Crain's Detroit Business, Oct. 9, 2017 issue by Crain's Detroit Business

OCTOBER9-15,2017

Gilbert’s case for Amazon Detroit.

Crain’s Michigan Business: When the chips are up, state shines

Page 3

Potato crop is biggest in nation for chips. Page 9

Insurance reform

Auto suppliers

By Chad Livengood

GST Autoleather bankruptcy could be an early warning

Duggan divides lawyers on auto insurance clivengood@crain.com

Mayor Mike Duggan’s auto insurance reform proposal could dramatically curtail a lucrative business for personal injury attorneys who sue insurers on behalf of drivers and their doctors for unlimited medical benefits, while preserving the pain-and-suffering litigation business for other trial lawyers. The sweeping overhaul of Michigan’s no-fault insurance law Duggan is pursuing seeks to rein in the proliferation of lawsuits that billboard-advertising trial attorneys such as Mike Morse have pursued for drivers and medical providers against insurance companies by capping payments and allowing motorists to buy limited coverage plans. The cornerstone of the plan pushed by Duggan and Need House Speaker to know Tom Leonard proJJFirst-party vides just $25,000 lawsuits are where in personal injury a person sues their protection beneinsurance fits for post-hospicompany talization care — effectively JJThird-party lawsuits are where shutting off the spigot of unlimita person sues an ed insurance benat-fault driver for efits that have pain and suffering been at stake in a JJProposal has twofold statewide split results for increase in such attorneys lawsuits, known specializing in each as first-party lawkind suits, over the past decade. “There’s not going to be any lawsuits. The $25,000 will be used up before (insurers) have time to cut off the benefits,” said David Christensen, a Southfield-based personal injury attorney who pursues first-party lawsuits against insurance companies. At the same time, House Bill 5013 contains a provision seen as a legislative shield for a segment of trial attorneys who sue at-fault drivers on behalf of injured motorists to recoup pain-and-suffering damages in what are known as third-party lawsuits. That provision and prominent personal injury attorney Mark Bernstein’s support of Duggan and Leonard’s proposal has angered other trial attorneys who say their business — and the rights of car accident victims — will be harmed by the legislation. SEE PROPOSAL, PAGE 28

crainsdetroit.com

By Dustin Walsh dwalsh@crain.com

While both are prominent in television advertisements, Mark Bernstein (top) of the Sam Bernstein Law Firm and Mike Morse of the Mike Morse Law Firm take different approaches in auto accident lawsuits. Vol. 33 No 41

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The Chapter 11 bankruptcy filing of GST Autoleather Inc. may be a harbinger of bankruptcies to come. The Southfield-based car seat leather supplier filed for bankruptcy protection last Tuesday in U.S. District Court in Delaware, blaming a sharp decline in vehicle production and supplier issues. GST said in its bankruptcy filing that global auto output declined 4 percent in the past 12 months, but it’s unclear whether that was Need on platforms it to know supplied, because JJGST Autoleather global production filed Ch. 11 is expected to be bankruptcy flat or even rise protection Oct. 3 this year. But local exJJThe Southfield perts who resupplier is saddled with $196M in debt viewed the filing say slim margins and underperforming operations and operational missteps are JJExperts believe more likely to more auto blame, and as bankruptcies will auto sales stagcome as industry nate in Europe stagnates and North America, more and more of the weaker suppliers will be tipped over the edge. “Any decrease in the market will create a lot more of these cases,” said Max Newman, partner and bankruptcy attorney for Butzel Long PC in Bloomfield Hills. “We in the bankruptcy bar have been predicting these bankruptcies would return. We’ve been on a (sales) uptick for a very long time; bad management has no season, and even good management can overextend or have capacity issues or have a supplier failure. This is the result.” Representatives from GST did not respond to multiple requests for comment last week. GST is saddled with $196 million in debt and says it needs protection from creditors despite revenue of $540 million in 2016, according to the bankruptcy filing.

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SECOND STAGE: STRATEG

IC PLANNING

LEVEL UP

How to grow your business with strategic planning tools By Rachelle Damico

Special to Crain’s Detroit Business

The biggest mistake companies make when it comes to strategic planning? They don’t bother with it. “Strategy is about how we survive into the future, and that future is uncertain because the environment changes so much,” said Dino Signore, manager of entrepreneurial education at the Edward Lowe Foundation in Cassopolis. “They need to create some type of system for addressing their initiatives that they’re working on, and then discovering what’s working and what’s not,” he said. Many compaNeed nies focus too much on the plan to know and not enough JJStrategic plans on the execution. can help drive owners Business growth company should involve as JJPlans should be many people in flexible, fluid the company as possible to inJJCreate crease their probaccountability for ability of success. shared goals, “It has to be inalignment on tegrated into the vision for future daily life of every evemployee, every department and ” ery leader within the organization, president and Winter, Mark said founding partner of Bingham Farmsbased Identity Marketing & Public Relations LLC. “That gives everybody clarity of the in vision and gets everybody rolling the same direction,” he said. The plan also has to be updated constantly depending on factors that include internal changes within the company, or what’s happening in the market. Many second stage companies don’t realize the model they originally built their first stage on won’t translate to second stage. Joel Pearlman, CEO and co-founder of Oak-Park based company Image One Corporation, describes the company’s strategic plan as fluid — it can LARRY PEPLIN FOR CRAIN’S change yearly, or even monthly. Relations LLC. Farms-based Identity Marketing & Public “It’s all part of the process,” Pearlman administrative coordinator, of Bingham May, Katherine and partner, said. “Things are constantly changing, Mark Winter, president and co-founding and there are times where we might

tity PR drive growth

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

CMS Enterprises buys solar plant near Lansing

CMS Enterprises has purchased Delta Solar, a plant in the Lansing area that will be able to power 3,300 homes when complete. Vermont-based GroSolar, a subsidiary of EDF Renewable Energy, is building the 24-megawatt solar power plant and expects to finish by summer 2018, according to a news release. CMS Enterprises, a subsidiary of Jackson-based CMS Energy Corp., did not disclose the price it paid for Delta Solar. The solar plant will be the state’s second-largest, Patti Poppe, president and CEO of CMS Energy, said in the release. It sits on 190 acres in Delta

CORRECTIONS

J A Forty Under 40 profile of Sean Mann misstated the name of the semi-professional soccer team he founded. It is Detroit City FC. J Judge Mariam Bazzi’s Forty Under 40 profile was incorrect about the length of her term as president of the Dearborn School Board. She served a six-month term. The profile also implied that she remains active with the Middle Eastern American Affairs commission and the Arab American

Township near the General Motors Lansing Delta Assembly Plant. Earlier this year, GroSolar and CMS Enterprises collaborated on a solar power plant in northern Wisconsin called Flambeau Solar, according to the release. CMS Enterprises also operates solar plants at Western Michigan University and Grand Valley State University. Delta Solar will provide homeowners energy through the Lansing Board of Water & Light, the release said. “There is a growing interest in developing clean, renewable energy sources,” Poppe said in the release. “We are committed to meeting Michigan’s energy needs with reliable and increasingly clean sources of energy, and we are pleased to take ownership of a project that will benefit homes and businesses in our state’s capital region.”

Political Action Committee. Upon being appointed to her judgeship, Bazzi resigned from those organizations. J The Forty Under 40 profile of Asha Shajahan incorrectly claimed that a project with Challenge Detroit is ongoing. It was a one-time, six-week project. The profile stated that Shajahan created a new elective in health disparities, but that proposed elective is still under review.

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RUMBLINGS

WEEK ON THE WEB

Crews have started a $115 million expansion project to a gardens and sculpture park in Grand Rapids, the

Associated Press reported. Frederik Meijer Gardens & Sculpture Park said in a statement that the first phase of the expansion began in September. New York-based Tod Wil-

liams Billie Tsien Architects was hired for the project. Detroit-native Tod Williams founded the firm with Billie Tsien in 1986. It includes a new welcome center, rooftop sculpture garden and picnic pavilion. Officials say the new areas will allow the attraction to increase educational offerings, expand annual horticulture exhibitions, host more events and create additional space.

J Spencer Hoover’s Forty Under 40 profile gave an incorrect title for a previous role. Before becoming executive director of the Henry Ford Cancer Institute, he was system vice president of business development. The profile included an incorrect budget and opening date for the cancer center pavilion. The budget is $156 million and it will open in 2020. It misstated the total amount of charges under Hoover’s management, which

total $1.2 billion. And it incorrectly located the investment banking firm where he worked before becoming a health care administrator. It was in Winter Park, Fla. J A Forty Under 40 profile of Jeena Patel incorrectly explained a case she won in which a supplier had demanded price increases above the price of the client’s purchase order. Patel argued that the client’s terms and conditions of purchase required

that the parts be sold for a fixed price for the life of the vehicle program. J A Forty Under 40 profile of Dhivya Suryadevara incorrectly characterized her role in GM’s capital allocation framework. She did not create it but is executing it. In addition, her comments in regard to a transaction in Venezuela, which she did not work on, were meant to reflect the company’s actions and not her own.

TOD WILLIAMS BILLIE TSIEN ARCHITECTS

Crews started a $115 million expansion project on Meijer Gardens & Scultpure Park in Grand Rapids..

Meijer Gardens begins $115 million expansion

Grow your small business at the SBAM Summit.

October 11, 2017

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Join Pure Michigan Business Connect and the Small Business Association of Michigan for a free, one-day matchmaking event in downtown Detroit. Where we’ll connect hundreds of Michigan suppliers to potential buyers from around the country representing various industries.

Visit MichiganBusiness.org/PMBC for additional summit details or to register.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

Amazon HQ2 bid

Government

Public land ballot plan creates rift in Troy By Kirk Pinho kpinho@crain.com

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Dan Gilbert’s team will submit a proposal to Amazon by Oct. 19 that will be a broad presentation of Detroit’s access to talent, the business climate in Michigan and quality of life.

Gilbert’s elevator pitch to Amazon By Chad Livengood

Need to know

clivengood@crain.com

Quicken Loans Inc. Chairman Dan Gilbert has a basic elevator pitch to Amazon Inc. Chairman Jeff Bezos on why his fellow billionaire should base Amazon’s second North American headquarters in Detroit. The proposal Gilbert’s team will submit to Amazon by the Oct. 19 deadline will be a broad presentation of Detroit’s access to talent, the business climate in Michigan and quality of life — factors that could be crucial in Bezos’ decision on where to invest $5 billion in 8 million square feet of new office space for 50,000 new employees. But here’s how Gilbert broke

n Dan Gilbert has assembled a team that will submit a proposal to Amazon . n Amazon is deciding where to invest $5 billion for new office space for 50,000 new employees. n The proposal is due by Oct. 19.

down his selling points in an interview with Crain’s last week:

International status Detroit’s location on an international border with Canada would give Amazon access to educated workers in Ontario, particularly

computer engineers trained at the University of Waterloo. “Those two countries have a vast and deep amount of talent and labor from Waterloo (Ontario) all the way to drawing from Chicago,” Gilbert said

One-stop shop for office space Gilbert’s “concentration of ownership” of downtown real estate holdings among office buildings that have been recently renovated, are currently under renovation or will be built in the next five years. The real estate impresario is willing to relocate employees from his

family of companies in office buildings he owns around Campus Martius to make room for Amazon’s initial needs of 500,000 to 1 million square feet of new office space by 2019. Unlike bigger cities like New York or Chicago, Gilbert said, Detroit has “tons of optionality” for building out a multiple-building footprint or campus in or near downtown in the same way Amazon did in Seattle’s South Lake Union neighborhood. “Your million (square) feet that you need in 2019, we have it for you in beautiful, renovated, cool downtown buildings,” Gilbert said, rehearsing his elevator pitch to Bezos. SEE GILBERT, PAGE 26

Of Amazon, Bezos and Detroit’s pitch for HQ2 By Kirk Pinho

Cast of characters

Dan Gilbert, many of his top lieutenants and city officials met with Crain’s last week for a wide-ranging discussion of the bid for Amazon’s HQ2 project that metro Detroit is mounting. Below is a partial transcript of that conversation, edited for length and clarity. Dan Gilbert: Even from the conversations we’ve had with them, they talked about tightness together in urban cores. They don’t specifically say it has to be in an urban core, but when we talk to their key, senior guys ... that’s what they are saying. Kirk Pinho: So you guys have had direct discussions with Amazon? DG: Yes. We’ve had a lot of discussions with a lot of people at Amazon. They have 300 engineers here. We put them here (in the 150 West Jefferson skyscraper, owned by South-

n Nick Perold, media and marketing coordinator, Bedrock LLC.

n Cory Tincher, director , Rock Ventures LLC.

n Steve Ogden, vice president of state and local government affairs, Bedrock LLC.

n Ron Fournier, editor/publisher, Crain's Detroit Business.

kpinho@crain.com

MUST READS OF THE WEEK

n Jared Fleisher, vice president of government affairs, Quicken Loans Inc. n Kumar Kintala, director of development, Bedrock LLC. n Dan Gilbert, founder and chairman, Quicken Loans Inc., Rock Ventures LLC.

n Michael Lee, managing editor, Crain's Detroit Business. n Chad Livengood, senior reporter, Detroit, Crain's Detroit Business. n Kirk Pinho, reporter, real estate, Crain's Detroit Business.

n RJ Wolney, vice president of finance and investment, Bedrock LLC.

n Dustin Walsh, senior reporter, economic issues, Crain's Detroit Business.

field-based Redico LLC). They expanded to almost 600 in downtown Detroit from a standing start of zero. Pretty impressive, and obviously we’ll use that as one of our points. Ron Fournier: Have you been out

there (to Seattle)? DG: I was out there maybe four months ago just in general to see some other stuff. I went to Amazon’s offices. (To others in the room) Why don’t you tell them about your trips?

Plante & Moran heads to Japan New office adds to international presence for Southfield-based accounting firm. Page 4

Cory Tincher: A small tactical group went out there last week (Sept. 25-29) and had meetings with a few Amazon folks of different ranks from different backgrounds and had some conversations with folks from Michigan who have insight that could be helpful. We walked the streets, got a flavor for the campus, which is not easy to pick out in their dense urban environment and turned it around within 24 hours. Got a sense of their transit situation there and then flew back. Then another group popped out there early (last) week as well. RJ Wolney: That visit was very focused on real estate and an understanding of sort of the decision-making mindset of Amazon, having conversations with folks who have worked with them over they years developing their campus in South Lake Union. Developers, architects, business associates, etc. SEE AMAZON, PAGE 25

A massive redevelopment of part of the Troy civic center complex is in the crosshairs of a ballot proposal next month and city officials warn its approval could hamper economic development and hamstring their ability to make routine decisions for publicly owned property. Proponents of the proposed charter amendment, which would require voter approval of “an agreement for the transfer, sale, lease or use for more than 90 days of any portion of any parcel of public land the Need whole of which is to know greater than two J Proposed (2) acres,” say charter amendelected officials ment would and other oppoimpact transfers, nents are wildly sales, leases or overstating the uses of Troytrue effect the owned property proposal would have if passed on J Officials argue it would bring normal Nov. 7. Drafted in regovernment sponse to a operations to a planned largegrinding halt scale real estate J Proponents say development effects are project on the overstated 127-acre Troy civic center campus off Big Beaver Road, the charter amendment would be “catastrophic to the city,” Mayor Dane Slater contends. “What it will do is shut down government,” he said. “It will tie our hands to the point where we won’t be able to operate as a governing city.” A letter from Troy city attorney Lori Grigg Bluhm to Gregory Schmid, the Saginaw-based attorney who is advising the Save the Troy Civic Center group that started the petition drive earlier this year, says the city has “over 200 agreements that would require voter approval” during future general elections if the ballot measure succeeds during the Nov. 7 vote. “If this proposal is passed by the Troy voters, we may need to file a declaratory action to address ramifications,” the letter reads. And Doug Tietz, a Republican county commissioner and former city council member, said everything from agreements to operate city golf courses to youth football teams to the Friends of the Troy Public Library could be affected. “These kids are playing football in our parks. There is nothing complicated about this,” he said, adding that it would give Troy the dubious distinction of being the only city in Michigan with such a charter provision. SEE TROY, PAGE 29

U.S. Rep. Joe Kennedy III to address Crain’s event

An athletic plan to draw students at Cleary

Health Care Leadership Conference to explore themes of management through uncertainty. Page 6

The nonprofit university plans $12 million in residential, sports improvements. Page 22

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

Plante Moran opens Tokyo office By Tom Henderson thenderson@crain.com

Southfield-based Plante Moran PLLC, one of the nation’s largest accounting and business advisory firms, has opened an office in Tokyo. The office will be led by Eigo Yamamoto, who had been a principal in the firm’s management consulting practice in Southfield. It is the firm’s fourth international office. With the support of the firm’s Japanese business-services team in the U.S., Yamamoto will serve as the local contact for more than 100 Japanese-based companies whose U.S. subsidiaries are already Plante Moran clients. “Eigo is from Japan and he wanted to move back, so this was a great opportunity for us to open an office in Tokyo,” said Jim Proppe, who replaced Gordon Krater in July as Plante Moran’s managing partner. “Tokyo was something we had on our radar for some time. It just happened a little sooner than we had planned. It’s a one-person office for now, but over time we will build it up. We wanted to better coordinate services with executives in Japan, and having someone on the ground in Japan is a great way to do it.”

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Ashley Furniture is entering the metro Detroit market with a store planned for Need Westland and to know another 13 in  WisconSoutheast Michsin-based igan over the company next five years. franchised investor The WisconZahi Abdelaziz of sin-based AshAziz Group to ley Furniture Inoperate locations dustries Inc. has franchised in 30,000-squarevestor Zahi Abfoot Westland store to open early delaziz, of Aziz Group, to operNovember ate furniture lo 13 others cations in the planned for southeast part of southeast part of the state. state over next five Terms of the years deal were not disclosed. “Before the market was dominated by Art Van and Gardner-White furniture stores,” said Tim Attalla, who serves as legal counsel for the

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The new office is near the core business district in downtown Tokyo and within walking distance of the Imperial Palace. The firm’s Japanese business services practice includes a team of English- and Japanese-speaking CPAs accredited in both the United States and Japan and has been serving Japanese companies for more than 15 years, offering audit, international tax planning, and business advisory services for U.S. transplants. In 2003, Plante Moran opened an office in Shanghai, followed by an office in Monterrey, Mexico, in 2008 and in Mumbai, India, in 2009. Plante Moran has four offices in Ohio, two in Illinois and Michigan offices in Ann Arbor, Auburn Hills, Detroit, East Lansing, Flint, Grand

Jim Proppe

Rapids, Kalamazoo, Clinton Township, St. Joseph and Traverse City. Proppe said the firm is open to further U.S. expansion but has no plans for other international offices. “We get asked by a lot of firms if they can join us. We evaluate all of them, but there's nothing in the works, now,” he said. Proppe said the firm recruited a big recent class of new employees from U.S. universities, pushing it to a new high for head count. “It was a big group that started in August. About 200,” he said. According to Accounting Today, Plante Moran is the 15th-largest accounting firm in the U.S. when ranked by revenue for fiscal 2016, with revenue of about $482 million. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

“Before the market was dominated by Art Van and Gardner-White furniture stores. Now consumers will have another very good choice.” Tim Attalla

group. “Now consumers will have another very good choice.” The first of what Abdelaziz plans to be many stores is set to open in Westland sometime early November, he said. Construction is underway at 35120 Central City Parkway, the 30,000-square-foot former home of a Bed Bath & Beyond. Najim Saymuah is in charge of the buildout. Investment in the building is not being disclosed. Another 30,000-square-foot store is planned for the former site of a

Kmart at 19800 West Road in Woodhaven. Bidding for construction has not happened yet, but Abdelaziz said he expects it to open in early January. Abdelaziz said there are also plans for a location to open in Lansing this month, as well as in Grand Rapids and Saginaw next year, but those stores will be operated by a different franchisee. Ashley Furniture has locations in Bad Axe, Escanaba and Marquette, according to its website. The company has more than 600 Ashley HomeStore locations. Each new store is expected to employ 36 people full-time and four part-time, said Scott Patrick, executive vice president of Aziz Group. A distribution center in Farmington Hills is expected to be staffed with 40 full-time employees. Patrick said they have held a job fair and have filled some positions. He said the company is also planning community outreach and engagement with local charities.

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2018

Eigo Yamamoto: To lead new Tokyo office.

Ashley Furniture plans to enter metro Detroit market with Westland store

The W Th World ld off PPrivate i AAviation i Provides...

SECURITY

Jim Proppe: Tokyo on Plante Moran’s radar,

“We wanted to better coordinate services with executives in Japan, and having someone on the ground in Japan is a great way to do it.”

Automotive supplier Denso announced plans Friday to invest $1 billion and create more than 1,000 new jobs in its main Tennessee facility to meet growing demand for electric vehicle parts. The investment is aimed at making the Maryville plant the Japanese company’s primary manufacturer in North American for electrification and safety systems, the company said. The company plans to expand sev-

eral production lines to produce advanced components for hybrid and electric vehicles. The products are designed to improve fuel efficiency and preserve electric power by recovering and recycling energy. They also will boost efficiency for the entire vehicle by anticipating road conditions through data collected inside and outside the car. The company is also expanding its Southfield headquarters in a project expected to cost $75 million and cre-

ate 120 jobs. Denso opened the plant in Maryville in 1988 with about 100 employees. U.S. Sen. Lamar Alexander, then governor, has said the facility in his hometown was a sort of consolation prize after Tennessee lost out to Kentucky for a Toyota assembly plant. Today about 3,200 people work at the Maryville plant, besides another 1,400 employees at another Denso facility in nearby Athens, Tenn. — The Associated Press

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Protecting history

Joe Zayance, SVP and Relationship Manager with Huntington Bank (left), built a relationship with Grosse Pointe Academy and Head of School Tommy Adams, right.

Insurance services help boost a broad school-bank partnership Story by Marcia Lerner | Crain Content Studio The stately Grosse Pointe Farms buildings that house The Grosse Pointe Academy, an elite Pre-K through 8th grade independent school, originally served as the Convent of the Sacred Heart. In 1969 the nuns who lived there deeded their home to a lay board of trustees, which founded The Grosse Pointe Academy. So when the school incorporated, it took on all the history and responsibility that come with educating children and caretaking a historic place. It was more than 40 years later that the school’s leadership, exploring alternative banking sources, found a way to better protect its historic surroundings at the same time. “They were looking for a bank that understood their organization,” says Joe Zayance, SVP and Relationship Manager with Huntington Bank. “They wanted a bank that understood where they were in their evolution, understood their long-term plan and could provide the types of products and relationship-based service that they coveted. They really were looking for a true partner.” Huntington became that partner. It started with financing: Huntington facilitated a tax-exempt direct bond purchase. “But we also looked at the other types of financial services that they needed both immediately and ones we could provide more long-term,” Zayance

says. “We saw a complete potential relationship with the Academy.” At Grosse Pointe Academy, the feeling was reciprocated. “Huntington has an interest in working with nonprofit institutions,” says Tommy Adams, the Academy’s head of school. “Joe’s a really thoughtful guy who asks very thoughtful questions.” Comfortable with one another, the two parties extended their relationship, focusing on what the Academy needed to flourish. A close look at its insurance was essential due to the Academy’s unique setting. “Their school is a special asset that sits on beautiful property with significant acreage in Grosse Pointe, overlooking the water,” Zayance says. “Our agents were able to come in, look at that unique property and setting, and make smart recommendations to help secure the right protections at the right price.” Huntington Insurance’s status as one of the largest bank-owned insurance agencies in the country eased the process. “The unique thing about our insurance business and how we deliver it to the market is that we already have a vested interest in our clients,” says Brian Berryman, sales executive at Huntington Insurance. “We’re familiar with the school market, but we try and look at what makes each place different. We don’t want to give them a cookie-cutter program. We’re looking at everything: Are they having any other entities SPONSORED BY:

HuntingtonGPAcademy.indd 1

“I think for us it’s that thoughtful leadership that we’ve been most comfortable with.” Tommy Adams, Head of School, Grosse Pointe Academy come in and use their grounds? Are we insuring the buildings correctly?” Huntington reviewed the school’s planned additions and sought not only to provide protection for new assets like recently purchased computers, but also to prevent losses by looking at protective services like fire suppression systems. Huntington also addressed how to present the Academy positively to insurers. “If they look good on paper to insurance companies, they will be rewarded with favorable pricing,” Berryman says. “We’re very cost-conscious because we understand challenges in the educational sector.” Huntington helped the Academy fine-tune its risk profile to give it more options in the insurance market. The bank also ensured it had a disaster-recovery plan and a claims process. “We’ll get an investigator out right away,” Berryman says. “We’ll find out what caused a loss, and then we’ll

work with the carriers and work with our insured to get them paid as quickly as possible—and we’ll try to put a corrective action plan in place to prevent future losses.” As the Academy’s relationship with the bank has expanded to include other financial services like retirement benefits, Adams continues to be impressed. “I think for us it’s that thoughtful leadership that we’ve been most comfortable with,” Adams says. “We understand that tuition revenue is critically important to the school, but managing the resources that we have is also critical. And, managing our retirement options is important because it’s an opportunity to better attract the kind of faculty that we want.” In turn, Huntington appreciates not only the relationship, but the Academy itself. “They’ve been a long-time contributor in the Grosse Pointe community,” Zayance says. “They’re not just preparing their students academically, but also in terms of character and service and leadership. They have a long track record of success in that area. “You can see the passion from the top down at Grosse Pointe Academy. That’s something special to be attached to and makes us especially thankful for their business.” For more information about Huntington Bank, contact Brian Marshall at 248-244-3607 or at brian.marshall@huntington.com.

10/2/17 9:23 AM

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

Crain’s Health Care Leadership Summit to feature Joe Kennedy “At the 50,000-foot level, there is a recognition that ACA is working and working well where there is a community commitment. We see the impact in Detroit, and across Michigan as uninsured rates are going down and populations are affected.”

By Jay Greene jgreene@crain.com

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U.S. Rep. Joe Kennedy III’s appearance at Crain’s Health Care Leadership Summit on Oct. 19 marks the first time a sitting congressperson will appear as a keynote speaker as the ninth annual gathering tackles the only thing that’s certain in health policy now — uncertainty. In just his third term, Kennedy, 36, has carved out a niche as one of the leading voices nationally for health care Need quality, mental to know health system J Health Care improvement, Leadership cost reduction Summit is Oct. 19 and expanded insurance acJ U.S. Rep. Joe cess. The DemoKennedy III to talk about health policy crat represents a diverse district uncertainty from the subJ Event also urbs of Boston includes to cities along innovation panel Massachusetts’ industrial south coast. Kennedy made national news earlier this year when he blasted Republican efforts to repeal the Affordable Care Act of 2010, or Obamacare. In an interview with Crain’s, Kennedy said he will talk about successes of the ACA, how it has cut in half the uninsured rate in Michigan and given incentives for doctors, hospitals and health insurers to improve quality and outcomes for patients. “As you can imagine, it was hard to write a speech and talk about uncertainty without knowing what would happen with the (Graham-Cassidy Obamacare repeal) bill,” said Kennedy. On Sept. 25, Senate Majority Leader Mitch McConnell withdrew the controversial bill after Sen. Susan Collins of Maine withdrew her support for it. “At the 50,000-foot level, there is a recognition that ACA is working and working well where there is a community commitment. We see the impact in Detroit, and across Michigan as uninsured rates are going down and populations are affected,” Kennedy said. In Michigan and in many states, Obamacare has been a strong economic driver that has helped the health care industry and has benefited society, Kennedy said. Nearly 1 million Michiganders have added either Medicaid or private insurance coverage, lowering the uninsured rate from 13 percent in 2010 to 6 percent last year. “The challenges in Detroit are different than in Boston or Texas,” he said. Kennedy acknowledged that Obamacare needs to be improved and benefits have been uneven in

Rep. Joe Kennedy III

some parts of the country, especially the 18 states that haven’t expanded Medicaid. He said also Republican efforts to repeal and replace Obamacare have sidetracked necessary improvement efforts. After Graham-Cassidy failed, Kennedy said Congress began working on other critical health care bills that had languished. He expects the House to soon pass the CHIP reauthorization bill that will enable 9 million children nationally and 90,000 in Michigan to keep Medicaid coverage. He said another bill to reauthorize health center funding also is expected to pass out of the House. The Senate is expected to pass both bills. But he isn’t sure whether there is enough support in the House to pass a critical bill that would lower private individual health insurance premiums for millions of low-income people. Currently, Sens. Patty Murray and Lamar Alexander are working on the bill that would provide $7 billion in “cost-sharing reduction” subsidies to help pay for out-of-pocket private insurance costs. If the bill isn’t approved, individual health insurance rates in Michigan could increase an average of nearly 30 percent for 2018, according to the state insurance department. With the bill, individual rates could still rise an average of 20 percent. “There is a political game that is being played” in Washington, said Kennedy, a former federal prosecutor who is a member of the House Energy & Commerce Committee. “The Senate is very close to a deal, but the House, despite the polarization, when a variety of dangerous bills that would have done extraordinary damage to health system, the public flexed and defeated those bills,” Kennedy said. “Now they have been defeated, the public needs to demand Congress take next step and fix (the cost-sharing reductions).” Kennedy said he believes public outrage can prompt Congress to act. “It is hard to get excited about CSR, but it will hit in the pocketbook and take money from American families unnecessarily and for no good reason,” he said.

Uncertainty over future Before Kennedy’s lunchtime keynote address at the Marriott Renaissance Center in Detroit, several panels will discuss a variety of topics on health care business uncertainty, innovation, retaining and recruiting talent and fighting the opioid crisis. Crain’s Publisher and Editor Ron Fournier will moderate the first panel on how health care companies and employers are going about making business decisions in a time of uncertainty over the direction of health care reform after several Republican efforts to repeal and replace Obamacare have failed. Panelists will include pharmacist Ghada Abdallah; Roger Jansen, senior vice president and chief strategy officer at Spectrum Health in Grand Rapids; Terri Kline, CEO of Health Alliance Plan; and Matt O’Bryan, CEO of KLA Laboratories Inc. A second panel on innovation in health care will be moderated by Marianne Udow-Phillips, executive director at the Center for Healthcare Research & Transformation at the University of Michigan. Udow-Phillips’ innovation panel will include Eishi Asano, M.D., professor of pediatrics and neurology at Wayne State University and a pediatric neurologist at DMC Children’s Hospital of Michigan; Maya Hammoud, M.D., professor of Learning Health Sciences and professor of obstetrics and gynecology at the University of Michigan Health System; Brent Nowak, executive director of applied Medical Devices Institute at Grand Valley State University; and Jaideep Rajput, director of commercialization at Beaumont Health. Later in the morning, three breakout panels on uncertainty will focus on attracting and retaining talent, cybersecurity and fighting the opioid crisis. Lt. Gov. Brian Calley will be a moderator and speaker in fighting the opioid crisis. Crain’s 2017 Health Care Heroes also will be invited to the summit in advance of their own breakfast event on Nov. 7 at the Gem Theatre, 333 Madison St. in Detroit.

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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 // O C T O B E R 9 , 2 0 1 7

OPINION

COMMENTARY

Pulling together for common ‘victory’ D an Gilbert doesn’t like to lose. He’s not accustomed to it. A billionaire entrepreneur and sportsman, this is a person who sets crazy-big goals — such as disrupting the mortgage industry or revitalizing downtown Detroit — and charges toward them with brute optimism. So you don’t want to be the guy who tells him he might fail. I found myself in that uncomfortable position last week when Crain’s Detroit Business published a story about an index of 35 U.S. metropolitan areas based on Amazon Inc.’s criteria for a second headquarters. It ranked Detroit near the bottom. “I am not sure what is worse,” Gilbert texted me after we posted the story. “The flawed trash in this incompetent silly report or the fact that the hometown newspaper would publish and tweet it.” He went on to detail his objections to the Anderson Economic Group report. I replied, defending our decision to publish the index and making him an offer I thought he’d refuse. “My team stands ready to hear your team’s case,” I texted. “Can I send them over today?” “Today is rough but appreciated,” Gilbert replied. “Stay tuned for times this week …” Two days later, five Crain’s reporters toured the top-secret Amazon “war room” (smaller than expected) and interviewed Gilbert and his team (larger than expected). It was a textbook example of how to respond to a negative story: Smother it with transparency. The first thing he did was punch holes in the Anderson’s analysis of the labor and transportation situation in metro Detroit. While acknowledging the region’s deficiencies, Gil-

RON FOURNIER Publisher and Editor

bert and his team argued that they’ve learned from direct talks with Amazon that the firm is taking a broader view than Detroit’s critics assume. One example: The lack of a regional transit system will be offset by downtown Detroit’s walkability, Gilbert said. On the issue of talent and education, Amazon is taking into account universities within a five-hour driving distance of potential headquarters, he revealed, which allows Detroit to claim a rich vein of engineering graduates from technology meccas like Pittsburgh’s Carnegie-Mellon. When I asked Gilbert to imagine himself in an elevator with Amazon owner Jeff Bezos and a minute to make his pitch, he didn’t hesitate. “You get a chance to come to a city that is not just a city but represents two countries,” he said. “And those two countries have a vast and deep amount of talent and labor from Waterloo (Ontario) all the way to drawing from Chicago.” In quick succession, he ticked off the region’s other assets: Access to downtown office space unmatched by any other bidder; an airport less than five miles from downtown; tax incentives; and a still-secret state “Marshall Plan” on education that will ensure Bezos “all the talent you’ll need to grow.”

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Dan Gilbert has 59 business, political, and nonprofit leaders in metro Detroit working jointly to bring Amazon to the region.

Gilbert brandished a list of 59 business, political, and nonprofit leaders in metro Detroit who are working jointly to bring Amazon to the region — a symbol of what he believes may be his biggest selling point. After decades of friction and fracture, the region’s leadership is for the most part setting aside ego and short-termism for a greater good. “Truly, and no BS, I’ve never seen” this level of cooperation, Gilbert said. “People volunteering, wanting to work together, rowing in the same direction. It’s unbelievable in this region. Everyone.” For what it’s worth, I believe Gilbert — and I think, win or lose, the

galvanizing urgency of Amazon’s bid may invigorate the region’s haphazard and halting approaches to transit, education, taxes and other obstacles to 21st century economic success. “Whether we win or not,” he said, “we are going to have action on things that are otherwise going to fester for a while or may never happen.” Whether we win or not? Losing usually isn’t an option for Gilbert. “On the slim chance we don’t win,” Gilbert said at another point in the interview, before stopping himself with a chuckle. “In the event it doesn’t happen,” he argued, the work poured into the

Help stop the bleeding

e can’t get the horrible images from Las Vegas out of our minds. A senseless massacre that killed 59 but wounded almost 600 victims. In times like these, our immediate reflex is to help, in any way we can. That prompted a surge of people who went down to the local Red Cross to donate much-needed blood, something that’s always needed, everywhere, in steady supply. It’s one of those things we can do that saves lives every day, even when there isn’t a major crisis. My friend Dr. Donald Weaver reminded me of another one of those last week. Bleeding control kits are available that would offer a life-and-death advantage to first responders. The mission is to give 2,000 of these kits to our first responders, the Detroit Police Department. The Detroit Medical Center would be willing to provide all the training

KEITH CRAIN Editor-in-chief

for the police in using these kits effectively. Detroit has some great trauma centers, but first we have to get the victims to the hospitals. These kits could save lives in the hands of trained police in Detroit. Dr. Weaver is looking for a sponsor or sponsors to help cover the costs of these kits for Detroit Police. If anyone is interested in helping, they should contact the Department of Surgery at the DMC at 313-745-8778. Before, it was something that would

Amazon bid from 59 partners and all points in the region — the data, the analysis, the combined creative juices — all of it reflects a seismic shift of attitude that gives metro Detroit new altitude. That’s when Gilbert won me over: Just think about how far the region has come in the four years since Detroit’s bankruptcy. We’ve got a real chance to land Amazon’s headquarters — and, even if we lose, we could win. Ron Fournier is publisher and editor of Crain’s Detroit Business. Catch his take on business at 6:10 a.m. Mondays on the Paul W. smith show on WJR AM 760.

LETTERS

Driver fee amnesty is not the solution be a nice addition. But after the carnage in Las Vegas, it has become a lot more significant. You hope that none of these kits would ever be used, but you know deep down that there is still way too much violence in our city, and to equip our first responders with these Bleeding Control Kits would make a difference. For the DMC to offer to provide all the training will help increase their effectiveness significantly. Whether one or 20 volunteers come forward, all efforts and contributions would be wonderfully appreciated. There are plenty of needs in the world — just add this to the list of those we can do that would make a real difference. Let’s hope the nothing approaching the tragedy in Las Vegas ever happens in Detroit. But these kits will help victims one at a time, and that is what it is all about — changing the world one person at a time.

To the editor: Your amnesty idea on driver responsibility fees (Editorial, Oct. 2) is all wrong. So breaking the law is allowed? So we law-abiding citizens can stop paying our fees, and we will be let go? Or we law-abiding citizens have to pay not only for our usage of our highways but for those who don’t pay? The solution is to provide a payment plan similar what Detroit did with all the water bill skippers. The solution is to not give amnesty but make them pay on terms they can manage. If they don’t have jobs, then put them to work. Even picking up trash is worth something to us taxpaying users. Amnesty will not put these people to work. They are driving illegally today and will con-

Amnesty will not put these people to work. They are driving illegally today and will continue to do so. tinue to do so. Driving is not a right; it is a privilege. With privilege comes responsibilities. Richard Marks Grosse Pointe Woods Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: rfournier@ crain.com

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

Keep short-term rental regulations fair and simple T he Motor City is at a tipping point. Businesses are relocating here and bringing jobs with them. The downtown core has re-established itself as the trendy destination we always knew it should be, attracting scores of millennials in the process. The question potential Detroit visitors now ask is not “should I visit Detroit?” It’s “where should I stay when I visit Detroit?” Recently, home-sharing platforms such as Airbnb have emerged as meaningful drivers of Detroit’s growth. Home sharing allows Detroit residents to safely rent a room in their home or apartment, or their entire place while they are gone, to visitors from around the globe. Home sharing complements Detroit’s traditional tourism economy by allowing even more people to experience the city, especially during big events like the North American International Auto Show that cause hotels to reach peak occupancy. The supplemental income — about $5,600 annually for the typical Detroit host — provides working people across the city with new ways to pay their mortgages, student debt and other bills. In particular, many middle class hosts living in historic Detroit estates use their Airbnb income specifically to continue to afford and maintain their homes. In 2016, these Airbnb Detroit hosts have welcomed 27,000 guest arrivals, who infused $10.5 million in economic activity throughout the city. These visitors are attending Red Wings games, eating in Old Redford restaurants, shopping on the Avenue of Fashion and experiencing Midtown museums. And often they’re staying in lesser known neighborhoods hungry for economic growth but historically shut off from traditional tourism revenue due to a lack of hotels. These visitors’ presence — and their dollars — reflect a small but

OTHER VOICES Christopher Lehane

meaningful component of the city’s comeback. At Airbnb, our mission is to make sure anyone can belong anywhere. To deliver on that mission, it is import-

ant that we are working as responsible partners with communities. And we don’t just say this; we have done it all over the world. To date, we have established more than 350 government partnerships globally. Here in Michigan, we demonstrate that commitment through a recent tax agreement with the state. In July, we began collecting and remitting state-level occupancy taxes on behalf of all Michigan hosts to the state Treasury Department, and we’ve already delivered hundreds of thousands of dollars in new revenue to the state in just three months. Unfortunately, not everyone shares

pragmatic views on the sharing economy. The powerful hotel industry has lobbied aggressively to deny people the right to responsibly share their homes. This has given rise to proposed harsh restrictions and even outright bans of short-term rentals in some lakefront towns in Michigan, including Traverse City, which is the third-most popular Michigan destination for Airbnb travelers behind Detroit and Ann Arbor. Airbnb and our Michigan hosts welcome fair regulation of short-term rentals, but those rules should be simple and fair. State lawmakers have recently introduced new legislation

— SB 329 and HB 4503 — which would simply prohibit outright bans. By taking the nuclear option off the table, this law would encourage communities to collaborate with local hosts on commonsense rules that protect both economic growth and quality of life. By protecting home sharing and expanding opportunities for outsiders to experience Michigan authentically, we can collectively continue to shine a global light on the qualities that make Detroit so special. Christopher Lehane is Airbnb’s head of global policy and public affairs.

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TALK ON THE WEB

Re: Proposed city, county land swap

The big news here, methinks, is the transfer of the AMC site, which — if redeveloped by an administration hungry for large industrial parcels — would be a game changer for the west side of the city. Kate Westwood As long as they preserve the original administration building for the AMC factory, I’m good with it. Jeffrey Lygon

Re: Detroit near bottom in ranking All those years of the auto companies lobbying against a suitable, modern mass transportation system have come home to roost. John The focus is mostly on transportation here, but the survey also scored Detroit comparatively low in labor and business services, so that too needs to be addressed. Marco Ramirez

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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 // O C T O B E R 9 , 2 0 1 7

FOCUS

CRAIN’S MICHIGAN BUSINESS: FOOD AND DRINK

CASHING IN ON CHIPS

GETTY IMAGES/ISTOCKPHOTO

Michigan ships 1.1B pounds of potatoes to chip manufacturers, making it king of crunch By Seth Schwartz

Special to Crain’s Detroit Business

Idaho may be famous for potatoes, but when it comes to chips, snack makers have their eyes on Michigan. Since the early 1990s, an increase in quality potato production has chip companies across the country filling their trucks with Michigan’s finest. Today, there are 76 farms and over 46,000 acres putting out 1.87 billion pounds, with 1.1 billion shipped to potato chip manufacturers bringing $554 million to the state’s economy. Michigan potatoes account for 25 percent of the chips consumed in the United States; 70 percent of the state’s potatoes are used to make chips. Frito-Lay, the largest chip company in the world, gets 40 percent of Michigan’s potatoes. According to Michael Wenkel, executive director of the Michigan Potato Industry Commission, by the late 1990s, Michigan became the top state for producing potato chips. Through the commission, 24 farms work with researchers at

Need to know

JJMichigan has 76 potato farms

producing more than 1.87 billion pounds of potatoes JJMichigan potatoes account for 25 percent of the chips consumed in the U.S. JJ70 percent of the state’s potatoes are

used to make chips.

Michigan State University, funding projects with scientists. For every hundred pounds grown, 5.5 cents is assessed to growers which is used for research, education and promotion activities. Farmers grow up to 25 varieties of potatoes. Snowden, Lamoka and Manistee are ideal for storage. As a result, Michigan is able to ship potatoes 10 months a year. Here’s a closer look at some of the giants of Michigan’s chip industry.

Sackett Potatoes Family farms in Michigan have been the backbone of potato yield. Sackett is the oldest, beginning in

1904. Edward Sackett came to Michigan and planted his first crop on 160 acres in Stanton in 1905. In the 1920s and ’30s, Hiram Sackett would send shipments of potatoes on the railroad to Grand Rapids, Lansing and Detroit. Their consumers were Ore-Ida Foods, whose Greenville plant closed in 1986, which made frozen french fries, and Frito-Lay which had a plant in Detroit. By 1972, Sackett Potatoes expanded to 500 acres of potatoes. In 1987, Alan Sackett and his sons, Jeff and Brian, moved 30 miles to Mecosta. Brother Larry stayed in Edmore with Sackett Ranch working 5,000-plus acres. Between the two farms they have 7,000 acres, of which 3,700 is used for potatoes, producing 100 million pounds. Grandson Tyler became a business partner in 2015 and manages their 3,500 acres in St. Anne, Ill. “We use seven to 10 potato varieties,” said Alan Sackett, age 74, who started working for his father Keith when he was a teenager. “We’ve grown at roughly five percent the past 15 years.”

Walther Farms Working the night shift at the Buick plant in Saginaw, Kyle Walther bet on his future as a potato farmer and left the auto business. In 1946, he started with a few acres in Cass City. By 1960, Walther was supplying Better Made with potatoes. Today Walther Farms have 13,000 acres nationally and 8,000 in Michigan with farms in Three Rivers, Cass City, Newberry, Elmira and Merrill along with three other states to meet the demand. Graduating from Michigan State in 1994, Jason Walther became the third generation to join the family business and is now CEO. “The Snowden gave us the ability to store through the winter and into the spring. Since we are closer to markets and could provide great quality, customers in the east transitioned to a Michigan supply,” said Walther, who was working in the fields at age 5. “Michigan went from being a small player in the market to becoming the country’s largest chip producing state.

“The varieties have evolved and now we have 25 that we grow. The best options are now Lamoka from New York and Manistee from Michigan State University [in 2014].”

Better Made Peter Cipriano, at age 15, was part of a wave of immigration from Tarasinni, Sicily before World War I. In the 1920s, Cipriano worked as a milkman. The family would buy potatoes from the produce market on Gratiot, handcook the chips at home and then sell them on Sundays at Belle Isle out of their truck at 5 cents a bag. Of the 20-plus chip companies in Detroit during the 1920s, Better Made was the only one to survive into the next decade. Using cottonseed oil and salt, the chips’ tasty bite caught customers. Marketing to mom-and-pop grocery stores, pedestrians and picnic-goers on Belle Isle in Detroit, they became part of lunch for many of the factory workers and residents in the metro area. SEE CHIPS, PAGE 12

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

CRAIN’S MICHIGAN BUSINESS: FOOD AND DRINK

Working with winemakers

MSU’s programs help state go from 7 wineries in 1970 to more than 100 today By Seth Schwartz

Special to Crain's Detroit Business

A Michigan State University program, whose seeds were planted almost 50 years ago, has helped shape winemakers who are making their mark at universiNeed ties and vineto know yards across the JJMSU’s Spartan country, and Cellars a center of have a shaped a wine research Michigan wine industry that JJProgram and its continues to graduates have grow. changed face of The universiMichigan wine ty’s enology and JJIndustry has viticulture progrown immensely grams — and the in size and respect associated Sparover the decades tan Cellars winery — have helped the state go from seven wineries in 1970 to more than 100 today. It also helped transform the wine itself from primarily sweet wines grown with American grapes to European-style cabernets and Merlots that compete with highly regarded wines from California and around the world. It all started with what might have been a bad career move.

The creation story Innovative ideas are often met with skepticism and concern. When Professor Stan Howell approached administrators at MSU in 1970 about the science of studying wine grapes, the response wasn’t enthusiastic. “Nobody wanted to work with the wine industry,” said Howell, who retired in 2006. “It was considered professional suicide.” In 1970, the Michigan grape growing industry was 95 percent Concord, Niagara and Delaware grapes, used to make sweet wines. At that time, Bronte Winery winemaker Angelo Spinazze raised an important question. “Michigan State is dedicated to agriculture, why can’t MSU do some-

thing to help the wine industry?” When the late Lawrence Boger, dean of the College Agriculture and Natural Resources, gave approval in 1970, the vineyards were planted. Equally critical to progress was Paw Paw’s Warner Vineyards, one of the state’s oldest and still in operation today, making a $15,000 contribution. “The money convinced others in the industry and people at MSU that we were serious about our efforts,” said Howell. “At that time, the perceived important big tree fruits were: apples, sour cherries, peaches and plums. Grapes were not considered a major crop.” In the mid-1970s, former state Sen. Bob Wellborn raised $50,000 for research at MSU. In 1985, Michigan’s Grape and Wine Industry Council was founded and provided $350,000 support for research, education and promotion at MSU. The experimental vineyards near the university’s East Lansing campus were invaluable. MSU’s Spartan Cellars was where they turned grapes into wine starting in 1970. (You can’t buy bottles of Spartan Cellars wine — they’re for research purposes only.) Increasing the volume each year since 2000, the university’s winery has been making wine annually from 140 batches of grapes and wine. “Along with colleges at MSU, we could tell growers and winemakers the issues in growing grapes, pruning, harvesting, what fertilizer and pest control to use,” said Howell. “We always had a series of projects. I gave each student one plot as their responsibility and said, ‘You’re the team leader.’ It worked. Each of our master’s and Ph.D. students had about a quarter of an acre with 50150 vines. We set up to ask relevant production questions and employed statistical approaches producing analysis that yielded quality results.” According to Howell, a watershed moment came when a positive story on Michigan wines appeared in the Detroit Free Press, during the late 1970s. With publications of over 300

After receiving a Ph.D. in viticulture and enology in 1997, Dave Miller took a job with St. Julian Winery in Paw Paw. He and his wife later opened White Pine Winery.

When Professor Stan Howell approached administrators at Michigan State University in 1970 about the science of studying wine grapes, the response wasn’t enthusiastic.

scholarly research articles, lectures in many countries in Europe, New Zealand and Australia, Howell gave MSU an international viticulture reputation. It’s one that has spread, influencing both winemaking and its study. Currently 12 MSU graduates are winemakers in Michigan, six involved in various positions in New Zealand, Australia and South Africa. Dr. James Wolpert headed University of California-Davis’ viticulture and enology department from 1996-2003. Dr. Keith Striegler was the research scientist at Fresno State from 199498, served as interim department chair in 1997 and now works for E & J Gallo Winery. “I am confident to say, since the mid-1990s, we’ve had numerous examples of world class wines in Michigan,” said Howell. “Efforts continue through the quality research of Dr. Paolo Sabbatini. His knowledge and expertise are a critical necessity for the continued expansion, improved wine quality, and positive economic impact of Michigan’s grape and wine industry.”

You know. The Motor City has both fueled and felt the power of the Laker Effect. Many of our students not only hail from the Detroit area, but they also return there: as analysts and engineers, biochemists and health professionals, as leaders in business and leaders of communities. Support them. Support us. And see the power of what can be.

Changing the industry Some of Howell’s proteges have contributed to major changes and growth in Michigan’s industry. Dave Miller, Charlie Edson and Brian Hosmer are playing instrumental roles making Michigan a burgeoning name for producing exceptional wines. Traversing vineyards throughout southwestern Michigan over his quarter-century tenure as research assistant at Michigan State University and St. Julian Winery, Miller harvested a wealth of knowledge. Miller headed west for a sabbatical as an amateur skier in Colorado after finishing biology degrees at Ball State University. Relaxing in the evening, he developed an affection for wines. Miller became friends with his plant ecology professor, who taught him about wine grapes and the importance of place, soil, slope, aspect, location and climate on wines. SEE WINE, PAGE 14

gvsu.edu/SupportLakerEffect

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

CRAIN’S MICHIGAN BUSINESS: FOOD AND DRINK CHIPS FROM PAGE 10

“We do things the old-fashioned way; slow and steady. It pays dividends in the long run,” said Sal Cipriano, 75. “We’re consistent, we buy the best and use the best ingredients. We slice our chips thick, and we’re consistent with our hundred percent cottonseed oil. My father, Peter, designed the logo at his kitchen table, he wanted to make them better than others. In 1949, they moved into a plant in Detroit on Gratiot Avenue, with many Sicilian immigrants working there. “The reason we’re an icon is so many people remember eating our chips when they were kids,” said Cipriano, who has two sons, a sister and two nephews working with him and has been with the company since 1978. “We get letters from people all over the country.” Starting as a storefront in 1945, they expanded the factory 19 times to its current size, over 15,000 square feet. They added barbecue flavor in the mid-1960s and then sour cream and onion to go with the original. All three are best sellers from a list of 20 flavors. Until 1994, Better Made’s market was strictly metro Detroit. After buying out Made Right in 2006, the company expanded to northern and western parts of the state and increased sales 40 percent. Today, 80 percent of sales are in Michigan; 20 percent in 20 other states. Last year, they went through 60 million pounds of pota-

Potato plants at Walther Farms, which have 13,000 acres nationally and 8,000 in Michigan with farms in Three Rivers, Cass City, Newberry, Elmira and Merrill along with three other states to meet demand.

toes; a decade ago it was 50 million pounds. A dedicated contingent of ex-Detroiters, in Florida and Arizona, order online. “We take more time, but we come out with stronger relationships on the back end,” said Cipriano, who has 250 employees at his factory and goes through 50,000 pounds of potatoes a day. “We’re very pleased; we think there’ll be even more growth in the coming years.”

Uncle Ray’s After moving from Tennessee to Detroit during World War II, Ray

Jenkins worked in an auto plant to support seven children. In 1965, he followed through on an epiphany: Go into business to sell potato chips. For three decades, the company’s market was Detroit and the Midwest. In 2006, Uncle Ray’s was bought by H T Hackney of Knoxville, Tenn., and market strategy changed. It has a warehouse in Grand Rapids. Today its sales are 75 percent Michigan and the rest across the south and east coasts. Sales have increased 8 percent to 10 percent for the past decade.

Last year, Better Made went through 60 million pounds of potatoes; a decade ago it was 50 million pounds. BETTER MADE POTATO CHIPS

SEE CHIPS, PAGE 13

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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 // O C T O B E R 9 , 2 0 1 7

CHIPS

CONTINUED FROM PAGE 12

Of the 75 million pounds of potatoes the company processes each year, 80 percent are from Michigan. The recipe has stayed the same for the past 20 years. A unique blend of oils guarantees shelf life of 10 months, and the chips are cut thick. Barbecue, regular and sour cream and onion are the favorites among the 18 flavors.

Great Lakes Potato Chip Co. Launching Great Lakes Potato Chip Co. in 2010, Traverse City resident Ed Girrbach and son Chris have taken a successful bite into the chip market. Their four varieties netted $80,000 the first year. Great Lakes gets almost 95 percent of its chipping potatoes from Sackett Farms in Mecosta County.

Leaving the skins on and cooking in sunflower oil adds crunch to the chips. There are seven flavors and two seasonal; all are kettle cooked. Great Lakes received the most investible growth award at the Crain’s 2016 food summit in Detroit. The Chicago Tribune voted Great Lakes the best kettle chip from a pool of 150 companies in 2015. At the New York Chips Festival in Saratoga Springs last year, the company won a gold medal for its cooked tortilla and original potato chips. After three years in Michigan, the company has expanded distribution to Illinois, Ohio, Wisconsin, Indiana, Canada, Pennsylvania and Florida with shipments to Texas, Tennessee and California. With two 150-pound fryers and one 300-pounder, it uses more than 300,000 pounds of potatoes monthly. Last year Great Lakes saw $2.5 million in sales, 70 percent of them in Michigan. This year it expects $3.5 million in sales.

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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 // O C T O B E R 9 , 2 0 1 7

WINE

FROM PAGE 11

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His mother put him in the right direction by relaying a story on Michigan State’s wine program where he landed a job as a teaching and research assistant. “They were the biggest in the Midwest and a young industry with an opportunity to make impact,” he said. After receiving a Ph.D. in viticulture and enology in 1997, he took a job with St. Julian Winery in Paw Paw. For the ensuing 13 years, Miller spent hours doing vine training systems, canopy management techniques and crop adjustment to achieve vine balance and improve the quality of the fruit — and the wine. It was evident for the industry to advance major conversions were required. Because of Miller’s efforts, the wine industry in southwest Michigan was transformed. “There was a gradual change beginning in the 1970s from using native American juice grapes like Concord for wine to more recognized wine grapes like Riesling and Cabernet franc,” said Miller. In the early 1970s, all Michigan wines were produced with native American grapes. Today, nearly all Michigan wines are produced using European vinfera [Riesling] and resistant hybrid varieties, crosses of American and European grapes that are cold tolerant and disease resistant, like Traminette and Vidal blanc. “There were a lot of problems with Michigan wines from the vineyard through the cellar. I brought modern viticulture practices to the growers and applied new QC/QA programs at St. Julian. These changed the face of St. Julian wines and the face of southwest Michigan wines.” The results are quite positive with sales of cases at St. Julian quadrupling since 1997. Dave and his wife, Sandy, struck out on their own and opened White Pine Winery tasting room in St. Joseph in 2010. Their 40-acre vineyard is in Lawton. “We saw huge potential here,” said Miller, who is using 40 percent of his own grapes in making his wines. “Lawton is on an old glacial range. There’s a high ridge; we’re at 1,000 feet. The soil and hill drains well, there’s a lot of sand and gravel, the air is cold; it’s excellent for grapes. We’re on the eastern edge of the microclimate. The climate is more like Europe. The wine tasting room has been a hit on several levels. “When you see someone drink one of our wines, their eyes light up and they say, ‘That’s really good; I didn’t know you made wines like this is Michigan!’” Miller said.

A Leelanau dream Majestic views from the bucolic landscape of Cedar on the Leelanau Peninsula gives impetus to pour wine and unwind with evening sunsets. In 1986, Edson and his wife, Amy Iezzoni, and in-laws Domenic and Ruth Iezzoni bought a farm north of Cedar and planted an acre of vines, giving birth to Bel Lago Vineyards & Winery. Following four years as a research technician and student under MSU’s Howell, Edson earned a Ph.D. in horticulture in 1991. He spent the next three years as viticulture adviser and assistant professor at Missouri State.

CHATEAU CHANTAL

A year into his five-year term at Chateau Chantal on Old Mission Peninsula, Brian Hosmer was promoted as winemaker.

With a thirst to learn, Edson trekked extensive miles across vineyards in Europe and the United States. “I traveled to Germany, France Italy, Switzerland, Luxembourg, Canada and California a few times,” he said. “I would go to a region with an agenda. I’d visit and meet winemakers to learn more about the business. To be a successful winemaker, your education is ongoing.” Ten miles north of Traverse City and a few hundred yards from Lake Leelanau, the scenery surrounding Bel Lago is enchanting. For over a century, fruits have been harvested on the peninsula where the limestone and sandy soil is ideal for growing grapes, and Lake Michigan’s effect on the climate doesn’t hurt, either. “Proximity to the lakes has a tempering affect where it’s not too cold in the winter and cool evenings in the summer” Edson said. “It’s very good for growing Rieslings and other varieties.” Edson planted an additional 28 acres of grapes 10 miles north of Bel Lago. The 950-foot elevation with a south slope allows for more heat from the sun. They use all of their own grapes — 100 varieties — to make 12 whites, eight reds and two cherry wines. “We picked this farm because it’s excellent for growing grapes as a location,” said Edson. “Bel Lago’s expansion in the last 20 years parallels the growth of the industry in Michigan. There were five wineries on Leelanau Peninsula and Old Mission Peninsula in 1997. Today the numbers are 24 and 10, respectively. In 1998-2000 they produced 3,0004,000 cases, today they’re selling 15,000-17,000 cases, including custom winemaking for client wineries.” The wineries on the peninsulas are dedicated to small-batch production, but sharing information is also a common thread. A half-dozen times during the winter, 15-30 winemakers gather for blind tasting of selected varieties. “You have to check your ego at the door. We’ve had a wonderful exchange of ideas,” said Edson. “It’s a great way to learn from others in the industry. Over the years the wines

have gotten better and better.”

Mission on Old Mission As a graduate student pursuing a master’s degree at Michigan State, Hosmer made a point of absorbing wine and vine knowledge in Michigan and Europe from 2002-2007. In the school year, he studied under Howell. In the summers, he was a teacher’s assistant leading students through the Netherlands, Spain, France and Italy. Learning the nuances of grape growing under Howell was a painstaking scientific endeavor. “We’d make hundreds of batches of wine to separate out the variables,” Hosmer said. “We’d make three replications of each variable, which resulted in a lot of chemical analysis in the lab.” “Howell is one of the most gregarious, fun people you’d ever meet,” said Hosmer. “When you were his student, spring break was spent pruning the vineyards. Afterwards at dinner, we’d talk all night about wine and viticulture.” After finishing MSU in 2006, Hosmer spent a year at Bel Lago Winery. “It was a great transition to the real world,” said Hosmer. “Charlie was very open with sharing information. He was doing a lot of experimental research other than straight production.” A year into his five-year term at Chateau Chantal on Old Mission Peninsula, he was promoted as winemaker. The winery’s location on the long, narrow Old Mission Peninsula near Traverse City features soil and cooling waters quite similar to Leelanau. “Our whites are aromatic with pronounced fruity characteristics,” he said. “Our reds are delicate and also have a great aroma. “I made improvements to modernize winemaking techniques with the goal of vintage wine consistency in a place where annual weather patterns are very different each year. It’s something we monitor through the year; you have to hedge your bets with the harvest.” “The past 10 years we’ve entered wine in competitions across the country and have done well against many of the best wineries in California,” Hosmer said.

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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 // O C T O B E R 9 , 2 0 1 7

FOCUS

SECOND STAGE: STRATEGIC PLANNING

How to grow your business with strategic planning tools

LEVEL UP

By Rachelle Damico

Special to Crain’s Detroit Business

LARRY PEPLIN FOR CRAIN’S

Mark Winter, president and co-founding partner, and Katherine May, administrative coordinator, of Bingham Farms-based Identity Marketing & Public Relations LLC.

In this package How to grow your business: Strategic planning tools. This page Level up: How a strategic plan helped Identity PR drive growth. This page Knowing when to let go: A strategic planning process helped ImageOne decide to sell a computer business it had just acquired. Page 17 Eating the elephant, one bite at a time: Broder and Sachse’s strategic plan is helping it transition away from property management so it can concentrate on property development. Page 18 Do you have the right people in the right seats: A business adviser can help bring an objective view to company’s internal workings. Page 18

How a strategic plan helped Identity PR drive growth By Rachelle Damico

Special to Crain’s Detroit Business

Mark Winter, president and founding partner of Bingham Farms-based Identity Marketing & Public Relations LLC, said strategic planning has had a significant impact on the growth of the company. “In our 20-year history, we’ve had both greater revenue and higher net income for 19 years,” Winter said. Identity specializes in media relations, marketing, digital strategies, social media and creative design. The company was founded by Winter in 1998. Identity has 25 employees and generated $4.7 million in revenue last year. It services 70 cli-

ents in more than 35 states. Winter formed a strategic plan in 2004, with guidance from the Detroit chapter of the Entrepreneurs’ Organization, a global organization that enables entrepreneurs to learn and grow from each other. However, as Identity began to grow, Winter said adjustments were needed to take the company to the next level. It was through EO that Winter met Gino Wickman, founder of the Entrepreneurial Operating System, which offers tools for entrepreneurs to run their businesses more effectively. “When we were a smaller company, it was much easier for me to operate as an entrepreneur where it was a

little bit more off the cuff,” Winter said. “As you continue to grow and scale, you can’t continue to grow at the same pace and through the same systems you had before.” Wickman met with the Identity’s leadership team to help identify the company’s strengths and issues, and to define where the company wanted to go into the future. “Find somebody to help you get into a habit of the disciplined nature that you need in order to execute on that plan,” Winter said. “Creatives by nature tend to be more focused on getting things done for clients than we do running our businesses.” SEE IDENTITY, PAGE 18

The biggest mistake companies make when it comes to strategic planning? They don’t bother with it. “Strategy is about how we survive into the future, and that future is uncertain because the environment changes so much,” said Dino Signore, manager of entrepreneurial education at the Edward Lowe Foundation in Cassopolis. “They need to create some type of system for addressing their initiatives that they’re working on, and then discovering what’s working and what’s not,” he said. Many compaNeed nies focus too to know much on the plan JJStrategic plans and not enough can help drive on the execution. company growth Business owners should involve as JJPlans should be many people in flexible, fluid the company as JJCreate possible to inaccountability for crease their probshared goals, ability of success. alignment on “It has to be invision for future tegrated into the daily life of every employee, every department and every leader within the organization,” said Mark Winter, president and founding partner of Bingham Farmsbased Identity Marketing & Public Relations LLC. “That gives everybody clarity of the vision and gets everybody rolling in the same direction,” he said. The plan also has to be updated constantly depending on factors that include internal changes within the company, or what’s happening in the market. Many second stage companies don’t realize the model they originally built their first stage on won’t translate to second stage. Joel Pearlman, CEO and co-founder of Oak-Park based company Image One Corporation, describes the company’s strategic plan as fluid — it can change yearly, or even monthly. “It’s all part of the process,” Pearlman said. “Things are constantly changing, and there are times where we might have to go into a different direction.” In this month’s Second Stage, Crain’s talked to three second-stage business owners about how strategic planning helped grow their companies, as well as advice and tips on how it was implemented.

“Strategy is about how we survive into the future, and that future is uncertain because the environment changes so much.” Dino Signore

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

SECOND STAGE: STRATEGIC PLANNING

Knowing when to let go

A strategic planning process helped ImageOne decide to sell a computer business it had just acquired By Rachelle Damico

Special to Crain’s Detroit Business

Strategic planning helps Image One Corp. determine what paths the company should pursue to fuel future growth. The Oak-Park based company provides print management services. Joel Pearlman, CEO, co-founded the company with partner Rob Dube in 1991. The pair met in elementary school, where they started their first business together selling Blow Pop suckers out of their lockers. “It’s really where Rob and I fell in love with entrepreneurship,” Pearlman said. The company has 52 employees and reached $15 million in revenue last year. ImageOne implemented a formal strategic planning process in 2000. At that time, the company had purchased a small computer company that focused on computer, desktop and network services. The partners believed the company complemented their core business, Pearlman said, but the computer company had a completely different process, sales strategy and client base than the print services the company was focusing on. “We were struggling with the business and were looking for somebody to talk to about whether we should continue down that road,” Pearlman said. The partners hired a business adviser, who directed them to read a book written by Al Ries called Focus: The Future of Your Company Depends on It. The book highlights why business owners should avoid the temptation of diversifying into unrelated companies and instead focus on their core offerings. “We spent a lot of time trying to figure that business out, and he helped us decide to eliminate that business,” Pearlman said. “Our expertise was on the print side.” ImageOne sold the computer company that same year. The company continued to work with the adviser for about six years on a quarterly basis, who helped facilitate meetings where the company would review its vision and solidify its company goals. The company created a 10-year vision of reaching $60 million in revenue, a three-year plan to reach $21.5 million in revenue, and a one-year plan to reach $15 million in revenue. It all fits on a two-page strategic plan, which includes revenue figures and company goals. “Some people write a really long 10-20 page plan, and it’s almost too detailed,” Pearlman said. “This simplifies it and makes it so everyone can see it and understand it in two pages.” To keep the company on track, the ImageOne executive team organizes all-day strategic meetings four times a year to review company goals and revenue figures. The entire ImageOne team also meets monthly to review the quarterly goals and to make sure everyone understands the company’s strategies and how they’re moving forward.

“We would not be where we are now without this constant meeting rhythm we have,” Pearlman said. The plan also helps promote employee accountability, Pearlman said. Team members have quarterly goals, or a list of two to five important things that must be completed by the end of the quarter. For instance, a team member may have to produce

30 qualified sales leads per month, send out 500 direct mail pieces with follow-up phone calls or help improve processes that help the company save money or make the company more efficient. Employees also have weekly oneon-one meetings with their managers to discuss their progress. “It’s been really strategic and em-

Joel Pearlman (right), CEO of ImageOne, co-founded the company with partner Rob Dube in 1991.

powering the entire company to understand what they actually do improves the bottom line,” Pearlman said. “If you don’t have a strategic plan to speak of, there isn’t a lot of clarity and people are going to be going in different directions.” Updating the plan is also important, because the business evolves as technology does, Pearlman said. As print has been slowly declining, Pearlman said the company has offered services that help clients with digital workflow systems and document security solutions. “It’s ever-evolving,” Pearlman said. “The plan today will not look the same in the next couple of years, or maybe even the next month.”

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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 // O C T O B E R 9 , 2 0 1 7

SECOND STAGE: STRATEGIC PLANNING

Eating the elephant, one bite at a time By Rachelle Damico

Special to Crain’s Detroit Business

Broder & Sachse Real Estate Services Inc. used strategic planning tools to help the company end its third-party property management contracts and concentrate on property development. “It’s a manageable tool that lets you eat the elephant one bite at a time,” said Richard Broder, CEO. The Birmingham-based development company, which was founded in 1993, has 65 employees and has been active in developing in downtown Detroit, including The Albert

IDENTITY FROM PAGE 16

Using tools from EOS, Winter and his partner, Andrea Bogos Trapani, set milestones to reach the company’s five-year plan — which includes doubling revenue, hiring and retaining the best people and ensuring the right employees are in the right roles. “It’s not about the plan as much as it is about the execution,” Winter said. “Strategic planning is about figuring out a plan that’s doable and that you know you can accomplish, and then just having the discipline to do it.” The five-year plan is broken down into three-year, one-year and quarterly milestones, and the leadership team meets weekly to discuss the progress of the quarterly goals. After the five-year plan is complete, the plan resets itself. (The company is currently working toward its 2020 plan). Identity teams meet weekly and are responsible for their own set of quarterly goals to ultimately reach the five-year plan. “Having goals, strategies and vision for a company only works if you get everybody within the company to feel like they’re a part of it, and to basically have them sign off on it and be committed to it,” Winter said. To create accountability, employ-

apartments in Capitol Park and The Scott at Brush Park apartments. Broder said the company planned the strategic shift last year. “We wanted to concentrate on Richard Broder: bringing that exceptional quality Plan helps bring to the market, as clarity to tasks. opposed to being a property management service provider to people’s properties where we

don’t have a direct financial interest,” Broder said. The company had worked with a business adviser in 2008 that introduced it to the Entrepreneurial Operating System, which helps business owners run their businesses more efficiently. “We wanted to make our businesses scalable so we could grow, with processes and systems,” Broder said. “Not just by throwing human capital and human bodies at problems and tasks.” Following the EOS system, Broder & Sachse uses written, trackable and

“Strategic planning is about figuring out a plan that’s doable and that you know you can accomplish, and then just having the discipline to do it.”

To identify, retain and develop key employees, Identity invested in continuing education programs, such as hiring third-party coaches to teach seminars, and offering internal mentoring. “Our biggest inhibitor to growth is finding the very best people,” Winter said. The company also has quarterly off-site meetings where the team discusses its successes, where there’s room for improvement, and where new opportunities lie. “You truly can’t get your head out of the business when you’re in the business,” Winter said. “You have to get outside of the business to work on the business.” Winter said that the plan is always evolving and goals can change depending on what is happening in the industry, but there has to be a compelling reason to do so. “Most companies that fail have a visionary that gets easily distracted and there aren’t other folks to keep them on track,” Winter said. “This creates an operational discipline for our company that allows us to stay true to the process without losing sight of the ultimate goal.” Winter said results weren’t immediate, and companies should be patient with the process. “Be disciplined with accountability, and I guarantee within six months or so you’ll start to see results,” he said.

Mark Winter

ees must complete a set of goals by the end of each quarter. Teams meet weekly to discuss progress. “The bigger you get, the more important it is to have that clear communication so (employees) don’t get so caught up in their day-to-day, they don’t truly understand where the company is going and where the opportunities are for them in the future,” he said. “That’s how you lose employees.” Winter said the company has seen significant growth from its current five-year plan, and diversification was a major factor. Last year, Identity added consulting services that include media training and web and social media analytics. The company also added an internal marketing team to help generate new business. “The one thing you learn very quickly when you’re a business owner is that if you try to continue to do the same thing, you’re going to get the same results,” Winter said.

accountable goals on a 90-day pulse. The teams meet each week — same time, place and agenda, to meet those goals. “You build yourself into a framework of a schedule that’s repeated and repeatable, and helps bring clarity to tasks and processes,” Broder said. Broder said the strategic plan is on a front-and-back piece of paper that clearly states the company’s oneyear, three-year and 10-year goals. This is used in monthly, weekly and daily meetings. “It’s a living, breathing document

that you can literally put in your pocket and look at everyday as opposed to it just sitting on the shelf,” he said. Broder said the company’s 10-year vision is to be “the best at developing innovative, urban investment properties by acquiring or developing commercial real estate.” The company’s decision to move away from third-party property management was part of that vision, Broder said. “Had we not lived within this discipline we wouldn’t have made it through as well,” Broder said.

Do you have the right people in the right seats? By Rachelle Damico

Special to Crain’s Detroit Business

Dino Signore, manager of entrepreneurial education at the Edward Lowe Foundation in Cassopolis, said strategic planning should be job No. 1 for the top leaders in the company. “Change is required and innovation is a critical thing for second stage companies,” Signore said. “Can they re-invent themselves to meet new opporDino Signore: Change is required, tunities or at least innovation critical. fight off threats that are coming?” When it comes to strategic planning, a mistake Signore sees is that business owners put the wrong people in the wrong seats. A business adviser, Signore said, can help bring an objective view to what a company is capable of doing internally. “People get very defensive when you start bringing that conversation to them about what they are actually capable of doing,” Signore said. “When you find out you’ve got the

wrong people in the wrong seats, the internal environment tends to resist change.” Mark Winter, president and founding partner of Bingham Farms-based Identity Marketing & Public Relations LLC, said his business coach helped him determine that he was not the right person to handle accountability within the company. “I put myself as this visionary role where I’m great at ideas, but I may not be as strong of an integrator in terms of execution and accountability as somebody else might be that would run the company day-today,” Winter said. That was also the case for Joel Pearlman, CEO and co-founder of Oak Park-based Image One Corp. Pearlman said the company’s business adviser helped the co-founders realize that Pearlman was better suited as the company’s visionary, or “idea guy” for the company, while his partner, Rob Dube, was better at holding others accountable. “He helped us figure out that our skill sets were very different,” Pearlman said. “We realized we all have our own unique abilities.”

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

CRAIN'S LIST: MICHIGAN'S LARGEST PATENT RECIPIENTS 2014-2016 Ranked by number of utility patents awarded Rank

1 2 3 4 5 6 7 8 9 10 10 12 13 14 15 16 17 18 19 20 21 22

Company Address Phone, website

GM Global Technologies Operations LLC B 300 Renaissance Center, Detroit 48265 Ford Global Technologies LLC C 330 Town Center Drive Fairlane Plaza South Suite 800, Dearborn 48126 (313) 390-9453

Top executive(s)

Mark Reuss,executive VP, global product development, purchasing and supply chain Bill Coughlin, CEO; James Hackett, CEO, Ford Motor Co.

Toyota Motor Engineering and Manufacturing North America Inc. James Lentz president 1555 Woodridge Ave., Ann Arbor 48105 www.toyota.com Mark Whiteman Dow Global Technologies Inc. president 2030 Dow Center, Midland 48674 (989) 636-1000 Mark Schlissel University of Michigan president Ann Arbor 48109 (734) 764-1817; umich.edu Marc Bitzer D Whirlpool Corp. CEO 2000 N. M-63, Benton Harbor 49022 (269) 923-5000; whirlpool.com Don Walker Magna International of America Inc. CEO 750 Tower Drive, Troy 48098 (248) 631-1100; www.magna.com Sergio Marchionne FCA US LLC chairman and CEO 1000 Chrysler Drive, Auburn Hills 48326-2766 (248) 576-5741; www.fcanorthamerica.com Kunio Nakaguro, corporate VP, Nissan Nissan North America Inc. product development 39001 Sunrise Drive, Farmington Hills 48331-3404 (248) 488-4123; www.nissanusa.com Nick Kassanos LG Chem Ltd. president 1 LG Way, Holland 49423 (616) 494-7100 Ron Vaupel Guardian Industries Corp. E president and CEO 2300 Harmon Road, Auburn Hills 48326-1714 (248) 340-1800; www.guardian.com Mauro Gregorio Dow Corning Corp. F CEO 2200 W. Salzburg Road, Midland 48686 (989) 496-4000; www.dowcorning.com Kenichiro Ito, chairman and CEO and Denso International America Inc. CEO, Denso North America 24777 Denso Drive, Southfield 48033 (248) 350-7500; www.densocorp-na.com Matthew Simoncini Lear Corp. president and CEO 21557 Telegraph Road, Southfield 48033 (248) 447-1500; www.lear.com Mike Mansuetti Robert Bosch GmbH president 38000 Hills Tech Drive, Farmington Hills 48331 (248) 876-1000; www.boschusa.com Rainer Jueckstock, co-CEO, coFederal-Mogul LLC H chairman and CEO, powertrain; 27300 W. 11 Mile Road, Southfield 48034 Brad Norton, co-CEO, co-chairman, (248) 354-7700; www.federalmogul.com and CEO motorparts Joao Faria I Eaton Corp. president, vehicle group 13100 E. Michigan Ave., Galesburg 49053 (616) 342-3000; www.eaton.com Fred Bauer Gentex Corp. chairman and CEO 600 N. Centennial St., Zeeland 49464 (616) 772-1800; www.gentex.com Lou Anna Simon Michigan State University president East Lansing 48824 (517) 355-1855; www.msu.edu R. Bruce McDonald Johnson Controls Technology Co. J chairman and CEO 49200 Halyard Dr., Plymouth 48170 (734) 254-5000; www.johnsoncontrols.com Shunkichi Shimizu TK Holdings Inc. K president 2500 Takata Drive, Auburn Hills 48326 (248) 373-8040; www.takata.com Samir Salman Continental Automotive Systems U.S. Inc. CEO, NAFTA region 1 Continental Drive, Auburn Hills 48326 (248) 393-5300; www.conti-online.com

Total patents Patents Patents Patents awarded awarded awarded awarded 2014-2016 2016 2015 2014 Type of business

3,095

908

1,013

1,174

Automobile manufacturer

3,089

1,368

1,025

696

Automobile manufacturer

477

202

128

147

Automobile manufacturer

444

140

155

149

Chemicals, plastics and agricultural products

441

159

137

145

Public university and health system

437

159

145

133

Household appliances

306

113

Automotive parts supplier

248

Automobile manufacturer

195

Automobile manufacturer

160

Chemicals company and lithium-ion battery solutions

160

Manufacturer of glass and automotive products and building products distributor.

159

Silicon-based chemical researcher, developer and manufacturer

149 G

Global supplier of advanced automotive components

146

Automotive supplier

143

Technology and services supplier for mobility solutions, industrial technology, consumer goods, and energy and building technology

134

Designs, engineers, manufactures and distributes technologies to improve fuel economy, reduce emissions and enhance vehicle safety

131

Engine air management, actuators, sensors, mirror controls, differentials, superchargers, valve trains, hose, truck transmissions

119

Auto-dimming mirrors and aircraft windows, fire protection products

115

Public university

114

Automotive seating

105

Automotive safety restraint supplier

102

Automotive supplier

SOURCE: IFI CLAIMS Patent Services A utility patent protects the invention of a new machine, process or composition. The invention must be useful, such as software or stamping machine, to qualify for a utility patent. This year, Crain's collaborated with IFI CLAIMS Patent Services to compile the list of Michigan's top patenting companies. The list is based on US Utility patents granted in 2016, 2015 and 2014. The counts are based on the number of utility patent filings of companies with major local operations and where at least one listed inventor is shown as residing in Michigan. The count only includes patents with a Michigan connection. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. IFI CLAIMS Patent Services maintains a database of standardized names for patent assignees and applicants. This database is the basis for this year's Michigan list. NA = not available.

B Includes patents registered to General Motors LLC. C Wholly-owned subsidiary of Ford Motor Co. D Succeeded Jeff Fettig as CEO, effective Oct. 1. E Shareholders, on Nov. 21, 2016, approved the sale of the company to KGIC Merger Corp., a wholly-owned subsidiary of Wichita, Kan.-based Koch Industries Inc. F Now part of Dow Chemical. G Includes patents registered to Denso Corp. H Formerly Federal-Mogul Holdings Corp. Acquired by Icahn Enterprises L.P. on Jan. 23, 2017, and is now a wholly owned subsidiary. I Succeeded Kenneth Davis as president effective May 1. J A subsidiary of Adient plc. Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. K U.S. subsidiary of Takata Corp. The Sterling Heights based-Key Safety Systems is to acquire Takata in a deal that is expected to close in the first quarter of 2018. An expanded version of this list is available with a Crainâ&#x20AC;&#x2122;s data membership at crainsdetroit.com/lists

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

DEALS & DETAILS

CALENDAR WEDNESDAY, OCT. 11 From Here to Security: How Workplace Savings Can Keep America’s Promise. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Robert Reynolds, president and CEO, Putnam Investments & Great-West Financial, will speak on how to improve retirement systems — public and private. Cobo Center. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Women of Influence Lecture Series. 6:30-8 p.m. The Community House. Denise Brooks-Williams, president and CEO, Henry Ford Hospital. $15. The Community House, Birmingham. Contact: Program department, phone: (248) 644-5832; email: program@communityhouse. com.

UPCOMING EVENTS Crain’s 2017 Health Care Leadership Summit. 8 a.m.-1 p.m. Oct. 19. Crain’s Detroit Business. The summit will focus on managing health care in a time of uncertainty. Attendees will hear from industry experts on how their companies are managing today and making long-term decisions, despite uncertainty in the areas of policy and decision making, talent acquisition and retention, and technology. Keynote address from Rep. Joe Kennedy III, who will discuss the future of health care reform and an eye-opening panel discussion on Michigan’s opioid crisis, moderated by Lt. Governor Brian Calley. Marriott Renaissance Center. Individual ticket: $185; reserved table of 10: $1,900; young professional ticket for ages 21-35: $140. Contact: Kacey Anderson, phone: (313) 446-0300; email: cdbevents@crain.com. Launching a Local Sports Organization to Drive Economic Impact. 11:30 a.m.-1:30 p.m. Oct. 25. Detroit Economic Club. Leadership from Detroit’s sports teams, the Detroit Sports Commission, Detroit Metro Convention & Visitors Bureau, media and the business community have joined forces to form the Detroit Sports Organizing Corp. with a mission to win the large Super Bowlsized sporting events for Detroit. Panel includes: Arn Tellem, vice chairman, Palace Sports & Entertainment; Tom Wilson, president and CEO, Olympia Entertainment; Rod Wood, team president, Detroit Lions. Ford Field. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Things That Go Bump in the Workplace — A Survivor’s Guide to Employment Nightmares. 8:00 a.m.noon Oct. 27. Plunkett Cooney.Topics to include: compliance with civil rights law, recent case law developments, investigation strategies and practical recommendations for managing employment risk. Detroit Athletic Club. Free. Contact: Stephanie Pegg, phone: (248) 901-4028; email: spegg@plunkettcooney.com; website: .plunkettcooney.com The Talent Journey Conference. 8 a.m.-2 p.m. Oct. 27. Auburn Hills Chamber of Commerce. Conference tackles attraction and retention issues and brings together executives,

higher education and resources for different industry sectors including: advanced manufacturing and skilled trade, technology, healthcare, automotive and engineering and professional services. Marriott Auburn Hills Pontiac. $99 members; $149 nonmembers. Contact: Courtney Woods, phone: (248) 853-7862; email: cwoods@auburnhillschamber.com; website: business.auburnhillschamber.com/events Transforming Healthcare. 11:30 a.m.-1:30 p.m. Oct. 27. Detroit Economic Club. Toby Cosgrove, president and CEO of Cleveland Clinic, will explore national healthcare trends and industry disruptors. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org State of the Region. 11 a.m.-1:15 p.m. Nov. 1. Detroit Regional Chamber. The Detroit Regional Chamber’s fourth annual release of the State of the Region report, providing an economic overview of the 11-county region. Cobo Center. $50 members; $100 nonmembers. Contact: Jordan Yagiela, phone: (313) 596-0384; email: jyagiela@detroitchamber. com; website: detroitchamber.com Women of Influence Lecture Series. 6:30-8 p.m. Nov. 1. The Community House. Barbara McQuade, professor of law, University of Michigan Law School; former Attorney, Barbara McQuade U.S. Eastern District of Michigan. $15. The Community House, Birmingham. Contact: Program department, phone: (248) 6445832; email: program@communityhouse.com. Strengthening Urban Communities by Creating Opportunities for Minorities in Business. 11:30 a.m.1:30 p.m. Nov. 6. Detroit Economic Club. John W. Rogers Jr., chairman, CEO and chief investment officer, Ariel Investments, will discuss how to create economic opportunity for people of color in businesses despite the barriers those communities face. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Crain’s Health Care Heroes. 8-10:30 a.m. Nov. 7. Crain’s Detroit Business. Crain’s Health Care Heroes represent consummate professionals working within the health field. These heroes are innovators who are dedicated to helping save lives and improving access to care. Gem Theatre, Detroit. $85.$60 young professional ages 2135. Contact: Kacey Anderson, phone: (313) 446-0300; email: cdbevents@ crain.com, website: crainsdetroit. com To submit calendar items 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.

CONTRACTS J Hygieia, Ann Arbor, an insulin-management company, has a distribution agreement with Spirit Healthcare Ltd., United Kingdom, to expand access of Hygieia’s d-Nav Insulin Guidance Service in England, Scotland and Wales. Websites: hygieia.com, spirit-healthcare.co.uk. J Nexteer Automotive Corp., Auburn Hills, a supplier of driveline and steering systems, is in a joint venture with Continental AG, Hanover, Germany, an automotive systems supplier. CNXMotion is focused on the advancement of motion control systems and actuator components for automated driving. It will occupy a 19,000-square-foot facility in Grand Blanc. Websites: nexteer.com, continental-corporation.com. J Clor & Associates LLC, Grosse Pointe Farms, an HVAC manufacturers representative, sales and marketing agency, is now an official distributor for Production Tool Supply Inc., Warren, one of the leading suppliers of industrial tools in the Midwest.

Websites: clorandassociates.com, pts-tools.com.

EXPANSIONS J Crunch Fitness, New York, N.Y., a fitness center franchise, has opened a 25,000-square-foot gym at 35715 Warren Road, Westland. Phone: (734) 589-8622. Website: crunch. com. J Ziebart International Corp., Troy, an automotive franchise of vehicle protection and appearance services, has opened a store in Utica, N.Y. Website: ziebart.com. J UHY LLP, Sterling Heights, a certified public accounting firm, has opened an office at 455 E. Eisenhower, Suite 102, Ann Arbor. Phone: (734) 213-1040. Website: uhy-us. com. J Cooper-Standard Automotive Inc., Novi, a part of Cooper-Standard Holdings Inc., a supplier of systems and components for the automotive industry, opened its Canada Industrial Specialty Group facility in Sher-

brooke, Quebec. It will serve as a dedicated site for ISG manufacturing and warehousing. Website: cooperstandard.com. J Domino’s Pizza Inc., Ann Arbor, has opened its first store in Slovakia, in the capital city of Bratislava. Daufood, master franchisee for Domino’s Slovakia, opened the two-story pizza theater store, where customers can watch their pizzas being made, in cooperation with local franchisee APIM Gastro. Website: dominos. com, daufood.com.

NEW PRODUCTS J Acromag Inc., Wixom, a designer and manufacturer of industrial electronics, measurement and control products, announced the AP580 Series, an addition to its PCIe-based AcroPack modules that provides a single Ethernet 10, 100, or 1000 Mbps port and an optional Power Over Ethernet (POE) model. Website: acromag.com.

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

Jury hits Jaffe Raitt with $5 million legal malpractice verdict By Dustin Walsh dwalsh@crain.com

A jury in U.S. District Court in Detroit on Tuesday delivered a $5 million verdict against law firm Jaffe Raitt Heuer & Weiss PC for legal malpractice for failing to vet a client’s pension liability from an acquisition. The damages were awarded to Neal Cohen and Darren Chaffee, partners at New York private equity firm CoBe Capital LLC, and the pair’s holding company SSL Assets LLC. Partners at Southfield-based Jaffe Raitt did not respond to multiple re-

Need to know

Jaffe Raitt found liable in legal malpractice case J

J Ordered to pay nearly $5 million in damages J Case stems from unfunded pension liability tied to client acquisition

quests last week for comment on the case. The case, which was filed in April 2016, stemmed from Jaffe’s work to vet SSL’s 2013 acquisition of Minneapolis-based laminate cabinetmaker

LSi Corp. of America Inc. from office furniture maker HNI Corp. Cohen and Chaffee argued that Jaffe failed to protect the partners and their holding company from LSi’s $3.26 million underfunded pension liability. According to court documents, Jeffrey Weiss, a partner at Jaffe Raitt, provided legal advice that Cohen, Chaffee and SSL Assets would not be liable for the pension as long as any one individual or entity did not own more than 80 percent of LSi. The two partners split the ownership stake in half and offered a 2 per-

cent stake to another partner at CoBe. The new owners of LSi invested several million dollars into the manufacturer in hopes of turning around the business, according to court documents, unaware that if it failed, they would be held personally accountable for the pension liability. LSi ultimately went into receivership in January 2016. The pension liability had ballooned to $4.86 million by the time of insolvency and the pension fund declared the owners liable, triggering Cohen and Chaffee to

sue Jaffe Raitt. “If Jaffe had correctly advised Mr. Cohen and Mr. Chaffee as to the potential for controlled group liability, Mr. Cohen and Mr. Chaffee would not have purchased LSi Corp.,” the lawsuit reads. The jury awarded Cohen $1 million in damages, Chaffee $667,000 in damages and made SSL whole in the pension liability at the time of the LSi acquisition with a $3.26 million award. It’s unclear whether Jaffe Raitt plans to appeal the ruling.

Cleary University adding athletic complex, student housing By Bill Shea

In recent years, schools such as University of Michigan-Dearborn, Oakland University, and Eastern Michigan have spent millions to make their campuses more attractive to potential students — part of the race to increase enrollment as the state’s K-12 population shrinks.

bshea@crain.com

Cleary University said Thursday it will spend nearly $12 million to build an athletic complex and additional student housing as part of its push to become a more traditional college. The work is part of a trend of small schools, often commuter colleges, spending to bolstering their athletic departments and dorms as a strategy to offer a transitional college experience, which they say can boost enrollment and potentially build a lucrative alumni base in the long term. Cleary, a private business school with about 800 students mainly on a campus in Livingston County’s Genoa Township, intends for the $2.5 million athletic complex to support its six varsity sports: baseball, men’s and women’s soccer, men’s and women’s lacrosse and softball. The township must approve plans for the facility, and Cleary wants to open it by fall 2018. The university will try to sell the facility’s naming rights, Cleary President Jayson Boyers told Crain’s. He declined to say how much the school would seek in naming rights money. The athletic complex will have lighting to permit outdoor games, seating room for hundreds of spectators and artificial turf. Adding a new athletic complex comes on the heels of Cleary joining the National Association of Intercollegiate Athletics in August as an independent after five years as a member of the small-school United States Collegiate Athletic Association. As an NAIA school, Cleary will offer 17 women’s and men’s sports, including new programs in wrestling and competitive dance. There is no plan to add football, Boyers said, but basketball and volleyball are distinct possibilities in the future. The $10 million housing facility for 126 students is expected to get township approval this fall, the school said, and groundbreaking will be in November. Powell, Ohio-based University Housing Solutions gave Cleary an undisclosed philanthropic gift, both cash and in-kind, to help pay for the capital costs on both projects, Boyers said. He declined to discuss specifics of the financing. University Housing Solutions is national developer of campus residential buildings and other college facilities. It opened an $8 million, 102-bed student apartment building for Cleary in 2015, and has an $8 million deal with Madonna University in Detroit announced earlier this year to build a pair of residence halls. UHS will own the new Cleary

Lawrence Tech plans

Proposed new housing for Cleary University in Livington County near Howell.

MKC ARCHITECTS

Need to know

JJBusiness college to add sports complex, student housing JJProjects totals nearly $12 million JJSmalls schools increasingly adding sports, dorms

dorms on a multi-year lease-back agreement, Boyers said, after which the university will take ownership. He declined to get into more granular detail of the agreement with UHS. The school will own the athletics complex outright. Both projects are being designed by Powell, Ohio-based MKC Architects. The new facilities are intended to aid Cleary’s goal to increase enrollment to up to 1,500 students within five years, Boyers said. The school also has contracts do to corporate training for companies, and is seeking to expand that enrollment, as well, he added. Creating a more traditional college campus not only will boost attendance and build an alumni base, but it’s intended to help students have a college experience that also bolsters their networking with each other, Boyers said. “We’re a business university, and your network should be important. We want (students) to be connected to the school, but also each other,” he said. Cheering on Cleary Cougars sports can be part of that networking experience. Cleary was founded in 1883 and phased out athletics in 1920. It reintroduced them in 2012, when Cleary joined the USCAA. In addition to its main Howell campus, the school operates education centers in Ann Arbor, Detroit and Flint. The student population is about 60 percent “traditional” students and 40 percent “non-

BOSS ENGINEERING

Cleary University intends for a $2.5 million athletic complex to support its six varsity sports: baseball, men’s and women’s soccer, men’s and women’s lacrosse and softball.

traditional,” the school has estimated.

Sports can help boost enrollment There is some evidence to support what Cleary and other schools are doing: Adding sports teams and facilities, especially football and marching bands, can fuel an enrollment boost, according to a 2015 study of five small universities published in the maga-

zine College Planning & Management by Virginia Wesleyan College President Scott Miller and former Carlow University President Marylouise Fennell. “Each institution saw a six-year increase of at least 26 percent, with one institution doubling its enrollment during that period. An accompanying focus on student opportunity, fitness and fun is a more qualitative, but equally compelling, outcome,” they wrote.

Locally, Cleary follows Southfield-based Lawrence Technological University in building expanded athletics programs and facilities to goose enrollment. LTU last year opted to spend $1.2 million to relaunch a football program in 2018, after 70 years without one, as part of the private business school’s business strategy to remold itself into a traditional residential college. The goal is to compete by 2019 in the NAIA’s Mid-States Football Association. Lawrence Tech is deploying a capital campaign to raise money for an $8 million to $10 million football stadium. Last year, an anonymous donor gave Lawrence Tech $1 million to cover the cost of an 88,000-squarefoot synthetic grass field. The field was finished in September 2016, and is lined for football, soccer and lacrosse, and has a sand and rubber infill base. Lawrence Tech relaunched its athletics programs, dormant since the 1950s, in 2011. Its 24 teams include basketball, soccer, lacrosse, hockey, golf, tennis, bowling, baseball, softball, volleyball and cross country. Plans are in the works to add women’s ice hockey, dance/spirit squads and a marching band. LTU was founded in Detroit in 1932 as an engineering college, and it moved to Southfield in 1955. Athletics are one element of Lawrence Tech’s ongoing effort to increase its residential students from 700 now to 1,000 in coming years, and boost the current enrollment to 5,000 from the current 4,100. Another Michigan college, Grand Rapids-based Davenport University, was an NAIA football school, but moved up to NCAA Division II earlier this year to play in the Great Lakes Intercollegiate Athletic Conference. The state has 21 colleges playing NCAA football (five NCAA Division I, nine Division II schools and seven Division III). There are 11 other NAIA schools in Michigan, including Aquinas College in Grand Rapids, Lawrence Tech and Marygrove College in Detroit. With Cleary switching to the NAIA, the only other USCAA school in the state is Andrews University in Berrien Springs.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

DMC signs performancebased contract with BCBSM

Youâ&#x20AC;&#x2122;re not like everybody else; and neither are we. 8IFUIFS ZPV BSF DPOTFSWBUJWF PS BHHSFTTJWF B OFU TBWFS PS TQFOEFS EFTJSF DPSSFMBUFE PS BMUFSOBUJWF OPO DPSSFMBUFE JOWFTUNFOUT ZPVS OFFET BSF VOJRVF 8F DVTUPN EFTJHO JOWFTUNFOU QSPHSBNT UP GJU ZPV ZPVS GBNJMZ ZPVS UBY TJUVBUJPO BOE ZPVS DPNGPSU [POF

By Jay Greene jgreene@crain.com

Detroit Medical Center has signed a performance-based health insurance contract with Blue Cross Blue Shield of Michigan that will pay the hospital system more if it improves quality and patient outcomes. â&#x20AC;&#x153;DMC is furNeed thering its comto know mitment to valJJPerforue-based care, mance-based and we are excitcontract pays ed to enhance higher reimburseour relationship ments for better with the system quality so the Detroit community can JJProgram seeks r e c e i v e fewer hospital high-quality readmissions, health care serunnecessary ER vices from a visits trusted provider JJMore than 70 in our network,â&#x20AC;? hospitals Susan Barkell, participate in Blue Blue Crossâ&#x20AC;&#x2122; seCross program nior vice president for health care value, said in a statement. Like more than 70 hospitals already in Michigan, DMC has agreed to move away from traditional feefor-service payments that rewards higher utilization and toward a value-based approach that rewards efficiency and such positive patient outcomes as fewer hospital readmissions. â&#x20AC;&#x153;Our hospitals are recognized locally and nationally by leading assessors for quality, and our clinical teams are steadfastly committed to numerous quality initiatives that make a difference in the lives of our patients,â&#x20AC;? Tony Tedeschi, M.D., CEO of the DMC, said in a statement. Under the national movement of value-based reimbursement, which was encouraged under the Affordable Care Act, hospitals are rewarded if patient health improves and hospitals help lower costs. Examples include reducing duplicate services, moving care to the most appropriate setting and reducing unnecessary emergency visits. More than 80 percent of what Blue Cross pays to Michigan hospitals now is associated with value-based contracts, Blue Cross said. Health systems participating in Blue Crossâ&#x20AC;&#x2122; value-based contracts include St. John Providence Health System, Henry Ford Health System, Trinity Health, Beaumont Health, MidMichigan Health and the University of Michigan Health System. Since 2013, hospitals have received more than $50 million in payments and cut costs by 1 percent of total expenses, Crainâ&#x20AC;&#x2122;s has reported.

â&#x20AC;&#x153;DMC is furthering its commitment to value-based care, and we are excited to enhance our relationship with the system...â&#x20AC;? Susan Barkell

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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 // O C T O B E R 9 , 2 0 1 7

Planet M launches mobility industry hub inside WeWork By Annalise Frank afrank@crain.com

PEOPLE

Grow Michigan appoints new CEO

ADVERTISING/ MARKETING/PR Kevin Kelly to vice president, Eisbrenner Public Relations, Royal Oak, from director, Advanced Technology, Automotive Events, Cleveland, Ohio.

Startups that want to dive into Detroit’s mobility industry can rent dedicated, subsidized space at WeWork’s Merchant’s Row location in downtown Detroit. The Planet M Landing Zone, a 65desk space funded by the Michigan Economic Development Corp. and the Detroit Regional Chamber, offers a selection of startups and larger companies all of WeWork’s services along with resources tailored to the automated, shared and electric vehicle sectors. Need The niche to know co-working JJMobility space officially startups can rent opened Thursspace at Planet M day. It started Landing Zone testing operations in July, said JJSpace in Trevor Pawl, WeWork Detroit group vice presioffers auto dent for Planet industry, M, which started investment out last year as connections an MEDC camJJ65-desk space paign to boost opened Thursday Michigan’s standing as a mobility hub. It is now transitioning into a business development program with a mobility focus, Pawl said. Long- or short-term users of the new space can rent desks or individual offices. They’ll also get access to networking events and matchmaking opportunities with the auto industry; legal, tax and automotive experts; help with economic development opportunities, and venture capital, said Justin Robinson, the chamber’s vice president of business attraction. “How do we help secure the future of Michigan’s automotive industry for the next 100 years? The way we want to do that is to bring those global tech disruptors here,” Robinson said. “The way we think

ARCHITECTURE Garrick Landsberg to senior architect, Quinn Evans Architects, Detroit, from historic preservation architect, AECOM, New York, N.Y.

BANKING/FINANCE Alisa Ambers to senior audit associate, Cole, Newton & Duran CPAs, Livonia, from senior financial analyst, Detroit Agency on Aging, Detroit. Also, Monica Soosik to manager from senior associate, Rehmann Robson, Farmington Hills.

J Ross Ricelli to managing partner, Crescent Way Capital Partners, Ann Arbor, from global planner, BASF, Southfield.

TREVOR PAWL/PLANET M

The Planet M Landing Zone in WeWork’s Merchant’s Row location in downtown Detroit offers space and resources for startups looking to accelerate growth in Michigan and the global mobility industry.

about this is as a hub ... a physical entry point for these global startups.” MEDC is contributing 75 percent of the space’s operational costs through Planet M’s budget and the Detroit Regional Chamber is contributing the other 25 percent, Robinson said. The office space is provided at discounted rates through WeWork. A 10-member team from the ride-sharing startup Splt is already renting space at the Landing Zone. Also on board are about five members of Ford Motor Co.’s City Solutions operations and about six people from the behavioral location data startup Spatial, which is based in Cincinnati. General pricing is $100 per desk

per month for the first six months and $200 per desk per month for months seven to 12. Ideally companies will remain in WeWork or in Southeast Michigan after the full year, Pawl said. Planet M and the chamber are also seeking auto industry partners to participate in events and networking, and help introduce them to more mobility startups. Mobility is a general term used to cover advanced technology-focused auto industry sectors such as autonomous vehicles, ride-share systems and electric vehicles. Southeast Michigan companies and the state have made efforts to draw mobility technology businesses to the region. For more details or to apply, visit planetmlandingzone.com.

ADVERTISING SECTION

To place your listing or for more information, please call Lynn Calcaterra at (313) 446-6086 or email lcalcaterra@crain.com

FINANCIAL SERVICES

HEALTH CARE

Edward Wolyniec

Cindy Tomlinson

Chief Executive Officer

Vice President of Hospice

BeneSys, Inc.

McLaren Homecare Group

Wolyniec brings more than 25 years of experience with Xerox and Mercer, growing businesses, developing winning teams and leveraging technology. With BeneSys as wellpositioned and respected provider of Taft-Hartley benefit administration servicing approximately one million members and their dependents, Wolyniec will now focus on building on an already strong market position, increasing brand awareness and enhancing the delivery of BeneSys’ services to over 150 Union Trust Funds across the USA.

EDUCATION Jarrad Louis Grandy to executive director of student services, Oakland Schools, Waterford Township, from director of career readiness, Kent ISD, Grand Rapids.

INSURANCE Michelle Acciavatti to Michigan market leader, Willis Towers Watson, Southfield, from Michigan director of account management.

MANUFACTURING J Jill Whelan to owner and president, Swagelok Michigan | Toledo, Farmington Hills, from vice president, corporate communications, Swagelok, Solon, Ohio. J Annemarie Kleabir to vice president, internal audit and compliance, Cooper Standard, Novi, from controller and chief accounting officer, Rock Ventures LLC, Detroit.

NONPROFITS

www.crainsdetroit.com/onthemove

McLaren Homecare Group is pleased to announce the promotion of Cindy Tomlinson, MSN, RN, from director of hospice to vice president of hospice. Tomlinson has expanded the service area of McLaren Hospice in Mt. Pleasant and Bay City, and is in the process of adding a location in Port Huron. In her new role, Tomlinson will continue to implement her growth plan in both the MidMichigan and Southeast Michigan markets, as well as lead the development of a palliative care program, launching October 9.

J Alex Smith to director of development, buildOn, Detroit, from director of communications, buildOn, New York, N.Y.

REAL ESTATE

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

SPOTLIGHT

John Gosdzinski to regional manager, Pogoda Companies, Farmington Hills, from property sales manager, Pogoda Management Companies, Ann Arbor. Also Misti Huguelet to lead operations specialist from receptionist, Dr. Ron Fried Chiropractic and Wellness Center, Rochester Hills.

RETAIL J Michele Azar to chief digital officer, Art Van Furniture, Warren, from vice president of global e-commerce multi-channel fulfillment and growth, Best Buy Co., Richfield, Minn.

To submit news of your new hires or promotions to People, go to crainsdetroit. com/peoplesubmit and fill out the online form. Please limit submissions to management- or partner-level positions.

Finance veteran Patrick O’Keefe has been appointed to lead Grow Michigan LLC. He will lead the group simultaneously with O’Keefe & Associates LLC, which he founded in 2001. O’Keefe, 62, Patrick O’Keefe will oversee a capital investment fund that has contributed $51.1 million to small-business projects since 2013. The funds come from the Michigan Strategic Fund and 19 banks in Michigan, a news release said. “His 30-plus years of experience in financial advisory work, his stellar reputation and high integrity make the relationship a perfect fit for our mission,” Board Chair David Treadwell said in a statement. O’Keefe replaces Russ Youngdahl, who retired to pursue other interests. O’Keefe has been a board member since June.

Finn Partners’ Detroit office leader selected

PR veteran Mike DeVilling has been added as a senior partner of Finn Partners, the New York City-based public relations firm announced. He began Sept. 25. DeVilling, 51, heads the Detroit office’s staff of 18, overseeing its Mike DeVilling new business development, client service and counsel. He reports to managing partner Dan Pooley in Chicago. Prior to Finn, DeVilling operated his own agency that served automotive, nonprofit, real estate and personal finance clients in metro Detroit for nearly 10 years. DeVilling has a journalism degree from Central Michigan University.

Beaumont names human resources chief

Beaumont Health has picked Aaron Gillingham to become senior vice president and chief human resources officer, CEO John Fox announced. He begins Nov. 6. Gillingham, 44, will replace J. Paul Aaron Gillingham Conway, who retires at the end of the month. Gillingham will oversee Beaumont’s human resources department, responsible for hiring, staff development, benefits and diversity, among other responsibilities. “(He) will help us advance our position as a workplace of choice drawing top talent from across Michigan and beyond,” Fox said in a statement.

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October 9, 2017 25

AMAZON FROM PAGE 3

DG: Labor and talent is a big, big deal. Amazon has told us more than five times, 10 times, that they want to know about the university talent within a five hour drive of Detroit, so that gets us (the University of) Waterloo, which is one of the reasons we are so high on the Canadian thing. It’s one of the, if not the, premier software technology schools in North America. I think it’s the No. 1 place outside of Silicon Valley. That also gets us Carnegie Mellon, which is in Pittsburgh, Chicago universities, obviously East Lansing. Amazon comes to a region, they are looking more broad. No. 2, it’s dynamic analysis, not a static analysis. What they make is just hard to fit into a spreadsheet. RF: You mentioned that one of the big things we have going for us in this region is the fact that the region is working together in a way that we never have. Who is the “we?” Who is on this committee? DG: As soon as it came out, I reached out to the mayor and said, “Look, I already put guys in a room.” Literally within minutes. These guys and others. He said, “What do you think about creating this, whatever you want to call it, ‘Super Bowl-ish type committee?” There’s this committee. We have conference calls, discussions and updates. But then there is a working group of DEGC (Detroit Economic Growth Corp.). Some consulting groups have offered their services. Truly, and no BS, I have never seen in anything I’ve ever done a region of people volunteering, wanting to work together, rowing in the same direction. It’s unbelievable in this region. Everyone. Dustin Walsh: Is it too many cooks in the kitchen, though? DG: We just said we are going to set this up in a centralized location. If you guys want to come, come in, it’s wide open. Clearly, they have pretty big day jobs, these people. From an on-the-ground level. CT: It’s been the most impressive effort I’ve ever seen with groups from the private sector, nonprofits, development corporations, consultants coming together. I wouldn’t say it’s felt like too many cooks in the kitchen at all. Boston Consulting Group, Michelle Anderson and her office here in Detroit committed seven or eight people to helping us with the project management of this, but also with the research piece, especially leveraging their network. That was pro bono. They reached out to us. We have a consultant out of Seattle, TIP Strategies. We have campaign consultants. We have at least four creative consultants on board helping us not only look at this through the lens of the Amazon campaign, but beyond and what all this leads to for Detroit as a platform. The best and most compelling thing for all this is that this has lead to all the conversations we want to have, both from a public and private standpoint around the region. DW: We’ve seen big development projects like Foxconn, the largest price tag tax incentive wins. Detroit can’t necessarily do that. How important is that versus all the other things? DG: Yes, they stated clearly that incentives will be a piece of it. I personally don’t believe it will be the single largest reason. It will be a reason, one of the things they look at. We have something that we think is unique and different that counters incen-

Jared Fleisher, vice president of government relations at Quicken Loans.

tives. We can’t discuss it right now because we don’t want to give it away to our competitors, but we think it’s better than incentives. You’ll see that soon enough here. What would make Amazon have more profits? That’s what we are looking at. Incentives are a one-time thing. We are working on something. We are not done. There are a lot of interesting concepts. Not only is this process going to help us whether we win or not, but we are going to have action on things that are otherwise going to fester for awhile or may never happen. RF: You get into an elevator with Bezos with 15 floors to make your case after all the work you’ve done. What is it? DG: No. 1, you get a chance to come to a city that is a city that represents two countries. Those two countries have a vast and deep amount of talent and labor, from Waterloo, drawing from Chicago and the five-hour drive. No. 2, we have a path on the real estate to get you your 8 million-plus (square) feet that nobody has because of the concentration of ownership we have and the land that we have and the developments that can happen. Tons of optionality for you. Your million (square) feet that you need in 2019, we have it for you in beautiful, renovated, cool downtown buildings. No. 3, there’s going to be some stuff on the training with the state and technology people and all that. RF: You did mention incentives. DG: We have something that I personally think will be better. There are all these things that are being juggled and talked about that aren’t our decision. RF: No. 3 has something to do with training? DG: There will be something where I will be able to say, “You will have all the talent that you will need to grow this thing to the 50,000 people you want.” Some pretty good things. (Random banter) DG: You have a (municipal) airport 4 1/2 miles away from here that can be rejuvenated a little bit. That’s very attractive and helpful to them for a lot of reasons. I don’t know how they are looking at it vis-a-vis RFP, but we are absolutely going to offer that in some way shape or form. I don’t know if they are going to offer the whole air-

port, but access and things that make Amazon like it. They didn’t say anything specifically about that, but we know that’s a big thing. RF: What else can you tell us about the education and training component? DG: The state and universities are very, very cooperative and anxious. The term is a Marshall-like Plan for this. The governor is driving this. Michael Lee: Are there discussions about creating a specific incentive for Amazon, the way Wisconsin did for Foxconn? DG: There have been discussions, and also on the Canadian side. Jared Fleisher: We know that the state, in the past year, has added some tools to its toolbox. I am personally confident that the state will be robust and competitive in its package for Amazon. I also agree that the value proposition for Amazon will far transcend that. We’ll really deliver what’s core to them on issues of talent, quality of life, cost competitiveness of doing business here in what’s become an overall more favorable tax climate. When you compare that to the astronomical cost in Seattle, it’s extreme. DG: When we first started this process, we said, “Let’s start with the things we can do that’s going to be very hard for others to do.” Clearly the international thing is very difficult for others to do. The other thing we have that we didn't mention is that Amazon, to some degree, believes they are a transportation company. They are becoming more and more of that. Clearly the transportation industry, a big chunk of it, is located here. Our research tells us that Amazon is very, very interested in its pursuit of significant relationships with Detroit and other international car makers for reasons you guys can probably figure out. There is a reason why people want to be together in urban cores. The same reason why we’d probably be preferable for them. It probably makes it easier, more likely, more effective. Chad Livengood: On the education part, is it more important that the state of Michigan show in part that we will fill their job needs more than just writing a check, like Wisconsin is doing for Foxconn? DG: I think it is. I can’t speak to Amazon and Jeff Bezos, but I think it is.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

It’s a public company trading on some future belief of earnings and market capitalization, a little more cash on the balance sheet, but I think that would be a priority over what you’re talking about. Steve Ogden: We believe, and we are banking on in our submission, that Amazon has a more noble purpose and a more noble mission than trying to find who can write the biggest check. We add all the ingredient to a pot, make a bouillon bag and then on top of that — because every city is going to throw money at them. What we gleaned from our research is that they want to impact the outcome.

Going to somewhere that’s going to write the biggest check will not accomplish all those ingredients. RF: Is it possible that our bid is not going to have tax incentives, and instead take that money and push it all to the talent issue? JF: I think it’s going to have a robust and competitive incentives package. I think it’s going to make a very strong case not only on our talent assets today, but how we are going to mobilize resources. SO: I guess we are talking about a ramp-up period. There are things to do in the short term and things to do, sustainable things that you ramp up over time. They have talked about 500,000 square feet and then growing into millions beyond that. They are not trying to do that overnight. There are some solutions to position to them for short-term. DG: People get hung up on incentives, and I get that. I just did some numbers. Let’s say there’s one city that has these large incentives and there’s another city that’s $40 per square foot cheaper in rent. Forty dollars per square foot times 8 million is $320 million per year, times 10 years, $3.2 billion. This is what I’m saying. You have to look at the whole thing, all the levers. (Random banter) DG: The concentration of our ownership, combined with what the city has under their control. You have to think about and understand … they are going to another big city Boston, New York — No. 1, how am I going to cobble together, who am I going to have to deal with to get 8 million square feet in this city? KP: That’s half the size of downtown. DG: Yes. That is a massive, massive, maybe multi-year undertaking. Literally, with the snap of our fingers, today say, “This is your path and comSEE AMAZON, PAGE 26

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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 // O C T O B E R 9 , 2 0 1 7

AMAZON

CONTINUED FROM PAGE 25

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CHANGE THE WORLD

WITH A GIVING HEART

mit to it.” I’m not sure if another city can do that. KP: Where do you get 100 acres to accommodate what essentially is three FOCs (Quicken Loans Family of Companies)? DG: There are multiple ways to get there. KP: Do you throw them on Uniroyal? Do you throw them on the Syncora property (on the riverfront)? DG: If we have to, because we have control, we can move our businesses somewhere temporarily until new construction can be built to accommodate other stuff, and we would do that because it’s right for the city and region. That we can do. As you go through the years, and look at what they project … You know all the sites. There’s Monroe, there’s Hudson’s, the river, the jail site, the Gratiot site, there’s Uniroyal. ML: How specific will the bid get in terms of recommending locations? JF: I think the key is that there is a flexible pathway here in the CBD. You can’t forget that Amazon already has a presence in this region. The flexible pathways also include the entire region, and I think the case is that HQ2 is also logistics assets and so forth. We think we have the most flexible, high-quality pathway to meet your need of 8 million square feet. DG: One-hundred acres, and they explained this to us, doesn’t have to be a vacant 100 acres. What they said to us is it could be multiple buildings. They are about the city. He’s (Bezos) a big city guy and most of their executives are city, urban center guys. CT: A lot of people assume that the 100 acres is just a plot of land that gets developed on. But in our understanding of Amazon, you just have to go to Seattle and see how their current

GILBERT FROM PAGE 3

Talent Gov. Rick Snyder’s administration is developing a training and career education “Marshall Plan” to meet Amazon’s demands to fill 50,000 jobs over the next two decades, Gilbert said. “We can’t discuss it right now because we don’t want to give it away to our competitors, but we think it’s better than incentives,” Gilbert told Crain’s. Gov. Rick Snyder said Friday the plan is being developed to both pitch to Amazon and also meet the increasing demands of existing Michigan employers who are experiencing talent shortages, particularly in information technology jobs. “They’re talking about the need to hire 50,000 people, but my point to everybody was it shouldn’t be just about Amazon," Snyder said. The governor said the state will commit an undetermined amount of new money toward training programs that could be run through the state's universities, community colleges and K-12 schools. “I would expect that to happen, whether it would be to our educational institutions or through job training," Snyder said of taxpayer support of job training.

Tax incentives Gilbert’s team says the state,

campus is laid out in South Lake Union. It is completely embedded into the urban core over there. Go to Seattle. RJW: The area in South Lake Union where they are covers a footprint of about 240 acres and it is intermingled with other companies. That area has experienced tremendous growth. It is not the same area as it was when they took a presence there. KP: Have you spoke with Bezos since this has come out? DG: Personally? No, I have not. I’m waiting for the right time. KP: Do you have a direct line to him? Do you have his cell? DG: Yeah, I have his cell phone. I’ve seen him every summer for the last 10 years. KP: Over in Aspen? DG: No, Sun Valley Conference. He’s a data-driven, information guy with big ideas. He’s got two parts to him. Data, information, data, information, big ideas. That’s Amazon. CL: Will the incentive package that’s presented to Amazon require any kind of amendment to current law? JF: We would refer all questions about that to the governor’s office. These are new tools, the Good Jobs legislation and the transformational brownfield legislation, both of them have yet to be used. We are not without capacity. I would say that by fortuity or whatnot, the state of Michigan was well-timed in creating these tools for transformational developments and transformational job-creation opportunities because we now have them in our hands. CL: Is the tool big enough? Because it has a cap of 3,000 jobs. JF: All questions like that need to go to the governor’s office. RF: We saw the video. What else are you doing to make the public argument? Nick Perold: I don’t want to get

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county and Detroit will offer a “robust” incentives package, but it probably won’t be in the stratosphere of the $3 billion check Wisconsin is writing Foxconn Electronics Group for the Taiwanese contract manufacturer’s new factory. There also could be incentives available from Canada and Ontario, Gilbert said. Among the tax incentives Amazon could qualify for include abatements on property tax, the state’s new program allowing employers to capture the state income taxes of new employees and a Michigan Renaissance Zone incentive that would give the company a break on Detroit’s city corporate income tax. The mortgage mogul turned real estate developer is stressing that Detroit’s office lease rates will be far less expensive than other cities, potentially negating the need for massive taxpayer subsidies that larger cities may offer. “You have to look at the whole thing, all the levers,” Gilbert said.

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Regional cooperation A coalition of Detroit’s business, political, philanthropic and nonprofit leaders are working on the proposal for Amazon. The 59-member Amazon Detroit Regional Committee includes the presidents of the three biggest public universities, the CEOs of DTE Energy Co. and General Motors Co. and foundation presidents.

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into specifics about what’s coming other than to say on the 19th of October, there will be much more in the way of content referencing what we all know to be true, which is that Detroit is a dynamic place with a lot to offer to a lot of different kinds of companies, but especially in areas that Amazon cares about and that Amazon would find a very welcoming reception here. RF: Does that content include paid advertising? NP: There will be methods, both organic and paid, to get the word out, but they will always be done with an eye towards referencing our city in a way that Amazon would understand well. DG: Are you trying to sell some ads? RF: Actually, no. Will we see national advertisements, for example? Cable TV? Washington Post full-page ad? NP: There will be advertising, for sure, of various stripes, but I don’t want to get into the specific size and scope of those ads. DG: Amazon’s not the kind of company ... There are certain companies that enjoy that and it will impact them. The impact is what we talked about earlier. The region is together. The video is not the kind of thing that will put these guys over the top. Keep in mind, we have to move into the next round and we don't know how big that round will be. But that's what it's about right now. DW: Who’s writing the proposal? DG: It’s being written by several people who are part of this. Three or four. CT: Across the board, there will be a concentrated team of a few people focused solely on producing that. We’ll be pulling from everywhere. ML: The one thing we haven't discussed really is transit. What discussions are going on about how we adOakland County Executive L. Brooks Patterson and Macomb County Executive Mark Hackel are supporting Detroit’s bid for Amazon HQ2 instead of being neutral or pursuing their own proposals for suburban office parks. “Truly, and no BS, I have never seen in anything I’ve ever done (in) a region of people volunteering, wanting to work together, rowing in the same direction,” Gilbert said. “It’s unbelievable in this region. Everyone.”

Transportation options While Detroit doesn’t have a sophisticated mass transit system, Gilbert is playing up the airports and the regional economy centered around transportation, mobility and logistics — fields Amazon relies on to home deliver consumer goods. The under-utilized Coleman A. Young International Airport is less than five miles from downtown and could be “rejuvenated” for Amazon executives to take direct private flights to Seattle. It also could be used for Amazon’s development of package-carrying drones. Detroit Metropolitan Airport also is available for direct commercial flights to international destinations for Amazon’s global commerce and talent recruitment work. Crain’s Staff Writer Kirk Pinho contributed. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

dress that in the RFP? JF: Three things. One, I think to their credit on a regional and state basis, they are looking at solutions that they could bring to bear in 2019 and beyond that would serve a campus. Two, we are at the center of mobility here in the metro Detroit area. I think we are also looking at innovative mobility solutions. The final thing I’d say is that this, on many dimensions, will be catalytic as we look at a comprehensive regional transit solution in the near future, with 2018 being your first opportunity. I think this crystallizes in many people’s minds the missed opportunity in 2016. DW: Is the chief mobility officer for the city running that? JF: He is very involved, for sure.

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27 Cory Tincher, director of special projects at Rock Ventures LLC, is serving as project manager for the committee drafting a proposal for Amazon to base its second headquarters in Detroit.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

First arou perc have

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Sourc

CON

MICHIGAN HOUSE OF REPRESENTATIVES TV

Detroit Mayor Mike Duggan testifies Tuesday in front of the House Insurance Committee in favor of a three-tier medical coverage options for auto insurance.

Auto insurance litigation primer First-party lawsuits involve drivers or their medical providers suing their auto insurance companies to get medical bills paid through the personal injury protection benefits of Michigan’s no-fault car insurance law. These lawsuits center on economic damages to pay for the injured driver’s lost wages and long-term rehabilitation and medical care, including in-home attendant care that is usually performed by family members. Personal injury attorneys can place a lien on the judgment they win for drivers and collect as much as 30 percent of the economic damages. Third-party lawsuits involve badly injured drivers suing the at-fault driver who caused their catastrophic injury for non-economic damages known as pain and suffering damages. Injured drivers have to meet a certain threshold to sue, which is determined on a case-by-case basis. If the injured driver wins, the insurance company of the at-fault driver will typically have to pay the damages plus attorney fees.

GST

FROM PAGE 1

GST suffered more business setbacks at its foreign operations — the company employs 5,600 in the U.S., Mexico, Japan, China, Korea, Germany, Hungary, South Africa and Argentina. GST says in its bankruptcy filing that between April 2016 and July 2017 roughly 20 percent of its supplied content to an automaker in Europe were rejected due to one of its suppliers’ violation of the automaker’s validation process. The problem cost GST about $8 million, it said in a filing. GST generated $142 million in revenue in Europe last year. A leather tannery in China also

PROPOSAL FROM PAGE 1

“In my opinion, third-party lawyers will make more money if these caps go into effect,” said Thomas Waun, a first-party auto insurance lawyer and managing partner of the Flint office of Johnson Law PLC. “The more you reduce first-party (lawsuits), the more you increase the third-party rights.” Bernstein, the son of personal injury super attorney Sam Bernstein, acknowledges the legislation keeps in place the pain-and-suffering lawsuits that are synonymous with his family’s law firm. “That explains my bias in this,” Bernstein told Crain’s. But Bernstein said limitations on how much money can be collected through first-party lawsuits are meant to curtail abusive practices of some lawyers who run their clients through excess medical procedures and then capture as much as a third of their personal injury protection benefits through liens. “I didn’t go into law … to be a collecbegan demanding above-contract pricing in late 2015, costing GST an additional $24 million to move capacity elsewhere, the filing said. The company is currently building its own facility in China to supplant its current supplier contract. “(GST) has been rumored to have been in trouble for years,” said Fred Hubacker, managing director of Birmingham turnaround advisory firm Conway MacKenzie Inc. “If you’re a levered company with limited liquidity and some suppliers make a run on you, you’re getting toppled.” GST is owned by Tokyo-based private equity firm Advantage Partners LLP, which acquired the supplier for $310 million from Citibank Venture Capital and its affiliate

tion agency for chiropractors,” said Bernstein, president and managing partner of The Sam Bernstein Law Firm in Farmington Hills. “I don’t begrudge them of that. But that’s not why I went to law school.”

Auto insurance lawsuit spike Over the past decade, there has been a ballooning number of first-party lawsuits revolving around medical bills for injured drivers in metro Detroit that Duggan and insurer carriers blame for driving up the cost of Michigan’s highest-in-the-nation auto insurance premiums. Between 2007 and 2016, the number of first-party lawsuits filed annually in Wayne County spiked by 163 percent, while Macomb County saw a 165 percent increase, a Crain’s analysis of state court data shows. Washtenaw County had a 148 percent increase in lawsuits between motorists and their insurance companies over medical benefits over the past decade, while Oakland County saw the lowest increase in metro Detroit at 82

“(GST) has been rumored to have been in trouble for years.” Fred Hubacker

SILLC Holdings in 2008. Advantage entered into an agreement to sell GST to private equity firms MBK Partners of Hong Kong and Simone FC Co Ltd. of South Korea in 2015 for $400 million, but the deal never materialized. By October 2016, GST attracted four potential buyers of the business, all pulling out of the bidding process by late-summer this year as the company’s performance continued to decline, the company said

percent more lawsuits each year. The rapidly increasing number of lawsuits over car accidents and unpaid medical bills is not limited to Detroit or its suburbs. In Kent County, the total number of auto insurance lawsuits filed between 2009 and 2017 more than doubled, state courts data shows. Statewide, first-party lawsuits rose nearly 130 percent over the past 10 years. When third-party lawsuits are added to the mix, litigation over no-fault auto insurance accounted for two of every five lawsuits filed in Michigan’s court system last year — a 83 percent increase from a decade ago. “These lawyers, they’re all spreading the strategy to each other,” Duggan told members of the House Insurance Committee last week. “This is going everywhere. And if you continue to close your eyes, it is going to affect everybody.” Duggan, a former CEO of the Detroit Medical Center, said personal injury attorneys sue auto insurance companies before hospitals have even billed for services. SEE PROPOSAL, PAGE 29

in an affidavit to the court. The supplier was able to negotiate $40 million in debtor-in-possession financing from its secured lenders to continue operations as the bankruptcy proceedings get under way. It owes more than 750 creditors as of its Oct. 3 filing. The lenders are expected to operate as stalking horse bidders, initiating an auction process for the company, it said in a filing. GST supplies leather for nearly ever major automaker, including Audi, BMW, Daimler, FCA, Ford, General Motors, Hyundai, Honda, Porsche, PSA, Nissan, Kia, Toyota and Volkswagen. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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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 // O C T O B E R 9 , 2 0 1 7

The rise in driver lawsuits First-party lawsuits involve drivers or their medical providers suing their auto insurance companies to get medical bills paid through the personal injury protection benefits of Michigan’s no-fault car insurance law. The lawsuits center around economic damages to pay for the injured driver’s lost wages and long-term medical care, including in-home attendant care. Personal injury attorneys can place a lien on the judgement they win and collect as much as 30 percent of the non-economic damages. Third-party lawsuits involve badly injured drivers suing the at-fault driver who caused their castrophic injury for non-economic damages known as pain and suffering damages. Injured drivers have to meet a certain threshold to sue, which is determined on a case-by-case basis. If the injured driver wins, the insurance company of the at-fault driver will typically have to pay the damages plus attorney fees.

Year

Macomb 1st party lawsuits

Macomb 3rd party lawsuits

Oakland 1st party lawsuits

Oakland 3rd party lawsuits

Washtenaw 1st party lawsuits

Washtenaw 3rd party lawsuits

Wayne 1st party lawsuits

Wayne 3rd party lawsuits

Statewide 1st party lawsuits

Statewide 3rd party lawsuits

2007

304

501

354

568

112

110

2,399

1,562

3,950

6381

2008

284

521

281

573

2,530

1,659

4,027

6,378

2009

312

605

346

622

125

102

2,787

1,791

4,402

6,602

2010

322

768

353

770

123

141

3,462

2,173

5,156

7,519

2011

539

886

431

880

142

164

4,264

2,861

6,359

8,494

2012

486

887

538

935

150

145

5,245

2,738

7,485

8,468

2013

482

993

529

1,049

193

161

5,599

2,904

7,898

9,064

2014

621

1,082

542

1,042

227

176

5,415

3,096

7,996

9,436

2015

650

1,095

593

1,178

253

194

5,691

3,381

8,296

9,860

2016

806

1,162

644

1,152

278

202

6,327

3,435

9,077

9,838

% increase

165.13%

131.94%

81.92%

102.82%

148.21%

83.64%

163.73%

119.91%

129.80%

54.18%

Source: Michigan court records; Crain’s research

PROPOSAL

CONTINUED FROM PAGE 28

“And then for the rest of (the injured driver’s) life, a third of the medical bills are taken off the top by the lawyer,” Duggan said. “It’s an annuity. They figured this out, which causes attorneys to be really motivated to get these cases.” “An entirely new class of litigation has been built up in this state,” the hospital executive-turned-mayor added. Personal injury attorneys don’t dispute there’s a practice of filing liens against a driver’s medical benefits and serving as a pass-through for the bills. Some attorneys in the industry take issue with Duggan’s characterization that they’re all filing lawsuits in pursuit of a big payday. “There’s been a spike in lawsuits because insurance companies don’t pay what they should and because providers are overcharging for services that probably shouldn’t have been charged,” said Marc Lipton, a Southfield personal injury attorney. House Bill 5013 would strengthen the state insurance commissioner’s powers to crack down on fraud in medical care for auto accident victims — one of several ways Duggan and Leonard say the reforms will reduce costs driving up no-fault premiums. Lipton’s Southfield firm, Lipton Law, does primarily first-party litigation for injured drivers. In most cases, Lipton said, his firm does not file suit because a team of paralegals and attorneys is able to

TROY FROM PAGE 3

However Brian Wattles, a petition circulator and supporter of the charter amendment, says “very few things” would have to go for voter approval if the measure succeeds. “Our intention was not to throw all kinds of things to the vote of the people,” he said. And Frank Howrylak, father of state Rep. Martin Howrylak, calls the concerns from city officials unfounded and says they are scare tactics. “They are blowing a lot of smoke around here, and I think the goal is to scare people,” Howrylak said.

compile a driver’s medical records and negotiate with an insurance company on what they’ll agree to pay for health care services, lost wages and attendant care. The Duggan-Leonard legislation “would close a lot of plaintiffs firms,” Lipton said. Morse, whose Southfield law firm advertises heavily for auto accident litigation in metro Detroit, did not return a call seeking comment on the legislation. Instead, Morse had another attorney who doesn't work for him — David Christensen — call a Crain's reporter back to discuss the legislation's impact on trial attorneys. “The fact that Mark Bernstein was standing next to Mike Duggan (at a press conference) should not suggest to anybody that trial attorneys support this bill," Christensen said. "Because none of them do, except perhaps Mark.”

Foreseen ‘proliferation of litigation’ Michigan’s lack of any laws policing “bad-faith denials” by auto insurance companies also leads to more litigation, said Steven Gursten, an attorney at Michigan Auto Law, a Farmington Hills-based personal injury law firm. “If you don’t want to see a spike in lawsuits, tell the insurance companies to pay the damn claims,” Gursten said. Attorneys also blame a 2005 ruling by the Michigan Supreme Court that drivers have to sue their insurance company within one year of a medical procedure being rendered to qualify for payment.

“They are blowing a lot of smoke around here, and I think the goal is to scare people.” Frank Howrylak

He said the intent of the 2-acre threshold was to prevent the city from “slicing and dicing” the civic center into smaller parcels to avoid the provisions of the charter amendment. Two acres is approximately the size of 1 1/2 football fields. Ethan Holtz, a partner at the Southfield office of Jaffe Raitt Heuer & Weiss PC who represents clients in real estate disputes and

The previous standard allowed for lawsuits within one year of an insurer denying a claim, leaving more time for negotiation between patients, their medical providers and the insurers. “We file lawsuits all of the time now that we shouldn’t have to because we don’t have the check in hand,” said Steve Sinas, a partner at the Sinas Dranis Law Firm in Lansing and Grand Rapids. “That’s a big driving factor in how many lawsuits get filed.” In a dissenting opinion, then-Justice Michael Cavanagh correctly predicted 12 years ago that the majority’s ruling would lead to more lawsuits in a no-fault system that was designed in 1971 to limit lawsuits over car accidents. “With the proliferation of litigation that is now bound to occur, insurers will be paying the costs of defending the lawsuits, and converting resources that could otherwise go toward investigating claims and communicating with their insureds into payments for billable hours,” Cavanagh wrote. “This will, in turn, translate into higher premiums, further denigrating the opposite goal of the no-fault act.”

HB5013, the no-fault insurance reform legislation, contains other provisions that trial attorneys say shield insurance companies from being sued over ignoring or denying medical claims. The bill bars personal injury attorneys from seeking payment or placing liens on a driver’s personal injury protection benefits until payment for

the claim is authorized by the insurer, the claim is overdue and 30 days after the attorney gave the insurer notice in writing of the overdue bill. “If I do my job, I don’t get paid, according to this bill,” Lipton said. “Which means I’m not going to do the job.” Drivers also could be left on the hook to pay an insurance company’s attorney fees in a lawsuit if the treatment or procedure they got is deemed “not medically necessary,” according to the bill. These provisions were crafted into the legislation to curtail perceived abuses and excess litigation, Chuck Raimi, deputy corporation counsel for the city of Detroit. “The cost (of auto insurance) would come way down under the proposed legislation because it would be taking away the financial incentives from both the doctors and lawyers to run up these exorbitant bills,” said Raimi, who previously was deputy general counsel of DMC when Duggan was CEO. “(Attorneys) would have to prove they earned their money instead of just slapping a lien on the proceeds.” With their industry under increasing scrutiny, personal injury attorneys have shown a willingness to make a deal with lawmakers that would protect the rights of drivers to sue for medical benefits, while reining in the unlimited expenses that get passed along to all insured motorists. The Coalition Protecting Auto NoFault, a group that includes the personal injury attorneys in the Michigan Association of Justice, has said it

would agree to a medical payment fee schedule of 185 percent of rates paid under the workers' compensation system. Duggan and Leonard’s proposal calls for a Medicare-level fee schedule for doctors and rehabilitation clinics that treat injured drivers and a 125 percent of Medicare rate for emergency room care. Medicare pays less than workers compensation. CPAN also has said it would agree to establishing a state fraud authority and capping hourly rates paid for family members who care for injured loved ones at home. “This system has been made much more complex than it should have ever been made, and that’s working against everybody’s interests,” said Sinas, who also is legal counsel to CPAN. “It may be broken, but it can be fixed.” But the trial attorneys remain vehemently opposed to the $25,000 cap for personal injury protection benefits under the lowest level of optional auto insurance proposed by Duggan, Leonard and Rep. Lana Theis, chair of the House Insurance Committee. “The solution is not to cut benefits,” Lipton said. “The solution is to have a fraud authority. “They’re going to put 10 people out of work in my office,” Lipton said of the Duggan-Leonard legislation. "They’re making it essentially illegal for an injured person to hire a lawyer to represent them. This is horrible."

others, called the language “pretty broad.” “It would put some fairly restrictive clamps on how the City Council could operate,” he said. “If any of these contracts renew annually are on land that is over 2 acres in size, it could require a vote every single year by the public.” Proponents said they provided the city with language for an “evergreen” clause that could be inserted into leases that would allow them to continue in perpetuity until one of the parties decides to sever the agreement. The genesis of the ballot proposal comes from a city plan unveiled last year to redevelop the cityowned civic center property nestled between I-75 to the west, Liv-

ernois to the east and north of Big Beaver Road. It’s that property’s preservation that Howrylak and Wattles say they are advocating. “We believe the civic center should be preserved for recreational and civic-type activities and facilities,” Howrylak said. “It’s a central area in Troy, and it’s a defining characteristic with our open space and green lands. The people of Troy should vote if anything is to be partially developed on that land.” For over a year, the city has been working with Bingham Farmsbased Core Partners LLC and Birmingham-based Gibbs Planning Group Inc. to develop a master plan for the property. The city con-

tains City Hall, and also the police department, library, community center, an aquatic center and the 52-4 District Court. Under the group's proposal, those buildings would remain largely unchanged, minus a new facade and clock tower for City Hall. It’s the acreage surrounding those buildings that would see the most activity as retail spaces, townhouses, live-work units, condominiums, apartments and cottage homes are planned, plus a 300-room hotel. For now, however, those plans are on hold pending next month’s election.

‘This is horrible’

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 9 , 2 0 1 7

THE WEEK ON THE WEB

RUMBLINGS

Proposed land swap another step toward Gilbert jail site plan

Anita’s Kitchen moves into fast-casual

SEPT. 29 - OCT. 5 | For more, visit crainsdetroit.com

ayne County and the city of Detroit have agreed to a land swap that moves the county into better position to forge to a deal with Dan Gilbert for the Wayne County Consolidated Jail site on Gratiot Avenue. Under terms of the tentative agreement announced last Thursday, the county would get ownership of a portion of a Detroit Department of Transportation property where Gilbert’s Rock Ventures LLC is proposing to build a new criminal justice complex to replace the halfbuilt jail at the foot of downtown. In return, the city gets ownership of the 1.4 million-square-foot American Motors Corp. site on Detroit’s west side at 14250 Plymouth Road, upon which the county foreclosed in 2015. Wayne County Land Bank had planned to sell that property to a Commerce Township man, but the sale was canceled because he missed a payment deadline. The Detroit City Council, Wayne County Commission and Wayne County Land Bank board must sign off on the deal. Last month, the county commission approved extending a deadline to Dec. 1 to recommend a path forward on the half-built jail site, while keeping Walsh Construction’s proposal to finish building the jail on the table. The county has said it is focusing its efforts on Rock Ventures’ $1 billion plan to build a new consolidated jail complex on the DDOT property and build a Major League Soccer stadium and a trio of high-rises at the Gratiot site. “This agreement gets us one step closer to a deal with Rock Ventures. Acquiring this land was one of the significant hurdles to Rock’s proposed criminal justice complex,” county Executive Warren Evans said in a news release. The DDOT property involved in the swap does not include the bus system’s terminal, but rather the land behind it, which means it will not affect DDOT operations at the facility, according to the release. Duggan said it’s “land we don’t need” and that the city receives the AMC property as one it “wants to take on as a redevelopment project to improve the neighborhood.”

BUSINESS NEWS J Pregame events at Little Caesars Arena last Thursday celebrated the Detroit Red Wings’ regular season home opener. J A group of 18 behavioral health providers based in metro Detroit are banding together to create a more unified voice amid a leadership shakeup at Detroit Wayne Mental Health Authority and a push to privatize behavioral health in Michigan. J Motor City Match recipient Union Town Woodshop opened in an industrial space near New Center and is applying for another grant to expand. J Detroit-based Finance Michigan Inc. invested $5 million in Livo-

SMITHGROUPJJR

The University of Michigan-Dearborn is planning a $90 million project to redevelop an engineering building by fall 2020, showing in this rendering.

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

$27 million The cost of Banyan Investments LLC's east riverfront development that will include condos, a market and a new home for the Shakespeare in Detroit nonprofit.

The number of Detroit homes that could avoid tax foreclosure under a $300,000 Quicken Loans Inc. initiative aiming to combat blight in the neighborhoods.

nia-based Marketplace Homes Inc., a broker of more than $3 billion in new-construction homes and owner of a controlling interest in nearly 23,000 single-family properties in the U.S. J Thrift Books Global LLC is permanently laying off 51 employees with the closure of its warehouse in Brownstown Township. J A Macomb County man named David Johnson, owner of Livernois Dental, fled the country to avoid dozens of felony charges and was arrested in the Dominican Republic. J The 40,0000-square-foot Lawyers Building at 139 Cadillac Square is set for a $7 million-plus conversion into 45 market-rate apartments. J After a $1 million plus build-out and a few upcoming soft launches, Eastern Market Brewing Co. is set to open to the public later in October. J Deloitte Consulting LLP has agreed to work as an in-kind consul-

tant for the American Center for Mobility in Ypsilanti Township. J An auto insurance reform proposal backed by Detroit Mayor Mike Duggan would shift $150 million in medical costs for injured drivers onto the state’s Medicaid insurance system for the working poor within 10 years, according to a new analysis. J Blue Cross Michigan’s LifeSecure Insurance Co. has sold a 20 percent interest in the company in a $15.2 million deal with BCS Financial Corp. J The Film Exchange Building in downtown Detroit is going to an online auction in November with a minimum bid of $2.25 million. J The Platform LLC’s former Joe Muer’s Seafood site transformation just outside of Eastern Market will be a multifamily and retail/commercial development. J Palace Sports & Entertainment filed for federal trademark protection for the “Motor City Soccer Club” name last week and made a grab for five corresponding web domain names.

OTHER NEWS Businessman and Democrat Dan Haberman of Troy will run for the 11th Congressional District seat being vacated by Republican Rep. Dave Trott. J The Michigan Supreme Court awarded $1.64 million to eight Southeast Michigan adult and juvenile mental health court programs. J More than 140 speakers including “CBS Sunday Morning” correspondent and humorist Mo Rocca and the president of the Ford Foundation will address Our Common Future, a three-day gathering in Detroit. J

nita's Kitchen Lebanese Cafe in Ferndale is growing its brand by branching out into fast-casual territory. The owners, Jennifer and Joe Wegrzyn, plan to open a new space before the end of the year called AK Takeaway near the Guardian Building in downtown Detroit. They're introducing an app that will allow customers to order and pay before they pick up their meals. Breakfast and lunch will be offered alongside coffee, fresh juices and kombucha. The plan is to keep quality, authentic Lebanese favorites like pita sandwiches, hummus, bowls and salads on the menu while speeding up the delivery process to adapt to the modern food landscape. The concept, termed "fast-casual," falls somewhere between fast food and sit-down and was popularized by chains including Chipotle and Panera. "In the downtown commercial sector, people have a finite amount of time, so we’d like to go the fast-casual route so we can maximize the customer’s ability to enjoy eating our food versus procuring it," Jennifer Wegrzyn said. The 2,100-square-foot space is on the ground floor of the 150 W. Jefferson Ave. building, which they share with law firm Miller, Canfield, Paddock and Stone PLC and others. Anita's is leasing from owner Redico LLC. It will seat 20 indoors and 20 on an

outdoor patio, and employ 25-30. Next summer the Wegrzyns plan to open another AK Takeaway-style location at 45 W. Flint St. in Lake Orion. Renovations are still underway on the building, which is owned by an entity in which they are a partner. AK Takeaway will take up about 3,500 square feet while 2,000 square feet will be leased for office space. The Anita's owners are spending "in excess of $500,000" building out each of the two takeaway locations, Jennifer Wegrzyn said. In addition to growing its restaurant footprint, Anita's Kitchen is developing a 2,000-square-foot commercial kitchen less than a mile from the Ferndale restaurant. "We can produce larger volume and quantity and keep everything consistent," Wegrzyn said. They'll whip up make-ahead products like marinades, dressings, yogurt and hummus at the new kitchen, but Anita's Kitchen's dishes will contiue to be prepared fresh at the restaurants, she said. With its new AK Takeaway concept, Wegrzyn said Anita's Kitchen is returning to its origins. It started in 1981 with a grab-and-go eatery opened by Wegrzyn's parents, Lebanese immigrants Pierre and Anita Farah, in a food hall in Farmington Hills. They opened a Troy restaurant later, and the Wegrzyns opened Anita's Kitchen in Ferndale in 2008, she said. The Troy location closed in 2011.

MIKE LANKA

Left to right: William Pickard; Ann Hall, wife of the late Ron Hall; and Dennis Archer in front of the newly renamed dormitory.

Western renames dorms to honor alumni trio

ome old college friends with prominent names got a tour of a building that now bears their names. Two dormitories at Western Michigan University in Kalamazoo were renamed for the late automotive executive Ronald Hall, former Detroit Mayor Dennis Archer and entrepreneur William Pickard. All three are alumni of Western Michigan. Hall and Archer are for-

mer WMU trustees. Pickard is a current trustee whose term ends in 2020. The new Hall-Archer-Pickard East and West dorms were built in 2015. The trio first met as WMU undergrads in the 1960s and became friends. Pickard and Archer were roommates in Vandercook Hall. The three also pledged Alpha Phi Alpha Fraternity. Pickard gave a gift of more than $3 million to the university.

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Notable Women Lawyers in Michigan set legal precedent and manage high-profile cases. They win awards and earn promotions. They serve on boards in the community and mentor co-workers. In a special section Dec. 11, Crain Content Studio, the custom publishing division of Crain’s Detroit

Business, will name the 2017 Notable Women Lawyers in Michigan. In that section, we’ll profile the female lawyers who are considered leaders in their workplaces and in the community, as nominated by a client or colleague.

yers inate. w a l menom/nom o w e c tabl etroit. o n d T: 16 ree crains F h E t L T. K p toisiting C E u O E e inat by v E W LOSE N O Nom siness LY IONS C bu N r O u o at y NAT

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