Crain's Detroit Business, April 9, 2018 issue by Crain's Detroit Business

What keeps Joan Budden, CEO of Priority Health, up at night? Page 4

Renovation begins on historic Masonic Temple Page 3

APRIL 9 - 15, 2018 | crainsdetroit.com

SPORTS BUSINESS

MANUFACTURING

Ideal Group builds by trying new things

Last track standing

Northville Downs to hire staff to handle new business from Hazel Park Raceway By Bill Shea bshea@crain.com

The end of Michigan’s thoroughbred horse racing industry will be something of a windfall for the state’s last remaining track. News that Hazel Park Raceway closed Thursday after 69 years disturbed Mike Carlo, operations man-

ager and co-owner of Northville Downs, but he’s already putting plans in place to absorb any new business. “We’re ready to take on the business that we assume will transition over to Northville,” he said. The harness track has 69 employees for the waging and racing business,

and Carlo said he expects to add more than 30 more to handle any influx from Hazel Park customers. The food and beverage service at Northville Downs is handled by a third-party concessionaire that Carlo said will probably double its staff. He didn’t have job numbers for concessions. SEE NORTHVILLE, PAGE 18

Need to know

J Northville Downs will hire staff to handle Hazel Park Raceway gambling refugees J Track has remained profitable despite steep wagering declines

By Chad Livengood clivengood@crain.com

Michigan left with single horse track, down from 7 just a decade ago J

About eight years ago, Loren Venegas took a dozen of his family-run company’s Ideal Shield plastic-sleeved bumper posts to a sales pitch meeting with Huntington Bank. Most of the steel barriers the Detroit company makes, called bollards, are wrapped in yellow plastic — for visibility — and can be found around the perimeters of McDonald’s restau-

CRAIN’S MICHIGAN BUSINESS

CITIES BY THE BAY

Need to know

JJThe Ideal Group Inc. began moving from Livingston County to southwest Detroit in 1995 JJMultifaceted company in steel fabrication, construction and protective barrier businesses posted $350 million in sales in 2017 JJSales rose 51 percent between 2010 and last year

Bay City at dusk. GREAT LAKES BAY CONVENTION AND VISITORS BUREAU

Saginaw, Bay City back from the brink as downtowns rebound By Tom Henderson thenderson@crain.com

Saginaw and Bay City have something in common with Mark Twain: Rumors of their death have turned out to be exaggerated. Like many mid-sized cities around the state 10 or 15 years ago, they seemed well on their way to becoming ghost towns. Downtown storefronts sat vacant. Movie theaters were shut-

tered. Parking lots were empty. Sidewalks went without walkers. "You could have easily shot a cannon in any direction downtown and not hit anyone,” said Trevor Keyes, the president and CEO of Bay Future Inc., a nonprofit economic development agency in Bay County that was founded in 2004. Outside the window of his office in the historic Phoenix Building on Washington Avenue, Bay City’s main street,

two cranes were busy working on another historic building, the Legacy-Crapo Building across the street, a $12 million project that will convert it into a mixed-use office and residential space, with plans for 24 apartments on the top three floors, two office suites on the second floor and commercial space on the ground floor. Cranes! Once as rare downtown as carrier pigeons. SEE BOOMTOWNS, PAGE 17

Need to know

J Saginaw Future, Bay Future have helped drive tens of millions in development in comeback downtowns J 240-acre Great Lakes Tech Park in Saginaw County is offering free shovel-ready land for approved projects J $12 million Phoenix Building in downtown Bay City one among many historic renovation, new construction projects

rants, Costco warehouse stores and Boeing aerospace assembly plants. The retail banking giant wanted them in lime green. “We thought they were out of their minds,” Venegas said. “But when they redid their banks and started to put them up, they actually looked pretty good.” The sale of thousands of customized barriers to Huntington Bank since 2010 was a reminder to Venegas that listening to the customer usually opens more doors of opportunity. “You gotta listen to the customer. It’s the most important thing to do,” said Venegas, president of Ideal Group Inc. “If they want goofy, we’ll do goofy.” Trying new things and adjusting to a changing customer base has been a central tenet in the rapid growth of the steel fabrication and barrier company Venegas’ brother, Frank, founded in 1979 and moved to southwest Detroit 23 years ago to fill a major void left by a Cadillac plant that had been shuttered in the late 1980s. SEE IDEAL, PAGE 20

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A vending machine, but for tooling parts

FOCUS

SAGINAW/BAY CITY CRAIN’S MICHIGAN BUSINESS:

By Tom Henderson thenderson@crain.com

just It was spring of 1986 and Jim Terry, who was Saginaw about to finish his marketing degree from on a Valley State University, had a plan: To embark induscareer as a salesman in the pharmaceutical try. at Terry was working his way through school of drill Fullerton Tool Co., a Saginaw-based maker Paul bits and cutting tools for factories, and met Markey, whose small company, Saginaw-based P.F. Markey Inc., was a distributor of Fullerton’s

CRAIN’S MICHIGAN BUSINESS – Saginaw/Bay City, Page 8 BROUGHT TO YOU BY:

GENE MEADOWS

Corning Inc. and Shin-Etsu Chemical of Japan.

reeling The only U.S. polysilicon supplier is still

Hemlock Semiconductor was founded in 1961

and is a joint venture of the Dow Chemical Co.,

rods are broken down into chunks and small chips to meet specific customer Hemlock Semiconductor is the post- requirements. is a vast amount of elecHow much er child for the unintended consetricity? The company is the largest user quences of trade wars. electricity in Michigan and annually One of the world’s leading makers of of consumes more electricity than all the polycrystalline silicon, more commonresidents and businesses of Lansing ly known as polysilicon, the key comand Ann Arbor combined. ponent of both solar-cell panels and The company has 130 buildings on semiconductors, Hemlock was badly 200 acres, the largest of which is 310,000 hurt by a decision the Obama adminissquare feet. Five hundred miles of tration made in 2012 that was intended large-diameter, above-ground pipes to bolster the U.S. solar-power industry. connect the buildings, distributing About 700 Hemlock workers eventually such chemicals as trichlorosilane, lost their jobs, a brand new plant in which is made up of silicon, hydrogen Tennessee had to be shuttered and the and chlorine; silicon tetrachloride, company lost billions. is made up of silicon and chloHemlock, named for the unincorpo- which rine; and hydrogen chloride, made up rated community between Midland of hydrogen and chlorine. The chemiand Saginaw where its sprawling facility tanks hauled in by is based, was cals come from large founded in 1961 truck. and is a joint venture of the Dow Unintended Co., consequences Chemical Corning Inc. and polysilicon to the supplying 2011, In ChemiShin-Etsu panels was Hemcal of Japan. Dow makers of solar-cell market. By then, and Corning each lock’s fastest growing business was own 40.25 percent 90 percent of Hemlock’s power Shin-Etsu supplying the burgeoning solar and Mark Bassett: share of that 90 owns 19.5 per- industry, and the lion’s Hopeful about to China, which sales in was percent cent. trade talks. of the world’s Polysilicon is consumes 80 percent polysilicon. of production ubiquitous — it’s in every computer, Demand had outgrown the Hemlock tablet, laptop and smartphone. “There’s manufacbillion $1.2 new facility and a a chance everyone in Michigan has a turing plant near Clarksville, Tenn., was cell phone with some Hemlock poly in , with plans already

In this package

By Tom Henderson

JJSister nonprofits work for a brighter

future in Bay City, Saginaw. Page 1 JJThe only U.S. polysilicon supplier is still reeling. This page

thenderson@crain.com

JJA vending machine, but for tooling

parts. Page 9

JJAn aerospace startup lifts off in Bay

City. Page 10

JJCommunications startup helps

HEMLOCK SEMICONDUCTOR

An aerial view of the sprawling facility located

solar manufacturers by SolarWorld could undermine the solar industry’s significant progress at the very moment it is poised for success,” said Dow Corning President and CEO Robert Hansen. That May, though, the U.S. decided to impose tariffs averaging 31 percent

between MIdland and Saginaw.

Saginaw businesses tell their stories. Page 12 JJFrom Saginaw to the cloud, Dice Corp. grows security business. Page 12

zation. now. As part of his announcement, “The implementation of tariffs on Trump directed Lighthizer to engage in Chinese solar panels had no direct bendiscussions that could lead to the resoefit to us,” said Bassett. “Frankly, the lution of the tariffs imposed on Chitariffs enacted by China were devastatnese solar products and on U.S. polysiling to Hemlock. We built that plant in icon. Tennessee on the assumption we’d In a statement released on Jan. 24, we and markets, world to have access Hemlock said it believed restoring its had to immediately shut that plant on Chinese solar products. access to China through such a resoluand lay off hundreds of people.” Hemlock’s Tennessee plant did offi- down would expand U.S. jobs, grow U.S. “There are unintended consequenc- tion cially open in 2012, but because of worexports and reduce the trade deficit es of trade wars. Once they start, you ries over a possible response by China, with China. don’t know where they will end," said no chemicals were ever inventoried In March, Trump announced plans founder of

“Frankly, the tariffs enacted by China were devastating to Hemlock.” Mark Bassett

products. as Markey convinced Terry to go to work for him spend a a salesman, telling him that he ought to expefew months as a salesman there to get a little path. rience, then head out in the fall on his career — P.F. Markey was just a three-person outfit were Markey, a secretary and a salesperson. Sales a place of kind the wasn’t It less than $1 million. a great soon-to-be eager college graduate saw as job ofcareer opportunity, but Terry accepted the fer. still is Terry planned. Things didn’t work out as there. He’s never sold a drug. He has, however, of distributor built a tiny operation into a national six in a tooling parts with 58 employees, including in sales office in Redford Township; 48 customers OntarMichigan, another 37 around the U.S. and $50 io; and projected revenue this year of almost million. in a He has also spun off another business R&S building across the parking lot from Markey, for MarCutter Grind LLC, which sharpens tools which key customers. He co-owns that business, employs six, with Alan McNalley. “To my surprise, I fell in love with the tooling business,” said Terry. In 1998, Terry attended the huge International Place in Machine Tool Show at the McCormick world. Chicago, the largest such trade show in the drumAt a small booth, one of the attendees was maming up sales for what looked like a vending chine. bag of Only instead of getting a candy bar or a The chips, you’d get a drill bit or a grinding disc. back came “I AutoCrib. an branded machine was ‘I think and told Paul, ‘This is the future.’ Paul said, business a together put can it’s a fad, but if you model for me, we’ll try it.’” AuThere were two advantages to using the for custoCrib to supply cutting and grinding tools tomers. were By using the Web to alert Markey as tools prodispensed and automating the reordering cess, the AutoCrib saved time. maBut the chief problem Markey’s vending shrinkchines solve is euphemistically known as age, or theft. are The carbide drill bits that Markey distributes

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

MICHIGAN BRIEFS

INSIDE

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

Candidates for governor to debate at Mackinac

The top contenders for governor in the Republican and Democratic primaries will share a stage at the Grand Hotel for a joint debate on the final night of this year’s Mackinac Policy Conference. The Detroit Regional Chamber’s political action committee is sponsoring an 90-minute debate on May 31 for the top three candidates in both major parties vying to be the state’s next chief executive. The chamber plans to limit the debate to the “cream of the crop candidates” who finish in the top three of each primary field in a statewide survey the chamber has commissioned with Lansing-based polling firm Glengariff Group Inc., said Brad Williams, vice president of governmental relations for the Detroit Regional Chamber. In the Republican field, Attorney General Bill Schuette has led most polls to date of likely primary voters over Lt. Gov. Brian Calley, followed by state Sen. Patrick Colbeck and Saginaw obstetrician Jim Hines. Former Senate Minority Leader Gretchen Whitmer has been seen as the frontrunner in the Democratic primary but has faced a mounting opposition from Ann Arbor busi-

nessman Shri Thanedar and former Detroit health department Director Abdul El-Sayed. Former Xerox executive Bill Cobbs also is actively seeking the Democratic Party nomination. The debate will occur about 10 weeks before the Aug. 7 primary. The annual post-Memorial Day confab at the Grand Hotel is traditionally a hotbed for politicking during election years. In 2010, the chamber held a dual debate with the two Democratic candidates running for governor — then-Lansing Mayor Virg Bernero and then-House Speaker Andy Dillon — as well as the five Republicans who ran for governor that year: then-Attorney General Mike Cox; then-U.S. Rep. Pete Hoekstra; then-state Sen. Tom George; Oakland County Sheriff Mike Bouchard; and businessman Rick Snyder, who went on to defeat Bernero in the general election. Schuette has previously called for a gubernatorial debate at the Mackinac conference.

Mobility council targets cybersecurity, liability

The state’s 21-member council focused on advancing Michigan’s mobility industry is calling on the state to identify and amend laws to prepare for autonomous vehicles. The Michigan Council on Future Mobility, which was created in con-

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DEALS & DETAILS

KEITH CRAIN

OPINION

OTHER VOICES

PEOPLE

WEEK ON THE WEB

to withdraw 250 gallons a minute from an underground aquifer in Osceola Township. The top contenders for governor will share a stage at the Grand Hotel for a joint debate on the final night of this year’s Mackinac Policy Conference.

junction with an autonomous vehicle bill passed in December 2016, recommends Michigan maintain its national leadership position in the field of mobility by creating a public-private framework for vehicle cybersecurity as well as studying and addressing liability and insurance risks associated with autonomous vehicles. The council made its recommendations public last week after presenting them to Gov. Rick Snyder. The group is calling for the state to study the Michigan Vehicle Code and the Michigan Insurance Code and seek ways to codify the liability of autonomous vehicles, by determining whether the word “drive” or “operate” should be amended.

State OKs Nestle water-pump bid

Michigan officials have approved a permit allowing Stamford, Conn.based Nestle Waters North America Inc. to pump more groundwater for its Ice Mountain brand, The Associated Press reported. The Michigan Department of Environmental Quality ruled last week the company’s application to increase water output to 400 gallons a minute meets state standards. Officials said in a statement that most of public comments they received expressed opposition to the permit, but the department “thoroughly and conscientiously” applied the law in its review. The company had been permitted

Synthetic coolant leaks from power cables

Submerged cables that carried electricity between the two peninsulas were shut down after leaking about 550 gallons of coolant fluid into the waterway that connects Lake Huron and Lake Michigan, officials said last week, according to the Associated Press. The fluid is a mineral-based synthetic oil used for insulation that can be harmful if released into the environment, said Jackie Olson, spokeswoman for American Transmission Co., which operates the cables. It was too early to know what ecological damage might have been done in the Straits of Mackinac, said Joe Haas, district supervisor for the Michigan Department of Environmental Quality. No warnings were issued for people to avoid the area.

Thursday, May 10

8-10:30 a.m. | Somerset Inn, Troy Individual ticket: $80 Reserved table of 10: $850 Young Professional (30% Off): $56

What did we learn 10 years ago? There’s more flexibility and discipline in the system – but has there been too little capital investment? Where is the risk and who will be affected?

RUMBLINGS

For the first time in a generation, metro Detroit is flush with capital. How can your business tap into it? And what will it mean for the region when – not if – we have another recession? Crain’s NEXT: Finance is a look at the future of metro Detroit’s economy and what that means for your business.

WHAT DOES THE NEXT RECESSION LOOK LIKE?

RON FOURNIER

HOW TO TAP INTO NEW CAPITAL FOR YOUR BUSINESS

Experts say it’s a better time than ever for businesses to access capital. Is it true? Why and what’s changed? More importantly, how can business owners tap into it?

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

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

NONPROFITS

DDP looks at funding sources for Campus Martius upkeep By Sherri Welch swelch@crain.com

The Downtown Detroit Partnership is evaluating long-term sustainable sources of funding to pay for the upkeep of Campus Martius Park in downtown Detroit and other cityowned parks it oversees. One option the partnership has considered, according to a memo obtained by Crain’s, is a $17 million endowment campaign to support Campus Martius itself. However, CEO Eric Larson said the

Need to know

JJDowntown Detroit Partnership works

to create sustainable revenue for Campus Martius Park JJPlan includes new endowment campaign and increasing earned revenue, business development zone funding JJBut DDP says there are no current plans to launch an endowment campaign

agency has no current plans to launch an endowment campaign and is just proactively evaluating

multiple sources of sustainable funding. The campaign envisioned in the memo would launch this spring to round out the Detroit 300 Conservancy’s $3.5 million endowment to $20 million by 2020 through broad gifts and others that come with naming rights for things like the fountain, ice rink, gardens and seasonal “beach” at Campus Martius. DDP said it would look to combine the campaign with bids to increase SEE PARK, PAGE 19

REDEVELOPMENT

LARRY PEPLIN FOR CRAIN’S

The seasonal “beach” at Campus Martius Park in downtown Detroit.

HEALTH CARE

Masonic Temple begins $3.7M renovation

Insurers begin bundled pay program for knees, hips

By Kirk Pinho

By Jay Greene

The historic Masonic Temple in downtown Detroit has started a $3.7 million renovation expected to be complete by the end of the year. In addition to the improvements to the 96-year-old building on Temple Street, the Masonic Temple Association, which owns the property, wants to reposition or find new uses for the 55,000-squareNeed foot East Tower. to know Those uses could JJMasonic Temple range from office begins a $3.7 space to a boumillion renovation, tique hotel or to be complete by residential if rethe end of the year developed. The work inJJ30,000 square cludes renovafeet of space on tions of existing upper floors to be restrooms and leased installation of JJUpgrades will additional reallow more events strooms; sound to take place at insulation imthe same time provement; upgrades to heating and cooling systems; and updates to two large kitchens. On the exterior, masonry restoration and limestone façade cleaning are planned. Steve Genther, facilities general manager for the Masonic Temple Association, said insulation improvements will allow the association to host multiple events concurrently as sound from one event won’t bleed into another. About 30,000 square feet of space on the upper floors will also be marketed for lease, Genther said.

Michigan health insurers are creating programs aimed at getting better prices and quality for hip and knee replacements, some of the most expensive and common surgeries, and the programs are likely to move more of the procedures outside the hospital. Blue Cross Blue Shield of Michigan has signed up Need two orthopedic to know medical groups, JJBlue Cross has five hospitals and signed seven 65 orthopedic bundled payment surgeons into contracts with five one of the state’s hospitals, two first programs to physician offer a flat fee organizations and known as a bun65 orthopedic dled fee for surgeons non-complicated knee and hip surJJPriority Health geries in people also has rolled out under age 65. a bundled hip and Under the Blue knee reimbursement program and Cross program, providers in plans to offer one for back and spines Southeast Michigan will be paid a JJGoal is to reduce single fee of surgery and $28,700 for the post-operative knee or hip recosts from as high placement suras $58,000 to gery and will be under $28,000 responsible for 90 days after the surgery for all covered treatment, including physical therapy, rehabilitation, home health or nursing home care. Blue Cross has different regional bundled rates based on historic care episodes.

kpinho@crain.com

jgreene@crain.com

Renovations are planned for the interior and exterior of the Masonic Temple in Detroit. LARRY PEPLIN FOR CRAIN’S

SEE MASONIC, PAGE 19

SEE BUNDLED, PAGE 21

MUST READS OF THE WEEK ‘Serious’ plan for road repairs

Detroit weather to stream on Cobo marquee

Swedish retailer scoping out Detroit

Gubernatorial candidate Gretchen Whitmer has a proposal for fixing the state’s ailing infrastructure. Page 6

365 days of Detroit weather part of yearlong art installation. Page 22

Sources say H&M is looking for a site to located a store in downtown Detroit. Page 22

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

WHAT KEEPS YOU UP AT NIGHT?

For a CEO, what’s a good day? J

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A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

Michigan’s #1 Financial Advisor*

oan Budden of Priority Health has some advice for her fellow CEOs, even those whose companies have nothing to do with health insurance. Start small. Adjust fast. Grow to scale. “Think big and start small,” she told me in a wide-ranging interview that touched on the politics of health care and the unique challenges RON facing her $3.7 billion Grand Rapids-based FOURNIER company serving nearly 800,000 members. Budden, the company’s president and CEO, said her team of 1,200 employees is adept at identifying a problem, fixing it for a small group of members, and then broadening the solution throughout the health plan. One of her biggest challenges, she said, is helping employees understand that they can’t solve every problem. “Where it is tough for me is when people are so well-intentioned that they want to take care of the member and they want to understand how the business side works,” she said. Some ask her directly, “Why do we have to make any money?” To those employees, Budden explains that Priority Health keeps its administrative costs low and operates on a 2 percent profit margin. “It is hard to convey how important it is for us to remain financially solvent — for people who just really want to do good for people,” Budden said, expressing pride in her employees’ dedication to service. “Those are hard conversations.” The hardest conversations are about politics. Budden is clearly annoyed at Washington for failing to adapt and improve the Affordable Care Act, which expanded health care coverage to millions of Americans. “We could have gone with the ACA and made incremental changes from there and probably have gotten to a better place,” she said. “Instead, we are trying to reverse the direction of the ACA, which is causing true disruption in the market.” The rest of our conversation was edited for length and context.

What keeps you awake at night?

Charles C. Zhang CFP®, MBA, MSFS, ChFC, CLU Managing Partner

Charles has been ranked in the top 10 on Barron’s list of Top 100 Independent Financial Advisors for 2015, 2016, and 2017 and is currently the highest ranked fee-only NAPFA-Registered Financial Advisor on the list.**

We Uphold a Fiduciary Standard 101 West Big Beaver Road 14th Floor Troy, MI 48084 (248) 687-1258 or (888) 777-0126

www.zhangfinancial.com Assets under custody of LPL Financial and TD Ameritrade. *As reported in Barron’s March 4, 2017. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices and other factors. **As reported in Barron’s August 22, 2015, August 27, 2016, and September 15, 2017. Based on assets under management, quality of practices, revenue that advisors generate for their firms, and other factors. For fee-only status see NAPFA.org. Minimum Investment Requirement: $1,000,000 in Michigan/$2,000,000 outside of Michigan.

The one thing is that health care is going to go through a tremendous period of disruption. It is at the crossroads of technology and science, really reaching the next level of capability. That means more control for consumers?

Yes, definitely. And we couldn’t need that more. Health care is becoming too expensive. It is becoming unaffordable. Our job at Priority Health is … providing you financial access for the care you need to get healthy, be healthy, and stay healthy. In order to do that, we need to have radical change in the system … but managing that position and that change (is) a big task. Radical is a scary word. Demystify the change coming to consumers.

From the consumer’s perspective, I think it is nothing but good. Health care and the care they will receive is going to be much more consumer-centric. It is going to be much more focused on you. We will need fewer inpatient (hospital) stays. We will still treat really severe illnesses in a (hospital) setting, but much more is going to be able to be done … in the physician’s office or in (your) home. That can be healthier, because there is less chance for infection, and it can be more preventative and more (about) managing disease, and not just treating it when you reach that acute stage. Now as the care changes, the (in-

surance) plan has to be nimble and change with it. If our job is to help you get the care you need, we have to have open minds about what is that care and how do you best get it. Talk a little bit about the changes we are going to see due to technology.

The kinds of procedures that we do today with the diagnostic testing and those kinds of things will be able to be done much more efficiently and effectively in a lower-cost setting. They are talking about being able to do ultrasounds through iPhone, for example, and you can already do telemedicine. So how does this make health care cheaper?

It makes access better and more affordable, because you can get quicker access to the care you need and sometimes in a lower-cost setting. Tell me more about your take on the ACA debate in Washington.

What happened here is we had an imperfect law passed, and we have been reversing it with the change of parties in Washington. To be clear, you are talking about the Trump administration and Republicans in Congress rolling back Obamacare?

Yes, but I don’t want to make it this partisan. If I go way back to where my disappointment starts, it’s not the original structure of the ACA, it’s the fact

Joan Budden PRIORITY HEALTH

The Budden File Age: 56 Education: B.S., General Studies, University of Michigan; Master’s of Public Administration, Wayne State University Biggest achievement: My kids — Megan and Mitchell First job: Taking pizza orders at Lorenzo’s Pizza in Livonia Life goal: To leave the world a better place than when she came into it

that way back then, the Democrats knew they needed to fix it. Hillary said it in speeches. Obama administration (officials) said it as well. Had they made some adjustments, then we would have started off one foot closer instead of the exact opposite tail-spinning the other way. Let’s talk about being a CEO at Priority Health. What’s a good day?

A good day is when I get a story about how we are really helping somebody and somebody really believed in us. I love it when it matters to people, and sometimes that comes from an employee. I get a lot of letters directly from members and I get letters from members that may have moved and they tell me that they have never had a plan like Priority Health and they talked to (an employee named) Mary last week and she was her case manager and how great she was. Those are good stories. Those are the good days.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

OPINION COMMENTARY

Whitmer pushes road funding plan that relies on new debt

ormer state Sen. Gretchen Whitmer, the frontrunner for the Democratic nomination for governor, pitched a “fix the damn roads” plan last week for repairing Michigan’s faltering infrastructure that comes with one big caveat: Get out the damn credit card. Whitmer proposed the creation of an infrastructure bank that would need to be capitalized with up to $2 billion in new state bond debt every year for the next decade in order to leverage an additional $1 billion annually in local, federal and private funding for repairing and replacing roads, bridges, dams, underground water and electrical grid infrastructure. The East Lansing Democrat says the state can’t afford to keep pursuing a pay-as-you-go strategy to fixing crumbling roads and bridges, which has been the approach a debt-cutting Gov. Rick Snyder has pursued over the past eight years in conjunction with a debt-adverse Republican-controlled Legislature. The bonds would have to be backed by a dedicated revenue source and Whitmer has not ruled out “user fees” such as higher fuel taxes, vehicle registration fees and penalties for heavy trucks. “I’m not introducing the budget today, but here’s what I do know: We can’t fix the roads with piddly withdrawals from the general fund here and there,” Whitmer said, referencing the Legislature’s midwinter injection of $175 million into road repairs in the midst of the worst pothole season in recent memory. “We can’t just hope the roads are going to get better,” Whitmer said in an interview. “It’s going to take some effort — and this is a serious plan that I’m putting on the table and a real commitment to do the job and

CHAD LIVENGOOD clivengood@crain.com

do it right.” Whitmer rolled out the plan on a week in April when the groups supporting the two leading Republican rivals — Attorney General Bill Schuette and Lt. Gov. Brian Calley — were exchanging increasingly personal barbs. And while the “fix the damn roads” phrase is catchy, Whitmer’s plan for drumming up $20 billion over 10 years for infrastructure investments is much more complex. Whitmer devised the plan with guidance from Jay Rising, a retired Detroit Medical Center executive who served as former Gov. Jennifer Granholm’s state treasurer from 2003 to 2006. “What you’re trying to do is create a state which is conducive for business development,” Rising said in an interview. “We’re at the point now if we don’t start prioritizing infrastructure development, it’s going to hurt the ability to sustain the economic development we have.” Rising said the infrastructure bank would need to be funded with 30year bonds backed by a designated revenue source. “It would be difficult to come up with $2 billion a year for 10 years from current revenue,” Rising said. That’s the lesson Snyder and the Legislature — and by extension Calley — have learned as they’ve re-

CRAIN’S DETROIT BUSINESS

Gretchen Whitmer proposed the creation of an infrastructure bank for repairing and replacing roads, bridges, dams, underground water and electrical grid infrastructure.

peatedly turned to the state’s $10 billion general fund for one-time surpluses to pave over potholes on roads like I-696 in Macomb and Oakland counties that have long outlived their life expectancy. Rising suggested one area of revenue the state could tap to repay the bonds after 2030 is the Michigan Economic Growth Authority tax credits when they expire. The state shells out more than $600 million annually in tax credits to big businesses — namely General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles — that still use the Granholm-era Michigan Business Tax. “The easiest one to look at is take the MEGA credits,” Rising said. That’s assuming Detroit’s Big

Three automakers won’t still want them. Even though politicians of all stripes have vowed to end the MEGA credits when they expire in a dozen years, the old tax code is integrated into the business models of GM, Ford and FCA to incentivize their continued base of operations in Michigan and preserving up to 100,000 jobs. The prevailing thought in Lansing the past few years is that the Big Three may eventually want to retain their own tax code, separate from the 6 percent corporate income tax rate other big corporations pay. And because of term limits, the 148 members of the Legislature and new governor elected in November won’t still be in office by the time the MEGA credits stop being a general

Another victim falls I

have to admit that I have never been to Hazel Park Raceway, and I don’t bet on the ponies. The governor of Kentucky once invited me to the Kentucky Derby, and I placed a small bet on a loser, but that is my experience with horse racing. Nevertheless, I am sorry that Hazel Park is closing and being sold off for development. It was probably just another victim, among many, of the creep of technology. I don’t know if installing slot machines would have saved it, but my guess is that outside of Churchill Downs, the days of horse racing are numbered. Last week, I was at the funeral of a very successful man who had built

KEITH CRAIN Editor in chief

up Blockbuster Video into a giant and then sold it for more than $8 billion. Now Blockbuster has disappeared, itself a victim of technology. When you start to think about it, we are watching a lot of traditional industries disappear as new and bet-

fund liability in 2030. These are the financial, economic and political realities facing the next governor and Legislature — balancing the urgent priority to fix the roads with past promises. Whitmer contends the flawed nature of the $1.2 billion annual road funding increase Snyder and the Legislature devised in 2015 — which won’t be fully funded until 2021 — is starting to show up in broken pavement and broken tire rims. And, if elected governor, she’ll push to take Michigan down a different infrastructure-funding road. “It’s time for us to fix the roads in Michigan and do it right,” she said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

LETTERS ter — or at least different — technology takes over. There is a battle going on right now in the automobile industry as makers of driverless cars fight to replace the driver in vehicles. They will probably be somewhat successful, but my guess is that it will take a couple of decades to see winners and losers. When was the last time you saw someone put some Kodak film in their Kodak camera? Another victim. It doesn’t seem that long ago when we all thought that the fax would replace everything, and it died before it could really get started. It will make for an interesting trivia game to think about all the industries that have simply gone away or been

replaced by a newer technology. I hate to think of Hazel Park as one of those victims, but its industry has been fighting for its very survival for quite a while. There are many who wonder what will become of the printed word, whether it’s publications or books or whatever. Time will tell. Meanwhile, it seems OK to mourn each time a business that was at one time cherished sinks below the waves. There is no accounting for taste. Yesterday’s obsolete idea may be tomorrow’s hot new idea. Meanwhile, we should lower our flags to honor the death of Hazel Park.

Issue bonds to pay for roads?

To the editor: There is a simple reason why the Detroit area has more potholes than most of western Europe. Europeans build their roads using much higher standards for both bases and asphalt. This type of road can cost much more than ours to build, but lasts two or three times longer. Perhaps communities could issue bonds to pay for roads that would not crumble and need to be replaced every few years at great inconvenience and cost to both motorists and businesses. Richard Rosenbaum Bloomfield Hills

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OTHER VOICES

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Judith Wollack

Michigan has need for mental health workers A

t a time when our nation seeks common ground of agreement, versus planting the flag of “R” or “D” on “won” turf, do we really need to look any further than gun violence, anxiety and depression, income inequality, the opioid crisis or racial injustice? Solutions are necessary for our entire nation now, and the timing couldn’t be better to call attention to the dire need for more mental health professionals in Michigan. Although social work is one of the fastest growing professions because of the rise in such issues, with more than 680,000 professional social workers in our nation, according to the Bureau of Labor Statistics, there is a severe shortage of professional social workers in the U.S. to manage the growing caseloads in our communities. In fact, last year, the Michigan Department of Community Health reported that metro Detroit has more than 300 designated health professional shortage areas with insufficient mental health professionals to meet the needs of the population. I am a second-generation social worker. I began my career more than 40 years ago at Hawthorn Center, Children’s Psychiatric Hospital and have been dedicated to helping children ever since. My husband started Wolverine Human Services in 1987 to provide residential services to male adolescents in the juvenile justice system. We’ve expanded, adding services to different populations over the years to become the largest child welfare agency in Michigan with six residential facilities and three foster care offices, serving close to 500 children daily. I commend the bipartisan work of the House C.A.R.E.S task force and urge all legislators to implement policy changes and legislation to improve the level of mental health care in Michigan. We are increasingly beyond wanting more professionals to tackle these issues for us. We are now in desperate need. We need legislation to combat the growing shortage of mental health care professionals by expanding Michigan’s talent pool. We need more funding. We need to reallocate resources. We need to incentivize mental health professionals to work in Michigan. We need to increase relevant residencies. We need to recognize that the cultural issues before us require more mental health professionals to help than we simply have now. The problems they solve tomorrow will ease a burden that impacts homes, towns, cities and ultimately, an entire nation. Our social ills don’t have one owner; we must recognize that only the addition of more trained mental health professionals can better address those issues that impact us all. Judith Wollack is CEO of Grosse Pointe Park-based Wolverine Human Services.

,ĞĂůƚŚǇ &ĂŵŝůŝĞƐ͘ ,ĞĂůƚŚǇ ƚŽ tŽƌŬ͘ ,ĞĂůƚŚǇ ƚŽ ZĞƟƌĞ Thursday, June 7th | 7:00 AM - 4:30 PM | The Inn at St. John's - Plymouth, Michigan :ŽŝŶ <ĂƉŶŝĐŬ /ŶƐƵƌĂŶĐĞ 'ƌŽƵƉ ĂŶĚ ŽƵƌ <ĞǇŶŽƚĞ ƐƉĞĂŬĞƌ͕ dŝīĂŶŝĞ z͘ >ĞǁŝƐ͕ ƚŽ ĚŝƐĐƵƐƐ ͞dŚĞ DŽƐƚ /ŵƉŽƌƚĂŶƚ dƌĂŶƐĨŽƌŵĂƟŽŶ ŝŶ ,Z͘͟ >ŝƐƚĞŶ ƚŽ ƚŚĞ ƐĞŵŝŶĂƌ ƉƌĞƐĞŶƚĂƟŽŶƐ͕ ĞŶŐĂŐĞ ŝŶ ďƌĞĂŬŽƵƚ ƐĞƐƐŝŽŶƐ͕ ĂŶĚ ŝŶƚĞƌĂĐƚ ǁŝƚŚ ŽƚŚĞƌ ĂƩĞŶĚĞĞƐ ĚƵƌŝŶŐ Ă ŶĞƚǁŽƌŬŝŶŐ ƌĞĐĞƉƟŽŶ͘ ĐŽŵƉůŝŵĞŶƚĂƌǇ ďƌĞĂŬĨĂƐƚ ĂŶĚ ůƵŶĐŚ ǁŝůů ĂůƐŽ ďĞ ƉƌŽǀŝĚĞĚ͘ EĞǁ ƚŚŝƐ ǇĞĂƌ Ͳ Ă ĐŚĂƌŝƚĂďůĞ ĚŽŶĂƟŽŶ ǁŝůů ďĞ ŵĂĚĞ ďǇ <ĂƉŶŝĐŬ ĨŽƌ ĞĂĐŚ ƉĞƌƐŽŶ ŝŶ ĂƩĞŶĚĂŶĐĞ͊

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CRAIN’S MICHIGAN BUSINESS: SAGINAW/BAY CITY

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Hemlock Semiconductor was founded in 1961 and is a joint venture of the Dow Chemical Co., Corning Inc. and Shin-Etsu Chemical of Japan.

The only U.S. polysilicon supplier is still reeling By Tom Henderson thenderson@crain.com

Hemlock Semiconductor is the poster child for the unintended consequences of trade wars. One of the world’s leading makers of polycrystalline silicon, more commonly known as polysilicon, the key component of both solar-cell panels and semiconductors, Hemlock was badly hurt by a decision the Obama administration made in 2012 that was intended to bolster the U.S. solar-power industry. About 700 Hemlock workers eventually lost their jobs, a brand new plant in Tennessee had to be shuttered and the company lost billions. Hemlock, named for the unincorporated community between Midland and Saginaw where its sprawling facility is based, was founded in 1961 and is a joint venture of the Dow Chemical Co., Corning Inc. and Shin-Etsu Chemical of Japan. Dow and Corning each own 40.25 percent and Shin-Etsu Mark Bassett: owns 19.5 perHopeful about cent. trade talks. Polysilicon is ubiquitous — it’s in every computer, tablet, laptop and smartphone. “There’s a chance everyone in Michigan has a cell phone with some Hemlock poly in it,” said Mark Bassett, the company’s chairman and CEO.

A vast operation The chemical process to produce polysilicon, known as a Siemens process, occurs in huge cylindrical tanks called vapor-deposition chambers. It uses vast amounts of electricity to grow crystals into U-shaped rods that weigh several hundred pounds, are about four feet long and have arms about five inches in diameter. After cooling, the

rods are broken down into chunks and small chips to meet specific customer requirements. How much is a vast amount of electricity? The company is the largest user of electricity in Michigan and annually consumes more electricity than all the residents and businesses of Lansing and Ann Arbor combined. The company has 130 buildings on 200 acres, the largest of which is 310,000 square feet. Five hundred miles of large-diameter, above-ground pipes connect the buildings, distributing such chemicals as trichlorosilane, which is made up of silicon, hydrogen and chlorine; silicon tetrachloride, which is made up of silicon and chlorine; and hydrogen chloride, made up of hydrogen and chlorine. The chemicals come from large tanks hauled in by truck.

Unintended consequences In 2011, supplying polysilicon to the makers of solar-cell panels was Hemlock’s fastest growing market. By then, 90 percent of Hemlock’s business was supplying the burgeoning solar power industry, and the lion’s share of that 90 percent was in sales to China, which consumes 80 percent of the world’s production of polysilicon. Demand had outgrown the Hemlock facility and a new $1.2 billion manufacturing plant near Clarksville, Tenn., was nearing completion, with plans already underway for a $3 billion expansion there. In 2012, though, several U.S. solar panel makers, including Oregon-based SolarWorld, lobbied the U.S. Commerce Department to impose tariffs on China over claims it was dumping its panels in the U.S. at below-cost to unfairly grab market share. In April 2012, Dow Corning and Hemlock announced they were opposed to such tariffs. “We believe that the trade case brought against Chinese

In this package

JJSister nonprofits work for a brighter future in Bay City, Saginaw. Page 1 JJThe only U.S. polysilicon supplier is still reeling. This page JJA vending machine, but for tooling parts. Page 9 JJAn aerospace startup lifts off in Bay City. Page 10 JJCommunications startup helps Saginaw businesses tell their stories. Page 12

HEMLOCK SEMICONDUCTOR

An aerial view of the sprawling facility located between MIdland and Saginaw.

“Frankly, the tariffs enacted by China were devastating to Hemlock.” Mark Bassett

on Chinese solar products. Hemlock’s Tennessee plant did officially open in 2012, but because of worries over a possible response by China, no chemicals were ever inventoried there and no product was made. China announced a tariff of 50 percent on U.S. polysilicon imports beginning in 2014, effectively halting Hemlock exports there. Chinese manufacturers replaced their supply of polysilicon with material from two other large global suppliers, Wacker Chemie AG of Germany and the Tokuyama Group of Japan. In December 2014, Hemlock shut the Tennessee plant down and laid off its 50 workers. Hundreds more were

laid off in Hemlock. Employment there is now about 1,500, down from a peak of about 2,200. While Hemlock doesn’t release revenue figures, reliable estimates are that its revenue has fallen from about $2 billion a year before the Chinese tariffs to about $1.5 billion now. “The implementation of tariffs on Chinese solar panels had no direct benefit to us,” said Bassett. “Frankly, the tariffs enacted by China were devastating to Hemlock. We built that plant in Tennessee on the assumption we’d have access to world markets, and we had to immediately shut that plant down and lay off hundreds of people.” “There are unintended consequences of trade wars. Once they start, you don’t know where they will end," said Lindsay Aspegren, a co-founder of North Coast Technology Investors LP, which has an office in Midland and has long followed Hemlock. Bassett said he is hopeful that trade talks between the Trump administration and China can reduce or eliminate tariffs on Chinese solar panels and Hemlock’s polysilicon. “We continue to have a dialogue with the U.S. Trade Representative Ambassador Robert Lighthizer and his team about the best way to ease tariffs.”

JJFrom Saginaw to the cloud, Dice Corp. grows security business. Page 12

Last May, Suniva, joined by SolarWorld, filed another trade case against Chinese imports. In January, President Donald Trump announced tariffs on Chinese solar cells and modules for four more years, a move that has been challenged at the World Trade Organization. As part of his announcement, Trump directed Lighthizer to engage in discussions that could lead to the resolution of the tariffs imposed on Chinese solar products and on U.S. polysilicon. In a statement released on Jan. 24, Hemlock said it believed restoring its access to China through such a resolution would expand U.S. jobs, grow U.S. exports and reduce the trade deficit with China. In March, Trump announced plans to implement tariffs of $60 billion on Chinese imports, with details to follow. How that announcement and subsequent discussions with the Chinese will impact Trump’s announcement in January that he hopes there can be a resolution of trade barriers for solar and polysilicon products remains to be seen. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

A vending machine, but for tooling parts By Tom Henderson thenderson@crain.com

It was spring of 1986 and Jim Terry, who was just about to finish his marketing degree from Saginaw Valley State University, had a plan: To embark on a career as a salesman in the pharmaceutical industry. Terry was working his way through school at Fullerton Tool Co., a Saginaw-based maker of drill bits and cutting tools for factories, and met Paul Markey, whose small company, Saginaw-based P.F. Markey Inc., was a distributor of Fullerton’s products. Markey convinced Terry to go to work for him as a salesman, telling him that he ought to spend a few months as a salesman there to get a little experience, then head out in the fall on his career path. P.F. Markey was just a three-person outfit — Markey, a secretary and a salesperson. Sales were less than $1 million. It wasn’t the kind of place a soon-to-be eager college graduate saw as a great career opportunity, but Terry accepted the job offer. Things didn’t work out as planned. Terry is still there. He’s never sold a drug. He has, however, built a tiny operation into a national distributor of tooling parts with 58 employees, including six in a sales office in Redford Township; 48 customers in Michigan, another 37 around the U.S. and Ontario; and projected revenue this year of almost $50 million. He has also spun off another business in a building across the parking lot from Markey, R&S Cutter Grind LLC, which sharpens tools for Markey customers. He co-owns that business, which employs six, with Alan McNalley. “To my surprise, I fell in love with the tooling business,” said Terry. In 1998, Terry attended the huge International Machine Tool Show at the McCormick Place in Chicago, the largest such trade show in the world. At a small booth, one of the attendees was drumming up sales for what looked like a vending machine. Only instead of getting a candy bar or a bag of chips, you’d get a drill bit or a grinding disc. The machine was branded an AutoCrib. “I came back and told Paul, ‘This is the future.’ Paul said, ‘I think it’s a fad, but if you can put together a business model for me, we’ll try it.’” There were two advantages to using the AutoCrib to supply cutting and grinding tools for customers. By using the Web to alert Markey as tools were dispensed and automating the reordering process, the AutoCrib saved time. But the chief problem Markey’s vending machines solve is euphemistically known as shrinkage, or theft. The carbide drill bits that Markey distributes are

pricey. A typical five-inch-long steel drill bit might cost a buck or two at Home Depot. The same-sized carbide bit costs about $60. “A steel bit might drill 200 holes. These will drill 10,000,” said Terry. Employees take them home or scrap the carbide tools for $10 a pound. With AutoCrib, tools are under lock and key, and companies can track which employees are getting them out. Terry’s proposal to Paul Markey and customers: Markey would buy the AutoCribs and install them for free at customers’ factories if the customer agreed to buy all its drill bits and grinding tools from Markey. The vending machines, depending on size and complexity, range from $20,000 to $45,000. Often factories used multiple tool vendors, and Terry wanted to eliminate the competition. Free vending machines was the way to do it. Markey installed the first AutoCrib in 1999, at Wixom-based Panther Crankshafts Inc. In 2000, Terry bought out Paul Markey. The company was doing $2 million a year in revenue. Eight years later, revenue was at $10 million. And that’s when the business really took off. Counterintuitively, the Great Recession gets the credit from Terry. During the recession, machine shops started closing. So Terry upped the ante. He started promising prospective customers a 20 percent savings annually in tooling parts cost if they made Markey their sole supplier. He’d write them a check for the difference if they didn’t save that much. Those savings were huge when owners were already tightening their belts. Much of those savings would come from reducing theft. But factory managers could also reduce costs using Markey’s reports. If two employees ran the same machines, for example, and one employee used more equipment over a period of time, perhaps he or she needed better training, or one machine was in need of repair or reconditioning. Wayne Gibson is chief operating officer at Traverse City-based Century Inc., a manufacturer of machined parts for the aerospace and oil and gas industries. He had been using several supplier of tooling parts but in 2015 wanted to consolidate them. Markey had been one of his suppliers and Gibson asked him to make a proposal. “Jim committed to a 20 percent reduction in costs from the beginning, and he hit that target,” said Gibson, who said he has seven or eight of the vending machines in three plants. “Twenty percent was a big number. I didn’t think he would make it, but he delivered.” Since offering the guarantee, Markey has more than quadrupled sales. Terry has set a revenue target of $100 million by 2022 and in 2016 hired an industry veteran, Tom Haggerty, as president to help oversee that growth. “He has the know-how to get us there,” said Terry.

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CRAINâ&#x20AC;&#x2122;S MICHIGAN BUSINESS: SAGINAW/BAY CITY

An aerospace startup lifts off By Tom Henderson thenderson@crain.com

CONNECTION TO

COM M U N IT Y We travel your roads and live on your streets so we know well what is important to your community. Local knowledge and personal understanding â&#x20AC;&#x201C; itâ&#x20AC;&#x2122;s all connected.

FISHBECK , THOMPSON, CARR & HUBER engineers | scientists | architects | constructors

It was a good-news, bad-news moment last October for the founders of Bay City-based BGT Aerospace LLC. The good? They were approved for the Small Business Administration loan they needed to get their startup, a maker of machine-tooled parts for military aircraft, really up and running. The bad? They were approved for the SBA loan they needed. To get it, founders Ben Davis and Garrett Oâ&#x20AC;&#x2122;Brien had to back up the loan with everything they owned, including their bank accounts and their houses. Scary? â&#x20AC;&#x153;Absolutely. Ask my wife. Sheâ&#x20AC;&#x2122;s terrified. Weâ&#x20AC;&#x2122;ve got four kids and one of them is in college,â&#x20AC;? said Oâ&#x20AC;&#x2122;Brien. It came on the heels of more good news, bad news: Landing their first military contract. â&#x20AC;&#x153;It was, â&#x20AC;&#x2DC;Oh my God, we just got that contract,â&#x20AC;&#x2122;â&#x20AC;? said Davis, breaking into a big smile to mimic how he felt when he heard that news. â&#x20AC;&#x153;And then it was, â&#x20AC;&#x2DC;Oh my God, we got that contract, how are we going to afford to fill it?â&#x20AC;&#x2122;â&#x20AC;? said Davis, changing his face into one of horror. And that was Ben and Garrettâ&#x20AC;&#x2122;s welcome to the world of startup entrepreneurship. Oâ&#x20AC;&#x2122;Brien and Davis had worked together in the Bay City facility of Thomas Instrument, a Brookshire, Texas-based manufacturer of components for the Department of Defense. Davis, a mechanical engineer from the University of Michigan,

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â&#x20AC;&#x153;We said, â&#x20AC;&#x2DC;We donâ&#x20AC;&#x2122;t want to do this anymore, working for someone else. We should start our own company.â&#x20AC;&#x2122;â&#x20AC;? Garrett Oâ&#x20AC;&#x2122;Brien

was the lead engineer in what is called actuation hardware, the gears and ball joints that move various parts of a plane, including wing flaps that go up and down during flight. Oâ&#x20AC;&#x2122;Brien ran the plant. Oâ&#x20AC;&#x2122;Brien said that in January 2017, management from Texas visited the Bay City facility. â&#x20AC;&#x153;They said, â&#x20AC;&#x2DC;Youâ&#x20AC;&#x2122;re going great, weâ&#x20AC;&#x2122;re giving you more work, weâ&#x20AC;&#x2122;re going to hire more people.â&#x20AC;&#x2122; On March 17, though, they said, â&#x20AC;&#x2DC;Weâ&#x20AC;&#x2122;re shutting this plant down, youâ&#x20AC;&#x2122;re gone.â&#x20AC;&#x2122;â&#x20AC;? Two weeks later, Oâ&#x20AC;&#x2122;Brien and Davis bought three pieces of tooling equipment for well below market value from Thomas, put them into cold storage and looked into whether they should start their own aerospace supply company. They figured they could always sell the equipment if they chickened out. â&#x20AC;&#x153;I was pissed off,â&#x20AC;? said Oâ&#x20AC;&#x2122;Brien, a journeyman tool maker who also has a business degree. â&#x20AC;&#x153;We said, â&#x20AC;&#x2DC;We donâ&#x20AC;&#x2122;t want to do this anymore, working for someone else. We should start our own company.â&#x20AC;&#x2122;â&#x20AC;? â&#x20AC;&#x153;There werenâ&#x20AC;&#x2122;t any other aerospace companies here, and I didn't want to move,â&#x20AC;? said Davis. They met with SBA officials, got good advice on a business plan and applied for a loan. While they waited to see if theyâ&#x20AC;&#x2122;d get it, they began working out of Oâ&#x20AC;&#x2122;Brienâ&#x20AC;&#x2122;s kitchen. They knew how the military procurement process worked and began looking at the online list of manufacturing jobs open for bidding â&#x20AC;&#x201D; jobs small enough for them to realistically bid on and fill. In April, they got that first contract Davis joked about, to make three pieces of equipment for the Air Force called jack assemblies for the ammunition loaders of A-10 Thunderbolt jet fighters. â&#x20AC;&#x153;It was only three pieces, but it was exciting,â&#x20AC;? said Davis. Last May, while driving around Bay City looking for space to rent, they

came across a hand-written for-rent sign outside a small, 5,500-squarefoot shop in a small industrial park on the north side of town. Serendipitously, the owner had just put the sign out the day before. It was a small building that had served as a warehouse. They got out their credit cards, paid to have years of oil drippings cleaned off the floors, installed bright new overhead lighting, bought another couple of used pieces of manufacturing equipment and moved in. â&#x20AC;&#x153;We had the bare minimum to begin making things,â&#x20AC;? said Davis. â&#x20AC;&#x153;It was about the level of equipment youâ&#x20AC;&#x2122;d expect to find in a farmerâ&#x20AC;&#x2122;s barn,â&#x20AC;? joked O'Brien. They made their jack assemblies. â&#x20AC;&#x153;It was a case study, a proof of concept. Weâ&#x20AC;&#x2122;d bought this cheap machinery and found this space to rent. But could we make it all work?â&#x20AC;? said Davis. So far, so good. In a year, they have landed 15 small military projects worth a total of about $250,000. And at the end of March, they hired their first employee, to help run their machines. (The G and B in the companyâ&#x20AC;&#x2122;s name is for their last names. They had a co-founder with a last name starting with a T, but he left the company soon after they launched. â&#x20AC;&#x153;We had already signed so many government forms that that T will be there forever,â&#x20AC;? said Davis.) One job was gearing for an escape hatch for an Ohio class submarine. Another was for a few of what they joke is a â&#x20AC;&#x153;holy s... handle,â&#x20AC;? a handle that triggers the ejection seat in a jet. Another job was for a hook to hold a cannon. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s all weird stuff,â&#x20AC;? said Davis. Enough weird stuff that â&#x20AC;&#x153;thereâ&#x20AC;&#x2122;s not enough hours in the day,â&#x20AC;? he said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re both working six or seven days a week,â&#x20AC;? said Oâ&#x20AC;&#x2122;Brien. And his wife, Rachelle, is starting to breathe a little easier. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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CRAIN’S MICHIGAN BUSINESS: SAGINAW/BAY CITY

Startup helps Saginaw businesses tell their stories By Tom Henderson thenderson@crain.com

It was 2014, and Amy Augustin was bored. An employee of Tampa, Fla.based AVI-SPL Inc., a provider of corporate communication services, she had a nice and remunerative gig as a sub-contractor at Midland-based Dow Chemical Co. As the company’s digital communications project manager, she was in charge of creating apps and websites and running e-mail campaigns. “But I wasn’t using my creativity. At Dow, we had meetings about meetings. I was tired of the corporate environment. I wanted to change gears,” said Augustin, who has a master’s degree in digital media and communications from Saginaw Valley State University, where she taught communication and theater as an adjunct professor. Plus, there were rumors swirling about a possible merger between Dow and Wilmington, Del.-based DuPont, one that was announced in December 2015. If there were meetings about meetings before the two giants joined together, there would be meetings about the meetings you hold before meetings after the merger. She wanted to strike out on her own. She quit her consultant job to have a baby, then while still at home full time in April 2015, she started putting out feelers and posted her resume on Indeed. Cliff Dice, the president and CEO of Saginaw-based Dice Corp., which provides software and cloud-hosting services for alarm companies around the U.S., saw it and got in touch. “I needed marketing videos and I needed training videos, so I thought,

“At Dow, we had meetings about meetings. I was tired of the corporate environment.” Amy Augustin

‘Let’s bring her in to do it,’” said Dice. “I met Cliff and his passion pulled me in,” said Augustin. He asked her to handle marketing and communications for Dice and for a telecom company he had spun off from Dice in 2014, IPtelX. But she had plans beyond filling Dice’s communciations needs. To satisfy her creative and entrepreneurial appetite, she founded Saginaw-based Venture6 Studio LLC and lured five colleagues away from Dow. “I stole some people,” she joked. The new company was unveiled at a Dice Corp. user conference in April 2016. There were no hard feelings at Dow over her departure and those of the other five. In October 2016, Augustin got her first non-Dice job, a

project for Dow. Since then, she has landed several projects with Nexteer, the large tier one auto supplier based in Saginaw. One recent project, for an internal presentation for top Nexteer executives, involved complicated shoots both at the Saginaw plant and one in Mexico. GoPro cameras were set up inside pieces of factory floor equipment and drones were launched overhead to capture the action of a busy production environment. Venture6 offers a range of services, including marketing strategies, logo design, cinematography, copywriting, video editing, creating mobile apps and multimedia presentations. Richard Budd, executive vice president for national sales at Bay Citybased Universal Printing Co., hired

Augustin for a national promotional campaign. “Our company needed to make an internet commercial to represent our company’s products and goals. Everything was done in a timely manner, and we got exactly what we were looking for at a very fair price,” he said. “I would recommend Venture6 to every business who needs advanced marketing representation.” Augustin projects revenue of $1 million this year. “We’ve done very well for a startup,” she said. Venture6 has also ventured into documentaries. Last year, she took a team to Uganda. “Cliff approached me and said he wanted to give back and we chose Uganda. We traveled to some of the poorest areas of east Africa, provid-

ing security resources for schools, hospitals and homes with a child head of household. Our team captured candid moments of compassion, dedication and friendship,” she said. The trip was the first of a series of trips Dice is sponsoring in a project they are calling Our Safer World. On March 30, Augustin took another team to Haiti for 11 days to shoot a video honoring the empowerment of women there. Dice sponsored that trip, as did the Avenue Hair Studio & Spa in Saginaw. A teacher from the Owosso Public Schools went along. Two other sponsors for events in Haiti they were attending were Paul Polly,owner of Wicked Sister foods in Australia, and Freeland-based Zentx Media Group Inc. The agenda called, among other things, for a graduation ceremony and dinner for 50 women who had graduated from child-care classes; visiting an orphanage and donating games and food; visiting schools and donating school supplies; donating supplies and helping build a kitchen on Haiti’s Gonave Island; and donating mattresses, solar flashlights, chalk boards and food in various villages. “This part of our business is not a revenue maker. The return on investment is that we are able to be a voice for a developing country,” said Augustin, who said she will submit the finished Haiti documenary to various film festivals. “Hopefully we will get picked up this year,” she said. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

From Saginaw to the cloud, Dice Corp. grows security business By Tom Henderson

“Everybody told me that no one would ever host their alarm company in the cloud, but they were wrong.”

thenderson@crain.com

Before “the cloud” became an ubiquitous IT term, Cliff Dice thought off-site data storage and hosting could be the springboard for growing the business at Saginaw-based Dice Corp., a provider of telecom, software and monitoring services for the security alarm and surveillance industries. Dice, the president and CEO, founded the company in 1992 to provide software for alarm companies around the country. He said off-site hosting and storage has been key to steady growth of 20-30 percent annually in recent years. Revenue at the company is about $7 million a year. Dice Corp. moved to the hosting model in 2013. “Everybody told me that no one would ever host their alarm company in the cloud, but they were wrong,” said Dice. He said he has nondisclosure agreements with most of his customers, but provides software or hosting services to more than 1,000 security companies nationwide. “More than 80 percent of all retailers in the U.S. use our system for some sort of security protection and about 40 percent of Fortune 500 companies,” he said, all of that through his alarm-company customers. In 2014, Dice Corp. spun off IPtelX, a fast-growing telecom provider that

Cliff Dice

is run by his son, Jordan, the president and CEO. It also has revenue of about $7 million, up from just $1.5 million when it was spun off. Dice says that IPtelX realistically could have revenue of $100 million in two years. Both are under the umbrella of Dice Resource Holdings in the Valley Center Technology Park and employ a total of 54, with projections to be at 70 in a year. Dice said the plan is for Dice Corp. to have the largest combined data center of alarm customers in the world in five years, surpassing ADT. The company has been certified by Underwriter Laboratories for its fire and life-safety signaling systems. Dice estimated that about 12 mil-

lion homes have alarms tied into his equipment and three million businesses, including customers in Ireland, Australia, the Philippines, Japan, Brazil, Argentina, Peru and Chile. He has his own server farm at the Dice headquarters and also uses external servers through Amazon and Microsoft Azure. Prior to founding his company, Dice was a computer programmer at Dow Corning from 1980-1983 and worked on database projects for Dow Chemical from 1983-1985. He is a 1984 graduate of the Richard DeVos Graduate School of Management at Northwood University. “Cliff has been an innovator in the industry,” said Tim LeBlanc, founder and president of TriStar Monitoring

LLC, an installer of alarm systems based in Orange County, Calif., who has owned or managed alarm companies since 1974. “Before Cliff started moving everything to the cloud, it had never been done in our industry before. Traditionally, hardware and servers were stored in your central station. Now, other companies are starting to go to his model. Other companies are copying what he’s doing. It just makes sense. If you have your own servers, you have to keep replacing them every three or four years as they go obsolete. Now, it’s Cliff ’s responsibility.” LeBlanc said he launched TriStar in February 2013. “I had used Dice for 20 years at other companies and gave Cliff a call. I was looking at a $2 million investment in servers and hardware and I told him, ‘Cliff, I don't want to invest $2 million.’ So he came up with a hosted solution for us. He owns the hardware, the phone switches, the servers. He hosts everything. And if I have a problem or something I want to do, I can pick up the phone and call Cliff and he’ll sit down with his engineers and software people and solve it.” LeBlanc said he hired IPtelX as his telecom provider. The company ran fiber into his building both from San Diego and Los Angeles to give him redundancy. “That provides (us) with all our internet and phone capabilities cost

effectively, and it allows us to provide phone and internet service to our alarm customers. That gives us more revenue streams, and adding more revenue streams is the name of the game,” he said. Dice describes IPtelX as a European-type telecom. He said American telecoms typically have high capital expenses associated with infrastructure, while European telecoms limit infrastructure by relying more on cloud technologies. He said that allows IPtelX, despite being in an aggressive growth mode, to have operating margins of 95 percent. He said it has customers in 65 countries. Proving the nationwide breadth of Dice is Statewide Central Station, an alarm company based in Staten Island, N.Y. Steven Coppola said he bought the small, 5,000-customer company in 2001 and knew he needed to find better software to grow the business. Dice Corp. got the contract and he’s been with them ever since, having now grown to 50,000 customers, most in Connecticut, New Jersey and New York, with others down the East Coast to Florida. “We couldn’t have handled the growth without Cliff,” said Coppola. “They’ve got great quality of service, but, truthfully, it’s Cliff. He’s got that entrepreneurial vision. He’s got a good pulse on the industry and where it’s going.”

across Michigan and around the world. Medical professionals such as doctors, physical therapists and audiologists supporting patients and families in underserved communities Researchers leading $20 million worth of efforts to protect and restore the Great Lakes Executives, entrepreneurs, engineers, SAP software experts and top-performing sales leaders enhancing economies, communities and businesses

FIRE UP CHIPS!

CMU is an AA/EO institution, providing equal opportunity to all persons, including minorities, females, veterans and individuals with disabilities (see cmich.edu/ocrie). 3682355 3/18

Central Michigan University, founded in 1892, delivers high-quality academic experiences on campus, online and at satellite locations around the country â&#x20AC;&#x201D; including at more than 15 military installations. CMU is among only 5 percent of U.S. universities in the highest two Carnegie research classifications. We also immerse students in more leadership programming than any other college or university in America.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

CRAIN'S LIST: MICHIGAN'S LARGEST EMPLOYERS

Ranked by full-time employees January 2018

Michigan employees 2018/2017

Worldwide employees 2018/2017

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

Mary Barra chairman and CEO

52,113 52,811

180,000 225,000

Automobile manufacturer

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

Jim Hackett president and CEO

48,000 B 48,000

NA 203,000

Automobile manufacturer

Rick Snyder State of Michigan 3042 W. Grand Blvd., Cadillac Place, Suite 4-400; Detroit 48202 governor (313) 456-4400; www.michigan.gov Mark Schlissel University of Michigan president Ann Arbor 48109 (734) 764-1817; umich.edu Sergio Marchionne FCA US LLC chairman and CEO 1000 Chrysler Drive; Auburn Hills 48326-2766 (248) 576-5741; www.fcanorthamerica.com NA U.S. government 477 Michigan Ave.; Detroit 48226 (313) 226-4910; www.usa.gov John Fox Beaumont Health president and CEO 2000 Town Center, Suite 1200; Southfield 48075 (248) 213-3333; www.beaumont.org Wright Lassiter III Henry Ford Health System president and CEO 1 Ford Place; Detroit 48202 (800) 436-7936; www.henryford.com Richard Gilfillan Trinity Health chief executive officer 20555 Victor Parkway; Livonia 48152 (734) 343-1000; www.trinity-health.org Philip Incarnati McLaren Health Care Corp. president and CEO One McLaren Parkway; Grand Blanc 48439 (810) 342-1100; www.mclaren.org Gwen MacKenzie, Ascension Michigan senior VP, Ascension 28000 Dequindre Road; Warren 48092 Healthcare; market NA; www.ascension.org/michigan executive, Ascension Michigan Ministry Richard Breon Spectrum Health System president and CEO 100 Michigan St. NE; Grand Rapids 49503 (616) 391-1382; www.spectrumhealth.org Lee Thompson U.S. Postal Service district manager 1401 W. Fort St.; Detroit 48233-9998 (313) 226-8678; www.usps.com Dan Gilbert Rock Ventures chairman and founder 1050 Woodward Ave.; Detroit 48226 (800) 251-9080 John Engler E Michigan State University interim president East Lansing 48824 (517) 355-1855; www.msu.edu Don Walker, CEO Magna International of America Inc. 750 Tower Drive; Troy 48098 (248) 631-1100; www.magna.com Anthony Tedeschi Detroit Medical Center CEO 3990 John R; Detroit 48201 (313) 578-2442; www.dmc.org Gerard Anderson DTE Energy Co. chairman and CEO 1 Energy Plaza; Detroit 48226 (800) 235-8000; www.dteenergy.com Mike Duggan City of Detroit mayor 2 Woodward Ave. Coleman A. Young Municipal Center; Detroit 48226 (313) 224-3700; www.detroitmi.gov Daniel Loepp Blue Cross Blue Shield of Michigan/ president and CEO Blue Care Network 600 E. Lafayette Blvd.; Detroit 48226 (313) 225-9000; www.bcbsm.com Dennis Swan F Sparrow Health System president and CEO 1215 E. Michigan Ave.; Lansing 48912 (517) 364-1000; www.sparrow.org Patti Poppe CMS Energy Corp. president and CEO 1 Energy Plaza; Jackson 49201 (800) 477-5050; www.cmsenergy.com Andrew Liveris, DowDuPont (formerly Dow Chemical Co.) G director and former 2030 Dow Center; Midland 48674 executive chairman (989) 636-1000; www.dow.com

44,680 44,540

NA NA

34,904 33,591

49,797 C 48,000 C

33,863 34,300

80,865 83,800

28,881 28,813

2,085,449 NA

Federal government

28,038 27,318

28,055 27,318

Health care system

25,514 18,520

25,554 18,520

Health care system

23,063 21,944

131,000 NA

Health care system

22,850 22,500

23,201 21,688 D

Health care system

22,709 23,103

Health care system

21,480 20,707

NA NA

Health care system

18,204 18,568

503,103 508,908

Postal service

17,819 16,617

29,835 28,742

Services organization that connects and serves a portfolio of companies, investments, and real estate

11,738 11,840

11,764 NA

Public university

10,328 10,133

163,000 155,000

Automotive parts supplier

10,153 10,431

NA NA

9,803 9,780

10,311 NA

Energy and energy-technology company

9,440 9,221

9,440 NA

City government

8,891 8,004

10,096 8,004

Health care insurer

8,281 6,968

8,281 NA

Health care system

7,496 7,366

7,952 NA

Energy provider

7,450 7,203

98,000 56,000

Specialty chemicals, advanced materials, agrosciences and plastics

Bronson Healthcare Group Inc. H 301 John St.; Kalamazoo 49007 (269) 341-6000; www.bronsonhealth.com

7,329 NA

Regional health system

Rank

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Company Address Phone; website

Top executive

Frank Sardone president and CEO

Type of business

State government

Public university and health system

Automobile manufacturer

Health care system

This list of Michigan employers encompasses companies with headquarters in the state. Number of full-time employees may include full-time equivalents. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. NA = not available.

B Company estimate. C Includes approximately 15,000 in-state part-time employees. D Crain's estimate. E Succeeded Lou Anna Simon. Simon announced resignation on Jan. 24, 2018. F Plans to retire on or before October 1. G Dow Chemical Co. merged with DuPont Co. on Aug. 31, 2017, to form DowDuPont. H Bronson Healthcare Group Inc. is the sole member of Bronson Lakeview Hospital. An expanded version of this list is available with a Crainâ&#x20AC;&#x2122;s membership at crainsdetroit.com/lists

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

SPECIAL REPORT: WOMEN IN LEADERSHIP

ERIN KIRKLAND FOR CRAIN’S DETROIT BUSINESS

Dana Schmitt, chief operating officer of United Shore Professional Baseball League, at Jimmy John’s Field in Utica.

A few questions for: Dana Schmitt Special to Crain’s Detroit Business

Dana Schmitt is the chief operating officer of the United Shore Professional Baseball League, which was started in 2015 by sports entrepreneur Andy Appleby. The ballpark is located at Jimmy John’s Field along M-59 in Utica. Last season, the USPBL averaged 3,350 fans per game and sold out 60 of its 75 games. Schmitt oversees all league, ballpark and team operations. Schmitt previously worked with Appleby in 1999 as the COO and general counsel of General Sports and Entertainment LLC. Schmitt joined General Sports following four years at the Chicago law firm of Blatt, Hammesfahr & Eaton. She graduated with a law degree from the University of Michigan in 1995. Were you interested in sports when you were younger?

I played sports, and I grew up as a huge sports fan and Tigers fan. One of my dad’s best friends was a top executive with the Tigers, so I had the opportunity to grow up around the old Tiger Stadium and see behind the scenes. I went to All-Star games and visited ball parks around the country. I knew I wanted to have a career in sports. Why did you obtain a law degree before entering into the sports industry?

A lot of top executives in the sports industry have law degrees. The business side of sports involves a broad range of business and legal issues, so having the legal background helps. After graduation, I practiced at a law firm, but knew I was not planning to stay for long. About two years into my time, I started looking to make the break into the sports industry. How did you do that?

I met Andy Appleby through a family connection in 1998, when he

was still senior vice president at Palace Sports and Entertainment. Shortly after, he left to start General Sports and Entertainment. I came on board originally as his general counsel. My responsibilities included drafting contracts (including player contracts), filing trademark applications, buying and selling businesses and negotiating licensing agreements. I was eventually promoted to COO. I still handle most of the legal work for the USPBL. What were the early years like at USPBL? Did you anticipate the league’s success?

When Andy left the Palace, he put together an investment group to purchase a minor league baseball team in Fort Wayne, Indiana. We expected it would be successful based on what we knew about our experience in Fort Wayne. When we sold that team, we intended to have a professional baseball team in Michigan. Over time, it evolved from having a professional team to creating our own league. With the USPBL, we had to put together coaching staff and find players. It was a big undertaking, but we had a great location in downtown Utica, right off M-59 and in the center of an area with a lot of families. The baseball side exceeded our expectations. We have had 20 players

“A lot of top executives in the sports industry have law degrees. The business side of sports involves a broad range of business and legal issues, so having the legal background helps.” Dana Schmitt

that signed contracts with major league organizations within the first two years. That in itself has been a huge accomplishment. What are some new things at the stadium this season you’ve been directly involved with?

We’re introducing a craft beer garden this year, and we’ll also have new food options, such as Dole Whip (a pineapple-flavored soft-serve dessert popular in Hawaii and at Disney resorts and theme parks). This year we’re introducing our bat dog, JJ The Field General, at every game. He’s a golden retriever that’s been in training for 14 months to pick up bats and take water out to the umpires. We will also have dance crews that will perform at every game, and ’70s and ’80s dance parties on the field after games. We have something different every night.

What’s the most challenging part about working in the sports industry?

The time commitment. You’ve got to really love it, because during our season we essentially work seven days a week. May through mid-September, you give up your summer. On non-game days we have other events going on, or things happening with the players and practice. On game days, we start in the office at 9 a.m., and if it’s a night game, we usually leave between 11 p.m. and midnight. It’s not for everybody. You have to love going to the ballpark, and love baseball. If you’re looking to break into the sports industry, you have to pay your dues. It’s very competitive. Entry level sports positions don’t pay as much as other industries. Be willing to do internships, and to go anywhere. If you get an internship, take it seriously and do your best. We’ve hired interns that are full-time employees now, and only have a few spots open each year.

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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

DEALS & DETAILS ACQUISITIONS & MERGERS

EXPANSIONS Fourmidable Group Inc., Bingham Farms, a real estate management company, is now the managing agent for The Village at Arlington I and II, in Youngstown, Ohio, consisting of 120 multi-family units. Website: fourmidable.com J Pet Supplies Plus, Livonia, a pet retail franchise, has opened new stores in Winter Park, Fla.; Davenport, Iowa; Katy East, Texas; Bailey Boswell, Texas, and Mount Vernon, Ill. Website: petsuppliesplus.com J Star Truck Rentals Inc., Grand Rapids, a transportation company serving commercial businesses, has a new location at 8801 N. Haggerty Road, Plymouth. Website: startruckrentals.com J Ross Mortgage Corp., Troy, a residential mortgage lender, has opened an office in Bel Air, Md. Thomas Barker Jr. will serve as branch manager. Web-

sites: tbarker.rossmortgage.com, rossmortgage.com

J Motown Harley-Davidson, 14100 Telegraph, Taylor, formerly known as Biker Bob’s Harley-Davidson, has been acquired by Michael Veracka, Paul Veracka and managing partner, Jason Bremer. Website: motownharley.com J Millbrook Group, Millbrook, U.K., has acquired Revolutionary Engineering Inc., Livonia, an integrator of test systems and engineering services for the powertrain industry. Millbrook will retain Revolutionary Engineering’s employees and operations in the U.S., China and Germany, and focus on the continued growth of the business, which will now be branded as “Millbrook Revolutionary Engineering.” Millbrook is part of the Test and Measurement business segment of Spectris PLC, Egham, U.K. Websites: revoleng. com, millbrook.co.uk, spectris.com

NEW PRODUCTS J Alpine Power Systems Inc., Redford Township, provider of backup power, telecom, cable and motive power solutions, has launched PowerMAX Battery and Charger Fleet Solutions, an inventory of used and rental batteries and chargers for the material handling marketplace. Website: alpinepowersystems.com J BorgWarner Inc., Auburn Hills, automotive components and parts supplier, has introduced its Electro-Mechanical On-Demand transfer case on the 2019 Ram 1500 4x4 pickup truck to deliver faster response and higher torque output. Website: borgwarner.com

Submit Deals & Details items to cdbdepartments@crain.com.

CALENDAR WEDNESDAY, APRIL 11 Create Raving Fans Lunch and Learn. 11:30 a.m.-1:30 p.m. April 11. Troy Rotary Club. Panelists include: Ara Topouzian, president and CEO of Troy Chamber of Commerce; Shawn Lee, founder and owner of Shawn Lee Studios in Southfield and director of photography for TEDx Detroit; and Candice Simons, president and CEO, Brooklyn Outdoor Advertising. Bank of America Plaza, Troy. $20 (includes lunch). Contact: Rene Pothetes, phone: (248) 9728126; email: rene@michaelangelocaruso.com; website: portal.club r u n n e r. c a / 1 4 7 5 / E v e n t / creating-raving-fans

THURSDAY, APRIL 12 Business Banking Seminar: Social Media Strategy. 6-7:30 p.m. April 12. DFCU Financial. Seminar will discuss how to achieve specific

objectives by platform, how to develop a paid social media campaign and measuring social media success. DFCU Financial, Livonia. Free. Contact: Lauren Steinhelper, phone: (313) 322-8258; email: lauren.steinhelper@dfcufinancial.com; website: dfcufinancial.com/businessbanking

UPCOMING EVENTS The Next Big Thing: Adcraft Luncheon with Brian Cooley. 11:30 a.m.-1 p.m. April 18. Adcraft Club Detroit. Brian Cooley, editor at large, CNET, takes a look at what consumers will respond to — and when they probably won’t. Learn about the innovation fueling and creating new ways people consume content, go about their lives and discover loyalty to brands. San Marino Club, Troy. $50 members; $75 nonmembers. Contact: LaVar Harris, phone: (313) 872-7850; email: lharris@adcraft.org; website: adcraftdetroit.com

The Plan for a Stronger Michigan. 11:30 a.m.-1:30 p.m. April 24. Detroit Economic Club. Business Leaders for Michigan has unveiled its “Plan for a Stronger Michigan” which identifies key steps to growing good paying jobs and accelerating our state’s economic turnaround. Speakers: John Rakolta Jr., chairman and CEO, Walbridge, and Doug Rothwell, president and CEO, Business Leaders for Michigan. The Masonic. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org 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.

Crain’s Detroit Business sales director to add Cleveland role Crain's Detroit Business Director of Sales Lisa Rudy has added a new role to her job and will also direct sales for Crain’s sister publication Crain’s Cleveland Business. Rudy has been with Crain’s since 2016. She will continue to head up the Crain’s Detroit sales operation. Rudy, 55, has a deep background in media advertising sales in radio, digital and print. She was previously general sales manager at WWJ 950 AM. Lisa Rudy Her career also has included 14 years at the Metro Times, Detroit’s alternative weekly, where she served five years as publisher. Rudy also held sales and management roles at the radio group Greater Media Detroit and the Detroit Media Partnership as a senior director for retail advertising in The Detroit News and Free Press. “This move makes sense for both brands,” Crain’s Group Publisher Mary Kramer said in a message to staff. “We have many clients in common and there are opportunities to share successful products and projects more quickly with common sales leadership.” Both Crain’s Detroit Business and Crain’s Cleveland Business are owned by Detroit-based Crain Communications Inc., which also publishes regional business journals in Chicago and New York and more than 30 daily business newsletters covering cities and regions across North America.

PEOPLE HEALTH CARE

ADVERTISING SECTION www.crainsdetroit.com/onthemove To place your listing or for more information, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

LAW Daniel L. Lemisch General Counsel

Lakeview Capital, Inc. Dan Lemisch has joined Lakeview Capital as General Counsel. Previously, he served at the U.S. Attorney’s Office for the Eastern District of Michigan as the Acting U.S. Attorney, First Assistant U.S. Attorney, and the Chief of the Criminal Division. He has prosecuted cases involving public corruption, white collar crime, health care fraud, narcotics conspiracies, money laundering and homicide, and has lectured for the Department of Justice and U.S. Department of State on criminal justice reform.

KNOW SOMEONE ON THE MOVE?

For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

J Chris Harrison to senior vice president of financial operations and corporate finance, Beaumont Health, Southfield, from vice president and operations controller, LifePoint Health, Brentwood, Tenn. Also, Jonathan Maner to senior vice president and executive director of Beaumont Physician Partners and executive director of Beaumont Medical Group, Beaumont Health, Southfield, from vice president of operational excellence, Trinity Health, Livonia. J Dan Hirschfeld to chief executive officer, Great Expressions Dental Centers PC, Southfield, from president, Genesis Rehabilitation Services, and executive vice president and chief operating officer, international operations, Genesis Healthcare Inc., Kennett Square, Pa.

NONPROFITS Aimee Nimeh to executive director, Susan G. Komen Greater Detroit, Southfield, from vice president, programs and services, Common Ground, Bloomfield Hills.

SPOTLIGHT United Way for SE Michigan names CEO

United Way for Southeastern Michigan has named the superintendent of Milwaukee Public Schools as its next president and CEO. Darienne Driver, who began her career as an elem e n t a r y school teacher in Detroit PubDarienne Driver lic Schools, will join United Way in July. She succeeds Tanya Heidelberg-Yopp, United Way’s COO, who had served as interim CEO since December when former President and CEO Herman Gray left the agency after two years to become chairman of pediatrics at Wayne State University School of Medicine. Driver’s track record, passion for children’s education and community service and connection to the local community made her the right person to lead United Way, said Mark Petroff, chairman of the United Way board.

Beaumont Medical appoints president

Daniel Frattarelli, M.D., has been named the new president of Beaumont Medical Group, Beaumont Health announced. Frattarelli, whose appointment is effective Monday, will oversee strategic planning to improve cliniDaniel Frattarelli cal care, research and operational performance for Beaumont Health’s group of 1,000 primary care and specialty physicians, the Southfield-based health system said in a news release. The 51-year-old most recently served as physician executive for BMG’s primary care network and chief of the pediatrics department at Beaumont Hospital, Dearborn.

Museum director to leave position

Devon Akmon will leave his post as director of the Arab American National Museum after spending the past 13 years — right out of graduate school — with the Dearborn institution. Akmon’s last day is May 31. A national search is underway to select the next Devon Akmon leader of the museum, the first and only of its kind focused on Arab-American history and culture. It operates under the Dearborn-based nonprofit Arab Community Center for Economic and Social Services, or ACCESS. He said he is in “conversations with a handful” of organizations on possibilities for his next move.

April 9, 2018

DETROIT BUSINESS C R A I N ’ S D E T R OCIRAIN T ’BS U SINE S S // A P R I L 9 , 2 0 1 8

BOOMTOWNS

Page1717

In downtown Saginaw, Delta College has finished plans for a $12.7 million, 35,000-square-foot building and large green space on what is now a parking lot. It is expected to be open for the fall 2019 semester. In both cities, vacancy rates are down sharply and no one would risk firing a cannon in the streets. Much of the progress is the result of the work of both Bay Future and its older sister nonprofit, Saginaw Future Inc.

court and a lounge and ballroom. Outside the building there will be a pavilion for 48 vendor stalls for the Downtown Saginaw Farmers’ Market. Saginaw Future also is working with the Saginaw County Chamber of Commerce, Saginaw County, the Saginaw River Alliance of commercial dock owners and the U.S. Army Corps of Engineers to study whether it makes economic sense to deepen and widen the shipping channel in the Saginaw River for the 17.5 miles to Lake Huron. Will the cost be offset by the benefits of opening the channel to bigger cargo ships?

Saginaw Future Inc.

Bay Future Inc.

FROM PAGE 1

Saginaw Future Inc. was founded in 1992. Its signature project is the 240-acre Great Lakes Tech Park in Thomas Township in western Saginaw County, which is offering free shovel-ready land for approved projects. Saginaw Future spent $7.5 million on the park — $2,640,000 to acquire the land from the Faucher family and $4,860,000 on infrastructure, including a road that wends through the site and water, sanitary and storm sewer systems. AT&T fiber is available at the site, which currently has one tenant, the second manufacturing facility of the Fullerton Tool Co., a maker of carbide tools for machining and cutting tools in factories. Ten acres of the site were transferred to Thomas township to build an elevated water tower and 30 acres were transferred to Fullerton, leaving 200 acres for development. Saginaw Future helped Fullerton, a 75-year-old company that spent $882,000 on new technology at the plant, get a trade expansion grant from the Michigan Economic Development Corp., which goes to companies expanding their exports. Fullerton has sales reps in Mexico and sells to customers all over the world, including Singapore, China, the United Kingdom, Sweden, Switzerland, Australia and Costa Rica. JoAnn Crary, who has been CEO of Saginaw Future since 1993, said she is in early stage talks with three more prospective tenants. Officials from Foxconn, the Taiwanese electronics supplier, visited the site before choosing last year to build its American factory in Wisconsin. She said companies can get as few as 10 acres or all 200, or increments in between. In addition to free land for commitments to meet certain construction standards, park occupants are eligible for a 50 percent, 12-year abatement on property taxes. According to Saginaw Future’s 2017 annual report, it was involved in 34 economic development projects last year that led to more than 376,000 square feet of planned expansions or new construction. County companies invested more than $177 million in projects and created or retained almost 1,400 jobs. Other recent projects in the county include The Central Michigan College of Medicine’s $25 million, 46,000-square-foot building in Saginaw. Construction began in 2014. Sixty medical students, who began school in 2013 in Mt. Pleasant, completed their third and fourth years in Saginaw and graduated last year. And The Bancroft and Eddy buildings in the heart of downtown Saginaw are now home to 150 luxury market-rate apartments and firstfloor retail and commercial space, a development by Lakeshore Management LLC of Cleveland. An out-ofstate firm spending $7 million in

BAY FUTURE

Uptown Bay City is a 35-acre waterfront development that Bay Future helped shepherd with Bay City-based Shaheen Development over the last four years.

STEVE JESSMORE/CENTRAL MICHIGAN UNIVERSITY

The CMU College of Medicine hosted a grand opening of its 46,000-square-foot educational facility in Saginaw.

“You could have easily shot a cannon in any direction downtown and not hit anyone.” — Trevor Keyes, president and CEO of Bay Future Inc.

downtown Saginaw would have seemed impossible 15 years ago. The Bancroft Building was born as the Bancroft Hotel in 1859, an elegant place that required men and women to enter from separate streets to maintain proper decorum, the men from East Genesee, the women from South Washington. In 1915, the hotel was torn down, replaced by a far more elegant hotel, a 200-room Ionic-style building with a rooftop garden that featured outdoor bands and dancing in summer months. A 100-room addition was added in 1925. The Eddy Building was built in 1874, with retail shops on the ground floor and offices on the top three. In 1892, two more floors were added to meet demand. In the 1960s, both buildings started to decline, and in 1982, the Wingate Companies, a Massachusetts company, bought both of the buildings to be converted into subsidized housing for the poor. In 2011, state housing officials an-

nounced that Wingate had stopped making payments on the properties and the residents had to leave. In 2013, Lakeshore Management bought both buildings and began extensive renovations, with the first tenant moving in late that year. Ground-floor tenants in the Bancroft building include a ballroom and banquet center, an art gallery, a wine and martini bar and a coffee and tea shop. Isabella Bank took over the first floor of the Eddy Building. Last year, ROCO Real Estate, a Bloomfield Hills firm with more than 20,000 market-rate apartment units in 13 states, primarily in the Midwest and South, bought both buildings. One challenge facing many old downtowns on the comeback is what to do with former newspaper buildings — imposing structures that often take up large city blocks. The former Flint Journal building is now a thriving farmer’s market open seven days a week. Saginaw County-based SVRC Industries Inc. bought the old Saginaw News building for $500,000 in December 2014, with help from state and county entities, including Saginaw Future. The building, which had housed the paper for 50 years, was shuttered in 2009. The Downtown Development Authority, which Saginaw Future administers, sold two parcels of land to SVC, including an adjacent parking lot. Saginaw Future also helped with a brownfield grant of $1 million and a combination grant and loan of $3.5 million from the Michigan Strategic Fund. SVRC’s budget for the project, dubbed SVRC Marketplace and scheduled for a grand opening on June 8, is $19.8 million. The building, which is almost 100,000 square feet, will include retail and office space, an incubator/shared-work space, a 37-stall indoor farmer’s market, a food

A visitor early for a meeting in downtown Bay City recently crossed the Veterans Memorial Bridge into the central business district and pulled into a parking lot along the Saginaw River. He headed south along the river for a jog and within minutes came to a site, and sight, that would have seemed unimaginable just a few years ago. On adjoining lots, surrounding lawns and green spaces were a collection of new buildings, including a Comfort Inn, a DoubleTree Inn, a Courtyard by Marriott, a McLaren healthcare facility, a Real Seafood restaurant, a Central Michigan University Research Corp. business accelerator and shared work space, the new headquarters for Michigan Sugar, a Dow Corning office building and a long string of one-story condominiums. This is Uptown Bay City, a 35-acre waterfront development that Bay Future helped shepherd with Bay Citybased Shaheen Development over the last four years. It also includes boutique retail shops and, atop a building housing Chemical Bank offices, 20 condos that quickly sold out, at prices ranging from $152,000 for a one-bedroom unit to $495,000 for a penthouse suite. There is no more symbolic and tangible proof of Bay City’s resurgence than this, on a former brownfield site that had been home to an iconic manufacturer for 110 years, beginning in 1873, when a group of local businessmen purchased the MacDowell Foundry Co. and began a new business called Industrial Brownhoist. Founded the same year as a worldwide financial panic, it barely survived. The company started off as a maker of galvanized pipe for area salt mines, engines and boilers for local sawmills and shipbuilders and industrial saws for factories. Eventually

it morphed into the world’s leading maker of large cranes and hoists. In 1881, it built the first railroad steam shovel and later built hoists for the construction of the Panama Canal. The factory shut its doors in 1983. The site was briefly brought to life in the early 1990s when Michigan Congressman Robert Traxler announced that the U.S. Environmental Protection Agency wanted to build a science park there that would house supercomputers. The hoist factory’s old administration building was renovated and leased to Unisys Corp., which did indeed install a supercomputer. But soon after Traxler’s retirement, the EPA dropped its plans for a science park and Unisys moved the supercomputer out of the city. Another development project underway in the city is the Mill End Lofts on Water Street in downtown Bay City, site of a storied center of commerce that had gone dark in 2005. In 1862, the Globe Hotel opened on the site. During prohibition, tunnels under the site hid drinkers from the prying eyes of the law. In 1940, the Mill End Store opened there, billing itself as the world’s most unusual store for its collection of everything under the sun. The store closed in 2005, and in 2007, the building was bought by Paul and Peggy Rowley, whose family-owned business, Rowley’s Tire & Automotive Services Inc., was founded by Paul’s father, Art. The building couldn’t be saved, though, and was demolished in 2012. The next year, up went a $7.5 million, three-story commercial and residential building, with Midland-based Three Rivers Corp. doing the architectural design and construction management and Bay Citybased Freiwald-Staudacher Design Inc. doing the interior design. Tenants began moving into the 24 residential units in 2014. Units range from 960 to 1,615 square feet, with rent starting at $1,200 a month. Bay Future’s annual report for 2017 is due out later this month. According to the 2016 report, the agency was involved in projects that year that created 284 new jobs and retained more than 70 jobs, with total new investment in the county of $201 million. One project near and dear to the hearts of the millennials who are fueling urban renewal was a tax abatement granted for a $1.3 million investment in a new Bangor Township facility for the Tri-City Brewing Co. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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NORTHVILLE FROM PAGE 1

The track has been profitable for the past three years, Carlo said, and the closing of Hazel Park Raceway will help ensure Northville Downs remains in the black for a while longer. But he’s not celebrating. “I’m sad for the industry in that it’s another track we lost,” he said. “It’s never a good day in the industry when a racetrack closes. We need to get the scales balanced so we can compete in the market with the other gaming in the state.” Carlo and others in the state’s horse racing industry for many years have bemoaned the legal limits they face when it comes to wagering. Customers are restricted to live and simulcast betting. In many other states, including neighboring Ohio, tracks are permitted to offer slot machines and other forms of wagering. Without additional forms of gambling at Northville Downs, it may be only a matter of time before it joins the state’s eight tracks that have closed since 1998. The loss of Hazel Park, which raced only thoroughbreds since converting from harness racing in 2014, is further evidence that something must be done, Carlo said. “It’s an indication that horse racing in Michigan has to be treated like

Live race betting decline

FRO

Below are annual totals for the wagers placed on live races at Michigan horse tracks. The number of tracks is listed in parenthesis. 2006: $22,116,171 (7) 2007: $20,429,573 (7) 2008: $18,321,140 (7) 2009: $11,609,256 (6) 2010: $9,848,178 (6) 2011: $7,935,261 (4) 2012: $6,944,308 (4) 2013: $5,659,751 (4) 2014: $4,623,279 (3) 2015: $4,554,931 (2) 2016: $4,275,609 (2) Source: State of Michigan

The Hazel Park Raceway announced on Thursday that it was closing.

racing in Ohio, Indiana, Kentucky,” he said. “We’re trying to keep it viable.” The rise of Michigan’s commercial and tribal casinos since the late 1990s, and the expansion of the Michigan Lottery, siphoned off gamblers from the tracks. Making matters worse, nearby states opened casinos and racinos, which are tracks with slot machines. Detroit real estate bil-

lionaire Dan Gilbert owns both Jack Detroit Casino-Hotel in Greektown and the Jack Thistledown Racino in suburban Cleveland. “You don’t have to go far. You can go to Cleveland, Detroit, Columbus, Toledo, Cincinnati,” Carlo said. Michigan’s horse racing industry for years has tried and failed to gain legislative support for measures that would open new waging options at the tracks, from slot machines to poker rooms, but have been blocked by the casinos and other opponents. “I need more product on my building,” Carlo said. Northville Downs’ commission on wagering at the track fell from $6.3 million in 2015 to $6 million the following year, according to the most recent data available from the Michigan Gaming Control Board that oversees the state’s racing industry. Waging on live harness racing at the track over that time fell from $2.3 million to $2.2 million, in part because the number of race days was reduced from 71 to 60. Simulcast betting, in which bettors can gamble on televised races at tracks across the country, dropped from $45 million to $42.9 million. Gambling numbers at horse tracks, declining for decades, have been in freefall. The amount of money wagered at Michigan horse tracks on live racing

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has fallen from $22.1 million across seven tracks in 2006 to $4.2 million at two tracks in 2016, according to state data. That’s an 81 percent decline. Combined live and simulcast betting in the state over that decade dropped from $281.1 million in 2006 to $103.2 million in 2016. The most money wagered at Michigan tracks on both live and simulcast races was a combined $474 million in 1997, which was a year after the state legalized simulcast betting at tracks. The peak of Michigan’s live race betting was $443.1 million in 1989. That was before the rise of the Internet, the expansion of the state lottery and the legalization of casinos in Michigan. The declines in Michigan aren’t mirrored in national numbers. Nationally, combined live and offtrack wagering on horse racing was $10.9 billion last year, and it’s grown each year since 2014. Its peak was $15.1 billion in 2003, according to The Jockey Club, a New York Citybased horse breed registry. As wagering shrinks, so does the size of the pools of money used for live racing purse. As purses shrink, horse owners look elsewhere to race. Northville Downs this year already lost one of its 60 live standardbred racing days to weather and a horse illness that reduced the number of

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

animals available to race. In the meantime, as the last track standing, Northville Downs may use new business gains to make future track improvements. The facility was last renovated in 1970, and Carlo regularly fends off offers to sell the valuable land near the center of wealthy Northville for what would be lucrative new development. But he doesn’t have any renovations planned yet. “It’s too early to tell, but it definitely opens the door for that discussion. That’ll take a few months to see what kind of business gain we get out of this,” he said. Northville Downs can trace its roots to 1902. A driving club was formed in 1907 to manage land in Northville that had been turned into a rudimentary fairgrounds horse track in 1902. Michigan didn’t create a formal pari-mutuel harness racing law until 1933, and Northville Downs became the entity it is today in 1944. The track business itself leases the land from the Northville Driving Club on an annual basis, Carlo said, and any sale would require both the club and family to jointly sell. Northville Downs gets a handful of offers every year from developers interested in buying some or all of the track’s 49 acres, Carlo said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Industrial or warehouse uses likely for Hazel Park site By Kirk Pinho kpinho@crain.com

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Hazel Park is likely at the starting gate of what will likely turn out to be a large conversion of a now-closed horse racing track into industrial or distribution/warehouse-type uses. A pending buyer for the remaining 95 or so acres of the Hazel Park Raceway, which abruptly closed last week following years of financial difficulties, could be revealed in a matter of weeks. However, New York City-based developer Ashley Capital, which has its local office in Canton Township, said it was “seriously considering” purchasing the site at 10 Mile and Dequindre roads. Two and a half years ago, the company purchased 36 acres of the 120-acre site and built a 575,000-square-foot building that now houses Amazon.com, LG Elec-

tronics and Bridgewater Interiors. The building was completed a year ago. “Ashley Capital had huge success in building the first building,” said Dan Labes, an industrial real estate expert who is senior managing director in the Southfield office of Newmark Knight Frank. “You’ve got to imagine that’s what it’s going to be, additional bulk warehouse/distribution.” He estimated that the remaining portion of the site could house two more buildings totaling 1.4 million square feet. “Ashley has done pretty well there,” said Peter Burton, principal, board member and partner of Bingham Farms-based Core Partners LLC. “It’s not that easy to find bigger sites like that. It could be that site could have some industrial potential as well.”

The industrial and warehouse markets have remained strong in recent years with low vacancy rates triggering new rounds of construction, including speculative building. In southeast Oakland County, there is 85.9 million square feet of industrial space that is just 3.3 percent vacant, according to first quarter report from Newmark Knight Frank. Rents in that region are among the highest at $6.05 per square foot, behind only Livingston County ($6.37 per square foot) and southwest Oakland County ($6.55 per square foot). The region’s total warehouse/distribution market is 129.79 million square feet and is 3.4 percent vacant with an asking rent of $4.56 per square foot, according to the report. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

PARK FROM PAGE 3

earned revenue from park and facility rentals, restaurants, food trucks and bars by $100,000 a year and Business Improvement Zone funding from companies in a 1.1-square-mile area around the park by $50,000, along with securing a rolling commitment of $500,000 in annual operating funding from property owners next to the park by 2020. Larson said that the DDP has not relaunched the campaign at this point. But it is talking with some of the Detroit 300 Conservancy’s original supporters. “It’s now (been) 15 years since the park opened. What do we want to do?” The organization is continuing to look at the potential to increase the endowment as one of the key pillars of its overall sustained funding strategy, he said. But it’s spending a lot more time and thought on increasing earned revenue and sponsorships than endowment right now. “At some point, in order to really sustain the kind of public spaces we’ve come to expect ... we need to have a broader-range plan,” Larson said. “It’s very important because these are public spaces that the city continues to be at the table.” DDP has oversight of Campus Martius and Cadillac Square, Capitol Park, Grand Circus Park and Beacon Park. Sustained funding is needed to ensure Campus Martius and other city parks do what they set out to do, he said, namely creating equitable access for everyone and serving as an economic development tool. Property values have increased near great public spaces around the country, as the quality of life improves for people who live, work or visit, Larson said. In 2000, when the Detroit 300 Conservancy decided to build Campus Martius, there was little development around the park, he said. Since then, there has been more than $3 billion invested around its perimeter. The DDP and its wholly owned subsidiary, the Detroit 300 Conservancy, have paid for the maintenance of Campus Martius for the past 13 years through a combination of annual corporate support totaling more than $1 million, $725,000 in earned/other revenue and more recently, $75,000 in Business Improvement Zone funding from companies in the larger area operating around the park, according to the memo. Park programming is funded separately through sponsorships and earned revenue. But securing the annual support “continues to be very challenging as operations funding is a very low priority in a competitive nonprofit environment,” the DDP said in the memo. The Detroit 300 Conservancy reported $4.26 million in total revenue in 2015 and 2016, the years of its most recent 990s. It reported a loss from operations both years, but Paul Trulik, treasurer for the conservancy, DDP and Detroit Downtown Inc., said that was a function of support coming through late in the year and being booked that year, per accounting requirements, while expenses for those funded programs were booked in the following year when they took place. For 2017, Trulik said he expects the conservancy to show a modest surplus, before market gains on the endowment and the total revenue and expense increases associated with the launch of Beacon Park in June. The original endowment campaign for Campus Martius Park raised $3.5 million of its $10 million goal between

2000 and 2008. Then the recession took hold. A $20 million endowment would provide roughly $1 million each year toward the conservancy’s $2 million average operating budget for Campus Martius/Cadillac Square, up from the $150,000 in interest the current endowment provides. There is a question of timing, though, given other fundraising efforts in the community and the possibility of a renewed regional transportation authority initiative. “It is not a hidden fact that there is some funding fatigue within this community because of all the things we’ve needed to address,” Larson said. Business improvement districts and zones and civic authorities are the primary funding sources for a high percentage of downtown parks and public space operating budgets in cities like Philadelphia and Houston, the DDP said in the memo. But downtown Detroit’s Business Improvement Zone is “in its infancy and may not be a more significant contributor for another five to 10 years,” the agency said. Officially launched in spring of 2014, the Downtown Detroit Business Improvement Zone provides services of cleaning, safety, hospitality, downtown lighting and landscaping. Assessments of over 550 commercial properties in the 1.1-square-mile area bounded by three major highways and the Detroit River supports the $4 million budget that enables DDP and Detroit Downtown Inc., which provides services to the business improvement zone, to serve the downtown community, according to DDP’s website. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

Since 1939, Detroit’s Masonic Temple has been the largest Masonic temple in the world.

MASONIC

1926,” said Ron Staley, senior vice president of Southeast Michigan operations in the Detroit office of Lansing-based The Christman Co., which is construction manager on the project. It was also its original builder. Also working on the 550,000-squarefoot building are Livonia-based RAM Construction Services and Detroit-based Kraemer Design Group. The Masonic Temple is the second home of the Masonic Temple Association, which was founded in 1895. Originally it had a building on Lafayette at First Street near downtown, but as membership grew, the association purchased the land at Second Avenue and what was then known as Bagg Street (now Temple Street). The temple fell on hard times sev-

FROM PAGE 3

The association anticipates increased revenue from more events and leasing out space to cover the cost of its $3.7 million construction loan from Chemical Bank, Genther said. Approximately $2.5 million of the work is on the building’s interior, he said. It’s the first substantial renovation to the building since 1990, when about $1 million was spent on renovations, Genther said. “It was just before we had the first run of the ‘Phantom of the Opera’ in Detroit,” Genther said. “Not a whole lot has changed since

eral years ago. In 2013, Detroit-born rocker Jack White paid off $142,000 in back taxes it owed, saving the venue from auction. Reportedly, White’s mother served as an usher at the theater, which takes up a full city block and is listed on the National Register of Historic Places. Genther said the association has an annual budget of approximately $1.4 million, with about 90 percent of that coming from event revenue. The Masonic hosts about 300 events a year. Half of those are lodge meetings and the rest are things like weddings, plays, corporate events and concerts. Since 1939, it has been the largest Masonic temple in the world. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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IDEAL FROM PAGE 1

Ideal Group, the parent company of six core businesses the Venegases have on a city block along Clark Avenue, has risen from what began with Frank Venegas Jr. erecting steel cross beams for homes and small commercial buildings to a $350 million-a-year enterprise with an increasingly global reach beyond Detroit, where his grandfather immigrated from Mexico a century ago for Henry Ford’s $5-a-week assembly line wage. Frank and Loren Venegas’ grandfather and father both spent four decades of their lives working at Ford Motor Co.’s Rouge plant. The third and fourth generation of Venegases have built a business that has repeatedly intersected with Ford and GM — planting their company on the site of an old polluted GM factory, inventing and building safety barriers for auto factories, installing aluminum railings inside Ford Field and doing construction work at GM assembly plants and offices from Texas to Warren. Having grown up in Southwest Detroit, Frank Venegas left for the exurbs of Livingston County in the 1970s to pursue construction work in his 20s. In 1978, he shelled out $150 to the Livingston County home builders’ group for a ticket in a drawing for a 1979 Cadillac Coupe de Ville. He won the drawing and drove the gold-colored coupe for nine days before selling it for $12,000 and a used car to get cash he needed to start his own steel fabricating business. He’s been his own boss ever since. In 1995, Frank Venegas was one of four Hispanic businessmen who went into a joint venture to buy and occupy the former Cadillac plant that was known as Detroit Assembly. The last Cadillac rolled off that line just before Christmas of 1987. Mexicantown had become overrun with drug-dealing gangs “terrorizing the old people” and prostitutes walking the streets, Frank Venegas said. “I sold a Cadillac (to start the business), and here I bought the plant they made it in,” said Frank Venegas, 65, who remains chairman and CEO of Ideal Group. “When I bought this place in 1995-96, nobody was here. There was no Compuware. There was no Dan Gilbert." “Most people thought I was out of my mind about buying this building and changing it into a manufacturing center,” Venegas added. As Gilbert’s downtown business empire has been fueled by Quicken Loans selling home mortgages, Frank Venegas’ low-maintenance plastic-sleeved bollard has fueled his company’s growth. He proudly boasts about putting 80 former gang members to work in 1996 — some of whom still work for him. “They said they wanted jobs with benefits, opportunity,” Venegas said. “One day they were shooting at each other, and the next day they were building things together.”

Need for protection Two decades after moving to Detroit, Ideal Group is the only one of the original four businesses left at the site of an Archer administration-era Empowerment Zone for fostering redevelopment. The company has grown from one 120,000-square-foot warehouse to a three-building campus that houses the company’s headquarters and businesses in construction, bollards, steel

LARRY PEPLIN FOR CRAIN’S

Ideal Group is the parent company of six core businesses the Venegases have on a city block along Clark Avenue.

Most of the steel barriers that Ideal Shield makes are wrapped in yellow plastic.

and surplus materials as well as an industrial parts-management joint venture with Setech Inc. Ideal Shield’s Original Bumper Post Sleeve and other heavy-duty plastic products are molded by contract manufacturers at extrusion plants in Bowling Green, Ohio; Chino, Calif.; Cleveland; Farmington, Mo.; and St. Louis, Mich. Loren Venegas said the company focuses on controlling the design and production of its patented products. But they’ve shied away from building a large network of company-owned plants across the country — much like automakers have focused on building engines, transmissions and doing the final assembly of their vehicles. “We’re not molding anything,” he said. “I really learned that at Ford Motor Co. years and years ago when we were doing steel fabrication for them.” The plastic pipe is shipped back to the main plant on Clark Avenue, where it is cut, fabricated and fitted for standard and custom sizes. Since 1997, Ideal Shield has sold 2.8 million units of its bollards, most recently starting a new line of steel posts and plastic covers for Bosch electric vehicle charging stations. The Ideal Group’s annual sales have more than tripled since 2010 when the company reported $116 million in sales to $350 million, which Frank Venegas said the company posted last year. The company reported sales of $231 million in 2013 to $307 million in 2016, according to the Crain’s Fast 50 list of fastest-growing companies in

Loren Venegas: Company focuses on design.

Frank Venegas: Chairman and founder.

Michigan. Ideal Shield’s growth has largely been driven by businesses that want to protect buildings from vehicles, whether it’s accidental or intentional. “Unfortunately, in the world we live in, you need protection everywhere,” Loren Venegas said. The company holds nearly 100 patents and is now producing 43 products ranging from stop sign bases for drive-through retail store pickup lanes at Target stores and CVS pharmacies to heavy-duty fence-like barriers to protect utility stations and a steel wall for shielding electric substations from multiple rounds of .50-caliber gunshots. The heavy-duty barriers spawned a spin-off business in the family of companies, Ideal Utility Services, that is focused on serving power companies and customers with critical infrastructure, such as government institutions. For years, Ideal Shield advertised its products to construction companies, contractors, architects and facilities

managers in the Grainger Industrial Supply catalog. In recent years, the company has built an aggressive online sales team focused on search engine optimization for keywords. “People aren’t going to that Grainger catalogue anymore,” Loren Venegas said. “They’re just popping on the Internet and saying, ‘Hey, I need hand-rail.’” The company still deploys some old-school marketing techniques, sending postcards to universities and sports stadium operators advertising dead-stop barriers. Every time there’s a viral video on YouTube of a car accidentally crashing into a storefront, Ideal sees a spike in Internet sales of plastic-wrapped bollards, Frank Venegas said. “With all of these people crashing through windows … all of a sudden our product is being used in front of stores all across the country,” Venegas said. Online marketing and sales have been the sole factor in the success of another company the Venegases started that intersects with their auto and aerospace manufacturing customers. At the height of the Great Recession, as manufacturing plants closed or retooled, the Venegases bought up excess and obsolete inventory of parts for machines and presses from automakers like GM and suppliers like Dana Corp. Through Ideal Surplus Sales, the company has accumulated and catalogued for Internet sales some 55,000 different machinery parts and components — half of which also are listed on eBay. Last year, Ideal Surplus shipped parts to 65 countries, Loren Venegas said. “Nobody ever thought we could do what we do with the parts, and now people are copying us,” Frank Venegas said.

Business opportunity In many ways, Ideal Group’s businesses share the same customers. Welders in Ideal Steel’s shop fabricate steel beams that the construction division’s unionized ironworkers build on-site. A tool-and-die shop in Ohio that needs a replacement part for a 30-yearold old machine that’s in Ideal Surplus’ inventory may also need Ideal Shield's bollards or railings. “We’ve gotten business that way,”

Loren Venegas said. Frank Venegas’ original company, Ideal Steel & Builders Supplies LLC, has been able to open more business opportunities in steel fabrication and construction. The company built steel railings for Comerica Park and designed a new line of aluminum railings after first installing them at Ford Field (Detroit Lions team officials and the Ford family liked that the railings matched the silver in Lions’ jerseys and they didn’t have to be painted every year, Loren Venegas said.). Construction and installation of the railings gave way to another business opportunity. In 1998, Frank Venegas started Ideal Contracting LLC as a joint venture with Southfield-based construction giant Barton Malow, which was responding to its customer Ford Motor Co.’s desire to hire more minority-owned businesses. Ideal Contracting and Barton Malow worked together on the Westin Book Cadillac, Little Caesars Arena and Wayne State University’s Mike Ilitch School of Business. Ideal Contracting has also worked inside General Motors Co. assembly plants, GM’s Warren Tech Center and the Detroit automaker’s Renaissance Center headquarters. GM is Ideal Group’s largest customer across multiple lines of business, Loren Venegas said. In January, Frank Venegas bought out the Maibach family-owned Barton Malow’s 49 percent interest in the construction contracting company. Doug Maibach, chairman of Barton Malow Enterprises, said his company “created a real competitor” in Ideal Contracting and that the two firms will continue to work together in the future. “It’s akin to your child growing up and going off to college,” Maibach said. “You raise them to be independent. But when they ultimately do it, it’s a little bittersweet and very prideful.” Linzie Venegas, Frank’s daughter and a vice president of Ideal Group, said the partnership ended with mutual admiration between the two families. “The most important thing about this process is that it was really out of the respect that my family and the Maibachs have for each other,” she said.

Faced a test Linzie Venegas and her brother, Jesse, who also is a vice president, grew up in the family business. Linzie learned at a young age how to organize customer orders alphabetically, while Jesse learned how to weld and run a hi-lo forklift at the Clark Avenue plant, their father said. Last summer, the second generation and younger brother Loren got a real test of what life would be like when the patriarch is gone. Frank Venegas fell in a bad accident last July and sustained a head injury that kept him out of work for eight months. But the son, daughter and brother kept the company moving along, building off their years of working closely with the customer base Frank Venegas built. “You can always prepare for an emergency, but you don’t really know what the fire drill is until you have a real fire,” Frank Venegas said. Venegas said his son, daughter and brother have carried on his mantra of trying different things. “It seems to have gotten us a long way,” he said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

BUNDLED FROM PAGE 3

Priority Health began its 90-day bundled hip and knee package on Jan. 1 and has 33 surgeons and two hospital systems under contract — Beaumont Health and Holland Hospital, said James Forshee, M.D., its chief medical officer. He said Priority will be adding back and spine surgery to its bundled payment program. No further details were available. “Doctors are very willing to get in value-based payment. We can tie that into our quality outcomes programs,” Forshee said. “We strongly encourage partnering with outpatient surgery centers (because of lower costs). We are seeing some movement to outpatient centers.” But Peter Schonfeld, the Michigan Health and Hospital Association’s COO and senior vice president of policy, said Blue Cross’ bundled payment program will hurt hospitals financially, especially if they are forced to cut joint surgery prices to participate. Hospitals also stand to lose surgery volume if more doctors perform surgeries in ambulatory centers and that also will reduce revenue. Blue Cross had planned to launch the joint replacement bundled-payment program in early 2017, but delayed it because hospitals and doctors needed more data, Schonfeld said. “Hospitals are at different stages of readiness (to accept risk-based payments). Some are uncomfortable on the readiness on the costs. They don’t know what patients would actually fit the category (for inpatient surgery),” he said. “Other hospitals are ready to learn and are willing to take a certain amount of risk to get there faster.” Each year more than 45,000 hip and knee replacement surgeries are conducted in Michigan, according to research conducted by Triarq Health, a Troy-based physician management organization. At costs that range from $28,000 to $55,000, they are one of the five most expensive surgeries along with spinal fusion, percutaneous coronary angioplasty and cesarean section. Because of the aging population, total hip replacements are projected to grow 171 percent and total knee replacements are expected to grow 189 percent by 2030, Triarq said. The average age for hip and knee replacements also has dropped to about age 65 over the past 15 years from about 68. Bundled pricing for surgeries is another move by insurers to encourage doctors to move patients out of hospitals and into lower-cost settings. Blue Cross said its new program aims to “improve outcomes of hip and knee replacement procedures” and cut 10 percent off the surgeries’ average costs. “The variation in cost across hospitals and geographies is significant. We are working with surgeons and health care systems to manage the cost and outcome variation of these procedures, and to consider appropriate sites for care,” Steve Anderson, Blue Cross’ vice president of provider contracting and network administration, said in a statement. The Blue Cross program covers surgeries in Wayne, Oakland, Macomb, Washtenaw, Livingston, St. Clair, Jackson, Ingham and Genesee counties. Blue Cross in 2016 accounted for about 5,000 joint replacements excluding hip fractures, and Priority Health completed 3,900 total joint replacements that same year. “The participating providers in this program account for about a third of the hip and knee procedures performed, so it’s a good-sized test program. We expect to have representative

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Bundled pricing for surgeries is another move by health insurers to encourage doctors to move patients out of hospitals and into lower cost, outpatient settings. GETTY IMAGES

data to review after one year,” Anderson said. The 65 participating doctors conducted 850 eligible hip and knee joint replacement surgeries for members covered by a Blues’ plan. In Michigan, there are about 580 orthopedic surgeons, with 320 who do joint procedures. But about 80 surgeons do half the volume in the state.

Some hospitals prepared Hospital organizations participating in the Blue Cross program are Henry Ford Health System, Detroit; DMC Huron Valley Sinai Hospital, Commerce Township; Oakland Regional Hospital, Southfield; St. Joseph Mercy Brighton Health Center and St. Joseph Mercy Livingston. The hospitals have 45 physicians participating, Blue Cross said. “We are taking risk on the total costs of care. If we do a good job at management (of a patient’s) costs, we get rewarded,” said Rob Casalou, president and CEO of St. Joseph Mercy Health System. “It is minimally invasive outpatient care. We can make it work with the payment Blue Cross is offering. At the end of the day, we have to lower costs.” David Markel, M.D., former president of the Michigan Orthopedic Society, said hospitals are taking a gamble that they can work with post-acute providers to lower costs enough to make the bundled price work. “To make this successful, (doctors) will likely move patients out of the hospital,” Markel said. Klobucar said the bundled payment program request for proposals went to hospitals, freestanding ambulatory surgery centers and orthopedic surgeons. “We create financial incentive for them to move (surgeries) to outpatient settings” to save costs and promote quality, said Klobucar, adding that the program doesn’t exclude hospitals but it gives them incentive to lower costs. Markel said most hospitals didn’t join the Blue Cross program because they didn’t want to give up their fees for the surgeries and take financial risks on patient recovery, said Markel, who also is market president of The Core Institute at Porretta, a nine-physician orthopedic group in Southfield and Novi that mainly practices at Ascension hospitals. “The groups outside the hospitals have said, ‘These are our (Blue Cross) patients, we believe we can manage the post-acute care episodes and move patients outside of expensive environments,’” Markel said. But Core at Porretta did not bid for the Blue Cross or Priority contracts in Michigan at this time because the group could not reach agreement with enough hospital systems on pricing and surgery best practices, said DeLyle Manwaring, executive vice president of health systems and payment reform at Core Institute in Phoenix.

Core has several successful bundled joint contracts with health insurers and health systems in Arizona. It also has participated in the Medicare bundled care program with good results. “We believe bundles are inevitable for the country,” Manwaring said. “The (Medicare) program has shown increased quality and decreased costs.” Manwaring said the next step for Core in Michigan is to build an ambulatory surgery center “where we can do those kind of procedures. It will happen.”

Group participation The two physician organizations participating with the Blue Cross program are Triarq Health Alliance with 12 orthopedic surgeons in the joint venture; and Michigan Orthopaedic Surgeons, a Southfield-based medical group whose surgeons practice mostly at Beaumont Health’s hospitals. A Beaumont official said the hospital has not cut its prices with the orthopedic group. The two physician groups have 19 physicians participating in the program, Blue Cross said. Mike Sappington, CEO of Triarq Health, said the group sees the Blue Cross bundled contract as just the beginning that will move care to outpatient settings and offer a single price for an episode of care that includes all aspects of surgery and recovery. “Before last year, Blue Cross did not allow hips to be done outpatient. They saw all the trends to do a portion of the healthy population in outpatient setting and offered it to everybody,” Sappington said. Sappington said Blue Cross will penalize hospitals and physicians for readmission and infection rates. Other metrics Blue Cross will track include length of stay, blood clots and deep vein thrombosis. Jeffrey DeClaire, an orthopedic surgeon with the DeClaire LaMacchia Orthopedic Institute in Rochester Hills, said his three surgeon associates do the majority of their surgeries at Ascension Health’s Crittenton Hospital in Rochester Hills. DeClaire, who is affiliated with Triarq, does about 1,100 knee replacement surgeries annually. “One of my visions was to get involved in this whole bundled payment” movement that began in 2014 with some Medicare patients, DeClaire said. “It is a positive and driving force that focuses on the quality aspect and the ability to deliver care at an efficient level without compromising quality.” DeClaire said each patient is closely evaluated to determine if they are a candidate for surgery and whether they can be treated inpatient or outpatient. “We look at health, nutritional status and patient optimization,” he said. “Do these patients qualify for outpatient surgery? Can they go home the

same day or do they need to spend the night at the hospital?” Schonfeld said he hopes patients have an option to choose to go into the bundled arrangement and where to have their surgeries. While DeClaire said patients will have choices on inpatient or outpatient care, he said participating in the bundle will offer them much more coordinated care. Over the past five years, DeClaire said he has been doing an increasing number of knee surgeries in outpatient settings. For example, he does about 75 percent of partial knee surgeries in outpatient facilities, but only 25 percent of total knees are done on an outpatient basis. He said the figures for total knee replacements will climb to nearly 50 percent as outpatient surgery technology improves. “I am seeing improved outcomes, but it depends on the technique in surgery and the pain-management protocols,” he said. “The cost of care will be less in the outpatient setting.” DeClaire said some Triarq surgeons have negotiated a lower price and procedure changes for inpatient surgery at hospitals. But he said negotiation with Crittenton hasn’t started yet. He said negotiations with outpatient providers have gone well, especially with physical therapy providers. Markel said hospitals will have to lower their surgery prices to avoid losing too much volume. “If you operate on a patient in a hospital, the hospital gets paid its rate. If you operate at a surgery center, the rate difference is about $7,800,” he said. Markel said if a hospital accepts the $28,700 rate, they already know what they will get in reimbursement from Blue Cross. “They are banking their risk and they can manage the post-acute care episode at a lower cost,” he said. But Markel said the problem in Michigan is many ambulatory surgery centers do not have the technical and nursing expertise for knee and hip replacement surgeries. “The use and ability of doing total joints outpatient is still in its infancy in Michigan,” said Markel, adding that Michigan should make changes in certificate-of-need regulations that will allow for the expansion of physician-owned ambulatory surgery centers to accommodate more volume if health insurers continue to push surgeries to outpatient settings. “The way the bundles are set up, it is hard to control costs other than where the person is getting surgery,” said Markel. “We will be involved in commercial bundles here in Michigan. We can contract with the post-acute care providers. We just need to own our own surgery center and negotiate our own contracts. That will change everything.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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

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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 9 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

MARCH 30-APRIL 5 | For more, visit crainsdetroit.com

HAP may open innovation center in Detroit

ealth Alliance Plan of Michigan is considering a plan to move some of its workforce from its longtime Detroit New Center headquarters to Troy and a plan to open an innovation center in downtown Detroit for research on emerging technology. HAP CEO Terri Kline said the health insurer is in the early design phase for both projects and doesn’t know yet how large a space it will need for the innovation center or how many employees it will move to Troy from its New Center headquarters at 2850 W. Grand Blvd. Earlier this year, Crain’s reported HAP plans to move about 725 employees from its Southfield office during the fourth quarter to Troy at 1414 E. Maple Road, the current location of United Shore Financial Services. United Shore plans to move to its new corporate headquarters in Pontiac later this year. Kline said the downtown Detroit innovation center would just be for HAP, but she suggested there could also be employees co-located there with parent company Henry Ford Health System, which has an innovation institute of its own at the Henry Ford Hospital campus. Early plans call for HAP to keep some departments at its New Center headquarters but move some other unspecified departments to Troy, Kline said in an interview with Crain’s. HAP employs about 200 at its Detroit office. Departments that will stay in Detroit include the data center, customer service, mail operations, the boardroom and the executive suite, Kline said. HAP has 1,100 employees in Detroit, Southfield and Flint and has space for several more hundred contractors. “We have a lease on a building in Detroit that goes on for several more years (2024),” Kline said, adding: “We know everything in Southfield will move to Troy. We are looking to see what is best in Detroit and consolidate the rest into Troy.” HAP will sublease 180,000 square feet of space in the 275,000-square-foot Troy building from Henry Ford. Kline said HAP expects to complete all employee moves during the first quarter of 2019. “Our intention is to make our operation as efficient as we can,” Kline said. “Between Southfield and Detroit, we are on 17 different floors. That does not

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

1 million

The number of pizza lunch combos Little Caesars estimates it gave away April 2 to fulfill its “If Crazy Happens” March Madness promotion

1 acre

The size of a Brush Park property for which the city of Detroit is seeking a developer

180

The number of staff to be temporarily laid off at the Fillmore Detroit venue for five months of renovations starting in June

lead to much collaboration. People have worked there for decades who don’t know each other. We want a much better workflow space that will improve collaboration and efficiency and lends to a lot of administrative production.”

BUSINESS NEWS J The hit Broadway musical “Hamilton” will premiere in Detroit in March 2019 at the Fisher Theatre. The 2018-19 Broadway in Detroit season also includes Disney’s “Aladdin” at the Detroit Opera House and “Waitress” at the Fisher. J Duo Security Inc. is moving 30 employees from its Ann Arbor headquarters to the Bamboo shared office space in downtown Detroit as part of a plan to expand in the city and assist its tech startups. J A $9 million contract awarded by the Department of Defense last summer to a metro Detroit manufacturer, Mettle Ops, and the U.S. Army Tank-Automotive Research Development and Engineering Center in Warren has been increased by $4.26 million. J The Detroit Pistons’ esports team made its historic first draft pick last week, and whether Ramo “Lets Get It Ramo” Radoncic proves to be a pixel equivalent of Hall of Famer Isiah Thomas or epic bust Darko Milicic, or someone in between, will be known soon. J The Monster Energy NASCAR Cup Series races will make two stops next

GREAT LAKES HPP FOOD INNOVATION CENTER

The Great Lakes HPP Food Innovation Center in Taylor held a grand opening Thursday. Jack and Annette Aronson, co-founders of Garden Fresh Gourmet, have opened the center with the intention of helping Michigan’s food industry access one of the largest high-pressure processing machines in the world that can help extend the shelf life of their products.

year at the Michigan International Speedway in Brooklyn, according to its 2019 schedule. J German auto suppliers Continental AG and Osram have closed on a joint venture agreement to create a new company, Osram Continental GmbH, with a presence planned in Troy and throughout the U.S., Europe and Asia. J Trumbull & Porter hotel in Corktown plans to show cult classic movies for free at 8 p.m. every Friday in its outdoor courtyard to drum up business at its restaurant, Red Dunn Kitchen. J Detroit’s Potato Lady Express is planning a new location on Seven Mile Road north of Highland Park to open in June, after closing up its last storefront in 2015 due to building issues and a need for more business knowledge. J A new waste management company, Priority Waste, based temporarily in Clinton Township, is entering the metro Detroit market as acquisitions continue to rearrange the landscape of the local trash collection business. J The co-founders of famous local salsa maker Garden Fresh Gourmet opened the Great Lakes HPP Food Innovation Center in Taylor with the intention of helping Michigan’s food industry access one of the largest high-pressure processing machines in the world that can help extend the shelf life of their products. J Quicken Loans Inc. is making its debut on the big screen by landing a deal with Marvel Studios to place its Rocket Mortgage app in the upcoming movie “Avengers: Infinity War.”

OTHER NEWS J Wayne County commissioners voted last Thursday to approve a deal to swap land with the city of Detroit in another step toward making way for a new county jail complex and Dan Gilbert redeveloping the “fail jail” site downtown. J Government, automotive and tech leaders celebrated the grand opening of the American Center for Mobility in Ypsilanti Township last week, touting the facility as important to the future of autonomous vehicles. J Gov. Rick Snyder appointed Livonia City Attorney Donald Knapp Jr. to replace former Circuit Judge Richard Skutt, who died in February, on the 3rd Circuit Court in Wayne. The seat will be up for election in November. J The Detroit Institute of Arts is seeking landscape architects and urban designers for a competition to build a plan that “reimagines the DIA’s grounds” as a “town square.” J The recently rehabbed and expanding Randolph Career Technical Center got 23 security cameras installed through Detroit’s crime monitoring system Project Green Light. It’s the first education institution to join the initiative, which currently has around 300 businesses participating. J The Ralph C. Wilson Jr. Foundation is granting $2 million to the Michigan Health Endowment Fund and $2 million to the Health Foundation for Western & Central New York to endow program officer positions at each institution.

OBITUARY J Freddie Mae Lindsay-Payne, who co-led the Payne-Pulliam School of Trade and Commerce in Detroit for four decades, died last Wednesday at 74.

H&M GROUP

H&M is looking for a downtown Detroit location for what would be its first store in the city, according to sources.

Sources: Retailer H&M pursuing Detroit store

&M Group is scouting downtown Detroit for a location for what would be its first store in the city, according to three sources familiar with the matter. H&M would join the likes of Nike, Under Armour, John Varvatos and other national apparel retailers downtown, all of which have opened in Dan Gilbert properties in the last several years. The precise size and location of the possible store are not known. An email was sent to an H&M spokeswoman Friday morning.

The company has 15 Michigan stores, with metro Detroit locations in Sterling Heights, Ann Arbor, Novi, Dearborn, Auburn Hills, Clinton Township, Roseville, Taylor, Livonia and Troy, according to its website. It says it plans to open about 220 new stores this year, most of which will be H&M stores but also include other H&M Group brands such as COS, Monki, Weekday and ARKET. H&M says it has more than 171,000 employees worldwide across more than 4,700 stores.

SUSAN GOETHEL CAMPBELL

Created by Cranbrook Academy of Art graduate Susan Goethel Campbell, the Detroit weather installation is a more than three-hour video composed of images taken from a webcam affixed to the 22nd floor of the Fisher Building in New Center.

365 days of Detroit weather to stream across Cobo marquee

ometimes the trade-off for beautiful changes in the seasons is snow in April. In tandem with flurries in Detroit this week, a new art installation at Cobo Center called “Detroit Weather: 365 Days” aims to showcase the city in all its wonky-weather glory. The art will appear throughout April on the Detroit convention center’s marquee videoboard on Washington Boulevard, according to a news release. It is part of a yearlong series “The Big Screen: Cobo Center Marquee Series,” which launched in October as part of an initiative to bring more art into the city and expand mediums for local artists. Created by Cranbrook Academy of Art graduate Susan Goethel Campbell in 2011, the Detroit weather installation is a more than three-hour

video composed of images taken from a webcam affixed to the 22nd floor of the Fisher Building in New Center. Twenty-four hours a day for an entire year, the camera archived an image every minute, capturing three different views of the city. The video rifles through all those images at a clip of 30 frames per second. Campbell is the sixth artist to be showcased on the marquee video series. Last month saw Catwoman prowling around downtown as part of an installation by Detroit native and video game artist Cassie McQuater. The pixelated installations are funded by a $40,000 grant from the John S. and James L. Knight Foundation’s Knight Arts Challenge and a matching $40,000 from the Detroit Regional Convention Facility Authority, which operates the venue.

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Crain Content Studio, the custom publishing division of Crain’s Detroit Business, thanks Federal-Mogul Motorparts for its support of the Notable Women in Manufacturing project. These women make medical devices, food and beverages, and automobiles. They secure patents and manage plants. They mentor their peers and inspire students by teaching them about careers in STEM. Federal-Mogul Motorparts brought these women together for an evening of networking; here’s to an amazing and diverse group of outstanding leaders!

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