Crain's Detroit Business, Oct. 30, 2017 issue by Crain's Detroit Business

OCTOBER 30 - NOVEMBER 5, 2017

Johnson’s company poised for global success

Football helmet market has strong Detroit ties Page 3

Page 12

Workforce

Insurance

Diversity initiatives fail to move needle

The intersection of policy and penalty By Chad Livengood clivengood@crain.com

The intersection of Moross Road and Mack Avenue has always been thought of as a dividing line between Detroit and Grosse Pointe, between black and white, working class and elites. But when it comes to auto insurance rates in Michigan, it’s the intersection of public policy and a penalty for living where Need you can afford to to know buy or rent a JJPrices vary home. wildly from one Within a side of intersection 10-block radius of to the other Moross and Mack, AAA of Michigan JJBarrier to has six different economic upward auto insurance mobility for base price ratings. Detroiters And the price JJUnchecked you pay — before medical treatment nondriving factors costs a factor like age, gender and credit score are thrown into the mix — all depends on which side of the border you live on. On the southeast corner of the intersection in Grosse Pointe Farms, car owners in that tony neighborhood behind Kerby Field get a 48.1 percent discount on the base rate AAA charges for personal injury protection, the most expensive portion of auto insurance, according to the insurer’s pricing data filed with the state. SEE INSURANCE, PAGE 18

Overall, employment of disabled stagnates By Dustin Walsh dwalsh@crain.com

Emagine Entertainment is starved for good workers. The Royal Oak-based movie theater company, which operates 17 theaters in Michigan, Minnesota and Illinois, is constrained by a tight labor market and a changing culture among teenage workers, so it widened its net to put vests on candidates. Three years ago, Emagine turned to a local nonprofit to find new workers: those with a disability.

Need to know

JJCompanies lag in hiring disabled workers JJSome businesses target hiring people with disabilities, though it has not yet led to impactful change in hiring numbers overall JJHiring workers with disabilities can reduce turnover, improve productivity, according to some studies

CRAIN’S DETROIT BUSINESS/CHAD LIVENGOOD

Within 10 blocks of Moross and Mack, AAA of Michigan has six different base price ratings for auto insurance.

Real Estate

Meijer makes a bet on downtown workforce By Kirk Pinho kpinho@crain.com

Meijer Inc. is betting big on going small. The Walker-based retailer’s third store in Detroit will be just a fraction of the size of its two supercenter locations that have opened since 2013, and as such won’t need to pull customers from as large of a population pool to produce a healthy bottom line, according to the project’s developers. But beyond that, they are also confident that downtown’s growing workcrainsdetroit.com

force and new residential developments around the site on East Jefferson Avenue between Rivard and Riopelle streets will further bolster the store’s success, in spite of the five miles surrounding it having less than half the population of the areas around its two supercenters in Detroit. Last week, the East Riverfront Development Co. LLC joint-venture and city officials announced a $60 million mixed-use development anchored by a 42,300-square-foot Meijer grocery store anticipated to open in the fall 2019. SEE MEIJER, PAGE 17

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The $60 million mixed-used development on Jefferson Avenue will feature a Meijer grocery store that’s much smaller than the typical Meijer.

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“It’s hard to find people who want to work these days,” said Frank Ficalora, vice president of operations at Emagine. “There’s a lot of jobs out there and, personally, I think the work ethic has changed since I was a kid. So if I can find someone who wants to work, and they have a barrier to employment, I’ll find a way to make it work.” Emagine has hired six people at its Royal Oak, Canton and Novi theaters since 2014 from Dearborn-based Services to Enhance Potential (STEP) out of roughly 13 that participated through a work-study program, Ficalora said. Emagine is on a short list of companies that have prioritized hiring employees with disabilities, even out of necessity. Recent studies show that while the business community has embraced initiatives to boost diversity, it has failed to improve inclusion among the disabled community despite that population’s growing numbers. SEE DIVERSITY, PAGE 17 0, 2017 S I N E S S // O C T O B E R 3 CRAIN’S DETROIT BU

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MICHIGAN BRIEFS

INSIDE

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

Child care solutions sought Five years ago, John Wilson formed a private family foundation and set out to help lift people out of poverty in Mason County. Wilson’s foundation, Pennies from Heaven, helped organize an employer resource network serving 12 companies and about 20 percent of the local workforce. Such networks are cropping up around the state as tools for employers to pool resources and tackle barriers that keep people from holding down a job, from transportation to housing to child care. The foundation also invested about $300,000 to open Oaktree Academy, a nonprofit child care center housed inside a former school in Ludington, and another $100,000 annually to operate it. The Grand Rapids Area Chamber of Commerce and Talent 2025, a West Michigan-based business coalition focused on finding and developing talent, last week hosted a panel discussion with state lawmakers, researchers and Wilson about how to get business leaders engaged in helping working families find child care. “We need to start thinking about different solutions,” said Wilson, CEO of Western Land Services Inc., an oil and gas leasing company in Ludington. Wilson is an example of a business

leader attempting to move the needle on helping Michigan families access affordable child care — something that eludes many families in the state, due to availability or cost. Full-time care for an infant in Michigan can cost close to $10,000 per year on average, based on estimates from the Economic Policy Institute. The private sector increasingly views the issue as a way to attract and keep talented employees. But it’s also an expensive undertaking, one that neither business nor government can solve alone. The state spends about $160 million a year to serve close to 30,000 children, said Michelle Richard, a vice president at Lansing-based Public Sector Consultants, “Which sounds great — except that 15 years ago, we served three times as many children.” Michigan has some of the tightest limits in the country on who can qualify for subsidies, and ranks near the bottom of states for both income eligibility for families and the amount it reimburses daycare providers for the care they give. The state will use $5.5 million in federal funds this fiscal year to increase income eligibility for families earning child care subsidies from 125 percent of the federal poverty level to 130 percent, according to the nonpartisan House Fiscal Agency. Lawmakers also budgeted another $19.4 million in both state and federal

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funds to slightly boost reimbursement rates to child care providers. Even so, those rates are still less than what families pay in tuition, Richard said.

KEITH CRAIN

OPINION

OTHER VOICES

State unveils ‘Mich.’ magazine

RON FOURNIER

Michigan now has its own magazine thanks to a new state marketing initiative intended to draw investment to Detroit and other business centers. Titled Mich., the annual publication will be aimed at movers and shakers in 15 states, including California, Texas, New York, Illinois, Ohio and Pennsylvania. “With the success of the Pure Michigan campaign telling our story, we’re hoping for the same kind of image-laden, compelling storytelling targeted at business audiences,” said Frank Provenzano, public relations manager for the state. The inaugural edition is 164 pages and being distributed across the country. The cover is an aerial shot of downtown Detroit in the twilight. Paid advertisements — from universities, law firms, utility companies, etc. — fill about half of the magazine, while the other half is sourced from local freelance writers. Former Detroit Free Press reporter Tom Walsh wrote one of the main stories, which leads with “Michigan is inventing the future.” Troy-based Hour Media won a one-year renewable con-

PEOPLE

Mich. will be aimed at movers and shakers in 15 states.

tract for the project, which includes editorial, design, print and distribution. About 75,000-85,000 copies were printed. Mich. is funded through corporate funds from the Michigan Economic Development Corp. The total budget for the project was $208,000 for creative and editorial content, $52,000 for printing and $40,000 for shipping.

Increase for small group business coverage

The small group business health insurance market in Michigan will average a 4 percent average premium rate increase for 2018, up from a 2.5

16 8

RUMBLINGS

WEEK ON THE WEB

percent average hike for 2017 and 1 percent average in 2016, the state Department of Insurance and Financial Services said last week. That’s a much smaller rate hike than the 27 percent premium increase for individual health coverage, caused by uncertainty surrounding the Affordable Care Act, the individual mandate and cost-sharing reduction funding to insurers from the federal government. Open enrollment starts Wednesday and runs through Dec. 15.

CORRECTIONS J A story on Page 1 of the Giving Guide published Oct. 23 had an incorrect name for the Charles Stewart Mott Foundation. J A story on Page 1 of the Oct. 23 issue should have said the Skillman Foundation funded regionally, not just in Pontiac and Detroit before shifting its grants and investments solely to Detroit.

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Sports Business

Helmet market, with deep Detroit ties, in arms race

Football helmet market share

By Bill Shea bshea@crain.com

Detroit Lions wide receiver Golden Tate wants to play for many more years. He also wants to remember his career, and that concerns him because of the long-term effects of repeated brain trauma from playing amid the violence of pro football. So he’s been keen on concussion safety, and that led him to opt for a new helmet this season, a unique first-time entry into the market from a Seattle manufacturer Vicis Inc. The helmet, called the Zero1, is different because it has a malleable outer shell that can deform to absorb hits, similar to a car bumper. Inside the helmet, it’s filled with finger-like columns that twist and buckle with blows, further distributing the impact of a hit. The player’s head is protected with a

XENITH

The pro football helmets from Detroit-based Xenith use a system of shock absorbers that allow the plastic outer shell to move independently when hit.

Rosemont, Ill.-based Riddell Sports Group: 50 percent Litchfield, Ill.-based Schutt Sports: 40 percent Detroit-based Xenith LLC: 10 percent Note: Seattle-based Vicis Inc. and others don’t yet account for a statistically significant share of the market Source: Schutt Sports

hard interior plastic shell fitted around the skull. The Zero1 topped the NFL’s helmet safety rankings this season, meaning its technology could potentially be disruptive in the $150 million football helmet market, a mature business sector whose few players include two companies with Detroit ownership. SEE HELMET, PAGE 20

Infrastructure

Nonprofits

Water crisis hits the suburbs

Fisher House for veterans in the works for Detroit location

By Joel Kurth and Mike Wilkinson Bridge Magazine

When a massive water main broke last week in Oakland County and made tap water unsafe to drink for 305,000 residents, a top utility official called the mishap “unprecedented.” Experts fear it could be something else: a byproduct of aging infrastructure in Michigan whose failings are becoming more freNeed quent and to know dangerous. A task J Michigan’s aging force appointed water system by Gov. Rick Snyneeds $60 billion in der last year conupgrades cluded that Michigan water J Lack of systems need $60 long-term planning billion in upwill continue to grades. lead to emergen“There’s no cies like Oakland question. As inCounty water main frastructure gets break older, we’re seeJ Silver lining of a ing these things crisis: a “wake-up happen more frecall” quently, and the cost for repairs is only going to increase,” said Sean McBrearty, a campaign organizer with Michigan Clean Water Action, an environmental group. This month alone, boil water advisories have been issued in Potterville, South Haven, Albion and Mount Morris because of water main breaks, which are common in winter because of the freeze-thaw cycle but far less so in warmer months. “We’ve taken water and sewer for granted for a long time,” said Brian Steglitz, who heads the city of Ann Arbor’s Water Treatment Department and served on the governor’s task force. SEE WATER, PAGE 21

By Sherri Welch swelch@crain.com

JOEL KURTH/BRIDGE MAGAZINE

Stores in western Oakland County quickly sold out of bottled water after a transmission main broke on Monday night.

Plans are in the works to bring to Detroit a Fisher House — a home away from home for the families of veterans undergoing medical treatment at the John D. Dingell Veterans Affairs Medical Center. The effort is solidifying a year after the state’s first Zachary and Elizabeth M. Fisher House, often referred to as a “Ronald McDonald House for veterans,” was approved for Ann Arbor and works to raise $3.5 million in local money to support construction and operations. Located at or near major military and VA medical centers across the US, Fisher Houses include up to 21 suites, with private bedrooms and baths. Veterans and their families share a common kitchen, laundry facilities, a dining room and living room at no cost while they undergo treatment. The efforts aim to address a need in a state where veterans travel from as far away as the Upper Peninsula to receive VA care. Michigan is home to the largest number of veterans of any state without a Fisher House. The Maryland-based Fisher House Foundation helps fund and build the houses, working with local groups of supporters to raise additional dollars, before gifting them to the VA. “There are 72 of these houses around the country and a couple overseas,” said Mark Palmucci, a re-

Need to know

JJPlan in works to bring home away from home for vets seeking medical care to Detroit JJDetroit offering city-owned land for Fisher House JJVA expects to finalize proposal for the house by year’s end

tired Borders executive who serves as vice president of the board of directors for Fisher House Michigan, the nonprofit raising money to help fund the Ann Arbor house. Michigan is home to about 640,000 veterans, according to the Michigan Veterans Affairs Agency. And it’s No. 11 in the country for military enlistments, said Fisher House Michigan Director Daniel Patrick, a veteran who fought in Iraq and is a three-time Purple Heart recipient. Both Patrick and his father, also a veteran, stayed in a Fisher House during treatment at VA medical centers. Plans to bring a Fisher House to VA campuses in Detroit and Ann Arbor are happening separately at the moment, but the groups involved say there’s potential to bring the Detroit house under the Fisher House Michigan umbrella of the Ann Arbor effort, provided the Detroit house secures approval from both the U.S. Veterans Administration and the Maryland-based Fisher Foundation, which handles all development. SEE FISHER, PAGE 21

MUST READS OF THE WEEK Delphi’s $450 million ticket to Singapore

Fournier: A lift for the ‘Been-ups’

Detroit Mercy hits $78M in $100M campaign

NuTonomy offers gateway to the hotbed of self-driving vehicle development. Page 4

A tale of drywall and dreams shows tenacity of neighborhood businesses. Page 8

Capital raise goes public as it comes down the home stretch. Page 7

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NUTONOMY

Delphi Automotive plans to acquire Boston-based autonomous vehicle software supplier NuTonomy in a deal valued at $450 million.

Delphi’s NuTonomy deal highlights Singapore as self-driving hotbed By Dustin Walsh dwalsh@crain.com

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Delphi Automotive plc’s $450 million acquisition of Boston-based autonomous car software supplier NuTonomy escalates the importance of Singapore in the arms race to self-driving vehicles. Delphi pinned the Southeast Asian city-state as the epicenter of autonomous vehicle adoption several years ago and with the addition of NuTonomy, which also has an office in Singapore, plans to expedite its efforts to launch an autonomous car service. Singapore’s Land Transport Authority selected Delphi in 2016 as the lead contractor for its mission to bring autonomous driving options to the wealthy metropolis with a commercial program in 2020 or 2021. Glen De Vos, chief technology officer for Delphi, now says that will likely happen sooner with NuTonomy on board. “... our expectation is that by doing this, we’re able to actually accelerate some of those initial deployments into the 2019 timeframe,” De Vos said last week on a conference call with reporters and analysts. NuTonomy launched public roads testing of an on-demand mobility service in Singapore in August 2016, partnering with Groupe PSA, Renault and Mitsubishi. It had planned to launch the service fully in the second quarter of 2018. Delphi and NuTonomy will now begin to combine their respective test programs with Singapore’s transport authority. Singapore is an autonomous vehicle hotbed because its government has made implementation a priority, said Qiang Hong, senior research scientist for the transportation systems analysis group of Center for Automotive Research in Ann Arbor. “Singapore has long been active

Need to know

JJDelphi adds fourth autonomous driving

business with acquisition of NuTonomy JJDeal is valued at $450 million JJDelphi’s automated driving business will spin off into a separate public company in March

“Singapore has long been active in applying advanced ITS technologies such as congestion pricing and traffic control. ” Qiang Hong, senior research scientist for the transportation systems analysis group of Center for Automotive Research in Ann Arbor

in applying advanced ITS technologies such as congestion pricing and traffic control,” Hong said. “Usually they adopt a top-down approach so it’s very effective, aligning tech applications with national planning goals.” For Singapore, it’s essential. Despite only having a surface area onesixth the size of Rhode Island, it has five times the population at roughly 5.6 million. Congestion is so bad, Singapore is banning, starting in February, vehicle registrations. Its population will have to get by with the roughly 600,000 private and rental vehicles in circulation today through 2020, according to an Engadget report last week. “We face constraints in land and manpower,” Pang Kin Keong, Singapore’s Permanent Secretary for Transport and the chairman of its committee on autonomous driving, told Bloomberg in 2016. “We want to take advantage of self-driving technology to overcome such constraints, and in particular to introduce new mobility concepts which

could bring about transformational improvements to public transport in Singapore.” The NuTonomy acquisition, which is expected to close before the end of this year, will nearly double Delphi’s 100-plus automated driving team with NuTonomy’s 100 employees, including 70 engineers and scientists, the company said in a news release. It will continue to operate in Boston, alongside Delphi’s team there, as well as in Delphi offices in Pittsburgh; Santa Monica, Calif.; and in Silicon Valley in California. Upon completion of the transaction, Delphi will have 60 autonomous-driving cars testing on roads in three continents, the company said. The acquisition of NuTonomy is the latest for Delphi as it races to build its autonomous driving business. Delphi acquired Pittsburgh-based Carnegie Mellon spinoff Ottomatika in 2015 for an undisclosed sum; Allen Park-based Control-Tec LLC, a provider of telematics and analytics software provider, for $100 million; and Plymouth-based over-the-air software update provider Movimento Inc. for an undisclosed sum. The four autonomous driving add-ons will continue to operate as separate entities, but will coordinate on projects, De Vos said. Delphi is also spinning off its powertrain unit to focus on developing technology for autonomous and connected automotive systems, the culmination of years of moves aimed at focusing the auto supplier on advanced technologies. The spinoff, which will be tax-free, is expected to be completed by March, Delphi said. Current Delphi shareholders will hold stock in both companies. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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Genuine people

Joe Zayance, SVP and Relationship Manager with Huntington Bank (right), helped YMCA of Metropolitan Detroit and CEO Scott Landry, left, find the services that fit his organization’s needs.

The Detroit YMCA looked for financing and ended up with a lot more Story by Marcia Lerner | Crain Content Studio The YMCA of Metropolitan Detroit has been serving the families of Southeast Michigan for 165 years. Anticipating trends, identifying needs and responding with programs and facilities that strengthen entire communities, the Y has thrived in Michigan. In 2014, however, it was feeling financing pressure. With an original bond issue of $35 million that had been paid down to $28 million, and with the financing period expiring, it was time to go back to the market to optimize terms. The Y leadership, including Scott Landry, CEO, sent a request for proposals to a number of banks and prepared themselves for the search process. “It was pretty intense for us,” Landry says, thinking back to the search. “It’s almost like you’re in one of these internet dating commercials. We’re interviewing five different banks. And they’re coming in and they all have very nice suits on, and they’re all telling you how wonderful you are and how they want to do business with you.” But Huntington Bank came across differently. “We knew almost immediately these were upper-Midwest folks, which for us up here in Michigan is a term we use to describe genuine

people,” Landry says. “They weren’t there to impress us. They were there to find out about us.” Landry felt that he was with people he could trust. “They had a set of core values that were solid that set them apart from the other folks.” The quality and creativity of Huntington’s offerings were directly in line with the sense of personal comfort Landry got from the Huntington people and their values. In addition to an effective financing product, Huntington recommended ancillary financial services to help the YMCA improve efficiency and reduce risk. In particular, interest rate swaps were discussed to mitigate the prospects of rising interest rates in the years ahead. “They gave us a seven-year deal, basically, which is unusual in this line of business,” Landry says. “It told us that they were interested in a long-term view, which really worked well for us. We weren’t going to have to dance like a show horse to present quarterly numbers. And they came in with a very reasonable set of fees.” For his part, Joe Zayance, SVP and Relationship Manager at Huntington, saw real potential to help. “Whenever you have a significant amount of financing in place you want to try and strike the right balance between cost and protection as it SPONSORED BY:

“They (Huntington) weren’t there to impress us. They were there to find out about us. They had a set of core values that were solid that set them apart from the other folks.” Scott Landry, CEO, YMCA of Metropolitan Detroit

relates to interest rates,” Zayance says. “We saw some good options.” As the Y leadership assessed the options that Huntington presented, they got a sense of the solid financial expertise and deep experience Huntington brought to the table. “Our derivatives products group is a real leader in the market,” Zayance says. “We were able to consult with Y leadership and representatives and end up in a place where everyone was very satisfied.” Huntington and its participant bank POWERED BY:

shared in the bond and an interest rate swap, working together to help secure the Y’s financing while protecting it long-term against interest rate risk. Landry appreciated that while there were two banks involved, the partnership between the two was calm and amicable. “It all fit our needs,” Landry says. The terms were clear and reasonable, and communication worked well.” “We really enjoy having Huntington as a lead bank because that’s the bank we want to deal with,” Landry says. “Everything that they were talking to us about made a lot of sense.” Setting up complex financial agreements with other banks to help a nonprofit thrive may not be easy, but it is gratifying. “Just knowing that we have at least an indirect hand in their mission—in what they do for the community —is very rewarding,” Zayance says. “But that’s part of Huntington’s culture. We’re a business that wants to operate profitably, but we also feel a significant social responsibility. So when those two sides come together, it’s the perfect scenario for us.” For more information about Huntington Bank, contact Brian Marshall at 248-244-3607 or at brian.marshall@huntington.com.

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Art Van Furniture congratulates the recipients of the 5th Annual

Art Van Award of Hope Honoring five individuals who are planting the seeds of hope for Midwest families!

A new thing for metro Detroit: Jobs rising even as auto sales start falling Historically, metro Detroit rises and falls with the car-buying whims of North Americans. We know too well what happens when people stop buying cars. But new data suggests a disruption to the cyclical nature of the local economy is afoot; we’re continuing to add jobs as car sales slow. North American auto sales, minus imports, transitioned from 0.4 percent year-over-year Need growth in 2016 to to know a 2.3 percent deJ Metro Detroit cline year-tocontinues to add date, while job jobs at a 2 percent growth in the rerate gion experienced a 2 percent annuJ Historically, al increase, acDetroit loses jobs as auto sales erode cording to research by J Diversification Jonathan Silberfinally paying off in man, professor of region economics at Oakland University and director of the Southeast Michigan Economic Data Center. “Data from the Federal Reserve shows that the (metro) Detroit economy is more cyclical than any other of the 50 largest metros in the U.S. ... due to the cyclical nature of the auto industry and Detroit’s reliance on it,” Silberman said. “We’re now seeing a break in that trend. Economies evolve and Detroit’s is finally changing, and we’re seeing the start of a noticeable change in the historic relationship with autos and jobs.” Silberman credits the diversification of the manufacturing sector away from automotive and into aerospace, the medical sector and other production areas as well as the rise of the region’s financial services and tech industries. He noted Amazon’s opening of three distribution facilities in metro Detroit. “Diversification is finally taking hold,” he said. “Detroit has become

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more attractive, and we’re seeing an explosion in e-commerce as well as new ways auto engineering can produce economic benefits in other industries.” It’s too early to tell whether the region will continue on its new path to prosperity if car sales continue to fall, but to Silberman, auto industry investments into Jonathan autonomous Silberman: driving technoloDetroit economy gies will continue cyclical. to proliferate and further diversify the regional economy. But Detroit is still wrapped in an arms race with Silicon Valley over the future of mobility. Collaborations continue, but if California’s tech sector wins out, it may lead to a further hollowing out of Detroit’s legacy manufacturers. Silberman remains optimistic. “There are a lot of positive things going on, so I think autos aren’t going to be as sensitive to the business cycle as they were in the past,” he said. “Local (auto) companies are getting out of unprofitable businesses and investing in new technologies that can create all new business spinoffs, like security, data analytics, internet of things, etc. It’s not hard to look around and be positive about the future.”

Hyundai R&D arm invests $5M in center for mobility By Annalise Frank

From Left to Right: LeeAnne Walters - Flint Water Activist, Pastor Kent Clark - Grace Centers of Hope, Mary Zeien - The Well of Mercy, Cindy Crawford - Art Van Charity Challenge Ambassador, Rhonda Walker - The Rhonda Walker Foundation, Christy Buck - Mental Health Foundation of West Michigan and Kim Yost - President & CEO Art Van Furniture

DUSTIN WALSH

Hyundai America Technical Center Inc. is investing $5 million in the American Center for Mobility in Ypsilanti Township. The investment brings the autonomous vehicle testing site’s fundraising total to $101 million out of the total project cost of $135 million, according to a news release. The mobility center bumped up its total cost estimate from a previous $110 million as “we increased the scope (of the project) based on input from investors and are working to meet their needs,” ACM CEO John Maddox said in an emailed statement. Dearborn-based Ford Motor Co. invested $5 million in September, following Plano, Texas-based Toyota Motor North America, which was the first automaker to invest — Toyota and the Toyota Research Institute contributed $5 million in July. Hyundai America Technical Cen-

Need to know

JJHyundai tech center invests $5 million in American Center for Mobility JJAutomaker will test autonomous vehicle technology at site JJDonation brings ACM funding total to $101 million out of $135 million needed

ter in neighboring Superior Township is a research and development facility for Hyundai Motor Group’s North American design, technology and engineering divisions. The automaker has signed on as a founder-level sponsor of the American Center for Mobility. It will join the nonprofit’s government-industry team, which will work to create government standards and regulations; it will also be able to test its own connected vehicle technologies there, according to the release. Construction on the 500-acre site began last November at General Motors Co.’s former Willow Run assembly plant.

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Employment Law Experience

In Your Corner.

Ŷ Facilitative mediator for U.S. District Court –

UNIVERSITY OF DETROIT MERCY

Western District of Michigan and Michigan Courts.

The University of Detroit Mercy has raised more than $78 million toward its goal of $100 million.

Ŷ Arbitrator and mediator with National Arbitration and Mediation, Inc., the American Settlement Centers and the National Arbitration Forum.

Detroit Mercy raises $78M toward $100M campaign goal By Kurt Nagl knagl@crain.com

The University of Detroit Mercy has raised more than $78 million toward its goal of $100 million for student scholarships, academic programs and research in a campaign it made public last week. The campaign, which was launched in a silent phase in 2012, will close in 2019 or early 2020, Detroit Mercy President Antoine Garibaldi said. “It could be the tough last stretch; it could be the icing on the cake,” depending on how you look at it, Garibaldi said, referencing the fundraising efforts in the Antoine post-quiet periGaribaldi: od. Campaign boosts He said the endowment campaign has boosted the university’s endowment, established more than 130 endowed scholarships and drawn 21 gifts of more than $1 million each within the past six years. Detroit Mercy’s endowment has grown to about $52.5 million from $25.9 million in 2011. The university Need has achieved $29 to know million of its $40 JJDetroit Mercy million goal for announced student financial fundraising aid, $22.5 million campaign of its $25 million goal for proJJUniversity has grams and faculraised about ty and $9.7 milthree-quarters of lion of its $25 $100 million goal million goal for JJSchool aims to capital improveboost endowment ments. and capital The universiimprovements ty’s philanthropic and community engagement arm, Live6 Alliance, is a prime example of the university’s commitment to service and the neighborhood, Garibaldi said. The city of Detroit broke ground this month on a park near Detroit Mercy as part of a revitalization effort in which Live6 will take a primary role. “The neighborhood is a part and parcel of the university and will continue to be,” Garibaldi said.

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OPINION

COMMENTARY

In startups’ shadow, a lift for Detroit’s ‘Been-ups’

rma Fuentes greets me from behind the counter at ESI Hardware, a 2,800-foot ocean-blue storefront in southwest Detroit. “My English isn’t very good,” the businesswoman says. “I’ll show you around.” With wooden floorboards creaking beneath our feet, Fuentes takes me on a short walk, through ESI’s departments, each with a small number of neatly stocked shelves. Electrical. Hardware. Gardens. Plumbing. Paint. “Nails are our big sellers,” she says while slipping between plastic sheeting to show me a storage room in the back. “This is where the lumber will go,” Fuentes smiles, pointing at a large bank of near-empty shelves. “This is going to be big for my business and for my neighborhood.” ESI Hardware is one of 22 Detroit companies awarded $10,000 and $100,000 grants to support their growth ideas via the New Economy Initiative’s “NEIdeas” program (see list below). It aims to help Detroit’s existing neighborhood businesses — which NEI calls “been-ups” — to complement the easier money available to startups. Fuentes won a $10,000 grant to purchase drywall, lumber and concrete so local contractors and builders could buy materials locally rather than driv-

RON FOURNIER Publisher and Editor

ing to big-box stores in the suburbs. I was one of the NEIdeas judges on the $10,000 panel. Her pitch was simple: Front me the money for the inventory and I can save Detroit contractors time and money, and use the profits to buy more inventory, which will save local contractors more time and money. Servando Alarcon is one of those contractors. He lives in Lincoln Park and makes his living in Fuentes’ neighborhood as a handyman — his jobs ranging from basic repairs to bathroom remodels. “This is great news that she’s going to have the material on hand,” he said. “Now I won’t have to drive back and forth to Dearborn to go to the Home Depot.” There’s another thing he gets from Fuentes that Home Depot can’t provide: A personal touch. “She lets us

guys buy on credit,” he told me in a telephone interview. “Home Depot won’t do that.” Amid Detroit’s post-bankruptcy resurgence, the money and attention heaped upon startups in downtown and Midtown threatens to overshadow long-running businesses in Detroit’s neighborhoods. That startups are often run by young, white Detroit transplants arriving at the crest of an economic wave and “been-ups” are often owned by minorities who struggled through the worst of times feeds a “two-Detroits” narrative. Black and white. Rich and poor. City and suburb. Downtown and the rest of town. NEI Director Pam Lewis told me the program celebrates and supports been-ups without diminishing the importance of Detroit’s startup culture. “These (startups) are companies around the country that in a very quick time have brought a lot of economic vitality to these cities. They are the kind of companies that have brought new talent to these communities. They change the narrative about how your city supports young talent and innovative talent. I think that’s all a good opportunity” for Detroit, Lewis said. “But I think people get hung up on

thinking that entrepreneurship only equates to startups and not really valuing the entrepreneur activities that happen every day in communities.” In other words, been-ups are butt kickers — no less, and maybe more, bold and innovative than the typical startup. They’re savvy stayers. “Sometimes out of necessity,” Lewis said. “Sometimes out of opportunities.” Look at the list of Fuentes’ fellow winners. It includes a food manufacturing firm in Eastern Market that will upgrade its kitchen and rent space to other small businesses. A residential lawn-cutting company that will buy commercial-grade equipment so it can cut lawns for major businesses. A musician-turned-fitness guru who will buy wheelchairs to start a basketball league for disabled veterans. That last idea is the brainchild of Sam Anderson III, a former Marine who travels the country staging exercise classes set to techno bass music, much of which he writes. His secret to success? His services are unique to the market. “I’m trying to do nothing that nobody is doing,” said Anderson, better known as DJ Maestro. Nobody else is selling hardware in Fuentes’ neighborhood. But that’s just one reason why her businesses has been around 14 years. Fuentes, who

Irma Fuentes at ESI Hardware in southwest Detroit.

lives above her store, shrugged her shoulders when I asked what made her such a good businesswoman. “I know what my customers want,” she said, “and I get it for them.” Thanks to the NEIdeas, a certain number of them will now get their drywall, lumber and cement at ESI Hardware. 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.

NEIdeas awards $400,000 to small businesses The Detroit-based New Economy Initiative has awarded grants totaling $400,000 to small businesses in Detroit, Hamtramck and Highland Park as part of its NEIdeas program. NEIdeas, launched in 2014, is intended to help existing small businesses grow, as a complement to efforts aimed at startups. This year’s list includes 22 businesses. Here’s who won and what they plan to do with the money:

$100,000 winners J Bel Air Luxury Cinema: Expand commercial kitchen and build bar to serve more food options and alcoholic beverages to customers. J Vaughan Industries: Purchase equipment that makes producing car

wash parts dramatically more efficient.

$10,000 winners J 1 Step 2 Fitness: Purchase basketball wheelchairs for adapted sports programming. J All of My Children: Purchase van to transport new and expectant mothers to “safe sleep academy.” J Beau Bien Fine Foods LLC: Upgrade kitchen equipment to be able to rent kitchen space to other small food businesses. J Blessed Beginnings Learning Center LLC: Purchase tablets, a computer and a smart whiteboard to add technology and STEM programming to the child care facility. J Bon Bon Bon: Pay for manufacture of new silicone molding to dramati-

cally increase production of chocolates. J Crystal Clear Images.com LLC: Create a mini computer lab so customers can design their own projects in the printshop. J El Asador Steakhouse: Expand kitchen and interior dining space to serve more customers. J ESI Hardware Store: Purchase drywall, lumber, plumbing and other inventory so contractors and builders don’t have to go to big box hardware stores. J Everyday Super Discounts: Increase inventory of sporting goods and fitness equipment sold in store. J Fa Show Lawn N' Home Care: Purchase commercial-grade landscaping equipment to service both residential and commercial land-

scaping opportunities. Lush Yummies Pie Co.: Buy walkin freezer and a double-deck convection oven to increase production and keep up with demand for new grocery store contracts. J Nandi's Knowledge Café: Upgrade signage and online presence to get the word out to more potential customers. J Naturalicious: Marketing campaign to reach new customers of natural hair-care and cosmetics in 2,500 markets nationwide where products are in stores. J Nikki's Ginger Tea LLC: Purchase new delivery van to ensure reliable delivery of their ginger tea beverages. J Pages Bookshop LLC: Hire parttime event planner to bring authors into the store, increase traffic and in-

crease book sales. Painexx Corp.: Purchase vats, mixer, and other machinery to make production of Ringmaster Rubbing Oil more efficient. J Taqueria El Nacimiento: Marketing campaign to spread word about new sports cantina. J The Food Exchange Restaurant: Activate a vacant lot adjacent to carry-out restaurant, to be called Harper Gardens. J Trinosophes: Purchase permanent audio/visual recording equipment for musicians and touring artists to create recordings on independent record label. J Vernor Chiropractic Clinic: Purchase shockwave therapy machine and training for staff to offer treatment for chronic pain.

Games, and after building all the facilities and spending the money, ended up bankrupt. The cost of running an Olympics seems to be beyond the resources of the communities that seek them. The same could be true for Amazon. When I see how many billions of dollars are being offered by some other cities, I have no idea how they expect to ever get any payback from their incentives. I also recall the feeding frenzy whenever a new car plant is mentioned. The money, land and tax incentives start to fly.

Amazon seems to be generating new heights as far as incentives to attract this company, already one of the most prosperous without anyone’s help. It has become a Catch-22. If we don’t offer some gigantic amount of incentives, we simply will be left by the side of the road to be run over by more aggressive communities willing to give away the farm — in fact, everyone’s farm. If we try to play that game, we could well be way over our heads in financial obligations that could be devastating to our city over the long haul.

Incidentally, I was also impressed with the formation of a sports event acquisition team with folks from the Lions, Tigers and Pistons. That can add greatly to the city’s income and prestige. Although sporting events don’t create permanent jobs, they add lots of money to our economy. As for Amazon, the corporate attraction game is full of land mines, and it will take a real wizard to navigate safely through this labyrinth. I hope we win the competition for Amazon’s new headquarters. But if we do, I sure hope we can afford it.

Can we afford to win?

here are few things that have impressed me more than the group Dan Gilbert and our mayor put together to go after the second headquarters for Amazon in Detroit. It is an impressive group of executives, and I have no doubt that their collective horsepower can be used for any number of activities. But I must admit a certain trepidation about our efforts. I have no doubt that we have the land and facilities available to house the thousands of employees who would come to our city. But what bothers me the most is when I read what sort of of-

KEITH CRAIN Editor-in-chief

fers other states and cities are making to attract this headquarters. I am reminded of all the cities that, in the past, have won the Olympic

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Measuring poverty and need requires a new standard I n an Oct. 23 Crain’s article headlined “Suburban poverty is on the rise in metro Detroit,” a number of concerns were brought up regarding the lack of support and negative policies affecting the residents of Detroit’s suburbs. These are valid concerns, with many shared by the Food Bank Council of Michigan. I encourage readers, however, to carefully look at the data that was analyzed in this article. The first principle in leadership is to define reality, and the problems addressed in this article are even grimmer than expressed. When discussing poverty, the most readily available data cited is from the U.S. Census Bureau. Some consider this data the best snapshot of the economic status for individuals with low income. Others do not accept the data as it currently stands, because it doesn’t take into account specifics of family composition or where people live. To find a better and more useful measurement of income sufficiency, FBCM sought the assistance of distinguished researchers at the University of Washington who have authored the “Self-Sufficiency Standard” for states across the nation. The Self-Sufficiency Standard details the wages needed to meet a family’s basic needs. It takes into account geography and household composition, including the ages of children. FBCM understands the study’s impact and joined 38 other states who recognized the report’s importance. The report and data tables can be accessed at fbcmich.org/ selfsufficiencystandard. As cited in the Crain’s article, the official poverty threshold is $12,486 for a single person and $24,563 for a family of four. But in reality, that is far below what is needed to meet a family’s basic needs. For a Wayne County household with one adult, one preschooler and one school-age child, the self-sufficiency wages needed are 248 percent of the federal poverty guideline, and the median income for the county reaches only 84 percent of the standard’s self-sufficiency income. Guidelines for determining poverty under the official poverty measure consider the cost of food (onethird of a monthly budget) and assume all other costs are twothirds of a monthly budget. This doesn’t match the reality of what it costs for basic needs, including health care, transportation, food, child care, housing, taxes and miscellaneous expenses. The Self-Sufficiency Standard takes into account these individual parts of a monthly budget. The 2017 Self-Sufficiency Standard for Michigan also recognizes the cost variance of geography, whereas the poverty threshold is the same nationwide. In a household with one adult and one preschooler, the wages needed to reach self-sufficiency ranges from $14 per hour to $22.99 per hour across the state. Finally, the poverty measure groups all children together regardless of age. But we know that child care makes up a larger portion of a household’s budget for families with infants, compared with older

OTHER VOICES Phillip Knight

children. With this information, we suggest these action items: J We encourage readers to review and share the Self-Sufficiency Stan-

dard and discuss what this means for you, your family or clients you serve. J We recommend the use of the Self-Sufficiency Standard, or a similar tool, with the official poverty measure to evaluate and determine eligibility for benefits, or replace the official poverty measure altogether. J We urge legislators and state department heads to re-evaluate policies, practices and legislation regarding the scalability of benefits in a working home, including the replacement of policies that de-incentivize work.

J We ask the current gubernatorial administration (and the next one) to establish a bipartisan commission to develop a collaborative and actionable plan to create food security in Michigan. Achieving food security for all Michigan residents cannot be done without considering all factors that contribute to food insecurity. To do this, we must be realistic about the barriers that residents face.

Phillip Knight is executive director of the Food Bank Council of Michigan, a network representing the state’s regional food banks.

As cited in the Crain’s article, the official poverty threshold is $12,486 for a single person and $24,563 for a family of four. But in reality, that is far below what is needed to meet a family’s basic needs.

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FOCUS

SPECIAL REPORT: ADVANCED MANUFACTURING

GETTY IMAGES/ISTOCKPHOTO

Through the virtual looking glass

Manufacturers create digital ‘twins’ to test products, troubleshoot problems, avoid downtime By Dustin Walsh

dwalsh@crain.com

Bridging the physical and digital worlds is often the work of science fiction. From “Blade Runner” to The Hitchhiker’s Guide to the Galaxy, artificial intelligence and virtual realities have engaged the minds of writers, sci-fi fans and scientists. But that bridge is now more real than ever on factory floors across the globe. The concept of the “digital twin” is 15 years old but is only recently making headway into largescale manufacturing. How it works: A virtual version of a physical plant exists within a computer system. This digital twin is identical to the physical plant and is used to design products, test them, simulate production and program the machines that actually make them. This occurs through sensors that gather data about the real-time status and working conditions of physical assets, such as a welding robot. The complex web of components in the factory are connected to a cloud-based system that receives and processes the monitored data. That data is then analyzed against business and other circumstantial

DASSAULT SYSTEMES

Using real-time data feeds and digital images of the manufacturing facility and the manufacturing shop floor, visual indicators highlight the problem area within the plant and the specific machine on the shop floor that is “down.”

data to help companies make the most informed decision possible. The result? Manufacturers can monitor far-away factory systems, prevent tooling downtime and try out big ideas in the digital space before a product is ever developed. It’s no longer science fiction. It’s real, and it’s a powerful business tool.

How it works Running a test simulation at its North American headquarters in Auburn Hills, Dassault Systemes’ digital twin platform looks like Google Earth with pinpoints of a specific company’s plants across the globe. The system relays real-time updates on the status of the plant, such as available

capacity and production volumes, and highlights any problems arising at each plant. The platform can assess a down machine in Detroit, what impact that’ll have on output and where it can shift production — to a plant in Argentina, for example — to ensure shipments arrive to the customer on SEE TWINS, PAGE 11

Need to know

J The “digital twin” is revolutionizing manufacturing with the internet J Twinning allows manufacturers to control and adjust processes and product via a virtual system J These systems can create command centers to control global factories from one location

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SPECIAL REPORT: ADVANCED MANUFACTURING

SIEMENS PLM SOFTWARE

Siemens’ digital twins platform enables manufacturers to make the best-informed decisions to improve performance of products and global production operations.

TWINS FROM PAGE 10

time. This sort of assessment, which can lead to a very expensive line shutdown at a customer’s plant, usually takes days. With the digital twin system, it takes minutes. But the system has even more potential to save money and time for a manufacturer. It can then analyze the problem with the broken machine and run tests on similar machines at all of a company’s plants to stop future problems — before they become problems. “I had a prospective customer brag about their system and team, saying they could identify and remedy a similar problem in three days, which is good for traditional methods,” said Fred Thomas, industry director at Dassault Systemes. “I have customers now that can do the same thing in 24 plants in four hours or less.”

Space age invention While the digital twin is new to most factories, it’s not a new invention. The systems were first invented when humans sought to make another part of science fiction a reality — space travel. NASA built models 50 years ago to predict potential outcomes and modify space shuttles and rockets. As computer power increased, analogue models turned digital, The Economist reported earlier this year. These systems have evolved over time, incorporating software, computer-aided design, engineering, simulation, product life cycle management, process control and production. Today, digital twin systems, which range from $10,000 to hundreds of millions depending on the breadth of the products used, are becoming more common across the manufacturing industry, particularly in automotive. France-based Valeo SA uses Dassault’s digital twin products at 130 plants across the world. Seattle-based aerospace giant Boeing Co. signed a 30-year $1 billion contract to expand its commercial aviation, space and defense programs with Dassault’s software platform. Dassault, which employs 450 in Michigan, is joined by competitors Siemens AG and General Electric Co. in selling digital twin software — Siemens and GE, however, also use the software at their own plants. Bob Jones, executive vice president of Siemens PLM software business, said the systems have already penetrated most automakers and are working their way through the supply chain as more and more advancements are

making the systems cheaper. Cloud-computing, which uses off-site servers, opened the floodgates, Jones said. “As we move toward digitization (of the factory), the cloud has removed the barriers to entry for smaller manufacturers,” Jones said. “What Ford or GM could do years ago took significant investment; now a lot of that capability is available to the mom-and-pop manufacturers.” The true value in twinning is to bring products to market faster at a lower cost and to push the boundaries on innovation in the less risky virtual space without impacting the production line, said Patrick Michel, vice president of Dassault’s digital twin software platform. “Virtual environments allow the testing of all ideas, even the crazy ones,” Michel said. “Companies can cross between the virtual and real without regard and can make decisions about direction of a product or process with a much higher level of understanding and smaller cost.” Fiat Chrysler used Siemens digital twin software at its Grugliasco, Italy plant to bring the Maserati Ghibli luxury sedan to market in just 16 months, more than a year faster than the automaker’s typical schedule. Mark Stevens, a project manager at Ann Arbor-based Center for Automotive Research and former executive director of manufacturing engineering at General Motors Co., said the use of the virtual world has increased over time and the industry is ramping up efforts. “Plants today are set up not similar, but identical,” Stevens said. “Virtual modeling allowed that to happen and now we’ve got huge efficiencies. With every new iteration (of the digital twin products), these plants get more productivity and more uptime and that’s created new value in the manufacturing process.” Jones said digital twin platforms will be used in every plant across the globe in no more than five years. The next iteration, which is already in use at places like Ford, is the concept of the “command center,” where entire factory networks and their robots are controlled from one central location. “We’re seeing a convergence of all this tech into one central control; where an operations person can simulate and control everything that’s going on across many manufacturing environments,” Jones said. “With two clicks, an operator can make a change across all the company’s factories in the world. That doesn’t sound transformational to the layperson, but to a manufacturer it’s revolutionary.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

“Virtual environments allow the testing of all ideas, even the crazy ones.” Patrick Michel, Dassault

smart mover TOTAL FREEDOM OF MOVEMENT

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PISTON GROUP

Former Detroit Piston Vinnie Johnsonâ&#x20AC;&#x2122;s company is at the threshold of becoming not merely a certified minority business enterprise that is larger, but potentially a formidable global supplier that happens to be an MBE.

For Vinnie Johnson, a new game beckons

Successful minority business enterprise transitions to the big league By Jeff Mortimer Automotive News

Vinnie Johnson, the celebrated sixth man for the Detroit Pistons teams that won NBA championships in 1989 and 1990, was nicknamed the â&#x20AC;&#x153;Microwaveâ&#x20AC;? for his ability to come off the bench and instantly heat up the offense. Heâ&#x20AC;&#x2122;s doing it again. Johnsonâ&#x20AC;&#x2122;s Redford Township-based auto parts business, Piston Group LLC, last year paid a reported $175 million to acquire Irvin Automotive Products, a supplier of interior trim and seating components based in Pontiac, from the troubled Japanese airbag supplier Takata Corp. Plenty of bigger acquisitions have made news of late. But Johnsonâ&#x20AC;&#x2122;s deal is a potential game changer for him, transforming his privately held Piston Group â&#x20AC;&#x201D; a certified minority business enterprise, or MBE, focused primarily on assembly work â&#x20AC;&#x201D; into a major league auto industry supplier with a shot at supporting vehicle programs globally. If so, it will be a whole new ballgame for Johnson. The company is at the threshold of becoming not merely an MBE that is larger, but potentially a formidable global supplier that happens to be an MBE. The Irvin acquisition increased Piston Groupâ&#x20AC;&#x2122;s annual sales from $1.3 billion to about $1.8 billion. Johnson expects the combined sales to exceed $2.6 billion in 2018. That revenue would put his company among the 75 or so biggest auto suppliers in the world, based on the Automotive Newsâ&#x20AC;&#x2122; list of the top 100 global suppliers. The deal took Johnson from 1,300 employees to 8,300 â&#x20AC;&#x201D; not all of them dedicated to automotive â&#x20AC;&#x201D; and added world-class manufacturing operations to Piston Groupâ&#x20AC;&#x2122;s assembly and sequencing operations. The compa-

Need to know

Piston Group could break through as a major global auto supplier that happens to be an MBE J

J Sales for Piston Group expected to exceed $2.6 billion in 2018 J Clients include the Detroit 3, Toyota, Honda, Nissan and ZF

He is also contemplating a move deeper into technology innovation. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s something the customer is asking for today. To really get to the next level, weâ&#x20AC;&#x2122;ve got to bring some ideas and innovations,â&#x20AC;? he said. â&#x20AC;&#x153;OEMs are looking for suppliers to be creative and bring things they don't have today that would make them a better OEM.â&#x20AC;?

â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m an ex-jock. I know that. But I also Entrepreneur know if you put a Johnsonâ&#x20AC;&#x2122;s business story is not so much a reflection of auto industry good team around megatrends as it is a tale of entrepreyou, you can neurial determination. accomplish The Brooklyn native retired from professional basketball at 35 and beanything.â&#x20AC;? Vinnie Johnson

ny now runs 15 plants in North America. The new question: Where does Johnson go now?

Pivoting â&#x20AC;&#x153;My entire career in sports, I was willing to make adjustments,â&#x20AC;? he told Automotive News at his companyâ&#x20AC;&#x2122;s low-profile corporate offices in Redford Township. â&#x20AC;&#x153;I know what Iâ&#x20AC;&#x2122;m good at and I know what Iâ&#x20AC;&#x2122;m not good at. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m an ex-jock,â&#x20AC;? the 61-year-old Johnson said. â&#x20AC;&#x153;I know that. But I also know if you put a good team around you, you can accomplish anything.â&#x20AC;? The conversations with customers are underway. â&#x20AC;&#x153;Our customers are saying we have to be global if we want to compete,â&#x20AC;? Johnson said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been looking at China â&#x20AC;&#x201D; we have a couple of opportunities with Ford over there â&#x20AC;&#x201D; as well as at Europe. â&#x20AC;&#x153;If you want to stay in this business, you donâ&#x20AC;&#x2122;t have a choice but to be a global player.â&#x20AC;?

gan considering new business pursuits. He started a construction company with a couple of buddies, but it folded after one project. He then joined with former Detroit Pistons teammate, center Bill Laimbeer, in a venture that made packaging supplies for automakers in Detroitâ&#x20AC;&#x2122;s empowerment zone, an area where federal tax breaks promote development. That venture was struggling to stay afloat when Johnson read a newspaper article in which Harold Kutner, Detroit-based General Motors Co.â&#x20AC;&#x2122;s vice president of global purchasing in the 1990s, vowed to support companies willing to open in Detroit with jobs. Johnson picked up the phone and called GM. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m only doing $50,000 worth of business with General Motors, and this guy is top dog, but he took my call,â&#x20AC;? Johnson recalled of the GM executive. â&#x20AC;&#x153;Within two months, he was at my plant. â&#x20AC;&#x153;I told him my story,â&#x20AC;? Johnson said, â&#x20AC;&#x153;and he said, â&#x20AC;&#x2DC;Get out of packaging. Get into auto and Iâ&#x20AC;&#x2122;ll support you with some opportunities.â&#x20AC;&#x2122; SEE JOHNSON, PAGE 13

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JOHNSON FROM PAGE 12

“Two months later, we had business from GM.” Johnson said the resulting business struggled as it learned the ropes in the auto industry. Quality was paramount. Schedules were airtight. But recognizing that the startup supplier had potential, GM called in a consultant to help — Bill Diehl, COO and later CEO of the suburban Detroit consulting firm BBK. “Bill was assigned to turn me around financially and operationally,” Johnson said. But Diehl, whose firm was acquired in 2014 by the global consulting giant KPMG where he is now a managing director, said none of it would have happened without the spark and personal power of the man once called the Microwave. “Vinnie was given a chance because Harold Kutner saw something in him that he liked,” Diehl said. “Although he had not honed his business skills yet, it was clear that he possessed that entrepreneurial gene. His goal from day one was to become a great supplier which — oh, by the way — is also a minority supplier.”

The bench Hundreds of millions of dollars in revenue later, with customers that include the Detroit 3, Tokyo-based Toyota Motor Corp., Tokyo-based Honda Motor Co., Ltd, Japan-based Nissan Motor Co. Ltd and Germany-based ZF Friedrichshafen AG,

“Although (Johnson) had not honed his business skills yet, it was clear that he possessed that entrepreneurial gene.” Bill Diehl

Johnson's enterprise has expanded. In addition to the freshly acquired Irvin, Piston Group owns Piston Automotive; Romulus-based Detroit Thermal Systems LLC, a joint venture assembler of vehicle heating and air conditioning modules in partnership with the French tier one supplier Valeo; and a nonautomotive business, Southfield-based AIREA Inc., an office design studio and furniture dealer. Johnson owns 100 percent of the group companies and 51 percent of Detroit Thermal Systems. He expects the group’s revenue to grow significantly next year, based on booked business. Irvin itself could grow as a result of being acquired by Piston Group and becoming part of a minority business enterprise. North American automakers strive to buy from certified minority companies. Johnson has moved to strengthen his management bench at the enlarged company, establishing a Piston Group executive board for consultation, and in July naming as his CFO industry veteran Amit Singhi. Singhi began his career as a research engineer with GM in 1989.

Five years later, he joined Dearborn-based Ford Motor Co. where he progressed through a series of senior finance positions in North America. He was appointed CFO for Ford South America in 2012. “Amit was the missing piece for this company to go to the next level,” Johnson said. “As we continue to grow, we need a person like Amit to help us manage all the entities and make sure we make the right decisions. “I've watched other ex-athletes get into business and looked at why they failed or succeeded,” he said. “One of the main things I do is hire the best talent I can possibly hire and stay out of their way.” But Johnson has been the key to Piston Group’s success so far. How he navigates financial issues in the coming years will be critical, especially as a minority business enterprise. Public offerings are traditionally not an option for certified minority enterprises that need capital, because they must be at least 51 percent minority-owned, and public trading dilutes the ownership. “Our balance sheet is strong enough where we don’t think it’s necessary for us,” Johnson said of a public offering. “Piston Group is a great supplier that just happens to be a minority supplier,” Johnson said. “We didn’t get to this point with handouts. We earned it. Once you get an opportunity, it’s up to you to show that you can deliver on everything you say. You have to go out and develop a reputation, and all of a sudden people are calling you.”

Chassix to acquire Benteler’s automotive casting business By Dustin Walsh dwalsh@crain.com

Chassix Inc. signed an agreement Thursday to acquire Austrian conglomerate Benteler International AG’s automotive casting business. Terms of the deal were not disclosed, but an outside valuation expert calculated the deal to be worth about $30 million, assuming estimated revenue of $63 million with a five-times multiple on approximately $6 million earnings before interest, tax, depreciation and amortization. The Southfield-based supplier plans to increase vertical integration in Europe with the buying of the Norway-based Benteler Automotive Farsund business that focuses on lightweight aluminum castings. The business manufactures safety components such as automotive sub frames, swing arms, steering knuckles and rear hubs, Chassix said in a news release. It employs 275 in Norway. “The Farsund business is strategically aligned with the Chassix growth plan and provides a strong team to further develop our core competencies of casting and machining chassis, powertrain and sub-frame solutions for global customers,” Chassix President and CEO Doug DelGrosso said in a release. The sales agreement does not require regulatory approval, however

Need to know

JJChassix to acquire Norwegian castings business from Benteler JJTerms were not disclosed, but value is estimated at $30 million JJRepresents the first major acquisition since Chassix emerged from bankruptcy in 2015

several customer conditions and supplier contracts need to be approved before the deal is final, Chassix said. A date of completion is unknown. The deal comes on the heels of Chassix’s $50 million expansion plan in Europe. In March, it announced it would build a 140,000-square-foot plant in Ostrava, Czech Republic, to produce aluminum chassis and powertrain parts for passenger cars. This will be its first casting factory and third plant in Europe, which will allow the manufacturer to vertically integrate production in its key automotive regions. Chassix plans to hire 350 at the location. Chassix filed for Chapter 11 bankruptcy in March 2015 with $556.7 million in total debt and $34.3 million in assets after missing bond payments, but reorganized and emerged in July of that year. In 2016, it generated revenue of $1.2 billion at 23 manufacturing plants with more than 4,000 employees.

Congratulations to the winners of the Knight Arts Challenge Detroit! Learn more about their big ideas to engage and enrich Detroit through the arts at knightarts.org. Heritage Works Sherina Sharpe and Chace Morris / House Aquemini Kisma Jordan Yvette Rock / Live Coal Gallery Mariachi Femenil Detroit Michigan Opera Theatre Mosaic Youth Theatre of Detroit Motor City Street Dance Academy Rob St. Mary Signal-Return Sultan Sharrief / Street Cred Detroit Youth Crew Tiff Massey Tiffany Brown / Urban Arts Collective Danielle Aubert / Wayne State University WDET Young Nation

Photo: Heritage Works by Mark Harris

a.gen.cy Amelia Duran Arab American National Museum Ayinde Fondren Bryce Detroit Charles H. Wright Museum of African American History / jessica Care moore and Aku Kadogo Cinema Lamont Wayne Ramocan, Allandra Bulger and Dominque Campbell / D.Cipher Detroit Symphony Orchestra Dunya Mikhail Facing Change: Documenting America Ghana ThinkTank and Central Detroit Christian CDC Great Lakes Chamber Music Festival

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 3 0 , 2 0 1 7

CRAIN'S LIST: LARGEST MICHIGAN MANUFACTURERS

Ranked by 2016 revenue Company Address Rank Phone; website

Top executive(s)

General Motors Co. 300 Renaissance Center, Detroit 48265 (313) 556-5000; www.gm.com

Mary Barra chairman and CEO

Ford Motor Co. 1 American Road, Dearborn 48126 (313) 322-3000; www.ford.com

Employees Revenue Revenue Jan. 2017 Number of ($000,000) % Michigan/ plants 2016/2015 change Worldwide in Michigan Michigan plant locations

$166,380.0 $152,400.0

9.2%

52,811 225,000

Jim Hackett president and CEO

151,800.0 149,558.0

1.5

48,000 203,000

FCA US LLC 1000 Chrysler Drive, Auburn Hills 48326-2766 (248) 576-5741; www.fcanorthamerica.com

Sergio Marchionne chairman and CEO

72,794.7 B 76,469.1

-4.8

34,300 83,800

Dow Chemical Co. C 2030 Dow Center, Midland 48674 (989) 636-1000; www.dow.com

Andrew Liveris, chairman and CEO and executive chairman, DowDuPont; Ed Breen, CEO, DowDuPont Marc Bitzer D CEO

48,158.0 48,778.0

-1.3

20,718.0 20,891.0

Clients/industries served

Bay City, Brownstown Township, Detroit/ Hamtramck, Flint (3), Grand Rapids, Lansing (2), Milford, Lake Orion, Pontiac, Romulus, Saginaw, Swartz Creek, Warren, Ypsilanti, Wixom Dearborn, Flat Rock, Wayne, Woodhaven, Romeo, Sterling Heights, Livonia, Ypsilanti

Automotive

Detroit (3) Sterling Heights (2), Trenton (2), Warren (2), Dundee

Automotive

7,203 56,000

Midland, Harbor Beach, Hillsdale, Hemlock, Packaging and plastics; Auburn automotive and transportation; building and construction

-0.8

NA 93,000

None

Household appliances

Automotive

Whirlpool Corp. 2000 N. M-63, Benton Harbor 49022 (269) 923-5000; whirlpool.com

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

Matthew Simoncini president and CEO

18,557.6 18,211.4

1.9

3,903 NA

Auburn Hills, Traverse City, Roscommon, Farwell, Rochester Hills, Detroit (2), Taylor, Southfield (HQ)

Ford, GM, BMW, VW/Audi/ Porsche, FCA

Adient LLC E 49200 Halyard Drive, Plymouth 48170 (734) 254-5000; adient.com

Bruce McDonald, chairman and CEO; Byron Foster, executive VP; Eric Mitchell, executive VP

16,837.0 20,100.0

-16.2

NA 80,569

Detroit, Warren, Lansing, Battle Creek, Lakewood, Charlotte and Madison Heights

Automotive

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

Kevin Clark president and CEO

16,661.0 15,165.0

9.9

1,604 145,000

None

Automotive

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

Franz Kleiner CEO

14,446.0 13,280.0 F

8.8

3,075 63,515

Fenton, Fowlerville, Livonia, Marysville, Lapeer

Automotive

13,700.0 14,000.0

-2.1

3,250 390,000

St. Joseph, Kentwood

Automotive, industrial

13,014.0 13,525.0

-3.8

NA NA

Battle Creek, Grand Rapids, Wyoming

Food products

11,325.0 9,946.0

13.9

NA NA

Kalamazoo, Portage

Health care

10,951.3 H 11,184.2

-2.1

NA NA

Auburn Hills, Brimley, Dearborn, Rochester Automotive Hills, Troy

9,884.3 I 9,234.7 I

7.0

10,133 155,000

Automotive

10 11 12 13

Mike Mansuetti Robert Bosch LLC 38000 Hills Tech Drive, Farmington Hills 48331 president (248) 876-1000; www.boschusa.com Steven Cahillane G Kellogg Co. CEO 1 Kellogg Square, Battle Creek 49016 (269) 961-2000; www.kelloggcompany.com Kevin Lobo Stryker Corp. chairman and CEO 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.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 Don Walker, CEO; Jim Tobin, Magna International of America Inc. CMO and president, Magna Asia 750 Tower Drive, Troy 48098 (248) 631-1100; www.magna.com

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

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

9,700.0 9,900.0

-2.0

4,117 154,493

Alto Township, Auburn Hills, Battle Creek, Boyne City, Brownstown Township, Delhi Township, Delta Township, Grand Blanc Township, Grand Haven, Highland Park, Holland Township, Kentwood, New Hudson, Newaygo, Novi, Plymouth Township, Shelby Township, Sterling Heights, Troy, Warren Battle Creek

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

James Verrier president and CEO

9,071.0 8,023.2

13.1

NA NA

Cadillac, Livonia, Marshall

Automotive

Amway 7575 Fulton St. E., Ada 49355-0001 (616) 787-1000; www.amwayglobal.com

Steve Van Andel, chairman; Doug DeVos, president

8,800.0 9,500.0

-7.4

4,000 19,000

Ada

Consumer products, agribusiness, logistics supply chain

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

Rainer Jueckstock, co-CEO and co-chairman and CEO, powertrain; Brad Norton, co-CEO and co-chairman and CEO, motorparts Keith Allman president and CEO

7,434.0 7,419.0

0.2

1,566 53,000

Greenville, Sparta

7,357.0 7,142.0

3.0

1,200 26,000

Ann Arbor, Adrian, Novi, Brownstown, Lapeer

Automotive, commercial, aerospace, marine, rail and offroad vehicles; and industrial, agricultural and power generation equipment Home improvement, construction

Kevin Lammers U.S. president

6,100.0 6,400.0

-4.7

3,100 100,000

Fraser, Lansing, Saline, Sterling Heights, Taylor

18 19

Masco Corp. 17450 Masco Way, Livonia 48152 (313) 274-7400; www.masco.com

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

Automotive

This list of manufacturing companies is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. Actual revenue figures may vary. NA = not available.

B The 2016 revenue is based on Dec. 31, 2016, euro to dollars rate of 1.0522. The 2015 revenue is based on Dec. 31, 2015, euro to dollars rate of 1.0858. C Dow Chemical Co. merged with DuPont Co. on Aug. 31, 2017, to form DowDuPont. D Succeeded Jeff Fettig as CEO, effective Oct. 1. E Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. F TRW Automotive Holdings Corp. merged into ZF Friedrichshafen on May 15, 2015. The 2015 revenue represents North American revenue of ZF TRW, a ZF Friedrichshafen division (May 2015 until December 2015), combined with the 2015 revenue of ZF North America, a ZF Friedrichshafen subsidiary.

G Succeeded the retiring John Bryant on Oct. 2. H The 2016 revenue figures represent NAFTA sales of Continental AG, based on a Dec. 31, 2016, euro to dollars rate of 1.0522. The 2015 revenue figures represent NAFTA sales of Continental AG, based on a Dec. 31, 2015, euro to dollars rate of 1.0858.

I Crain's estimate. J Formerly Federal-Mogul Holdings Corp. Acquired by Icahn Enterprises L.P. on Jan. 23, 2017, and is now a wholly owned subsidiary. LIST RESEARCHED BY SONYA D. HILL

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // O C T O B E R 3 0 , 2 0 1 7

CALENDAR TUESDAY, OCT. 31

THURSDAY, NOV. 2

Disrupting The Future: A Conversation With Bill Ford. 11:30 a.m.1:30 p.m. Oct. 31. Detroit Economic Club. Ford, executive chairman of Ford Motor Company, talks about what it will take to embrace technology trends, the reality of smart mobility and the expected impact on the auto industry, Detroit and society at large. Ford Field. $45 members, $55 guests of members, $75 nonmembers. Website: econclub.org

Elf on the Shelf: Chanda Bell. 8-10 a.m. Nov. 2. Adcraft Detroit. Chanda Bell wrote and researched how to self-publish her familyâ&#x20AC;&#x2122;s publishing companyâ&#x20AC;&#x2122;s flagship title, The Elf on the Shelf: A Christmas Tradition. Bell serves as co-CEO overseeing marketing, product development, design and digital departments at the company. The Community House, Birmingham. $40 members; $65 nonmembers. Website: adcraftdetroit. com

WEDNESDAY, NOV. 1 State of the Region. 11 a.m.-1:15 p.m. Nov. 1. Detroit Regional Chamber. The Detroit Regional Chamberâ&#x20AC;&#x2122;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 U.S. Attorney, Eastern District of Michigan. $15. The Community House, Birmingham. Contact: Program department, phone: (248) 644-5832; email: program@communityhouse. com.

Ninja Innovation. 6-10 p.m. Nov. 2. British American Business Council of Michigan. Gary Shapiro, president and CEO of Consumer Technology Association, will share the strategies that make businesses and regions successful, providing a framework for both understanding and action. Birmingham Country Club. $150 members; $175 nonmembers; $125 young leaders. Contact: Helen French, email: babc.michigan@ gmail.com To submit calendar items visit crainsdetroit.com and click â&#x20AC;&#x153;Eventsâ&#x20AC;? near the top of the home page. Then, click â&#x20AC;&#x153;Submit Your Eventsâ&#x20AC;? from the drop-down menu that will appear. Fill out the submission form, then click â&#x20AC;&#x153;Submit eventâ&#x20AC;? at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

30,000

400

Physicians

Patients

$29.5 Million in Medicare Savings

Reliance ACO is a group of independent physicians in Southeast Michigan working together to provide better, more coordinated health care. Since 2014, Reliance ACO has saved Medicare over $29.5 million across three consecutive years, including $15.4 million in 2016 while providing quality health care to more than 30,000 patients.

RELIANCE ACO Physician Owned Physician Driven Physician Operated

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DEALS & DETAILS

Youâ&#x20AC;&#x2122;re not like everybody else; and neither are we. EXPANSIONS J Huron Capital Partners LLC, Detroit, launched its 15th ExecFactor platform investment, Brudner Polymer Corp., in partnership with David Brunori, a specialty chemical industry executive. Through Brudner, Huron Capital plans to invest in technologically advanced adhesive and sealant companies. Website: huroncapital.com.

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 Come learn why so many smart investors are choosing Schechter.

J Shrine Catholic Schools, Royal Oak, parish schools of the National Shrine of the Little Flower Basilica, opened a Shrine Grade School Early Childhood Center at 1621 Linwood Ave., Royal Oak. The 5,800-square-foot facility features six classrooms and an outdoor area. Website: shrineschools.com.

NEW PRODUCTS J Clixie Media LLC, Ann Arbor, has launched its interactive video platform in Professor David Brophyâ&#x20AC;&#x2122;s finance and entrepreneurship class at the University of Michiganâ&#x20AC;&#x2122;s Ross School of Business. Websites: clixievideo.com/ elearning, clixiemedia.com. J Radley Corp., Southfield, a software supplier for the automotive supply chain, is providing a radio-frequency identification system to manufacturing companies, which includes hardware and middlewares. Website: radley.com.

Submit Deals & Details items to cdbdepartments.com

866.731.9500 WWW. SCHECHTERWEALTH.COM

INVESTMENT ADVISORY

P R I VA T E C A P I T A L

LIFE INSURANCE

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 3 0 , 2 0 1 7

PEOPLE ADVERTISING/ MARKETING/PR Jake Serwer to founder and CEO, Espresso Public Relations LLC, Detroit, from communications director, Ignition Media Group, Detroit. J

BANKING/FINANCE J David Doyle to chief compliance officer, LJPR Financial Advisors, Troy, from compliance consultant, Lumen Legal, Royal Oak.

CONSULTING J Craig J. Roshak to director, New England Consulting Partners, Detroit, from head of internal control and enterprise risk management, Fiat Chrysler Automobiles, Auburn Hills.

MEDIA Justin Grosjean to editor from assistant editor, Cutters Studios Detroit, Detroit. J

NONPROFITS J Joelle-Jude Fontaine to senior program officer, human services program, The Kresge Foundation, Troy, from program officer, W.K. Kellogg Foundation, Battle Creek. Also, Jonathan Hui to associate program officer, Detroit program, from director of strategy and planning, Education Achievement Authority of Michigan, Detroit.

RETAIL J Brenda Dillon to director of e-commerce merchandising, Art Van Furniture, Warren, from vice president of merchandising and product development, Ashley Furniture Industries, Arcadia, Wis. Also, Neil Zimmer to senior vice president from vice president of merchandising, Art Van PureSleep, Warren. J Alison Piech Linn to director of sales and business development, City Bird, Detroit, from major gifts officer, Detroit Institute of Arts, Detroit.

Leonard See, owner of Frisbie Moving and Storage, dies By Annalise Frank afrank@crain.com

Leonard See, owner and president of Detroit-based Frisbie Moving and Storage Co., died Oct. 23 at 81. See, a former president of Spirit of Detroit and longtime Detroit Executives Association member, had owned Frisbie for more than 20 years. He was born in Springfield, Ohio, and moved to Detroit in 1960, when he began working for the moving company as a clerk, said Bertie See, his wife of about 40 years and vice president of Frisbie. Leonard See moved up to the position of president in 1972 and became owner in 1995. He met Bertie while they were both working there, she said. Leonard See was passionate about his industry and about caring for his customers and employ-

ees, his wife said. “He was a mentor to many of the next-generation people in the moving industry,” Bertie See said. “He helped the Leonard See: young people Owned Frisbie for who were learnmore than 20 ing to lead their years. companies, to be better at it. I think that speaks to the fact that it wasn’t just about Frisbie, but it was about the moving industry as a whole.” See continued to work until about five weeks before his death, when he was hospitalized with a malignant brain tumor, his wife said. He died at St. John Hospital and Medical Center in Detroit. Leonard was also a member of

“He was a mentor to many of the nextgeneration people in the moving industry.” Bertie See

the bowler’s group at the Detroit Athletic Club and actively involved in the Grosse Pointe United Methodist Church in Grosse Pointe Farms. See is survived by his wife, Bertie; brother Roger; sister Pam Dettorre; sons Scott, Tim and Jeff; daughter Kate; and grandchildren Cameron, Cassidy, Ellen and Lauren See. Services were last week, and burial is Monday in Oxford, Iowa. Memorial donations may be made to the Detroit Athletic Club Foundation or Grosse Pointe United Methodist Church.

Centria to open new HQ in Farmington Hills, add 1,200 employees By Jay Greene and Lindsay VanHulle Centria Healthcare LLC was approved Tuesday for an $8 million state grant for a new national headquarters building in Farmington Hills that would give it room to hire 1,200 more employees over the next five years, according to the company and the Michigan Economic Development Corp. The estimated $16.5 million capital investment in the new building will provide space for Centria to further expand its home-based health care services that include autism therapy and private-duty nursing. Through affiliates, Centria also provides homebased care to people who have suffered traumatic brain and spinal cord injuries. In its Michigan Business Development Program performance-based grant request, Centria said it conducted a nationwide site search for a new location to house its headquarters. New Mexico, Texas, Arizona and Tennessee also were under consider-

Need to know

JJCentria receives $8 million state

development grant for new Farmington Hills headquarters JJHome-based health care services provider plans to add 1,200 jobs JJCentria also plans to expand autism services and traumatic injury care

ation, the company said in its application. “While there were generous and very attractive packages to relocate, Centria’s home is in Michigan,” Scott Barry, Centria’s co-founder and CEO, said in a statement. “There is no doubt that we are a Pure Michigan company dedicated to serving more children and families, and at the same time growing Michigan’s economy by developing, retaining and attracting a new generation of talent in Michigan’s growing health care industry.” Centria is headquartered in Novi with three buildings and 35,000 square feet. About 1,380 employees work or report to the main office in

Novi, Barry said. The company expects to seek a building with 90,000 square feet of office space that it can expand up to 160,000 square feet within five years. Barry told Crain’s that Centria is eyeing two building locations in the corridor south of 12 Mile Road, west of Farmington Road and north of I-696. He said a decision is expected soon that will enable the company to move into the headquarters in the spring. The project memo also says the city of Farmington Hills has offered a “staff, financial, or economic commitment to the project.” The city said it will help recruit employees for Centria using the Costick Center for a recruitment event. The headquarters will include all leadership and management positions, as well as therapists and supervising clinicians. Barry said. The company also has 13 therapy centers throughout Michigan and expects to increase that number in the next few year, Barry said.

In a statement, Centria said it is hiring board-certified behavior analysts, behavior technicians, client service managers, registered nurses, licensed practical nurses and other office support staff. Barry said 700 jobs will support business operations, but 500 will be therapists or clinicians. “I’m excited about 1,200 jobs. I’m more excited about the impact it will make on many more thousands of people who will then be able to reach their potential,” Lt. Gov. Brian Calley, whose daughter Reagan has autism, said in remarks before the grant approval. Calley said Michigan is home to at least 15,000 children and 50,000 adults with autism. The number of board-certified behavior analysts who provided services to people with autism in Michigan was about three dozen in 2012, and is up to about 600 now, he said. The need in the state is closer to 2,000 such professionals, he added. “This core, basic, required center-

piece service — applied behavior analysis — was unavailable to most people,” Calley said. “There is no company that has made a bigger commitment and a bigger difference to date than Centria in providing that core centerpiece services for kids and families with autism.” Barry said Michigan’s health insurers have come a long way in accepting applied behavior analysis, an autism therapy that teaches each individual to learn appropriate social skills and behaviors, as effective. “Blue Cross, Priority, HAP and United Healthcare, have done a great job in supporting kids and doing it in a quality manner,” he said. “Blue Cross has not been the easiest payer to work with, but working with Blue Cross is much better than other (health insurers) in the U.S.” Employers in Michigan also have stepped up to the plate and made autism therapy much more accessible to families, Barry said. “The state has really led the way with kids on Medicaid,” he said.

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

www.crainsdetroit.com/onthemove

PROFESSIONAL SERVICES

INSURANCE

MANUFACTURING

Serena Wolfe

Cory French

Stephanie Jones

Market Segment Leader for the Real Estate, Hospitality and Construction sector in EY’s Central Region

Account Executive

Director of Human Resources

McNish Group, Inc.

Lucerne International

EY Serena I. Wolfe has been appointed the Market Segment Leader for the Real Estate, Hospitality and Construction sector in EY’s Central region. In this role, she manages the go-to-market efforts and client relationships across the sector. EY’s RHC practice is one of the largest integrated real estate practices of any accounting organization, with more than 12,000 professionals around the world providing audit, tax, transaction, and real estate advisory services.

Royal Oak based Risk Management and Independent Insurance Agency has hired Cory French as an Account Executive with a strong focus on Construction Business Development. French originally from Iowa is a graduate of Graceland University and spent 8 years as a Bond Underwriter with Merchants Bonding Company in Des Moines, IA. Over the last 13 years, Cory has focused his expertise as a Surety and Property and Casualty Insurance Agent in Michigan.

Stephanie Jones has been named Director of Human Resources at Lucerne International. In this role, Stephanie is responsible for working with the management team in defining and implementing training, recruiting and payroll management, as well as employee engagement and development, compliance, worker’s compensation, benefits and more. She is known for her positivity, encouraging words and organizational skills, all strengths needed to manage the office and to ensure the team’s success.

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

Page 2

DIVERSITY FROM PAGE 1

Disabled Americans make up as much as 19 percent of the population, but only 3.2 percent of the workforce. In fact, only 30.3 percent of prime working age, 25 years to 54 years old, people with a disability were employed in 2016, compared to 81 percent of prime working age adults without a disability, according to Bureau of Labor Statistics data. The unemployment rate in 2016 for people in prime working age with a disability was 11.1 percent, compared to just 4 percent for those without. â&#x20AC;&#x153;The disparities are enormous,â&#x20AC;? said John Oâ&#x20AC;&#x2122;Neill, director of disability and employment research for East Hanover, N.J.-based Kessler Foundation. â&#x20AC;&#x153;While weâ&#x20AC;&#x2122;ve seen the labor force participation rate climb for the population with disabilities, as it has with those without, it hasnâ&#x20AC;&#x2122;t reached pre-recession levels. People without disabilities have recovered, the rest simply have not.â&#x20AC;? Robert Kroll, 29, hasnâ&#x20AC;&#x2122;t recovered. He hasnâ&#x20AC;&#x2122;t held an independent job in years. Kroll suffers a developmental disability and, like many of his peers with a diagnosed disability, is often on the losing side of economic independence. But heâ&#x20AC;&#x2122;s currently being trained by STEP for work in retail and manufacturing and recently interviewed for a job at Loweâ&#x20AC;&#x2122;s Home Improvement downriver. â&#x20AC;&#x153;(Iâ&#x20AC;&#x2122;m) kind of nervous, but I really want it,â&#x20AC;? Kroll said, who lives with his parents in Riverview and is a graduate of Lincoln Park High School. People with a disability work in the retail trade with a higher prevalence than those without a disability â&#x20AC;&#x201D; 12.8 percent of the workers with a disability are in retail, compared to 10.9 percent of workers without a disability. These positions tend to be part-time and more entry-level, like Emagineâ&#x20AC;&#x2122;s job offerings. Brent Mikulski, president and CEO of STEP, said more industries are at least starting the conversation, even if it hasnâ&#x20AC;&#x2122;t resulted in impactful hiring yet. â&#x20AC;&#x153;What used to be not a lot of conversations about this population is changing,â&#x20AC;? he said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re seeing more and more advocates and weâ&#x20AC;&#x2122;re

MEIJER FROM PAGE 1

That footprint pales in comparison to its locations at Eight Mile and Woodward (215,000 square feet) and Grand River and McNichols (190,000 square feet) on the cityâ&#x20AC;&#x2122;s northwest side, although the company is developing a similar small-format store of similar size in Grand Rapids under the name Bridge Street Market. A population of just 172,000 lives within five miles of the Jefferson location with a median household income of $22,762, according to CoStar Group Inc., a Washington, D.C.based real estate information service. Just by the numbers, the site would appear to face difficulties producing a stable customer base. Consider that the Eight Mile and Woodward location is surrounded by 419,000 living within a five-mile radius and the median household income is $37,551; while at the Grand River location, 340,500 people live

C R A I N â&#x20AC;&#x2122; S D E T R O I TCRAIN B Uâ&#x20AC;&#x2122;SSDIETROIT N E SBSUSINESS // O C T O B E R 3 0 , 2 0 1 7

â&#x20AC;&#x153;The disparities are enormous. While weâ&#x20AC;&#x2122;ve seen the labor force participation rate climb for the population with disabilities, as it has with those without, it hasnâ&#x20AC;&#x2122;t reached prerecession levels. People without disabilities have recovered, the rest simply have not.â&#x20AC;? â&#x20AC;&#x201D; John Oâ&#x20AC;&#x2122;Neill, director of disability and employment research for Kessler Foundation

getting better outcomes every year. Employers are recognizing this out of need (for workers) and thatâ&#x20AC;&#x2122;s creating change.â&#x20AC;? He pointed to organizations like DTE Energy and Ford Motor Co., which have both prioritized hiring of workers with autism in the last 18 months. STEP provides services to roughly 1,300 people in Wayne County annually, including an intern program for high school students in their senior year at six local sites, including Focus: Hope, StoneCrest Center, Northwest Activities Center of Detroit and Emagine. Since the Americans with Disabilities Act became law in 1990, requiring companies to provide reasonable accommodations to employees with disabilities, businesses have acclimated to embracing employees with disabilities but continue to struggle in the actual hiring of disabled workers, according to a survey of supervisors released earlier this month by the Kessler Foundation. Only 12 percent of the organizations that participated in the survey have hiring goals focused on disabilities, while more than 57 percent of organizations had diversity hiring goals. â&#x20AC;&#x153;(Businesses) are completely ignoring disabilities in their diversity agenda,â&#x20AC;? Oâ&#x20AC;&#x2122;Neill said. â&#x20AC;&#x153;They may be doing some outreach in hiring with a within five miles, with a median household incomes of $38,832, according to CoStar. â&#x20AC;&#x153;At those stores, you can buy toilet paper, a television, a bicycle and a grill,â&#x20AC;? said Dennis Archer Jr., one of the developers spearheading the project, which is also slated to include 213 studio, one- and two-bedroom apartments. â&#x20AC;&#x153;This is only grocery.â&#x20AC;? But Robert Gibbs, a nationally renowned retail and urban planning expert who is president of Birmingham-based Gibbs Planning Group, said one drawback could be the lack of apparel, which he said generally have 100 percent profit margins compared with profit margins of 2 to 4 percent for groceries. â&#x20AC;&#x153;Smaller stores are riskier than having the larger model,â&#x20AC;? he said. â&#x20AC;&#x153;To do it, you have to be a grocer first, and Meijer is a grocer first and a soft goods store second. Meijer knows how to do the grocery business, and it should be able to succeed.â&#x20AC;? Archer said factors other than the number of people in a five-mile radi-

couple of feel-good hires, but they are not using the same overall commitment as they are with other important aspects to inclusion.â&#x20AC;? Thereâ&#x20AC;&#x2122;s an economic reason for businesses to care â&#x20AC;&#x201D; workers with disabilities tend to reduce turnover and improve productivity. In 2007, Walgreen Co. opened a distribution center in Anderson, S.C. and piloted a program to employ workers with disabilities â&#x20AC;&#x201D; 33 percent of the nearly 300 workers at that time. The Anderson center now employs more than 40 percent with disabilities, and Walgreen opened a similar facility in Connecticut in 2009. The results have been staggering. Turnover among employees with disabilities at Walgreen is 50 percent lower than its non-disabled employees, the Chicago Tribune reported last year. The accuracy and productivity measurements are also higher among its workforce with disabilities. Walgreen has since hosted hundreds of companies at its Anderson facility to show the power of hiring workers with disabilities, including DTE Energy Co. in January 2015. â&#x20AC;&#x153;The employer and business leaders underestimate what a person with a disability can do,â&#x20AC;? Mikulski, said. â&#x20AC;&#x153;We spend a lot of time showing businesses what a small step towards inclusion can do for your business and your non-disabled population, like boosting morale.â&#x20AC;? Ficalora said hiring workers with disabilities has enhanced its culture, but hasnâ&#x20AC;&#x2122;t alleviated turnover. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve noticed about the same attrition level (between employees with disabilities and without), but weâ&#x20AC;&#x2122;re playing a numbers game,â&#x20AC;? he said. â&#x20AC;&#x153;Sure, I have to manage those employees differently based on their disability, but nothing is out of the realm of what we can do. Weâ&#x20AC;&#x2122;re always hiring, always looking for good people. So if we can hire someone and they have had previous barriers to employment, we can make that work.â&#x20AC;? Kroll wants more employers to recognize what jobs mean for the population with a disability. â&#x20AC;&#x153;People think Iâ&#x20AC;&#x2122;m lazy, but thatâ&#x20AC;&#x2122;s just not true,â&#x20AC;? he said. â&#x20AC;&#x153;(I want to work) so I can be independent and prepare for the future.â&#x20AC;? Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh us of the project â&#x20AC;&#x201D; which is a joint-venture between Bloomfield Hills-based Lormax Stern Development Co. LLC, Archer and Marcel Burgler of Grand Rapids-based Prime Development â&#x20AC;&#x201D; need to be considered. â&#x20AC;&#x153;Jefferson is a very busy street going back and forth. Not only will you capture (customers from) the surrounding neighborhood, youâ&#x20AC;&#x2122;ll also be able to capture people coming home from work,â&#x20AC;? he said. The 7.2SQ MI report by the Hudson-Webber Foundation says that as of February 2015, there were 85,000 workers downtown. â&#x20AC;&#x153;And lastly,â&#x20AC;? Archer said, â&#x20AC;&#x153;youâ&#x20AC;&#x2122;ve got to remember the amount of growth thatâ&#x20AC;&#x2122;s forecasted in this area, how many projects that have been announced. We are bullish on the area. Meijer is bullish on the area. We think the square footage of the store puts it in the position to be very successful.â&#x20AC;? Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

17 October 30, 2017

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Across the busy intersection of Moross and Mack on the southwest side of the street in Detroit, a car owner who lives on Chandler Park Drive in Detroit’s leafy Cornerstone Village neighborhood gets charged 54.8 percent above AAA of Michigan’s base rate for personal injury protection. Collision costs 25.6 percent more. You want comprehensive to cover the cost of repairing nicks and scratches to your new car in Detroit? That’ll be an extra 243 percent, please. Six blocks east, back in Grosse Pointe Farms, drivers of the same exact vehicle get a 7.7 percent base rate discount on comprehensive coverage. These pricing disparities by neighborhood-level census tracts are what’s known as territorial rating — a system that lets auto insurers charge wildly different rates based on accident claim history in that area. And it’s all perfectly legal in Michigan. Using AAA’s territorial pricing, if the base rate for personal injury protection is $1,000, the driver on the Detroit side of Mack Avenue pays $1,548. Across the street, the Grosse Pointe Farms driver pays $519 for unlimited medical coverage — a $1,029 price swing for the same vehicle. “How do you do that? How do you have that large of a difference?” said state Rep. Sherry Gay-Dagnogo, a Detroit Democrat. “They’re getting penalized for where they live.” Gay-Dagnogo, a second-term representative from Detroit’s west side, has been swimming upstream lately in auto insurance reform. She’s trying to get Republican legislators and Mayor Mike Duggan to take an interest in banning territorial pricing in auto insurance as part of the reform package in House Bill 5013. Oakland County Executive L. Brooks Patterson has become a surprising Republican ally to Gay-Dagnogo, calling ZIP code-level pricing “classic redlining” that should be outlawed. “I don’t know how you can define redlining any better than what they’ve done in Detroit,” Patterson said of insurers. Last Thursday, the GOP-dominated House Insurance Committee rejected Gay-Dagnogo’s amendment to prohibit all factors unrelated to a person’s driving record as a variable in determining insurance prices. The amended bill was sent to the full House, where it could see action this week. Duggan is focused squarely on trying to reduce the escalating medical costs in the system and has said getting rid of nondriving factors like credit scores and territorial ratings is “not politically possible.” The reality is, if the territories went away tomorrow, the higher prices for residents of Detroit, Dearborn, Hazel Park, Southfield, Warren and even swaths of Sterling Heights would likely be spread out to other drivers in Patterson’s Oakland County — and beyond. That’s because simply getting rid of the territories doesn’t bring down the cost of unchecked medical treatment costs, which Crain’s found tripled per injured motorist between 2000 and 2013. But Gay-Dagnogo is not convinced, in part because auto insurance claims data for individual ZIP codes and counties is a closely guarded trade secret. “How do we know where the

claims are coming from?” Gay-Dagnogo asked. “We’re just supposed to take their word that there’s too much fraud in 48227?” AAA did not make a company executive available for comment. Executives at auto insurance companies in Michigan have declined comment in recent weeks on their business practices, referring questions to their industry lobbyist in Lansing. Pete Kuhnmuench, the industry’s main lobbyist, acknowledges that some territorial prices can simply be higher because “a couple of really bad drivers in an area” ran up the collision and medical bills. “Their rates are based largely upon their experience in those territories,” said Kuhnmuench, executive director of the Insurance Institute of Michigan. “It’s not related to the driver per se, but the environment they’re in.”

Inside hospital, it’s the same Back at Mack and Moross, the reality of how high auto insurance in Detroit has become a barrier to economic upward mobility is visible at the bus stops outside of St. John Hospital & Medical Center and the adjacent Pointe Plaza shopping center. Dominique Blalock, 30, lives in nearby Harper Woods and said the $226 per month she spends on auto insurance is a necessary cost of making a living in a low-density region like metro Detroit. She’s a home-based mental health therapy clinician and drives to clients all over Wayne County and as far north as Waterford Township. “It’s really unfortunate because some of the places where (auto insurance is) highest, the necessity for it is the greatest,” Blalock said. Faith Dentry, a bus driver for the Detroit Department of Transportation, hears a common complaint daily from riders boarding her bus who used to drive themselves to work or doctor’s appointments at the hospital. “They can’t afford to spend $500 a month insuring a little beater car,” Dentry said. St. John Hospital is one of the medical facilities in the thick of the auto insurance fight in Lansing right now. Duggan, a former Detroit Medical Center CEO, wants to cap emergency medical and ambulance care costs at 125 percent of the Medicare rate, greatly reducing what hospitals like St. John can charge auto insurers. Outpatient services would be limited to the normal Medicare payment rate under the bill. The irony of the legislation seeking to dictate what St. John can charge and not what AAA can charge individual drivers who live on different sides of Mack and Moross is not lost on some. Laura Appel, senior vice president at the Michigan Health & Hospital Association, said hospitals have been criticized for years about their pricing for treating auto accident victims. She’s frustrated by the variation in insurance prices, as evidence by the AAA rates within a half-mile of Mack and Moross. “You can’t lay that at the doorstep of the hospital,” Appel said of territorial pricing. “When you come into the hospital and if you’re critically injured, the sound goes off in the hospital — trauma team to Bay 1 — and they all run there. They don’t know which side of the street you were insured on.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

CARING FOR KIDS SPONSORED CONTENT

Conversations about creating opportunity for metro Detroit children

Host Larry Burns, President and CEO, Children’s Hospital of Michigan Foundation

About this report: On his monthly radio program, Children’s Hospital of Michigan Foundation President and CEO Larry Burns talks to community, government and business leaders about issues related to children’s health and wellness in Michigan. The hourlong show airs at 7 p.m. the fourth Tuesday of each month on WJR 760AM. Here’s a summary of the Oct. 24 show; listen to the entire episode, and archived episodes, at chmfoundation.org/ caringforkids

Tarence Wheeler, Director of Corporate and Community Affairs, River Rouge School District. Wheeler’s day job and organization, All-Star-Giveback, help alleviate non-academic barriers for students.

Chris Kelly, Vice President of Development, Children’s Hospital of Michigan Foundation. Kelly joined the Foundation in October after a long career in finance (and a stint as an opera singer).

Tom Wilson, President and CEO of Olympia Entertainment. Wilson has had a front row seat to one of the biggest transformations that Midtown Detroit has seen: The building of Little Caesars Arena.

Larry Burns: You have a unique job title. Can you talk about what you are doing for River Rouge schools? Tarence Wheeler: My title is basically about barriers belonging on the freeway and not in education. We alleviate the non-academic barriers for our young people. Kids come to school with wounds seen and unseen. For example, a kid has a lot of trauma when the lights are cut off or when the gas is cut off. My job is to build partnerships to help take the stress off our young adults, so they can focus on education. I go out and partner with an Art Van or a Best Buy to bring washers and dryers into every school or with DTE Foundation to provide pads and pantyliners for our young ladies. I go out and I try to make sure our kids have access. Poverty isn’t just about money—it cuts off access to people that can help you. We try to give kids the opportunity to see a pathway out of poverty.

Larry Burns: How do you think your past roles (at Merrill Lynch Community Foundation Alliance, Comerica Charitable Trust and Charitable Legacy Foundation, and PNC Institutional Asset Management) will help as you move forward in this new role with the Foundation? Chris Kelly: It’s important in today’s donor community to leverage partnerships and advice from the donor’s financial adviser, legal adviser and tax adviser. I am excited to interact with these professionals and help them achieve what they are looking to promote for their clients who are becoming donors of the Foundation.

Larry Burns: As a graduate of Cass Tech and Wayne State University and a native Detroiter, you’ve seen this city go through a lot of ups and downs. How does it feel to be part of this growth and revitalization? Tom Wilson: I think the real treat is the comeback of Midtown. I am standing looking out over downtown and this view makes you excited about what is going on and it was largely a ghost town three or four years ago.

Burns: I have been in a lot of urban schools, and when I walked into your school, I had a different feel. The security level was low; the kids were running about smiling and positive. Can you tell us what you’ve done to create that environment? Wheeler: There are no metal detectors in any of our schools. Kids are going to school, not prison. We have security cameras; we have a security presence, but it’s not there to make you feel as though you’re not wanted. This is an inviting atmosphere. We have to put kids in positions that they can come and learn. Kids are doing the best they can to get to school. They have the resilience and perseverance that money can’t buy. We must extract that potential out of young people. Burns: Tell us about upcoming All-Star Giveback events and how we can help. Wheeler: The next event we have is our Thanksgiving turkey edition on Nov. 21. We’ll give away about 5,000 turkeys with all the trimmings. This is about wrapping your arms around the community, because the need is great. (Details at Facebook.com/AllStarGiveback.)

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Burns: Tell our readers about donor-advised funds. Kelly: That is what is so exciting about the direction the Foundation is taking. We can utilize gifting opportunities like donor-advised funds to help donors organize their philanthropy and to have an even stronger impact on the issues they feel are important to children today — not just their health, but their lives in general. Donor funds allow us to create a vehicle to take in assets — whether it’s cash, stock, whatever the donor is looking to contribute towards their philanthropy — and then utilize it later. It puts the donor in the driver’s seat to comfortably select the philanthropic goals they want to achieve. And that is what good philanthropy is all about: Being able to take your time, study, ask questions, utilize all the advice the Foundation can offer as well as the advice of your own advisers. Burns: With our Foundation, much like a community foundation, you can support Children’s Hospital of Michigan and also support other programs and organizations that benefit children. What is the most-used vehicle for a plain gift? Kelly: If you’d asked me that question a few years ago I would have said testamentary gift. Today, donors are utilizing things like charitable gift annuity, charitable remainder trust, as well as donor funds. Today’s donor is organized and loves having an impact. And that’s what we do at the Foundation: we help them have their impact.

Burns: One of the things I watch is the building for the Mike Ilitch School of Business. Wilson: It is scheduled to come to fruition the spring of 2018. There will be hundreds of kids down here every day and night. When you see people living a life with smiles on their faces downtown, it gives you the courage to do more. Everything that comes down here boosts everything else down here. Burns: Do you have a favorite part of the new Little Caesars Arena? Wilson: The part that I enjoy the most is just watching people who are looking at it for the first time. The arena is like nothing else anybody has seen or designed before. To share it through fresh eyes kind of makes it all worthwhile. Burns: We are excited about our new partnership with the Detroit Red Wings Foundation. What is the foundation doing for our community and our kids? Wilson: Our players have so much influence over our young people. They are out in the community and making a difference with youth groups and touching people at Children’s Hospital on a regular basis, so they can use their influence to do good. Along the way we hope, through different raffles and other things, that we can raise some funds that allow us to really help people in the community. We are uniquely placed —as are all sports teams — to take advantage of our partnerships and sponsorships so some of the money can be allocated to good things, and then we all work on it together.

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 3 0 , 2 0 1 7

HELMET FROM PAGE 3

Rosemont, Ill.-based Riddell Sports Group for decades has had the majority of the football helmet market. Second is Litchfield, Ill.-based Schutt Sports, owned by Detroit Pistons owner Tom Gores’ Platinum Equity firm. And with about 10 percent of the total market is Detroit-based Xenith LLC, among whose major investors is Dan Gilbert. It moved to Detroit from Massachusetts in 2015. The competition among the helmet makers is especially fierce, and often litigious, in the race to develop safety technology as attention on the longterm effects of football-related brain injuries raises questions about the game’s future. With parents fearful of the risks, youth football participation has been declining for nearly a decade, theoretically sapping the NFL and college football of future stars. The race is on to build the better helmet.

The competition Glenn Beckmann, director of marketing communications at Schutt, said all the helmet makers have the same objective: Build the safest helmet and own the market. “We’re all taking different paths to that same goal. At some point in time, someone is going to develop something that will really disrupt the industry. We’re essentially all trying to improve the way the helmets handle and absorb impact, how they fit and the materials that are used in making helmets,” he said. Each uses new data from doctors and scientists to drive development. Vicis, which is worn by Tate and teammate Travis Swanson, made a splashy entry with its unique helmet earlier this year. It was the top-rated helmet for safety in the laboratory testing results, sponsored by the NFL and the player union, for the current season. Gores’ Schutt had five helmet models in the top-performing category and Gilbert’s Xenith had four. Riddell had the other four. The lab results measured the helmets’ ability to reduce potential for concussion from the types of hits football players sustain during games, and are for professional football helmets and not intended to be extrapolated to college, high school or youth football, the NFL said. Tate switched to a Vicis helmet this season because his friend and former teammate with the Seattle Seahawks, receiver Doug Baldwin, wears the Zero1 and advocates for it. Tate has noticed a difference since the switch. “It seemed different once I hit the ground with my head or took a lick where some helmet was involved, that’s where I really felt it. Things that in the past I thought really might do some damage weren’t doing as much damage. That was key,” he said. Tate previously wore Xenith, Schutt, and Riddell helmets during his eight season career. “At this point in this career, I’m forgetting about what looks the best. I want what protects me the most,” he said. Players can choose to wear any helmet that meets the National Operating Committee on Standards for Athletic Equipment standards. NOCSAE standards will give helmets a pass/fail grade beginning in 2018 for absorbing rotational impact (instead of just linear hits), prompting the current wave of helmet research. While Vicis ranked atop the NFL’s

DETROIT LIONS

Detroit Lions wide receiver Golden Tate this season is wearing the new Zero1 helmet from Seattle-based Vicis. The helmet uses materials that allow the outer shell to bend, not unlike a car bumper, as a way to spread impact forces and curb brain injuries.

Need to know

Seattle-based Vicis could be market disrupter J

J 2 football helmet makers have Detroit ownership links J

Brain injuries drive helmet development

helmet tests, the rest of the results for each helmet in the top-performing group weren’t statistically much different, according to the data released by the league. That hasn’t stopped Vicis from touting the result as it seeks to take market share. Growth won’t be easy, however, because while most pro, college, and youth helmets cost anywhere from $100 to $350, the Vicis ZERO1 retails for $1,500. The company said more than 50 NFL players are wearing it this season. NFL players get their helmets through their team equipment managers, who work directly with the helmet makers. Riddell, Schutt, and Xenith are known to produce thousands of helmets. They also have established distribution networks that Vicis must create. Riddell and Schutt own about 90 percent of the football helmet market with Xenith taking up the other 10 percent via mostly high school and youth sales, with some NFL players wearing the Detroit-made helmets (including several Detroit Lions). Schutt and Xenith are part of Gores’ and Gilbert’s business portfolios, but are not major pieces. Riddell is part of New York City private equity firm Fenway Partner’s BRG Sports unit. “Schutt’s football products are very well recognized and NFL market share has grown every year since we acquired the business. The company continues to invest in new product development in football, baseball, softball and lacrosse. We are optimistic about Schutt’s future,” said Dan Whelan, vice president and spokesman for Gores’ Beverly Hills, Ca-

lif.-based Platinum Equity LLC. Vicis is a University of Washington spinoff co-owned by CEO Dave Marver. It’s raised $40 million in several funding rounds from a variety of investors. The Pro Football Hall of Fame recently requested one of Tate’s Vicis helmets to include in its display of the advancements in helmet safety.

Brain risk The league is pouring money into helmet research. Dire reports of former players dying young and committing suicide from what experts say are the long-term effects of football-induced brain disease clearly have spooked the $14 billion league into finding ways to accelerate safety measures. It has repeatedly changed rules to protect player health, and established concussion protocols that govern when players diagnosed with brain injuries can return to the field. Ongoing research and public cases of famous NFL players diagnosed with the condition postmortem has shed light on chronic traumatic encephalopathy (CTE), a degenerative brain disease linked to repeated head traumas such as concussions. The NFL has faced multiple lawsuits related to brain injuries, and in 2015 a federal judge approved a class-action lawsuit settlement that requires the NFL to provide up to $5 million to each retired player suffering from issues linked to repeated head blows. The NFL reported 244 concussions last season, not including the playoffs. That was down from 275 in 2015 but up from 209 in 2014. The average from 2012-16 is 242 concussions. In 2016, the NFL created a $100 million “Play Safe. Play Smart” program, and earmarked $60 million specifically for helmet safety initiatives in a bid to hasten advancements within five years. General Electric and Under Armour are now part of the effort, too.

As part of its initiatives, the NFL created the nonprofit Football Research Inc. that works with Duke University’s Clinical and Translational Science Institute to crowd-source helmet safety innovation. It will award up to $1 million through challenge grants for new helmet technology and safety improvements. Vicis reportedly received $500,000 from the program. As part of its effort to curb brain injury risk, the league wants position-specific helmets by 2020. That potentially slices up the helmet market further for manufacturers.

Lawsuits, lawsuits, lawsuits While the NFL will share research and fund advancements, the helmet makers are fiercely protective of their technologies. A Riddell lawsuit put Schutt into bankruptcy, which allowed Gores’ private equity firm to buy the company in a 2010 bankruptcy auction for $33.1 million. Earlier this year, Schutt sued Riddell in on ongoing lawsuit over patent infringement. Xenith settled a similar claim in July against Riddell, which also is being sued by former NFL players. Lawsuits drove St. Louis-based equipment maker Rawlings out of the football helmet market. Lawsuits make it hard to enter the helmet market, limiting new competition to the exceedingly well-capitalized. “It is one of the things that’s a barrier to entry,” Schutt’s Beckmann said. “You really have to carry millions and millions of dollars in liability insurance.” Jeff Miller, the NFL’s executive vice president for health and safety initiatives, said the league doesn’t have a position on the level of competition in the helmet market. Instead, the NFL wants the data and technology it’s incentivizing to speed safer helmets to market. “Whether it’s a new company or a new design from an incumbent com-

pany, or a new idea from an incumbent in their next production model, we’re agnostic,” he said. “The three large companies, now four, should be able to take advantage of the work we’re doing to accelerate their innovation. We become additive to the research and development departments of those companies.” Andrew Elliott is a research and test engineer for Xenith in Detroit, and spends his days tinkering with piles of helmet shells and materials in a quest to find the holy grail of combinations that will further reduce brain injuries. He previously did safety research work in the automotive sector for Andrew Elliott: Takata Corp. and Work needs to be Inc., and the heldone soon. met industry has been applying what’s known about auto safety and materials to football. “We know there is more work to be done and it needs to be done sooner than later,” Elliott said. “Everyone is scrambling to find out what that solution is.” Xenith, part of Gilbert’s Rock Ventures portfolio, has been focused on its “shock bonnet” system that’s basically a set of shock absorbers inside the helmet that rotate from the force of a blow independently from a player’s head. The company has about 70 employees at its facility on Fort Street. Like its competitors, it doesn’t disclose revenue or production numbers. Being near Detroit’s auto industry gives the company a leg up, Elliott said. “We have an advantage here at Xenith because much of the automotive safety and impact material expertise started and is located in Southeast Michigan,” he said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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FISHER FROM PAGE 3

Bill Browning, chief of volunteer and community relations for the Detroit VA, said Michigan Congresswoman Debbie Dingell, a supporter of the Ann Arbor house, has encouraged dialogue between the groups backing each of the projects. The VA and local veterans service organizations like Motor City Veteran Village are enthusiastic about the prospect of bringing a Fisher House to Detroit, Browning said. “We would love to work with Fisher House Michigan,” he said. “We’ll look at forming a partnership with them once we’re officially selected by Fisher House and approved by the VA.”

Detroit effort The city of Detroit has identified city-owned parcels of land that would provide a safe location for a Fisher House within walking distance of Detroit VA, on John R Street between East Warren Avenue and Mack Avenue, Browning said. The Fisher House Foundation is reviewing the proposed sites in Detroit. Once it deems one of them suitable, Browning said, the Detroit

VA plans to officially apply for the Fisher House designation, which comes with a sizable grant from the Fisher Foundation to cover a large portion of the costs to build the home. It hopes by year’s end to submit a final proposal to the secretary of Veterans Affairs, which will assume operation of the house once it’s built, Browning said. Dingell, a national proponent of Fisher Houses who helped make the Ann Arbor house a reality, is supporting the Detroit effort, he said. A Fisher House is definitely needed in Detroit, given the number of veterans served at the Detroit VA, said J.J. Tighe, who is director of parks and trails initiative for the Ralph C. Wilson Jr. Foundation, a veteran of the Iraq war and a member of the Michigan Veterans Trust Fund board. The Detroit medical center has about 500,000 patient visits each year. Tighe’s father was a Vietnam veteran who sought treatment at a Texas medical facility for complications from Agent Orange. He stayed with his father in a long-term stay hotel as he went through treatment, before his death three years ago. Having to pay for a place to stay while going through treatment puts

a financial strain on veterans and their families, Tighe said. “These types of support facilities for our veterans and our families are incredibly important. These veterans have sacrificed a lot ... we owe them and their families a level of support to make sure they get the care they need when they get home.”

Fundraising in Ann Arbor As the Detroit effort takes shape, fundraising continues to fund the approved plan to bring a Fisher House to Ann Arbor. The Fisher House Foundation pledged $3.5 million to the house, and the nonprofit Fisher House Michigan is now working to raise $3.5 million to round out the costs to build the new site and to create a $1.5 million endowment to help support any other out-of-pocket needs of people staying there beyond housing. The plan is to break ground on the 16- to 20-suite site in 2019 and complete it within nine months to a year, Palmucci said. Once the house is built, the VA will fund the ongoing maintenance and operation of the Fisher House. Fisher House Michigan has raised

WATER

Sherri Welch: (313) 446-1694 Twitter: @SherriWelch gallons of water per day, but as much as 80 million gallons of that leaks from the pipes before reaching customers, according to a 2015 master plan. Compounding the problem in places like metro Detroit: Conservation is reducing water usage, which reduces revenues. Yet the GLWA and the dozens of municipalities that operate systems big and small still have to maintain the same number of pipes. “This system was built for a much larger service population than we have today,” said McCormick.

FROM PAGE 3

Officials said they don’t know why the water main ruptured in Farmington Hills on Monday night, pouring hundreds of thousands of gallons onto the street and prompting a water emergency extending to northwestern Detroit exurbs. The incident lowered water pressure, making tap water susceptible to bacteria and E.coli infections, prompting a mandate to boil water that covered 11 communities from Novi and West Bloomfield to Rochester Hills that is estimated to continue at least through Friday. Schools closed. Hospitals canceled surgeries. And residents drove miles for bottled water. “A main break of this magnitude impacting so many customers is really unprecedented in our system,” said Sue McCormick, CEO for the Great Lakes Water Authority that manages the water system that serves some 4 million customers in southeast Michigan. Water officials are investigating whether an outage at a nearby power station caused an electrical surge that contributed to the rupture of the 48inch transmission main, said Cheryl Porter, COO of the authority. The water main was installed in 1970 — about middle-aged for its type — and had no previous breaks, McCormick said. She acknowledged it had never been inspected but said that isn’t unusual for large mains that are buried 6 to 10 feet deep. The mishap comes three weeks after the Detroit branch of the NAACP called on the Great Lakes Water Authority to invest more money in repairs and maintenance. Since 2016, the authority has been leasing and operating Detroit’s water system as part of a deal that gives the city $50 million per year over 40 years to make repairs. “We’ve been sounding alarms for years that there’s a huge infrastructure crisis,” said Meeko Williams, a Detroit water activist who served on the Blue Ribbon Panel on Water Affordability, a group of experts appointed by the De-

just over $1.2 million since last fall when the project was approved, said Patrick, 30. It was serendipitous that he would come to lead the nonprofit, as he benefited personally from a Fisher House. Patrick, a Purple Heart recipient, was hit by an enemy hand grenade in Iraq late in 2006. He spent more than a year and a half in the hospital in Germany and then Maryland and was discharged from the U.S. Marine Corps in 2009. In connection with his discharge, he traveled to Wright Patterson Air Force Base in Ohio for a medical assessment for traumatic brain injury and to assess damage to his hand, hip and arm. A Fisher House near the base called Patrick and his best friend and invited them to stay there for free while he went through the assessment. After an exhausting day of medical appointments, the staff at the house made dinner for the pair and made sure all of their needs were met. “That was the best night of sleep I ever had,” Patrick said. “I felt comfortable there.”

JOEL KURTH/BRIDGE MAGAZINE

Great Lakes Water Authority CEO Sue McCormick (left) and COO Cheryl Porter discuss a water main break during a press conference Tuesday.

troit City Council in 2016. In February, for instance, a problem at a GLWA water treatment plant in Detroit put nearly half the city — and all of Hamtramck and Highland Park — on a boil-water advisory for more than two days. “So many things should have been wake-up calls,” Williams said. “Why neighborhoods and freeways flood when it storms. Sinkholes. Maybe now that it’s happening to Oakland County (Michigan’s wealthiest), people will pay attention.”

‘We could really use some help’ Water quality issues extend far beyond southeast Michigan. In September, the Great Lakes Commission, a government group representing eight states and two provinces, called for $271 billion in water infrastructure investment over the next 20 years — including at least $15 billion in investments to the Michigan water system. “The lack of long-term planning and investments to maintain and improve water infrastructure systems are key factors that have led to this crisis,” the report read. “Many Great Lakes communities have outdated water infrastructure that is now between 50 and 150 years old.” The most notorious example, of

course, is Flint, which is still recovering from a three-year water emergency that exposed 100,000 residents to high levels of lead in drinking water and is also linked to an outbreak of legionella that killed at least a dozen people. The crisis began when the city, at the direction of a state-appointed emergency manager, switched its water source from the Detroit system to the Flint River without taking precautions to ensure the city’s pipes didn’t leach lead into the system. Yet the municipalities, counties and utility authorities that can fix the problems are spending $800 million a year less than is necessary to keep up, according to the report. “We could really use some help,” said Jim Nash, Oakland County’s water resources commissioner. Snyder’s task force called for $4 billion per year in new taxes and fees. Nothing has come of the proposal. Nash said he would welcome the new spending because it would help communities inspect systems and prioritize repairs. Without a list of specific needs, Nash said cities only respond to emergencies. Detroit, for instance, repairs 1,900 water main breaks per year rather than invest in improvements, Nash said. If Detroit shored up its massive leaks, Nash said, the GLWA could shut down one of its five water treatment plants. The system pumps 400 million

A ‘major pain and inconvenience’ In Oakland County, the incident was a wakeup call to Tanya Haaseth. The West Bloomfield woman has three sons, including a 17-year-old with autism. She called the situation a “major pain and inconvenience.” “I worry about these things all the time because we can’t just go to a hotel because of my son,” she said. “He doesn’t understand that he can’t drink the water, so we have to be vigilant to make sure he doesn’t.” She said she plans on keeping more bottled water in storage in case of a recurrence. McCormick said the GLWA has undertaken a “methodical condition assessment” of its sewer system and will embark on a similar one for its water transmission lines. Steglitz and Nash agree the situation could have a silver lining: increased awareness of a problem that many had associated with poorer cities such as Flint and Detroit. “It’s starting to impact more people,” Steglitz said. Ann Arbor, for instance, may have to spend $80 million to replace a water treatment plant that was built in 1938 and updated many times over the years. And in 2015, Grand Rapids finished a multi-million upgrade of a system that carries and treats sanitary sewage and stormwater, reducing the danger that untreated sewage would flow into the Grand River. “You have to replace the car at some point,” Steglitz said. “You can’t keep fixing it.”

www.crainsdetroit.com Editor-in-Chief Keith E. Crain President KC Crain Publisher/Editor Ron Fournier, (313) 446-1674 or rfournier@crain.com Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Manager/Marketing and Events Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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THE WEEK ON THE WEB

RUMBLINGS

Duggan, Young spar over effectiveness in debate

Snyder aims at VC event in Homecoming vein

OCTOBER 20-26 | For more, visit crainsdetroit.com

etroit Mayor Mike Duggan and state Sen. Coleman Young II traded multiple rhetorical barbs about each other’s effectiveness as public servants in a wild debate last Wednesday night, as the incumbent sought to put down an upstart challenger who has accused him of caring only for the city’s greater downtown area. Young used the hourlong debate inside a downtown television studio at WDIV (Channel 4) to continue to paint the Nov. 7 mayoral election as a referendum on the city’s comeback. In their only face-to-face debate, Duggan, 59, touted citywide growth in jobs, new businesses and economic opportunity while taking Young to task for his ineffectiveness as a state legislator since his mid-20s. Young used the ongoing debate in the Legislature over reforming Michigan’s auto insurance system to present an alternative to the proposal Duggan is pushing to rein in medical costs for injured drivers. The 34-year-old state senator and son of the late Mayor Coleman Young said he would direct Detroit police to stop asking motorists for proof of insurance during traffic stops and take auto insurance companies to court over their territorial pricing system. “I’m going to sue the auto insurance companies to stop this racist redlining from going on in the city of Detroit,” Young said. Duggan, who is pushing for passage of a no-fault reform plan favored by insurers, called Young’s plan “Lansing nonsense.” “You’re going to file a lawsuit? The NAACP filed the redlining lawsuit in 1993,” Duggan said. “It went on for three years. And they lost because the insurance companies proved Detroiters are being charged more because of these medical expenses to lawyers and doctors preying on us.” The mayor used the exchange to continue to contrast his experience from years in local government and as CEO of the Detroit Medical Center with Young’s 10-year tenure in the Michigan Legislature. After the debate, Young decried the lack of additional televised debates, accusing Duggan of “political cowardice.” “I think it’s disrespectful,” he said. Duggan said there won’t be a second debate before the Nov. 7 election. “I figured the public would get the idea after one of these,” he said.

BUSINESS NEWS J The Detroit Pistons and Henry Ford Health System ceremoniously broke ground last week on the 175,000-square-foot facility in New Center that will be the basketball franchise’s new headquarters and practice facility as well as a regional sports medicine facility. J The state also approved nearly $16 million in brownfield tax incentives for the Pistons’ facility. J Waymo, Google’s autonomous driving business, will test its technology on Michigan public roads this winter.

CITY OF SOUTHFIELD

Demolition at Northland Center in Southfield got underway Thursday. The building that used to house a Target retail location is the first to be demolished, after environmental assessments, asbestos abatement and remediation were recently completed. The process is likely to take about two weeks.

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

$124.5 million The amount the city of Detroit is borrowing from JPMorgan Chase & Co. to revitalize two dozen commercial corridors.

The number of organizations awarded nearly $2 million in grants through the 2017 Knight Arts Challenge Detroit; they include an art festival, a kids architecture workshop and an African dance program.

$17.8 billion The amount nonprofits contribute yearly to the economy in Southeast Michigan and the thumb, according to Independent Sector data.

J The Coe, a new $4 million mixeduse development in Detroit’s West Village, officially opens this week. J The Buhl Bar in downtown Detroit is set to be revamped under a new manager, Dave Kwiatkowski’s Detroit Optimist Society, which will expand hours, enhance the menu and shake up staff. J Arn Tellem, the sports executive leading the Detroit’s bid to secure a Major League Soccer expansion team, said last week that he expects to host league officials next month as part of the process. J To help Detroit land major sporting events such as the Super Bowl, WrestleMania, and the Final Four, a new local organizing committee under the Detroit Sports Commission, the Detroit Sports Organizing Corp., has been formed of some the region’s notable executives. J An ax-throwing game venue called Detroit Axe is opening in November in Ferndale, above the former Local Kitchen and Bar space. J Airbnb has paid $960,000 in taxes to the state of Michigan since enter-

he state of Michigan is in early planning to start a venture capital event to spur investment in the state next summer. Gov. Rick Snyder, speaking to Crain’s about his economic development trip to Silicon Valley last week, said the idea would be to mimic Detroit Homecoming, an annual event produced by Crain’s Detroit Business that brings former Detroiters back to the city to re-engage them in the city and consider investment. Snyder said the event would focus on investors and successful startups. “What they ask for, those in the Valley, is an event like Detroit Homecoming, but for people in their industry,” he said. “Essentially give them the opportunity to show them what we have here, what we can offer.” Snyder said the West Coast inves-

tors are starting to see Michigan’s advantages, such as cost of living, as labor and housing prices continue to rise out West. “If you’re in the Valley, can you hire 50 to 100 people that can afford to live there?” he said. “You can buy a nice residence in metro Detroit and a vacation home on a lake and still save money here. This is something they are starting to look at.” The event is still conceptual at this time, but he has instructed the Michigan Economic Development Corp. to explore the options. Snyder’s trip followed a week after roughly a dozen Silicon Valley investors visited Detroit at the behest of the MEDC’s mobility development arm PlanetM. That event was the first time the state’s economic development team brought investors to the state.

ing a tax agreement with the government in June. J Beaumont Health opened its $4 million Skandalaris Family Center for Children with Cancer and Blood Disorders at Beaumont Hospital, Royal Oak. J Two years after a China-based company acquired Meadowbrook Insurance Group, the 62-year-old Southfield-based risk management company announced that it has changed its name to AmeriTrust Group Inc. J A $32 million transformation of a vacant 13-acre industrial site in Ferndale and Pleasant Ridge is expected to include apartments, a new brewery and a new market.

OTHER NEWS J Veteran TV news anchor Carmen Harlan and Detroit-raised rapper Big Sean will be the grand marshals of Detroit’s Thanksgiving parade. J Hyundai America Technical Center Inc. is investing $5 million in the American Center for Mobility in Ypsilanti Township, bringing its fundraising to $101 million out of $135 million. J A boil water advisory in western Oakland County that began last week affected more than 50,000 homes and businesses after a transmission line broke. J Demolition started last week at Southfield’s vacant Northland Center property, which is on track to be redeveloped with retail, medical and office space. J Detroit’s businesses have been called upon to reduce their greenhouse gas emissions by 10 percent in the next five years and 80 percent by 2050, according to a report released last week by Detroiters Working for Environmental Justice. J The University of Michigan bus service connecting Ann Arbor to Detroit is being made available to the public, as it ramps up operation to seven days a week.

OBITUARIES J Russell Mawby, who served as CEO of the W.K. Kellogg Foundation from 1970 to 1995, died last Friday at 89.

A T-shirt that was for sale on Barstool Sports’ website mirrors the Vs Everybody phrasing.

Detroit Vs Everybody appears to win Vs Barstool

he “Barstool Vs Everybody” shirt is apparently no longer for sale after an attorney representing the founder of the Detroit Vs Everybody clothing line fired off a cease and desist letter to the popular and sometimes controversial sports website. The shirt was listed for sale for $25 on the website early last week but as of Friday, the page was no longer accessible on Barstool Sports’ website. Emails sent to Barstool Sports were not returned last week. At issue is a trademark Detroit Vs Everbody founder Tommey Walker Jr. received in 2013 for the “Vs Everybody” language on “wearable garments and clothing, namely, shirts.” The trademark application was filed Jan. 20, 2013, and registered on Dec. 24, 2013,

according to U.S. Patent Office records. Detroit Vs Everybody launched online in 2012. It has stores in Greektown, Eastern Market, Southfield and Dearborn at Fairlane Town Center. New stores are expected in Clinton Township and Sterling Heights in November, Crain’s reported earlier this month. Barstool Sports was founded by David Portnoy, a University of Michigan graduate. ESPN brought “Barstool Van Talk” to the popular cable network’s ESPN2, but the show was canceled after just one episode a week ago after uproar over comments Portnoy and others made in 2014 about Samantha Ponder, host of “Sunday NFL Countdown.” The website has also been criticized for misogyny and vulgarity.

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