Crain's Detroit Business, Nov. 13, 2017 issue by Crain's Detroit Business

NOVEMBER 13 - 19, 2017

Gilbert, son Nick talk health care journey

Flint’s Ferris Wheel gets entrepreneurial hub in motion

Page 4

Hagerman hopes to spur new businesses. Page 3

Workforce

Auto Insurance

Opioids on the shop floor

When employers find drug rings — and their own insurance is the supplier

By Dustin Walsh dwalsh@crain.com

Factory owners are discovering that their own shop floors are home to drug rings — with the company itself as the supplier. The combination of generous health benefits and the national opioid epidemic has made manufactur-

ers a prime target both for sales of the addictive drugs and for acquiring them. More and more, companies are finding that investigations of worker’s compensation scams turn into drug investigations amid a national epidemic that is killing thousands of people a year. And it’s a tricky problem to root

Need to know Opioid prescriptions tied to plant drug rings 

 Manufacturers a prime target both for sales of the addictive drugs and for acquiring them

Worker’s compensation scams turn into drug investigations 

out, because plenty of employees are prescribed the drugs legitimately. At Nexteer Automotive Corp.’s Saginaw Steering Gear complex in Buena Vista Township, more than 4,000 employees toil on lines making steering columns, electronics and systems.

SEE LIONS, PAGE 27

SEE DUGGAN, PAGE 28

Business lessons from a Honolulu blue turnaround RICK OSENTOSKI/ASSOCIATED PRESS

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Since Detroit Lions owner Martha Firestone Ford gutted the long-moribund team’s front office in 2015 and stacked it with her own hires, the team has improved. And that’s been driven by an improving corporate culture, the team president and other NFL insiders say.

It’s a problem all businesses wrestle with: How do you change a culture, and how do you know when you’ve succeeded? For the Lions, there is an extra dimension. Even if they succeed in changing a culture that accepted mediocrity — or worse — then they have to convince millions of fans who have often branded them the “Same Old Lions.”

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For the Lions, the formula has been simple: There are goals, and employees are accountable for meeting them. That’s the foundation intended to improve customer service for fans and corporate clients off the field, and to create a better process for acquiring on-field talent, team President Rod Wood said.

How to change a culture, Detroit Lions edition bshea@crain.com

By Chad Livengood

Mayor Mike Duggan’s landslide re-election may give him a bully pulpit in a second term to unseat the fellow Detroit Democrats who helped defeat his auto insurance reform legislation five days before Election Day. Two days before Duggan scored the largest margin of victory in a Detroit Need mayoral election to know in 20 years, Dug-  Mayor gan telegraphed frustrated with his strategy and Detroit reps who frustration during helped defeat auto a campaign stop at insurance overhaul Historic Little  Duggan scored Rock Baptist the largest margin Church on Wood- of victory in a ward Avenue in Detroit mayoral the North End election in 20 years neighborhood. “Half of the  Southeast Detroit delega- Michigan business tion didn’t vote community a key with us. I intend cog in Duggan’s to campaign growing influence against every one of them this August,” Duggan told congregants, apparently unaware a Detroit News reporter was in the room to capture his comments. Duggan’s remark was aimed squarely at state Reps. Fred Durhal III, LaTanya Garrett, Sherry Gay-Dagnogo, Rose Mary C. Robinson and Stephanie Chang, who voted against the auto insurance overhaul he pursued with Republican House Speaker Tom Leonard. The bill died on a 45-63 vote. The political machine Duggan had already been building before winning 72 percent of the vote Tuesday is likely to get stronger, especially given the support he draws from regional business leaders. The Southeast Michigan business community has proved to be a key cog in Duggan’s growing influence, both in terms of financial support for his re-election campaign and helping carry out his agenda.

SEE OPIOIDS, PAGE 29

Sports Business

By Bill Shea

In 2nd term, Duggan aims to play hardball

INSIDE

Houghton-Hancock is surprisingly high tech Entrepreneur’s risk turns small Keweenaw firm into region’s largest employer of engineers. Page 11 Biomed startup aims to change post-op care. Page 12

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MICHIGAN BRIEFS

INSIDE

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

CALENDAR CLASSIFIEDS

Rothwell on education, jobs Michigan continues to be a leader nationally in business and technology innovation, but it continues to struggle to help K-12 students succeed in school and train people for highly skilled jobs needed in today’s workforce, said Doug Rothwell, CEO of Business Leaders for Michigan, the state’s business roundtable made up of executives of the state’s largest companies. Weakness in those two areas will continue to hold Michigan back from becoming one of the top 10 states in the nation when it comes to jobs, income and a thriving economy, Rothwell told a crowd of about 500 business leaders last Thursday at Business Leaders for Michigan’s annual CEO summit at the Westin Book Cadillac Detroit. “Unless we change this, Michigan employers are not going to be able to create and fill jobs with Michigan graduates,” he said. “They’re going to have to do it somewhere else.” Michigan’s talent problems are well-documented. Employers say they’re challenged to find enough workers with the required skills, while K-12 students continue to score low on standardized tests showing they’ve mastered reading and math concepts.

22 23-25

DEALS & DETAILS

Business Leaders for Michigan last week released this year’s edition of its annual benchmarking report on the state’s economic competitiveness compared to other states, using 2016 data. Michigan ranked 46th out of 50 states for fourth-graders’ proficiency in reading and 37th for eighth-graders proficient in math, the data show. Michigan ranked 29th for its students’ career and college readiness. Gov. Rick Snyder has made workforce training a priority, including stressing the skilled trades as viable career options for students who don’t plan to attend a four-year university. Yet despite the efforts in Lansing, the state ranked 42nd for the number of high school students enrolled in career-technical education programs — this “in a state that prides itself for being a hands-on, practical place that makes things,” Rothwell said.

House approves unemployment changes

The Michigan House unanimously approved a bipartisan set of reforms to the state’s unemployment insurance office after a scandal left tens of thousands of residents falsely accused of fraud. Under the eight-bill package, which is on its way to the Senate after the House’s 107-0 vote, the state’s unemployment insurance agency would charge smaller penalties to benefits recipients who are accused

The Michigan House unanimously approved a bipartisan set of reforms to the state’s unemployment insurance office after a scandal left tens of thousands of residents falsely accused of fraud.

of defrauding the system. The agency would be able to collect penalties worth the same amount of the benefits collected fraudulently, rather than twice the amount it can collect now. For each additional violation, the penalties the agency could collect would be worth 1.5 times, instead of four times, the amount of benefits collected fraudulently. If it’s determined that the benefits fraud was the result of identity theft, the unemployment office would be allowed to collect four times the amount of fraudulently obtained benefits. Other provisions include allowing employers and benefits recipients accused of fraud to work with an advocate to represent their case, and preventing the state from collecting interest on top of penalties if the ben-

efits paid out were the result of a state error. “There are times when we as policymakers have to learn from mistakes that have happened,” state Rep. Kevin Hertel, D-St. Clair Shores, said on the House floor before the vote. “I firmly believe (these bills) will improve the system as it stands. Currently, we are working in a system where a simple mistake, a simple checking of the wrong box, could lead to a fraudulent charge.” The Michigan Talent Investment Agency, which manages the unemployment office, has overturned close to 44,000 fraud cases after it was discovered that a computer system was incorrectly flagging benefits payments as improper with no human oversight from October 2013 to August 2015.

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OPINION

OTHER VOICES

PEOPLE

RUMBLINGS

WEEK ON THE WEB

Senate OKs concealed guns in schools, bars

Licensed gun owners with extra training could legally carry inside schools, churches, bars and other pistol-free zones under hotly contested legislation that was approved last Wednesday by the Republican-led Michigan Senate, days after the Texas church massacre, the Associated Press reported. The bills were sent to the GOP-led House for consideration next. They face an uncertain future because Gov. Rick Snyder, a Republican, vetoed a similar plan in 2012 following the mass shooting of elementary schoolchildren in Connecticut. The legislation would legalize the right to carry in schools, day cares, stadiums, large concert halls, taverns and other currently gun-free zones if a license holder gets eight more hours of training, though privately owned businesses such as bars could stay pistol-free.

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Innovation

Flint’s new entrepreneur hub set in motion By Kurt Nagl

knagl@crain.com

Flint’s new entrepreneurship hub opened last week after a $7.5 million build-out in the once-abandoned Ferris Building downtown. Flint Ferris Wheel Innovation Center now occupies 615 S. Saginaw St., a seven-story art deco building boasting 50,000 square feet of space on the city’s main red-brick drag. The building’s owner, business mogul Phil Hagerman, spearheaded the renovation through SkyPoint Ventures LLC, his Need venture capital to know and real estate JJInnovation firm. It was boostincubator for ed by a $1.5 milcommunity lion grant from celebrates official the Michigan opening Economic Development Corp. JJSkyPoint and support from Ventures’ Phil a community Hagerman coping with a waspearheaded $7.5 ter crisis and million renovation keen on seeing of building investment in the JJSpace to be struggling city. mixture of “ N o t h i n g ’s startups, about what hapnonprofits and pens today,” Hagestablished erman told a businesses crowd of entrepreneurs, students and community leaders — including Gov. Rick Snyder, Lt. Gov. Brian Calley and Congressman Dan Kildee — at the hub’s debut party. “It’s about what happens going forward.” David Ollila, president and chief innovation officer for SkyPoint, is tasked with overseeing the Flint Ferris Wheel. One of its main tenants is 100K Ideas, a Flint-based nonprofit backed by the MEDC and focused on training entrepreneurs. “While Flint certainly still has its struggles, the Ferris Wheel shows it is still worth building a future while in crisis,” Ollila said. At the front of the Ferris Building are its two retail tenants: Flint Print and Foster Coffee Co. SEE HUB, PAGE 29

The new entrepreneur hub, Flint Ferris Wheel, boasts 50,000-square-feet of space on the city’s main drag. PHOTOS BY KURT NAGL/CRAIN’S DETROIT BUSINESS

David Ollila, president and chief innovation officer for SkyPoint Ventures, is tasked with overseeing the Flint Ferris Wheel, a new entrepreneur hub in downtown Flint.

MUST READS OF THE WEEK Small business

Government

Nonprofits mobilize to encourage participation in 2020 census By Sherri Welch swelch@crain.com

Artisan cheese, chocolate shop opens in Ferndale and a cookie dough cafe looks to open in Detroit. Page 19

Keith Crain

Capitol briefings

The voters have spoken: Stay the course with Detroit Mayor Mike Duggan Page 8

Lindsay VanHulle: Do ride-sharing and driverless cars mean fewer parking garages? Page 6

Foster Coffee is one of the first tenants at 615 Saginaw St., where an entrepreneur hub called Flint Ferris Wheel opened Monday.

The 2020 Census is more than two years out, but the Michigan Nonprofit Association is already launching a campaign to encourage populations that are typically underreported to take part in the census. Among the complicating factors: A new online census form expected to roll out this year and fears among Michigan’s Middle Eastern population and other immigrants, sparked by White House policy, could further hurt counts, Michigan nonprofit leaders said. And that translates to lost federal funding for programs serving those populations and the state as a whole. Michigan was one of the top states in the country for reporting during the 2010 Census. It actually saw a slight overcount. But that was largely due to double counts. Within that,

Need to know

JJMichigan’s nonprofit sector mobilizing more than two years before 2020 census to counter new challenges JJFear among region’s, state’s large immigrant populations could affect counts in 2020 census and federal funding as a result JJIt comes on top of other issues expected to affect counts, including lack of federal funding and a new online census format

populations of people who often rely on federally funded programs underreported, according to the state. Populations that are typically undercounted include low-income, minority, immigrant, rural, renter and young children populations. In Michigan, minorities and young children, in particular, were underreported during the last census.

Joan Bowman: Distrust of government high.

Hassan Jaber: Immigrants feeling targeted.

Many nonprofits serve those hardto-count populations, putting them in a position to help allay fears, educate and to impress upon those often missed in counts how important it is to be counted. “Distrust of government is at an all-time high,” said Joan Bowman, vice president of Michigan Nonprofit Association. SEE CENSUS, PAGE 28

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Roger Packer, M.D. (left), Nick Gilbert, Michigan State University disabilities specialist Angela Sebald and Dan Gilbert.

Dan Gilbert and son Nick discuss their health care journey By Jay Greene jgreene@crain.com

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Businessman Dan Gilbert and his son Nick opened up last week about their family’s journey through the health care system to treat Nick’s rare genetic disorder, neurofibromatosis, that caused tumors to form on his brain and eventually nearly blinded him. Nick, now a 21-year-old junior studying business at Michigan State University, appeared on stage with his father, the billionaire owner of Quicken Loans in Detroit, at Crain’s 16th annual Health Care Heroes event at the Gem Theatre in Detroit. The event honored Crain’s 2017 Health Care Heroes. After Dan interviewed Nick about his recollections of his treatments over the years, the Gilberts were joined on stage by Roger Packer, M.D., a pediatric neurologist from Washington, D.C., and Angela Sebald, an MSU disabilities specialist, both of whom have helped Nick over the past decade. Starting when Nick was about 15 months old, Dan Gilbert said he and his wife, Jennifer, took Nick to many oncology centers for evaluation and treatment. He was diagnosed with neurofibromatosis. Dan Gilbert kicked off the session by asking his son if he remembered his first chemotherapy when he was about 5 years old to remove a benign tumor in his optic nerve. “It was just something I had to do,” Nick Gilbert said. Nodding his head, Dan Gilbert said that positive attitude always impressed him and his wife. “How lucky has it been to have a mom like” Jennifer? Gilbert asked. Nick responded, “She is happy to have me as a son.” Gilbert said that unfortunately, chemotherapy more than 18 years ago wasn’t as advanced as it is now and didn’t work as successfully as they would have liked. As a result, Nick is blind in his right eye and has about 25 percent vision in his left. He is considered blind, which made him eligible for special services at MSU. Nick said he can’t read print, but he sees the “core” of objects and things,

Need to know

Gilbert and son talk about their health care journey 

 Nick Gilbert’s neurofibromatosis has left him legally blind  The pair spoke at Crain’s Health Care Heroes event

enough to get around in daily life. But at age 10, two days after his birthday, Nick was coming back from summer camp and began experiencing headaches and nausea. “He had a big tumor on the base of his brain and needed emergency surgery,” Dan Gilbert said. This is when he first was directed to the Children’s National Medical Center in Washington, D.C. He had a team of nurses and surgeons, including later Packer. The surgery was successful, Dan Gilbert recalled, but it was the aftermath that stood out. “So when you woke up, you were never mean in your life, (and) you were mean,” he said. Nick had asked the nurse to move up the angle of his bed so he could be more comfortable. But the nurse had trouble operating the bed. “He looked up at this poor, hard-working nurse and said, ‘Where did you go to nursing school?’” Dan Gilbert said. “He never was that way before or after” he said with a little smile.

Strength from kids Packer met Nick 11 years ago after his brain tumor was removed by a different neurologist. Gilbert said Packer is nationally known for taking difficult cases when other doctors might have given up. “When other doctors give up on patients, he intervenes with magic and saves lives,” Gilbert said. Packer recalled meeting Nick in a hospital room that contained an extra-large poster picture of the Cavaliers’ Lebron James. “I didn’t know the connection to the Cavs until after Nick was discharged,” he said. Gilbert asked Packer how he deals with the daily stress of children with

tumors and families dealing with their ongoing stress of medical problems. “I get strength from the kids and the families,” Packer said. “They don’t want to give up.” Packer said there have been many advances in cancer treatment over the past 10 years with designer biologic drugs. “The tools are finally here” to use precise therapy, said Parker. “Our job is to apply these advances.” Parker said doctors have developed early techniques to regrow the optic nerve through regeneration using stem cells. Another fast-growing research area is revitalizing cells that were once thought to be dead, but are sometimes only injured. “There are remarkable advances that were not possible five years ago,” he said.

Nick-isms Gilbert said he has collected a number of what he called “Nick-isms” over the years, comments that Nick has made about his family, to the public and to health care providers. For example, when Nick was 3 years old, one of the family goldfish died. A babysitter flushed the dead fish down the garbage disposal. “We had to explain it to you. Where did it go? ... We explained that the goldfish went up to heaven,” said Gilbert, asking Nick to recall what he said. Nick replied, “So heaven is in the garbage disposal?” Dan Gilbert said he sometimes talks about how many truly happy people he knows. He said can count three or maybe a few more. “You are always in the top two,” he said to Nick. “For me, you got dealt a bad card, not your fault. You could say you are a victim. You don’t act that way. In fact, I run across a lot of kids who have cancer or other problems. You are happy. Why is that?” Nick said simply he understands he has a problem, but he doesn’t want to dwell on it. “I just deal with it.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Matt Jaeger, Commercial Relationship Manager with Huntington Bank helped Sonja Schmidt, vice president of finance and CFO at Gehring LP, refinance and reevaluate the company’s 401 (k) plan.

Getting to know you Starting off fresh gave Gehring LP and Huntington Bank freedom to make things better Story by Marcia Lerner | Crain Content Studio Sonja Schmidt’s relocation to Michigan after five years in Germany was rife with detailed responsibilities. Schmidt, vice president of finance and the CFO of Gehring LP, a Farmington Hills-based manufacturer of honing machines and leader in advanced honing technology, oversees finance, HR and IT—so she had a lot to handle. And amidst Schmidt’s move and her normal responsibilities, Gehring LP was embarking on a new banking relationship. Schmidt came to Michigan in August 2016, just as Gehring LP was beginning its association with First Merit Bank, which had just been acquired by Huntington Bank. What could have been a chaotic transition became an opportunity for transformation. Huntington’s process begins with taking time to understand its clients, so the newness on all sides ended up offering fresh perspectives. “We were able to see some needs that Gehring had and wanted to review,” said Matt Jaeger, relationship manager at Huntington. “Huntington has a vast amount of resources, so we had a number of

meetings getting to know and understand Gehring’s business, and then we could bring in the appropriate resources to assist them”. For Schmidt, the exploration of Huntington’s options and Gehring’s needs yielded powerful results. “Huntington understands our manufacturing business,” she noted, which made for a welcome change from previous banking relationships. “We didn’t have to explain why our inventory is high, because they understand our customers, their payment conditions, our balance sheet.” This understanding also meant that Huntington could see where Gehring could improve its situation; retirement plans, in particular, stood out as needing improvement. Jaeger brought in Mike Strader, one of Huntington’s retirement services specialists. “We did a deep analysis into what the costs were,” Strader says. “We looked at how many parties were involved in it, what the plan design looked like.” The examination revealed that Gehring was struggling with multiple providers in the administration of its 401(k) plan. To alleviate the difficulties that came with this, Huntington offered Gehring the option of consolidating and SPONSORED BY:

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“Huntington understsands our manufacturing business. ... they understand our customers, their payment conditions, our balance sheet.” Sonja Schmidt, VP and CFO, Gehring LP managing its plan with Huntington. The new plan would lower expense ratios on mutual funds, saving Gehring some money, and benefit Gehring’s employees by increasing the plan’s participation rate through automatic enrollment and automatic escalation on the contribution rates. Their increasing satisfaction would in turn benefit management. The offerings were right in line with what Schmidt had grown to expect from Huntington. She trusted their recommendations and appreciated being relieved of some of the

complications that had come with the previous plan. In turn, her willingness to explore new options and re-envision financial operations smoothed the process. Huntington’s expertise in U.S. law and retirement plans has also proved helpful. “I was very glad about the due diligence and expertise of Huntington, and what we need to cover all legal aspects,” Schmidt says. “They were also willing to communicate with our existing provider, so it was a very smooth process.” For Jaeger, the new improved 401(k) plan— along with a better financing deal—means Gehring is an extremely satisfied customer. “They’re able to focus their energies and attention on their business, and they have confidence in their relationship with our bank,” Jaeger says. “That’s my driving motivation: to make my customers’ lives easier, to make the business more successful. That’s what gets me to work every day.” Schmidt agreed. “We have amazing partners like Huntington that can make our lives easier. It’s a win-win for everybody.” For more information about Huntington Bank, contact Brian Marshall at 248-244-3607 or at brian.marshall@huntington.com.

11/3/17 10:09 AM

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CAPITOL BRIEFINGS

Do ride-sharing and driverless cars mean fewer parking garages? LANSING — Cities should start thinking now about the impact driverless cars will have on everything from transit to parking, even though the first automated vehicles aren’t expected to be available to the public until at least 2020. That’s according to the new CEO of the Michigan Economic Development Corp., which commissioned a recent report as a road map for cities to consider the kinds of infrastructure and land use changes that the emerging mobility industry will bring. “Think about … what mobility and autonomy essentially allows in terms of helping our seniors potentially be more active and able to be out living on their own, or for the disabled community, or some of our rural areas,” said Jeff Mason, who took the helm of the state’s economic development agency in July. “Just providing more access and opportunity, I think that’s what’s kind of exciting about what the future holds,” he said. “But it also can be, maybe, threatening or challenging from a planning and a community standpoint.” I talked to Mason recently while he was in Montreal for the ITS World Congress, a conference devoted to intelligent transportation. The MEDC was there to pitch Planet M, the state’s mobility brand, and Michigan itself as the preeminent leader on all things connected and autonomous vehicles. The “Future Cities” report, written by the Center for Automotive Research in Ann Arbor, tries to make the case that

helpful in terms of kind of exposing those elected officials to what the future is.”

Career-tech challenge

LINDSAY VANHULLE lvanhulle@crain.com

the most attractive communities will be those that have invested in the infrastructure to be ready for ride-hailing and bike-sharing services, for instance, and self-driving cars. That would include such things as eliminating minimum parking requirements for developments, creating carand bike-sharing parking spaces and loading zones for ride-hailing companies, studying potential congestion and travel patterns if fewer human-driven vehicles are on the roads, integrating fares between several modes of transit and anticipating the need for fewer parking spaces in the future. Yet planning often is a short-term exercise. How does the state help local governments take a longer view? Municipalities have long grappled with that, Mason said. “Municipalities or governmental bodies, we’re pretty risk-averse,” Mason said. “But I think when you have the industry and companies here in the state that are beginning to introduce some of this technology, that’s

Michigan ranks 42nd out of 50 states for the number of high school students enrolled in career and technical education programs. That fact stood out last week as Business Leaders for Michigan, the state’s business roundtable, released its latest benchmarking report comparing Michigan to other states during its annual CEO summit in Detroit. BLM’s report includes the data point, indicating that fewer than a quarter of public school students took a vocational course in 2015. That’s less than half of what “top 10” states on such metrics as jobs, personal income and economic health are enrolling. That’s happening “in a state that prides itself for being a hands-on, practical place that makes things,” Doug Rothwell, CEO of Business Leaders for Michigan, told a crowd of about 500 attending the summit. Yet the statistic shines light on a larger problem, which is that Michigan struggles to produce enough workers with the right set of advanced skills that employers are demanding in a global, 21st-century economy. Just 23 percent of students graduated from Michigan high schools in 2016 meeting college readiness benchmarks in English, reading, math and

science on the ACT college entrance exam — far below the 36 percent who, on average, can do so in “top 10” states, the report shows. The problem starts early: Michigan ranks 46th when it comes to fourthgrade students who are proficient in reading on state standardized tests, and 37th in eighth-graders who can demonstrate math proficiency. Gov. Rick Snyder has focused on increasing employment in skilled trades — which can be high-paying work — particularly for students who don’t plan to attend a four-year university. Getting students into vocational courses that can help accelerate that path has proven challenging. For one, the state adopted more rigorous high school course requirements, which can leave less time available for students to spend at a vocational program. Michigan has a decentralized career-tech structure statewide, with some programs supported by local millages. And the state has had difficulty recruiting enough teachers to lead courses. There has been some progress. This year, 109,005 students are enrolled in career and technical education programs in Michigan schools, according to data from the Michigan Department of Talent and Economic Development. That’s nearly 5,000 more students than in 2015, when enrollment hit a recent trough at 104,038, yet still below the 118,575 students enrolled in 2011 when Snyder took office.

The state is trying to boost the image of skilled trades fields in multiple ways, from its “Going Pro” marketing campaign to a tool called Pathfinder that aims to offer information about job openings and wages in given fields, talent department spokesman Dave Murray said via email. “We also need to start the discussion about improving CTE statewide,” Murray said, citing the need to create equity between districts with vocational millages and those without. And “so many districts say they are unable to offer some classes because they can’t find someone to teach them,” he said. Snyder this month signed a supplemental funding bill for this fiscal year, which started Oct. 1, to increase vocational programming and equipment by $3 million. And over the summer, the state talent and education departments jointly rolled out a plan to enlist the state’s business community in an effort to find more teachers. Now, a five-bill package is pending in a state House committee that would, among other things, allow non-certified instructors with relevant work experience or expertise to teach career-tech courses. The bills have the support of a number of professional associations, including groups that lobby on behalf of manufacturers, restaurants and road builders, as well as the Grand Rapids Area Chamber of Commerce.

WE ARE ALL BORN TO SUCCEED. Sometimes all we have is the strength inside. The kind of strength that keeps you moving forward when you’d rather turn back. The strength to do the right thing when it’s easier to do nothing at all. To do good and then ask, “How can I do better?” The strength to never settle for the way things are, but to strive for the way things ought to be. And know that to get where you want to go, you might have to make your own path. At Wayne State University, we take that strength and make it stronger. Because being strong isn’t strong enough. You need to be Warrior Strong.

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OPINION

EDITORIAL

Employers must take lead on opioid crisis

he abuse of opioids is an emergency — President Donald Trump declared as much in a speech last month. But costly inaction among employers is as ubiquitous as the drugs themselves. Southeast Michigan’s manufacturers are a hotbed of opioid use and abuse, as Dustin Walsh reported in a story on Page 1. Yet the crisis is either being ignored or swept out of the public eye by local companies as they struggle with abuse on shop floors and methods to deter prescription painkiller abuse in the midst of a labor shortage. Nexteer Automotive Corp. should be commended for discussing its startling discovery of prescription drug dealing at its manufacturing complex near Saginaw. The supplier did not shy away from discussing the very real problem it faced and continues to face. Ignoring the issue is costly, in more ways than one. Nexteer discovered its problem by keeping an eye on costs. The bill under its health benefits plan for prescription painkillers rose by several hundred thousand dollars in 2015. Last year roughly 11 million opioid prescriptions were written for Michigan’s 9.9 million residents, according to state data. In Michigan, health care costs associated with opioid abuse totaled $830 million in 2013, a number that has likely risen in recent years, according to a 2016 Centers for Disease Control study. And who’s often left picking up that tab? Employers. The average employer medical costs were nearly twice as much for opioid abusers, $19,450, than non-abusers, $10,583, in 2015, according to a recent report by Castlight Heath. The crisis goes beyond the bottom line. It is also a moral issue with a huge human cost. Opioids claimed as many as 64,000 American lives last year — a 22 percent increase from 2015. They are nearly as big a killer as diabetes. Because they offer health insurance to take care of their workers, employers are also the source for many of these life-threatening pills. Fixing this issue won’t be easy. Employers can follow Nexteer’s lead by making efforts to re-evaluate zero-tolerance drug policies and offering alternatives to termination, such as mandatory drug counseling, as well as advocating for alternatives to painkillers through the company’s employee assistance program. Most employees are unaware of the EAPs, and marketing them internally can go a long way toward preventing opioid abuse. Lansing can help by mandating use by physicians and pharmacies of the state’s prescription-drug reporting system to prevent doctor and pharmacy shopping. If lawmakers fail to act, employers should lobby their benefits providers to require their networks to use it. Employers, especially huge employers General Motors Co., Ford Motor Co. and Dow Chemical, should take a leadership role in recognizing and confronting this crisis in the name of a healthier workforce for all employers in the state.

LETTERS

Mr. Moroun, work with community

An open letter to Matthew Moroun: I am writing you to ask you from the bottom of my heart and from our community’s hearts, will you put your words into action? How, you may ask, can I prove to the people of the Southwest Detroit community that I mean what I say, that I do want to “change the narrative” of my and my father’s Detroit International Bridge Co.? We, the people of this community, need you to stop forever the DIBC’s pursuit of closing St. Anne Street at Fort Street and at West Lafayette. To close it would be gambling with the lives of the dense population of residents living on St. Anne Street, the children being taught within the St. Anne school building, and the 1,000 parishioners of Historic St. Anne’s Church and worldwide visitors who fill the church for events and masses weekly. I and other residents of the community heard you say at a public meeting in 2015 with Mayor Mike Duggan that you are “turning a new leaf” for the DIBC. We heard this same statement from you during a press conference at that same time. And more recently, you have been quoted in the Detroit Free Press on Oct. 3 and Detroit News on Oct. 19 stating that you want to “change the narrative.” You were quoted saying you no longer want to be “noxious” or “confrontational” with the people of the community. This is the time, Matthew, when you can begin to come together with the people of the community and announce that DIBC will stop forever all efforts to close off St. Anne Street because you have learned that this is the most direct and quickest route for 911 responders to reach the dense community of residents living on St. Anne and on the five dead-end streets off of St. Anne, the schoolchildren and the parishioners, and the Mexicantown Business District. You can say that DIBC will not close this crucial lifeline because our 911 responders’ times would be delayed if they had to proceed one block further eastbound on Fort Street to be able to turn left to head northbound to West Lafayette, to then make another left to backtrack one block, to finally reach St. Anne Street and make a right northbound. You can say that DIBC will not allow our 911 responders to

be forced to travel two more blocks and make two additional turns to try to save lives. What would you do if your family and your father and mother lived on St. Anne? Clearly, if DIBC wishes to have its employees not leave the Bridge Plaza footprint boundaries as they are now, then DIBC can incorporate a new employee building to include bathrooms, lockers, time clocks, etc. Surely, your expert architects who design your new Bridge Plaza can be problem-solvers for you and make what you need happen efficiently and effectively within your present contiguous Bridge Plaza footprint. You could also announce that you will personally welcome the community’s draft of a Community Benefits Agreement (CBA) and will sit with community reps at the same table to work on the details of a CBA that both parties can sign in the end. Please, Matthew, let me know whether you will put your words into these actions, to do what is just and right. Deb Sumner Detroit

Huron Valley-Sinai provides safe care

Please see below a statement from the medical chiefs of DMC Huron Valley-Sinai Hospital. This is in direct response to allegations made in a media event earlier this month regarding patient safety and care at the hospital. The physician leaders who signed this statement feel strongly that the care at Huron Valley-Sinai Hospital is safe, and that the allegations do not accurately represent the care delivered by the hospital’s clinical staff. Syed Ahmed Hussain, M.D. Chief Medical Officer DMC Sinai Grace Hospital DMC Huron Valley Sinai Hospital Statement from the DMC Huron Valley-Sinai Physicians: As physicians at Huron Valley-Sinai Hospital, nothing is more important to us than delivering safe, quality care for our patients as we have been doing for the past 30 years. Our entire health care team has been, and will always be dedicated, to the community and patients we serve. Because of the hard work, dedication and commitment of the staff to providing a safe environment for

their patients, Huron Valley-Sinai Hospital has been recognized consistently by multiple third-party safety and quality organizations over the years. Among other commendations, Huron Valley-Sinai Hospital has again earned a straight “A” from The Leapfrog Group, an organization that rates hospitals for patient safety. We have earned a straight “A” from The Leapfrog Group twelve consecutive reporting periods, making us one of only 59 hospitals across the country and one of only three in Michigan to achieve this remarkable track record for patient safety performance. Every day, we practice at the hospital with our nurse partners as a team, and we attest to providing the highest quality medical care in a safe and secure environment. Mehmet Bayram, M.D. Chairman of the Board Jay Kozlowski, M.D. Chief of Cardiology Danny Benjamin, M.D. Chief of Obstetrics/Gynecology Chief of Staff Christopher J. Heberer, M.D. Chief of Emergency Medicine Scott Simecek, D.O. Chief of Critical Care Mark Mackey, M.D. Chief of Orthopaedic Surgery Kim Hart, M.D. Chief of Radiation/Oncology, Vice Chief of Staff AnKing Ang, M.D. Chief of Surgery Jeet Pillay, M.D. Chief of Medicine, Internal Medicine Residency Program Director

Poppe’s words don’t reflect actions

A Nov. 6 interview with Consumers Energy CEO Patti Poppe appeared to indicate her organization is keenly focused on keeping electricity prices low and competing for customers. “I think a lot of people think of the utility is sort of a sleepy old monopoly that really doesn’t care about prices because they’re guaranteed the customer base. We’re not guaranteed that people will move to Michigan. We have to be part of the attraction to Michigan, and that’s why we're so committed to economic development for Michigan. “We want to be part of the reason why companies can say yes. The last thing we want is somebody to say, ‘Oh, SEE LETTERS, PAGE 9

Detroit has spoken: Stay the course

s someone told me last week, Mayor Mike Duggan’s overwhelming re-election victory said that Detroiters want him to keep doing what he’s been doing — only more of it. Much about the race sent positive messages to the world. If it had been close, there might have been some questions about whether he had a mandate from the city’s residents. But the vote spoke clearly. Turnout

KEITH CRAIN Editor-in-chief

was typically tiny, a little over 20 per-

cent. But my guess is that the folks who voted are a small but representative sample. That is, it would not have mattered if turnout was double or triple what it was. The result would have been the same. By Detroit standards, it was a pretty mild political race, with only a little mudslinging. But even from the beginning, the choice was crystal-clear. Duggan’s re-election is also important for Detroit’s momentum, because the executive branch cannot

stop for a moment. There is little time to even take a breath when there’s so much to do. Changing mayors would have put many tasks back to square one. With so much to do, the mayor is fortunate to have the private sector becoming more and more involved with the city, with lots of investments of time and money. People and companies that were absent or quiet for decades are raising their hands to help.

Wayne County Executive Warren Evans said it best when he described the key issue as “continuity.” People want to see stability in Detroit, and they are seeing that for the first time in decades. That is helping make Detroit a place to get involved and invest for those inside and outside our community. Duggan’s re-election only reinforces that signal: We have only just begun, and we’re going to stay the course.

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Apprenticeship week highlights path to good jobs in Michigan

ichigan has long been known for its hard-working people. That hasn’t changed over the years. But the careers that transform Michigan — and the world — are very different from even a few short years ago. With more than 500,000 new private-sector jobs created since 2010, employers know that Michigan is a great place to locate and expand. But our work isn’t done, and we need to help more people gain in-demand skills so they can fill rewarding jobs as we continue to grow our economy. National Apprenticeship Week provides us the opportunity to highlight one of the many pathways to good jobs available here. Registered apprenticeship programs continue to be an effective way to grow Michiganders’ paychecks and provide a sustainable, prosperous lifestyle. Today, there are more than 900 registered apprenticeship programs in the Great Lakes State, with 14,000plus apprentices, putting us in the top 10 in the nation for these training programs. Make no mistake, these programs are beneficial to businesses, too. For every dollar spent, companies see a $1.50-plus return on their investment. And apprentices are expanding to new fields. Michigan last year was awarded a $2.5 million grant from the U.S. Department of Labor to expand the number of apprenticeship opportunities for women, veterans and other underrepresented populations. The grant will expand a learning network for employers and intermediaries to grow apprenticeships in targeted industries and occupations including

LETTERS FROM PAGE 8

I’d come to Michigan but your electric prices are too high.’” But there is a disparity between her comments and her company’s actions. Under the requirements of Michigan’s laws — P.A. 286 of 2008 — Consumer’s Energy is guaranteed 90 percent of retail electricity customers in its operating area. That means, her company is exactly “a sleepy old monopoly … that is guaranteed the customer base.” Despite what Ms. Poppe suggests, no company that is considering a move into Consumers Energy’s operating area in Michigan has the opportunity to choose another electricity provider. Borrowing from Henry Ford’s comment: You can have any electricity provider that you want, so long as it is Consumers Energy. Additionally, her comment about electricity prices also seems strange as, under the guidance of Michigan’s monopoly utilities and the Michigan Public Service Commission — and since our electricity system was re-regulated in 2008 — Michigan has consistently had the highest residential electricity prices in the Midwest. Jason Hayes Director of Environmental Policy The Mackinac Center for Public Policy, Midland Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: rfournier@crain.com

OTHER VOICES Brian Calley

agriculture, construction, energy, health care, information technology and manufacturing. The challenge that lies before us now is educating our students about this pathway that can provide a life-

time of reward and opportunity. We have a career-awareness and a perception issue, creating a barrier that prevents students from getting career-connected. We need to shatter stereotypes and inform students so they can make the best possible decision for their future. By 2024, professional trades will account for more than 500,000 jobs in our economy, adding 15,000 new jobs each year during that time. Baby boomers are retiring and we need more talent with the in-demand skills and knowledge needed to fill the numerous openings within the professional trades. As I travel across our state, I hear

from businesses — small and large — that talent is a prime factor in decisions on where to grow and locate. We want to attract the big projects, but also grow the small businesses that are the strength of our economy. Talent is the new economic currency of the Michigan economy, and we must lead now to take our success to the next level. The primary goal of the Michigan Career Pathways Alliance, a growing, 90-plus member alliance led by the Michigan Department of Talent and Economic Development and the Michigan Department of Education, is closing our talent gap. The alliance outlined 17 initiatives

designed to improve student access to multiple pathways — including apprenticeships — which build off the recommendations of the 21st Century Economy Commission and 21st Century Education Commission reports. They’re making substantial progress, and there is much work ahead. It takes all of us to effect meaningful change. Our state shines best when Michiganders have the ability and opportunity to thrive. We’ve come a long way, but we need to keep our foot on the gas. Brian Calley is lieutenant governor of Michigan.

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FOCUS

CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

High-tech Houghton-Hancock

he city of Houghton, in the Keweenaw Peninsula, is 550 miles from Detroit. It’s farther away than Washington, D.C. But set aside your notions, if you harbor them, of an isolated U.P. small town. Anchored by Michigan Technological University, with over 270,000 square feet of research space, and home to the Michigan Tech Enterprise Corporation SmartZone, a high-tech business incubator, Houghton is a hub of design, engineering and innovation. In our Crain’s Michigan Business section on Houghton, Hancock and the Keweenaw Peninsula, we feature companies that are growing in the region — some even attracting talent from Detroit — including a company that makes aluminum wheels for California’s wildfire-fighting planes, a company that solves heating and cooling problems, like how to control the temperature in Cirque du Soleil’s massive tents, and a startup analytics firm that can predict which students are most likely to drop out of a college without intervention. The material riches of copper country fueled Michigan’s prosperity in the 19th and 20th centuries. The region’s technological talent is forging ahead in the 21st. INSIDE: GS Engineering — Page 11 | FM Wound Care — Page 12 | Great Lakes Sound — Page 14 | Goldstrike Data — Page 15 | ThermoAnalytics — Page 16

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CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

How a Houghtonbased company is helping California fight wildfires

A current GS Engineering client is Cal Fire, the government agency in California that fights wild fires. GS, in partnership with Lanse Manufacturing, makes aluminum wheels for Cal Fire’s old Grumman aircraft. CAL FIRE

By Tom Henderson thenderson@crain.com

When the Michigan Tech Enterprise Corp. (MTEC) SmartZone was created in the Keweenaw Peninsula in 2002 to encourage entrepreneurship and the creation of high-tech companies, Glen Simula thought he was in the right place at the right time. “When the SmartZone started, I raised my hand. I wanted to be the guinea pig,” he said. Others, including his wife, had a different perspective. Simula had eight kids, ranging in age from 3 to 15, and a well-paid, secure job with full benefits. It seemed crazy in mid-career to gamble everything on owning a business. “It was a big decision. My wife was home with the kids. I had a great job at Tech. I was the only breadwinner,” he said. He had a master’s degree in mechanical engineering from the University of Michigan, having earned his bachelor’s at Michigan Tech in 1981, “but I had never taken a business class. I knew nothing about the finance side.” But he knew it was time for a change. For 19 years, he had been a researcher at the Keweenaw Research Center, a research institute of Michigan Technological University located at the Houghton County Airpark, seven miles north of Houghton. The KRC did contract work for the private sector, doing such things as computer-based modeling and analysis; vehicle testing and evaluation; snow and ice research; and noise, vibration and harshness testing. “I was tired of doing research. I’d work on prototypes and write reports that would sit on a shelf. I wanted to make something real, something that wasn’t just a project,” he said. So he founded his company in

Need to know

Entrepreneur left Michigan Tech mid-career to start engineering venture 

 GS Engineering now has 74 employees and is region’s largest employer of engineers  Clients include military and government agencies, including wildfire-fighting Cal Fire

2001, before the SmartZone was officially launched. “There was no space, no charter, no executive director,” said Simula of the fledgling SmartZone. He was told by his superiors at KRC that he could work on his own company at night and weekends, provided he worked full time on KRC projects. He rented a small, one-room office above the police station in downtown Houghton. By September 2002, he had hired two employees and took the plunge for real, quitting his day job and taking out a home-equity line of credit so he’d have money available when the business needed it. “I had just about paid off the house and took out another loan on the house, and I’ve been in debt ever since,” he said with a laugh. Before he left the KRC, Simula, who is now 57, was working on a project to improve mine rollers, which are used in the field to detonate anti-tank mines. Small business innovative research grants helped keep the lights on at his new venture, and his first one was for another mine-rollers project. Today, GS Engineering offers engineering services that include program management, mechanical and electrical design, simulation and field testing. The company has provided more than 1.4 million engineering service hours to government

TOM HENDERSON FOR CRAIN’S

Glen Simula of GS Engineering has been awarded 20 patents for his various designs. For 19 years he had been a researcher at the Keweenaw Research Center.

and commercial clients and is the area’s largest employer of engineers. “We just hired two engineers to get to 74 employees,” he said. “When I started out, I thought if we could ever get to 25, that’d be great.” He said he expects to add 10 more employees next year, all of them Tech grads already working there as interns or Tech grads who have been working elsewhere for bigger companies and want to move back to the Keweenaw. Simula, who has been awarded 20 patents for his various designs, said the company has been growing revenue between 10 and 15 percent in recent years, with a target of $20 million this year. The company has what Simula describes “as a military concentration. We help the military light-weight their vehicles. The Department of Defense didn’t used to care how heavy vehicles were when they were

transporting them on ships. But after the war in Afghanistan began and they started flying in heavy equipment, weight became much more important.” This became even more true after the military started armoring its vehicles to help protect them against improvised explosive devices. In 2007, GS added manufacturing capabilities, funded with an SBIR grant to design and make lighter-weight components for the military’s Humvees. Selling manufacturing products has a higher profit margin than consulting and engineering services. A current client is Cal Fire, the government agency in California that fights wild fires. GS, in partnership with Lanse Manufacturing in nearby Lanse, makes aluminum wheels for Cal Fire’s old Grumman aircraft. GS made its first layoffs in 2010, a result of having diversified into proj-

ects for makers of heavy construction equipment, a market that Simula says “fell off a cliff ” with the 2008 Great Recession. In 2012, the company diversified into aerospace, rail and commercial trucks. Today, its mix is about 60 percent military and 40 percent commercial. In 2015, Simula bought a Hancock company, BridgeGuard Inc., which has since been renamed GS Infrastructure and focuses on civil infrastructure inspection services. In October, the company won an SBIR grant from the Air Force to use ground-penetrating radar to evaluate the integrity of airport runways. The Phase I component was worth $100,000, with the expected Phase II award to be $750,000. Jeff Shelagowski is an executive vice president at Saginaw-based Cignys, a maker of custom jacks, braking systems, leveling systems, components for conveyor systems and hoists for military and industrial customers. He said a consultant told him about GS Engineering four years ago when he was looking to replace a Boston engineering firm he was dissatisfied with that had been providing consulting and design services. “We had a brake system part we were having trouble with and we needed a quick solution. GS Engineering helped us develop a system that delivered the needed stopping power. They proved themselves right out of the gate, and we’ve been using them ever since,” he said. “They’ve been top notch, without exception. Very responsive. We probably use them on four projects a year, and we’re extremely happy with them. I can’t say enough good things about them.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

Biomedical startup aims to change post-op care By Tom Henderson thenderson@crain.com

Jeff Millin, a seasoned entrepreneur who took his last startup to $100 million in revenue and a successful exit for his venture-capital investors, knew a good thing when he saw it three years ago. The good thing? What would soon become FM Wound Care LLC, a spinoff from Michigan Technological University. Founded by Megan Frost, an associate professor in biomedical engineering, the company has created nitric-oxide-infused bandages and wound dressings to greatly reduce the risk of infection, especially in patients post-surgery. Millin’s previous company, Marquette-based Pioneer Surgical Technology Inc., a maker of metal and synthetic implants for the orthopedic, spinal and cardiothoracic markets, was founded in 1992 and sold in 2013 to Alachua, Fla.-based RTI Surgical Inc. (Nasdaq: RTIX). “I was there before day one,” said Millin, who was Pioneer’s CEO. After Pioneer was sold, Millin began consulting. “They pay you a lot

Need to know

Founder Megan Frost inspired after her own post-operative care raised concerns J

J Technology infuses bandages with nitric oxide, which has natural anti-microbial properties J Consultant-turned-president and CEO Jeff Millin brings entrepreneurial experience to the startup

for your advice, and then they never listen to it,” he joked. In 2014, he was asked to vet a range of emerging technologies at Michigan Tech to see which had market potential. And he found, in Frost, someone to listen to him. “I saw great ideas looking for problems, and I saw technologies that needed a lot of help to get to market. “A couple of ideas really stood out. Megan’s could not only get to market quickly, but it could be game-changing,” he said. “Hospitals are infection factories. Patients are always getting infections post-surgery. But you put this dressing on after out-patient surgery and you don’t have to have home health care

come in every day and change your bandages. You’re going to be free from infection for seven days. This will change the way post-operative health care will be done.” Millin served as Frost’s adviser for six months, then co-founded the company with her as Wound Care’s president and CEO. Frost is chief technology officer. The company, which has one patent pending, is a member of the Houghton/Hancock SmartZone incubator, with its lab in Hancock. Frost and Millin reached a licensing agreement with Tech, put in seed funding and raised a follow-on angel round that Millin says will fund the company for the next year and a half. The technology has also won two National Science Foundation grants totaling $1 million. “If things go as planned, at some point we’ll need a significant amount of funding,” he said. He has already begun to reach out to venture capitalists to tell them about the technology and let them know he may come calling. “Jeff is a tireless and driven execu-

MICHIGAN TECHNOLOGICAL UNIVERSITY

Megan Frost, an associate professor in biomedical engineering, has created nitric-oxide-infused bandages and wound dressings to greatly reduce the risk of infection.

tive with experience leading highgrowth companies. He scaled Pioneer from an emerging startup to a diversified, multi-national medical device company,” said Michael Gross, a managing director of Farmington Hills-based Beringea, one of the VC firms that invested in Pioneer. “This experience will position him well to lead growth at Wound Care LLC.” Millin said the company has also signed nondisclosure agreements with potential medical-product manufacturers to help fund development. In the meantime, there’s all that entrepreneurship to savor. “Being the CEO of a four-person company is really a lot of fun,” he said. “If you’ve got any entrepreneurial drive at all, it’s so much fun to start a company. Growing Pioneer to $100 million in revenue was a lot of fun. But it ceased to be fun the last three years. It became corporate, not entrepreneurial.” Frost joined the Tech faculty in 2007. She’d earned her Ph.D. in chemistry from the University of Michigan and was looking for what she describes as “the ideal place to live.” Her grandmother was from Laurium, a small town north of Houghton, and had lots of stories about life in the U.P. After visiting, Frost accepted a job offer. She got the idea for a company after suffering a serious infection following oral surgery in 2011. Treatment for the infection required her to use what is called a PICC line for 40 days. PICC is an acronym for peripherally inserted central catheter, a thin, soft tube inserted in a vein that carries blood to the heart. The problem is that PICC lines are

themselves hosts to serious infections. Frost was cleaning the site daily and changing the bandage and thinking about how unsanitary, dangerous and in need of improvement it all was. Her solution? Figure out a way to infuse polymers with nitric oxide, a free radical gas which has antimicrobial properties and is benign in the human body. Strips of the infused polymers would serve as bandages and wound dressings. “It’s analogous to the way bleach kills bacteria, but much gentler,” she said. In August 2012, Tech flew her and other researchers to a conference for would-be women entrepreneurs that the nonprofit inForum was hosting in Detroit. “It was the first time I seriously thought about what it takes to run a business,” she said. “It turned out I was seriously ill-prepared to run a business.” That’s where Millin comes in. The company is working on ramping up production from trial scale to market scale. “I’m really good at making it on a small scale,” she joked. Frost said it is unclear, yet, what steps will be required for approval by the U.S. Food and Drug Administration. “Because we’re using materials that are already well understood, we may not have to have human trials,” she said. The SmartZone has hired what are called bionavigators to help Wound Care and other companies through the FDA approval process. “Best case, we could be on the market next summer,” she said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAINâ&#x20AC;&#x2122;S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

Good vibrations

Great Lakes Sound solves acoustic, shock problems By Tom Henderson thenderson@crain.com

Steve Mattson came to Houghton from nearby Ontonagon in 1995 to play point guard on Michigan Technological Universityâ&#x20AC;&#x2122;s basketball team and quarterback on the football team. He took his athletics seriously. He played quarterback for two years and lettered in basketball four years, leading the team in steals his senior season of 1998-1999. A mechanical engineer, he took his education seriously, too, getting both his bachelorâ&#x20AC;&#x2122;s degree and his masterâ&#x20AC;&#x2122;s. He has published 14 research papers with titles like â&#x20AC;&#x153;Effect of Phase Staggering Exterior Noise Sources on Acoustic Levels,â&#x20AC;? and is president

Need to know

J Great Lakes Sound & Vibration helps manufacturers solve acoustic, shock, vibration problems J Expanded military budget could mean revenue growth in 2018 J Company beginning to predict noise and vibration problems in the design stage, before prototyping

and CEO of Houghton-based Great Lakes Sound & Vibration Inc. Great Lakes Sound was founded in 1996 to solve manufacturersâ&#x20AC;&#x2122; acoustic, shock and vibration problems. Mattson joined the firm just after getting his bachelorâ&#x20AC;&#x2122;s degree in 1999

and was its second employee. Heâ&#x20AC;&#x2122;d had a chance encounter with the companyâ&#x20AC;&#x2122;s founder, Steve Polakowski, who had been running a small consulting business out of his house for commercial marine and power-sports companies. â&#x20AC;&#x153;His business had grown and he needed to make a hire and move out of the house,â&#x20AC;? said Mattson. That year, the company built a small 40-by-60-foot building, just southwest of Techâ&#x20AC;&#x2122;s campus. Mattson bought the company in 2014. Today, the company is at the same site, but it has grown through the years to 14,000 square feet and employs 25, most of them Michigan SEE SOUND, PAGE 18

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MICHIGAN TECHNOLOGICAL UNIVERSITY

Michigan Tech and â&#x20AC;&#x153;The Innovation Shoreâ&#x20AC;? Michigan Technological University is nationally known for its research and major federal grant support. Less well-known are the schoolâ&#x20AC;&#x2122;s and regionâ&#x20AC;&#x2122;s programs for commercializing research, a support system called The Innovation Shore. J The school has nearly 200 faculty in 19 research centers and institutes totaling more than 270,000 square feet of research space. They are currently funded by $72.5 million in grants and university spending.

There are 23 active companies that have license agreements with the university to commercialize research. J

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J The Michigan Tech Enterprise Corporation (MTEC) SmartZone is a high-tech incubator founded in 2002 to boost entrepreneurship and high-tech business acceleration in the Keweenaw Peninsula. It is a collaboration between the cities of Houghton and Hancock, Michigan Technological University in Houghton, Finlandia University in Hancock, the Keweenaw Economic Development Alliance and the Keweenaw Chamber of Commerce. J Michigan Techâ&#x20AC;&#x2122;s Office of Innovation and Industry Engagement helps faculty

and researchers identify market opportunities, file patents and figure out commercialization strategies. JJTech startups are supported by the Michigan Translational Research and Commercialization (M-TRAC) program, which provides guidance for advanced materials technologies, and the Michigan Tech Transfer Talent Network (T3N), which helps university-affiliated entrepreneurs find consultants and employees. Both programs are funded by the Michigan Strategic Fund of the Michigan Economic Development Corp. JJTech startups get funding help from the Advance Grant Proof-Of-Concept Fund; Superior Innovations, a for-profit company funded through alumni donations; Northern Initiatives, a nonprofit that provides loans to small business owners and entrepreneurs in Northern Michigan who donâ&#x20AC;&#x2122;t qualify for loans from traditional banks; and Superior Ideas, a Michigan Tech crowdfunding site, which partners with the schoolâ&#x20AC;&#x2122;s Commercialization Milestone Grant program and helps make connections with angel investor networks. JJStartups can also get funding at the

Bob Marks Elevator Pitch Competition and, in conjunction with Central Michigan University, the New Venture Business Plan Competition. JJThe schoolâ&#x20AC;&#x2122;s Advanced Technology Development Complex is a 27,000-square-foot building on campus that houses the Ford Student Design Center, the Keweenaw Research Centerâ&#x20AC;&#x2122;s dynamometer, the Office of Innovation and Industry Engagement and lease space for startups. JJTech is home to a National Science Foundationâ&#x20AC;&#x2122;s I-Corps training program. JJArea entrepreneurs can use the Entrepreneur Support Center in the Jutila Center at Finlandia University in Hancock to get access to office equipment and supplies in starting up their business. JJThe schoolâ&#x20AC;&#x2122;s Pavlis Honors College houses the Innovation Center for Entrepreneurship and the Innovation Alley Maker Space. JJThe Grand Rapids-based Michigan Small Business Development Center has several counselors available on campus and a new full-time counselor is expected next year.

â&#x20AC;&#x201D; Tom Henderson

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CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

There’s gold in those datasets By Tom Henderson thenderson@crain.com

You never know what a good beer can lead to. For Ashley Kern, it led to the first customer for Goldstrike Data LLC, her startup company based in the Jutila Center, a SmartZone incubator facility in Hancock, across the Portage waterway from Houghton. The SmartZone is one of a network of 15 SmartZones in the state of Michigan, incorporated in 2002 to boost entrepreneurship and high-tech business acceleration Ashley Kern: in the Keweenaw Started company Peninsula, a colwhile in school. laboration between the cities of Need Houghton and to know Hancock, MichiJJAnalytics gan Technologicompany can help cal University in universities Houghton, Finimprove financial landia University planning, predict in Hancock, the students likely to Keweenaw Ecodrop out nomic DevelopJJ“Slow-growth,” ment Alliance bootstrapped and the Keweenbusiness model aw Chamber of Commerce. JJCompany is a The fortuitous semi-finalist in beer happened a Accelerate year and a half Michigan ago at the KeInnovation weenaw Brewing Competition Co. in Houghton, where Kern ran into John Lehman, Michigan Tech University’s associate vice president for enrollment and university relations. Lehman first met Kern before she enrolled at Tech, when she visited campus from Minnesota as one of 1,000 applicants for six prestigious full-ride scholarships called The Leading Scholar Award. Three went to Michigan residents and three to nonresidents. And he got to know her better after she won one of the out-ofstate scholarships. But as she worked toward her undergraduate degree at Tech in mathematics in 2015 and began her master’s degree in data sciences — she finished this past spring — Lehman lost track of her until that night at the brewery. Over a beer, she told him what she was up to, that though still in school she had launched a company to do statistical analysis to help companies and institutions solve financial problems. “I thought about what she was doing and how she might be able to help me and called her a week later,” said Lehman. Each year, Tech has to predict how much money it will need to cover ongoing scholarships for students currently enrolled in the school. The university has a $36 million annual budget for financial aid, but a number of variables play into what their actual aid need will be. How many students on scholarship will drop out? How many will have poor grades that cause them to lose their scholarships? How many will qualify for federal programs and no longer

“She’s one of those people who looks at every problem and sees numbers. Like that character in ‘The Matrix.’” John Lehman

need to be on Tech’s books? Lehman wasn’t satisfied with how his department was assessing needs and met with Kern over another

beer to see if she wanted to take on the project and improve results. “It’s been fantastic what she’s been able to do. We had about an 8 percent fluctuation up or down on what our aid needs would actually be. There was a lot of slop in the methodology. Ashley was able to dial it down to a plus or minus two and a half percent, which is a lot of savings for us with a minimal amount of effort,” he said. Lehman said he has had her work on several other projects since and is about to have her take on another

project, helping Tech, which is self-insured for employee health insurance, cut down those costs. “And I’m reaching out to other universities to see if they can use her, too,” he said. “She’s one of those people who looks at every problem and sees numbers. Like that character in ‘The Matrix.’” Kern’s father, John, who used to teach at Tech, has his own consulting company and serves on her advisory board. His company, Kern’s Statistical Services Inc. of Sauk Rapids, Minn., does statistical modeling

to help environmental engineers working at superfund cleanup sites. Not only does her financial modeling help Lehman and Tech plan for financial-aid budgeting, but it also identifies students at risk of dropping out, allowing Tech to make interventions to keep them in school. Kern said she can give Lehman data two semesters out that tell him which students are at risk of quitting school without intervention to keep them enrolled. It’s cheaper to keep

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CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK

Houghton-based company can help you take the heat By Tom Henderson thenderson@crain.com

Where did the world-famous Cirque du Soleil turn when execs wanted to assess how to most efficiently heat and cool the six traveling Big Tops it has on tour — tents that are more than half a football field in diameter and big enough to house the stage, a large troupe of performers, stage hands, large amounts of machinery, rigging and 2,600 show-goers? To Houghton County in the Upper Peninsula, where a company called ThermoAnalytics Inc. analyzes heating problems and Keith Johnson: creates solutions Sees growth potential in textiles for auto manufacturers, makers of off-road vehicles and snowmobiles, the military, aerospace, architects and now, circuses. Aerospace customers include Cessna, Airbus, Textron and Lear Jet. In June, the company was one of 10 from the state to accompany Gov. Rick Snyder to the Paris air show. Automakers include Fiat Chrysler,

Need to know

ThermoAnalytics solves heating problems for automakers, military, aerospace J

J Company grew out of research project for Ford at Keweenaw Research Center J Expanding into high-tech textile industry

Ford, General Motors, Hyundai, Toyota, Honda, Mazda, Jaguar, Volkswagen, Porsche, BMW, Renault and Volvo. And while military, auto and aerospace contracts make up the bulk of revenue, Microsoft, Nike and Apple have joined the client roster as they expand their lines of wearable technologies and need to assess how they work in various climates. Cirque du Soleil is building a new heating and cooling system for its tents. One of its vendors recommended ThermoAnalytics for what Mark McNaughton, the circus’ HVAC project manager, calls heat-load analysis. He said troupes travel with different colored tents, which vary in how they absorb heat. How does heat absorption in warm climates affect performers high up in the air, where heat rises? How does it affect customers sitting closest to the tent? What is the

best way to get air flow blowing past machines to keep them cool? How much stratification of heat is there inside the tents? “Since the tents have an R factor of zero, it gets complicated,” said McNaughton. (An R-value measures the effectiveness of insulation; the higher the R-value, the more effectively something is insulated.) “In a nutshell, it’s pretty complex what ThermoAnalytics does, but they’ve helped us become more energy efficient and profitable. They’ve done a really good job. We’d never done an analysis like this before. It’s such a specialty.” ThermoAnalytics was founded in 1996 by Keith Johnson and Al Curran. The company grew out of a research project they were doing for Ford at the Keweenaw Research Center, a research arm of Michigan Technological University that works on projects for the private sector and the military. Ford was having a problem with a new vehicle, the Ford Explorer. “They were having all kinds of heating issues,” said Johnson, the company’s president. The main one was a problem with spare-tire failures. ThermoAnalytics determined that the spare tire was being housed too close to a bend in the exhaust pipe that radiated enough heat to degrade the

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rubber in the tire over time. “That was all it took for Ford to decide they wanted to use our software and put some money into it,” said Johnson. He and Curran decided to license the thermal modeling technologies they were using from Tech and form a for-profit company, with Ford as their first customer. They took six other researchers with them. Ford remains a customer today. Soon came a Small Business Innovation Research phase one grant of $100,000 and a phase two grant of $750,000 from the U.S. Army, which was used to write more powerful thermal modeling software. Today, ThermoAnalytics has 65 employees, an office in Novi and, since 2014, one in Munich, Germany, with plans to eventually open an office in Asia. “Japan is really starting to grow, and we’re starting to increase our business in (South) Korea, too,” said Johnson. “The Korean defense department is working with us, for obvious reasons, but our main customer is Hyundai.” Revenue had been projected at $8 million this year, but Johnson said it could beat that by 15 percent, with 2018 expected to be up sharply, thanks to new markets opening up, especially the textile industry with its focus on wearable technologies. Microsoft recently came on board. “It was a total cold call. They did a search, found our website and said, ‘Here’s what we’re looking for,’” said Johnson.

The headquarters of ThermoAnalytics Inc. in Houghton in January.

To support the emerging wearables market, ThermoAnalytics has developed CAD-based human-thermal modeling, which analyzes blood flow, sweating, surface temperature and core temperature. “Textiles isn’t big, yet, but it’s very promising,” said Johnson. An old sector, automotive, is bringing new business through the push to autonomous vehicles, which requires the car itself to pay more attention to passenger comfort. Scott Dudley, the chief engineer in the Novi office of Polaris Industries, a

maker of snowmobiles and all-terrain vehicles, was an engineer at Ford and worked with Johnson and Curran when they were still at the Keweenaw Research Center. “Thermal analysis was in its infancy. They had this innovative technology that was the first of its kind,” he said. “They captured that market early in the game, and they’ve been able to hold their own against bigger companies by continuing to innovate.” Dudley has used ThermoAnalytics at three companies since leaving Ford, and says Polaris’ products have

THERMOANALYTICS INC.

a particular need for the company’s analysis, considering how close passengers are to engine components and exhaust systems. “They’re able to address human comfort, not just vehicle performance,” he said. “ThermoAnalytics has, and a lot of people in the industry agree with me, the best heat-radiation solutions in the business. They found a niche market that no one else has figured out.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAIN’S MICHIGAN BUSINESS: HOUGHTON-HANCOCK General Dynamics Land Systems get passed that includes a healthy He said he has been using Great “There is a strong SOUND and its M1 Abrams tank, for which increase in funding for the military, Lakes Sound for five years, hiring it pool of talent with FROM PAGE 14

Tech grads. “There is a strong pool of talent with ties to Tech that wants to stay here for family reasons, and we’ve had good luck with mid-career returnees. We’ve got a good mix of Detroit transplants,” said Mattson. The company does design, analysis, prototyping and even specialty, low-volume manufacturing for the defense, marine, automotive and recreational vehicle markets, with a recent focus on doing computer modeling to detect possible noise and vibration problems and solve

ties to Tech that wants to stay here for family reasons, and we’ve had good luck with midcareer returnees.” Steve Mattson

them in the design stage and before prototyping, rather than what had been the typical practice of coming in after prototyping and figuring out what was wrong and why. Customers include the U.S. Army;

Great Lakes Sound is working on a project to reduce noise generated by forced-air-cooling fans; BAE Systems Land and Armaments, for its Bradley Fighting Vehicle; and Oshkosh Defense LLC and its next generation joint light tactical vehicle (JLTV), the replacement for the Humvee. The company is wrapping up its first year as a manufacturer, too, designing and building exhaust and noise dampening systems for General Dynamics’ Stryker armored military vehicle. Mattson said despite the chaos in Washington, he expects a budget to

“and that will be good for us.” That would mean continued revenue increases. Before he bought the company, revenue had stagnated at $2.5 million a year. He expects it to hit $4 million this year. “We’ve plotted aggressive plans for the future. We plan to grow and add staff,” he said. Matt Halonen is the reliability engineer for North American operations for Koppers Performance Chemicals in the Upper Peninsula city of Hubbell. Koppers buys scrap copper and turns it into a powder that is coated on treated wood to give it antifungal properties.

to replace a company in Ironwood he had been dissatisfied with. “They come in every month and take vibration readings of our equipment,” he said. “We have a 247-365 operation and we need our equipment to run. Great Lakes predicts failures. If a motor bearing is starting to fail, they tell us before it fails. It’s all about keeping the plant running. If I know something is going to fail, I can schedule a repair instead of getting a call at three in the morning.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

DATA

FROM PAGE 15

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the students you have than to recruit replacements. Factors that go into the risk assessment include a student’s age, how many credits she or he has, grade-point average and how much scholarship money each student has. Somewhat counterintuitively, the more scholarship money a student has, the more likely he or she is to drop out. Those who have invested their own money feel more invested in staying the course, apparently, than those spending others’. Kern ranks students into various categories based on their metrics. The drop-out rates for various groups rank from 41.6 percent to 1.2 percent, so Lehman and his team know which groups to devote their energies to. So far, Kern has bootstrapped her company — using her own money, money from project work for Tech and money she makes from consulting for her dad’s firm. “It’s a slow-growth model,” she said. She is a one-woman show for now, using what she describes as a network of subcontractors as needed for various Tech projects. Though she has been on the business-plan-pitch circuit, for now, she isn’t interested in angel or venture capital investing, preferring not to dilute equity. “I worked really hard so I can stay up here after graduation and hopefully create more jobs and hire local talent, including some of my friends and classmates,” she said. Goldstrike Data was chosen as one of 36 semifinalists for the eighth annual Accelerate Michigan Innovation event to be held in Detroit on Nov. 16. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

“I worked really hard so I can stay up here after graduation and hopefully create more jobs and hire local talent, including some of my friends and classmates.” Ashley Kern

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SMALL BUSINESS

Artisan cheese, chocolate shop opens in Ferndale By Kurt Nagl knagl@crain.com

Ferndale has a new spot to buy artisan cheese and chocolate. Not just any artisan cheese and chocolate. Prime pickings such as cloth-bound, cave-aged cheddar from Vermont and Rozsavolgyi chocolate from Budapest are on the menu at Provisions, which ofNeed ficially opened to know Saturday.  Grand opening The quaint was Saturday 150-square-foot shop shares space  Cheese, with Farm Field chocolate, charcuterie offered Table at 1030 Woodward  Owners looking Heights, across to expand in from Urbanrest Detroit Brewing Co. Co-owners William Werner and Zach Berg, both 33, said they have aspired to own a restaurant together since they were kids. This past year, they had been doing pop-ups around metro Detroit before settling into a more permanent location. Their focus is feeding and educating customers. The store is a place for “cheese buying in a consultative atmosphere,” Berg said. Provisions will stock a rotating list of charcuterie, cheese and chocolate — domestic and imported. The retail shop has no seating, but customers are encouraged to try before they buy with complimentary samples. The company also makes trays and offers catering.

Cheeses and meats are cut on the spot. Cheese prices range from $18 to $36 per pound and are available in smaller portions. Chocolate ranges from $8 to $13 a bar and $3 to $5 for mini bars. Werner is a chocolate connoisseur who has traveled from Utah to Vietnam to study the treat. He also worked as a manager for Gayle’s Chocolates in Royal Oak. Berg has worked for 20 years in kosher catering and brings to the table his love of cheese. He managed the cheese department of Bi-Rite Market in San Francisco. “We’re looking for people connected to culture, land and their food-making,” Berg said. “We want to teach people about the food.” The shop had a soft opening last Saturday and will officially open with one full-time employee in addition to Werner and Berg. They decided to rent space at Farm Field Table, a butcher shop and marketplace, after realizing its owners shared the same vision. “We have the same customers and we were really having the same kind of conversations,” Berg said. “We were really eager to get to market.” Berg said he hopes to eventually expand the business and ultimately land a location in Detroit’s downtown or Midtown. He said he completed a retail boot camp with TechTown Detroit and won a $5,000 award for building a brickand-mortar business in Detroit. Provisions hours will be 10 a.m.-5 p.m. Monday-Wednesday, 10 a.m.-7 p.m. Thursday-Saturday and 11 a.m.-5 p.m. Sunday.

Zach Berg and William Werner are co-owners of the new Provisions cheese and chocolate shop in Ferndale. PROVISIONS

Cookie dough cafe team hopes to help boost Detroit neighborhood By Tyler Clifford tclifford@crain.com

A band of millennials is mixing up a new cookie dough business that it hopes will serve as a “beacon of hope” in the deNeed pressed NW to know Goldberg neigh Team plans to borhood in Deinvest $400,000 troit. into edible raw Chief Marketcookie dough cafe ing Officer Danin Detroit iel Washington, a 24-year-old  Detroit Dough Detroit native, expects to launch said his team of in the spring partners plans to  Owners plan to invest $400,000 give back to to launch Detroit community with Dough LLC, sales, discounts which will serve edible raw cookie dough. His sister Victoria Washington, 27, and business partner Autumn Kyles, 24 of Farmington, will lead the business as general manager and CEO, respectively. “As a kid, I always loved to sneak a scoop of cookie dough when my mom made cookies. Today, I’m still in love with cookie dough and I know that most people still love it, too,” Kyles said in a statement. “I think in today’s age there’s always that opportunity to push the boundaries and try new concepts that connect people together through food.

Daniel Washington: Chief marketing officer

DETROIT DOUGH LLC

One scoop of Detroit Dough LLC’s cookie dough will cost $5, two scoops for $7 and three scoops for $9.

This is my way of sharing my love with others while giving back.” In a Cold Stone-style service, patrons will be able to create their own treat, starting with one of five dough bases and choosing from more than 50 mix-ins. One scoop costs $5, two scoops for $7 and three for $9, with mix-ins available for 50 cents each. The cafe will also serve 20 signature creations, it said in a news release. Homemade pastries, milk, Faygo pop, coffee and ice cream are among the other goodies that will also be on the menu.

“The dough will be safe to eat because there are no eggs. The recipe allows for an amazing product at the end of the day. My brother is an executive chef, who worked out the recipe,” Daniel Washington said. Executive Chef Theodore Washington, 29, runs custom cake business Cakes By: Teddy Washington III LLC out of his home in Detroit. “(The dough) cannot be baked, so we are going to hang our hats on the people who like cookie dough without it being baked,” Daniel Washington said. Detroit-based Three Squared Inc.

Victoria Washington: General manager

was tapped to design the 1,200-square-foot cookie dough bar on the corner of Linwood Street and Ferry Park Avenue out of six custom-built shipping containers. The cafe will feature patio and (nonalcoholic) bar seating. A contractor has not been selected. The entrepreneurs are looking at a mix of loans, accelerator grants and private investments to fund the startup. Victoria Washington and Kyles pitched for a $10,000 grand prize in the Dolphin Tank pitch event in Detroit last Wednesday hosted by the Michigan Women’s Foundation. They won $5,000 for a second place lifestyle award and $1,000 for audience choice award. On Dec. 1, they will pitch for a chance at $2,500 in seed money in Lawrence Technological University’s Detroit Center For Design + Technology Design Accelerator 10-

Autumn Kyles: Chief executive officer

Theodore Washington: Executive chef

week program. The accelerator “helps aspiring business owners take an idea from concept to creation to grow new opportunities in the city of Detroit,” according to its website. With a projected spring launch, Daniel Washington said they expect to break even in the first two years before realizing $300,000 in annual sales. The owners will offer NW Goldberg residents a 10 percent discount on all orders and donate 10 percent of nonresident sales to organizations and programs that serve the community. “We want to remove blight. We see the disparity between the downtown and the neighborhood,” Washington said. “So that’s our mantra: Why not us? It’s a neighborhood that deserves the same love and investment as others.”

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COSTAR GROUP INC.

Ikea Group’s first Michigan location opened in Canton Township in 2006. The home furnishings retailer is scounting for a site for a second store in the region, according to sources.

Ikea scouting metro Detroit for second store location, sources say By Kirk Pinho kpinho@crain.com

Ikea Group is looking in the Detroit area for a location for a new store that would complement its Canton Township flagship in Michigan, Crain’s has learned. Sources familiar with the search who requested anonymity said the home furnishings retailer is leaning toward a suburban location, either in Macomb or Oakland County. One source said a site in the running is the 200-acre property at I-94 and Hall Road/M-59 in Chesterfield Township, where about 30 acres are being considered for a second location. The site is near where a Cabela’s store opened earlier this year. The source said Ikea at one point

Need to know

JJIkea scouting suburban locations in

Oakland, Macomb

JJOne site being considered is at I-94/M-59 in Chesterfield Township JJIt would be the second Michigan store for the home furnishings retailer

was scouting five locations in the region but has since narrowed that down and is looking to build a store of about 300,000 square feet. Other possible locations are not known, but Oakland County also boasts several large sites, including the Pontiac Silverdome, which is set to be demolished in the next year; the Palace of Auburn Hills; and Summit

DEALS & DETAILS

Place Mall in Waterford Township, among others. “IKEA has not announced any formal plans for a second store in the Detroit area,” Latisha Bracy, an Ikea spokeswoman, said in an email to Crain’s. “As we endeavor to expand our presence here in the United States we will continue to evaluate opportunities as they arise.” The Canton location, which opened in 2006, is 355,000 square feet and sits on 21 acres with 800 parking spaces, according to CoStar Group Inc., a Washington, D.C.based real estate information service. It has about 300 employees. Ikea, which has 355 stores in 29 countries, reported $40.2 billion in sales last fiscal year.

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ACQUISITIONS & MERGERS AM Data Service Inc., Livonia, has acquired Polylogical Solutions, Novi. Both companies provide managed IT services to businesses in Metro Detroit. Websites: amdataservice.com, polylogical.net. J

Domestic and international intellectual property strategy development.

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Focused on both mechanical and electrical arts with experience in automotive, medical devices, consumer goods, mobile applications and sensor technology.

CONTRACTS J Friedman Integrated Real Estate Solutions LLC, Farmington Hills, was appointed as manager of the 23-story historic Ford Building at 615 Griswold St. in Downtown Detroit, owned by Ford Building Rino LLC. Website: friedmanrealestate. com.

NEW PRODUCTS J Meritor Inc., Troy, announced the ProTec Series 50 range of beam axles for military-specific applications, as well as a 79000 single-reduction drive axle for transit buses and its EX+ air disc brake for tractors and trailers. Also, the Meritor Tire Inflation System for trailers will include the ThermALERT wheel-end heat-sensing system as standard, and a new value brand called Mach will offer products at affordable prices. Website: meritor.com.

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November 13, 2017 22

SPOTLIGHT DTE Energy VP to step down

DTE Energy Co. Vice President Faye Nelson is stepping down in January for a teaching position at the University of Michigan and to continue her public board career, according to a DTE news release. Nelson, 64, also serves as Faye Nelson board chair and president of the DTE Energy Foundation. At UM, her class will examine development of the Detroit Riverfront by exploring development of public and private partnerships, politics and ethics. “We’ll look at all the ingredients that came together that supported the success of the launch of the riverfront,” she said. Nelson served as the first president and CEO of the Detroit River-

Front Conservancy for a decade before joining DTE.

loitte LLP in 2005. He became Michigan managing partner in 2011.

Michigan Chamber of Commerce names chair

Cranbrook Schools selects new director

Mark Davidoff of Deloitte will take over as chair of the Michigan Chamber of Commerce Board of Directors in January, leading its 84-member board that establishes policy and priorities on issues that affect job creation and Mark Davidoff business success in Michigan. Davidoff, 58, who is Michigan managing partner of Deloitte, will succeed Raymond Biggs, who is president and CEO of Ludington-based West Shore Bank Corp. Biggs will hold the title of immediate past chair on the chamber’s executive committee. Davidoff is a Detroit native who joined New York City-based De-

Cranbrook Schools has named West Coast school executive Aimeclaire Lambert Roche as its new director, effective next August. Roche will succeed Alryce Seibert, who is retiring at the end of the current school year after 47 years Aimeclaire Roche with Cranbrook. She’s led the independent school system in Bloomfield Hills for the past 23 years. Cranbrook contracted with national search firm Resource Group 175 in the search. Roche will join Cranbrook next year from The Bishop’s School in La Jolla, Calif., an independent college preparatory Episcopal day school near San Diego that she has led since 2009.

PEOPLE BANKING/FINANCE

SERVICES

Quicken Loans, Detroit.

J Darron Markwood to vice president of marketing, Americorp Financial LLC, Birmingham, from director of marketing, AIP Marketing Alliance, Troy.

J Jim Nelson to accounting and finance search and contract specialist, Express Employment Professionals, Royal Oak, from team leader for training and coaching,

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form.

CALENDAR TUESDAY, NOV. 14

THURSDAY, NOV. 16

U-M Ford School of Public Policy’s Policy Talks Series. 4-5:30 p.m. Paul Tagliabue, former commissioner of the National Football League, and Ford Motor Co. CEO Jim Hackett will join U-M Athletics Director Warde Manuel for a discussion about the intersection of sports, society and public policy. Hackett is the former interim U-M athletic director who hired football coach Jim Harbaugh. Rackham Auditorium, Ann Arbor. Free. Contact: Nicole Casal Moore, phone: (734) 647-7087; email: ncmoore@ umich.edu

Stop Guessing: Build a Social Media Strategy That Works. 9-10:30 a.m. The Association for Women in Communications Detroit Chapter. Breakfast workshop examining the best strategies for brand development. Workshop facilitators are Nick Skislak, CEO/founder of SS Digital Media, and Emily Shirden, partner of Finn Partners. Next Wave Media Lab, Troy. $30 members; $40 nonmembers; $15 students and recent graduates. Contact: Shauna Bradley, phone: (231) 675-9917; email: shaunaebradley@gmail.com; website: womcomdetroit.org/wic-events/

WEDNESDAY, NOV. 15 A Deep Dive with Ed Bastian. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Delta Air Lines CEO Bastian talks about how he keeps a global airline on course. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Positive Links Speaker Series: Evelina Fredricksson. 4-5 p.m. Center for Positive Organizations Ross School of Business. Fredriksson will share her experience of creating a positive setting for learning and growth in Cambodia. Robertson Auditorium, Ann Arbor. Free. Contact: Angie Ceely, phone: (734) 647-8154; email: cpo-events@umich.edu

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

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FINANCIAL SERVICES

KNOW SOMEONE ON THE MOVE? For more

Ted Wahby, Jr.

Kelly McConnell

Kevin Stanley

First Vice President and Group Manager

First Vice President

FlagStar Bank Ted Wahby, Jr. recently joined Flagstar as First Vice President and Group Manager in middle market lending. He is focused on building banking relationships with companies with annual revenue in the $25-$200 million range throughout Michigan. He also is leading a new team of lenders in Macomb County. He has been a resident of Macomb County for over 50 years and knows the community well. He is an experienced banker, with more than 30 years in the industry, primarily with Chase Bank. Kelly McConnell is a new First Vice President and middle market lender at Flagstar Bank. She joined Flagstar from Comerica Bank and brings almost 25 years of commercial lending experience. She is responsible for developing business relationships with companies with approximately $25 million to $200 million in annual revenue. From her office in Sterling Heights, she focuses primarily on companies in Macomb County. She is a graduate of the University of Notre Dame with a BBA degree in finance. Kevin Stanley recently joined Flagstar Bank as First Vice President in middle market lending. Prior to that, he was with Comerica Bank for almost 20 years. He is responsible for building relationships with companies with approximately $25 million to $200 million in annual revenue and is part of a new team of Flagstar bankers located in Sterling Heights and focusing on the middle market in Macomb County. He is a graduate of the University of Dayton with a major in finance.

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

LIONS FROM PAGE 1

“We have higher expectations. People are going to be held accountable to higher standards,” he said. Wood, a longtime financial adviser to the Ford family, was installed as team president in November 2015 by Martha Ford, who inherited the team after husband William Clay Ford Sr.’s death at age 88 in 2014. For decades, conventional wisdom held that the Lions were merely a profit machine for a billionaire automotive family and hampered by Ford Sr.’s unwavering loyalty to executives who’d proven inept, especially Matt Millen from 2001-07. That ended with Martha Ford, who turned 92 this season and is active in both team and league business.

The housecleaning Martha Ford didn’t wait long to make a statement. When the Lions started the 2015 season 1-7, she fired the top team executives, President Tom Lewand and General Manager Martin Mayhew. Other executives followed them out the door. It was a housecleaning the likes of which Lions fans had not seen. “She sparked the change with her decisions. When the owner comes in and make changes, it shows (the former lack of accountability) is not going to be tolerated,” Wood said. “That sends a signal that wakes up an entire organization.” Significant turnover and reorganization happened, on both the football and business side, over the past two seasons with the intention of ending the cycle of losing and complacency. “The people that have replaced them have a higher degree of accountability,” Wood said. That accountability drives the type of culture Wood wants to foster with the Lions. It’s not easy, he acknowledged, but creating a corporate culture of genuine accountability is critical and one of the major lessons any business can embrace. “I’ve been asked about culture quite a bit here and in prior assignments. It’s difficult. Cultures are deeply embedded. Culture change has to happen incrementally and has to be tangible and obvious to people,” Wood said.

A history of defeat The slow change stems from the team’s ignoble history. The Lions’ bill of particulars when it comes to mediocrity, or worse, runs more than half a century. To fans, it’s a familiar litany: They’ve won just a single playoff game since their 1957 championship, they lost all 16 games during the 2008 season, and the two best players in franchise history, Barry Sanders and Calvin Johnson, walked away from the game entirely at the height of their careers rather than continuing to play for Detroit. The losing has been a drag on the team’s value and revenue, both of which significantly trail the NFL average in the annual estimates from Forbes. Under Ford family control, beginning with the 1964 season and going into this weekend, the Lions are 341466-13. That’s 125 more losses than victories. They’re 1-12 in the playoffs under the Fords. Now, however, there are signs of change. Quarterback Matthew Stafford, now in his ninth season, has blossomed into a star, and he’s surrounded by

Rod Wood said he evolved the team’s corporate sales philosophy as part of his remake of the Lions.

Lions vs. the league: Franchise value

Although the Lions value was nearly $32 million more than that of the average NFL franchise in 1997, Detroit’s team value is substantially lower than the NFL average now: 1997 Lions

$312 million

1997 NFL

$280 million

2017 Lions

$1.7 billion

2017 NFL

$2.5 billion

$500M

$1.0B

$1.5B

$2.0B

$2.5B

SOURCE: Forbes

quality players — although there remain holes to fill. The defense also has its share of young good players. While they haven’t won a playoff game, they’ve reached Jeff Antaya: the postseason Praises Wood on three times in the suite sponsorship. past six seasons. That’s a start, and the entire organization is aware accountability means they need to eventually win playoff games and reach the Super Bowl — they’re one of just four NFL teams never to play in one. The Lions on Oct. 6 beat the Green Bay Packers at Lambeau Field, only their second victory there in 25 years and just their 12th ever at the fabled stadium. It’s the sort of statement game that can launch a playoff run, and Detroit has a soft schedule over the rest of the season. They were heavy favorites going into Sunday’s game against winless Cleveland at Ford Field. Fans are responding, too. The Lions have seen two of their best-attended games at 64,500-seat Ford Field this season since the stadium opened in 2002. They’ve sold out every game since October 2010. The stadium itself is a physical sign and an expensive declaration that a changing culture extends to all facets of the business. The Ford family privately financed a $100 million renovation that included revamping the 129 suites and creating several new clubs. The Lions’ new way of doing business under Wood led to three companies signing multi-year naming-rights sponsorships for the

new club and suite spaces. Southfield-based Plante Moran PLLC is paying an undisclosed sum to put its name on the 12 theater-style “Plante Moran Terrace Suites” that were built on the fifth level of the stadium’s north side (visitor bench side). Chicago-based beer giant MillerCoors and Dallas-based Comerica Bank also signed deals as part of the renovation. Jeff Antaya, Plante Moran’s chief marketing officer, praises Wood for not only crafting its suite sponsorship but also for speaking at events for the public accounting firm. The suites and non-football events Plante Moran has held at Ford Field have helped the firm with recruiting and with its effort to get more national recognition. “He knows that we’re there to drive business,” Antaya said.

Listening and learning Wood said he evolved the team’s corporate sales philosophy as part of his remake of the Lions. Specifically, the business staff seeks ways to boost the value that companies get from spending money with the Lions. “How do we make sure they’re getting something out of it besides a sign with their name on it in the stadium?” he said. Those business-side efforts have increased revenue — the team won’t discuss its financial specifics — and the work to keep the money flowing isn’t easy, Wood said. “We have to earn it,” he said. The team’s business operation also has made it a chief priority to gather feedback from fans, especially season ticket holders. “The main things I tried to change

JACOB LEWKOW FOR CRAIN’S

was really listening to our fans and treating them like important customers, especially those that come to games. They have many options for their dollars,” Wood said. The team in recent years instituted fan focus groups, especially with season ticket holders, and fan surveys are conducted after every game. Wood is keen on boosting the team’s reliance on data, such as what the NFL provides from its game audits that rate fan experience for things such as lines at concessions stands, cleanliness and safety. While no one is worried about Martha Ford’s financial status — Forbes estimates she’s worth $1.5 billion — improving the Lions’ business operations and on-field success will increase revenue and profitability. The NFL’s 32 teams averaged $101 million last year in operating profits (earnings, before interest, taxes, depreciation and amortization), according to Forbes, with the Lions training most of the league with $48 million. The gap was as sharp for overall revenue, too, with a $411 million league average in 2016, and the Lions generating $341 million. The team ranked 59th on Crain’s most recent list of the top 200 private businesses in metro Detroit by revenue ($321 million in 2015).

Playing well together The success of Wood’s business strategies combined with a new respect for what the team does on the field signals an improved corporate culture others have noticed. Andrew Brandt, who ran the Green Bay Packers from 1999-2008, is among those who have noticed the change. “There’s a sense of more stability, more professionalism,” he said. What’s critical for the Lions — aside from scoring touchdowns — is to ensure all parts of the organization work well together, from business operations to coaching to scouting to salary cap management, Brandt said. Lack of synergy can cripple an organization. “You see this with a lot of teams, where the football people don’t interact with the business side because they don’t have a relationship,” said Brandt, who is director of the Jeffrey S. Moorad Center for the Study of Sports Law at Villanova University’s law school in Philadelphia and writes for Sports Illustrated’s MMQB football site.

Wood said making the right hires, people who embrace the team’s new culture of accountability, has ensured a smoother-running operation. “We bring in people that buy into that culture and embrace it,” he said. “It’s hard to see it as it’s happening. The best definition of culture sometimes is outside the organization.” It’s also critical, Wood said, that everyone who works for the Lions understands that they’re working for one of America’s most notable business families. “We talk not only about cultural change, but also results — both on the field and off the field. The kind of people who we hire to represent the organization also represent the Ford family. I had a pretty good sense of what the Ford family ethics and culture and expectations would be. That’s always in the back of my mind in discussions. I’m attuned to putting a very good reflection out there of the team and family.” Some of Detroit’s current success is built on a foundation created under prior executives. Amy Trask, former CEO of the Oakland Raiders and now an analyst for CBS Sports, noted that the current positive perception of the Lions has roots in what prior regimes did in Detroit. “While I certainly do not wish to diminish all that Martha Ford, Rod Wood and Bob Quinn have done or will do, I find it fascinating that many identify Matthew Stafford as one of the reasons for hopefulness for the Lions, yet still point to a recent ‘change in culture,’” she said via email. “Stafford was, of course, drafted while Tom Lewand was president and Martin Mayhew was the general manager, and in their final year the team went 11-5. Again, this isn’t to suggest that Martha, Rod and Bob aren’t improving the perception of the franchise; simply noting the many people have short memories and or conflate timelines and often equate correlation with causation.” Wood has acknowledged the contributions of his predecessors. He said his plans for the Lions also are based in part on his observation of the NFL’s consistent winners, particularly the Packers, Pittsburgh Steelers and New England Patriots. Those three teams have gone to 22 of the 51 Super Bowls, and won 15 of them. “I’d love to get to that level of consistency on the football side,” Wood said. But that’s rare in sports, which makes changing the team’s football and business culture and how the Lions are perceived by fans vital to continued success. Proving to fans that the organization has a long-term plan can tide them over through lean times. “Tap into goodwill, and they’ll stick with you,” Wood said. He hired Bob Quinn away from the Patriots two years ago to be Detroit’s general manager, and the consensus is Quinn has done a solid job of building a roster so far via the draft and free agency. Making the correct front office hires, just like hiring the right coach or drafting the right player, makes a difference. “That helps and accelerates the change,” Wood said. And it gets easier to make those hires when the team has improved its standards and performance — a virtuous cycle. “They have to sense that culture change already is under way,” Wood said. “People recognize it. That’s sometimes the best definition, what people outside observe. That’s confirmation we’ve made improvements.” Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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

CENSUS FROM PAGE 3

“Nonprofits are one of the last trusted entities.”

Immigrant concerns Given that it’s home to the country’s largest Middle Eastern settlement, the region and state — which also has significant Hispanic populations in Detroit and Grand Rapids — could face undercounts in immigrant populations. Fears that census data could be shared among federal agencies — something that’s illegal currently — and that sensitive questions of citizenship may be included on the form could deter immigrant populations from providing data for the census, nonprofit leaders said. Policy considerations such as adding questions around citizenship to the census could deter participation in the census, said Debbie McKeon, senior vice president, member services for the Council of Michigan Foundations. “We don’t know yet, what may come out of that. ... It’s definitely a concern that our undercount could be higher.” Hassan Jaber, executive director and CEO of Dearborn-based ACCESS and a member of the national advisory board to the U.S. Census Bureau, said he, too, has been hearing the concerns about questions on citizenship. But that hasn’t come up

Debbie McKeon: Questions could deter participation.

Eric Guthrie: State could lose money.

during advisory board meetings. Immigrants and minorities have expressed concerns, he said, that they feel targeted and are concerned about the use of private, individual census data for anything other than census purposes. It’s a serious issue, he said. “We need to be transparent ... be direct in terms of upholding the law (which) says that census information needs to be confidential and private.”

What’s at stake Counts for citizens and immigrants alike affect the funding coming to Michigan and other states for programs serving those populations and the public as a whole, including housing assistance, Head Start, health care, highway construction and other programs. The U.S. Census Bureau routinely undercounts those communities, the NAACP’s general counsel Bradford Berry told The Washington Post in October. And the 2020 Census is shaping up to be an even more “egre-

gious failure” on that front, he said. Lack of a permanent director of the U.S. Census Bureau and decreased federal funding for the census efforts is hampering outreach aimed at decreasing undercounts. In October, the NAACP sued the Trump administration, alleging the U.S. Commerce Department is illegally withholding information about its plans for the 2020 Census, including how it will make sure minority and low-income communities know about it, according to an article in The Washington Post. Compounding those issues is the fact that the Census Bureau plans to introduce a new online option for submitting census data this year, which some nonprofit leaders fear could present access issues for people living in poverty and those with language barriers and concerns about online data breaches. Hassan said the Census Bureau believes it can reach about 70 percent of the country’s population with the online effort, while making reporting more efficient and reducing costs. Census data also shapes business decisions about where to locate. And it will influence whether Michigan loses a congressional seat. In fiscal 2017, which ended Sept. 30, 40 percent of Michigan’s $56 billion budget came through federal allocations, a level consistent in recent years, said Kurt Weiss, a spokesman for the Michigan Department of Technology, Management and Budget. Michigan stands to lose an esti-

mated $1,800, per person, per year, for every person not counted, said Eric Guthrie, state demographer for Michigan. That number is based on Michigan’s annual federal allocations divided by its population and is only meant to give a sense of the impact undercounts have. The federal dollars are not allocated on a per-person basis, but rather through programs aimed at specific populations or projects. A bad census count can impact allocations for 10 years, Guthrie said, given that census data is used as a basis for other estimates and federal allocations for the next decade. During the last census in 2010, Michigan’s overall population was over counted by about 0.1 percent, Guthrie said. Much of that was double counting caused by confusion over things like whether to count the grandmother or mother-in-law living in the cottage in the back yard. Within that, however, were undercounts in the specific populations that tap federally funded programs, due to things like reticence to report, lack of ability to do so or errors such as forgetting to count a newborn child. The Census Bureau does quality analysis in determining overcounts and undercounts, Guthrie said, building expected population numbers by analyzing birth and death records dating back to the 1930s and doing additional surveys to see if they match data collected during the census.

DUGGAN FROM PAGE 1

Duggan put Quicken Loans Chairman Dan Gilbert and Lear Corp. CEO Matt Simoncini to work lobbying for the auto insurance bill after he and Leonard made their case to a group of Detroit corporate executives last month. Simoncini sent an email to 5,000 of the Southfield-based auto supplier’s employees in Michigan asking them to contact their legislators and urge them to support House Bill 5013. He made direct calls to legislators. “I don’t normally lobby,” Simoncini told Crain’s two days before the failed vote. “But this is an important issue for us.” Detroit business leaders see the city’s highest-in-the-nation auto insurance as a stumbling block to recruiting talent to work and live in the city — and rebuilding a largely missing middle class in the poorest big city in America. “What we hear mostly is from the folks who want to move downtown ... and then when they realize how incredibly expensive it is to insure a vehicle in Detroit,” Simoncini said. Gilbert held personal meetings with individual legislators at his online mortgage company’s headquarters at One Campus Martius, according to Durhal and Gay-Dagnogo, who said they met separately with the billionaire businessman. Quicken Loans lobbyist Jared Fleisher organized the meetings and worked behind the scenes for weeks to push for passage of the bill. Gay-Dagnogo said the meeting with Gilbert and Fleisher went deep into the weeds about how Duggan’s bill would have effectively shifted medical costs from the no-fault auto insurance system to Medicaid and employer-provided health insurance plans when a motorist hit the $25,000

Detroit Mayor Mike Duggan won re-election to a second term by a large margin.

maximum for post-hospitalization care. “I asked Mr. Gilbert, ‘So what impact are you willing to take or absorb when this insurance doesn’t coordinate with your third-party health plan? Are you going to transfer their costs to your employees?’” Gay-Dagnogo said. “I don’t think he made that connection.” “It seems like a lot of smart people were not very smart in this whole scheme,” she added. A Quicken Loans spokesman declined to comment on the nature of Gilbert’s meetings with legislators. Chang declined to say who she was lobbied by, but said there was “a tremendous amount of pressure” to side with the mayor. A candidate for the Senate’s 1st District, Chang had a three-word re-

sponse to Duggan’s threat to campaign against her next year. “Bring it on,” Chang wrote on Twitter. “I’ll run my campaign and (Mayor Duggan) can do what he feels he needs to do,” Chang told Crain’s. Duggan has suggested the Detroit lawmakers who voted against his bill are aligned with the hospitals and personal injury attorneys who have a financial interest in maintaining a limitless medical benefit with none of the cost controls that exist in other forms of health care. Hospitals and trial attorneys are big donors to individual Democrats and the House and Senate Democratic caucuses. The Michigan Health & Hospital Association and Michigan Association for Justice are Durhal’s top two donors this year. Through Oct. 20, the

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

hospital group’s political action committee had donated $9,800 to Durhal’s re-election campaign and the trial attorneys group had contributed $4,500, campaign finance records show. “We stand for some of the same values. We don’t want to limit (personal injury protection) benefits," said Durhal, who has his eyes set on being the House Democratic leader next term. Garrett cited the finances of the Detroit Medical Center — where Duggan was previously CEO — in a statement Thursday defending her vote. “I could not in good conscience vote for a bill that would have both eliminated lifetime benefits for children, as well as jeopardized the success of our Detroit Medical Center,” Garrett said.

One thing working in Michigan’s favor is the state was fairly high in terms of response rate, tied for fifth in the country with the 2010 census, Guthrie said. “That’s something we need to continue.” The Michigan Nonprofit Association has set a goal to get at least as many people in Michigan counted in the 2020 census as the last time around. To do so, it’s launching a statewide campaign to engage grassroots nonprofits that have relationships with hard-to-count communities and may be able to impact counts within those communities. A $600,000 grant over three years from the W.K. Kellogg Foundation is funding outreach in four cities: Detroit, Dearborn, Flint and Grand Rapids. Modeled on a similar effort that launched a year before the 2010 census, the 2020 Michigan Nonprofit Counts Campaign will provide training and tools to help nonprofits reach hard-to-count people and to award mini-grants to local nonprofits for the outreach. Among other efforts, the Michigan Nonprofit Association is creating a committee of statewide nonprofit groups to take the message to their grassroots members and working with the Council of Michigan Foundations and its members to secure additional grants for broader outreach in Michigan. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch Even before the failed House vote, Duggan had begun aligning with legislators who support his position that relieving auto insurance rates requires letting drivers opt out of unlimited medical benefits. During the televised Oct. 25 mayoral debate with state Sen. Coleman Young II, Duggan gave a shoutout to Sen. Ian Conyers and Rep. Sylvia Santana for supporting the legislation. Santana, a first-term member from the city’s west side, and fellow Detroit Reps. Wendell Byrd, Leslie Love and Bettie Cook Scott were the only Democrats who voted for the bill. The next day, Santana announced her candidacy for the state Senate’s 3rd District open seat next year and said she had the early support of Duggan. On Thursday, Wayne County Commission Chairman Gary Woronchak joined that Senate race and was critical of the Duggan-Leonard auto insurance bill and how they attempted to ram it through the House in five weeks. “It was kind of like, ‘Here’s our plan and we’re going to dare you to vote against it,’” Woronchak told Crain’s. “The legislative process, by its nature, moves slowly. That’s not what we witnessed.” This is one of several races where Duggan may try to influence the outcome over this one defining issue. After his victory last Tuesday, Duggan addressed his comments from two days earlier suggesting political payback was in order for opponents of House Bill 5013. “I’m going to work very hard to help elect Democrats who are willing to look past the special interests,” said Duggan, mentioning “the hospitals and the trial lawyers.” “We need to get back to representing people,” the mayor added. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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

OPIOIDS FROM PAGE 1

Business has been growing for the Auburn Hills-based supplier, but it still struggles with the same issues facing its peers — slowing auto sales, labor shortages and a new epidemic sweeping through Rust Belt cities at an alarming rate: Opioids. Opioid drug abuse in the workforce is a growing, yet often ignored, challenge facing U.S. businesses. Some have questioned whether the drugs are keeping people out of the labor force, but according to the U.S. Substance Abuse and Mental Health Services Administration, roughly two-thirds of people who use prescribed pain medications are employed. Opioids are a class of drugs that include the illegal drug heroin, synthetic opioids such as fentanyl, and pain relievers available legally by prescription such as oxycodone (OxyContin), hydrocodone (Vicodin), morphine and others. Between 1999 and 2015, the amount of opioids prescribed per person in the U.S. tripled, providing enough prescribed pills in 2015 for every man, woman and child in the country to be medicated continuously for three weeks, according to the U.S. Centers for Disease Control. Based on National Center for Health Statistics figures, opioid painkillers, such as OxyContin and Percocet, were involved in about 14,400 overdose deaths in 2016, while non-methadone synthetic opioids like fentanyl were linked to more than 20,100 overdose deaths. The epidemic is costly, particularly for businesses. Abusers cost employers nearly twice as much in health care costs, $19,450 versus $10,583 for non-abusers, according to the 2016 report by Castlight Health.

The cost tip-off Nexteer discovered its problem when looking at its costs. Prescription costs for painkillers for Nexteer employees on its health insur-

ance skyrocketed “several hundred thousand dollars” in 2015, said Tony Behrman, general director of human resources. And the company had no idea why. There had been no dramatic increases in worker’s compensation claims or changes in the company’s health plan. “With 4,000 people, we’re talking about probably a $500 per head increase for these types of prescriptions alone; the pills aren’t that expensive,” Behrman said. “The spike didn’t make any logical sense to me.” After a yearlong investigation, Behrman found out Nexteer’s generous prescription benefits made it a prime target for drug pushers and abusers. Nexteer turned to Ann Arbor-based corporate security and risk management firm Pinkerton, who placed an undercover agent on Nexteer’s factory floor to investigate. “They told us we were a prime target for people to deal,” Behrman said. “We’re the largest employer in town with the best benefits. They called us a ‘target-rich environment.’” A production worker at Nexteer enjoys wages roughly 33 percent higher than the median hourly wage in Saginaw County, for example. Within the first hours of the agent’s first shift, the agent was approached to buy prescription opioids. For Pinkerton, this is the new normal, said Eric Rose, the Midwest region managing director. Opioid investigations have overtaken internal theft investigations in the past 18 months, Rose said. A worker’s compensation scam often is tied to the investigation, according to Rose. “We’ll have seven fully functioning (undercover) investigations in the next month,” Rose said. “We’re seeing it over and over again. A guy will fall off a forklift and will get a script for 50 Percocets. We recently had a case where six employees would alternate injuries to get scripts filled and supply each other. Two of the six then started selling (the pills) on the side. The employer was paying out worker’s comp and paying

for the medication. The employer becomes the source.” At Nexteer, the investigation led to the firing of six employees and switching from a fully insured health plan to a self-insured plan, Behrman said. “Indications are that (opioid use) has been curbed somewhat, but we’re not totally sure until we see this year’s costs,” he said. But the epidemic overall — which President Donald Trump named a national health emergency in October — is only going to get worse until more employers take action, Behrman said. “I think it’s getting by almost everybody; it got by me and I’ve been in HR a long time,” he said. “As long as people are able to get so many pills and companies are paying for them, we’ll never solve this problem.” Other major manufacturers in the region, including General Motors Co., Ford Motor Co., Lear Corp. and Cooper-Standard Holdings Inc., either declined to comment on the topic or did not respond to inquiries on the issue.

Workforce effects A recent survey from the National Safety Council reported that 29 percent of employers reported impaired job performance due to prescription-painkiller use. Nearly 70 percent of those surveyed said their workforce had been affected in some way by opioids. Yet employers may be ignoring the issue, or at worst keeping it quiet, because hiring remains difficult as the economy strengthens and available workers are few and far between. The economy added 261,000 jobs in October, and the pool of workers hasn’t kept pace. Labor force participation is holding steady at 63 percent, down four percentage points from 2000, before the opioid epidemic reached overdrive. Opioids, and other drugs, are at least partly to blame. U.S. Federal Reserve Chair Janet Yellen noted as much earlier this year. “I do think it is related to declining labor force participation among prime-age workers,” Yellen said of opioids during a July hearing before the

Senate Banking Committee, Bloomberg reported. “I don’t know if it’s causal or if it’s a symptom of long-running economic maladies that have affected these communities and particularly affected workers who have seen their job opportunities decline.” At Nexteer, drug screening is a growing concern, as many employees taking opioids do so at the direction of their doctor and are not abusing the painkillers, Behrman said. “About 10 percent to 20 percent of our applicants fail the drug screening, not all because of opioids,” Behrman said. “I’m growing more and more concerned that we are automatically dismissing a candidate that tests positive.” Behrman said his own research revealed many of Nexteer’s peers have eliminated screening for marijuana as medicinal use, and even recreational use, becomes more normalized. He said he is reviewing whether Nexteer will relax its drug screening protocols in a way that won’t jeopardize its plant operations and still open employment to more workers. “I’m hoping we change our approach; educating our employees about the risks of opioids, and other drugs, and pain management alternatives,” Behrman said. “My personal opinion is that many of these (opioid abusers) don’t put them in the same category as someone shooting heroin or snorting cocaine and don’t consider themselves an addict. We need to do a better job (as an industry) about our Employee Assistance Programs and get our workers the help they need.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

BANKRUPTCIES The following business filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit Nov. 3-9. Chapter 7 involves total liquidation. J E And B Transport LLC, 2625 Winter Park Road, Rochester, voluntary Chapter 7. Assets and liabilities are not available.

HUB

FROM PAGE 3

The goal is to attract passersby who may have the next million-dollar idea. “We put innovation directly behind retail to make it accessible,” Ollila said. “You don’t need to be special to buy a cup of coffee. You shouldn’t need to be special to receive entrepreneurial support.” About 15 students work at the building through 100K Ideas, along with one salaried employee, Jessica Judson, program manager for the nonprofit. The plan is to have 100 students on staff and capitalize on an often-overlooked aspect of Flint: It is a college town, with the University of Michigan-Flint woven into its downtown core, and Kettering University and Mott Community College at its edges. UM-Flint’s Innovation Incubator, housed on the second floor of the building, aims to plug students into the entrepreneurship ecosystem and serve as a one-stop for all local resources. Ollila said he hopes other area universities will also rent space. At the same time, the hub is meant for the community at large. “We just want people to come in the door feeling confident saying, ‘This is what I want to do. Who can help?’” Judson said.

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KURT NAGL/CRAIN’S DETROIT BUSINESS

Flint Prints, the second location for Flushing-based Ads Plus, is one of the first tenants at the Flint Ferris Wheel, a new entrepreneur hub at 615 Saginaw St. in downtown Flint.

Aspiring entrepreneurs receive a free hourlong consultation with 100K Ideas, where they get feedback on the viability and originality of their ideas. After that, it costs $40 an hour to consult with students, who provide help with everything from product design and engineering to marketing. Judson said a $50,000 grant from Huntington

Bank allows them to waive or reduce fees for those who cannot afford the regular rate. 100K Ideas is already assisting with about 20 projects, with more coming in regularly, Ollila said. Another unique feature of the Ferris Wheel is the space dedicated to vocational and educational rehab. Peck-

ham Inc., which provides job training for those who have been incarcerated or are facing other barriers to employment, operates at the building on a grant from Genesee County. “We’re trying to disrupt the school to prison pipeline,” said Sarah Britton, assistant director of youth services for the nonprofit.

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Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2017 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

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

THE WEEK ON THE WEB

RUMBLINGS

HAP lays off 169 employees

Amazon store to pop up in Whole Foods

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

ealth Alliance Plan of Michigan has laid off 169 employees after contract talks broke down with three large employer groups, Crain’s has learned. Officials at HAP confirmed the layoffs, which account for 13 percent of its 1,300-member workforce. HAP would not name the employer groups. A source familiar with the matter who requested anonymity told Crain’s, however, that contracts covering Ford Motor Co. salaried employees, an unspecified contract with Chrysler Corp. and one with MPSERS, the Michigan Public School Employees Retirement System, were not renewed. Terri Kline, CEO of HAP, said in a statement that HAP essentially dropped three unprofitable business contracts after the health insurer couldn’t reach mutually acceptable terms. “All insurers owe it to their members and the health care industry to remain profitable so they can continue to offer the products and services their members expect and deserve. At HAP, we’ve made the strategic decision not to remain in unprofitable business relationships,” Kline said in a statement. “We were unable to come to a mutually beneficial agreement with several of our large employer group customers and will not be offering HAP plans to those groups in 2018. “As a result of this reduction in membership, as well as our efforts to become a more nimble, consumer-focused insurer that can respond quickly to the ever-changing health care landscape, we anticipate reducing HAP’s 1,300-person workforce by approximately 13 percent.” A majority of the reductions are expected to come through a voluntary retirement package for eligible employees, the statement said. The insurer said it expects that process to happen by the end of the year.

BUSINESS NEWS J The Detroit Fitness Foundation and Lexus signed a long-term naming rights deal for the organization’s $4 million velodrome complex at Mack Avenue and I-75; it is now the Lexus Velodrome. J Comerica Bank is moving its center at 201 W. Fort St. in downtown Detroit to the Penobscot Building as part of the bank’s $3 million investment plan for the city. J Detroit Maid and Brut Detroit took home top awards of $10,000 each at the Detroit Dolphin Tank pitch competition. J Zenith Education Group, a nonprofit career training provider, plans to close its education center in Southfield and lay off 70 employees. J Jesse Cory and Dan Armand, business partners and co-founders of 1xRun and Inner State Gallery, are leaving Eastern Market in Detroit for a new headquarters up Gratiot Avenue, near the Heidelberg Project. J Target will close two stores in Michigan, including one at Eastland Center in Harper Woods, as part of a plan to close 12 stores nationwide.

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The Detroit Fitness Foundation and Lexus signed a long-term naming rights deal for the organization’s $4 million velodrome complex at Mack Avenue and I-75; it is now the Lexus Velodrome.

The size of the building the African Bead Museum is renovating to add more exhibition and collection space.

J Bunker Labs, a Chicago-based nonprofit that helps veterans and active duty service members start businesses, is working with WeWork to launch its Detroit chapter. J Madison Heights-based McNaughton-McKay Electric Co. is acquiring a Fort Worth, Texas-based electrical distributor in a deal that will increase the company’s footprint to 41 locations.

$10 million

OTHER NEWS

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

20,000 sq. ft.

Former JetBlue Airways Corp. CEO Dave Barger's donation to the University of Michigan to expand a leadership opportunity program.

The number of new buses Detroit's transportation department added to its fleet for $9.7 million.

J The 112-year-old Devon Building at 64 Watson St. is being demolished to make way for a new condo development with similar features. J Domino’s Pizza Inc. partnered with Slack Technologies Inc. to launch a chat ordering system for office workers. J The Michigan Department of Agriculture & Rural Development led nine Michigan food producers, including Southfield-based Nirvana Tea Inc. and Dearborn-based Owens Family Foods LLC, on a trade mission to China. J Company Folders Inc. is doubling its staff in its move to a new headquarters in Pontiac that it purchased for $280,000. J Chuck Rizzo, former head of Rizzo Environmental Services Inc., a trash-hauling company, pleaded guilty to bribing suburban officials and ripping off the company, the Associated Press reported. J Lanzen Fabricating Inc. plans to leave Roseville for a new 90,000-square-foot facility in Romeo in a move that will nearly triple the size of its headquarters. J The Detroit City Council is considering approval of a transformational brownfield plan for four major developments and redevelopments in downtown Detroit by Dan Gilbert’s Bedrock LLC.

J Troy voters rejected a public land-use ballot initiative that targeted a large-scale redevelopment of city-owned property. J Wayne County Commission Chairman Gary Woronchak opted against seeking another term on the county’s governing board and will instead run for an open seat in the state Senate next year. J Cass Community Social Services broke ground to build five more tiny homes in its quest to build a total of 25 for low-income Detroit residents. J Beacon Park is adding to Detroit’s Campus Martius tree lighting festivities Nov. 17 with a new event including holiday light displays, Santa visits and food truck fare. J John Hartig, refuge manager of the Detroit River International Wildlife Refuge, was named a Fulbright Scholar and will spend the next half year in Ontario evaluating the last three decades of cleanup efforts in the Great Lakes. J The Menagerie Lounge in Pontiac named Marcus Ware its executive chef and is expanding to a fullfledged restaurant in downtown Pontiac in the Masonic Temple building. J University Liggett School in Grosse Pointe Woods promoted Bart Bronk from interim to permanent head of the school. J The Southfield Freeway and its service drives closed this weekend in Detroit from I-96 to Eight Mile Road for pedestrian bridge demolitions.

OBITUARY J Michigan’s first black female federal judge, Anna Diggs Taylor, has died at age 84, the Associated Press reported.

he Whole Foods store in Rochester Hills will be among a handful of stores across the country to host a staffed Amazon pop-up store. The Seattle-based online retailer, which acquired Austin-based Whole Foods Market Inc. in August, announced Thursday that it will start selling its products at 100 Whole Foods stores across the country. It is also opening small, staffed shops in Whole Foods locations in Rochester Hills; Chicago; Davie, Fla.; Pasadena, Calif.; and Denver, according to a news release. The pop-up in the Rochester Hills store at 2918 Walton Blvd. opens Monday and it’s not yet known when

it would close, Whole Foods spokeswoman Allison Phelps said in an email. The products on sale and available for testing include tech gadgets such as the Amazon Echo, Fire TV and Kindle e-readers. Amazon is making changes as it works to integrate the two companies’ operations, according to the release. The online retailer has also been expanding its brick-and-mortar presence: It recently opened shops inside some Kohl’s department stores and it has opened a dozen brick-and-mortar bookstores. — The Associated Press contributed to this report.

Funds from Detroit Receiving and WSU’s “Stop the Bleed” campaign will go to purchase the kits that first responders including police, firefighters, caregivers and teachers can use to control bleeding until patients can receive care at hospitals.

DMC Guild purchases 1,000 ‘bleed control kits’

he DMC Guild has purchased 1,000 tourniquet kits for $20,000 to help Detroit Receiving Hospital and Wayne State University emergency services experts train and outfit first responders to use them to control bleeding of trauma victims before they are transported to hospitals. The DMC Guild, founded by Detroit Medical Center when it was a nonprofit hospital, now gives grants to community organizations or causes. It presented the gift Thursday at its 65th annual Detroit Trauma Symposium at the MGM Grand Detroit. Funds from Detroit Receiving and WSU’s “Stop the Bleed” campaign will go to purchase the kits that first responders including police, firefighters, caregivers and teachers can use to control bleeding until patients

can receive care at hospitals. It’s a local arm of a national campaign announced in 2015 by the U.S. Department of Homeland Security. The Detroit trauma team is the first in this region to sponsor the national campaign to educate and train laypeople to be helpful first responders, said Tonita Cheatham, director of marketing, public relations and community outreach at DMC’s Receiving, Harper and Hutzel hospitals. “If Vegas taught us anything, this training is very much needed,” Cheatham said in an email to Crain’s, referring to the mass shooting last month in Las Vegas that left 58 people dead and more than 500 injured. The bleed control kits can be used by anyone trained in their use. Heavy blood loss can kill people within minutes if not properly treated.

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