Crain's Detroit Business, April 16, 2018 issue by Crain's Detroit Business

Health plan profits, enrollment hit record highs in 2017 Page 3 Pistons enjoy success off the court Page 3

Gwen MacKenzie leaving top exec post at Ascension

APRIL 16 - 22, 2018 | crainsdetroit.com

FROM RECESSION TO REINVENTION CRAIN’S DETROIT BUSINESS SPECIAL REPORT | MORE ON PAGE 10

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RETAIL

First new mall in more than a decade planned By Sherri Welch swelch@crain.com

A Commerce Township plan for the first major retail development in Southeast Michigan in more than a decade moved a step closer to becoming a reality last week. The township approved a planned unit development for the mixed-use project last week. As envisioned by developer Robert B. Aikens LLC, the $100 million first phase of the 55-acre project would bring the next generation of retail development to the region and the first since the 2007 launch of open-air shopping mall Partridge Creek in Clinton Township. The new project, dubbed “Five & Main,” would combine experiential offerings people can’t get from online shopping, like restaurants, spin-

Need to know

 Commerce Township approves $100 million mixed-use retail project  Would be first major retail development in Southeast Michigan in more than a decade  More than half of retail space would be taken by food and entertainment, developed with service and destination retail, residential and nature trails to create downtown feel

After long expansion, what will next recession look like? By Dustin Walsh |

dwalsh@crain.com

he global air filters market is expected to rise to a $19 billion industry by 2020. But shipments are running light, according to Brandon Stallard, CEO of Troy-based TPS Logistics Inc. The non-asset logistics provider CEO said freight is down nearly across the board in the first quarter of this year, indicating an economic slowdown. “Transportation is the leading indicator of the economy,” Stallard

aes ao. ta

said. “Right now, less stuff is moving and that’s getting my attention.” TPS, which moves $1 billion in freight annually, has seen air filter shipments down 9 percent, retail shipments down 6 percent and auto parts down 8 percent, despite logistics prices remaining high. Stallard is joined by economic experts who believe a recession is on the horizon — one that will be tempered, compared to the Great Recession a decade ago. It will only bruise the private sector but could cause a bloodletting in the public sphere. SEE RECESSION, PAGE 21

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ning, salons and pet care shops, with high-end and destination retail, residential development, a dog park and access to nature trails. Those elements would be woven together in a driveable and walkable open-air development with a downtown feel. Located on the northeast corner of Pontiac Trail and M-5, the first phase would include 341,137 square feet of retail space. More than half or 56 percent would be taken up by restaurants, specialty food and beverage retailers and entertainment options. By contrast, malls have traditionally only had about 15 percent food and entertainment options, said Ken Nisch, chairman of Southfield-based JGA, a brand strategy and retail design firm. As it works on a site plan to submit to the township, Aikens is now in final lease negotiations with anchor retailers including a movie theater and a gourmet market. It hopes to get signed commitment from the theater before the International Council of Shopping Centers’ national RECON conference in Las Vegas in late May to leverage in talks with other retailers, said Vice Chairman Robert Bruce Aikens Jr. To secure financing for the project, Aikens is working to get 60-70 percent of it leased, he said. SEE RETAIL, PAGE 20

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MICHIGAN BRIEFS

INSIDE

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

Vessel damages oil pipelines Gov. Rick Snyder said last week that twin oil pipelines in the Straits of Mackinac appear to have sustained minor damage from a vessel that may also have caused a recent leak of coolant fluid from electric cables, the Associated Press reported. Enbridge Inc.’s Line 5 runs along the bottom of the waterway in the vicinity of the American Transmission Co. power cables that released an estimated 600 gallons of insulation fluids earlier this month. Snyder also said in a statement last Wednesday that Enbridge needs to accelerate the pace at which it is studying alternatives for the segment’s future. The company agreed to terms in November with the state of Michigan, which owns the lakebed and granted an easement allowing the pipelines to go there. Among the options is replacing the pipelines with new ones that would be placed in a trench or tunnel. Enbridge is also studying ways to prevent anchor strikes of the existing lines. Enbridge had notified state officials last Tuesday that inspections after the recent coolant-fluid leak was discovered turned up two small, previously unseen dents in one of its pipelines and a single dent in the other. Snyder said in a news release that an anchor strike “was the largest risk iden-

year and, between 2013 and 2015, wrongly flagged 20,000 people for fraud.

House K-12 budget dings ‘Marshall Plan’

Twin oil pipelines in the Straits of Mackinac appear to have sustained minor damage from a vessel that may also have caused a recent leak of coolant fluid.

tified in a previous independent analysis of the Enbridge pipeline, which is apparently what happened in the Straits last week. We need the right answers, but we need them as soon as we can get them ...”

MI sees spike in identity theft complaints

The state of Michigan’s unemployment insurance agency said it has beefed up efforts against fraudulent unemployment claims following an influx of identity theft complaints late last year and early this year related to big nationwide data breaches. The agency received 1,600-2,000 calls to its fraud hotline each week in January, said Wanda Stokes, director of the Talent Investment Agency, which runs the Unemployment Insurance Agency. That number decreased to 300 per week in March. “What we found was that many of

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these unemployment insurance claims were fraudulent and, for the most part, we were stopping them,” Stokes said at a news conference last week. “We revamped some systems. Now we are able to investigate these claims quickly and thoroughly and make sure they are not paid out.” To help combat the issue, new legislation to help strengthen Michigan’s identity theft protections went in effect late last month. In addition, the agency introduced prevention tactics including allowing employers and individuals to make reports online. The agency is still trying to determine how many of the claims made were false and how much money the state has paid out to fraudulent claims, said Michelle Beebe, senior deputy director of the Talent Investment Agency. The claims are processed with the software MiDAS, a glitch in which was responsible for a data breach early last

The K-12 budget approved last week by a House subcommittee supports Gov. Rick Snyder’s proposed increase of $120 to $240 per pupil but otherwise veers in several areas from the governor’s recommendation, especially on his proposed talent improvement plan, Gongwer News Service reported. As expected, the subcommittee retained current year funding for two programs where Snyder proposed significant reductions: the shared-time program to fund public school districts’ programming for private and homeschool pupils and the basic funding for cyber charter schools. It was Snyder’s plan to improve how the K-12 system prepares pupils for careers, the proposal the governor has labeled his “Marshall Plan for Talent” where the subcommittee made major changes. While Snyder’s proposal is a combination of new programs, expanding existing programs and putting existing programs under the “Marshall Plan” label with $100 million in dedicated funding through a work project, the House subcommittee proposal is even more so. The House subcommittee approved spending $75 million on Snyder’s proposed talent programs, but

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did not fund several of his new programs and used the remaining $25 million to replace existing funding for other programs tied to science, technology, engineering and math (STEM) education.

Snyder leads 3-day trip to Silicon Valley

Gov. Rick Snyder traveled last week to Silicon Valley to tout Michigan as the “global epicenter of mobility” with tech companies, startups and investors. Michigan Economic Development Corp. officials Trevor Pawl, Tino Breithaupt and Kathy Kleckner were to join Snyder on the expedition to the San Francisco Bay Area for the trip last Monday through Wednesday. The trip was paid for by corporate funding through the MEDC, Snyder’s spokeswoman Anna Heaton said in an email. She did not say how much was budgeted for the trip. The governor’s office did not respond to inquiries on specific companies the governor met with or outcomes of the trip.

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HEALTH CARE

SPORTS BUSINESS

Health plan MOVE REVS SPONSORS enrollment, profits hit record highs

TRANSPORTATION

CEOs push for vote on regional transit

By Jay Greene

By Chad Livengood

Health plan profits and managed-care enrollment in Michigan broke records in 2017 with Blue Care Network/Blue Cross Complete and Priority Health posting banner years and clearly separating from the pack, according to the 2018 Michigan Health Market Review. More than half of the total net income of $452 million in 2017 for the 17 health plans came from Blue Care/ Complete; the Need Blues and Priority to know Health account Health plan ed for 77 percent profits in Michigan of the total. of $452 million, 2.6 The net income percent margin figure, which includes invest Driven by ment revenue, commercial, represents a 2.6 Medicare and percent average Medicaid revenue total margin, up  Blue Care from $304 million Network and and a 1.7 percent Priority Health margin posted in managed care 2016, according to operations Minneapoaccounted for 77 lis-based consulpercent of income tant Allan Baumgarten, who publishes the Michigan report and similar studies in eight other states. The health plans’ net income total for 2017 was the highest in at least 15 years, 50 percent higher than 2016 and 37 percent higher than $330 million in 2015, the previous recent high-water mark for Michigan’s health plans, Baumgarten said. In 2012, the health plans posted a similar 2.6 percent margin but recorded only $300 million in net income. Premium revenue grew last year, but only about $4 million to $17.6 billion. “Enrollment and profitability grew, but varied by lines of business,” Baumgarten said. “The really big difference between 2016 and 2017 is Blue Care Network.” Blue Care and Blue Cross Complete, a separately operated Medicaid HMO, increased enrollment collectively by 5.8 percent, a gain of 48,000 members to 892,138. BCN and Complete posted total net income of $257.4 million for a 5.8 percent margin, up from $104.6 million in 2016. “We had strong performance in 2017,” said James Kallas, Blue Care’s vice president of financial corporate services and treasurer. He cited membership growth, working with providers to reduce unnecessary utilization and inefficiencies, good investment performance and cutting wasteful administrative costs.

but Metzger did say the team intends to further boost income using several strategies. Notably, the team is in talks with its first Chinese corporate sponsor, an automotive firm the Pistons are not yet revealing, in a bid to capitalize on what the league has told Detroit is more than 10 million Pistons fans in China. The team also is using data gathered this past season from its inaugural use of “Nielsen Sports Social 24” which is the digital audience analytics tool from Nielsen Co. that the Pistons say will allow them to revamp their advertising rate card beginning next season.

A coalition of 23 metro Detroit CEOs representing most of the region’s largest companies are making a public push to get political leaders to coalesce around a regional mass transit plan to put before voters in the November general election. Led by DTE Energy Chairman and CEO Gerry Anderson, the group of business titans that employ nearly 200,000 people in Michigan are calling for action on regional transit in the wake of Amazon.com passing on Detroit for a potential site for its p l a n n e d 50,000-employee Gerry Anderson: second headLeads group quarters. calling for action. “The poor Need quality of our public transit is to know not lost on po DTE Energy tential investors Chairman Gerry in our region. Anderson’s CEOs When Amazon group wants passed on namregional transit ing Detroit as a plan on November finalist for its secballot ond headquar Transit vote ters site, the lack push endorsed by of a workable reDan Gilbert, Mary gional transit sysBarra, Jim Hackett, tem was one of a Roger Penske and few key factors Chris Ilitch cited,” the group of CEOs wrote in  Regional Transit a letter that was Authority board meets Thursday to expected to be published in the consider next Sunday Detroit steps Free Press. “How important a factor it was can be debated; what cannot be debated is that Amazon didn’t like what it saw.” The group includes Quicken Loans founder Dan Gilbert, General Motors Co. CEO Mary Barra, Ford Motor Co. CEO Jim Hackett, Blue Cross Blue Shield CEO Dan Loepp, Ilitch Holdings Chairman Christopher Ilitch and the heads of Henry Ford Health System, Detroit Medical Center and Beaumont Health. Kresge Foundation CEO Rip Rapson and Ralph C. Wilson, Jr. Foundation CEO Dave Egner also signed on to the letter. The group’s letter did not specifically endorse any one plan for solving metro Detroit’s decades-long regional battle over mass transportation.

SEE PISTONS, PAGE 19

SEE TRANSIT, PAGE 21

jgreene@crain.com

SEE HEALTH, PAGE 18

clivengood@crain.com

The Detroit Pistons ended their first season at new Little Caesars Arena by missing the playoffs for the eighth time in nine seasons. LARRY PEPLIN FOR CRAIN’S

Despite on-court mediocrity, Pistons see business expansion downtown By Bill Shea bshea@crain.com

The vexing Detroit Pistons ended their first season at new Little Caesars Arena by missing the playoffs for the eighth time in nine seasons, but the offcourt side of the business marked a triumphant return to downtown Detroit. The team’s chief marketing and revenue office, Charlie Metzger, told Crain’s that the team doubled its corporate sponsorship revenue for this season despite leaving its own building, The Palace of Auburn Hills, after 29 years to instead share an arena controlled by the Detroit Red Wings. The increase also came despite

Need to know

Pistons doubled corporate sponsorship revenue from final year at the Palace 

 Major deals with Flagstar, Henry Ford fueled growth  Team working on deal with Chinese automotive firm

having few advertisers at their new home, which they often struggled to fill, compared with The Palace. The companies advertising with the Pistons downtown are willing to pay more, Metzger said. The Pistons didn’t disclose corporate revenue or other financial data,

MUST READS OF THE WEEK Who deserves credit for streetlighting program?

Sears to sell its Twelve Oaks Mall location

Detroit Food Academy adds news products

Former Detroit Mayor Dave Bing started the program that is often credited to current Mayor Mike Duggan. Page 8

The anchor site at the Novi mall is one of 16 locations to be sold in an online auction in May. Page 23

Slow Jams Jam is the group’s third snack retail brand, after Mitten Bites granola bars and Detroit Pop Shop ice pops. Page 23

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 1 6 , 2 0 1 8

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Crain’s Publisher Ron Fournier leaves for role at Truscott Rossman Crain’s Detroit Business Publisher and Editor Ron Fournier has left journalism to become president of the Lansing-based Truscott Rossman public relations and lobbying firm. The firm’s founder and CEO, Kelly Rossman-McKinney, is retiring and seeking election to the state Senate in her district in mid-Michigan. Co-founder and current President John Truscott will become CEO of the firm and is buying out Rossman-McKinney’s stake. Truscott said the firm’s name will not change. He would not comment on the purchase price. Fournier will be based in the firm’s Detroit office in the GM Renaissance Center. Fournier, 54, joined Crain’s in September 2016, after covering politics in Washington, D.C., for the Associated Press, the National Journal and The Atlantic. His move represents a departure from journalism after three decades that included covering Presidents Bill Clinton, George W. Bush and Barack Obama. “I had a long run in journalism — from Arkansas to the White House and then back home in 2016 to Detroit, where I enjoyed leading Crain’s through major change. Now it’s time to get off the sidelines and into the arena,” Fournier said.

Ron Fournier: Taking on role at Truscott Rossman.

Lisa Rudy: Will run sales operations.

Fournier departed Crain’s last week. Rossman-McKinney’s retirement will take effect June 1. The Crain’s newsroom will be managed on a day-to-day basis by Managing Editor Michael Lee. Director of Sales Lisa Rudy will run sales operations for Crain’s Detroit Business and its sister publication Crain’s Cleveland Business. Both report to Group Publisher Mary Kramer. “The Crain organization was happy to play a big role in attracting a talent like Ron ‘back home,’” said Crain Communications President KC Crain. “Ron created a high-performing team at Crain’s Detroit Business, and that team already led our brand to a financially successful first quarter and we’re on track to have a great year, journalistically and financially.” 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 Michael Lee: and more than Manages 30 daily business newsroom. newsletters covering cities and regions across North America. The four regional business journals are undergoing a strategic reorganization led by Kramer, and some managers have assumed roles in more than one city. “By working together across the four cities, we’re serving clients more effectively,” Kramer said. “Good ideas from one of our brands can be adopted more quickly in our other cities. Sharing executive leadership helps accelerate adoption of new products and strategies.” Kramer noted that Rudy recently added responsibility for Cleveland, Christina Fabugais-Dimovska is coordinating marketing for all four cities and David Kordalski, based in Cleveland, serves as art director for the publications in Cleveland and Detroit.

Architecture and Design | Arts and Sciences | Engineering | Management

LORCAN O’HERLIHY ARCHITECTS

The second phase of the Baltimore Station project is slated to have 131 apartments at Woodward Avenue and Baltimore Street in Detroit’s Milwaukee Junction neighborhood.

Mixed-use development in Milwaukee Junction to be complete by summer 2019 By Kirk Pinho kpinho@crain.com

Detroit-based developer The Platform LLC plans its two-phase Baltimore Station project in Detroit’s Milwaukee Junction neighborhood to be complete by summer 2019. The first phase of the project has 23 loft apartments on Woodward Avenue with 10,000 square feet of firstfloor retail in a pair of rehabilitated buildings while the second phase is slated for 138 apartments with 9,000 square feet of retail. The second phase, construction on which began this week, is expected to cost $29 million, according to a news release. Retail tenants in the $7.6 million first phase, construction on which began a year ago, are Woodpile BBQ Shack and an unnamed bakery.

Need to know

Detroit-based The Platform LLC is the developer of Baltimore Station J

J First phase is leasing, expected to open this summer J Second phase slated for 138 apartments with 9,000 square feet of retail

The project began as a class project by three University of Michigan graduate students in professor and developer Peter Allen’s class. Later, the three — Dang Duong, Myles Hamby and Clarke Lewis — were hired by The Platform, which has been developing mixed-use projects in and around the New Center area, as well as neighborhoods including Islandview and northwest Detroit, among others.

“Baltimore Station is a great project, but the story behind it is amazing,” Peter Cummings, executive chairman of The Platform, said in the release. “To help take what had been a class project for these visionaries, to take their idea and make it a reality, it’s just inspiring for not only the future of Detroit, but for the careers of these brilliant young men.” Leasing is taking place for the project’s first phase, which was built by Eastpointe-based Monahan Co. and designed by Detroit-based architecture firm Archive DS. Troy-based O’Brien Construction Co. is the contractor on the second phase, which was designed by Los Angeles-based Lorcan O’Herlihy Architects. Both companies have offices in Detroit.

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Ex-Barnes & Noble chief Morouns appeal to Trump for help in Detroit River bridge battle named as Art Van CEO By Chad Livengood clivengood@crain.com

The Moroun family’s Detroit International Bridge Co. has appealed to President Donald Trump to reconsider an exemption his predecessor granted allowing the Canadian government to construct a new Detroit River bridge without “Buy American” requirements for steel. In an ongoing effort to block construction of the Gordie Howe International Bridge, trucking mogul Manuel “Matty” Moroun’s bridge company is also trying to lobby for relief from the Canadian government requiring them to tear down the 88-year-old Ambassador Bridge after they construct a new six-lane replacement span. “We question why a project like the GHIB should receive a ‘Buy American’ wavier from the U.S. government while the Canadian government unilaterally imposes a condition requiring the demolition of our existing bridge,” DIBC President Dan Stamper said in a statement. “Moreover, the GHIB conflicts with many of the current administration’s policies.” As part of his “America First” campaign pledge, Trump imposed tariffs last month on imported steel that initially exempts Canada and Mexico as part of an ongoing renegotiation of the North American Free Trade Agreement.

Need to know

Family’s company raises issue of Canada being exempt from buying U.S. steel for Gordie Howe International Bridge 

 President Obama granted the “Buy American” exemption in 2012  Moroun company wants Canada to drop requirement that it tear down Ambassador Bridge after constructing a replacement span

In 2012, then-President Barack Obama granted the Canadians a waiver on buying U.S. steel for a project the Canadian government has vowed to entirely finance — without any taxpayer contributions from the Michigan and federal governments. It’s unclear whether the Trump administration would make an 11thhour decision to reverse Obama’s exemption. A spokesperson for the U.S. Commerce Department did not immediately respond to a request for comment from Crain’s. The Moroun company, which is now under control of Moroun’s son, Matthew, wants Trump to intervene before the Detroit-Windsor Bridge Authority picks a consortium of companies to build the Gordie Howe bridge connecting southwest Detroit with the south side of Windsor. That decision is expected sometime this summer.

In its 2014 permit application, Moroun’s Canadian Transit Co. had proposed maintaining the Ambassador Bridge as a back-up crossing for emergencies and used for operational vehicles and public events. DIBC officials have said the company has spent millions in recent years redecking the Ambassador Bridge. But the Canadian government’s conditional permit says the DIBC’s subsidiary “shall demolish or cause to be demolished the Ambassador Bridge ... within five years from the day on which the replacement bridge opens to traffic.” “We hope that the U.S. will level the playing field at the border. Removing the Canadian condition allows construction to begin,” Stamper said. “Requiring the current bridge to be demolished was not proposed, nor was it considered during the environmental reviews, and our view is that Canada imposed this anti-competitive condition in an attempt to justify a government bridge.” The Moroun company’s newest effort to inject the “Buy American” debate a month after Trump sought to strengthen the U.S. steel industry comes just weeks before bridge proposals are due to the international authority created by Canada to oversee construction of the Gordie Howe bridge. Bloomberg Businessweek first reported the development on Thursday.

Notable Women in Health Care manage hospital staff and develop medical technology. They mentor and recruit other women in the health care field. They improve patient care and put community service above all else.

By Tyler Clifford tclifford@crain.com

Art Van Furniture has named former Barnes & Noble Inc. CEO Ronald Boire as its next president and CEO, effective April 30. Boire, 57, will replace Kim Yost who announced his retirement from the Warren-based retailer in February. He departs Upland Group, a retail consultancy in New York City, where he has been principal since 2016. Boire has 35 years in the industry, serving in leadership roles Ronald Boire: at a variety of reHas 35 years in tail and consumretail industry. er electronics companies, including Sony Electronics Inc., Best Buy, Toys “R” Us Inc., Brookstone Inc. and Sears Canada Inc. Boire resigned as CEO of Barnes & Noble in August 2016 after being in the position for less than a year. He was the third chief to leave the company in three years as the bookseller suffered from the rise of Amazon.com Inc., the New York Times reported. Prior to that, Boire served a total of six years in stints as CEO of Brookstone and Sears Canada, according to his LinkedIn account. “Ron is a tremendous addition to

Need to know

 Ronald Boire will replace retiring Kim Yost 

Boire is a longtime retail executive

Founder Art Van Elslander sold Warren-based company to Boston-based private equity firm last year 

the Art Van family,” said Yost, who joined Art Van nine years ago. “He is a charismatic and dynamic leader, who has an innate passion for the customer and shares our love for product and for sales. He also brings ‘war stories’ from many other sectors of retail, which will be invaluable as Art Van continues to transform the business into the leading all-home omni-channel retailer in the United States.” During Yost’s time, the company boosted its store count fivefold and grew sales from $350 million to more than $1.3 billion, he said in the release. Founder Art Van Elslander, who died earlier in February, sold Art Van to Boston-based private equity firm Thomas H. Lee Partners LP last year for an estimated $550 million. Boire said he is looking forward to the opportunity. “The furniture and mattress industry is going through a time of significant change and the Art Van portfolio of brands are uniquely positioned to capitalize on the opportunities present in this evolving landscape,” he said in the release.

Crain Content Studio, the custom publishing division of Crain’s Detroit Business, will name the 2018 Notable Women in Health Care in a special section on June 18.

ay ate AT d N n o i I st m M on /no i O t a m N n o O mi oit.c o T r n tr T 3 F ou sde y E n t L ril 2 mi crai b K E : Ap Suiting E W SE vis E by N LO

In that report, we’ll profile women in the health care industry – from doctors and nurses to hospital management to health innovators – who are considered leaders in their workplaces and in the community.

Y! R R

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United Way to offer data analysis in nonprofit sector By Sherri Welch

swelch@crain.com

United Way for Southeastern Michigan is offering its newly developed research and data analysis services to five local nonprofits on a pilot basis in a bid to begin helping the sector better leverage data. The pilot comes amid rising national interest in measuring the impact of nonprofit programs. Launched over the past year, the new department is helping to put metrics behind United Way’s own programs and large goals, like turning around high schools, so it can better communicate the impact they are having. “This is ensuring we have a mechanism to provide support to our internal organization on the work we’re doing,” said Donna Satterfield, a former IBM executive who joined United Way as vice president of community impact six months ago. It’s also one of the ways United Way is looking to support the nonprofits it funds and works with, offering to them some of the capability it’s developed in-house to strengthen their work, she said. At the same time, the new research and learning department, which harkens back to United Way’s stronger research focus during the last decade, is elevating United Way’s role as a convenor. It’s currently surveying residents of Wayne, Oakland and Macomb counties on their perceptions of their communities and lifestyles through a survey it plans to share with nonprofits it funds and works with as part of a May 9 symposium aimed at sharing best practices around collecting and leveraging data. The United Way pilot comes just months after the Ralph C. Wilson Jr. Foundation announced it would invest more than $5 million over the next few years in a first-of-its-kind nonprofit and innovation center in Detroit to address the lack of a coordinated support system for metro Detroit nonprofits. In recent years, United Way collected information like the number of people served by a program through employees spread across its community impact teams, Satterfield said. Former CEO Herman Gray instituted the department before his departure late last year, thinking it would make more sense to pull all

Donna Satterfield: Looking to support nonprofits.

Rachelle Bonelli: Information about impact valuable.

those people into one group so they could focus more intently on the work United Way is doing internally and also provide services to other nonprofits, Satterfield said. United Way is operating on a budget of about $59 million for fiscal 2018. Last year, it had revenue totaling $52.6 million and expenses totaling $55.1 million, according to its audited financials. It hired Terrence George, former principal of Hamtramck High School and director of pupil services for the district, as director of the new research and learning department to lead a staff of six whose capabilities include computer mapping, statistical analysis, program evaluation, data management and coding. Pleasant Ridge Mayor Kurt Metzger, who served as United Way’s first-ever research director from 2005-2008, is serving as a research consultant in connection with its new Research and Learning Department. During that earlier stint at United Way, Metzger, who went on to found Data Driven Detroit after leaving United Way, helped survey thousands of people in the community to identify the most pressing needs that led to United Way’s current focus areas under its community impact model: basic needs, financial stability and educational preparedness. The new department is now working with all of United Way’s programs, from its 211 health and human services call center to its workforce development efforts, helping to plan, implement and evaluate them. To take the newly honed expertise to others, United Way conducted a survey with its grantees and 211 referral nonprofits last year to ask what they would like to see United Way help them with, Satterfield said, beyond financial support.

Among other things, nonprofits said they’d like more opportunities to convene and to better understand how to leverage their data. “Frankly, that’s one of the things we’re all trying to figure out: how do we make the data more impactful?” Satterfield said. United Way is now providing services around research, data analysis and grant proposal support to five nonprofit partner agencies on a pilot basis at no charge. The agencies include: J Accounting Aid Society J Black Family Development J Development Centers Inc. J Gleaners Community Food Bank of Southeastern Michigan J Macomb Family Services United Way plans to take on the requests of additional nonprofits once it’s assisted the first group, Satterfield said, noting some requests are simple and take only a few hours to complete, while others are more robust. Gleaners’ ability to demonstrate and describe its impact “is valuable to our growth and sustainability,” said Vice President of Programs Rachelle Bonelli in an emailed statement. “Data gathering and improved communications about impact can only be beneficial to the nonprofit sector overall, and we are looking forward to working with (United Way).”

“Data gathering and improved communications about impact can only be beneficial to the nonprofit sector overall, and we are looking forward to working with (United Way).” Rachelle Bonelli, vice president of programs, Gleaners

Many behavioral health nonprofits are currently using data analytics to look at performance metrics, such as cancellation rates, no-show rates, therapist productivity levels in terms of clients served and revenue rates, said Owen Pfaendtner, president and CEO, Macomb Family Services. Conversely, “we want to look at outcomes to improve the client ex-

Need to know JJUnited Way for Southeastern Michigan

is offering newly developed research and data analysis services to five local nonprofits on a pilot basis

JJPilot, aimed at helping the sector better leverage data, comes amid rising national interest in measuring nonprofits’ impact JJResearch and learning department launched over past year to help United Way put metrics behind its programs and large goals, too

perience … and how we deliver services to see if there’s things we can improve on.” Macomb Family Services is operating on a budget of just over $7 million, with 215 employees. It provides behavioral health and substance abuse services and residential services for developmentally disabled adults. As part of the pilot, United Way has agreed to analyze data on Macomb Family Services’ behavioral mental health clients to see if there are patterns that match up with improved outcomes. ArdentCause L3C is currently helping the nonprofit pull data from its electronic medical records system. Having United Way analyze the data for free is saving it money, Pfaendtner said. “We don’t typically get funding or resources for this ... I don’t even know if there’s grants out there that would provide funding for data analysis.” Beyond the pilot, United Way is collecting myriad “data points” from tri-county residents through an online survey through April 15. Questions range from asking residents to rank their current community to how important proximity to a library is to them and whether they have a cell phone or checking account. It plans to combine the feedback, once analyzed, with secondary data from federal, state and other data sources to produce a series of informational pieces. It’s also set to provide highlights of the community report at a May 9 data symposium it’s now organizing with the University of Michigan’s Poverty Solutions and the Detroit Metropolitan Area Communities Study. This first symposium is aimed at United Way’s 180 grantees and its government, foundation and corporate partners,

given limited seating, Vickie Winn, director of public relations for United Way, said.

Value of data The push for data on nonprofit impact is picking up across the country. Among others, United Way for America is pointing to the value of using data to drive impact and other affiliates like United Way of Central Oklahoma have research/data initiatives in place. The Dorothy A. Johnson Center for Philanthropy at Grand Valley State University called out the growing push for more data-informed decision making in philanthropy as one of the macro trends affecting the nonprofit sector this year, cautioning that “a request for deep data without funding and adequate organizational capacity can be challenging for some nonprofits.” It’s not just foundations seeking more information on their grantmaking; nonprofits are looking to both prove and improve their impact, said Kyle Caldwell, executive director of the center. Technology has lowered the cost to gaining and managing data, while also creating faster ways to analyze and share it, which has provided philanthropy with “powerful tools” to gauge their impact, he said. But many organizations focusing on some of society’s most vexing social issues still lack the capacity to acquire technology to capture data and the capacity and expertise to interpret it and correlate it to the issues they’re addressing. “The challenge will be helping organizations be ‘data ready,’” Caldwell said. And that makes the role of data intermediaries vital. United Way’s Research and Learning Department, Data Driven Detroit and the Johnson Center’s Community Research Institute can help to close the gap of data disparities and make connections between the data collected and the issues nonprofits are tying to solve, Caldwell said. “They can also help organizations share data across issues, data sources and common solutions that can make data informed decision making more effective and accessible.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Clark Hill grows to 650 attorneys with addition of Dallas-based firm By Kurt Nagl knagl@crain.com

Clark Hill PLC is absorbing Dallas-based Strasburger & Price LLP in a deal that will expand the law firm to 650 attorneys and cement its status as the largest law firm based in Michigan. The firm will operate under the Clark Hill name in 25 offices across 12 states; Washington, D.C.; Ireland; and Mexico. In Texas, the firm will practice as Clark Hill Strasburger. Detroit-based Clark Hill CEO John Hern will remain at the helm of the combined firm. The deal is to take effect Wednesday. Terms were not disclosed. Hern said the deal is part of the firm’s strategy to be a “one-stop shop”

Need to know

Dallas-based Strasburger & Price has 200 attorneys J

Deal to become effective Wednesday

Move allows Clark Hill to tap into booming energy and oil sectors J

for clients and add value at a time of stagnation in the legal market. “The total market share growth of revenue in the law firm industry is flat and has been for 10 years,” Hern said. “But the number of lawyers continues to grow. That’s a bad recipe.” Expanding to different markets through mergers and acquisitions has become a necessity for many legal firms to retain clients, Hern said.

“If you have a client outside your geography, you know your competitors are there trying to poach the client. If you have a presence there, you can ward the poachers off.” John Hern

“If you have a client outside your geography, you know your competitors are there trying to poach the client,” he said. “If you have a presence there, you can ward the poachers off.” The most recent deal follows Clark Hill’s acquisition last summer of Los Angeles-based Morris Polich &

Purdy LLP, which added nearly 100 lawyers. That deal brought the firm 16 offices in nine states and Washington, D.C. The company’s expansion into Texas will give it a presence near existing clients and enable it to tap into lucrative energy and oil sectors as firms locally and across the coun-

try seek new markets to retain and grow client lists. It will also beef up its $193.6 million in revenue reported in 2017. Strasburger & Price had a revenue of $93.8 million in 2017 and $93.7 million in 2016, Hern said. The deal with Strasburger & Price will bring an additional 200 lawyers to Clark Hill, which has more than 450 lawyers in 17 offices. The second-largest firm in the state is Dickinson Wright PLLC, which has 458 attorneys as of June 2017, according to Crain’s Book of Lists. Following a whirlwind of deals, Hern said his firm is not presently looking for more expansion. “Integrating these last two mergers is the area of focus,” he said.

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 1 6 , 2 0 1 8

Gwen MacKenzie to leave as top executive at Ascension By Jay Greene jgreene@crain.com

Gwen MacKenzie, market president of Ascension Health Michigan, has announced she will resign effective April 30, a month after publicly announced layoffs of 500 employees. Joseph Cacchione, M.D., has been appointed interim ministry market executive for Ascension Michigan. He also is president of Ascension Medical Group. “I recruited Gwen to lead a complex market undergoing transformation to population health faster than many of our markets in Ascension,” Patricia Maryland, executive vice president of Ascension and CEO of Ascension Healthcare in St. Louis, said in a stateNeed ment. Maryland to know previously was JJGwen market president MacKenzie has of Ascension been with Michigan and St. Ascension John Providence Michigan since Health System, 2014 an Ascension regional system JJMichigan based in Warren. system has been “She has adundergoing layoffs vanced the cliniof more than 500 cally integrated employees this network for both year Ascension MichJJJoseph igan and TogethCacchione will er Health Netserve as interim work, our ministry market statewide, physiexecutive after cian-led clinicalMacKenzie leaves ly integrated netApril 30 work with Trinity Health and Michigan Medicine, and leaves us poised to grow. I am grateful for the time she committed.” MacKenzie, who has headed up the 15-hospital regional system since 2014, was unavailable for an interview. In a statement, MacKenzie said: “When I returned to Michigan from Florida having been recruited by Pat Maryland to support her in a market I was very familiar with and fond of, I gave Pat my commitment of three to four years. “Having fulfilled that commitment to Pat, I have been privileged to be part of Ascension and leave with best wishes for success. “With the rapid cycle transformation we are experiencing in health care, the skill sets of future top leaders will likely be different as we innovate around population health and consumer expectations. I believe Ascension will continue to be a leader in this space while sustaining the Mission of our historic sponsors.” Earlier this year, Crain’s reported layoffs at Ascension hospitals in Michigan. The layoffs ranged from nurses to managers. MacKenzie acknowledged in an interview in March that the goal was for the health system to reduce costs by $60 million this year, improve efficiencies and worker productivity. MacKenzie confirmed the layoffs covered a wide range of job categories: nurses, medical therapists, technicians, unit clerks and other support service employees. Other layoffs of union workers were expected to be announced in the coming weeks. “We have transitioned close to 500 associates. Every one of those has been painful and hurtful,” said MacKenzie in a previous interview. “You probably wonder why we were

Gwen MacKenzie: To leave April 30.

Joseph Cacchione: To take helm.

not talking more openly about it. It is very private and sensitive matter that we take very seriously on behalf of our associates.” Ascension Michigan employs

about 26,000 people, and the layoffs are a little more than 2 percent of the workforce. Maryland credited MacKenzie for advancing a number of cutting-edge Ascension programs and strategies. For example, MacKenzie last year helped recruit 136 new providers, including 100 physicians; opened a 60,000-square-foot, $17.5 million health center campus in Livingston; and exceeded its target for new primary-care patients. MacKenzie was recognized by Crain’s as among the Most Influential Women in Michigan in 2016. She also spent 27 years at the Detroit Medical Center before leaving to be-

“I recruited Gwen to lead a complex market undergoing transformation to population health faster than many of our markets in Ascension.” Patricia Maryland, executive vice president of Ascension and CEO of Ascension Healthcare in St. Louis

come CEO of Sarasota (Fla). Memorial Health Care System from 2005 to 2014. She also was vice chair of the

Florida Hospital Association from 2013-2014. She began her career as an oncology nurse practitioner at the University of Michigan, UCLA and DMC. She is a University of Michigan graduate and received a master’s degree in nursing from the University of California, Los Angeles. Cacchione, who will assume the Ascension Michigan helm on April 30, previously served in leadership positions at the Cleveland Clinic, including chair of operations and strategy for the clinic’s heart and vascular institute. An internist, Cacchione also has worked in the St. Vincent Health System in Erie, Pa.

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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 1 6 , 2 0 1 8

OPINION Missing piece in Detroit campaign to lead industry

COMMENTARY

AP PHOTO/CARLOS OSORIO

In 2012, then-Mayor Dave Bing got the Legislature to create the Public Lighting Authority of Detroit and dedicate utility and income tax revenue to pay off $185 million in bonds.

Bing irked by Duggan getting credit for streetlight repairs

n the 16 months since Detroit completed the citywide installation of 65,000 streetlights, a national narrative has taken root that this was the sole accomplishment of Mayor Mike Duggan — and it’s simply revisionist history. In 2012, then-Mayor Dave Bing got the Legislature to create the Public Lighting Authority of Detroit and dedicate utility and income tax revenue to pay off $185 million in bonds. The next year, as Detroit was careening toward a financial meltdown, Bing installed the first lighting authority board that signed the contract with DTE Energy to carry out the massive public works project, which began in early 2014 after Duggan took office under a shared-power role with Emergency Manager Kevyn Orr in charge. But Duggan has not done much to discourage the narrative that he turned the lights back on in Detroit, as evidenced Wednesday night when he spoke at Harvard University alongside JPMorgan Chase CEO Jamie Dimon and Peter Scher, the head of corporate responsibility for the banking giant and Dimon’s point man on Detroit investments. The moderator, Karen Mills, turned to Duggan and said she was “curious about this streetlight initiative” as the mayor frowned. “What was it about turning back on the lights?" she asked. “When did you get that idea? You told me you were running (Detroit Medical Center), the lights were off all the time. When did that vision come to you?” Duggan sidestepped Mills’ suggestion that it was his idea. “We’re done talking about streetlights in Detroit,” the mayor said. “... It was only a source of celebration in

CHAD LIVENGOOD clivengood@crain.com

Detroit, and now we’re at the point where it goes on every night and it’s boring, which is the way it should be. I shouldn’t get congratulations for the lights going on.” Duggan went on to tell a story he’s told publicly before about how he got so upset about broken streetlights one night as he was leaving the Detroit Medical Center that he went home to Livonia and took his wife, Lori Maher, on a drive down Outer Drive in Detroit where she grew up. “It was pitch dark the entire 10 miles. By the time I was done, she was crying that the neighborhood where she grew up looked like that,” Duggan said. “She was like, ‘OK, I’m on board.’ And that was really what led to the decision (to run for mayor).” But Duggan didn’t mention who deserves credit for putting the relighting of Detroit into motion — and that’s not been lost on his predecessor and Bing’s allies. “There’s no doubt that all of that started with my administration,” Bing said Thursday in an interview. “There’s nothing negative toward Duggan and his staff, but they shouldn’t get credit for things that somebody else did.” But over the past year, the Detroit mayor is getting all of the credit and

accolades in national news stories about Detroit’s revival. “With biblical succinctness, and foreshadowing a resurrection, Mike Duggan said, ‘Let there be light!’ and 65,000 LED streetlights replaced the 40 percent of the city’s streetlights that were broken when he took office in 2014,” Washington Post columnist George Will wrote in a breathtaking first sentence of a profile of Duggan calling him “America’s most accomplishing politician.” This kind of narrative irks the previous mayor, who came into office in the wake of former Mayor Kwame Kilpatrick’s corruption and spent his last nine months sidelined by Orr, the Washington bankruptcy attorney who set in motion a series of financial and bureaucratic reforms that Duggan has since been credited with the success of. “Nobody ever corrects them,” Bing said. “In some cases, it’s like maybe we didn’t even exist for the four-anda-half years that we were there.” Former state Rep. Maureen Stapleton of Detroit sponsored the public lighting authority legislation and worked with Bing to get it through the Legislature in late 2012. Bing appointed her to chair the authority’s board in 2013 when all of the preparation work had to be done to stand up the new entity, begin selling bonds and initiate the replacement of broken streetlights. “I often chuckle when I hear people talk about who was responsible for it,” Stapleton said. “The No. 1 individual who was responsible for the lights coming back on and the system put in place was Mayor Dave Bing.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

n today’s automotive industry, we’re witnessing a revolution. Ride-sharing, electric vehicles, autonomous technology and connectivity are combining to shift the current transportation model and car ownership. The runway is long, but a new era is clearly upon us. With these advancements and more, I’m more optimistic than ever about Detroit’s role in shaping the future of our industry. But we need to be prepared — we need engineering talent, specifically young engineering talent, to move us forward. By 2020, it’s estimated the U.S. will face a shortage of roughly half a million engineers. It’s also projected that 80 percent of future jobs in the U.S. will be related to the STEM fields — science, technology, engineering and math. It’s a situation that threatens to undermine our nation’s ability to compete in a world that is increasingly dependent on technology and innovation — unless we act now. As teachers, parents and leaders, we must work together to populate our future with engineers. And that means getting young people interested, involved and excited about STEM long before they head off to college. It’s critical that we do that right here in Detroit and Southeast Michigan, to ensure that we have the resources and talent we need. And we need to do it now.

OTHER VOICES Mark Reuss

We must take swift, bold action to achieve or exceed the talent levels in Silicon Valley and other world technology hubs. To a certain degree, we can attract talent from elsewhere. But true success lies in developing our own talent among the young people of this region — opening up new opportunities for them and injecting new vitality into our local communities. I’m confident that Detroit will remain at the forefront of the automotive revolution, so long as we all take the necessary steps today to foster the engineering talent and leaders of tomorrow. GM is committed to this effort and wants to work in partnership with individuals, companies and organizations across our industry in Detroit on the right solutions. Mark Reuss is executive vice president of global product development at General Motors Co.

A brave new world

ast week the head of Facebook testified before Congress for a couple of days to explain just how Facebook works for its billions of customers around the world. For anyone who watched more than just a small bit of the testimony, one thing quickly became painfully clear. The folks from Facebook know a lot more than our elected senators, who seemed fairly befuddled at the entire conversation. If this had been a prizefight, we would be saying they didn’t lay a glove on him. About the only memorable comments we heard from Mark Zuckerberg was how sorry Facebook was and how it won’t happen again. A general mea culpa seemed to cover all the company’s sins. It seemed quite appropriate coming out of Washington these days, when no one is quite sure what is real and what is “fake news.” With lots of new players showing up and crisis everywhere you turn — from Syria to Russia to North Korea to strip teasers — there is a raft of news coming out of Washington. But no one doing the reporting seems to have even the slightest idea of what is important to middle America and deserves covering. Each cable news channel has a political point of view and seems to be preaching to its own choir. Heaven help us if we happen to be listening to the wrong channel; we will be certain we are listening to the official broadcast of

KEITH CRAIN Editor-in-chief

North Korea or Radio Free Russia. There are so many scandals going on that most of the country would love to discover an “off” button for Washington. We would be far more interested in the box score for the Detroit Tigers or the decline of the Pistons and Red Wings. Not only is there a huge partisan divide in our country, but there seems to be an ever increasing divide between Washington (and add New York City and California) and the rest of the country. There seems to be no common thread at all. Those folks live on a different planet, with a different agenda. I have often advocated dispersing our federal government throughout the nation to make the bureaucrats who all too often rule our lives more representative of the country. As for Facebook, not only do we still have no idea how these social platforms work, but we have no idea who or what is watching us. Welcome to “1984.” It is a brave new world.

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 1 6 , 2 0 1 8

Rapid transit: The road not taken

he 2.9-mile Detroit People Mover automated downtown circulator began operations in 1987. The People Mover’s driverless, elevated trains run in a one-way loop connecting 13 stations in the city’s Central Business District. In 1973, the Southeast Michigan Transportation Authority, the precursor to SMART, presented a plan for the downtown people mover as a complement to a proposed subway that never came to fruition. According to the Detroit Free Press, thenCity Council Member and later U.S. Senator Carl Levin believed the People Mover could be “expanded into a fast-transit system at far less cost and possibly with better service” than a subway. Since launch, a common complaint with the People Mover is its short, 2.9-mile circular run and the fact that it moves in only one direction, limiting its utility. Despite these limitations, the People Mover has a lot going for it. Trains run in their own elevated right-ofway and do not interact with vehicles on the street. For a metro area unacquainted with rapid transit, the People Mover offers a glimpse at what rapid regional transit could look like. According to transit consultant Jarrett Walker, labor costs account for 70 percent or more of the average annual operating cost of public transit systems in developed nations. Automated driverless systems like the Detroit People Mover are the notable

OTHER VOICES Tim Hinkle

lion boardings. Further expansions are planned to meet growing demand. In the mid-2000s, transit consultant and former People Mover executive Marsden Berger proposed a Woodward Avenue People Mover expan-

sion connecting Henry Ford Hospital to the existing downtown loop. Berger calls the People Mover technology, even 30 years on, “still the number one steel-wheel automated technology that you can buy. … It has the capability of basically 100 percent expansion at very low cost, and we don’t even have people who truly look at this.” Vancouver is a case study in what rapid, reliable, regional transit in Southeast Michigan could look like, if only we could objectively study the Detroit People Mover for what it is, and what it could be. Tim Hinkle is a Detroit resident.

The Vancouver SkyTrain uses the same technology as the People Mover, but is a far more expansive and comprehensive regional system, boasting 53 stops along nearly 50 miles of track. exception. Automation allows for much lower operating costs, allowing for potentially lower fares and/or higher farebox recovery than many other forms of public transportation. To see how an expanded People Mover could scale up to a viable regional rapid transit system connecting city and suburbs, check out the Vancouver SkyTrain. The SkyTrain uses the same technology as the People Mover, but is a far more expansive and comprehensive regional system, boasting 53 stops along nearly 50 miles of track. SkyTrain serves numerous destinations and neighborhoods within the city, including Vancouver International Airport, as well as surrounding municipalities. It is one of the longest fully automated driverless transit systems in the world. SkyTrain opened in 1985 with a 13mile route. The system has been subsequently expanded several times to combat congestion on Vancouver streets. The city opted for transit investments in lieu of urban freeway construction. The earliest SkyTrain expansion came in 1988 with a doubling of the original line, from 13 to 26 miles. Additional expansions brought the SkyTrain system to its current size. Today, SkyTrain ridership is quite robust. September 2017 saw 36 mil-

The Detroit People Mover runs on an elevated track while the QLine runs on the street below in downtown Detroit.

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

FOCUS

FROM RECESSION TO REINVENTION

Ten years later, the Recession carries lessons

o sector of the economy was untouched by the Great Recession. The auto industry reeled. The burst of the housing bubble brought the construction industry to a halt. As the collapse rippled through the economy, nonprofits lost swaths of financial support. Even the pizza business suffered. The businesses and organizations that survived seized opportunities

to try new things. They adapted to uncertainty and unexpected, unpredictable turns of event. And they took risks — like the countless suddenly-entrepreneurs who ventured out on their own after being laid off. A decade after the Great Recession (and in the thick of a near-record economic expansion — see our story on Page 1), Crain’s talked to leaders whose stories of reinvention carry lessons for any business leader seeking inspiration in necessity.

A 175-year-old nonprofit shifts focus while returning to its roots By Rachelle Damico

Special to Crain’s Detroit Business

St. Vincent and Sarah Fisher Center has evolved and survived several economic downturns in its 175-year history. But the Great Recession nearly caused the center to close its doors for good. “Economic factors can force an organization to make drastic changes,” said Diane Renaud, executive director and CEO. “Our most recent evolution has been a true economic lesson.” The center provides free educational programs and workforce development services for at-risk children, adults and families, including those who live in areas with high poverty and unemployment rates. The nonprofit dates back to 1844, when the Daughters of Charity of St. Vincent De Paul, a Catholic congregation, founded St. Vincent’s Academy in Detroit. SEE NONPROFIT, PAGE 13

“Economic factors can force an organization to make drastic changes. Our most recent evolution has been a true economic lesson.” Diane Renaud LARRY PEPLIN FOR CRAIN’S

Diane Renaud, executive director and CEO, St. Vincent and Sarah Fisher Center.

A death in the family brought Deshler Group to the brink By Rachelle Damico

Special to Crain's Detroit Business

Robert Gruschow, president, Deshler Group.

DESHLER GROUP

When the automotive industry collapsed along with the economy, Deshler Group Inc. was forced to restructure its business to avoid going down with it. Deshler Group is a holding company composed of seven sister companies that provides manufacturing, assembly, transportation and global logistics, supply-chain management, warehousing and packaging and IT. The Livonia-based holding company is a global provider of integrated supply-chain solutions to tier one automotive manufacturers. Deshler Group has 400 employees worldwide and had 2016 revenue of more than $135 million.

“It felt like the perfect storm. It forced us to dig deep and to figure out how to survive and restructure ourselves.” Robert Gruschow

During the automotive industry crisis in 2009, Deshler Group was a $40 million company that saw a 40 percent sales drop in revenue. Deshler suffered from financial uncertainty as General Motors, Ford and Chrysler scrambled to avoid bankruptcy. “Generally, if you were a tier one

supplier your sales dropped by about 40 to 50 percent,” said Robert Gruschow, president. “Suppliers at the time were trying to determine how to make sure they were going to get paid.” Then things got worse: Deshler Group’s president Donald Gruschow passed away. Robert Gruschow succeeded his father that year. He was part of the company’s succession plan, but wasn’t planning to take over for years. “It felt like the perfect storm,” Gruschow said. “It forced us to dig deep and to figure out how to survive and restructure ourselves.” To reduce excess capacity and cut costs, Deshler Group permanently closed its Deshler, Ohio, plant. SEE DESHLER, PAGE 12

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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 1 6 , 2 0 1 8

A fireproof strategy for surviving the downturn By Rachelle Damico

Special to Crain's Detroit Business

When the construction industry was hit hard by the Great Recession, Warren-based company Conquest Firespray LLC had to diversify its business to stay competitive. Conquest Firespray began about 20 years ago as Duct Connection & Sheet Metal Supply. The business manufactured custom HVAC duct systems for the commercial market and sold to mechanical and sheet metal contractors throughout Southeast Michigan. “We were competing for whatever limited market there was in southern Michigan,” said James Miller, managing partner. “The necessity of innovation was brought about by the tension and pressure of the recession.” While the economy continued to weaken in 2008, new construction projects declined. Miller said the company was losing business, so the partners began to look for other opportunities. That year, the owners invested in building information modeling — engineered construction models which allowed customers to view a three-dimensional graphic of a proposed project. Miller said the models allow customers to spot potentially costly issues that can arise before the construction process, and allow different trade groups to come together on projects. However, Miller said many customers were unfamiliar with the new technology, so the company stopped selling the service. “That approach didn’t really bring us the growth and the opportunity that we hoped,” Miller said. Two years later, after networking with others in the construction industry, the company learned about Flamebar BW11, a fire retardant coating material developed in the United Kingdom. The company that manufactures the product, Firespray International LTD in Essex, England, commanded 60 percent of market in the UK, Miller said. Conquest Firespray negotiated a master license agreement for the product in 2011 for the U.S. and Cana-

dian market, and acquired the intellectual property rights two years later. The business was attracted to the product because it was less costly than traditional fire-rated HVAC systems and took up less space and time to install. For instance, Miller said fire-rated HVAC systems are typically wrapped in 2-4 inches of installation or boxed in with fire-rated drywall, but Miller said the Flamebar coating is only about 1-2 millimeters thick. It’s also less costly to ship. Miller said a shipping trailer typically holds $6,000-$8,000 worth of standard sheet metal duct, as opposed to $40,000$50,000 worth of Flamebar coated HVAC ductwork. “Traditional HVAC ductwork is relatively inexpensive but takes up a lot of space, so it’s very difficult to ship,” Miller said. “We’re able to ship Flamebar coated systems long distance and cost effectively.” Conquest Firespray also provides code compliance training for building code officials, engineers, fire marshals and mechanical contractors. Miller said Conquest began the education after the company discovered most industry-standard horizontal HVAC fire-rated assemblies are not in compliance with International Building Code requirements. As a result of the Flamebar coating, Miller said Conquest’s revenue has grown significantly, and he expects revenue to double by next year. The company closed a deal this month with Los Angeles, CA-based private equity firm Pacific Growth Investors LLC, which Miller said will help grow the company on a national scale. “We decided it was time to invest more deeply and more quickly to get the product across the United States and Canada,” Miller said. Conquest Firespray has secured many large-scale projects since 2010, including Comcast’s headquarters in Philadelphia, the Milwaukee Bucks stadium, Northwestern University in Chicago and Marriott hotels throughout the United States. “We are no longer a commodity — we’re highly differentiated,” Miller said.

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Conquest Firespray has secured many large-scale projects since 2010.

Anthony and Jennifer Thomas of Flooring Technologies LLC.

FLOORING TECHNOLOGIES LLC

Suddenly small-business owners By Rachelle Damico

Special to Crain's Detroit Business

When Anthony and Jennifer Thomas were laid off from their flooring industry jobs during the recession, they made a mid-life leap into small business ownership. The husband-and-wife team own Clinton Township-based company Flooring Technologies LLC. Anthony, president, manages sales and marketing while Jennifer, CEO, handles all office-related and financial responsibilities. They are the only employees aside from a contracted salesperson, Bill Sinzheimer. The company generates about $1.5 million in annual sales. During March of 2009, Anthony was laid off from his position as floor covering group manager at Interior Dynamics Inc., a Troy-based commercial office furniture company that did flooring installation. Anthony was responsible for sales development and operations of the floor covering division. Anthony said Interior Dynamics struggled during the recession while the company’s largest client was behind on their invoice payments. Consequently, the business closed, leaving Anthony without a job. “I was trying to figure out what I was going to do,” Anthony said. “My wife and I had two children in high school and on the verge of college.” Anthony said he interviewed with large commercial flooring companies in the area, but hiring managers wanted to see his book of business. That was an issue for Anthony, who said he only had a book of accounts rather than business he could bring in immediately. “I had all of these nice Fortune 500 companies that I’ve had as customers and had longstanding relationships

with, but they weren’t doing any business right now,” Anthony said. “It wasn’t money that I could bring in right now, but I knew they would buy down the line.” Two months later, in May 2009, Anthony and Jennifer started Flooring Technologies in the den of their home. The company struggled financially at the beginning, but was supported by Jennifer’s office manager job. She worked at CDK Carpet Inc. in Bloomfield Hills, a retail flooring company that does business as McLeod Carpet One Floor & Home. Many banks weren’t offering new companies a line of credit during the recession, and Flooring Technologies’ clients weren’t initially willing to give deposits for flooring materials, Anthony said. Anthony and Jennifer took money out of their own account and wire-transferred money to their suppliers. “It’s one thing working for an established company that had lines of credit,” Anthony said. “It’s another opening a brand-new business in the heart of a recession and asking for lines of credit.” During the first year, the company secured accounts from his prior business contacts, but they looked to different outlets as well in order to fund the business. For instance, Anthony secured a contract decommissioning existing

“I was trying to figure out what I was going to do. My wife and I had two children in high school and on the verge of college.” Anthony Thomas

offices and warehouse buildings for Electronic Data Systems, including a 30,000-square-foot facility in Auburn Hills. Anthony said the Texas-based information technology service company was previously one of Interior Dynamics’ biggest customers. (The EDS company name later dissolved after the company was purchased by the Hewlett-Packard Company) “It showed them I was willing to do anything to get back in their graces and get their work,” Anthony said. Then, near the end of 2010, Jennifer was laid off from her position at McLeod Carpet, which Anthony said was due to the long-lingering economic decline. “It was a rude awakening. Now we were truly on our own,” Anthony said. Flooring Technologies gained momentum in 2011, the same year the company secured its first line of credit. Their client base grew as he reestablished relationships with his previous business contacts. He also found new clients by searching through various publications, including Crain’s Book of Lists. The company earned national certification as a Women’s Business Enterprise by the Women’s Business Enterprise National Council in 2012. A year later, the company leased their first office, a 1,300-square-foot space in Clinton Township. Since its inception, Flooring Technologies has grown its client base to include Shinola, Comerica Bank, General Motors and Washtenaw Community College. Current projects include Google’s new office building in Detroit. “Even though we are a small business, we are proud to have started this organization in the worst of times, and are blessed to continue,” Anthony said.

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 1 6 , 2 0 1 8

SPECIAL REPORT: RECESSION TO REINVENTION

Even pizza biz slowed down during recession By Rachelle Damico

Special to Crain’s Detroit Business

Steve Jackson, president and CEO of Hungry Howie’s Pizza & Subs Inc., said although pizza brands typically thrive during economic downturns, Hungry Howie’s sales were flat. “I think America was paralyzed because of all the categories in the industry that were affected, and we didn’t experience that increase in sales,” Jackson said. “Business was challenged.” Hungry Howie’s was founded in Taylor in 1973. The Madison Heightsbased pizza chain has 550 locations in 20 states across the U.S. Jackson said Hungry Howie’s was affected by the downturn of the automotive industry around 20082009. Many of the pizza chain’s stores were located in small towns in Michigan or Ohio near automotive suppliers. “It was the backbone of that town, and if that auto supplier was affected or went out of business, it affected that town drastically,” Jackson said. “We lost some stores in some of the small towns.” Jackson said the economic conditions motivated Hungry Howie’s to hire new leaders, make changes and improve the brand. “We were in multiple states, but technically we were (marketing as) a big regional brand,” Jackson said. “We decided that to take this on a national level, we were going to have to go through the company, remodel

“We decided that to take this on a national level, we were going to have to go through the company, remodel our stores and look and act like a national brand.” Steve Jackson

HUNGRY HOWIE’S

Steve Jackson, president and CEO of Hungry Howie’s Pizza & Subs Inc.

our stores and look and act like a national brand.” During 2010, Jackson approached the brand’s franchisees about remodeling their stores. After 35 years, the chain had accumulated a number of older stores that needed to be updated, Jackson said. “We wanted them to spend money to improve their stores when they were making less money than the year

before, so the idea wasn’t a real popular idea from the start,” Jackson said. To convince franchisees that remodeling would drive sales, Jackson said the pizza chain began remodeling its own stores, updating signage and improving the store designs. After monitoring sales at the remodeled stores over a 20-week period, the experiment proved a success: sales were up.

“Slowly but surely, our franchisees began remodeling their old stores and they saw results,” Jackson said. Hungry Howie’s also invested in technology that gives its leadership team standardized metrics for all of its businesses across the country. Jackson said that allows the chain to be more nimble and make quicker marketing decisions. SEE PIZZA, PAGE 13

From a liquidated trucking company, a logistics group rises By Chad Livengood clivengood@crain.com

The trucking company John A. James co-founded in 1971 moving cars and parts for automakers for decades had to be liquidated during the Great Recession. His southwest Detroit-based company shifted to the export business, tracking parts for OEMs and assembling wheels for Toyota cars. Now, they’re looking for ways to prepare for the next recession — and getting in on Detroit’s real estate boom. James Group Lorron James: International Being stagnant is continues to death to a evolve as the company. company’s main subsidiary, Renaissance Global Logistics, has seen a decline in exporting transmissions, engines, sheet metal and other parts for Ford Motor Co. In the decade since the recession, James Group has morphed from a trucking company for automakers into a logistics and service company for automotive companies. “When we started, my father didn’t necessarily want to get into trucking, but that’s where the need was,” said Lorron James, CEO of James Group International. “These days, you have to consistently reinvent yourself.” James Group, which is headquartered at 4335 W. Fort St., is now more than just a logistics company. The family-run business is one of the only in Detroit that can actually

“When we started, my father didn’t necessarily want to get into trucking, but that’s where the need was.” Lorron James

James Group, which is headquartered at 4335 W. Fort St., is now more than just a logistics company.

claim to be downtown real estate mogul Dan Gilbert’s landlord. The Gilbert-owned Xenith sports equipment company leases 70,000 square feet of space at James Group’s Fort Street facility for assembly of its football helmets and other gear. “That’s not something we would have done in the past,” Lorron James said. Lorron James is running the dayto-day operations of the business these days, while his father remains the company’s chairman. His brother, John E. James, remains president of James Group and CEO of its Ford parts export subsidiary, Renaissance Global Logistics, while he seeks the Republican nomination for U.S. Senate in the Aug. 7 primary.

In Mississippi, where the elder John James grew up, the company has established a subsidiary that assembles tires and wheels for Toyota Corollas. In Detroit, James Group has gotten into joint ventures with technology companies to create parts-tracking software and platforms for the tracing of materials in the supply chains of automakers. They’ve also gotten into the business of buying up spare vehicle parts from General Motors Co. and tier one suppliers that are deemed “less than perfect” and reselling them to auto body shops, Lorron James said. The company’s next ventures will capitalize on being near the site of the long-planned Gordie Howe In-

COSTAR GROUP INC.

ternational Bridge. Lorron James is marketing 20 acres along the Detroit River that the company has owned since the mid-1990s for a delivery dock for steel needed to build the new bridge connecting Michigan and Canada. It’s all part of the company’s ongoing effort to diversify its business so it can weather future recessions. “Right now, real estate in Detroit is a pretty hot commodity,” Lorron James said. “And we’re finding that we can market land that we’ve been sitting on for more 25 years. Sitting still and being stagnant is the death to any company.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

DESHLER FROM PAGE 10

The holding company consolidated it with its current plant in Logan, Ohio, which is now Amanda Manufacturing LLC. “We combined two operations within six months, which is unheard of in auto, but you do what you need to do to continue to support the customer and keep the organization going,” Gruschow said. “There was a huge amount of excess capacity in the automotive industry at the time, and if you had a problem with that you weren’t going to come out of the downturn.” Later that year, General Motors, Ford and Chrysler were bailed out of bankruptcy. Gruschow said tier one auto suppliers, such as Deshler Group, were paid in order to keep production going. However, Gruschow said Deshler Group still needed reorganizing due to the company’s sharp drop in sales and the overall decline of the domestic automotive market. To compete, Deshler Group began providing global freight and warehousing services. Many of those services were provided to foreign customers from 2009 to 2011. “That helped us fill our warehouses and kept our people working through the downturn until we starting having additional sales growth within domestic U.S.,” Gruschow said. The holding company founded Global Strategic Supply Solutions LLC in 2010, which specializes in providing warehousing, packaging, assembly, sequencing, distribution and manufacturing. A year later, Deshler acquired global freight forwarding company Global Transportation Management LLC. Gruschow said the two companies helped fuel growth, at times working together to complete orders for customers. That collaboration inspired Deshler Group to refocus all seven sister companies to operate as one organization. This way, Gruschow said, the companies were a one-stop shop for customers that needed services that would encompass the entire supply chain. “In the end we end up a with a solution that involves a lot more resources and capabilities,” Gruschow said. Coming out of the downturn in 2011, Deshler Group saw their tier one contracts expand. “Thing started ramping up again and we were able to keep the core management and processes in place so that we were positioned to grow quickly and scale coming out of the downturn,” Gruschow said. The company has grown significantly since 2009. Growth has stemmed from acquisitions, including the roughly $3 million deal of Ferndale-based vehicle brake component manufacturer UniBond Brake LLC. Gruschow said growth was also fueled by re-branding and reorganizing its seven sister companies. “In the end, our near-death experience gave us the opportunity to concentrate on the core business, rebrand it and strengthen the balance sheet to withstand future downturns,” Gruschow said.

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 1 6 , 2 0 1 8

NONPROFIT FROM PAGE 10

The academy originally served as a kindergarten for orphaned children. In addition to their care, children received educational services at the facility. In the early 1920s, the center moved to a 16-acre campus in Farmington Hills, which featured an on-site kindergarten classroom. In addition to the center’s educational services, older children were enrolled in and transported to local schools. However, as the economy went downhill and policies changed in 2006, the residential facility lost its two primary sources of funding. The state of Michigan ended its subsidy for the center’s residential programs as it shifted its funding priorities to place children in foster homes. Additionally, the Daughters of Charity, who were also investing in the center, pulled funding as they worked through their own economic hardships. “Essentially overnight, the organization lost more than $10 million in support,” Renaud said. “There was just no way to make up that sort of funding for operations.” The center was at risk of closing due to the high overhead of operating a large facility, but the board of trustees wanted to continue their work with families. Over a six-month deliberation period, the board decided to shift strategic focus to offering free educational programs for children and adults rather than residential care. “The board did extensive research and decided that the core thing a lot of the families that they served still needed support with was education,” Renaud said. The center returned to Detroit in 2007, where Renaud said a number of adults had dropped out of school and had no high school diploma or GED. “In order to truly help kids, we needed to generate (services) that would help the parents,” Renaud said. “If their parents dropped out and are unable to get a job, the kids that are currently in school now have less of a chance of success if they’re not in a stable environment.” The center found its Detroit headquarters at a vacant building adjacent to Christ the King Catholic School on Trinity Street near the Brightmoor neighborhood. By negotiating a low rent, the center was no longer indebted to a mortgage. “This ultimately led the center to put more resources directly into service staff, and enabled it to broaden its reach into the community,” Renaud said. Since Renaud was hired in 2010, the organization has created four additional locations near at-risk neighborhoods, negotiating free rent in exchange for the center’s educational services. “Rather than looking to purchase property and recruit recipients to a single location to receive services, it (was) faster, cheaper and more sustainable to bring services to the community,” she said. For instance, the center partnered with Focus: Hope, a nonprofit that offers workforce training programs. Renaud learned the programs required students to have a GED, which Focus: Hope did not offer, resulting in hundreds of students being turned away. In exchange for classroom space at the campus, St. Vincent and Sarah Fisher Center offers GED training program services to about 100 students per year. Many of these students enroll in Focus: Hope’s training programs after earning

their GED. Last year, the center received about $200,000 from individual and corporate donations and about $500,000 from earned income. The center also received $300,000 in additional funding from grants and government contracts. “Because we are able to reach more neighborhoods and people, we are eligible for grants that we had not been in the previous incarnation of the center,” Renaud said. Renaud said having additional sources of funding has allowed the center to expand its reach, invest in hiring additional staff and provide additional services. As a result, the center has grown from serving about 20 adults and 6 children during 20062007 to about 1,000 adults and 150 children annually.

PIZZA FROM PAGE 12

“We have accurate information of how promotions, food costs, and everything works throughout the whole country and all of the states that we’re in,” he said. The pizza brand also used technology to train employees more effectively. The chain uses a platform that gives management access to resources such as operating and training manuals, which can help answer questions or address issues immediately. The chain also implemented online training tools for all employees, regardless of their position. This was a shift for the pizza brand, which previously had fran-

chisee owners or managers train their own employees. “When you have a system like that, training can tend to get watered down,” Jackson said. And to bring customers back through their doors, Hungry Howie’s hired a new advertising firm that collaborated with the company’s advertising council to create new marketing initiatives. This included Hungry Howie’s $5, $10, $15 and $20 coupon deals. Jackson said customers used the coupons so frequently, the deals now account for 40-50 percent of their business. “We realized they were common mnemonics that most people were familiar with,” Jackson said. “We decided instead of changing our offers all the time, we’d come up with

these meal deals for all budgets.” Jackson said Hungry Howie’s has also seen growth in recent years from adding new products, such as gluten-free pizza and new pizza flavor options. As a result of these efforts, Hungry Howie’s has reported samestore growth sales for the past eight years, and has increased sales by about 60 percent since 2010. Jackson said the pizza brand also has six additional stores opening in the next 90 days, and 50 franchisees that have signed agreements to open stores in the next three years. “We’re signing more franchisees now because of the way our company has performed, the image that we have, and the team we put together.” Jackson said. “We’re a much more marketable company.”

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? Finance NEXT is a look at the future of metro Detroit’s economy and what that means for your business.

Thursday, May 10 8-10:30 a.m. Somerset Inn, Troy Individual ticket: $80 Reserved table of 10: $850

WHAT DOES THE NEXT RECESSION LOOK LIKE?

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?

Young Professional (30% Off): $56 Are you a Crain’s Detroit Member? Email us at cdbevents@crain.com to receive your individual ticket discount.

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?

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 1 6 , 2 0 1 8

CRAIN'S LIST: SE MICHIGAN PUBLICLY HELD COMPANIES

Ranked by 2017 revenue Rank

1 2 3 4

Company Fiscal year end; website

Top executive(s)

Ford Motor Co. (12/2017) (313) 322-3000; www.ford.com

Jim Hackett president and CEO

$156,776.0

$151,800.0

3.3%

$4,607.0 $4,607.0

NYSE F

$13.48 $10.14

Automobile manufacturer

General Motors Co. (12/2017) (313) 556-5000; www.gm.com

Mary Barra chairman and CEO

145,588.0

149,184.0

-2.4

(3,864.0) 9,427.0

NYSE GM

46.76 31.92

Automobile manufacturer

Penske Automotive Group Inc. (12/2017) (248) 648-2500; www.penskeautomotive.com

Roger Penske CEO

21,386.9

20,118.5

6.3

613.3 342.9

NYSE PAG

54.83 38.33

Automobile dealerships

Lear Corp. (12/2017) (248) 447-1500; www.lear.com

Raymond Scott B president and CEO

20,467.0

18,557.6

10.3

1,313.4 975.1

NYSE LEA

202.42 132.01

Automotive supplier

Adient LLC C (9/2017) (734) 254-5000; adient.com

16,213.0

16,790.0

-3.4

877.0 (1,546.0)

NYSE ADNT

86.42 57.40

Automotive supplier

Aptiv D (12/2017) (248) 813-2000; www.aptiv.com

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

12,884.0

12,274.0

5.0

1,428.0 1,326.0

NYSE APTV

96.91 61.53

Automotive supplier

DTE Energy Co. (12/2017) (800) 235-8000; www.dteenergy.com

Gerard Anderson chairman and CEO

12,607.0

10,630.0

18.6

1,134.0 868.0

NYSE DTE

116.74 97.66

Energy company

BorgWarner Inc. (12/2017) (248) 754-9200; www.borgwarner.com

James Verrier president and CEO

9,799.3

9,071.0

8.0

439.9 118.5

NYSE BWA

58.22 37.64

Automotive supplier

Ally Financial Inc. (12/2017) (877) 247-2559; www.ally.com

Jeffrey Brown CEO

8,322.0

8,305.0

0.2

929.0 1,067.0

NYSE ALLY

31.29 18.11

Financial holding company

Masco Corp. (12/2017) (313) 274-7400; www.masco.com

Keith Allman president and CEO

7,644.0

7,357.0

3.9

533.0 491.0

NYSE MAS

46.45 33.05

Building products

CMS Energy Corp. (12/2017) (800) 477-5050; www.cmsenergy.com

Patti Poppe president and CEO

6,583.0

6,399.0

2.9

460.0 551.0

NYSE CMS

50.85 40.48

Energy

American Axle & Manufacturing Holdings Inc. (12/ 2017) (313) 758-2000; www.aam.com

6,266.0

3,948.0

58.7

337.5 240.7

NYSE AXL

20.27 13.38

Automotive supplier

Kelly Services Inc. (12/2017) (248) 362-4444; www.kellyservices.com

David Dauch, chairman and CEO; Michael K. Simonte, president George Corona president and CEO

5,276.8

0.0

71.6 120.8

Nasdaq KELYA

30.99 20.33

Staffing services

Diplomat Pharmacy Inc. (12/2017) (888) 720-4450; diplomatpharmacy.com

Jeff Park E interim CEO

4,485.2

4,410.4

1.7

15.5 28.3

NYSE DPLO

27.78 14.24

Drug retail

4,182.2 G

3,528.5 H

18.5

134.8 G 44.5 H

LSE TIFS

274.00 227.00

Automotive supplier

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

Stock Revenue Revenue Net income Exchange/ price ($000,000) ($000,000) Percent ($000,000) Ticker 52-week 2017 2016 change 2017/2016 symbol high/low Type of industry

TI Fluid Systems (formerly TI Automotive) F (12/2017) Bill Kozyra president and CEO (248) 296-8000; www.tiautomotive.com Cooper-Standard Holdings Inc. (12/2017) (248) 596-5800; www.cooperstandard.com

Jeffrey Edwards chairman and CEO

3,618.1

3,472.9

4.2

135.3 139.0

NYSE CPS

135.00 95.33

Automotive supplier

Meritor Inc. (10/2017) (248) 435-1000; www.meritor.com

Jeffrey Craig president and CEO

3,347.0

3,199.0

4.6

324.0 573.0

NYSE MTOR

29.54 14.97

Commercial vehicle, heavy duty truck and defense supplier

Visteon Corp. (12/2017) (734) 710-5000; www.visteon.com

Sachin Lawande CEO

3,146.0

3,161.0

-0.5

176.0 75.0

NYSE VC

140.64 91.20

Automotive supplier

Domino's Pizza Inc. (12/2017) (734) 930-3030; www.dominos.com

Patrick Doyle I president and CEO

2,788.0

2,472.6

12.8

277.9 214.7

NYSE DPZ

236.93 166.74

Restaurant franchisor

Tower International Inc. (12/2017) (248) 675-6000; www.towerinternational.com

James Gouin CEO

1,988.0

1,913.6

3.9

47.6 38.6

NYSE TOWR

33.65 21.00

Automotive supplier

Universal Logistics Holdings Inc. (12/2017) (586) 920-0100; www.UniversalLogistics.com

Jeff Rogers CEO

1,216.7

1,072.8

13.4

28.2 24.2

NASDAQ ULH

25.65 11.65

Transportation

Credit Acceptance Corp. (12/2017) (248) 353-2700; www.creditacceptance.com

Brett Roberts CEO

1,110.0

969.2

14.5

470.2 332.8

Nasdaq CACC

377.82 188.50

Financial institution

This list of publicly held companies is a compilation of the largest companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties that have stock traded on a public exchange. Covisint Corp., which had $70.2 million in 2016 revenue is no longer on the list because it was acquired in June 2017 by Canadian software company OpenText. 52-week highs and lows are for period ending April 9, 2018. Information is from SEC filings.

B Succeeded Matthew Simoncini as president and CEO in February. C Adient spun off from Johnson Controls on Oct. 31, 2016, to become an independent company. D In December 2017, Delphi Automotive plc spun off its powertrain segment as Delphi Technologies PLC (NYSE: DLPH) while Aptiv PLC (NYSE: APTV) emerged as its electric architecture and autonomous driving-focused business.

E Appointed interim CEO after Phil Hagerman retired as CEO on January 5. F Acquired by Bain Capital LLC in June 2015. In October 2017, started listing shares on the London Stock Exchange under the ticker TIFS. TI Fluid Systems has headquarters in Oxford, England and a corporate office in Auburn Hills, Mich.

G Currency conversion based on euro to dollars rate of 1.2002. H Currency conversion based on euro to dollars rate of 1.0522. I To be succeeded by Richard Allison as CEO on July 1.

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 1 6 , 2 0 1 8

CRAIN'S LIST: SE MICHIGAN PUBLICLY HELD COMPANIES

Ranked by 2017 revenue Rank

23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

Company Fiscal year end; website

Top executive(s)

Superior Industries International Inc. (12/2017) (248) 352-7300; www.supind.com

Don Stebbins CEO

Flagstar Bancorp Inc. (12/2017) (248) 312-2000; www.flagstar.com

Gentherm Inc. (12/2017)

Stock Revenue Revenue Net income Exchange/ price ($000,000) ($000,000) Percent ($000,000) Ticker 52-week 2017 2016 change 2017/2016 symbol high/low Type of industry

$1,108.1

$732.7

51.2%

($6.0) $41.4

NYSE SUP

$24.85 $12.70

Automotive supplier

Alessandro DiNello president and CEO

997.0

904.0

10.3

63.0 171.0

NYSE FBC

40.06 27.52

Financial institution

Phil Eyler B president and CEO

985.7

917.6

7.4

35.2 76.6

Nasdaq THRM

40.80 29.50

Thermal technology

(248) 504-0500; www.gentherm.com Sun Communities Inc. (12/2017) (248) 208-2500; www.suncommunities.com

Gary Shiffman chairman and CEO

982.6

833.8

17.8

65.0 17.4

NYSE SUI

96.08 80.12

Real estate

Syntel Inc. (12/2017) (248) 619-2800; www.syntelinc.com

923.8

966.6

-4.4

166.3 (57.4)

NASDAQ SYNT

27.72 15.82

Information technology

Horizon Global Corp. (12/2017) (248) 593-8820; www.horizonglobal.com

Rakesh Khanna president and CEO Bharat Desai chairman Mark Zeffiro president and CEO

893.0

649.2

37.6

(3.6) (12.4)

NYSE HZN

19.26 7.69

Towing, cargo management

TriMas Corp. (12/2017) (248) 631-5450; www.trimascorp.com

Thomas Amato president and CEO

817.7

794.0

3.0

31.0 (39.8)

NASDAQ TRS

28.85 19.75

Manufacturing conglomerate

Taubman Centers Inc. (12/2017) (248) 258-6800; www.taubman.com

Robert Taubman chairman, president and CEO

629.2

612.6

2.7

112.8 188.2

NYSE TCO

67.19 44.78

Retail real estate investment trust

Altair Engineering Inc. C (12/2017) (248) 614-2400; www.altair.com

James Scapa chairman and CEO

333.3

313.0

6.5

NA NA

NASDAQ ALTR

33.39 16.55

Engineering software

Ramco-Gershenson Properties Trust (12/2017) (248) 350-9900; www.rgpt.com

Dennis Gershenson president and CEO

265.1

260.9

1.6

62.4 53.0

NYSE RPT

15.00 11.36

Real estate

Unique Fabricating Inc. (12/2017) (248) 853-2333; www.uniquefab.com

John Weinhardt president and CEO

175.3

170.5

2.8

6.5 6.7

NYSE MKT UFAB

12.21 7.05

Plastic fabrication

Diversified Restaurant Holdings Inc. D (12/2017) (248) 223-9160; www.diversifiedrestaurantholdings.com

David Burke president and CEO

165.5

166.5

-0.6

(20.5) (6.0)

NASDAQ SAUC

4.12 1.26

Restaurant

Saga Communications Inc. (12/2017) (313) 886-7070; www.sagacommunications.com

Edward Christian chairman, president and CEO

118.1 E

119.0

-0.7

54.7 18.2

NYSE MKT SGA

52.05 36.10

Radio and TV stations

Agree Realty Corp. (12/2017) (248) 737-4190; www.agreerealty.com

Joey Agree CEO

116.9

91.5

27.7

58.8 45.8

NYSE ADC

53.65 43.74

Real estate investment trust

Arotech Corp. (12/2017) (734) 761-5836; www.arotech.com

Dean Krutty F president and CEO

98.7

93.0

6.2

3.8 (2.8)

NASDAQ ARTX

4.35 2.70

Defense and aerospace

Conifer Holdings Inc. (12/2017) (866) 412-2424; www.cnfrh.com

James Petcoff chairman and CEO

96.8

93.9

3.1

(21.5) (8.4)

NASDAQ CNFR

8.20 5.00

Insurance

Perceptron Inc. (6/2017) (734) 414-6100; www.perceptron.com

David Watza president, CEO and CFO

77.9

69.1

12.7

(168.0) (22.1)

NASDAQ PRCP

10.81 6.80

Process measurement tools

Federal Screw Works (6/2017) (586) 443-4200; www.federalscrewworks.com

Thomas Zurschmiede president and CEO

77.3

77.5

-0.2

3.1 7.1

OTC FSCR

9.75 6.51

Automotive supplier

InfuSystem Holdings Inc. (12/2017) (800) 962-9656; www.infusystem.com

Gregg Lehman executive chairman Richard Dilorio president and CEO Rob Chioini founder, chairman and CEO

71.1

70.5

0.8

(20.7) (222.0)

NYSE MKT INFU

2.95 1.20

Provider of ambulatory infusion pumps and associated clinical services

57.3

53.3

7.5

(25.9) (19.8)

NASDAQ RMTI

8.98 4.84

Bio-pharma and drug development

Stephen Ranzini president and CEO

54.5

50.9

7.0

5.1 3.8

OTC UNIB

9.50 6.55

Financial institution

FNBH Bancorp Inc. (First National Bank in Howell) (12/ Ronald Long president and CEO 2016) (517) 546-3150; www.fnbh.com

15.5

13.4

15.2

0.3 11.9

OTC FNHM

2.45 1.95

Financial institution

1.6

2.1

-23.1

0.1 0.2

OTC BONL

2.15 1.30

Manufacturing machinery

Rockwell Medical Inc. (12/2017) (248) 960-9009; www.rockwellmed.com University Bancorp Inc. (12/2017) (734) 741-5858; www.university-bank.com

Bonal International Inc. (3/2017) (248) 353-2041; www.bonal.com

Thomas Hebel chairman, president, and CEO

B Succeeded Daniel Coker as president and CEO, effective Dec. 4, 2017. C Announced closing of initial public offering on Nov. 6, 2017. D Spun off Bagger Dave's Burger Tavern into a separate company on Dec. 27, 2016. E On May 9, 2017 entered into an agreement to sell Joplin, Mo and Victoria, Texas television stations. This transaction closed on Sept. 1, 2017. The television stations that were sold constituted their entire television segment.

F Named president and CEO in March after serving as acting CEO since January 2017. LIST RESEARCHED BY SONYA D. HILL

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 1 6 , 2 0 1 8

PEOPLE FINANCE J Kenneth Kelly, chairman and CEO, First Independence Bank, Detroit, has been appointed to the Federal Reserve Bank of Chicago’s Community Depository Institutions Advisory Council. Kelly will serve a three-year term on the council from 2018-2020.

GOVERNMENT J Darren Nichols to executive director, Great Lakes Commission, Ann Arbor, from associate director, William D. Ruckelshaus Center, Seattle.

LAW J Linda J. Armstrong to chair, Immigration Practice Department, Butzel Long PC, Detroit, from attorney and shareholder.

MARKETING J

Don McLean to senior manager,

SPOTLIGHT marketing and communications, MMS Holdings Inc., Canton Township, from managing supervisor, FleishmanHillard Inc., Detroit.

NONPROFITS J Anna Cruz to strategic learning and evaluation officer, The Kresge Foundation, Troy, from research consultant, Harder+Company Community Research, San Diego.

REAL ESTATE J Gary Ciabotti to vice president, V-Suites, Southfield, from vice president, strategic alliances, National Corporate Housing, Greenwood Village, Colo. J Molly Haller to controller, Oxford Companies LLC, from controller, DFM Solutions LLC, Detroit.

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

President named to Schostak Development

Livonia-based real estate company Schostak Bros. & Co. has formed a new business unit, Schostak Development, and named Jeffrey Schostak its president. The 34-yearold will lead the division as it works on groundJeffrey Schostak up development projects, including one in Royal Oak for Beaumont Health at 13 Mile Road and Woodward Avenue with Bloomfield Hillsbased AF Jonna Development LLC, and Oak Park at Eight Mile and Greenfield roads with 15,000 square feet of retail for Foot Locker. “Essentially I have been running the development group for years and it was just a way to open it up and further define my specific role as leading all the Schostak development projects,” he said.

Schostak was previously vice president and director of development for Schostak Bros.

Delta Dental CEO to retire

The president and CEO of Delta Dental of Michigan, Ohio and Indiana plans to retire in December, the benefits firm announced last week. Laura Czelada has led the company for six years, during which it saw an 83 percent increase in subscribers, according to a news reLaura Czelada lease. The board of Okemos-based Delta Dental chose current COO Goran Jurkovic to replace Czelada, starting Jan. 1. Czelada has been with the company for 25 years in roles including executive vice president, chief financial officer and chief information officer.

Teach For America gets new Detroit leader

Armen Hratchian was named new executive director of Teach For America’s Detroit Regional Office. He assumed the post on April 1 to fill a vacancy left behind by Tiffany Taylor, who became vice president, deputy chief people officer, for the national nonprofit last year. The Detroit program is Armen Hratchian made up of 800 teachers and alumni seeking to expand education in the city, a news release said. The area office opened in 2010. Hratchian, 35, will be responsible for managing daily operations, making new partnerships with schools and drumming up public, private and foundation support.

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

www.crainsdetroit.com/onthemove

REAL ESTATE

ADVERTISING & MARKETING

R. Keith Rowan

Debra Romalia

Vice President of Development

Vice President, Content Marketing

The Platform

GroupeSTAHL

The Platform, a real estate development company specializing in residential and mixed-use in Detroit, is proud to announce R. Keith Rowan as its new vice president of development. Keith has more than 25 years of U.S. and international experience in planning and management of mixed-use developments and capital construction. He is an architect and has worked throughout the U.S., in Europe, the Middle East and Africa. He has a master of architecture degree from MIT and an MBA from Northwestern.

ARCHITECTURE

Leo Valentino Mendez, Jr., AIA Director of Design

GroupeSTAHL, a global leader in the garment decoration industry, has promoted Debra Romalia to vice president of content marketing. Romalia manages all GroupeSTAHL social media, digital advertising and SEO teams. Romalia also oversees web and educational content, product pages and marketing content strategy. Since joining GroupeSTAHL in 2009, Romaliaâ’s efforts have continued to grow revenue streams and generate positive ROI. She most recently served as director of digital marketing.

Neumann/Smith Architecture Leo Mendez was hired as Director of Design, to strengthen our design philosophy and leadership. An award-winning designer with more than 20 years of experience, Leo will lead the creative team with focus on elevating design, innovation and the client experience. Leo possesses a unique blend of planning, management, and design experience. His background entails Master Planning and Conceptual Design for Retail, Urban Planning, Mixed-Use, and Adaptive Re-Use projects.

TECHNOLOGY

ARCHITECTURE

Kurt Gollinger

Andrew Littman

Chief Operating Officer

Director of Market Research

CBI

Gibbs Planning Group

Kurt Gollinger has joined CBI, a Detroit-based Cyber Security Services company. He has 20+ years of experience in business, technology, and executive leadership. Kurt will help oversee all facets of the company’s operations. Before CBI, Kurt served as the Chief Technology Officer North America at Fiat Chrysler. Kurt also spent 12 yrs. at Harman, during his tenure the company grew more than 300%, eventually leading to an acquisition by Samsung.

Andrew L. Littman, J.D., CNU-A Andrew Littman joined Gibbs Planning Group as Director of Real Estate Market Research. Littman is oversees Gibbs Planning’s urban residential and retail market research across North America. Littman is a member of the State Bar of Michigan and a graduate of Skidmore College, The Ohio State University and the University of Michigan Taubman College of Architecture Graduate Certificate in Real Estate.

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

Share your success with custom

Reprints, E-prints and more! Contact Laura Picariello at lpicariello@crain.com or (732) 723-0569.

ETROIT C R A I N ’ S D E T R OCI RAIN T B’SUDS I N EBSUSINESS S // A P R I L 1 6 , 2 0 1 8

Page 16

CALENDAR WEDNESDAY, APRIL 18 The Next Big Thing: Adcraft Luncheon with Brian Cooley. 11:30 a.m.-1 p.m. 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) 8727850; email: lharris@adcraft.org; website: adcraftdetroit.com

DEALS & DETAILS ed to transform the region’s growing economy into a national powerhouse. Cobo Center. $75. Contact: Tom Wegehaupt, phone: (248) 2546789; email: twegehaupt@tannerfriedman.com; website: eightmile. org/event-2813457

UPCOMING EVENTS

Inside the CEO Mind. 8 a.m. Detroit Regional Chamber. Consumer Energy’s President and CEO Patti Poppe shares her journey in the energy and automotive industries. Townsend Hotel, Birmingham. $30 members; $50 Poppe nonmembers. Contact: Maggie Greaney, phone: (313) 596-0482; email: mgreaney@ detroitchamber.com

Rakolta

NEF Showcase Presentation and Panel Discussion. 5 p.m. New Enterprise Forum. Showcase of entrepreneurs who are looking to raise capital for their venture. Panel discussion: “Financials — Tying Your Financials to Your Story.” Panel includes: David Gregorka, venture partner, Baird Capital; Gerry Roston, CEO, Civionics; Colleen Spencer, CFO, Genomenon. Moderator is Stewart Nelson, CEO, Mayasil LLC. Ann Arbor Spark. Free. Website: newenterpriseforum.org/f201804

High Growth Happy Hour: Building a Community-minded Sports Team. 6-8 p.m. April 25. New Economy Initiative. Sean Mann and Todd Kropp, Detroit City FC co-founders, will share how they have built a community-minded sports team from the ground up. Ghost Light Hamtramck. Free. Website: neweconomyinitiative. org

Duggan

Hackel

Evans

Patterson

Eight Mile Boulevard Association Annual Leadership Luncheon. 11 a.m.-2 p.m. Eight Mile Boulevard Association. Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson in a conversation moderated by Ron Fournier, president of Truscott Rossman, that will focus on workforce development and the educational and collaborative efforts need-

ACQUISITIONS & MERGERS Regional Medical Imaging PC, Flint, an independent outpatient imaging center practice, has acquired the operations of Southgate Radiology, Southgate, a medical diagnostic imaging center. Website: rmipc.net J The Law Firm of John F. Schaefer PLLC, Birmingham, has merged with law firm Connor & Connor PLLC, Bloomfield Hills. The new affiliation will operate under the firm name of The Law Firm of John F. Schaefer. Website: lfjfs.com J

CONTRACTS

THURSDAY, APRIL 19

FRIDAY, APRIL 20

April 16, 2018 17

Rothwell

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

How Workplace Branding Creates Company Culture. 8:30-10:30 a.m. April 26. The Association for Women in Communications Detroit Chapter. Katie McGerty, marketing manager at ISCG, and panelists Karen Dybis of Corp! magazine and Kristin Palm, managing director of communications at TechTown, will discuss how inspiring workspaces can improve human, organizational and facility performance. ISCG, Royal Oak. $25 members; $35 nonmembers; $15 students and recent graduates. Contact: Melinda Kollins, phone: (248) 722-5408; email: melinda.kollins@gmail.com; website: womcomdetroit.org/wicevents 14th Annual MHCC Economic Forum Breakfast. 7:30-10 a.m. April 27. Michigan Hispanic Chamber of Commerce. Speakers: Bret Hardy, director and head of Mopar purchasing and supplier quality, FCA; Terry Nadeau, vice president global procurement, Johnson Controls; Tony Tomczak, chief procurement officer, DTE Energy. Detroit Athletic Club. $200. Contact: Eva Borquez, phone: (248) 763-2309. 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.

J Detroit Trading Co., Birmingham, an online car shopping software developer, and TEN: A Discovery Inc. Co., Los Angeles, an automotive media company, have a partnership that will include the development of new inventory search algorithms designed to connect shoppers to available inventory with accurate pricing; a streamlined online trade-in valuation process; online credit score estimators and online payment estimators. Websites: detroittrading.com, ten-discovery.com

REAL ESTATE MISCELLANEOUS

43 ACRES - JEWELL ROAD Between 27 & 28 Mile Roads Washington Township Zoned Residential (R1B)

NEW PRODUCTS J Swift Biosciences Inc., Ann Arbor, a biotechnology company, has launched Accel-NGS Unique Dual Indexing Kits, for multiplexed sequencing commonly used in clinical research, drug development and clinical services labs. Website: swiftbiosci. com J Humantech Inc., Ann Arbor, a business management consultant, has published an ebook titled “Five Common Approaches to Managing Musculoskeletal Disorders: What Really Works,” addressing ergonomics issues in the workplace. Website: humantech.com

NEW SERVICES Simon Group Holdings Ltd., Birmingham, an investment company, has launched a redesigned company website. Website: simongroupholdings.com J AutoHook LLC, Detroit, a digital marketing solutions provider, launched direct-to-mobile delivery of test drive incentives to improve deliverability rates of offers to online vehicle shoppers. Website: driveautohook. com J

STARTUPS J Bloomscape, Detroit, a plant shop and plant care community, has opened online. Website: bloomscape. com

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

JOB FRONT POSITIONS AVAILABLE PRINCIPAL SOFTWARE ENGINEER - HARMAN CONNECTED SERVICES, 1 POSITION Job Duties: Reqt gathering & analysis, dvlp Apache+ORACLE+Perl+JS+ProductCenter ecosystem, admin & support ORACLE DB., project design. Requirements: BS (or equiv.) in Comp Sc, +6yrs exp, or MS(or equiv.)+4yrs exp. expert with Perl & other scripting langs, exp. in JavaScript, HTML, support GIT+Gerrit+Perforce configuration Apply: Pls send resumes to Harman Connected Services Inc, Attn: Gokul, Job Code VPSE-01 to 2002 156th Ave NE #200, Bellevue, WA 98007. Work loc: 30001, Cabot Dr. Novi, MI 48377

With Water & Sewer Bid Pkg available at:

POSITIONS AVAILABLE

www.washingtontownship.org WATERFRONT PROPERTY

J Stoneridge Inc., Novi, designer and manufacturer of electrical and electronic components, modules and systems, will expand fleet evaluations for the company’s MirrorEye Camera Monitor System, which provides drivers with enhanced visibility where it is difficult to see with traditional mirrors. Also, Stoneridge has launched 24/7 technical support for Stoneridge EZ-ELD, an electronic logging device for the commercial vehicle industry. Websites: Stoneridge.com, trymirroreye.com, electronic-loggingdevice. com J The Local Credit Union, Sterling Heights, will implement OnBase by Hyland Software Inc., a content services platform for managing content, processes and cases, and integrate it with KeyStone by Corelation, its core banking application. Websites: thelocalcreditunion.com, hyland.com

SENIOR RESEARCH SCIENTIST (PROPULSION AND MOBILITY) ATTENTION: TARDEC is hiring a Senior Research Scientist (Propulsion and Mobility). To learn more to apply, visit: Https://apply.usastaffing.gov/ViewQuestionnaire/10105576

POSITIONS WANTED SENIOR FINANCIAL ANALYST - THE UT FOUNDATION This position is responsible for assisting in overseeing the day-to-day accounting and cash management operations. This includes assisting with supervising accounting staff in the areas of gift processing, general ledger, financial reporting, cash disbursements and other accounting functions. The successful applicant will possess a Bachelor’s degree in a relevant field. A CPA is preferred. Minimum 7 years’ experience in accounting or financial management. Previous experience in non-profit or institution of higher learning preferred. Supervisory experience preferred. To apply: submit a cover letter, resume and three professional references via email to UTF Jobs@utoledo.edu.Submissions must be received by May 30, 2018. The UT Foundation is an EEO Employer.

POSITIONS AVAILABLE

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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 1 6 , 2 0 1 8

HEALTH

Michigan’s health plans by enrollment

FROM PAGE 3

Blue Care on its own added 20,000 members to hit 689,000 while generating net income of $240 million for a 6.7 percent margin, the report said. Kallas said it is too early to project whether Blue Care can continue hitting the same enrollment and profitability numbers it did in 2017. “We put our estimates into our pricing, reduced rates and assess the health of the population we have,” he said. For example, small-group rates for Blue Care customers renewing in the last half of 2017 dropped by 3.2 percent. Priority Health, which is the second-largest HMO in Michigan, increased its membership by 5.2 percent, or 32,000, to 645,612. Priority earned $91.5 million in net income for a 2.6 percent margin in 2017, up from a $61.6 million gain in 2016. “Priority Health is committed to offering employers and individuals an option for high quality affordable coverage and as a result we are well-positioned for continued growth,” said Amy Miller, director of marketing and corporate communications. Blue Care and Priority Health clearly improved enrollment and profitability last year while holding down medical costs beyond that of most other health plans, Baumgarten said. “Priority is a strong company in all lines of business: commercial, Medicaid and Medicare. Both of them (Blue Care and Priority) are very strong in certain key geographic areas of the state,” said Baumgarten, adding that the health insurers operate in all of Michigan’s Lower Peninsula, making them attractive to statewide employers and giving them advantages over other health insurers. In 2017, Health Alliance Plan of Michigan and HAP Midwest Health Plan, a Medicaid health plan, turned around their collective operations by improving underwriting income to $5.9 million after losing $22.1 million in 2016. Terri Kline, HAP’s CEO, said one reason for HAP’s operating income improvement last year was due to administrative cost reductions and physicians doing a better job managing medical care. “We had a $30 million turnaround,” she said. But in 2017, HAP also lost 30,000 members, many of whom were in unprofitable employer group contracts, and now serves 265,000 managed care members. Kline said HAP eliminated several of the contracts because it could not renegotiate them to profitable terms. Other member losses included those who chose not to continue with HAP after it acquired HealthPlus of Michigan in 2016. “We looked at everything in operations (to improve profitability),” Kline said. “We eliminated open positions; we were careful on hiring; we renegotiated vendor contracts. Dr. (Michael) Genord joined us in 2017 (as chief medical officer) and we reorganized our medical management team.” For HAP, 2016 was difficult because just the year before, HAP Midwest had lost a lucrative state Medicaid contract and was forced to sell 65,000 of its members to Molina Healthcare of Michigan for about $30 million. HAP Midwest, which HAP acquired in 2011 for $70 million, was a very successful Medicaid

Health plan

Total enrollment 2017

Percent change from 2016

Underwriting revenue

Net income

Total margin

Blue Care Network/ Blue Cross Complete

892,138

5.8%

$4.5 billion

$257.4 million

5.8%

Priority Health

645,612

5.2%

$3.5 billion

$91.5 million

2.6%

Meridian Heatlh

517,288

2.8%

$2.2 billion

$546,074

Molina Healthcare

398,149

1.8%

$1.9 billion

$33 million

1.7%

Health Alliance Plan/ Midwest

265,755

-10.2%

$1.9 billion

$10.5 million

0.5%

United Healthcare Community Plan

254,772

-1.7%

$1.1 billion

$18.5 million

1.7%

McLaren Health Plan

222,974

4.5%

$959.9 million

$20 million

2.1%

Total Health Care

86,702

-0.6%

$409.2 million

$52,641

Aetna Better Health

50,421

-3.2%

$349.5 million

$3.2 million

0.9%

Upper Peninsula Health Plan

48,579

1.5%

$292.8 million

$12 million

4.1%

Physicians Health Plan

34,779

-3.8%

$182.4 million

$9.3 million

5.1%

Humana Medical Plan

10,610

-64.7%

$77.3 million

$-2.1 million

-2.6%

Harbor Health Plan

9,337

-8.1%

$44.5 million

($86,000)

-0.2%

AmeriHealth Michigan

3,286

-3.3%

$73.2 million

$-2.6 million

-3.9%

Michigan Complete Health

2,478

-40%

$54.3 million

$636,000

1.2%

Paramount Care of Michigan

1,986

$21.7 million

$2 million

9.2%

Grand Valley Health Plan

-100%

$1.3 million

$-1.2 million

-110%

Total, 17 plans

3.4 million

1.4%

$17.6 billion

$452.1 million

2.6%

Source: Allan Baumgarten, Michigan Health Market Review 2017, Part One

health plan, annually posting high quality scores and earning more than $20 million in operating income. “We are hoping to get back into Medicaid (in larger numbers) at some time. The Medicaid population is very important for us,” Kline said. However, the state won’t rebid out the Medicaid contract to health plans until at least 2020. For now, Kline said HAP Midwest’s current Medicaid business includes a contract in the Flint area for about 2,400 members and HAP’s dual-eligible Medicare-Medicaid MI Health Link contract with the state has about 4,800. “We are doing very well with the dual-eligible program,” she said. At one point, HAP Midwest had 100,000 Medicaid members. Over the next several years, Kline said, HAP will look for opportunities in Medicaid, which could include purchase of an existing Medicaid health plan. “We will look at all options,” she said.

Strong enrollment gains Overall, total managed-care enrollment in Michigan topped 3.4 million, up 1.4 percent from the 2016. Gains were driven by a 10 percent gain in Medicare and 1.5 percent increase in Medicaid managed-care enrollees. Medicare profits for the health plans increased by 14 percent to $64.5 million last year from $56.8 million in 2016, the report said. Because of aging baby boomers, Medicare managed care enrollment increased 11 percent to 346,000 last year. Medicare supplemental (Medigap) increased slightly to 28,000 from 27,000. While commercial managed care enrollment declined by 1 percent, commercial business income jumped to $203.2 million in 2017 from $12 million in 2016. Commercial enrollment was 1.3 million in

2017, or 37.5 percent of total enrollment. Much of the profitability gains in commercial plans came from Blue Care, which boosted its operJames Kallas: ating income to Important to $156 million in meet affordabili2017 from $29 ty. million in 2016. Despite holding steady on medical costs, Baumgarten said Blue Care increased its premiums by an average of $20 per member per month while also cutting administrative costs by 10 percent per member per month. Kallas said Blue Care held down premiums in the small group market, but was forced to increase premiums in the individual market as the federal government ended cost-sharing reduction payments under the Affordable Care Act. While collectively Blue Care and Complete increased membership by 5.8 percent, Kallas said Blue Care improved enrollment by 3 percent. “Growth is based on our rate actions, good retention and in the middle and small group markets,” he said. “It is very important for us to meet affordability.” On the cost side, Kallas said reducing administrative costs and holding down medical costs was accomplished by several actions taken over the last several years by working with physicians and hospitals. “We are helping to navigate (physicians) through the complexities in health care. We were successful in that,” he said. “We now have a high degree of automation, and that is helping to reduce administrative costs.” Blue Cross Complete improved net income in 2017 to $17 million for a 2 percent margin, up from $9 million and a 1.3 percent margin the year prior, Blue Cross said. Enroll-

ment increased 17 percent to 202,898 in 2017. Heidi Chan, president of Blue Cross Complete for Michigan, said the Medicaid health plan increased membership primarily because it expanded into 32 counties from three. “We attribute the growth to building a robust provider network and developing strong community partnerships with agencies that touch our members’ lives,” Chan said in an email. But the overall Medicaid HMO business, while still profitable, retrenched somewhat in 2017 as enrollment slowed to a 1.5 percent increase and per member costs rose as expressed by medical loss ratio. The MLR, which is a measure of how much is spent on claims and quality expenses, increased to 89.8 percent average in 2017 from 84 percent in 2016. As a result, Medicaid profitability dropped 26 percent to $122.5 million for a 1.6 percent margin from $165 million or 2 percent margin. This is despite Medicaid health plans adding 26,000 enrollees to reach 1.78 million. “Medicaid revenue did not grow in 2017 as the state pressed down the payment rates at the same time the program for dual-eligibles (Medicaid and Medicare), which had been a growth area, flattened out,” Baumgarten said.

The ACA’s effect In 2010, President Barack Obama signed the Affordable Care Act, which allowed states to expand Medicaid, imposed a variety of taxes and provided subsidies for lower income people to purchase private individual health insurance. Obamacare also cut Medicare reimbursement to hospitals and other provider groups by more than $700 billion to help pay for the program. In April 2014, Michigan started to enroll people under Healthy Michi-

gan Medicaid expansion. Over the past four years, 676,000 low-income people have enrolled. Over the past four years, enrollment in Michigan HMOs has increased steadily, growing 27 percent from 2.7 million in 2013 to 3.4 million at the end of 2017. The growth has occurred in three major lines of business: commercial (mostly individual plans), Medicaid and Medicare Advantage. Revenue and profitability also have continued to grow. From 20132017, the two market leaders posted net income of $492.1 million for Blue Care/Complete and $409.5 million for Priority Health’s managed care operations. Most other health plans also experienced profitability gains during the same period and overall the health plans earned $1.5 billion from 20132017. For example, HAP/Midwest earned net income of $107.8 million during that five-year period. Michigan HMOs also have improved operations as measured by underwriting income, increasing 69 percent in 2017 to $394.7 million from $233.6 million in 2016. On the other hand, investment income dropped 28 percent to $94.1 million from $130.7 million, the report said. Priority Health’s managed care operations improved in 2017 by increasing underwriting income to $72 million from $42.1 million in 2016. Blue Care’s underwriting income rose to $191.2 million in 2017 from $57.1 million the year before. One reason for improved operating profits, Larson said, is that Priority was able to cut administrative costs to less than 10 percent of premium costs on its commercial and Medicare plans. “Members get the right care at the right time,” she said. Besides Blue Care and Priority, three of the other most profitable health plans in Michigan are McLaren Health Plan, Molina Healthcare and UnitedHealthcare Community Plan. Molina earned $33 million net income last year for a 1.7 percent margin, up from $31 million in 2016; McLaren earned net income of $20 million for a 2.1 percent margin; and UnitedHealthcare earned $18.5 million for a 1.7 percent margin, but that was down from $27 million in 2016. Molina increased membership by 1.8 percent to 391,000 and McLaren by 2.8 percent to 213,000. But UnitedHealthcare lost 5,000 members, or 1.7 percent, to drop to 254,000. Meridian, the largest Medicaid HMO in Michigan, increased membership 2.8 percent to 517,288 in 2017, but because of rising medical expenses lost $956,000 on underwriting operations last year. Investment income of $2.9 million boosted its net income to $546,000 last year. Meridian’s medical loss ratio increased to 91.4 percent in 2017 from 85.1 percent the year before. Overall, the average medical loss ratio increased to 89.8 percent in 2017 from 84 percent in 2016, reflecting possibly higher utilization and higher prices for health care services. But Meridian turned around its Medicare operations in 2017, recording underwriting profit of $10.6 million, up from a loss of $12.6 million in 2016. Baumgarten plans to release his full Michigan Market Review, part one, on April 24. For more information, visit AllanBaumgarten.com. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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 1 6 , 2 0 1 8

PISTONS FROM PAGE 3

Metzger said the team will use the data to show sponsors the ROI they’re getting from spending on the Pistons’ 20-plus “digital content franchises.” “What really sets us apart is our digital firepower,” Metzger said. “We are constantly challenging ourselves to explore what’s next for our partners, whether that might be new social platforms or technology like augmented reality. We are a content company and a great way for partners to raise their profile and grow their business.” Two major deals helped fuel the Pistons’ corporate advertising income. First was the decision by Troybased Flagstar Bancorp Inc. last year to spend at least $5 million annually for three seasons to put the bank’s logo on a patch worn on the players’ game jerseys as part of the NBA’s experiment with uniform advertising. That deal also included digital and traditional sponsorship elements, making Flagstar the Pistons’ single largest corporate sponsor, Metzger said. In fact, in a sign of where sports advertising deals have shifted in recent years, 55 percent of Flagstar’s inventory with the Pistons is digital rather than static signage or old traditional branding platforms, Metzger said. Second, the Pistons have a deal with Henry Ford Health System to sponsor the team’s new headquarters and training facility now under construction in New Center. Financial terms of that deal haven’t been disclosed, but the investment is known to be heavy and its details will continue to unfold as the building comes online in 2019. The hospital system also became the team’s official health care provider. Jeep also is a major Pistons sponsor. “New assets like our jersey partnership with Flagstar, our naming rights partnership for the Henry Ford Detroit Pistons Performance Center with HFHS, and our digital firepower and the ability to create customized content for Jeep have driven our growth,” Metzger said. Savvy digital growth, major new deals, better ROI analytics, B-to-B customer service and a focus on the large millennial age cohort are the backbone of the revenue growth, Metzger said. “It starts with the power of the NBA and the demographics of our fan base — multicultural millennials with a global perspective. We can reach this audience better than any other platform,” he said. “On top of that, our business-to-business programs are helping our partners build relationships and drive their business forward. We do that better than anybody. It’s about innovation and ROI.” Relocating to Detroit boosted the business strategy, Metzger added, prompting both new and richer deals from current advertisers. “The decision to move the club back to Detroit has been received incredibly well,” he said. “We actually have fewer partners than when we were at The Palace, but the relationships are deeper and more encompassing. Long-standing partners like Belfor and Blue Cross Blue Shield have increased their commitment with us. We have new partners like McDonald’s, Art Van and Lear who are seeing positive results with us in the first year of our relationship.”

LARRY PEPLIN FOR CRAIN’S

The Detroit Pistons moved to the Little Caesars Arena in Detroit from the Palace of Auburn Hills.

One local sports industry observer agreed that the venue change helped the Pistons financially. “The Pistons move to Little Caesars Arena appears to have been a tipping point for companies to further their commitment to the resurgence of the city,” said Victor Chiasson, an assistant professor of sport management at Eastern Michigan University. “Their investment in sponsorship also buys consumer and

fan attention, which is the primary challenge facing their business and the sports industry today.” It’s not just locally the team seeks new money. Capitalizing on overseas interest in the Pistons also is a potentially lucrative new revenue stream, and the Pistons are crafting a strategy to reach their top two foreign markets, China and the Philippines. The team said about 25 percent of its Facebook

and Twitter followers are Filipinos because of the NBA’s long-term outreach efforts in the Pacific nation. “It is still early and evolving, but certainly there is opportunity there,” Metzger said. “As the city of Detroit continues its comeback, more and more partners — locally, nationally and internationally — are expressing interest in partnering with us. With our move back to the city, our philanthropic efforts, and our digital firepower, we are an attractive property for partners seeking to raise their profile in Detroit and drive their business forward.” An NBA study from 2016 showed 10.7 million Pistons fans in basketball-crazed China, which is perhaps the league’s potentially most lucrative new market. The NBA opened an office in Hong Kong in 1992 and has since added three more across the country of 1.4 billion people, and also is opening basketball education and training academies. The league has broadcast and streaming deals for games that have generated audiences in the hundreds of millions, many of whom became fans when the Houston Rockets took China’s Yao Ming with the No. 1 overall draft pick in 2002 and watched his career culminate with a hall of fame induction in 2016. Still, the Pistons marketeers can work only so much magic domestically or overseas until the team becomes a consistent winner and fills the new arena like it did when the Palace was packed for playoff runs starting with the Bad Boys in 1989 through the champion team in 200304. Detroit finished this season 201718 with a 39-43 record, and team

owner Tom Gores is expected to decide soon whether to keep or fire coach Stan Van Gundy, or perhaps strip him of some of his personnel power in favor of hiring a separate general manager. On the plus side, the Pistons sparked some fan interest by acquiring five-time all star Blake Griffin in a Jan. 29 trade. He’ll be paired with talented young center Andre Drummond as the core of the team’s oncourt strategy, and also will be heavily used in the team’s marketing plans to attract both fans and sponsors. Winning may soon become even more important in terms of sponsorship dollars. St. Louis-based beer giant Anheuser-Busch announced earlier this month that all of its future sports marketing deals would be indexed against team performance. Winning and playoff appearances, along with digital incentives, will trigger more spending by the beverage company, Forbes reported. In the NBA, the Minnesota Timberwolves already operate under the incentive-based formula with Anheuser-Busch, as do the New Orleans Saints, the Los Angeles Dodgers and NASCAR, according to Forbes. Anheuser-Busch and Little Caesars Arena signed a multi-year sponsorship last year. “If this innovation becomes the new standard, the next round of negotiations to renew corporate advertising and sponsorships will be interesting to watch,” EMU’s Chiasson said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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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 1 6 , 2 0 1 8

“A lot of retailers in our business have come to a project like this versus a mall because it has a chance to create an experience with landscaping, art, streets and people. ... More retailers are moving to that type of environment because they know they can’t just sell jeans. They have to sell an experience.” — Bruce Aikens, vice chairman of Robert B. Aikens LLC

JPRA ARCHITECTS

The Five & Main mixed-use retail development planned for Commerce Township would mix restaurants and a gourmet food market, a high-end movie theater, service retail such as salons, with clothing and home goods retailers, residential, green spaces for activites such as outdoor yoga and a nature trail system for hiking and snowshoeing.

RETAIL FROM PAGE 1

The developer is also in conversations with an undisclosed residential developer. Once an agreement is in place, Aikens will work with the developer to firm up whether it will designate half of the 300 luxury apartments planned as age-limited for people age 55 and over. Aikens hopes to launch construction a year from this spring and to open in fall of 2020. “A lot of retailers in our business have come to a project like this versus a mall because it has a chance to create an experience with landscaping, art, streets and people,” Bruce Aikens said during the township meeting last week. “ ... More retailers are moving to that type of environment because they know they can’t just sell jeans. They have to sell an experience.”

Creating a downtown The project would effectively create a downtown area for Commerce, giving momentum to a 300-acre plan its downtown development authority hatched around 2002-03 when it acquired 50 acres of Huron-Clinton Metropolitan Authority parkland, the El Dorado golf course and Links of Pinewood Golf Course. The goal was to bring more housing, a town center and new retail to the township, said Mark Stacey, director of the DDA. For the next three to four years, there was conversation with Taubman Cos., the developer and owner of nearby Twelve Oaks mall in Novi, about doing something with it, but that never happened, Stacey said. “Then we hit the downturn, basically mothballed the project, and waited for markets to start turning around.” A few years after the recession, the

township moved forward with development of Martin Parkway, the roundabout that connects to Pontiac Trail and M-5 and infrastructure improvements that went along with it, extending Township municipal water and sanitary sewer. And in 2014 it put out a request for proposals for a retail development. It chose Aikens, which developed the Village of Rochester. Aikens has a commitment to purchase 55 acres from the DDA and has paid $225,000 in non-refundable deposits that will count toward the overall purchase price, said Commerce Township Supervisor David Scott. It also has an option to purchase additional adjacent land from the DDA. “We were looking for a specific style of development that brought something to this community we never had before, a downtown with exceptional housing, that took advantage of the site,” Stacey said. In places like downtown Birmingham, Rochester, Ferndale and Royal Oak, you walk out of a business and within a short distance, you can see residential properties, Scott said. “It’s vibrant and operating all the time.” Five & Main “creates a place in Commerce Township that we can identify and gravitate to as our downtown,” he said. “It really will become the epicenter of activity different than any other project done previously.”

Room to grow The site is surrounded by an affluent, growing demographic, with several new home construction projects underway. Average household income is over $100,000 in the area within a 20-minute drive from the Five & Main site, said Bruce Aikens. Its location at the epicenter of M-5 and Pontiac Trail will bring people in

from the south, and nearby Martin Parkway will give people access from the north, east and west. As planned, the development will happen in David Scott: It two phases. The creates a first, targeting downtown. about 37 acres, calls for seven to nine restaurants, including local and farm-to-table options, a gourmet market, high-end movie theater and/or comedy club, service retail such as wellness offerings, salons and pet spas, high-end, unique and destination clothing and home goods retailers and boutiques, residential units, green spaces for activities like outdoor yoga, all linked with existing nature trails to the north for hiking in the summer and cross-country skiing in the winter. The plan includes walkable blocks and streets, including a main street with and a nearby “TowneSquare” public space and use of natural materials such as wood, glass and stone to echo the high-end homes in the area. Plans also include fountains, outdoor lighting, a play area, street furniture, artwork and landscaping. The second phase of the project to the north could include a hotel, additional restaurants, retailers and residential, based on what’s most successful in the first phase, said Cindy Ciura, principal of CC Consulting in Bloomfield Hills, which is consulting with Aikens on the project. Farmington Hills-based JPRA Architects is serving as project architect and Grissim, Metz Andriese Associates as landscape architect. PEA Inc. is the civil engineer for the project, and Fleis and Vandenbrink as traffic engineer. Could the development present

competition for Twelve Oaks Mall and other Novi retail located just five miles or so away? “There are some tenants who want to be in this format, and some who want to go in a mall,” Aikens said. Nisch doesn’t think so, given that a big percentage of the Five & Main project will not be traditional retail. “I think the uses are going to be apples and oranges ... other than the Cheesecake Factory at Twelve Oaks, it’s pretty much a mall offering.”

More than a mall Five & Main represents the next evolution of what developers call a “lifestyle center.” But many around the country have started to call it a “community center concept” instead, because it goes to great lengths to integrate itself into the community with bike trails, open public spaces and the mixture of people living there, Nisch said. In contrast to malls which sit isolated from the community “like a fortress,” with single entry points and limited operating hours, Five & Main and projects like it are the future of retail, he said. Five & Main’s mix of consumption vs. transaction retailers makes it more viable in the long term, since people can’t get their hair done, exercise, get medical care or education or eat at a restaurant online, Nisch said. And the mix of residential and services people need on a weekly basis will spur constant foot traffic. It’s a sustainable model because it can grow with customers from both an age and demographic standpoint, and customers can participate with it as a resident and a visitor. “With a mall, you’re always a visitor,” he said. Aikens will be courting retailers at a time when many legacy stores like Macy’s, with too many locations, are

seeing pressure to close. They’re losing brick-and-mortar sales while they’re growing e-commerce, so there’s not much net growth for their businesses. With Five & Main, Aikens is starting with a clean slate, Nisch said. That includes attracting “click to bricks” retailers like women’s clothier Soft Surroundings, Sundance and Gap’s Athleta that traditionally have only had catalogue or online, direct-to-consumer sales but now are looking to open a limited number of stores. “Most people might say, ‘More retail?’ But Five & Main isn’t really a retail project,” Nisch said. “It’s a community project of which retail is part. That’s why it makes sense.” Aikens’ plan for Five & Main also makes sense given Michigan’s limited population growth and aging population, he said. Popular mixed-used retail developments that have sprung up in other parts of the country in recent years such as The Villages in Florida include age-limited residential developments. That’s something that makes sense in Michigan, given that our population isn’t expected to grow much in the coming years, but it is aging and soon will be among the largest aging populations in the country, Nisch said. The project is the right model for retail, but it is not without some risk, he said. Populations are increasingly moving to urban centers, and Detroit could be a highly attractive model for wealthy customers in or moving toward retirement. That said, Aikens has “first-mover advantage” with Five & Main, Nisch said. “They’re creating a product (that’s) not anything ... in the market.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

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 1 6 , 2 0 1 8

RECESSION FROM PAGE 1

History says we’re overdue for a downturn. The national economy is in the midst of near-record unimpeded growth — growing for the past 106 months. The longest period of economic growth lasted 120 months in the 1990s. “If we can keep this going until the end of the summer of 2019 without a recession, this will be the longest expansion in American economic history,” said Charles Ballard, an economist at Michigan State University. “If we’re lucky, maybe this can continue for a few more years, but I don’t believe there’s any reason to believe that we’ve repealed the recession.” The Great Recession claimed more than 400,000 jobs in Michigan. We’ve since recovered. The state’s unemployment rate dropped from more than 14 percent during the recession to a low of 3.7 percent last July and stabilized at 4.7 percent in January. But despite record North American car sales in recent years and record earnings for metro Detroit automakers and suppliers, the state is still operating with 250,000 fewer jobs than pre-recession. The result is leaner, more nimble companies capable of withstanding the next downturn, Stallard said. “I’ve got gray hair and I got it at a very young age because I’ve been through a few (recessions),” Stallard said. “I think we’re getting close to entering the next recession, but it’s cyclical and I don’t think it’ll be a blood bath. The next one will be a recession our fathers would know well.” Marick Masters, director of Labor@ Wayne at Wayne State University, believes the systematic changes that occurred in the region’s labor force will result in fewer people in the unemploy-

ment line than the last several recessions. “Our companies are more nimble and in line with market variability,” Masters said. “There will likely be fewer layoffs because most companies are bare-bones already. No one went on a hiring or spending binge and (companies) have been much more thoughtful than in the past about orienting themselves to the cyclical nature of our region.”

Tough to predict But the cause of the next recession will determine its victims, Ballard said. The recession of 1974 and the double-dip in the 1980s were both caused by sudden spikes in oil prices. The 2001 recession was caused by the dotcom bubble and the Great Recession by a housing bubble. “Unfortunately, recessions are hard to predict; if I had the answer I could make a lot of money,” Ballard said. “In the words of Yogi Berra, ‘It’s tough to make predictions, especially about the future.’” The University of Michigan isn’t forecasting a recession within the next two years, but monetary policy and executive actions coming from the White House are creating cracks in the economy, said Daniil Manaenkov, a U.S. forecasting specialist at UM. “If a recession does occur, it’s going to be from the (U.S. Federal Reserve) raising interest rates too fast,” Manaenkov said. “That would kill a lot of the interest (in) sensitive areas of our economy (such as utilities and housing).” However, the biggest economic disturbances brewing are tensions between the U.S. and its trading partners. Not because ongoing trade battles with China or Mexico would throw the U.S. into recession, but because it could

TRANSIT FROM PAGE 3

Last month, Wayne County Executive Warren Evans proposed a $5.4 billion, 20-year regional transit plan that would saturate the region’s main roads with more frequent, limited-stop bus service, create direct routes to Detroit Metropolitan Airport and start a longsought commuter rail service between Ann Arbor and Detroit. The CEOs signed the letter ahead of a Regional Transit Authority board meeting on Thursday, where representatives from Macomb, Oakland, Washtenaw and Wayne counties will be asked to allow a public comment period on the Evans plan to commence over the next month. In their letter, the corporate and philanthropic leaders cited metro Detroit’s “dead last” or near-bottom ranking among the country’s top 25 largest metropolitan regions in use and access to public transportation options — a reflection of limited service among the two major bus transportation entities, SMART and DDOT. “This letter is not intended to endorse a specific plan,” Anderson said in an interview with Crain’s. “What we’re really saying is that we think the evidence is clear that we lag most of our peer regions across the country badly and the job of our political leaders and the RTA is to develop that both benefits the region overall and meets the needs of their part of the region.” Evans’ plan has faced resistance from Oakland County Executive L. Brooks Patterson and Macomb County Executive Mark Hackel.

GETTY IMAGES

The CEOs signed the letter ahead of a Regional Transit Authority board meeting on Thursday.

Patterson has decried the tax burden his more affluent communities would bear to subsidize bus service elsewhere in the region (by law, 80 percent of RTA tax revenue has to remain in the county of origin). Hackel has said his constituents want the county’s crumbling roads fixed before more buses are put into service. They both also cite the failed 2016 regional transit vote as evidence that voters have no appetite for higher taxes to fund improved mass transportation services. That measure narrowly failed by 20,000 votes out of 1.7 million votes cast across all four counties. The lobbying effort for a November transit vote now rests with convincing Hackel and Patterson’s appointees on the RTA board to put a plan on the ballot. Each of the four counties has two voting members and the city of Detroit

Need to know

JJReduced freight may indicate a

recession is near

JJExperts believe the next recession will be average JJMichigan’s public sector is not prepared

cause the Fed to make a mistake by maintaining low interest rates too long, Manaenkov said. “Current trade tensions don’t do a lot to our economy on the surface, but if it gives pause to the Fed, it reduces our firepower to get out of the next recession,” he said. Interest rates have remained artificially low since coming out of the Great Recession as a way to spur economic growth. In March, the Fed lifted the federal rate to a range of 1.5 percent to 1.75 percent, an increase of a quarter of a percentage point. The Fed’s target rate helps determine rates for mortgages, credit cards and other borrowing. The low interest rates will make it more difficult to spend our way out of the next recession, Harvard Economist and former U.S. Treasury Secretary Lawrence Summers told Crain’s in March. “We’ve kept interest rates artificially low for so long, we won’t be able to reduce them in a downturn,” Summer said. “And because of the recent tax cuts, we’re handicapping our ability to spend our way out of it. The next recession, therefore, will be longer, deeper than it should be.”

Public sector at risk The recent federal tax cuts also hinder the public sector’s ability to respond to a recession. Due to the Trump Administration’s tax reform, deficits are going to be about $1.85 trillion larger over 10 years than previously projected, a 17.5 percent increase above what they’d be has one member. To place a proposal on the ballot, a seven-vote super-majority is needed, with at least one “yes” vote from each county. Patterson’s two appointees on the RTA board have called for a legal change in the boundaries of the transit authority to be shrunk to “a coalition of the willing” and exclude cities such as Novi and Bloomfield Hills that have long shunned the SMART bus system. “I don’t think we doubt that there’s a need for transit that could benefit the region,” said Tim Soave, an Oakland County representative on the RTA board. “I’m not convinced that the plan as to how to pay for it is really the best way to do it.” Anderson said there needs to be a new “regional mindset” that suburban communities that invest in a regional transit system will result in a “benefit of everyone in the region.” “It’s the job of leaders to, in some ways, help their constituents see that,” he said. Anderson’s CEO group has no formal name but has been meeting for the past year, focusing on public policy issues that the business leaders see as crimping the region’s economic recovery. “There is so much going right in the region right now, but we know it’s important to keep asking where do we not have things going right, where do we lag other vibrant regions,” Anderson told Crain’s. “And transit is clearly one of those areas. When you benchmark us against other peer regions, we just do not look good.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

without the law, according to a recent report by the Congressional Budget Office. If the law’s cuts were made permanent, then the deficit would instead add another $722 billion, for a total cost of about $2.6 trillion over 10 years. This handicaps Michigan, which hasn’t recovered tax revenue from the Great Recession, because it’s required to balance the budget by law. The state hasn’t been able to build up a suitable rainy day fund to weather even an average recession, according to research from the Mercatus Center at George Mason University. According to the research, the state needs to save 13 percent, or $1.5 billion, of its $11.6 billion estimated tax revenue in 2018 to sustain an average recession. The state’s projected 2018 budget surplus is $13 million with a rainy day fund of $886 million, according to data from the National Association of State Budget Officers. This means the state is $601 million short of balancing its budget following an average recession, said Erick Elder, economist at the University of Arkansas at Little Rock and lead author on the George Mason study. “The results are clear,” Elder said. “If the state doesn’t have a sufficient amount of savings for an average recession, they are going to need to increase taxes by as much as 10 percent or reduce spending.” This will lead to hard choices for Michigan legislators, Ballard said. “We will either have to raise taxes or we will see further deterioration of public services,” Ballard said. “That’s why the policies of the last decade are so irresponsible. Here we are at the top of the business cycle and our roads and infrastructure are crumbling and we’re set to get even worse.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

CEOs for transit Twenty-three CEOs from some of metro Detroit’s largest companies signed a letter last week calling for regional solution to Southeast Michigan’s regional mass transportation woes. JJGerry Anderson, DTE Energy JJMatt Cullen, Rock Ventures JJDave Egner, Ralph C. Wilson, Jr. Foundation JJJim Hackett, Ford Motor Co. JJChristopher Ilitch, Ilitch Holdings JJDan Loepp, Blue Cross Blue Shield of Michigan JJChip McClure, Michigan Capital Partners JJCindy Pasky, Strategic Staffing

Solutions

JJRip Rapson, The Kresge Foundation JJRay Scott, Lear Corp. JJMary Barra, General Motors Co. JJDavid Dauch, American Axle JJDan Gilbert, Quicken Loans/Rock Ventures JJJoe Hinrichs, Ford Motor Co.

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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 1 6 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Tenneco to acquire Federal-Mogul

Detroit Food Academy adds Slow Jams

APRIL 6-12 | For more, visit crainsdetroit.com

enneco Inc. said last week that it has agreed to acquire Southfield-based Federal-Mogul LLC from billionaire investor Carl Icahn for $5.4 billion. The companies said the deal will ultimately create two separate publicly traded companies — one focused on replacement auto parts and the other on powertrain technology. The deal will be financed through $800 million in cash, about 30 million Tenneco shares and assumption of debt, Lake Forest, Ill.-based Tenneco said in a news release. Following the split, it’s expected that headquarters for each company will remain in the Detroit and Chicago areas, but a decision on which one would go where has not been made, Bill Dawson, executive director of communications for Tenneco, said in an email. No determinations on maintaining workforce have been made, Dawson said, but noted the companies don’t overlap on products. “It’s too early to talk about any integration changes, but it is important to remember that Tenneco’s and Federal-Mogul’s products and technologies are highly complementary,” Dawson said in a email. “We do not manufacture or engineer the same products as Federal-Mogul’s Motorparts and Powertrain businesses.” The acquisition is expected to close in the second half of this year, subject to regulatory approvals, with the separation occurring in the second half of 2019. The two new companies to be born after the union will be a $6.4 billion aftermarket supplier and the other a $10.7 billion powertrain technology supplier, the company said. The deal also marks a payoff for Icahn, who has sought to monetize his investment in Federal-Mogul since 2007, when he purchased unsecured Federal-Mogul bonds before its bankruptcy and eventually swapped them for equity as part of the company’s reorganization plan. In early 2017 and after nearly a year of posturing with Federal-Mogul’s shareholders, Icahn took full ownership of Federal-Mogul in a roughly $300 million deal.

BUSINESS NEWS J Key Safety Systems Inc., through its Chinese parent company and two outside investors, completed the acquisition of troubled Takata Corp. in a $1.6 billion deal last week. J The Detroit City Football Club headed into its third season opener at Keyworth Stadium on Saturday with a new title sponsor, rideshare service Lyft; fresh jersey kits; and a wave of momentum from record season ticket sales and mounting fanfare. J The Novi-based Better Health Store is planning a new grocery and vitamin shop on the Detroit-Grosse Pointe Woods border as part of a strategy to expand three locations in its Southeast Michigan footprint. J Hundreds of guests and employees at the MGM Grand Detroit were evacuated last Wednesday morning after a fire broke out in a restaurant ventilation system. The fire was extinguished and there were no injuries.

The $110 million rebuild and closure of I-696 in Macomb and Oakland counties is imminent. Prep work starts this week for the $90 million segment of the project, set to close a 10-mile section of the freeway’s westbound side between I-75 and I-94. The freeway will not be closed until later this month or early next month, said Diane Cross, spokeswoman for the Michigan Department of Transportation.

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

$112 million The revenue generated by members of the Endeavor Detroit nonprofit business leader mentorship group in 2017.

650

The number of attorneys Clark Hill now has after absorbing a Dallas-based firm, cementing its status as the largest law firm based in Michigan.

The number of lanes a 5-mile stretch of East Jefferson Avenue near downtown Detroit will have going each way — down from three — after bike lanes are added.

MJR Digital Cinemas plans to spend $9.4 million renovating three more theaters to add reserved seating and electric recliners. J The Detroit Tigers lost $46 million last season and experienced only slight growth in franchise value, according to the annual baseball team valuations published by Forbes.com. J The Detroit Lions will return to Ticketmaster for the 2018 season, jettisoning the Dan Gilbert-owned Flash Seats paperless digital ticketing system used at Ford Field since 2013. J Food & Wine magazine named Ferndale seafood restaurant Voyager one of its 10 “Restaurants of the Year.” J Detroit-based Shelborne Development Corp., which builds and renovates for affordable housing and increasingly mixed-use, added to its leadership team and is restructuring in a bid to grow. J Realcomp Ltd. II data on metro Detroit’s housing market released last week shows inventory was down yearover-year nearly 30 percent in March, matched by a 4.6 percent rise in median sales price. J Midwest Glass Fabricators is planning a $5.6 million expansion that will double the size of its Highland Township plant and add 76 new jobs over the next three years as it enters the ballistic- and blast-resistant glass market. J Chamberlain Marketing Group has acquired Traffic Digital Agency Inc. for J

$10 million, the Taylor-based corporate marketing firm announced. J The Commons, a cafe and laundromat in Detroit’s Islandview neighborhood from MACC Development recently opened with a mission of acting as a hub for nearby residents and providing them a much-needed service. J Birmingham-based Strength Capital Partners LLC has led a controlling investment in ESP Associates Inc., a company based in Charlotte, N.C., that provides engineering, surveying and planning services for public and private clients. J Kalamazoo-based Bell’s Brewery Inc. signed deals with 11 new distributors that will help carry its brews to New Jersey and all six states in the New England area. J Caesars Windsor has postponed a string of shows, promotions and events and canceled hotel reservations through the month of April as officials expect a strike at the casino and hotel by about 2,300 unionized dealers, cooks, housekeepers and other staff to last longer than first expected. J Happy Returns, a company that aims to take the hassle out of online shopping returns, opened at Somerset Collection in Troy — its first location in Michigan.

OTHER NEWS J The Detroit Riverfront Conservancy last Tuesday named New York Citybased Michael Van Valkenburgh Associates the winner of an international design competition for the $50 million transformation of the West Riverfront Park. J PNC Bank NA and the PNC Foundation announced last week they will commit $318,000 in grant and sponsorship funding to support early childhood programming at The Henry Ford in Dearborn. The commitment is part of the bank’s shifting of sponsorship dollars to the arts and away from sporting events. J Singer Michael Bolton’s documentary about the resurgence of Detroit that has been many years in the making is set to hit theaters May 15. J Detroit’s summer youth employment initiative is showing some positive educational outcomes for those who have participated in the program, according to a new University of Michigan study. J The city of Detroit is seeking planning and design consultants to foster a child-centric environment in the Warrendale-Cody Rouge neighborhood.

he Detroit Food Academy, a nonprofit that teaches young Detroiters about food entrepreneurship, is growing its food product line with the purchase of a gourmet jam company. Slow Jams Jam is the food-education group’s third snack retail brand, after Mitten Bites granola bars and Detroit Pop Shop ice pops. Detroit Food Academy sells products at Eastern Market, Whole Foods Market, Westborn Markets, Detroit Foundation Hotel and Avalon International Breads through its arm called Small Batch Detroit. Small Batch employs 15 academy graduates and brings in revenue for the nonprofit. The academy has around 25 employees total. The purchase of Slow Jams closed Tuesday. The parties declined to disclose terms of the deal. The academy doesn’t have plans “in the immediate future” to buy any more food companies, but “you never know,” said Jacob Schoenknecht, director of Small Batch.

SLOW JAMS VIA FACEBOOK

Products now offered by the nonprofit Detroit Food Academy include Slow Jams gourmet jams and Mitten Bites granola.

“The dedicated and talented Slow Jams team has built a powerful, mission-driven brand and I am proud that Slow Jams will play a vital role in growing the impact of Detroit Food Academy’s work employing and empowering Detroit youth,” Slow Jams founder Shannon Byrne said in the release.

REAL INSIGHT MARKETPLACE

The Sears location at Twelve Oaks Mall in Novi will be sold in an online auction that starts May 22.

Sears to sell location at Twelve Oaks Mall T

he Sears store at Twelve Oaks Mall in Novi is one of 16 locations to be sold in an online auction in May. Parent company Sears Holdings Corp. closed nearly 400 of its Sears and Kmart stores last year, and has closed or has plans to close more than 160 so far this winter and spring. But the Twelve Oaks Mall location, currently owned by Sears, is to remain open under a lease from whoever acquires it, the Detroit Free Press reported. The auction for the store at 27600 Novi Road starts 1 p.m. May 22. The winning bidder comes away with a two-story, 216,539-square-foot Sears and one-story, 28,300-square-foot auto shop, according to the listing. Chicago-based broker Cushman & Wakefield is handling the sale on Real Insight Marketplace. No minimum bid is listed. A Sears representative did not immediately respond to a request for comment. Though Sears owns its store property, Taubman Centers Inc. owns and manages Twelve Oaks Mall, which

also has Macy’s, J.C. Penney and Nordstrom in its department store stock. The sale-leaseback strategy comes as Sears Holdings struggles alongside other department stores. The company’s store count was down from 3,510 six years ago to less than 940 as of January. Kmart stores in Richmond and Greenville near Grand Rapids were most recently deemed nonprofitable. The Sears at Macomb Mall was cut last fall. Macy’s Inc. and Bon-Ton Stores Inc. have also shed locations in recent years, as more shoppers discard department store habits in favor of online shopping, less traditional retail concepts like showrooms and lower-cost chains such as Wal-Mart Stores Inc. or Target Corp. Struggles of certain brands — including Macy’s and Sears — are well-documented, from Time.com’s pronouncement that “Department stores are in a death spiral” to the widely hyped media term “retail apocalypse.”

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