Crain's Detroit Business, Feb. 26, 2018 issue by Crain's Detroit Business

SPLT deal shows new view of automotive acquisitions Page 3 Anya Babbitt

Marshall Plan: Does it de-emphasize college too much? FEBRUARY 26 - MARCH 4, 2018 | crainsdetroit.com

The price of potholes

Page3

HEALTH CARE

Hospitals cut costs as revenue squeezed By Jay Greene jgreene@crain.com

Sources: County road commissions; TRIP transportation research, Michigan Department of Transportation LISA SAWYER/CRAIN’S DETROIT BUSINESS

Bad roads good news for tire shops but millstone for business, workers By Kurt Nagl and Annalise Frank

knagl@crain.com, afrank@crain.com

For the Detroit’s Sucher Tire Services Inc., it’s the best of times. The 96-year old business is serving more clients than it has in 30 years thanks to metro Detroit’s early start to “pothole season.” For those not in the repair business, Michigan’s crumbling roads are deflating — and costly — to the tune of an average of $865 per motorist, according to transportation research firm TRIP, in annual repairs, an economic millstone for residents and businesses in a state that spends only $154 per person per year on roads. Crumbling concrete and tire-tearing potholes are driving emergency road repairs and lane closures this winter as temperature swings and heavy traffic worsen Southeast Michigan's already maligned roadways. Roughly 56 percent of the metro

region’s roads and highways are rated as poor by the U.S. Department of Transportation, ranking only behind earthquake-prone San Francisco, Los Angeles and San Jose. Last Thursday, the Detroit Police Department ordered a two-mile section of southbound I-75 closed for several hours due to excessive potholes causing accidents and damage. And the Michigan Department of Transportation is burning through its winter budget for the region ahead of schedule.

At the tire shop “I am very busy,” said Jon Sucher, owner of Sucher Tire Services. “The roads must be very bad, and I see no end in sight.” Sucher, other metro Detroit auto repair shops and towing companies are experiencing a boom, as drivers go through spares and wait long hours for assistance. SEE ROADS, PAGE 20

Road conditions offer opportunity for change The treacherous state of metro Detroit’s roads is an opportunity to fix the pothole of a road-funding plan the Legislature and Gov. Rick Snyder agreed to less CHAD than three years LIVENGOOD ago. That plan’s slow phase-in of $1.2 billion in new road funding has proven to be insufficient for tackling an infrastructure crisis posing a real threat to the state’s economy and safety of motorists. The Legislature’s rush last week to approve $175 million for emergency road repairs as concrete was literally crumbling in real time is, at best, another Band-Aid to the 2015 road funding plan that won’t be fully funded until 2021.

This election-year window-dressing was mounted just as the pockmarked roads of metro Detroit were wreaking what felt like a week-long assault on the tires, rims and frontends of countless personal and business vehicles. Instead of being resigned to the national embarrassment of our roads, the current crisis is a chance for business leaders to push lawmakers to give counties the option to ask voters for county-level fuel and vehicle registration taxes. That money could be dedicated to fixing local roads that are the lifeblood of commerce. In November of 2015, Snyder almost reluctantly agreed to the $1.2 billion road-funding plan, which relied upon $600 million in tax increases from motor fuel and vehicle registration fees that went into effect in January 2017. SEE CHANGE, PAGE 21

An ongoing round of layoffs at Ascension Health Michigan could be a harbinger of more cost-cutting to come for local hospitals. Hospitals in Michigan and nationwide are considering strategic layoffs and other moves Need to save money as to know they deal with  Ascension federal funding Health Michigan to cuts, increases in lay off an uncompensated unspecified care and declinnumber of ing numbers of employees insured patients. The past sever Several dozen al years average employees have hospital operatbeen laid off with ing margins have further cuts to be ranged from 2.5 announced in the percent to 3.5 coming days percent, but  Factors include those numbers declining operating are expected to income, federal decline in comreimbursement ing years, said cuts Moody’s Financial Services. Federal tax cuts approved by Congress last year are expected to primarily benefit for-profit hospitals and hurt nonprofit hospitals in 2018, Moody’s said. St. Louis-based Ascension Health, St. John Providence’s parent, reported a drop in profit margins to about 0.7 percent during the first six months of 2018 from 3.3 percent the same period in 2017. Layoffs have already begun at at least two of the five hospitals within the Warren-based St. John Providence Health System, according to four people familiar with the moves who requested anonymity. Detroit Medical Center, a for-profit hospital chain owned by Dallas-based Tenet Healthcare Corp., laid off at least 200 employees in 2017 and is in SEE HOSPITALS, PAGE 17

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Biggest deals 2017 << Last year’s big acquisitions had themes of consolidation and preparing for the future. Page 10 << See the list of the 50 largest deals, Pages 12, 14

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MICHIGAN BRIEFS

INSIDE

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

Engler to work for free as interim MSU president

Former Michigan Gov. John Engler intends to work for free as interim president of Michigan State University, choosing to donate a $510,399 annual salary back to university organizations and forgo health care and retirement benefits. The MSU board of trustees finalized a contract last week for Engler that calls for setting the interim president’s salary at $1 below the lowest paid leader of a Big Ten university, Hank Bounds, the president of the University of Nebraska. The contract, which was effective Feb. 5, says the board acknowledges the former three-term Republican governor will donate his salary to “qualified university organizations or entities and that such donation will be at the sole discretion of the interim president.” Engler signed the contract last Monday. The university released a copy of the employment agreement last Wednesday. The MSU board drafted Engler last month out of semi-retirement to lead the university through a period of crisis after longtime President Lou Anna Simon resigned over the fallout of former college doctor Larry Nassar’s years of sexual abuse of

female athletes inside a campus sports medicine clinic. The East Lansing school is facing no fewer than a half dozen investigations, from Congress to the NCAA and Attorney General Bill Schuette, about how the university internally handled past complaints about Nassar’s molestation of female patients under the guise of medical treatment.

CLASSIFIEDS

DEALS & DETAILS

KEITH CRAIN

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Former Michigan Gov. John Engler intends to work for free as interim president of Michigan State University.

fiscal year to now does not solve the problems with the roads, and is happening because it’s an election year. “The roads are actually going to get worse by 2025, their own Department of Transportation has said that,” he said. “Even though this is more money, it is not enough to really begin to solve the problems of our roads. Roads are actually going to get worse. They are going to continue to get worse.”

Eighty percent of the money would go to the state Department of Transportation and county road commissions, but cities and villages will benefit, too. The Detroit News reported the spending formula will include local population, pavement miles and other factors. Detroit would receive $5.8 million; Grand Rapids, $1.47 million; Warren, $924,337; Sterling Heights, $810,884.

PEOPLE

RUMBLINGS

WEEK ON THE WEB

Michigan released an official symbol to label medical marijuana products that are sold in the state and is detailing required labeling for such products, the Associated Press reported. The symbol is an upside-down green triangle with an image of a green marijuana leaf in the middle along with the words “Contains THC” above it. THC is the active ingredient of marijuana. The state Department of Licensing and Regulatory Affairs also released details of labeling for medical marijuana products under the state’s Medical Marihuana Facilities Licensing Act. Those include date of harvest, other identifying information and concentration of THC. Full details are posted on a section of the state’s website. Michigan voters approved marijuana use in 2008 for some chronic medical conditions. New regulations were approved in 2016.

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OPINION

State releases medical marijuana symbol

House votes for $175 million on roads, transportation

The Michigan House voted last Wednesday to spend $175 million on road and transportation projects now as the winter thaw produces gaping potholes — and flat tires — around the state, The Associated Press reported. Gov. Rick Snyder had proposed spending the money in the new budget year, which starts Oct. 1. But lawmakers decided to tap a budget surplus sooner in response to the poor road conditions. Republican Rep. Laura Cox of Livonia, who chairs the Appropriations Committee, said moving on the money now will help communities prepare for the construction season. The Senate could vote this week. House Minority Leader Sam Singh, D-East Lansing, said moving the $175 million from the 2018-19

CALENDAR

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M&A

A tech approach to automotive acquisitions

WORKFORCE

What Bosch’s deal with SPLT means By Dustin Walsh dwalsh@crain.com

Anya Babbitt gets to keep her company. Mostly. Following nine months of negotiations, she, and her board, agreed last week to sell her startup Splitting Fares Inc., doing business as SPLT, to German automotive conglomerate Robert Bosch GmbH — with the caveat that the Detroit-based corporate ride-sharing software firm Anya Babbitt: To be an indepencontinue to lead dent subsidiary. company. This means Need Babbitt and her to know team remain in  Bosch’s place to lead and acquisition of SPLT expand the startshows a new up, while Bosch’s motive for leadership operautomotive ates more as an advisory and in SPLT will operate as an inde- vestment partpendent subsidiary ner than an owner.  Industry “They underinvesting in profits stand that why on the horizon SPLT is successful is not the technology, it’s the people,” Babbitt said. The accelerated rise of new technologies and the changing consumer landscape around automotive — driven by mobility, autonomous driving, connectivity and electrification — has shifted the legacy industry’s approach to acquisitions. Southeast Michigan’s largest industry is now more like California’s tech sector, pushing for higher risk, lower-value deals with long-term potential instead of near-term profits. “We want to be very careful to not destroy anything we buy,” said Rene Schlegel, president of Bosch’s Mexico operations, Robert Bosch S. de R.L. de C.V., and a member of SPLT’s board. “When it comes to startups, it’s about talent. We’re keeping them independent because we want to keep its strength while we build the company going forward. It’s important for the continuity of the acquisition for the people that started the company, that made it strong, to remain with it. Not because we see it as SEE SPLT, PAGE 19

Gov. Rick Snyder unveils his “Marshall Plan for talent” at an event at the Michigan Science Center in Detroit. LARRY PEPLIN FOR CRAIN’S

Snyder’s plan departs from decades of policy By Chad Livengood clivengood@crain.com

Automotive supplier ZF North America Inc. currently has about 100 job openings in the field of mechatronics at four facilities in metro Detroit. Every one of those jobs combining mechanical engineering and electronics requires a bachelor’s degree in engineering, said Allison Corey, talent acquisition lead for ZF North America. “That has presented a lot of hiring challenges for our team, in trying to get that local talent … in for interviewing and interested in what we’re doing,” Corey said last Thursday at

Gov. Rick Snyder’s event in Detroit unveiling his “Marshall Plan for talent.” But what Snyder’s talent development plan will do to get more students into engineering schools at the state’s universities remains to be seen. In fact, the governor downplayed the significance of college degrees in favor of competency-based certificates. “Think about the work world as a practical matter: The only time you really care about someone’s degree is if someone’s talking about who’s playing football or basketball,” Snyder said in an interview with Crain’s. “Nobody cares once you’re on the

job six months or a couple of years. It’s not relevant.” “If you’re doing the work, did you ever hear someone say, ‘Well, you’re not going to get promoted because you went to this school instead of that school?’” the governor added. “That’s not the way the world works.” For Snyder, a businessman who earned three college degrees at the University of Michigan before age 24, the comments were a departure from decades of state policy pushing students along educational pathways that head straight from high school to college. It also conflicts with a report the Snyder administration published in

Need to know

 Snyder’s talent development plan focuses on certifications instead of college degrees  Employers who need college graduates to fill available jobs say they may rethink how they hire  Governor will ask Legislature for $100 million over 5 years to fund the plan

2016 that said seven in 10 of the state’s “Hot 50” jobs through 2024 will require a bachelor’s degree. Just 10 of those “hot” jobs — mostly in the skilled trades — required no college education at all. SEE SNYDER, PAGE 20

HEALTH CARE

Beaumont expanding pediatric network By Jay Greene jgreene@crain.com

BEAUMONT HEALTH

Beaumont Medical Park in Dearborn is located across the street from Beaumont Hospital’s Dearborn campus.

Beaumont Health is hoping to bring in more pediatric patients by adding a third clinic in Dearborn even as Michigan’s birth rates are declining and most health systems are struggling to maintain or grow inpatient admissions. The key? Focusing on pediatric subspecialties like neurology and endocrinology, where the supply of doctors hasn’t kept pace with demand and which can funnel more patients to Beaumont’s hospitals. Over the next five years, Beaumont plans to add subspecialty pediatric clinics in the Novi market and in northern Macomb County as well as expanding its primary care pediatric clinic presence in Southeast Michigan, said Brian Berman, M.D., Beaumont’s

Need to know

 Beaumont building pediatric network by adding specialists and outpatient clinics  New subspecialty clinic in Dearborn with plans to add another two  Other health systems in Michigan competing for pediatric and obstetric patients as volume has declined except for Oakland and Macomb counties

pediatrics chair. Berman said in an interview with Crain’s that the eight-hospital health system has steadily grown inpatient and outpatient volume by investing in hospital-based services, recruiting subspecialists and locating clinics closer to patients. SEE PEDIATRICS, PAGE 18

MUST READS OF THE WEEK DDOT’s ‘transit guru’ Bus system expert plans his vacations around exploring other cities’ transit systems. Page 7

Rumblings: A Hyperloop bullet train for Detroit?

Detroit Rising: The shortage of doctors

Company reached out to MDOT. It’s not clear if anything else has happened. Page 22

Primary care physicians are in short supply. Chad Livengood talks to one who has a less-common business model. Page 4

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JEFF HUARD/SPOTLIGHT PRODUCTIONS

Paul Thomas, M.D., of Plum Health DPC in southwest Detroit discusses his direct primary care business model during an interview for the Crain’s “Detroit Rising” podcast with reporter Chad Livengood at Bamboo Detroit’s downtown co-working space.

Primary care doctors in city neighborhoods in short supply

s Detroit’s planners strive to create “20-minute neighborhoods” where residents can easily access goods and services, there’s a missing component in many parts of the city: family physicians. In Wayne County, there are 1,516 residents for every primary care physician compared to a patient-to-doctor ratio of 683-to-1 in Oakland County and 567-to-1 in Washtenaw County, according to 2017 data compiled by the University of Wisconsin Population Health Institute. On a countywide basis, the Citizens Research Council of Michigan found in a 2015 study of the data that the number of primary care physicians in Wayne County would appear sufficient. But primary care physicians are not spread out evenly across the state’s largest county, creating severe shortages in some parts of Detroit, according to the CRC analysis. Within some census tracts on Detroit’s west side that include the Brightmoor neighborhood, there was just one primary care physician for every 10,030 residents, according to the CRC. (The ratio was much worse in 2010, but two more doctors moved into the

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BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit Feb. 16-22. Under Chapter 11, a company files for reorganization. J World View International Trade LLC, 8031 Main St., Ste. 302, Dexter, voluntary Chapter 11. Assets and liabilities are not available. J 4411 Engle Ridge Drive LLC, 8031 Main St., Ste. 302, Dexter, voluntary Chapter 11. Assets and liabilities are not available.

“The shortage in Detroit is about tenfold of what you might see in the suburban communities.” CHAD LIVENGOOD

Paul Thomas, M.D.

clivengood@crain.com

‘Detroit Rising’ “Detroit Rising” is a weekly Crain’s podcast on businesses, entrepreneurship and economic and workforce development in Detroit that is broadcasting each Monday at about 12:42 p.m. on “Business Rap” on WQTX 92.1 FM in Lansing and is published on crainsdetroit.com/DetroitRising on Tuesdays. You can also listen to all our podcasts by subscribing on iTunes, Apple Podcasts or anywhere else you get your podcasts.

neighborhood, making the total three.) “The shortage in Detroit is about tenfold of what you might see in the suburban communities,” said Paul Thomas, M.D., of Plum Health DPC, a direct primary care clinic in southwest Detroit. Thomas runs a one-doctor direct primary care clinic in an office in the Detroit Police Department’s former Third Precinct building at 21st Street and Vernor Highway. The Wayne State University-trained doctor’s business model is vastly different from most primary care physicians: Instead of accepting multiple forms of health insurance, Thomas runs a membership-based treatment service that costs $49 per month for adults and $10 for children. “I don’t bill or use insurance at all,” Thomas said in an interview for the Crain’s “Detroit Rising” podcast.

In 14 months, Thomas said he has grown the practice to 250 members and is starting to look for another doctor to join his practice once he reaches an “ideal” cap of 500. A typical family medicine doctor has 2,500 patients, Thomas said. Thomas, who takes same-day appointments by phone calls, text messages and emails, said his practice is primarily serving residents and workers in southwest Detroit, Corktown and downtown. He said more small health clinics are needed in neighborhood shopping districts to spread out a concentration of family medicine practices along Detroit’s borders in Grosse Pointe, Dearborn, Southfield and Ferndale. “If you look at a map of Detroit, virtually the entire city is medically underserved in terms of primary care resources,” Thomas said. “If you lose your neighborhood doctor, you no longer have a doctor you can walk to or take the bus to, and you’ve got to drive over to Southfield or Grosse Pointe or wherever it might be.” The “Detroit Rising” podcast is a weekly feature profiling people and issues in business, nonprofits and government in Detroit. If you’ve got a story idea to feature on the podcast, email me at clivengood@ crain.com or call me at (313) 446-1654.

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Through the eyes of DDOT’s ‘transit guru’ By Chad Livengood clivengood@crain.com

When seated by a window facing Woodward Avenue in a Midtown coffee shop, Neil Greenberg has a habit of glancing through the glass every few minutes when a bus passes by. He’s studying them, making mental notes of the route number and timing — because that’s what he does for a living. Greenberg, 36, designs bus routes for the Detroit Department of Transportation, a job where he’s focused on making a bus system with a bad reputation a logical and reliable way to get people to work in the city and suburbs every day. Transporting workers to their places of employment is the “bread and butter” of DDOT, “regardless of what kind of job they have,” Greenberg said. “If they have an entry-level job at Amazon, yes. If they’re a lawyer downtown making $220,000 a year, yes. Any and all things in between,” Greenberg said in an interview at Great Lakes Coffee Roasting Co. “That’s where the real opportunity is for transit to be a resource.” It’s not a stretch to say Greenberg is downright obsessed with transit systems and making Detroit’s better. If you ask Greenberg how to take buses from one point of metro Detroit to another, he’ll draw you a map on the yellow legal pad he carries around and rattle off a brief history of the route, dating back decades. “He knows everything there is about transit. When I first met Neil, I was like, ‘Wow,’” said Angelica Jones, interim director of DDOT who calls Greenberg the department’s “transit guru.” “It’s very intriguing about how he perceives transit.”

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Neil Greenberg designs bus routes for the Detroit Department of Transportation.

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“It excites not only me but others to be engaged in how people’s mobility trends are evolving in Detroit,” she added. Greenberg, whose formal title at DDOT is manager of service development, plans vacations around studying transit systems in other parts of the continent, bringing back new intel to Detroit. During an hourlong interview, he started to describe, in great detail, the bus system in Nepean, Ontario, the suburb of Ottawa where Detroit Red Wings great Steve Yzerman grew up. “It doesn’t look all that much different than Clinton Township. ... It’s suburbs, single-family homes, winding streets,” Greenberg said. “But it is absolutely saturated with transit service.” During a trip to Nepean, Greenberg said he was “checking out the transit system” at 6:50 a.m. on a Wednesday morning. “And I got an awesome picture of suburbanites, people standing outside of their McMansions, at a bus stop with the bus coming into the picture to pick people up,” Greenberg said. Greenberg tells this story because he thinks the biggest barrier to the metro Detroit region investing in a transit system is a lack of knowledge about how a network of mass transportation could be used in daily life. “They need to see something like that,” he said of visiting the Ottawa suburb. “They need to be educated about how it works elsewhere.” But with regional leaders at loggerheads over a mass transit plan, Greenberg is soldiering on with trying to improve the bus system within the city limits and boost ridership.

DDOT is embarking on a three-year, $9 million upgrade of its information technology systems that will include creation of a smart phone app with real-time information for riders on where their bus is, Greenberg said. Even as DDOT has added routes, hired new drivers and purchased new buses in the years since Detroit emerged from bankruptcy, there’s still a “thinness” in the service, particularly along secondary roads throughout the city, Greenberg said. But the system has limitations, mostly due to financial constraints at City Hall. “Let’s say you live on Mt. Elliott and Forest, you need to get to jobs just like someone who lives a block off of Woodward,” he said. “If we don't have any infrastructure to connect you from Mt. Elliott and Forest to any of these routes, what good are these routes to you?” Greenberg, who used to work at SMART, said the suburban bus routes are no better, underscoring arguments advocates for mass transit in metro Detroit have been making for years in a push to fund and build a comprehensive system and close holes. “Our service in the city needs some work, but even in the suburbs, if you find a job that’s close to Woodward in Berkley or Birmingham or whatever, that’s awesome,” he said. “But if you find a job on 16 Mile and Mound (in Sterling Heights), where there’s a lot of factories and a lot of work, you’re SOL because the connecting service to an area that’s not on a major corridor like that is nonexistent.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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OPINION OTHER VOICES

When higher education languishes, so does Michigan

By David Eisler, Thomas Haas and Edward Montgomery mazon’s rejection of Michigan as a finalist for its second headquarters is a wake-up call for what types of communities will prosper in the near and distant future — and they are the ones who prize and support post-secondary education. The verdict was clear; Amazon does not have enough confidence in the state to produce and attract a talented and educated workforce. But we do have that confidence, and we know how to make it happen. As the presidents of West Michigan’s three public universities, we are working together to make the case for higher education. College graduates live longer, make more money, hold better jobs, are less likely to be unemployed, and are more likely to be entrepreneurs. The numbers tell the tale. The average college graduate earns $61,400 annually; a high school graduate averages $36,800. Over a working

David Eisler

Thomas Haas

lifetime, that’s nearly a million-dollar difference. Why are we raising our voices today? It’s because our state’s commitment to higher education has eroded over time. Thirty years ago, state funding provided nearly two-thirds of the revenue at our universities. Today, the state’s share is under 20 percent. Students and their families have had to make up the difference. Education is a public good. The states with the highest percentage of college graduates — Massachusetts,

Colorado, New Hampshire, Maryland, New Jersey, and Connecticut — are the most prosperous. The state’s with the fewest college graduates — Alabama, Indiana, Kentucky, Edward Mississippi, ArMontgomery kansas and West Virginia — are the poorest. It’s as simple as that. Among the 50 states, Michigan ranks 37th in the number of college graduates, at 24 percent. The national average is 33 percent. While those numbers might appear close, they are not: That gap means Michigan has nearly one-third fewer college graduates than the national average. And this is getting worse. In the fall of 2016, 5 percent fewer Michigan high school graduates enrolled in col-

lege than in 2012, the lowest percentage since 2010. We must fix this. The well-paying jobs of the future require education after high school. Parents, teachers and civic leaders need to be resolute in sharing this truth with the next generation as well as with our elected policymakers. To make college more affordable, Michigan’s bipartisan leadership should again make higher education one of our state’s unflagging priorities. Yet, and we say this with grave concern, today there is less support for and apparently less understanding about the importance of our state’s universities. This should not be. It’s not just graduates who benefit from their diplomas. The local economic impact of our universities measures in the billions of dollars. Thousands of private-sector jobs in West Michigan owe their existence to the presence of our schools. Employers look to expand in communities with significant numbers of

college graduates. Businesses need access to a highly educated workforce for their success. This provides opportunities for our sons and daughters and helps them build careers and lives here at home in Michigan. Support for and investment in higher education helps us all — our young adults, their families, our state’s economy, and our collective future. Do we really want Michigan to remain in the lowest 25 percent of the states, grappling as they are with poverty, crime, poor health, shrinking job opportunities, children who move away and don’t come back? Unless we strengthen our commitment to education, that will be Michigan’s future. We cannot let this happen.

taxpayers for years with little or no improvement within their system. So now we are going to create an entirely new system for us taxpayers to fund. That makes no sense. Cities opted out because there was no reasonable return on their homeowners’ investment. If there is to be a transit system, it should serve all communities and not just Detroit, Pontiac and Ann Arbor. I live in Farmington Hills and my business is in Westland, there is NO way I could get there via SMART in any reasonable time frame. Also, would you folks please stop using Amazon not coming to the area as a battle cry. They weren’t coming

in the first place, and creating another transit system isn’t going to bring them. We are looking at two millages in November, what are the chances that they will both pass? Somebody needs to start thinking about merging SMART and the Detroit system and then expanding from there. We do not need three systems that still do not serve the entire population of our area. The money wasted on the 2.5-mile trolley could have been much better spent in creating a true regional system. Dick Isham Farmington Hills

David L. Eisler is president of Ferris State University. Thomas Haas is president of Grand Valley State University. Edward Montgomery is president of Western Michigan University.

Talk about it, and then act

e are hearing a lot of rhetoric after the tragic school shooting in Florida. There are many opinions being voiced about to what to do, some that are completely impractical and some that make a lot of sense. Like most of our citizens, I don’t see any simple fix for a very complex problem. If there were a simple solution, I would think it would have been implemented a long time ago. We’re already having a national discussion. Next, we need to do something. Conversation is great and good ideas will emerge, but then someone needs to make them happen. We cannot again just move on, changing nothing, as has happened so many times before. We also need to look hard for steps that can help. For example, I keep hearing about how Israel handles school security. Their schools, I understand, typically have an armed security guard. A select few other well-trained staffers, sometimes even teachers, also have access to weapons that are kept safely secured. If the school is attacked, then these personnel become defenders of that school. It’s a similar idea to the air marshals we have had on planes ever since 9-11. We know they are on planes, but they are essentially invisible, and everyone seems comfortable with that idea. I am told Israel has not had a single school shooting under this system. Israel isn’t a perfect comparison to the U.S. Israel also has strict gun-licensing laws and guns in general are far less common. Israel also has compulsory military service, so

KEITH CRAIN Editor-in-chief

We cannot again just move on, changing nothing, as has happened so many times before. most people have experience with guns. And the threat is different — organized terrorism rather than from, say, students themselves. But my point is that we need to look far and wide for potential solutions. This is just one idea. Schools haven’t been the only targets of mass shooters, and we will have to address those dangers as well. But schools need to be a priority. Children should feel — and be — safe at school. It is urgent to start taking small steps soon to make that happen. It will be a journey, and no single step will do the job alone, but we need to start somewhere. A parent said it best, we should not have let a single death happen after the first incident. It will be better if we try some remedies and fail, rather than standing by again, only see it happen again. We have to try.

LETTERS

We need a transit system that works To the editor: I’m writing in response to the article “Brightmoor to Novi: The long ride for low-wage workers,” in your Feb. 19 issue. For years I have opposed millages for SMART, and recently have supported L. Brooks Patterson’s views on the alleged new system. Your map is great, and it proves one of my points that SMART goes from nowhere to nowhere. This area should have a transit system that works, but we don’t. SMART has been milking us

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

LETTERS

State wrong on Belle Isle golf RFP To the editor: I am surprised but more shocked that the state of Michigan is looking for a new operator of the Belle Isle Golf Center. The state had a perfect opportunity to keep the current vendor, Francine Pegues, who is operating the facility at a personal loss yet for the love of the game. If the state of Michigan thinks that anybody would want to bid on this expense-ridden operation that grossed just $90,000 in 2014 (Taken from the 2015 RFP information), they are sorely mistaken. The current RFP did not include 2017 revenue, which had to drop due to the island restrictions, including backups at the bridge, as well as the $11 annual island park pass fee. As a city resident living near Belle Isle and customer of Belle Isle Golf Center, I am pleased with the state of Michigan’s improvements, as well as Francine’s upgrades paid for out of her own pocket. Many Detroit residents (including some golfers) still will not visit the island since the state took over. As a PGA Golf professional and manager of one of the most active driving ranges in the Midwest, I know that the expected golfer travel time is up to 25 percent of a 45- to 60-minute visit. Much of this travel time is wasted at the backups on the bridge. If you think people are upset waiting 15-20 minutes to attend an afternoon picnic, think how golfers feel waiting to hit one bucket of golf balls. There is no state signage for the driving range, nor have they improved the much-needed core infrastructure for the facility. Current issues include the failing building, irrigation, flooding and water pumps. Who will want to bid on a facility with this much deferred maintenance and only get a three-year guarantee? On top of that, the RFP states that “no sales” will be allowed for the nine days comprising the fireworks and Grand Prix. Now add the six-week inconvenience of the Grand Prix and an already short season just got shorter. The state should thank Francine for the improvements that she has made, the programs that she has created for women and youth and her passion for the City of Detroit. When the state finds an empty “mailbox” on the deadline date of the RFP, maybe they will do just that. I just hope that Francine answers the phone. Glenn A. Pulice Michigan PGA Golf Professional, 31 years General Manager, Royal Oak Golf Center Director of Golf, Midnight Golf Program Member, Detroit Golf Course Advisory Council

rapidly changing auto industry In his Feb. 11 column, Keith Crain raises several concerns over the impact transitioning to electric vehicles will have on our state, but fails to mention any of the economic benefits to Michigan drivers and ratepayers. Presently, electric vehicle charging infrastructure is a challenge to the expansion of electric vehicles. However, Michigan utility companies, regulators, automakers and other interested parties are actively working towards solutions to increase access to electric vehicle charging. The Michigan Public Service Commission is working with utility companies DTE and Consumers Energy on electric vehicle pilot programs to inform a plan for increasing charging infrastructure and ensuring

electricity rates are structured to benefit all ratepayers. In addition to direct savings on fuel costs for owners of electric vehicles, having more electric vehicles on the road will save all electricity ratepayers money, in particular if those vehicles are charged at night when the cost for generating electricity is cheapest. As utility companies sell more electricity to charge electric vehicles, they generate more revenue, which they are required by law to pass down to ratepayers in the form of lower electricity costs. In fact, a recent study by MJ Bradley & Associates found that Michigan drivers and electricity customers could save more than $30 billion over the next several decades as Michiganders transition from gasoline to electric

vehicles. With all the benefits associated with expanding electric vehicles in Michigan, decision-makers should take a market-centered approach and show leadership on this issue. Common sense policies that support and encourage drivers to go electric are better than mandates. As charging infrastructure increases and consumers learn more about the benefits of owning an electric vehicle, they are destined to become mainstream. Until then, policymakers should play a more active role with solutions that are pro-business and pro-job. Investing in electric vehicles is investing in the future of transportation and mobility. Michigan automakers are making the right decision by ag-

gressively expanding research and development of electric vehicles. As utility companies, policymakers, regulators and other stakeholders continue to develop a plan for increasing access to charging and expanding electric vehicles, all Michigan residents stand to benefit. Mike Alaimo Executive director Clean Fuels Michigan Lansing 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

GOOD BUSINESS. Sure, efficient lighting, heating and cooling will save you money. But they can also make your business more appealing, improve sales and increase worker safety. Adding insulation and sealing air leaks will keep everyone comfortable. And upgraded lighting will create a more inviting environment. DTE Energy wants to help you use less and save more. That’s just good business. Visit dteenergy.com/savenow to learn more.

Electric vehicles have benefits for MI

To the editor: Automakers like General Motors and Ford, as well as their global competitors, are investing heavily in electric vehicles because they realize the inevitability of an electric vehicle future. In Michigan, we should encourage automakers to continue aggressively investing in development and production of electric vehicles to stay competitive in a

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

FOCUS

CRAIN’S BIGGEST DEALS OF 2017 Deal totals 2016 vs. 2017 A comparison of the number of deals per year per industry. 2016 Industries

# of deals

Automotive

Health care

Technology

Retail

Finance

Food

Utilities

Construction

Manufacturing 1

Real estate

Total

100

Industries

# of deals

Automotive

23.2

Retail

12.5

Technology

12.5

Services

10.7

Biotech/ Medical

8.9

Food

7.1

Health care

5.4

Manufacturing 3

5.4

Energy

3.6

Finance

3.6

Media/ Marketing

3.6

Insurance

1.8

Mining

1.8

Total

100

2017

Source: Crain’s Lists of Largest Mergers & Acquisitions 2016 and 2017

GETTY IMAGES/ISTOCKPHOTO

Hot M&A market

Southeast Michigan’s automotive industry, technology, private equity drive 2017 deals By Dustin Walsh dwalsh@crain.com

As far as mergers and acquisitions were concerned, 2017 was the year of consolidation. From American Axle & Manufacturing’s $3.3 billion deal for Metaldyne Performance Group to Meritor’s $34 million acquisition of Fabco Automotive, Southeast Michigan’s automotive industry looked to build market share by gobbling up competitors and smaller players. Strategic buyers also made big plays for technology, and private eq-

Need to know 

2017 was the year of consolidation

 Automotive industry looked to build market share  Strategic buyers also made big plays for technology

uity wasn’t dormant, looking for middle-market or regional players it could roll up into larger entities. M&A experts say Michigan is a hot acquisition market because of its record returns in recent years coming

out of the recession and with the automotive industry reaching its projected sales peak in 2016, more deals could be on the horizon thanks to favorable tax reform, even as values drop. “Multiples are really high right now, and that’s driven a lot of sellers into the marketplace that normally wouldn’t have been interested,” said Timothy Damschroder, partner and chair of the business practice for Bodman LLP in Ann Arbor. “People are bullish on the economy, from Wall Street to the middle market, and

that’s driven everyone to be aggressive.” For American Axle, the push to acquire Metaldyne Performance Group — formed in 2014 when its private equity owners American Securities merged the former Metaldyne with Grede Holdings LLC and HHI Group Holdings LLC — was a necessity to reduce its reliance on its former parent company General Motors Co. The automaker accounts for more than 60 percent of American Axle’s revenue and poses a threat to its bottom line if the automaker’s sales fall

off. The integration of MPG is expected to reduce GM to 41 percent of sales this year with plans to reduce that further to 32 percent by 2020. David Dauch chairman and CEO, in an interview with Crain’s in April last year, said he spoke with Steve Keifer, GM’s chief of purchasing, after the deal was signed and the automaker is very supportive of the deal. “Keifer recognizes the intent to reduce our reliance on GM, but while protecting our business with them,” Dauch said. SEE DEALS, PAGE 11

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

DEALS

SPECIAL REPORT: CRAIN’S BIGGEST DEALS OF 2017

FROM PAGE 10

Plymouth Township-based Adient Ltd. sought to improve its capacity use and expand market share with its $360 million acquisition of competitor Futuris Group in September. Lear did the same thing in April when it acquired the seating business of Grupo Antolin for $307 million. Strategic buyers weren’t alone in amassing market share last year either. Boston-based private equity firm Thomas H. Lee Partners acquired Warren’s Art Van Furniture Co. in a $550 million deal in February, then used the furniture retailer to acquire Levin Furniture Inc. and Wolf Furniture Co., both of Pennsylvania, for $170 million and $95 million, respectively. Experts believe Thomas H. Lee plans to roll out the Art Van brand to a wider geographic market in a fragmented industry ripe for such consolidation. Private equity is expected to remain strong in 2018 as well, Damschroder said, because firms continue to be very successful in raising funds thanks to a years-long trend in economic growth. Globally, private equity funds are sitting on nearly $1 trillion of “dry powder,” industry slang for money that they’ve raised but have yet to invest. “People want to invest dollars in business, and the amount of dry powder is just massive,” Damschroder said. “PE firms have so much to invest they are essentially fighting each other to get deals done.” The auto industry’s breakneck pace of new launches — some suppliers expect to be involved in as many as 200 new product launches in the next two years — is expected to cause financial distress among the supply base, providing lower prices and more opportunity for private equity takeovers, said Leonard LaRocca, partner of the deal advisory practice for KPMG LLP in Detroit. “Suppliers are struggling to keep up and the expected stagnant (sales) volumes will add financial pressure to the system,” LaRocca said. “We’re going to start to see cracks in the supply chain, and PE will step in and get in on deals that are bit too hairy for traditional strategic buyers.” The trend of chasing, bidding and acquiring niche technology firms that can be used to expand, differentiate and exploit new markets is not expected to slow, LaRocca said. Aptiv Inc., formerly Delphi Automotive plc, bought Boston-based autonomous driving software firm NuTonomy for $450 million in December. BorgWarner Inc., an Auburn Hills-based powertrain supplier, acquired electric vehicle battery charger manufacturer Sevcon Inc. in September for $200 million. That trend will continue — Germany’s Robert Bosch GmbH acquired Detroit-based corporate ride-sharing software developer Splitting Fares Inc. (better known by its brand name SPLT) last week for an undisclosed sum. “For our local companies, like BorgWarner, Adient, Lear, etc., they are all going to be active (with M&A),” LaRocca said. “But automo-

Timothy Damschroder: People want to invest in business.

Leonard LaRocca: Connectivity has impact.

tive is not the only industry that’s being disrupted. Health care and financial services are expected to see M&A too. Everyone is getting more and more impacted by con-

nectivity and the trends in the tech space.” For instance, Kalamazoo’s Stryker Corp. acquired real-time imaging technology firm Novadaq Technologies Inc. for $701 million in September. Deal structure is also changing, which expedited deals last year and is expected to this year as well, both LaRocca and Damschroder agree. The use of representation and warranty insurance, which provides coverage for the breach of a representation or warranty, in a purchase agreement. Essentially, in deals without the use of the insurance, the buyers’ attorneys work diligently to protect their client

“People want to invest dollars in business, and the amount of dry powder is just massive. PE firms have so much to invest they are essentially fighting each other to get deals done.” — Timothy Damschroder

the sale — think a massive, painfully expensive automotive recall. Indemnification negotiations ultimately slowed down deals and, often enough, killed them, Damschroder said. “The use of this insurance eliminates heavy negotiations and is really moving deals to completion with more ease,” Damschroder said. “In 2016, only about 20 percent to 30 percent of deals had the insurance; last year, they all did. I don’t expect that to change, and it’s gone a long way in making deals less painful.”

from liabilities tied to products and services made by the seller before

Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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CRAIN'S LIST: LARGEST MERGERS & ACQUISITIONS OF 2017 Rank Acquirer name

Date effective Description

Value of transaction ($000,000)

Target

Acquirer advisers

Target advisers

American Axle & Manufacturing Inc., Detroit

Metaldyne Performance Group Inc., Southfield

Weil, Gotshal & Manges LLP; April 6, Bank of America Merrill Lynch 2017

American Axle acquired MPG for $1.6 billion in cash and stock plus the assumption of $1.7 billion in debt.

$3,300.0

Stryker Corp., Kalamazoo

Novadaq Technologies Inc., Mississauga, Canada

Piper Jaffray Cos.; Perella Weinberg Partners LP

Sept. 5, 2017

Letica Corp., Rochester

Weil Gotshal; Wells Fargo

Jan. 31, 2017

Kellogg Co., Battle Creek

Chicago Bar Co. LLC, Chicago

Dec. 31, 2017

Stryker offered $11.75-per-share for Novadaq, a 95.8 percent premium, in a deal that involved $47 million in cash. The deal adds 13 plants that make rigid plastic packaging and food service products and 1,750 employees to RPC's North America operations. Kellogg acquired the protein bar maker of RXBar for $400 million net of tax benefits on the transaction.

$701.0

RPC Group PLC, United Kingdom

Shearman & Sterling LLP; Greenhill & Co. LLC; JP Morgan Chase Covington & During LLP; Osler, Hoskin & Harcourt LLP Bodman PLC; Goodman Derrick LLP; Goldman Sachs

Diplomat Pharmacy Inc., Flint

Leehar Distributors LLC, Creve Coeur, Mo.

Goodwin Procter LLP; Houlihan Lokey Inc.

Dec. 20, 2017

The deal terms were $515 million in cash and $80 million in Diplomat common stock.

$595.0

Thomas H. Lee Partners, Boston

Art Van Furniture Inc., Warren

Royal Bank of Canada; Deloitte LLP; Bodman PLC

Feb. 28, 2017

Art Van Furniture's management team remained in place $550.0 B after being bought by the private equity firm.

North American Bancard LLC, Troy

Honigman Miller Total Merchant Services Inc., Woodland Hills, Calif. Schwartz & Cohn LLP; Credit Suisse

Delphi Automotive PLC (now Aptiv Inc.), Troy

NuTonomy, Boston

Dec. 31, 2017

The deal made North American Bancard the 7th largest $500.0 credit and debt card processor in the country, adding $12 billion transactions processed annually from Total Merchant. The acquisition nearly doubled Aptiv's autonomous $450.0 driving team to near 200.

Adient Ltd., Plymouth Township

Futuris Group, Oak Park

Sept. 25, 2017

Private equity firm Clearlake Capital Group sold Futuris to Adient. The deal comes with $18 million in debt.

$360.0

Industrial Opportunity Partners LLC, Evanston, Ill.

Creative Foam Corp., Fenton

$350.0 B

1 2 3 4 5 6 7

Honigman Miller Schwartz and Cohn LLP; Quarles & Brady LLP Goldman Sachs & Co.

Skadden Arps Slate Meagher & June 30, Flom LLC; Berkowitz, Trager & 2017 Trager LLC

Sartorius AG, Germany

Essen Bioscience Inc., Ann Arbor

April 30, 2017

Lear Corp., Southfield

Grupo Antolin seating business, Burgos, Spain

April 28, 2017

The deal expanded Lear's global presence and was completed on a debt-free basis.

$307.0

WABCO Holdings Inc., Belgium

Meritor WABCO Vehicle Control Systems, Troy

Oct. 1, 2017

Meritor sold its 50 percent stake in the joint venture, but retained exclusive distributor rights under WABCO.

$250.0

WEC Energy Group Inc., Milwaukee

Bluewater Natural Gas Holding LLC facility, Detroit

Pending

The underground storage facility provides approximately one-third of WEC's natural gas storage needs.

$230.0

Certares LP and Vanwall Holdings LLC, New York

Guardian Alarm Co., Southfield

Boulevard & Co.; White & Case LLP

Flex Ltd., Singapore

AGM Automotive LLC, Troy

Winston & Strawn LLP

15 16 17

Bain Capital Private Equity LP, MSX International Inc., Boston Detroit

BorgWarner Inc., Auburn Hills Sevcon Inc., United Kingdom

Art Van Furniture Inc., Warren Levin Furniture Inc., Smithton, Penn.

Dykema Gossett PLLC; Stark Reagan PC

Oct. 5, 2017

Internal

Evercore; SunTrust Bank

Jan. 9, 2017

$600.0

The private equity fund acquired a majority stake in the engineering manufacturer that supplies formed foams and composite core kitting to automotive, airline, medical and the wind energy industries. Bain acquired MSX from Court Square Capital Partners, Prudential Financial Inc., Ardian and Falcon Investment Advisors in a loan-backed deal. Acquired from SFW Capital Partners, Essen Bioscience expands Sartorius' portfolio into bioanalytics.

McDermott Will & Emery PC; Western Reserve Partners

$640.0

Honigman Miller Schwartz and Cohn LLP

$220.0 B

Kirkland & Ellis LLP; Meitar Liquornik Geva Leshem Tal

Nov. 21, 2017

As part of the cash deal, the business will continue to supply existing commercial products to Perrigo under SK Capital.

$110.0

Evercore; Paul Hastings LLP

July 26, 2017

$103.0

Honigman Miller Schwartz and Cohn LLP; Plante Moran

May 21, 2017

Both OpenText and Covisint supply software to automakers and the deal expands the footprint for OpenText. Detroit-based Huron Capital exited the acquisition data software provider after nine years of ownership.

Kings III Emergency Communications, Coppell, Texas

Albertsons Cos., Boise, Idaho

MedCart Specialty Pharmacy, Livonia

SK Capital Partners LP, New York

Israel-based pharmaceutical ingredients business of Perrigo plc, Allegan

OpenText Corp., Ontario

Covisint Corp., Detroit

ICV Partners LLC, New York

LeadingResponse LLC, Tampa, Fla.

Newell Brands Inc., Hoboken, N.J.

Schiff Harden LLP Smith Mountain Industries Inc., Forest, Va.

Jaffe Raitt Heuer & Weiss PC

Jan. 6, 2017

Penn Engineering & Manufacturing Corp., Danboro, Pa.

Whitesell Formed Components Inc., Waterford Township

Angle Advisors

June 28, 2017

The Chamberlain Group Inc., Oakbrook, Ill.

Systems Holdings Inc., Germantown, Wisc.

Honigman Miller Schwartz and Cohn LLP; KPMG

Art Van Furniture Inc., Warren Wolf Furniture Co., Altoona, Pa.

21 22 23 24 24

RBC Capital Markets LLC; Rothschild

DLA Piper

Vedder Price PC

$320.0

Law offices of Melvin Raznick March 1, The family-owned company decided to sell the 87-yearPC; Denha & Associates PLLC 2017 old company following the death of founder Milton Pierce's son Douglas. Haynes and Boone LLP April 3, Sold by venture capital firm Trive Capital in an all-cash 2017 deal, AGM Automotive provides Flex with additional capabilities in automotive lighting. Rothschild Inc.; Skadden, Sept. 22, BorgWarner acquired the manufacturer of electric Arps, Slate, Meagher & Flom 2017 vehicle battery chargers for $22 per share. LLP; Locke Lord LLP Nov. 28, The deal added Levin Furniture's 35 locations in 2017 Pennsylvania and Ohio, bringing Art Van to more than 176 stores. Norton Rose Fulbright US LLP; June 20, Rockbridge acquired Kings III, which provides on-site Raymond James 2017 emergency phones to 23,000 customers, including Dan Gilbert's Quicken Loans and Bedrock, in a deal that included cash and stock. June 1, MedCart became valuable after fast growth thanks to 2017 new therapies in hepatitis C and cancer drugs.

Rockbridge Growth Equity LLC, Detroit

$323.0

$210.0

$200.0 $170.0 B $150.0 B

$114.2 B

$100.0

Newell Brands, the parent company of Yankee Candle, acquired competitor Smith Mountain in an equity deal from Birmingham-based Strength Capital Partners LLC. The acquired businesses join the existing PennEngineering brands and operate under the PENNAutomotive division.

$100.0

Dec. 4, 2017

Detroit-based Huron Capital sold its controlling interest of Systems after upping its stake in 2016.

$100.0

Nov. 28, 2017

The deal added Wolf Furniture's 18 locations in Pennsylvania, Maryland and Virginia to Art Van's growing store count.

$95.0 B

$100.0 B

Source: Company submissions and Crain's research. Many transactions had multiple sources of information. In some cases, more than one estimated value of a transaction exists. In those cases, Crain's has chosen the value it believes to be most accurate. The list does not include all 2017 transactions, only those valued at $10 million or more. It is not a complete listing but the most comprehensive available.

B Crain's estimate. LIST RESEARCHED BY CRAIN'S STAFF

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CRAIN'S LIST: LARGEST MERGERS & ACQUISITIONS OF 2017 Rank

Acquirer name

Target

Medline Industries Inc., Northfield, Ill.

Centurion Medican Products Corp., Williamston

Huron Capital Partners LLC, Detroit

Hansons Holdings LLC, Troy

Takara Bio USA Holdings Inc., Mountain View, Calif.

Acquirer advisers

Target advisers

Date effective

Description

Value of transaction ($000,000)

Wilmer Cutler Pickering Hale and Dorr LLP

Dec. 7, 2017

Centurion operated five blood pressure monitoring device manufacturing plants in Michigan, North Carolina, Pennsylvania, Arizona and Mexico. All now under Medline.

$93.8 B

Dykema Gossett PLLC; PwC

Jaffe Raitt Heuer & Weiss PC; Angle Advisors

Oct. 30, 2017

$80.0 B

Rubicon Genomics, Ann Arbor

Morrison & Foerster LLP

Jan. 17, 2017

Horizon Bancorp., Michigan City, Ind.

Wolverine Bancorp Inc., Midland

Raymond James & Associates Inc.; Barnes & Thornburg, LLP

Oct. 17, 2017

Wolverine's bank branches throughout the Bay County region became Horizon Bank branches.

$73.9

Morgan Murphy Media, Madison, Wisc.

Saga Quad States Communications LLC, Grosse Pointe Farms

Honigman Miller Schwartz and Cohn LLP Keefe, Bruyette & Woods Inc.; Luse Gorman P.C. Bodman PLLC; Smithwick and Belendiuk PC

The deal, in partnership with management, gives Huron a controlling interest in the home repair and innovations company that installs replacement windows, roofing and siding. The cash deal allows Takara to expand its DNA sequencing to more customers and geographies.

Sept. 1, 2017

Saga sold its television stations in Joplin, Mo. and Victoria, Texas, to Morgan Murphy in an all-cash deal.

$66.0

Gentherm Inc., Northville

Etratech Enterprises Inc., Canada

Angle Advisors

Nov. 1, 2017

Dentsu Aegis Network, United Kingdom

HelloWorld Inc., Southfield

Dec. 22, 2017

The all-cash transaction added new electronic controls and $64.0 control systems products in automotive, RV and marine and security industries for Gentherm. Dentsu Aegis, a global marketing firm, acquired the digital $60.0 B marketing firm from private equity firm L Catterton.

Wal-Mart Stores Inc., Bentonville, Ark.

Outdoor Lifestyle Holdings Inc., dba as Moosejaw, Madison Heights

Weil Gotshal & Manges LP

Honigman Miller Schwartz and Cohn LLP

Feb. 13, 2017

Wal-Mart acquired the outdoor brand retailer from private $51.0 equity firm Glencoe Capital to boost its online sales division.

Huron Capital Partners LLC, Detroit

Aquamar Inc., Rancho Cucamonga, Calif.

Honigman Miller Schwartz and Cohn LLP; Hein & Associates

Jeffer Mangels Butler & Mitchell LLP

Aug. 31, 2017

$50.0 B

The Timken Co., Canton, Ohio

Torsion Control Products Inc., Rochester Hills

Angle Advisors

April 3, 2017

Paired with the smaller acquisition of LMC Foods LLC, Huron Capital created Aquamar Holdings to supply crabflavored seafood to the North American market. The deal allowed Tikmen to expand product offerings in the construction, agriculture and mining industries.

Diplomat Pharmacy Inc., Flint

Pharmaceutical Technologies Inc., Omaha, Neb.

Nov. 27, 2017

Deal terms included $31 million in cash and $16 million in Diplomat common stock.

$47.0

Source Energy Services Ltd., Calgary, Canada

Sand Products Wisconsin LLC, Muskegon

April 17, 2017

Sand Products' assets include a frac sand mine and a processing facility near Blair, Wis.

$45.0

John Wood Group PLC, United Kingdom

CEC Controls Co. Inc., Warren

May 24, 2017

$44.0

Delphi Automotive PLC (now Aptiv Inc.), Troy

Movimento Inc., Plymouth

Peninsula Capital Partners LLC, Detroit

Truesdell Corp., Tempe, Ariz.

McGuireWoods LLP

John Wood paid $44 million in cash with $15 million in cash considerations over the next three years for the automotive process control systems supplier. Sold by Verdane Capital and Industrifonden, Moviemento provided over-the-air update capabilities to Delphi (now Aptiv). Peninsula acquired 78 percent of the concrete repair firm.

Meritor Inc., Troy

Fabco Automotive Corp., Livonia

PWC; Squire, Patton, Boggs LLP

O2 Investment Partners LP, Bloomfield Hills

MHC Software LLC, Burnsville, Minn.

Honigman Miller Schwartz and Cohn LLP

Peninsula Capital Partners LLC, Detroit

Allivet, Hialeah, Fla.

Foley & Lardner LLP

Chongqing Boao Industrial Co. Ltd., China

Interior lighting business of Federal-Mogul Corp., Farmington Hills

Saga Communications Inc., Grosse Pointe Farms

Apex Broadcasting Inc., Charleston, S.C.

Huron Capital Partners LLC, Detroit

PoloPlaz Inc., Jacksonville, Ark.

Peninsula Capital Partners LLC, Detroit

EnviroForensics LLC, Indianapolis

Project Mist Holdco LLC, New York

29 30

33 34 35 36 37 37 39

Honigman Miller Schwartz and Cohn LLP

Morgan Stanley

Jan. 3, 2017

Hool Coury Law PLLC; Generational Equity LLC Varnum LLP; UHY Advisors Corporate Finance LLC; Conway MacKenzie Inc. Burns & Levinson LLP; Headwaters BD LLC Marx Rosenthal PLLC

Feb. 10, 2017

Angle Advisors

$75.0

$50.0 B

$40.0

Aug. 31, 2017

Meritor acquired the product portfolio of Fabco under terms $34.0 of the deal, which included transfer cases, specialty gear boxes, auxiliary transmissions for heavy trucks.

Sept. 29, 2017

$32.0 B

Mar. 2, 2017

O2, along with MHC management, acquired a majority interest in the electronic transaction processing firm in a cash plus equity deal. Private equity firm Peninsula Capital acquired a 75 percent stake in the online pet pharmacy firm.

Dec. 4, 2017

The deal included a manufacturing plant in Sparta, Tenn., and a technical center in Ann Arbor.

$25.0 B

Sept. 1, 2017

Saga gained 12 radio stations in the South Carolina market in the all-cash deal.

$23.0

Ed Daniel IV

Aug. 31, 2017

Huron acquired the wood coatings firm under its Valentus Specialty Chemicals holding company.

$20.0

BGD LLP

June 30, 2017

Peninsula acquired majority interest in the groundwater remediation firm.

$20.0

Detroit Thermal LLC, Detroit

Dec. 31, 2017

Everbridge Inc., Burlington, Mass.

IDV Solutions LLC, Lansing

Jan. 31, 2017

Detroit Thermal provides steam to about 85 commercial $20.0 B and industrial customers in downtown Detroit. The steam is used for heating and cooling commercial offices, medical facilities, schools, manufacturing sites, government buildings, hotels and Cobo Center. IDV supplies threat assessment software to companies like $18.7 Amazon, Pfizer and others.

NGL Energy Partners, Tulsa, Okla.

Propane Services LLC, Romulus

Lagunitas Brewing Co., Petaluma, Calif.

Bodman PLC; Smithwick and Belendiuk PC Perkins Cole; Crowe Horwath Foley & Lardner LLP

July 3, 2017

NGL acquired all assets of Propane Services.

$18.0

Short's Brewing Co., Bellaire

Aug. 20, 2017

Lagunitas, a subsidiary of Dutch brewer Heineken International, acquired a 20 percent stake in Short's.

$16.5 B

BCS Financial Corp., Chicago

LifeSecure Insurance Co., Brighton

Oct. 1, 2017

Blue Cross Blue Shield of Michigan sold a 20 percent stake in $15.2 the critical-illness insurance company.

BasicNet SpA, Torino, Italy

Honigman Miller Sebago brand from Wolverine World Wide Inc., Schwartz and Cohn LLP; Harris Williams & Rockford Co.

July 31, 2017

The Italian shoemaker, with brands Robe di Kappa, K-way and Superga sneakers, acquired Wolverine's boat shoe line in an all-cash deal.

Seder & Chandler LLP

Jaffe Raitt Heuer & Weiss PC

$31.0

Pavesio e Associati

$14.0

B Crain's estimate. LIST RESEARCHED BY CRAIN'S STAFF

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

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Don’t Call Me a Millennial: Busting the Myths of the Next Generation of Leadership. 7:30-9 a.m. Young Professionals Panel includes: Sommer Brock, director of development, Cranbrook Educational Community; Clarence Dass, founder, The Dass Law Firm and Jennifer Korman, communications project manager, Mercedes-Benz Financial Services. MSU Management Education Center. $32 member, $36 nonmember. Website: leadershipoakland.com/breakfast-of-champions/

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THURSDAY, MARCH 1 2018 Detroit Policy Conference. 7:30 a.m.-4 p.m. Detroit Regional Chamber. The Detroit Policy Conference will focus on creating a culture of civility in Detroit, exploring what it means to be “civil” and the role that communities play in influencing individual behavior. MotorCity Casino Hotel. $159 members; $235 nonmembers. Website: detroitchamber. com/dpc

FRIDAY, MARCH 2 Birmingham Bloomfield Chamber’s Government Forecast Breakfast. 8-9:30 a.m. Speaker is U.S. Congressman Dave Trott. Townsend Hotel. $40 members; $50 nonmembers. Contact: Andrea Foglietta, phone: (248) 430-7688; email: andreaf@bbcc.com; website: bbcc.com

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UPCOMING EVENTS Embracing Emerging Technologies to Diversify Business. 9:30 a.m.3:30 p.m. March 8. Asian Pacific American Chamber of Commerce. APACC 15TH Annual East-West Business Connection. Edward Village, Dearborn. $75 member; $100 nonmember. Contact: Leonie Teichman, email: leonie@apacc.net Website: apacc.net A Conversation with Tim Sloan: Leadership, Culture and Innovation. 11:30 a.m.-1:30 p.m. March 15. Detroit Economic Club. Wells Fargo CEO and President Tim Sloan will discuss leadership, innovation, and the financial services industry. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Positive Links Speaker Series: Clash! Bridging Cultural Divides in the Workplace. 4-5 p.m. March 19. Ross School of Business. Hazel Rose Markus, Davis-Brack Professor in the Behavioral Sciences Department of Psychology at Stanford University, shows how recognizing and including interdependence within workplace culture can bridge divides. Michigan Ross Campus. Free. Contact: Jacob Feinberg, phone: (734) 764-0544; email: cpo-events@umich.edu; website: positiveorgs.bus.umich.edu To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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GET A HEALTHIER OUTLOOK ON CHILDHOOD Tune in to WJR 760 AM for Caring for Kids, a monthly radio program focused on highlighting individuals and organizations addressing issues and efforts locally, regionally and nationally, that are having a significant effect on the health of the children in our area.

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PEOPLE CONSTRUCTION Louis Goldhaber to chief of staff, Sachse Construction and Development Co. LLC, Detroit, from head of strategic initiatives. 

CONSULTING  Dan Felstow to managing director/partner, UHY Advisors Inc., Sterling Heights, from principal. Also, Tom Bowen to managing director/ partner, UHY Advisors Inc., Farmington Hills, from principal.

EDUCATION Alison Davis-Blake, Ph.D., current University of Michigan business professor and former Ross School of Business dean, has been appointed the eighth president of Bentley University, Waltham, Mass.  Michael Westfall to vice president for university advancement, Oakland University, Rochester, from vice president for advancement and executive director of the Foundation, Eastern Washington University, Cheney, Wash. 

FINANCE Thomas Rutherford to president, Crestmark Equipment Finance (CEF) division, Crestmark Bank, Bloomfield Hills, from chief operating officer. Also, James Recker to chief operating officer and general counsel, CEF division, from senior vice president and general counsel. 

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FOOD  Tabitha Mason to managing partner, Zingerman’s Cornman Farms, Dexter, from venue manager.

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 Christopher M. Trebilcock to member, Labor & Employment Practice Group, Clark Hill PLC, Detroit, from principal and deputy practice group leader, Employment and Labor Group, Miller Canfield Paddock and Stone PLC, Detroit.

SPOTLIGHT Devon P. Allard to partner, The Miller Law Firm PC, Rochester, from associate. 

NONPROFITS  Karen Monday to vice president, senior living, Samaritas, Detroit, from executive director, Evangelical Homes of Michigan, Sterling Heights. Also, Lena Wilson to vice president, Child & Family, from executive director, Lutheran Adoption Service Inc., Detroit.

REAL ESTATE  Christopher Maharg to director, BBG Inc., Detroit, from senior appraiser, CBRE Group Inc., Southfield.

SERVICES  Damian Zikakis to partner, executive search consultant, The Hunter Group LLC, Bloomfield Hills, from director of career development, University of Michigan Ross School of Business, Ann Arbor.  Jim Naughton to senior consultant, Innovative Learning Group Inc., Troy, from independent consultant, 1World4Learning LLC, Troy. Also, Lauralei Pariseau to project coordinator from training and development intern, Rock Connections LLC, Detroit.  Jeff Williams to cybersecurity program manager, Michigan Manufacturing Technology Center, Plymouth, from development team manager/ senior systems developer, Crestwood Associates LLC, Farmington Hills.  Julie Timmer to vice president and general counsel, NSF International Inc., Ann Arbor, from senior counsel, Maxion Wheels, Novi.

TECHNOLOGY  Alex Southern to executive director, Vectorform LLC, Royal Oak, from director of marketing, Midcoast Studio, Troy.

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

DEALS & DETAILS EXPANSIONS  At Home Group Inc., Plano, Texas, a home décor franchise, has opened an 88,000-square-foot store at 200 W. 14 Mile Road, Troy, next to the Oakland Mall. Phone: (248) 837-1177. Website: athome.com.  DoorDash Inc., San Francisco, Calif., an online and mobile food-ordering and delivery service, announced its launch in the Detroit area. Detroit marks its 53rd major metropolitan market; the company now offers door-to-door delivery from more than 1,500 local restaurants between 10 a.m. and 10 p.m. Website: doordash. com.  Henniges Automotive Holdings Inc., Auburn Hills, a supplier of highly engineered sealing and anti-vibration systems for the global automotive market, has opened a 79,500-squarefoot facility in Suzhou, China. Located in the Taicang Port Economic and Technological Development Zone,

the plant will feature both TPV (thermoplastic) and EPDM (traditional) rubber sealing. Website: hennigesautomotive.com.  The Impact Network (Impact Network Inc.), Detroit, is now available on Altice USA’s Optimum TV. Altice USA Inc., Bethpage, N.Y., is a cable provider operating under the Optimum and Suddenlink brands. Websites: watchimpact.com, alticeusa. com.  Varroc Lighting Systems Inc., Plymouth, a supplier of exterior vehicle lighting systems, is building a manufacturing and product development center in Morocco. Located in “Tanger Automotive City,” a major industrial center in the Tangier area, the facility will produce headlamps and rear lamps for current and future customers in Morocco and southern Europe. Website: varroclighting.com. Submit Deals & Details items to cdbdepartments@crain.com.

NextEnergy CEO to step down

Jean Redfield is stepping down from her longtime role of leading technology accelerator nonprofit NextEnergy. Redfield, 59, will be replaced by Jim Saber, vice president of business and technology development, in the CEO role, effective March 2. Angella Durkin is also being promoted from vice president of fiJean Redfield nance and administration to the newly formed role of COO as part of the transition. Redfield joined Detroit-based NextEnergy in 2010 as the vice president of public policy programs before becoming CEO in 2012 to help expand the organization’s reputation. She will join Warren-based Fordsell Machine Products Co., a precision-machining manufacturing supplier she co-owns with her husband.

Former DMC CEO named Tampa health system chief

Joe Mullany, former CEO of six-hospital Detroit Medical Center, has been named CEO of Tampa-based Bayfront Health, a six-hospital for-profit system with regional hospitals along Florida’s Gulf Coast. Mullany, 52, left DMC in a management shakeup in January 2017 after spending six years with the health system. He was hired by former CEO Mike Joe Mullany Duggan, who is now Detroit’s mayor, shortly after DMC was acquired by Vanguard Health System in 2013 and converted to a for-profit health system. Mullany has an MBA and a master’s in health science from the University of Florida. He was named a Crain’s Detroit Business Health Care Hero in 2017 for completing the turnaround of DMC, which is now owned by Dallas-based Tenet Healthcare Corp.

UM-Dearborn selects next chancellor

The University of Michigan board of regents unanimously approved Domenico Grasso to become UM-Dearborn’s sixth chancellor. His appointment is effective Aug 1. Grasso’s hire comes after a months-long search to replace Daniel Little, who announced in May that he will retire July 31 after 18 years in the role. Grasso, 62, who earned his Ph.D. in environmental engineering at UM, is a professor at the School of Public Policy and Administration and in the Department of Civil and Environmental Engineering at the University of Delaware.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

CREDIT When cash won’t do.

STEVE MAYLONE

Several dozen patient care technicians and nursing clerks in intensive care units, along with several respiratory care technicians, have been laid off at St. John Hospital and Medical Center in Detroit.

HOSPITALS FROM PAGE 1

the middle of further cuts that may range from 300 to as many as 600, including at least a dozen managers and executives, three sources familiar with the cuts who asked for anonymity told Crain’s. DMC officials have declined comment on workforce changes other than to confirm up to 300 layoffs are in the works, mostly in management, over the next several months. At Ascension Michigan and St. John, it’s unknown how many layoffs are in the works, but several dozen patient care technicians and nursing clerks in intensive care units, along with several respiratory care technicians, have been laid off at St. John Hospital and Medical Center in Detroit. A St. John employee said word is up to 200 employees would be laid off at the flagship St. John Hospital. Another employee source tells Crain’s that he learned from a manager that three of St. John’s hospitals are considering a move to lay off dozens of patient transporters and move them into employment with Touchpoint Support Services, which contracts with a number of St. John hospitals for dietary and housekeeping services. Some 20 employees in the cardiac catheter lab at St. John Macomb also have been laid off, said the St. John employee, under condition of anonymity. In addition, 50 percent of the unit clerks at Providence Park Hospital in Southfield are expected to be laid off, based on seniority, a St. John physician leader who also requested anonymity told Crain’s. The St. John physician leader said doctors were told that there would also be “significant” layoffs in the administrative ranks, but that the number would be the decision of executives at Ascension’s corporate office in St. Louis. Officials for Ascension Health Michigan declined to comment on the layoffs. But the St. John physician leader said he was told by a high-level executive that the system continues to add to the downsizing plan and that it would be rolled out over the next few days. Last week, when Crain’s first reported the layoff plan, Ascension Health Michigan spokesman Brian

Taylor said in a statement: “We continually review staffing models to ensure efficiency of our resources, while providing the highest quality and most compassionate care as is consistent with our mission. At this time, we have no information to share regarding personnel matters.” Contacted Friday, Taylor had no further comment. One laid-off St. John patient care technician told Crain’s that she and her co-workers were called into a meeting two weeks ago by managers, who told them their duties would be picked up by intensive-care nurses. The source said the HR director and nursing director cited studies that showed nurses were more efficient. Twenty-eight staffers in the ICU were laid off, she said. PCT duties include moving and turning around patients, cleaning patients, filling up medicine boxes, taking blood pressure and temperatures. In addition, by removing unit clerks, nurses will be responsible for additional paperwork, the PCT employee said. The PCT employee said workers were told they would receive sever-

Ascension — the largest nonprofit health system in the nation with more than 140 hospitals in 24 states — ended the first half of fiscal 2018 with operating income of $84.7 million, down 78 percent from operating income of $379.6 million in the same period a year earlier. ance pay and could reapply for open positions using St. John’s online job application system. Two sources told Crain’s that similar employees at other St. John hospitals in Southeast Michigan were laid off last week and more would be coming as the plan unfolded. It is not known whether the layoffs in Michigan are due to a 78 percent decline in operating income during in the first six months of fis-

cal 2018 ended Dec. 31 by Ascension Health, but past layoffs at Ascension have coincided with drop in earnings. But Crain’s also reported two weeks ago that 37 Michigan hospitals, including several affiliated by Ascension Michigan, Karmanos Cancer Hospital and Henry Ford Health System, stand to lose $73 million this year as the Trump administration slashed Medicare drug reimbursement rates under the controversial 340B drug discount program. Henry Ford officials said there would be no layoffs from the 340B program changes and that extra attention would be made to improving operating efficiencies. A spokesman for Beaumont Health also said the eight-hospital nonprofit system was not planning layoffs. Nationally, federal regulations changes led to an estimated cut of $1.6 billion from more than 2,500 nonprofit hospitals that participate in the drug discount program. The federal rule, which went into effect Jan. 1, slashed Medicare reimbursement rates on certain drugs from 6 percent above the sales price from pharmaceutical companies to 22.5 percent under the sales price. Ascension — the largest nonprofit health system in the nation with more than 140 hospitals in 24 states — ended the first half of fiscal 2018 with operating income of $84.7 million, down 78 percent from operating income of $379.6 million in the same period a year earlier. Revenue also declined less than 1 percent to $11.4 billion during the first six months of 2018, according to Ascension’s financial report. Ascension also experienced a 2.5 percent decline in inpatient admissions and a 3.2 percent fall in emergency department visits. Outpatient visits, however, increased 2.8 percent, the report said. Health insurers also have been affected by changes in the Affordable Care Act under the leadership of the Trump administration. For example, Health Alliance Plan, which is owned by Henry Ford Health System, laid off 169 employees last fall. Blue Cross Blue Shield of Michigan laid off at least 50 employees in 2017 and an additional 70 in January. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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PEDIATRICS FROM PAGE 3

“We have three subspecialty clinics, and we will have several more over the next years,” said Berman. The subspecialty clinics are near its hospitals in Royal Oak, Troy and Dearborn. “Everything we do across Beaumont we do to help children. It is a systemwide effort.” Under Beaumont’s multiyear pediatrics plan, inpatient admissions at Beaumont grew 6.8 percent in 2017 and outpatient visits grew 2.8 percent from 2016. Since 2015, Beaumont has grown in pediatric volume by about 15 percent and pediatric emergency visits by 1 percent, he said. Statewide, inpatient pediatric admissions dropped 4.5 percent to 44,622 in 2017 from 46,612 the year before, said the Michigan Health and Hospital Association, which surveys its hospital members. Brian Berman: Outpatient visBeaumont taking its also declined market share. 1.9 percent to 1.495 million from 1.523 million during that period. Berman said Beaumont is mostly growing by taking market share from its competitors. “Given the demographics, our growth has to be at the expense of others,” he said. Several other health systems in Southeast Michigan also offer inpatient and outpatient pediatric and obstetrical care. They include Henry Ford Health System, St. John Providence Health System, McLaren Health Care and Detroit Medical Center. In January 2016, DMC opened a $42 million pediatric outpatient center in Troy in a major push to increase its market share. During 2016, DMC experienced growth beyond its predictions, but in 2017 volume flattened, officials said. The 63,000-square-foot DMC children's center includes an emergency department, operating rooms, clinics and outpatient services. DMC also operates specialty pediatric centers in Canton Township, Clinton Township, Dearborn, Novi and Southfield. John Truscott, a DMC spokesman with Truscott Rossman in Lansing, said DMC Children’s experienced a small downturn in volume during 2017.

Christie Hartwell: Beaumont recruits specialists.

BEAUMONT HEALTH

Mohammad Osman examines Leah Taylor,6, of Dearborn Heights, at the Beaumont Pediatric Subspecialty Clinic in Dearborn.

However, this year patient volume is strong, especially ER visits, driven by flu and other winter ailments, he said. When DMC’s new children’s tower opens this summer, Truscott said admissions and patient visits downtown are expected to increase “in order to meet the needs for more specialized and acute care.” He added Children’s does many more advanced procedures on children than other hospitals in metro Detroit. Henry Ford Medical Group has increased pediatric outpatient volume by nearly 25 percent across all specialties the past three years, officials said. For 2017, newborn deliveries are up 2.5 percent and pediatric inpatient admissions are up 8 percent from 2016. Christie Hartwell, a children’s health care consultant and founder of CH Strategy Consulting, LLC in Richmond, Va., said larger hospitals that have pediatric departments like Beaumont, DMC Children’s and the University of Michigan’s C.S. Mott Children’s have been able to maintain or increase volume because smaller community hospitals have either downsized pediatrics or closed units. “Beaumont has become a more robust children’s hospital in the last decade because they have recruited specialists,” invested in care and have a

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broader market with the addition of Botsford Hospital and four-hospital Oakwood Healthcare in the 2014 merger that formed Beaumont Health. “This has moved them up a tier,” she said. Hartwell said Beaumont’s pediatric subspecialty growth strategy illustrates confidence that patients want what Beaumont has to offer. Despite inpatient volume not growing in most markets nationally, Hartwell said some health systems like Beaumont have devised strategies to grow despite the overall volume declines. “Even in areas where birth rates have rebounded, prenatal care is working, and most babies are healthy. The kids who end up in children’s hospitals, a big chunk are very sick,” said Hartwell, noting that about 5 percent of children account for 40 percent of the inpatient volume. “Babies are incredibly premature or they have complex issues that makes them come into the hospital.”" Moreover, medical technologies have improved and helped to decrease patient days, which reduces overall pediatric revenue, she said. In what could be an unusual business deal, Crain’s has reported that UM began discussions in early fall 2016 with a pediatric group affiliated with DMC Children’s Hospital that is now affiliated with Wayne State University School of Medicine. Talks among UM, DMC Children's and University Pediatricians became serious last October before a Wayne County Circuit Court judge ordered them to be halted until March 20. The order was based on a court ruling that UP could not talk with other universities until after a six-month notification was given based on UP's affiliation agreement with WSU. If UM gains a foothold in Detroit and combines strategies with its own Mott Children's Hospital in Ann Arbor, the child health market could radically change in Southeast Michigan, experts told Crain's. Hartwell said she knows of no situation nationally where a major medical school such as UM is contemplating taking away another medical school's affiliation with a children's hospital. "Some children's hospitals and pediatric practices end up with strange models where they have multiple relationships with academic institutions because of subspecialty shortages," Hartwell said. She added that children's hospitals

are highly valued because of the amount of research dollars and philanthropic support available for child health. "Some markets you see physician groups like UP that have relationships that aren't monogamous and sometimes they have multiple academic affiliations and relationships for teaching and research," Hartwell said. "UM might entertain a possible relationship with pediatrics they might never have considered on the adult side." But with intense competition between hospitals for the relatively flat pediatric market, Hartwell said she is not surprised health systems are looking for a variety of strategies.

The birth trend There were 113,374 births in the state in 2016, down 1.2 percent from 114,717 in 2010, said the Michigan Department of Health and Human Services. However, in Southeast Michigan, Macomb and Oakland counties bucked the trend, with births increasing by 3.9 percent from 2010 to 2016. For Beaumont, births increased 1.4 percent to 17,700 across Beaumont, including 6,872 at the main Royal Oak hospital, said Berman, adding that Beaumont has been able to work closely with the more than 500 primary care pediatricians on its hospital medical staffs. It also has a 75-physician employed pediatric specialty group. “Access to services, being available to referring physicians and the collegial culture of working with the primary care physicians” has contributed to inpatient and outpatient growth, he said. Beaumont’s third location is in Dearborn, across from Beaumont Hospital Dearborn. The small clinic located in a medical center opened in January and has three subspecialists in neurology, gastrointestinal and endocrinology. The clinic will expand into other clinical areas. Daniel Frattarelli, M.D., chief of pediatrics at Beaumont Dearborn, said the hospital has a large pediatric department and adding the subspecialty clinic has helped save patients travel to Royal Oak or Troy. “We are located across from the hospital and have lab and imaging and blood work downstairs,” he said. In Dearborn, the two pediatric neurologists are Alexandra Shaw, M.D., and Danielle Nolan, M.D. The pediatric endocrinologist is Shabana Kalladi

Daniel Frattarelli: Clinic a convenience for parents.

Puthanpurayil, M.D.; and the pediatric gastroenterologist is Mohammad Oxman, M.D. “To me as a pediatrician, having a subspecialty clinic nearby is more a convenience for parents,” Frattarelli said. “If I see a child with a neck mass, I can get them someplace quick for an evaluation.” Despite the statewide decline in births, Frattarelli said Beaumont has seen increases in inpatient and outpatient volume because the system is putting clinics closer to patients. “A lot of it has to do with the supply of primary care doctors in the area. Part of it is population growth” in areas Beaumont serves, he said. Berman said Beaumont subscribes to the theory of “if you build it they will come.” Frattarelli said one trend he is noticing is that it may not be an increase in pediatric patients, but that patients are visiting more. He did not have data on outpatient visits in Dearborn. “Doctors need to spend more time with patients and we are doing that,” he said. “We are maintaining our volume of patients but are seeing them more often, especially in subspecialty clinics” where they have more serious conditions. “What drives outpatient care is the availability of pediatric subspecialists. It is a national issue and problem in almost every market,” Hartwell said. “You measure delays not in days, but in months,” Hartwell said. “There is a bottleneck. When a children’s hospital invests in recruitment of pediatric subspecialists they fill (appointments) right up. It looks like the market is growing because it was artificially constrained by supply.” Hartwell said many of her children’s hospital clients see 2 percent to 5 percent increase in subspecialty visits when they add doctors. Beaumont Children’s Hospital, which actually is a hospital-within-a-hospital at the Royal Oak campus, was created in 2008 under when it became a member of the National Association of Children’s Hospitals and Related Institutes. The hospital actually consists of several distinct parts. They include the 80,000-square-foot William & Marie Carls Children’s Medical Center, the inpatient floor that houses 120 children’s and neonatal intensive care unit beds with more than 1,800 admissions. Beaumont Children’s also houses the Ghesquiere Family Center for Children's Surgery, a surgical specialty center for children that has performed more than 6,000 surgeries. An additional 21 private and NICU beds are at Beaumont Hospital Troy. Overall, Beaumont has more than 200 pediatric beds in its system. “You can be the most fantastic physician in the universe but if you don’t work in an aligned team” the outcomes are unlikely to be the best, Berman said. “We have aligned physicians and support staff and everyone is engaged in the larger clinical enterprise.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Page 2

SPLT

FROM PAGE 3

a trend, but because that’s what makes it successful.” Glenn Stevens, executive director of Detroit-based auto industry marketing organization MichAuto, said Bosch’s approach to SPLT is becoming the new normal and representative of the paradigm shift in the industry’s approach to new bets on technologies. “This is just another example of the auto industry and the tech industry converging; no, colliding,” Stevens said. “The tech industry is traditionally more used to operating in partnerships and these two industries are learning from each other and adapting their business models in different, but similar ways.” The approach is different because its acquisitions are different. Legacy automotive traditionally engaged in M&A activity that immediately impacted its bottom line — acquiring a competitor or plant, for example — and led to an immediate vertical integration and takeover of the acquired asset’s corporate governance, balance sheet and operational fortitude. But software acquisitions aren’t bolt-on entities designed to be rolled out through the chain of operations, said Mike Wall, director of automotive analysis for research firm IHS Markit in Southfield. “We’re all living in the near-term pressure of selling cars, but acquisitions like this are a different value proposition,” Wall said. “They are investing in these entities and these people, not in a parts plant. These are

A screen shot of the SPLT website.

standalone investments, where they are dedicating capital, letting it gestate and see what comes out of it and not wanting to disrupt what made these companies successful.” Bosch’s confidence in SPLT stems from its long-by-tech-standards relationship. Bosch became a SPLT cus-

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SURVEY ANALYZE MATCH

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tomer in 2016 after an internal survey in Mexico found that the perk its workers most desired was an efficient way to get to work. After hearing Babbitt pitch her company at Google Demo Day, Schlegel knew SPLT could solve his workers’ problems. The app works by

creating a community of carpoolers within an individual company, matching co-workers to share their ride to work. Employees can see their match prior to accepting the ride and can communicate within the app. “Mexico City has the most congestion in the world,” Schlegel said. “The pain point of getting to work or school is exceptionally high. It’s not just time, it’s money. Shared transport makes this more economical for my employees and others and cuts emissions — that’s highly attractive.” Which is another dramatic shift in the politics of operating in the automotive business: Socially and environmentally aware companies outperform their peers. The 58 companies recognized as “green” buyers — those whose procurement practice accounts for climate risk — in a January list of sustainable companies by McKinsey & Co. and environmental impact research nonprofit CDP outperformed the S&P 500 by 6 percent over four years. And according to 2017 study by Cone Communications, 87 percent of consumers said they would purchase a product because a company advocated for an issue they cared about and more than 75 percent said they would boycott a brand if the company supported an issue contrary to their ethics and values. This showcases the buying power of the millennial generation. For Babbitt, a 36-year-old millennial, reducing carbon emissions is critical to her business case. Her college thesis focused on the Kyoto Protocol, the 1995 treaty that committed nations to reducing greenhouse gases, and sustainability is now part of

February 26, 2018 19

“This is just another example of the auto industry and the tech industry converging; no colliding.” Glenn Stevens

SPLT’s core mission. “Knowledge is valuable,” Schlegel said. “The learning is not one directional. SPLT is not just going to gain from our expertise. We also learn about opportunities and pain points in an operation that’s relatively small. We gain these little insights, whether that’s about business or the environment, that we can use in future acquisitions. We see this as a sound investment with a good chance to deliver good profitability to us and our end users and externalities for communities as well as our mission.” Bosch’s mission is the critical word, as it and its peers are searching in these types of acquisitions for what the future of automotive holds and how their business will disrupt or be disrupted. “Are we in the automotive parts business? Are we in the mobility business?” Schlegel said. “We understand that in a broad way we’re now in the mobility business and we want to be active and play a significant role in that sector. That means acquisitions like this that provide solutions for our customers and benefits to society.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

REAL ESTATE COMMERCIAL PROPERTIES

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 6 , 2 0 1 8

ROADS FROM PAGE 1

Sucher said he has seen a steady stream of people in his shop since December, averaging into the thousands of customers per month and working on 30 to 50 cars per day — double the number of repairs during the summer. Most come in with blown tires or busted rims, along with a pothole horror story. “We've been patching instead of replacing the roads,” he said. “It’s turned into a perfect storm.” Cadillac Asphalt got a $4.5 million contract with MDOT to open up earlier than usual this season and use asphalt for repairs on I-696 and I-75 — traditional cold-patch techniques have failed to withstand recent freeze-thaw swings. Wet weather has also delayed some of MDOT’s emergency road work over the past week. Dearborn-based AAA Michigan auto club has received 32 percent more service calls related to tires damage this winter compared to the same time last year, said Susan Hiltz, public affairs director. “Although AAA cannot attribute a direct link to potholes and tire problems, deteriorating roads have a hazardous effect on motorist safety and increase the risks for tire problems,” the auto club said in a statement. Vehicle repair costs due to pothole damage in the U.S. totals about $15 billion, with the average pothole repair cost being $300, according to AAA. “This time of season definitely draws in a lot of customers, and the customer count has been up this year,” said Jason Wilson, Detroit-area manager for Firestone Complete Auto Care. Detroit-based Boulevard & Trumbull Towing’s business has doubled this winter, Vice President Matt Bancroft said. Bancroft said his towing firm is the beneficiary of overrun road service calls to insurance companies, which are estimating three- to four-hour waits for customers to receive service. “We’re kind of a secondary backup for road services when needed,” he said. “ETAs have tripled or quadrupled in most spots for road service.”

Deals for drivers Repair shops like Firestone are turning up deals on products and services as deteriorating roads eat up tires. Firestone is selling its lifetime alignment service for $179 and select tires for $50 off per set, for example. Goodyear was also promoting a $50off deal on tires. Discount Tire Co. has similar deals. Tire warranties are also on the rise. Allen Park-based Belle Tire has seen a 35 percent increase in warranty replacements on tires compared to the same period last year. Most tire shops offer standard warranties and spe-

SNYDER FROM PAGE 3

“I think we also are kind of puzzled by that,” said Bob Murphy, director of university relations and policy for the Michigan Association of State Universities. “The only thing stronger for a wage premium than a bachelor’s degree is a graduate degree. The more you learn, the more you earn.” The rollout of Snyder’s “Marshall Plan,” a one-time $100 million infu-

“We’ve been patching instead of replacing the roads,” he said. “It’s turned into a perfect storm.” Jon Sucher

cialty warranties for a fee. Rims, broken wheel parts, mufflers and even pieces of fenders are strewn along major thoroughfares in metro Detroit, like Mound Road and Gratiot Avenue, serving as a reminder of the damage the poor roads are causing. A crater on eastbound I-696 just before the Van Dyke Road exit tore a wheel well shield off of Marianne Zaranek’s Ford Escort last Tuesday morning on her way to the General Motors Technical Center in Warren, the project manager for Detroit-based MarxModa said. “I saw like four to five cars that had been on the side of the road there,” she said. “The car in front of me didn’t see (the pothole) in time ... he hit it, I was right behind him. We ended up being cars number six and seven on the side of the road.” She pulled over, got out and faced slowing traffic to grab the piece, before heading to a dealership. She said it cost her about two hours of her workday. After many MarxModa employees were impacted by poor roads, the company sent out directions on how to get reimbursed for pothole damage in Wayne County. The process requires estimates or receipts for any repairs — and having a photo helps, according to the county’s website. With rain and thawing ice filling up potholes this winter, it can be impossible to tell their depth to judge how to respond and prevent costly damage, Zaranek said. Similarly, Robin Schwartz of Robin Schwartz PR paid $500 to replace two flats her Lincoln MKC received last Tuesday after she hit what she thought was a puddle while exiting off of southbound I-75 just before I-94. “Next thing I know, it felt like my car was being dropped by a helicopter,” she said.

The Liver of cr

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Government price tag The recent wet, thawing weather has taken a toll on the region’s cars and roads. But it isn’t the only factor. Over the last decade, the majority of the department’s highway work has resurfaced the roads, rather than reconstructing them — this keeps them together in the short term, but doesn’t replace the deteriorating layers underneath. An MDOT fact sheet attributed this to “dwindling transportation funding and skyrocketing” material costs. Two major projects with $90 million and $20 million price tags are expected to start later this year on

MDOT crews patch potholes at Gratiot Avenue and McDougal Street in the rain on Friday morning.

sion of programs aimed at boosting certificate training, came with different messages about filling the balance of the education levels needed to meet Allison Corey: ZF the demands of North America employers. The recruiter. plan is a play on the name of the $13 billion the U.S.

spent rebuilding western Europe after World War II. The “Marshall Plan” will include career exploration programs for high school students to introduce them to multiple pathways into the workforce, said Brian Whiston, superintendent of public instruction. “If I know I want to be an IT person, let me get that experience in high school, let me get those certificates that allow me to get a job — and then go to college while I’m working,” Whiston said. “So we want

to change the whole dynamic.” Corey, the ZF North America recruiter who spoke at Snyder’s event at the Michigan Science Center in Midtown, said her company’s immediate needs are filling engineering jobs that the state’s universities are not producing enough of. A day prior to the event, Corey had been at Michigan State University trying to build her company’s pipeline of engineering graduates who might someday work in the tier one auto supplier’s regional head-

KURT NAGL/CRAIN’S DETROIT BUSINESS

Kurt Twit

quarters in Livonia or other facilities in Northville, Farmington Hills and Washington Township. “It’s a huge challenge. Even if we find someone who has the educational background, they still don’t quite have a handle on things like coding and actually hands-on (experience) getting into the embedded system architecture,” Corey said in an interview. “That comes with time.” The engineering talent shortage has caused the supplier of transmis-

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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 // F E B R U A R Y 2 6 , 2 0 1 8

CHANGE FROM PAGE 1

CRAIN’S DETROIT BUSINESS

The intersection of McNichols and Livernois in Detroit is just one example of crumbling roads in Michigan.

I-696, and MDOT is planning an I-75 modernization effort that would reconstruct 18 miles of roads by the end of 2022. The Michigan House also voted last week to spend $175 million on road and transportation projects sooner than Gov. Rick Snyder had previously proposed. “The roads are just kind of crazy,” said Republican Rep. Laura Cox of Livonia. Back in his shop on East Davison Street, Sucher has a sort of shrine — or graveyard — dedicated to the damage caused by these “crazy” roads. It’s a stack of busted wheels accumulated over just a few weeks. A few minutes after speaking about the business surge this year, he shared a picture of a newly popped tire and the newest addition to his collection. “Another one bites the dust,” he said. Senior Reporter Dustin Walsh and The Associated Press contributed to this report.

NESS

Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

ities and

sions, steering parts, airbags and other auto components to consider restructuring job requirements and duties, Corey said. “As a company, we have talked about going toward hiring people with certificates in coding to do those specific tasks,” she said. “Where an engineering bachelor’s degree could comprise of a lot of different (skills).” Roger Curtis, director of state Department of Talent and Economic Development, said the sheer volume of jobs coming open by 2024 requires

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The other half has yet to come — a $600 million bite out of the state’s $10 billion general fund that traditionally supports social services, prisons, business development and higher education. It’s an earmark the next governor and Legislature could very well ax in the next recession. Just a year into the actual funding of this scheme, there are pretty clear signs — or, in this case, holes in our roads — that the amount of money is insufficient for the needs, particularly when we get a winter like this with multiple freeze-and-thaw cycles that cause metro Detroit’s heavily trafficked roads to split wide open. In Oakland County, there are 600 miles of roads rated in poor condition that need to be repaved. Last year, the Road Commission of Oakland County repaved 45 miles of county roads, which was a record, said Craig Bryson, senior manager of communications for the road commission. At a rate of 45 miles of repaving each year, it will take 13 years to fix the roads in Michigan’s second-largest and arguably most politically influential county. Less than 25 percent of Oakland County’s roads are rated as “good,” Bryson said. During the next 13 years, the good roads will become fair and the fair roads will become poor — and the cycle repeats. “We’re not going to get roads in good condition on a large scale at this rate,” Bryson said. Oakland County’s total state funding was about $60 million before the 2015 plan passed. When the plan is fully funded, Oakland County will have $100 million in state funds, most of which goes to maintenance and repaving, Bryson said. “That will help us to begin to solve the road condition problem,” Bryson said. “It doesn’t do anything for the congestion problem, which presuming the economy remains strong, will just get worse.”

No new funding for widening or creating a boulevard along the congested Southfield Road. No new funding for widening any of the mile roads that clog during morning and afternoon rush hours. No new funding for public transit to cut down on congestion, get workers to jobs and attract new employers to the region. Even with the full $1.2 billion in new funding, transportation leaders have been warning legislators, business leaders, drivers and taxpayers alike for years that Michigan’s roads are going to get worse before they get better. A lot worse. On just highways and state trunklines such as Gratiot, Woodward, Grand River and Michigan avenues, about 75 percent of the pavement is rated as being in good or fair condition, according to the Michigan Department of Transportation. By 2021, when the 2015 road funding plan is fully funded, 57.5 percent of the state’s highways and trunklines will be rated in good or fair condition. By 2028, that good or fair condition rating is project to fall to less than 43 percent of the trunklines and highways, according to MDOT. Before the Great Recession, a coalition in metro Detroit called Businesses for Better Transportation had lobbied lawmakers for the ability to raise new revenue locally that would bypass Act 51, the statewide funding formula law for local roads that was conceived when Harry Truman was president. Act 51 is the third rail of road funding politics in Lansing — no one dares to try to reform it. And, because of term limits, no one really has time or longterm political clout to do so. On a per capita basis, rural counties in the Upper Peninsula and west Michigan get more money through the formula than Macomb, Oakland and Wayne counties. That stalemate caused Businesses for Better Transportation to lobby to let counties ask voters for special taxes on fuel, vehicle registrations, driver’s licenses and real estate transfers and even a dedicated sales tax, which would

require a constitutional amendment. “Like a lot of stuff when it came to trying to get somebody to agree to allow us to increase taxes, it died on the vine, more or less,” said Roy Rose, chairman of Anderson, Eckstein & Westrick Inc., a Shelby Township-based civil engineering, architecture and surveying company that works in the road-building industry. Thirty-seven other states allow some kind of locally-assessed vehicle tax and eleven states allow cities to impose local fuel taxes, according to a new report from the Citizens Research Council of Michigan. Locally generated money could be applied differently by different communities — even to expand public transportation, said Melissa Roy, executive director of Advancing Macomb, a countywide business group. “Then you’re talking about something that everybody recognizes as a need, and wants, and you’re addressing the transit,” Roy said. Rose and Roy think the time has come to revisit the way local roads are funded and give voters in Southeast Michigan more local options besides countywide property taxes. Business Leaders for Michigan and the Detroit Regional Chamber have long advocated for roads to be funded by users. “This idea of having a local option for road funding does make an element of sense,” said Brad Williams, vice president of governmental affairs for the Detroit chamber. Local road funding sources would reduce dependence on a Legislature often dominated by outstate members whose communities have different economic development needs and often better roads because they have less traffic and fewer of the dramatic freezeand-thaw cycles that plague metro Detroit. “Unfortunately, we as the taxpayers, the users … we’re going to have to flip the bill or switch everything back to gravel,” Rose said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Broken car wheel parts litter the side of northbound Mound Road, not far from large potholes, south of 15 Mile Road in Sterling Heights. KURT NAGL/CRAIN’S DETROIT BUSINESS

an all-of-the-above approach to getting students trained in certificates as well as associates and bachelor’s degree programs. “When you have 811,000 jobs, it’s everything,” Curtis said. “These are not either-or selections. ... You may go to a one-year credential and go into a very well-paying job ... but then go on to get your mechanical engineering (bachelor’s) degree.” Snyder, who leaves office at year’s end, is asking the Legislature to approve spending the $100 million over

the next five years. At Thursday’s event, both House Speaker Tom Leonard of DeWitt and Senate Majority Leader Arlan Meekhof of West Olive spoke in favor of the plan. “I’ll be honest, as a parent, I pushed my kids to go to college without really much regard about what job was on the other side of that,” Meekhof said. For some educators, Snyder’s approach to higher education is a welcome departure from policies de-

signed to create a direct high school-to-college pipeline. “We finally called out the lie for the last 10 years that at the end of the K-12 education experience that the only route you had was to go through a four-year institution. That’s not the truth,” said Tim Thorne, superintendent of Oxford Community Schools. “We are finally coming to the belief that that philosophy is wrong.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Crain’s Detroit Business is published by Crain Communications Inc Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 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 2018 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 // F E B R U A R Y 2 6 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Shinola President Jacques Panis to leave company

DDP CEO eyes Cadillac Square for market

FEBRUARY 16-22 | For more, visit crainsdetroit.com

hinola/Detroit LLC President Jacques Panis is leaving the Detroit-based luxury goods maker, effective March 2. Shannon Washburn, vice president of watch development, is to replace Panis on the same date, according to a statement released Thursday. Panis, 40, said in the release that it was the right time for him in his career to “move on” and that he plans to take time before deciding what he’ll do next. He was not available for further comment. Panis may be better suited to moving on to something “entrepreneurial” at this time, the global brand's founder, Tom Kartsotis, said in the release. Panis helped create the company alongside Kartsotis. “The brand has evolved to a point where the best parts of Jacques’ unique capabilities can be put to better use in a role that is more entrepreneurial than what his current role has become,” Kartsotis said. “... This unique guy wants to explore how his unique gifts can be more rewarding, both creatively and professionally.” Panis said he plans to “continue supporting” the Detroit-based brand. He started with Shinola in 2010 at its inception, leading the company’s brand strategy and product development. He became president in 2013. Panis, who moved to Detroit in 2014, is a board member for the Detroit Institute of Arts and Detroit Children’s Fund. Before joining Shinola, Panis led Dallas-based animation studio ReelFX’s interactive division. During that time, he helped found Webosaurs, an online children’s game. Washburn, 57, will lead the brand, product development teams and marketing, the release said. She will report to CEO Tom Lewand, the former Detroit Lions team president Kartsotis hired in June 2016. The announcement of Panis’ exit comes about eight months after Chief Marketing Officer Bridget Russo said she was leaving the company to take a professional break and possibly launch a new company in Detroit. Shinola has grown from a boutique watchmaker in Detroit to a large-scale producer of upscale bicycles, bags, turntables, jewelry and office accessories with 28 stores across the globe — 26 in the U.S. — and 650 employees. It has a factory on West Milwaukee Street in the New Center area and a store on West Canfield Street in Midtown — the first one it opened in Detroit in 2013.

BUSINESS NEWS J A U.S. Bankruptcy Court in Delaware approved the reorganization plan last week for Takata Corp.'s U.S. entity TK Holdings, paving the way for Sterling Heights-based Key Safety Systems Inc. to acquire the embattled supplier. J Metro Detroit tire and auto repair shops are experiencing booming business this winter as temperature extremes and heavy traffic worsen already crumbling roads. Belle Tire says warranty tire replacements are up by 35 percent.

USPBL

The Birmingham-Bloomfield Beavers defeated the Westside Woolly Mammoths at Jimmy John’s Field in Utica to take the 2017 USPBL championship. Opening Day for the United Shore Professional Baseball League is May 11, kicking off a weekend at Jimmy John’s Field in Utica loaded with festivities, fireworks and live music.

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

$10.2 million

The price tag for a temporary fix of a 4-mile section of crumbling Mound Road in Macomb County this summer.

The number of units planned for a new multifamily housing development in West Village

32 percent

The increase in tire service calls AAA Michigan auto club has received in the state this winter, compared with the same time last year.

J Bentley’s Pet Stuff, family-owned natural pet food supplier in suburban Chicago, plans to open its first Michigan store in Ann Arbor and eight across the state by the year’s end. J The president of the Michigan Mortgage Lenders Association issued an apology to Quicken Loans last Wednesday after making “regrettable comments” about the company to Michigan Public Radio. It addresses comments he made in a Feb. 15 story that focused on the issue of redlining — the practice of denying loans to those deemed to be financial risks. J The Farmer’s Hand grocery store in Corktown plans to open an expanded cafe this spring called Folk, serving breakfast and lunch. J Checkers & Rally’s Restaurants Inc. plans to grow its Southeast Michigan presence by 59 fast-food locations over the next six to 10 years. J A dealership based in Philadelphia specializing in the sale of luxury and exotic cars plans a second location in downtown Pontiac, in a building formerly owned by the parent company of The Oakland Press. J Clot Buster, a startup creating a medical device for clot removal, won the top award of $25,000 in the 2018 Michigan Business Challenge. J Cobo Center launched a new system that allows exhibitors to order conference services online, streamlining what is sometimes seen as a cumbersome process. J Cantoro Italian Trattoria, a new

Italian restaurant with banquet and private seating space, is planned for the former home of Tre Monti Ristorante behind the San Marino Club in Troy. J The University of Michigan business school hosted educators from some of the country’s top business programs last week to explore how organization dynamics can provide a competitive advantage for sport teams. J To make up for a space crunch during a $48.1 million construction project, St. John Macomb-Oakland Hospital enlisted the help of Madison Heights-based Triune Specialty Trailers to build a 1,000-square-foot mobile hospital unit. J Ford Motor Co. last Thursday tapped Kumar Galhotra, a company veteran who steered the Lincoln luxury brand back to respectability, to replace Raj Nair, who was ousted after an internal investigation uncovered “inappropriate behavior,” as its president of North America, Automotive News reported.

s Dan Gilbert’s real estate company prepares to break ground this year on a redevelopment of the Monroe Block, the Downtown Detroit Partnership is starting to contemplate new features to add to Cadillac Square. DDP CEO Eric Larson is interested in having Eastern Market establish a permanent marketplace building in Cadillac Square for weekday sales of fresh food and locally made products to downtown workers and residents. “That’s a great use for the Cadillac Square,” Larson said. “I personally think it would be really fun to get a summer market going in the downtown during the weekday, which doesn’t compete with the weekend drive to [Eastern Market]...” Gilbert’s Monroe Block development — bounded by Randolph Street, Bates Street, Cadillac Square and Monroe Avenue — is to include a 35-story building with 818,000 square feet, about 480 multifamily residential units and 170,000 square feet of retail space.

Dan Carmody, president of the Eastern Market Corp., said he’s open to the idea, but there have been no formal discussions with the downtown business group. “We’re always interested in talking with community partners to see how to improve food access and food entrepreneurship in the city of Detroit,” Carmody said. DDP has focused in recent years on expanding the number of public spaces downtown and revitalizing existing plazas, such as Capitol Park. Last year, the partnership and City of Detroit opened the Spirit Plaza on Woodward Avenue between Larned and Jefferson and a sparsely used pedestrian plaza along Randolph Street at the Gratiot Avenue intersection. Larson said plans are in the works to make the Randolph Street plaza open this summer to patio space and allowing neighboring restaurants and bars to serve alcohol outside. Buffalo Wild Wings, The Wild, the Baltimore Bar & Grill and the new Giordano’s Pizza are based along the Randolph Street plaza.

OTHER NEWS J Detroit’s only campground, Scout Hollow in Rouge Park, will reopen this spring through a public-private effort led by the YMCA of Metropolitan Detroit, Sierra Club and Detroit Parks and Recreation Department. J The Detroit Sports Commission is looking for volunteers to greet college teams and visitors at hotels in metro Detroit when Little Caesars Arena hosts its first March Madness games. J The Knight Foundation made a $1.5 million grant to CitizenDetroit to expand its efforts to get Detroit residents the information and access they need to influence civic decision-making and become civically active. J The city of Detroit is launching a new career mentorship program at five of its high schools after winning $100,000 from the Bloomberg Philanthropies’ Mayors Challenge and earning a spot as one of 35 “champion cities” competing for up to $5 million in grants. J Nonprofit Venture Inc. is planning a $10.9 million renovation of Washington Middle School in Pontiac for affordable senior living.

OBITUARY J Cliff Russell, Detroit’s first African-American mayoral press secretary and a former WWJ AM 950 reporter and anchor, died Feb. 18 at 61.

HYPERLOOP TRANSPORTATION TECHNOLOGIES INC.

In Hyperloop capsules, passengers and cargo hover through a network of low-pressure tubes between cities and transform travel time from hours to minutes, according to the company’s website.

Is Hyperloop seeking Detroit-Chicago route? A

California company has communicated with the Michigan Department of Transportation about a futuristic transportation system that could approach the speed of sound to and from Detroit. A spokesman for the state agency said Hyperloop Transportation Technologies Inc., based in Los Angeles, has “made contact and while there is no meeting scheduled, we are always willing to listen.” He did not respond to follow-up questions. The company, which is seeking to build a national network of highspeed commuter trains that could travel at speeds up to 760 mph, said last week it has signed “official agreements” with the Illinois transportation department and North Ohio Areawide Coordinating Committee to start conducting a feasibility study on building a system that would provide 28-minute commutes to Cleveland from Chicago.

“We see outstanding potential and economic benefit in connecting Detroit to our Great Lakes Hyperloop network,” Robert Miller, chief marketing officer for the company, said in an email to Crain’s. “At this time however we cannot comment on ongoing conversations.” Perhaps the best known hyperloop advocate is Tesla and SpaceX CEO Elon Musk, who proposed such a system to connect Los Angeles and San Francisco for what he estimated was $6 billion to $7.5 billion. Hyperloop Transportation Technologies later proposed a similar concept that would cost $7 billion to $19 billion. But how much would, say, a route from downtown Detroit to downtown Chicago cost, based on HTT’s estimates of $20 million to $45 million per mile? A lot. There’s about 300 miles between the two, so based on those numbers you’re looking at $6 billion to $13.5 billion.

KIRK PINHO

Join Crain’s real estate insider Kirk Pinho and a group of powerhouse experts as they share perspectives on the future of Detroit’s real estate market, what factors are impacting development in the area and how changes in the market can directly affect your business.

Thursday, March 22

8-10:30 a.m. Garden Theater, Detroit Individual ticket: $80 Reserved table of 10: $850

PANEL 1: FOLLOWING (AND ATTRACTING) THE MONEY Downtown Detroit’s resurgence is news everywhere from the New York Times to CNBC. But it still lags other cities in outside investment from REITs, hedge funds and others with deep pockets. What will it take to get Detroit to the next level? PANELISTS:

*This special discount is only available to young professionals ages 21-35. You may be required to show ID at the event.

Sonya Mays, president and CEO, Develop Detroit Inc.

Are you a Crain’s Detroit Member? Email us at cdbevents@crain.com to receive your individual ticket discount.

Clifford Brown, managing partner, Woodborn Partners LLC

Young Professional (30% Off) $56

Dennis Bernard, founder and president, Bernard Financial Group Dan Mullen, president, Bedrock LLC

PANEL 2: THE BIG PICTURE: ECONOMIC OUTLOOK FOR DETROIT COMMERCIAL REAL ESTATE An economic outlook for Detroit’s real estate market: What are the economic issues that will affect the region? Is it purely the performance of the automotive industry, or have we moved beyond that? What other outside factors will play a role? PANELISTS:

Keona Cowan, senior vice president, Invest Detroit Paul Traub, senior business economist, Federal Reserve Bank of Chicago, Detroit branch