educational outreach and international programs. J Grand River Avenue between I-94 and Cass Avenue in Detroit will be trimmed from seven lanes to five with new bike lanes under a $1.5 million plan by the Michigan Department of Transportation and city of Detroit. J The city of Hamtramck is calling for proposals for predevelopment planning and design services for the historic Hamtramck Stadium in Veterans Park. The stadium is one of a dozen remaining Negro Leagues baseball stadiums in the country. J Former Fiat Chrysler Automobiles labor relations chief Alphons Iacobelli, who federal officials believe to be at the center of a scandal involving individuals at the automaker and the United Auto Workers siphoning millions from an employee training fund, was released Tuesday on a $10,000 bond following his arraignment, Automotive News reported. J John Loftus has exited his position as executive director of the Detroit/ Wayne County Port Authority at the end of a three-year contract. J

DEATHS Philanthropist and former Guardian Industries Inc. executive Russell Ebeid died at his home July 30. He was 77. J

More than 5,000 people attended a VIP shopping event earlier this week for the new Cabela’s store in Chesterfield Township. The new 88,327-square-foot store near the intersection of M-59 and I-94 is planned to anchor a $100 million open-air mall development in the township.

ARTE EXPRESS DETROIT LLC

View from a building at the sprawling Packard Plant.

Pure Detroit to offer tours of Packard Plant

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he sprawling 3.5 millionsquare-foot old Packard Plant has long been a clandestine playground for urban explorers enamored with the ruins and history inside the hollowed-out complex on Detroit’s near east side. Now people will get the chance to tour the facility — safely and legally. Independent retailer Pure Detroit, in partnership with Packard owner Arte Express Detroit LLC, will begin offering walking tours of the plant Aug. 12. Tours will be available Saturdays at noon and 3 p.m. They cost $40 per person and are limited to those 18 years and older and groups of 30 per tour. The tours will run 90 minutes and include 1-2 miles of walking. Along the way, a tour guide will discuss the history of the facility built in 1903. “Our walking tours will offer a unique and enriching experience that focuses on the plant’s past, present and future contribution to the vitality of the city,” said Kevin Borsay,

owner of Pure Detroit. Reservations are necessary and can be made on Pure Detroit’s website at www.puredetroit.com. Arte Express Detroit, the local holding company of Peruvian developer Fernando Palazuelo, bought the Albert Kahn Associates designed Packard Plant in 2013. It is attempting to resurrect the facility and said in January that it had secured financing and tenants. In May, it broke ground on its first phase of construction, starting with renovation of the Administration Building and a bridge across East Grand Boulevard. Pure Detroit operates stores in historic Detroit buildings, including the Strathmore, Fisher Building, Guardian Building, GM Renaissance Center and Belle Isle Aquarium. It sells Detroit-themed items and offers free tours of the Guardian and Fisher buildings. Details of the agreement between Arte Express Detroit and Pure Detroit were not disclosed.

Is Snyder to meet with Foxconn on China trip?

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ould Gov. Rick Snyder be meeting with leaders of Taiwanese electronics giant Foxconn Technology Group while he’s in China? The Republican governor isn’t confirming a meeting, telling Crain’s by phone last week from China that “we haven’t announced anything specific.” But, in what has become a pattern, he said coyly in answer to a question about ongoing Foxconn conversations: “That’s one of the nice reasons to take these trips.” Snyder and the Michigan Economic Development Corp. are leading a delegation to the Chinese cities of Beijing, Guangzhou, Shenzhen, Chengdu, Shanghai and Hangzhou on a nine-day trip that ends Tuesday. He intends to focus on attracting Chinese investment to Michigan, including in the automotive and mobility industries, and promote Michigan’s tourism industry. Foxconn, formally Hon Hai Preci-

sion Industry Co. Ltd., makes liquid-crystal-display screens for use in smartphones and other electronic devices. Last month, the company announced a $10 billion investment in southeastern Wisconsin, though a specific location has not yet been revealed, with plans for 3,000 and as many as 13,000 jobs. Wisconsin Gov. Scott Walker said the state will offer $3 billion in economic incentives to lure Foxconn. Snyder signed into law an income tax incentive program that will allow companies that create hundreds or thousands of jobs and pay average or above-average wages to keep some or all of their income tax withholdings on new hires. It’s believed Foxconn is considering other American investments and Michigan could be a contending state. Snyder said from China that he is “still working on having a continuing dialogue with Foxconn.”

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CBHQ-15807 06/17

Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.