Crain's Detroit Business, April 30, 2018 issue by Crain's Detroit Business

New DEGC president Kevin Johnson is bullish on Detroit

Lists: Real estate sales and leases Pages 12-14

APRIL 30 - MAY 6, 2018 | crainsdetroit.com

Page 11

REAL ESTATE

Ford begins forging a Corktown campus

By Kirk Pinho

kpinho@crain.com

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There’s a price to be paid for losing, and the rebuilding Detroit Tigers could face a whopping invoice if their abysmal attendance to start the season continues. A one-two punch of low expectations and bad weather has depressed crowd size so far at Comerica Park, but the team is banking on sunny days, fun promotions and scrappy play to stave off further turnstile declines this year. Whether that scenario plays out remains to be seen. The team, which unloaded a platoon of expensive stars amid a 98-loss 2017 season, has flirted with .500 and played interesting baseball so far in 2018. At least for now, they’ve bucked the conventional wisdom that they’d be a doormat like the Kansas City Royals and Chicago White Sox. In fact, they’re kinda fun to watch, some say. That cheery narrative could con-

tinue, or collapse with mounting losses and more talent getting dealt for younger prospects before the summer trade deadline.

crainsdetroit.com

Vol. 34 No. 17 $5 a copy. $169 a year.

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By Lindsay Chappell and Richard Truett Automotive News

AP PHOTO/LON HORWEDEL

Empty seats could be the norm for the Tigers during this rebuilding season.

Ticket sales data so far reveals a skeptical fan base disinclined to watch this team in bad weather. SEE TIGERS, PAGE 20

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Lear’s Scott talks strategy, innovation and the future

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By Bill Shea

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Michigan Central Depot Former cold storage building The Alchemy The Factory at Corktown Land Former Detroit Public Schools book depository 7. 1744 Michigan Ave. Detroit Athletic Co. building 8. 2310 Rosa Parks Blvd. Land 9. 2302 Rosa Parks Blvd. Land 10. 1827 Kaline Dr. Land 11. 1821 Kaline Dr. Land 12. 2273 Harrison St. Land 13. 1803 W. Fisher Fwy. Land 14. 2321 Harrison Land 15. 2319 Harrison Land 16. 2315 Harrison Land 17. 2311 Harrison Land 18. 1814 Kaline Land 19. 2332 Harrison Land 20. 2326 Harrison Land 21. 2316 Harrison Land 22. 2312 Harrison Land 23. 2308 Harrison Land 24. 2304 Harrison Land 25. 2300 Harrison Land 26. 2292 Harrison Land 27. 2284 Harrison Land 28. 2278 Harrison Land 29. 2272 Harrison Land 30. 2254 Harrison Land 31. 2252 Harrison Land 32. 2244 Harrison Land 33. 2307 Cochrane Land 34. 2297 Cochrane Land 35. 2287 Cochrane Land 36. 2283 Cochrane Land 37. 2279 Cochrane Land 38. 2271 Cochrane Land 39. 2269 Cochrane Land 40. 2265 Cochrane Land 41. 2263 Cochrane Land 42. 2259 Cochrane Land 43. 2253 Cochrane Land 44. 2247 Cochrane Land 45. 2237 Cochrane Land 46. 2231 Cochrane Land 47. 1550 Kaline Dr. Land 48. 2610 Cochrane Land TOTAL ACREAGE

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Ford Motor Co. is in talks with multiple Corktown property owners in an effort that would create a sweeping campus consisting of dozens of individual properties, including both buildings and parcels of land, in the area, Crain’s has learned. With the abandoned Michigan Central Station as the campus’ anchor, Ford is also nearing deals to buy properties ranging from small retail buildings and slivers of land to large warehouses, according to a half-dozen sources who have been briefed on the discussions with property owners. The Dearborn-based automotive giant, which employs 48,000 in Michigan, is expected to reveal its intention to buy 75 and redevelop the dilapidated Michigan Central Station in Corktown next month, according to four other sources familiar with the campus discussions. An announcement of what could be the most transformational Detroit development plan in more than a decade may come May 10, one of the sources said. The other sources were unable 96 to verify that date, which is also when Ford’s annual shareholder meeting is slated to begin at 8:30 a.m., but did say that next month is the target.

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On the surface, it seems there isn’t much in common between a vehicle’s electrical architecture and its seats. Ray Scott, who took over as Lear Corp.’s CEO on March 1, doesn’t see it that way. With ride-sharing and self-driving vehicles on the horizon, Scott, 52, believes technology and the changing ways cars will be used will require a convergence of seats and intelligent technology. That is exactly Lear’s strategy play for the future — to boost the electronics side of its global business while developing smart seats that tie it all together. Scott, a 30-year Lear veteran, spoke with Lindsay Chappell and

Richard Truett of Crain’s sister publication Automotive News at Lear headquarters in Southfield. Did you ever imagine the industry would change at such a rapid pace?

No. I have never seen it like this before. And that’s what we talk about as a team. The door is open, and the amount of quotes we’re getting in electrification, connectivity and reconfigurability, all these areas we participate in today — talk about opportunity. It’s a significant amount of opportunity to manage, and you have to make sure you’re picking the right strategic places, making sure you are going to be successful with launches and that you can manage the type of growth in a reasonable way to keep delivering quality. SEE LEAR, PAGE 18

FOCUS: REAL ESTATE

Industrial development gets a boost from strong automotive market << Large leases were up 50 percent in 2017. Does the trend show any signs of stopping? Page 10

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MICHIGAN BRIEFS

INSIDE

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

Drive to legalize marijuana qualifies for ballot

Michigan’s elections board said organizers of a ballot drive to legalize marijuana for recreational use collected enough signatures to qualify for the November ballot, the Associated Press reported. The Board of State Canvassers ruled last Thursday that the Coalition to Regulate Marijuana Like Alcohol measure will first go to the Republican-led Legislature. Lawmakers could enact it or let it proceed to a statewide vote. An opponent of the legislation urged the board to reject it, saying marijuana is illegal under federal law. But a canvasser said the board’s role is ministerial, and the opposition should go to court if it wants to challenge the bill. The proposal would let people 21 and older possess up to 2.5 ounces of marijuana and grow up to 12 plants at home. A 10 percent tax on marijuana would be assessed on top of the 6 percent state sales tax.

Michigan Women’s Foundation rebrands

The Michigan Women’s Foundation announced a new name amid a tighter focus to assist women and young girls in achieving economic

GETTY IMAGES/ISTOCKPHOTO

Organizers of a ballot drive to legalize marijuana for recreational use collected enough signatures to qualify for the November ballot.

and social equality. The 32-year-old nonprofit announced its new name, Michigan Women Forward, with a new logo and branding, at Cobo Center in Detroit last week. Peg Tallet, the organization’s COO, said the name change is designed to reflect a more strategic approach to its mission as well removing the term foundation from its name, as it doesn’t make many grants. “The term foundation has been problematic for a long, long time,” Tallet said. “We used to give out grants to anyone with the word women in their name. But we ended up creating philanthropic welfare, giving a little bit of money to every organization. We weren’t moving the needle or creating a lot of impact.” Michigan Women Forward has $2.5 million in assets, paltry compared with the region’s most known foundations — like the Detroit-based Skillman Foundation, which has

$447 million in assets, or the Troybased Kresge Foundation, at $3.6 billion. But Michigan Women Forward’s mission has evolved in recent years. It now makes small, high-risk loans of less than $50,000 to entrepreneurs who banks won’t touch. It also provides youth programming to help develop the next generation of women leaders and leads fundraising efforts to fund testing of the Detroit Police Department’s thousands of backlogged rape evidence kits. The result of its rape kit effort is helping secure convictions against 130 men who sexually assaulted more than 350 girls and women. The success of its entrepreneurship work and funding rape kit testing raised its profile, Tallet said, allowing the organization to expand while remaining focused on equality. In October, it merged the Michigan Women’s Historical Center and Hall of Fame into its operations and just

CALENDAR

CLASSIFIEDS

DEALS & DETAILS

recently acquired the Entrepreneur Institute of Mid-Michigan in Lansing.

KEITH CRAIN OPINION

House OKs $56.7 billion budget

PEOPLE

RUMBLINGS

WEEK ON THE WEB

The Michigan House approved last Tuesday a $56.7 billion budget plan that would boost spending on school security after the recent Florida high school shooting and cut funding for universities that fail to comply with proposed sexual misconduct rules in the wake of the Larry Nassar scandal, the Associated Press reported. The two spending measures cleared the Republican-controlled chamber on 71-36 and 66-41 votes, mostly along party lines. After the GOP-led Senate approves its own budget blueprint and new revenue estimates are released in mid-May, the Legislature and Gov. Rick Snyder will likely finalize a budget in June — months before the next fiscal year starts in the fall. Republican leaders touted what would be the largest increase in base per-student funding in 17 years. The $120 to $240 hike aligns with Snyder’s plan, including record-high spending on road repairs, investments in workforce development and school and campus safety, and general fund spending that would be smaller than in the current year. Democrats, however, said more must be spent on deteriorating roads and financially struggling local governments. They unsuccessfully tried to en-

CRAIN’S

sure $8 million in funding to restore free bottled water in Flint, where Snyder recently cited the improved quality of tap water in ending the service.

2 Great Lakes electric cables severed

Officials said underwater photos show two electric cables were severed in what Michigan’s attorney general says was a tugboat anchor strike in the Straits of Mackinac, the Associated Press reported. An investigative team led by the U.S. Coast Guard said last Tuesday that a remotely controlled vehicle had obtained images of the damage site beneath the waterway. The two severed cables were among six owned by American Transmission Co. that are stretched along the lake floor. Officials said with the visual assessment finished, the company and its contractors plan to cap the ends of the damaged cables to prevent more pollution. About 600 gallons of mineral oil insulation fluid spilled into the water when the cables were struck April 1.

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HEALTH CARE

Pilot programs to include unenrolled Medicaid patients Need to know

Medicaid Section 298 integration pilots given unenrolled Medicaid population to manage 

 Three pilot programs are in Genesee, Saginaw, Muskegon, Lake, Mason and Oceana counties  Goal is to coordinate and manage behavioral and physical health services, reduce costs and improve quality

By Jay Greene jgreene@crain.com

Michigan state health officials plan to add an additional layer of complexity this fall to projects designed to test integration of Medicaid behavioral and physical health by requiring the mental health agencies participating in the pilots to contract with a single statewide public behavioral health organization. The change will require the inclu-

sion of an estimated 61,000 people in the six-county pilot markets who are unenrolled in managed care plans. Many behavioral health experts are concerned that placing people with Medicaid benefits in a statewide entity could be a first step in giving the management role to a single private managed care firm — the socalled privatization of publicly funded behavioral health services. That was one of the original goals of Gov.

Rick Snyder’s controversial budget language, known as the Section 298 boilerplate, proposed in early 2016. “We understand there are concerns in the community about the pilots and demo,” said Phil Kurdunowicz, a legislative analyst who is coordinating implementation of the Section 298 pilots in the Michigan Department of Health and Human Services. “We have ongoing engagement with stakeholders” that include

patients, families and the community mental health agencies. When Crain’s first reported original Section 298 boilerplate in February 2016, mental health providers, advocates and families pushed back hard. Lt. Gov. Brian Calley called a timeout, the state Legislature held hearings and eventually came up with a plan to test integration under the guidance of MDHHS. SEE PILOTS, PAGE 21

NONPROFITS

WORKFORCE DEVELOPMENT

Training for Flex-N-Gate jobs

Some worry tax reform will stall car donations By Sherri Welch swelch@crain.com

But the sheer volume of new jobs has garnered attention of workers as the 450,000-square-foot manufacturing facility is the largest newly built auto parts plant in Detroit in 20 years. Flex-N-Gate owner Shahid Khan has said he pursued the new 450,000-square-foot manufacturing facility in Detroit at the behest of the company’s customer, Ford Motor Co., and the automaker’s executive chairman, Bill Ford Jr., who has signaled an interest in re-establishing Ford’s connection to the city where it was founded 115 years ago.

Time will tell, but some charities operating vehicle donation programs in Detroit believe altruism and the convenience of being able to unload an old vehicle through donation programs will trump the imNeed pact of tax reform. to know Others are con Some charities cerned about the believe altruism, long-term outconvenience will look for vehicle sustain vehicle donations, which donation programs provide low-indespite tax reform come people with  Others are a source of transportation, supconcerned about port charitable impact fewer programs and for itemizers will have one program, a on car donations source of training  All charitable for up-and-comvehicle donation ing mechanics. programs are Nonprofits opwatching the erating the pronumbers closely grams have long relied on tax deductions to incentivize people to donate their vehicles. Vehicle donations are still tax deductible, but fewer taxpayers are expected to itemize with Rick Frazier: the larger, stanMother Waddles dardized deducnot yet affected. tions that take effect this year following tax reform. That hasn’t yet affected donations to Mother Waddles Community Outreach, one of the largest car donation programs in the area. And Rick Frazier, who manages its vehicle donation program on a contracted basis through his Charity Funding LLC, isn’t sure it will.

SEE JOBS, PAGE 22

SEE DONATIONS, PAGE 19

LaPorche McGowan participates in a training session at Focus: Hope last week. LARRY PEPLIN FOR CRAIN’S

New Detroit auto parts plant got 16,000 applications for 500 positions By Chad Livengood clivengood@crain.com

Auto parts giant Flex-N-Gate Corp. has received more than 16,300 applications for about 500 positions the company plans to fill at the manufacturing plant it’s constructing on Detroit’s east side to stamp and mold parts for the new Ford Ranger pickup truck. Company officials have been swamped with applications as they have prioritized hiring Detroiters, specifically residents of the 48213 ZIP code where the new plant is based just west of Van Dyke Avenue in Detroit’s

Need to know

Flex-N-Gate has received 16,370 applications to date for 496 jobs at new Detroit plant 

 Auto supplier to stamp and mold parts for new Ford Ranger  Focus: Hope operating city-funded training for Flex-N-Gate production workers

I-94 Industrial Park. With a median annual household income of $21,372 and about 49 percent of residents living in poverty, the 48213 ZIP code is one of the poorest

areas of Detroit, the poorest big city in the country, according to census data. Flex-N-Gate company officials would not discuss the company’s wage scale, but applicants said they were advertising entry-level wages of $13 per hour, with higher wages based on experience and 40-cent raises after a probationary period. “There’s a lot of people who need jobs, and Flex-N-Gate will be good for them,” said Edward Parker, 35, who got hired to work at the plant and lives in a nearby neighborhood. “It’s a good opportunity. The wage is going to be what people are really interested in."

MUST READS OF THE WEEK LinkedIn laying down roots in Detroit

Addressing concerns with system

Key property in New Center corridor

LinkedIn to open larger office space in old Sanders Building downtown. Page 7

City recommends new funding process for homelessness agencies. Page 4

The Platform buys Lakeshore Global building in New Center. Page 9

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City recommends new funding process for homelessness agencies By Sherri Welch swelch@crain.com

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A city of Detroit review of the process used to allocate about $25 million in annual federal dollars to address homelessness in Detroit, Highland Park and Hamtramck did not turn up ethical issues following allegations by one agency head of favoritism. But Arthur Jemison, director of housing and revitalization for the city, is recommending changing the funding process to Need avoid the appearto know ance of conflicts JJCity of Detroit of interest. review of process He’s also callfor allocating ing for an evaluafederal homeless tion of the role of dollars finds no the Detroit Conwrongdoing tinuum of Care’s lead agency, the JJBut city points to lack of strategic Homeless Action Network of Deplan to end troit, to determine homelessness, gaps in after-hours if it should continue in that capacity services and for the develJJMakes opment of a strarecommendations tegic plan to bring including the three cities to evaluation of “functional zero” effectiveness of homelessness, lead agency where the inflow of people into the system is less than the number exiting. To get more involved in the CoC, an independent nonprofit charged with spearheading the city’s bid to end homelessness, Jemison is joining Meghan Takashima, homelessness solutions director for the city, as city of Detroit representatives on the board. Tackling homeslessness is a reason why the city wants to develop 300 units of permanent supportive housing focused on chronically homeless individuals as part of a $250 million affordable housing strategy unveiled in March, Jemison said. Last year, during a one-day, “pointin-time” count, there were a total of 2,078 homeless people in Detroit, Highland Park and Hamtramck, down from 2,335 in 2016. Of those, 246 were chronically homeless last year, down from 307 in 2016. “We believe if we do the services part of this right, those 300 units can take a number of those individuals off the street and permanently house them,” Jemison said. Supporting people in that project is why the city is concerned with coordination of homelessness services. “I need to make sure through involvement in the CoC that services providers are ready to rally around those units,” Jemison said. “We have to have greater coordination ... everyone has to know what their role in the system is.”

Addressing concerns Jemison launched a review of the process by which the Continuum of Care allocates funds in recent months in the wake of allegations of self-interest, lack of transparency and a strategic plan and other concerns voiced by Detroit Rescue Mission Ministries CEO Chad Audi. In a letter sent to the chairs of the CoC and its lead administration agency, the Homeless Action Network of Detroit, on April 13, Jemison said he did not find any ethical issues in how funding was being allocated. But he recom-

Arthur Jemison: Recommends changing process.

Chad Audi: Satisfied with city recommendations.

mended that homeless service providers no longer vote on or score projects for funding to avoid the appearance of a conflict. “While recusing themselves from voting on their own proposals, providers (on the CoC board) do vote on one another’s CoC proposals,” he said. The process for avoiding conflicts is also clearly articulated in the CoC’s charter and has been followed, as demonstrated by board notes, Jemison said. However, given policy differences among providers around an approach that favors moving people into permanent housing and then helping them deal with issues like addiction vs. offering them transitional housing to get them clean/ready for permanent housing first, “the allocation pattern can give the impression, inaccurate though it may be, of bias,” he said. Jemison is also recommending the CoC evaluate HAND, the Detroit Continuum of Care’s lead agency, to see if it’s meeting its responsibilities as lead agency and local administrator of the Homeless Management Information System, which is used to collect client data on homelessness in Detroit, Hamtramck and Highland Park. “Although HAND has been more than adequate in its role as the collaborative applicant, it is unclear if the organization embraces the roles of lead agency and HMIS lead,” Jemison said in the letter. HAND has responded to numerous requests for data “by stating the agency does not have adequate staffing capacity to provide data or participate

“Though we recognize that there are areas of improvements to be made, HAND has been dedicated to ending homelessness for more than 20 years.” Seana Page

in the work,” he said. Jemison urged the CoC to evaluate HAND’s performance and if it decides to keep HAND in those roles, recommended it create articulated outcomes and a regular and thorough assessment of its progress. HAND “is pleased that the investigation of unethical funding practices has been unfounded by the City of Detroit’s Housing and Revitalization Department,” Chairwoman Seana Page, director of resident services for the Detroit Housing Commission, said in an email. “Though we recognize that there are areas of improvements to be made, HAND has been dedicated to ending homelessness for more than 20 years.” The organization in recent months has made changes to improve the Co-

ordinated Assessment Model, an intake system used by the continuum to assess the needs of the homeless and refer them to an agency for assistance. And HAND’s “very small and dedicated staff works diligently to deliver data, reports and personnel support for partner agencies and providers,” Page said. The CoC’s prioritization of Housing First programs for funding aligns with both the U.S. Department of Housing & Urban Development’s priorities and the city’s, Jemison said, and improves Detroit’s ability to compete for the $25 million it gets annually from HUD for homeless programs. Still, he said in the letter, there’s a role for providers like Detroit Rescue Mission that don’t necessarily follow that philosophy and provide critical services such as transitional housing for the homeless. Though it has seen programmatic cuts in recent years, DRRM received the highest allocation of any Detroit CoC agency — 14 percent of the roughly $25 million the CoC gets from the U.S. Department of Housing & Urban Development each year or $3.6 million in fiscal 2017, Jemison said.

Gaps in the system With his concerns, Audi helped bring to light a gap in assistance for the homeless after hours, Jemison said. There was confusion about whether the after-hours response was a responsibility included in the CAM intake model, but it was not, Jemison said. There were also questions about the effectiveness of CAM. In January, HAND announced a shift in the system’s intake operations, from a call center that proved hard to reach to in-person assessments that require homeless people in the three cities to get to one of five Detroit locations for housing assistance. Recently, CAM also added coverage after 5 p.m. and on days with extreme weather, HAND’s Page said. Jemison is recommending CAM continue to operate under lead administrator Southwest Solutions until December, and to evaluate and rebid it at that point. The city plans to allocate some of the $5 million it invests in services for the homeless to fund after-hours assistance, Jemison said. The city’s review also confirmed Audi’s concern that the CoC and HAND do not have a strategic plan in place to get homelessness in Detroit, Highland Park and Hamtramck to a “functional zero.” There’s been a tactical shift by the CoC and HAND from transitional housing to permanent supportive housing which gets people into housing first and then addresses addictions, mental health and other issues that led them to become homeless. “I definitely get a sense of tactics … but not a sense of strategy in which all providers have a role and know how they are contributing to the strategy,” Jemison said. Audi said he is satisfied with the city’s recommendations. “Our goal was to provide better services to the homeless population,” . Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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CaringForKidsAPRIL.indd 1

ioral issues. Have you seen a reinforcement of trying to help children with mental health issues versus just adults? Hipple: Yes, because this young generation is more open. They are not afraid of talking about mental health at all. It’s much different than talking to adults, because adults still carry around that stigma that we are talking about something bad. Someone with a brain illness, who is bipolar or has depression can still be mentally healthy because they are doing what they need to do to take care of themselves. That is the picture we want to push: people who have brain illnesses can be healthy. Burns: Some say that sports is a metaphor for life. Share some of the life lessons you’ve learned. Hipple: Football is a team sport and signifies that we’re in this life together with a common goal and mission. But the team is actually individuals taking care of themselves doing their job first and then reaching over to the next person and lifting them up when they get knocked down. There is a lot of adversity that happens on the field and in life, and we don’t want to just survive — we want to thrive.

Burns: It’s your eighth year as CEO; what has been your greatest impact? Walker: I see my position as a privilege. A lot of what we do is soft-skills oriented. While we’ve seen the advent of electronic medical records and telepsychiatry, it still comes back to the soft skills, the interaction with people. I emphasize to new employees that we want to be welcoming and accessible. We want to treat people with dignity and respect. We work with a lot of people who are vulnerable and sometimes down on their luck. A little kindness can go a long way. Burns: The Guidance Center recently completed a gift campaign to provide a permanent home for the Center’s KidsTALK program in Midtown. Walker: Kids-TALK is a children’s advocacy center that we were invited to manage about 15 years ago. It was started by the prosecutor’s office but they were interested in having

an independent organization take it. We’ve worked over the years to evolve the program. It had about $300,000 in funding when it started and now it has a $2.1 million budget. We have a child abuse doctor who is able to do forensic medical exams and then we also have a group of therapists that specialize in trauma and work with many of the kids. Last year we saw more than 2,000 kids. Burns: Our organization has provided grant funding for Kids-TALK. What does this money support? Walker: We think every child who goes through an abuse experience should be eligible for counseling, but a lot of the funding sources that we work with are designed to treat people with more serious conditions. Your funding has helped us in our therapy program for kids with trauma. Up to 2,381 children have been able to get follow-up counseling services because of the funding.

Burns: When did you realize that you wanted to be a pediatrician and a pediatric surgeon? Klein: During the Vietnam War I had a relevance crisis. What I was doing didn’t seem that important, so I went to medical school. Burns: How did you end up in Detroit? Klein: I was interviewing at the Mayo Clinic and I stopped in Detroit (on the way home to Boston) and visited the Children’s Hospital. I was impressed that the facilities were so much better than we were using in Boston. It’s been a remarkable place to work and practice. Burns: You created an endowment fund in honor of your late wife, Peggy Klein, that goes towards staff nursing education. Tell us about Peggy. Klein: Peggy was a nurse on the burn unit at Children’s Hospital. She had been a patient at the hospital as a child, and it was her first job out of nursing school. Our family has Children’s Hospital in its blood. Peggy always wanted to be a staff nurse. She was offered head nurse jobs when we traveled,

but she never wanted to do anything but care for patients. The endowment is set up for staff nurses who normally don’t have the funds for educational conferences. Burns: Tell us about your mission work. Klein: Kenya Relief is an interesting program that was started 20 years ago by a nurse anesthetist. It began with a small outpatient school and orphanage, and they just finished building a hospital. About 15 times a year medical teams will go there for a week, do surgeries and see patients. We can get a lot accomplished. Burns: What makes Children’s Hospital of Michigan special? Klein: The special thing is the depth of the experience that can be applied. There are many specialties that might be done elsewhere but are not done in the same way. For instance, pediatric anesthesia and pediatric radiology: specialists in those areas aren’t always available at general hospitals. I think more important is the nursing and child and family-centered atmosphere—the whole experience is significantly better.

4/24/18 11:15 AM

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DTE gets approval to build $1B gas plant in St. Clair County By Jay Greene jgreene@crain.com

DTE Energy Co. received approval from a state agency to build a $1 billion gas-fired power plant in St. Clair County, officials said Friday. After a contentious hearing in which DTE officials took some criticism from PSC Chairman Sally Talberg about how the company put together its proposal, the Michigan Public Service commission approved the Need 1,100-megawatt to know plant in a 3-0 vote.  State agency The approval unanimously came after a approves DTE monthslong camrequest to build a paign by renew$1 billion natural able-energy adgas plant in East vocates against China Township the plant. “DTE Electric’s  Michigan Public recent and Service Commisplanned investsion grants three ments in energy certificates of waste reduction, necessity that renewable energy green-lights DTE's and energy stor1,100-megawatt age, when cougas power plant pled with this  Opponents had highly efficient contended that gas plant, demonDTE could have strate that Michimore inexpensively gan is a great exreplaced coal ample of an ‘all of power with a mix the above’ strateof renewables gy to meet our energy needs in a reliable, affordable manner that protects the environment,” MPSC Chairman Sally Talberg said in a statement. “The commission is granting certificates of need for DTE Electric’s proposed 1,100 MW combined cycle natu-

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DTE’s natural gas plant

Heat recovery steam generator

Gas turbine Generator Transformers

Generator Transformers

Source: DTE Energy

Heat recovery steam generator

Gas turbine

Steam turbine

Building

Transformers

The plant in East China Township is intended to replace some of the generation capacity that will be lost as DTE closes coal-fired plants.

ral gas plant to replace coal plants closing in the early 2020s,” Talberg said. “This plant has the best combination of operational, reliability, and economic attributes to fill this need for power and will help position Michigan for a successful transition to a cleaner energy future.” Trevor Lauer, DTE Electric’s president and COO, said the company plans to break ground on the plant in 2019 and flip the power plant’s switch during the second quarter of 2022. “We are really happy the MPSC approved the gas plant today. It will provide renewable, clean and affordable energy for Michigan” in the years to come, said Lauer, adding the gas plant won’t completely replace the shuttered coal-fired plants. Two renewable energy advocates condemned the approval. Becky Stanfield, Vote Solar’s senior director of western states, said the outcome was “very disappointing” and “everybody knows this isn’t the best decision for DTE customers.” Sam Gomberg, senior energy analyst for the Union of Concerned Scientists, said the union, Vote Solar and the Environmental Law and Policy Center plan to review the MPSC’s order this afternoon and decide on a possible appeal. “Given the availability of lower-cost clean energy alternatives, this decision exposes Michigan ratepayers to unnecessarily high rates, a litany of risks associated with fossil fuel dependence and significant levels of pollution and carbon emissions,” Gomberg said. Lauer said DTE plans to build additional renewable energy sources in the coming years. In remarks to DTE at the hearing, Lauer said, Talberg “pointed out improvements (DTE) could make with the process” of applying for the new gas plant. “She asked us to reflect on ways to improve. The image we hope to

BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit April 20-26. Under Chapter 11, a company files for reorganization.  Bronco Bowling Center LLC, 22323 Ryan Road, Warren, voluntary Chapter 11. Assets and liabilities are not available.  L.S. Restaurant LLC, 16550 Strathmoor, Detroit, voluntary Chapter 11. Assets and liabilities are not available.

project as company is not one of contentiousness.” Lauer acknowledged some of DTE’s briefs on the case could have been taken by opponents of the gas plant as criticism. “(The commission) found some (statements) inappropriate,” he said. The opposition groups said DTE could save customers more than $340 million by shelving the gas plant and instead investing in wind and solar, other renewable energy options, storage technologies and energy efficiency programs. By doing so, the groups said DTE would increase its renewable energy portfolio to 24 percent of generation from the 11 percent projected based on DTE regulatory filings, said Vote Solar, Union of Concerned Scientists and the Environmental Law and Policy Center. DTE has said in previous interviews with Crain’s and in commission reports that building the gas plant is the least costly option for customers, will help it reduce carbon emissions by 30 percent by 2030 and will replace some lost jobs due to coal plant closures in St. Clair County. The company says it wants to break ground on the project in 2019 and begin producing enough electricity to power 850,000 homes, which is 39 percent of its 2.2 million electric customers in Southeast Michigan. In a statement, St. Clair County Commissioner Jeff Bohm said the decision is good news for residents of the county. “The new, cleaner natural gas power plant will create hundreds of jobs and provide additional revenue that we can put toward improving our roads, schools and other essential services,” Bohm said. DTE plans to close three coal-fired plants at River Rouge, St. Clair and Trenton Channel between 2020 and 2023. DTE said in a 15-year energy plan that it also could need another gas plant to meet baseload power demand by 2030, but commissioners said Friday they hoped DTE could find other alternatives to gas-powered energy production. In late July 2017, DTE submitted its certificate of necessity for the gas plant, five months before a new state law went into effect last December. Last month, DTE said it plans to double its renewable energy capacity by the early 2020s. The Detroit-based energy company said it would spend $1.7 billion to add 1,000 megawatts of solar and wind power by 2022, doubling its current capacity and investments in renewable energy.

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 3 0 , 2 0 1 8

Licensed Beverage Experience

In Your Corner.

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

LinkedIn will establish a permanent office in downtown Detroit in the old Sanders building on Woodward Avenue owned by Bedrock LLC.

LinkedIn to open larger Detroit office in old Sanders building

All areas of alcoholic beverage regulatory matters, including licensing and enforcement, wholesale, distributor and importer provisions of the Michigan Liquor Control Code Representing resorts, hotels, restaurants, retail developers, brew pubs and microbreweries

By Kurt Nagl knagl@crain.com

LinkedIn is laying down permanent roots in Detroit and moving its team of 40 from a temporary space into the historic Sanders building, marking its first new U.S. office in 10 years. The Silicon Valley-based social media company has been operating in the downtown WeWork space since October and has been looking for a larger space in the city all the while. It decided on the 74,500-square-foot building at 1523 Woodward Ave., owned by Bedrock LLC. Renovations are under way and the company plans to open its new office within the next year, according to a post on its website. LinkedIn is also hiring ahead of its move. One position — for an account strategist — was posted as of this week.

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Ann Arbor

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Detroit

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Grand Haven

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Grand Rapids

■

Hastings

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Kalamazoo ■ Lansing

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Novi

Contact Chris Baker at cpbaker@varnumlaw.com

Need to know

JJIt’s LinkedIn’s first new U.S. office in 10 years JJRenovations under way; planned opening within the year JJCompany has been operating temporarily out of downtown WeWork space

The company’s staff in Detroit grew from 13 to nearly 40 since launching a local office. LaRon Johnson, lead for the Detroit office, told Crain’s in October that he expected the new office to house 120 employees. Terms of the lease were not disclosed. “LinkedIn knows more about the absolute importance of connectedness than anyone else, so it only made sense that they look to Detroit’s urban core for their next office,” Dan Gilbert, Bedrock founder and chairman, said in a statement. “LinkedIn’s move downtown is even more proof that Detroit’s tech scene is rapidly growing, bringing with it established companies and startups alike.” Crain's first reported in August that the office was heading downtown. The company’s Detroit team also plans to work with the Bingham Farms-based Midnight Golf Program as part of its commitment to area nonprofit work, it said in the post.

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OPINION COMMENTARY

EDITORIAL

Lift the gags in the pharmacy

t’s time to take the gags off pharmacists and end a practice that makes it a disadvantage to have health insurance. A push is underway in Lansing to free pharmacists to tell patients when there is a cheaper way to fill their prescriptions, and it deserves to succeed. A bill proposed by Rep. Mary Whiteford, a West Michigan Republican, would ban so-called “gag rules” in contracts between pharmacy benefit management companies and pharmacies. The way gag rules work is this: Pharmacy benefit management companies, the middle men in the system who negotiate drug prices between insurers and pharmacies, insert a requirement into contracts that bans pharmacists from telling patients when the cash price for medicines is cheaper than the price when processed through insurance. Often, patients will pay the full co-payment for drugs even if the cash price is lower than the co-pay. The pharmacy benefit manager typically pockets the difference, in a practice known as a “clawback.” This can also apply in high-deductible health plans, where patients are fronting the full cost for prescriptions until they hit a deductible that could be thousands of dollars. Under those plans, a simple generic drug that might cost $15 for a cash customer might cost $75 when the pharmacy processes the prescription through the patient’s insurance. Pharmacy benefit managers keep this hidden from patients by requiring pharmacists stay silent about the price differences when filling prescriptions. That the PBMs see a need for these “gag clauses” should tell you all you need to know. It’s an example of one the primary factors in the rise of health care costs: the abundance of middle men who claim to take cost out of the system but are really just looking to take their cut. These “gag clauses” get in the way of a competitive market for prescription drugs. That costs patients — and their employers — money. It’s difficult enough for patients to shop around on prescription prices. The gag clauses only make it worse. Adding transparency to the system is one way to blunt decades of increases in drug spending that have driven employers’ health care costs through the roof. Drug spending is expected to rise by 8 percent this year, according to the U.S. General Accounting Office. It’s time for this anticompetitive and opaque practice — which costs patients and their employers money while benefiting only the pharmacy benefit manager — to end. Several other states have passed bans. Michigan should join them, and soon.

In Detroit and Flint, two tales of emergency management

hen Kevyn Orr arrived in Detroit five years ago to be Gov. Rick Snyder’s emergency manager, the Washington, D.C., bankruptcy attorney described his mission of digging the city out of insolvency as “the Olympics of restructuring.” In Orr, Snyder and his team had drafted a gold medalist of sorts in corporate turnarounds. And Orr brought with him an expensive dream team of world-class bankruptcy attorneys from his Jones Day law firm, along with some of the best restructuring consultants and financial experts money could buy. The result of Snyder’s unprecedented takeover of the state’s largest city culminates Monday when the Detroit Financial Review Commission is set to vote to end its direct oversight of the city’s finances after Detroit has three Rick Snyder: Took achieved consecutive years two approaches of balanced budto Flint, Detroit. gets — a feat that seemed inconceivable in the spring of 2013. At the time Snyder was unleashing the Olympians to fix Detroit’s broken municipal government, his caretaker in Flint was making the disastrous decision to shut off its water supply from Detroit and temporarily draw drinking water from the corrosive Flint River. It’s a tale of two approaches the Snyder administration took to state intervention in two cities that were economically decimated by the abandonment of automakers and their middle-class workers. Detroit shed $7 billion in unfunded liabilities in bankruptcy, freeing up tens of millions of dollars to restore basic services and super-charge an economic revival that’s starting to spread beyond downtown and Midtown. Flint got lead-tainted water, indifference from state bureaucrats and a twoyear supply of bottled water. In Detroit, the city spent $170 million on bankruptcy attorneys and consul-

tants to begin fixing deep-seated municipal dysfunction, including $58 million for Orr’s law firm alone. In Flint, Snyder-appointed emergency managers Ed Kurtz and Darnell Earley switched the city’s drinking water source to save about $12 million a year, and then Earley and his successor, Gerald Ambrose, repeatedly refused to go back to Detroit’s water system, citing the $1 million a month extra cost the city couldn’t afford. The Snyder administration went along with the decisions of the hometown emergency managers put in charge of Flint’s future without much purpose beyond balancing the budget. And the emergency managers, who were government and business administrators and not chemists, seemingly didn’t know to question why corrosion control chemicals at an estimated annual cost of $55,000 weren’t being added to the treated Flint River water. Since the discovery of toxic lead in Flint’s water and the bloodstreams of its children, taxpayers have shelled out $350 million for the state’s response to the water crisis — nearly as much as the total amount spent on Detroit’s bankruptcy attorneys and consultants and the state’s share of the “grand bargain” to settle the case. “Flint did not have the enormous restructuring team to restructure it, and things did not get done, and things got missed,” said Bill Nowling, who served as Orr’s spokesman and is a longtime Snyder ally. Nowling, who was Snyder’s 2010 campaign press secretary, has studied the Flint crisis closely for a doctoral thesis he recently completed at Wayne State University. He had a front-row view of Detroit’s

bankruptcy and then was brought into the governor’s office in the winter of 2016 to deal with the crisis communication aftermath of Flint’s water emergency. Nowling says Snyder’s corporate management style, tapping a select number of cabinet members to oversee not just their own state department, but others, may have contributed to the epic breakdown in communications and lack of scrutiny from Lansing on why Flint’s water was brown and smelly. Snyder made some state departments “too big to manage,” Nowling said. As Flint’s water problems weren’t generating alarm among state officials in the winter of 2015, Snyder was in the midst of merging the departments of Community Health and Human Services into one mega-department led by Director Nick Lyon under the guise of an ill-named “River of Opportunity” governing approach to social services. Lyon is now fighting an involuntary manslaughter criminal charge stemming from the Legionnaires’ bacteria outbreak linked to the Flint River water that left 12 people dead. Nowling, managing director of Lambert Edwards & Associates’ Detroit office and a partner in the public relations firm, also points to Snyder’s mantra of working in “dog years” as another risk factor in Flint. Over the last seven years, Snyder has moved at a brisk pace to change state government, lower long-term liabilities and tackle festering issues like Detroit municipal government that his predecessors never dared to touch. But Snyder’s disruption culture also could explain why his top aides and emergency managers did not take time to push back on the so-called experts who told them the brown water spewing from Flint’s faucets was just fine. “They were moving in dog years in both Detroit and Flint,” Nowling said. “In Detroit, they had the bandwidth, the team that could do it. In Flint, they didn’t.” A mantra of some who seek to disrupt is “Move fast and break things.” In this case, Detroit got fixed, and Flint got broken.

even with an executive director representing the group. A lot of the players may feel this is overkill, and that the group is better off remaining informal and loosely structured. They may well be right. But if this group has a point of view, a more formal organization will help it make those points. It is a shame that the original Detroit Renaissance died, no doubt due to the aspirations of some folks who hoped to have a stronger voice in statewide policymaking.

The opposite was true. Their role and impact diminished almost overnight. The irony? All this seemed to happen just as Detroit was experiencing its very real renaissance. They seem to have abandoned ship just as the city was on the cusp of a very real and exciting recovery. Now we have a chance to see a reincarnation. It seems the perfect time to again give Detroit business a voice to promote its point of view. I look forward to a new organization arising from the ashes.

CHAD LIVENGOOD clivengood@crain.com

Time for a Detroit Renaissance 2.0

or reasons I still do not understand, the old Detroit Renaissance CEO group saw fit to abandon its purpose and morph it into a new statewide organization that has had little or no impact on either the state of Michigan or our city of Detroit. Ever since, I have been waiting for some group to pick up the mantle of a business organization representing the city. Unfortunately, none stepped forward to fill the void. But now, it looks like some folks have realized it is time to start a Detroit Renaissance 2.0 and begin

KEITH CRAIN Editor-in-chief

again with a business organization that can be a loud and focused voice for the interests of Detroit.

I understand a group of Detroit executives has been holding regular, informal meetings solely to discuss issues that face the business community in and around Detroit. It is certainly long overdue. Plenty of local, state and federal issues impact Detroit, and having an organization of local leaders working together is indispensable. Now that a number of local business executives seem committed to the idea, it probably makes sense to formalize this group with some sort of nonprofit organization, perhaps

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 3 0 , 2 0 1 8

The Platform buys Lakeshore Global building in New Center

By Kirk Pinho kpinho@crain.com

The Platform LLC has added another key property on the Grand Boulevard in Detroit’s New Center corridor to its portfolio by purchasing the building that houses Lakeshore Global. The building, at the northeast corner of Woodward Avenue and Grand Boulevard, is 240,000 square feet and sits on 1.5 acres. Lakeshore will remain in the property as part of Need the sale/leaseback to know deal, said Dan JJBuilding was Austin, a spokesdesigned by Albert man for The PlatKahn and built in form, which is early 20th century based in Detroit. The purchase JJLakeshore will price was not disremain in the closed. property as part of “The Platform the sale/leaseback will spruce the deal building up and JJThe Platform make a number of plans upgrades key upgrades. and aims for full Then, working occupancy, with JLL (brokerincluding retail age firm), The tenants Platform will reposition it for full occupancy, with Lakeshore Global remaining a key tenant,” he said, adding that it is about 60 percent occupied now. Colliers International Inc. will be responsible for leasing the ground-floor retail space to tenants, and Southfield-based Redico LLC will serve as the property manager, Austin said. The building was built in the early 20th century as a Ford sales office. It was designed by Albert Kahn but a new facade over its original terra cotta was installed in the late 1960s. Sky Group Grand LLC, which is registered to Stacey Dogonski, paid $2.1 million for the

UM forecast: Oakland County to add 42,000 jobs by 2020 By Kurt Nagl knagl@crain.com

Oakland County is expected to add more than 42,000 jobs from 2018 to 2020, according to an annual forecast by University of Michigan economists. Job growth in the county is expected to average 1.9 percent per year, with 12,200 new jobs this year, 14,000 the next year and 15,800 in 2020. “Notably, growth has continued recently even with slight declines in Detroit Three vehicle sales in each of the past two years,” Gabriel Ehrlich, director of the UM Research Seminar in Quantitative Economics, said in a written statement. Ehrlich conducted the study with senior research specialist Don Grimes. The report was presented at a luncheon in Troy on Thursday hosted by the county. The county’s unemployment rate last year, 3.5 percent, is expected to drop to 3.4 percent this year, 2.9 percent next year and 2.6 percent in 2020. The national unemployment rate was 4.1 percent through March.

“The Platform will spruce the building up and make a number of key upgrades.” Dan Austin

building in May 2005, according to CoStar Group Inc., a Washington, D.C.based real estate information service, a rate of about $8.75 per square foot. Since its formation two years ago, The Platform, which is led by Peter

Cummings and Dietrich Knoer, has been amassing a large real estate portfolio around Grand Boulevard but also in several neighborhoods, including Islandview, northwest Detroit and the Livernois and McNichols area, among others. It has been building new residential and mixed-use buildings and plans a series of redevelopments across the city. Nearby, The Platform also owns the Fisher Building, Albert Kahn Building and the building perhaps best known for its colorful rainbow mural on its western side.

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The Lakeshore Global building at Woodward Avenue and Grand Boulevard in Detroit has been sold.

KIRK PINHO/CRAIN’S DETROIT BUSINESS

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 3 0 , 2 0 1 8

FOCUS REAL ESTATE

Strong automotive market spurs industrial development Metro Detroit industrial market

Charts show the percentage of total vacancies and the average industrial rental rates of industrial property in metro Detroit for the first quarters of 2000-2018.

5.30

5.22

2004

5.41

5.28 2003

5.21

5.07 $

4.84 $

4.77 $

4.53 2014

4.49 2013

4.45 2011

2010

4.65

4.89

5.04

4.44

4.36

5.5 5.1%

$4.60

6.4%

4.91

5.06

5.03 $

9.4

$4.80 %

12.7%

$5.00

8 7

$5.20

7.7%

$5.40

10.8%

11.4%

$5.60

8.5%

$5.80

9.7%

11.0%

10.6%

11.6%

12.2%

13.5%

14.9%

Average rent per square foot 15.6%

Total vacancy rate

$4.40

4 $4.20

3 2

$4.00

1 2018

2017

2016

2015

2012

2009

2007

2008

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2006

2002

2001

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GRAPHIC BY LISA SAWYER/CRAIN’S DETROIT BUSINESS

2000

$3.80

0 2001

The industrial property market is charging ahead at a rapid speed as large leases and developments dominate metro Detroit. While new offices get considerable attention, one of the driving forces in the Detroit real estate market is how well industrial space is performing. Need In 2017, there to know was a 50 per From 2016 to cent increase 2017 there was a from 2016 in the 50 percent number of large increase in the leases of number of large 150,000 square leases of 150,000 feet or more. square feet or That signifies a more healthy market and in some  Activity can be cases is helping attributed to the trigger a specuhigh-performing lative building automotive rush as compaindustry nies like Ashley  Momentum has Capital and continued in first others are putquarter of this year ting up new properties in Hazel Park, Auburn Hills and elsewhere. Much of the activity can be attributed to the automotive industry, which when performing well ripples out to automotive suppliers and other companies, causing a need for more space.

5.6%

kpinho@crain.com

2000

By Kirk Pinho

Source: Newmark Knight Frank

SEE INDUSTRIAL, PAGE 11 GETTY IMAGES/ISTOCKPHOTO

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 3 0 , 2 0 1 8

Q&A

DEGC’s new president ‘laser-focused’ on Detroit’s future

Kevin Johnson, 53, has been named the new president and CEO of the Detroit Economic Growth Corp. following a year-long search by Detroit’s economic development powerhouse to replace Rodrick Miller. Johnson, a graduate of South Carolina State University, comes to Detroit in June from Invest Atlanta, where he is senior vice president for economic development. He has also held economic development posiKevin Johnson: tions in Arizona, Has vision for Florida and Detroit’s future. North Carolina. He was part of the team five years ago that lured PulteGroup Inc., the homebuilder formerly based in Bloomfield Hills, to Georgia’s largest city and helped land a $100 million new headquarters by Porsche Cars North America Inc., among other developments. He spoke with Crain’s reporter Kirk Pinho last week about his work in Atlanta and his priorities and vision for the DEGC. Give us an overview of your work in Atlanta. Were you involved in the PulteGroup deal a few years back?

I did work with Pulte when they relocated their operations to Atlanta. (Former CEO) Richard Dugas and his team were a part of that whole relocation and we felt very fortunate about that operation relocating to Atlanta. It felt good that we did what any city would do when you approach a quality company like Pulte. We were very steady in what we were trying to accomplish. What are some other big projects you’ve been involved in down there?

It’s easy to talk about projects that we have worked on. I think the most important thing for us in the success that we’ve had here in Atlanta has been a steady and consistent commitment from our leadership, both political leadership as well as our governance leadership in Invest Atlanta, that we were going to be about the business of creating an economic development system where we aggressively sold Atlanta’s assets around the world. We felt good about those assets and how they impact business, and from that came an upstream benefit to working with companies like NCR Corp. and their relocation from the suburbs of Atlanta to downtown. Porsche Cars North America and their growth here in Atlanta, given their North American headquarters being out by our airport. Even startup companies that we worked with to begin and grow and prosper their businesses here, all of that was part of bigger and more sustained strategies. Boston Consulting Group last year was a company that we worked closely with when it came down between us and Dallas because we tried to create an atmosphere that allowed these projects to come to bear. Atlanta is home to 13 Fortune 500 compa-

SPECIAL REPORT: REAL ESTATE

nies and they set a tone for other companies that are looking. What are your priorities for the DEGC moving forward?

What I see is that Detroit has all of the prerequisite assets to be competitive in a very competitive market. There is a competition for economic growth and development, not just domestically but internationally. Our responsibility at DEGC, and what I hope we will be able to do, is to make sure that we can be in a competitive posture to attract the jobs of choice. When you can attract the jobs of choice, versus being selected for things that may not be what you choose, that’s a different conversation and a different outcome. We want to be where we are positioning Detroit as a place where the jobs that we want for Detroiters that need those jobs are readily available. That’s what I’m going to focus on, and I know our team is going to as well. Let me give you an example. Here in Atlanta, we have targeted industry clusters that we focus on. Those are connected to the capacity and capability that we determine our workforce is well-positioned to support. Those are financial technology, logistics, film and television, and others. Those come out of a strategic initiative. Those are jobs of choice. If you align your industry clusters, your workforce, the outcome is that these are the jobs our citizens are well-positioned to support. What sort of parallels do you see between Detroit and Atlanta?

One of the things I see very clearly is that our leadership, starting with our board and the mayor of Detroit, are as laser-focused on what their expectations are about what Detroit’s future looks like as we are and have been here in Atlanta. All cities came out of the recession trying to figure out what’s next. Atlanta did. Cleveland did. Dallas did. All of us came out of that going, “How do we approach this new economy coming out of this?” The parallels between Detroit and Atlanta are that we went through an industry cluster analysis; Detroit has done that. We have a pretty aggressive mayor here (in Atlanta). Detroit has that. There is a commitment from the board of directors to supply us with all we need to be competitive in this economy, and Detroit has that. Our job is to activate all of those things and see where we can make some significant inroads into the future we are trying to define here. Anything else to add?

I think the only thing I would say is that my expectation, is that our team’s expectation, is for us to compete and make sure that the infrastructure that we need to be competitive, both locally and from a programmatic perspective, is as solid as we can make it. With that, we are poised for some really unique opportunities in the future. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

LIVONIA CORPORATE CENTER

Properties such as the Livonia Corporate Center are seeing activity, with Penske Logistics taking 590,000 square feet, Experi-Metal Inc. taking 182,000 square feet and Landsberg Orora taking 81,000.

INDUSTRIAL FROM PAGE 10

“The vacancy rate is just silly,” said Paul Hoge, agent/broker at Southfield-based Signature Associates Inc. “I’ve been doing this (since) 1981. In some communities, it’s under 3 percent. It makes it very difficult to find product for customers. “You’ve had sustained years of high-level car sales and no matter how much we try and diversify our state’s economy, it’s still driven by the health of the auto industry,” Hoge said. According to a first-quarter market report from the local office of Newmark Knight Frank, a brokerage firm, the industrial market has 388 million square feet with a vacancy rate of 5.1 percent and an average asking rent of $5.06 per square foot. A year ago, there was a 5.5 percent vacancy rate and the average asking rent was $4.84 per

square foot. More than 8 million square feet of new space has been added to the market in the last year, according to the report, with 2.58 million added in the fourth quarter alone. Last year, there were 29 deals of 150,000 square feet or more averaging 201,781 square feet for a total of 5.85 million square feet, compared to 19 deals in 2016 of that size. The average was 459,282 square feet for a total of 8.27 million square feet. The activity last year was also geographically diverse, with large leases inked in Dearborn, Farmington Hills, Pontiac, Warren, Allen Park, Mt. Clemens and Highland Park, among others, with companies like Comau, Keystone Automotive Industries, Piston Automotive Group and Penske Logistics LLC taking new space or renewing or expanding. Even into the first quarter of this year, properties such as the Livonia Corporate Center are seeing activity, with Penske Logistics taking 590,000 square

feet, Experi-Metal Inc. taking 182,000 square feet and Landsberg Orora taking 81,000. In Auburn Hills, Westcast Industries Inc. took 128,000 square feet at 3300 University Drive and Esys Corp. took 124,000 at 1000 Brown. “We still remain optimistic even though we may not see the millions of square feet of new construction we saw in the years before,” said Dan Labes, an industrial real estate expert who is senior managing director in the Southfield office of Newmark Knight Frank. “Everyone is still very optimistic that we are still moving forward. For three years they have been saying we are in the ninth inning (of the strong market trends),” Labes said. “So are we in extra innings now? The suppliers are all doing well and auto sales are still strong. I don’t see a reason why there should be any slowdown.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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 3 0 , 2 0 1 8

CRAIN'S LIST: LOCAL SALES

Ranked by price Rank

1 2 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Buyer

Seller

Broker/advisers

Square feet

Acres

Price ($000,000)

Golden Realty & Management LLC, New York City

Sovereign Partners LLC, New York City

CBRE Inc.

470,475

$74.0

Hayman Co., Southfield

Osprey Management Company, Brighton

CBRE Inc., Hayman Co.

732,000

$55.0

MVP REIT Inc., San Diego

Center Parking Associates LP, Bloomfield Hills

CBRE Inc.

382,470

$55.0

Hillside Realty Investments, Plymouth Township

McKinley Inc., Ann Arbor

CBRE Inc.

189,905

$50.0

United Shore Financial Services LLC, Troy

Sovereign Partners LLC, New York City

Signature Associates Inc.

593,934

$40.0

Bedrock LLC, Detroit

Heico Cos., Chicago

Bedrock LLC, Cushman & Wakefield

392,000

$38.5

Beaumont Health, Southfield

Iron Point Partners LLC, Dallas, Washington, D.C.

Core Partners LLC

660,000

$38.0

ABB Inc., Sweden

Randal Bellestri, Oxford Township

JLL

542,800

$37.0

CitiGroup Inc., New York City

Signature Associates Inc., Cushman & Wakefield

247,210

$35.5

Group RMC Corp., New York City

Northwestern Mutual, Milwaukee

CBRE Inc.

349,625

$33.5

Wickfield Properties, Ann Arbor

Vesper Holdings LLC, New York City

CBRE Inc.

201,172

$28.1

Birmingham Place, Birmingham

Lorient Capital LLC, Birmingham

ValStone Partners LLC, Birmingham

Signature Associates Inc.

107,679

$28.0

Arboretum III, Farmington Hills

U.S. Realty Advisors LLC, New York City

Friedman Integrated Real Estate Solutions LLC, Farmington Hills

Colliers International Inc.

171,205

$26.5

789 E. Eisenhower, Ann Arbor

Cambridge Information Group LLC, Equity Commonwealth Management Bethesda, Md. LLC, Chicago

CBRE Inc.

136,961

$24.9

Building

Bank of America Plaza, Troy

Troy Officentre (now Troy PentaCentre), Troy 414 Renaissance Drive West, Detroit

McKinley Towne Center, Liberty Square, Ann Arbor 585 South Blvd., Pontiac

Buhl Building, Buhl Building parking deck, Detroit First Center Office Plaza, Southfield

1250 Brown Road, Auburn Hills

6300 Interfirst Drive, Pittsfield Township Thomson Reuters, Stamford, Conn.

Wilshire Plaza, Troy

Harbor House Apartments, Ann Arbor

Angelo, Gordon & Co., New York City

Kojaian Management Corp., Bloomfield Hills

CBRE Inc.

14,398

$24.5

Edge Realty LLC, Oak Park; Gibralt Capital Corp., Vancouver

Shamrock Capital Advisors LLC, Los Angeles

Signature Associates Inc.

489,000

$23.1

Moschouris Management LLC, Royal Oak

Brixmor Property Group, New York City

CBRE Inc.

175,503

$22.1

Amson Nassar Development, Birmingham

Faurecia Interior Systems, Inc., Paris

Colliers International Inc.

301,282

$20.0

First Distribution Building, Romulus

STAG Industrial Holdings LLC, Boston

American National Insurance Co., League City, Texas

Newmark Knight Frank

302,832

$19.4

Michigan Motion Picture Studios LLC land, Pontiac

Williams International Co. LLC, Commerce Township

Linden Nelson, Birmingham

Signature Associates Inc.

110

$18.0

15030 23 Mile Road, Shelby Township

Century Plastics Inc., Shelby Township

Patricia Winkle, Chesterfield Township

Newmark Knight Frank, L. Mason Capitani Inc.

303,865

$17.4

12100 Inkster Road, Redford Township

STAG Industrial Holdings LLC, Boston

Schostak Bros. & Co., Livonia

Newmark Knight Frank

290,105

$16.5

12 Mile Road land at Taft, Novi

Hino Motor Sales USA LLC, Novi

Premier Realty, Troy

CBRE Inc.

$16.3

1399 Pacific Drive, Auburn Hills

Amson Nassar Development, Birmingham

RDB Industries Inc., Leonard

CBRE Inc., National Realty Centers

176,674

$13.7

21001, 21111 Van Born Road, Taylor

Burton-Katzman, Bingham Farms

Masco Corp., Livonia

Colliers International Inc.

556,994

$11.6

2000 E. Taylor Road, Auburn Hills

Time Equities Inc., New York City

RGIS LLC, Auburn Hills

JLL

179,560

$11.3

Promanas Group, Ann Arbor

Dembs Roth Management Co. LP, Farmington Hills

Signature Associates Inc

292,000

$10.5

2020 Taylor Road, Auburn Hills

3000 University Drive, Auburn Hills

Hall Road Crossing, Shelby Township

17801 E. 14 Mile Road, Fraser

Redford Trade Center, Redford Township

List is based on information from CoStar Group Inc., Crain's research, Loveland Technologies, public land records, from published information or submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. LIST RESEARCHED BY KIRK PINHO

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 3 0 , 2 0 1 8

CRAIN'S LIST: INDUSTRIAL LEASES Rank

Building

Ranked by square feet

Owner, owner city

Tenant

Broker

Square feet

Comau LLC

Signature Associates Inc.

317,000

6837 Wyoming Avenue, Dearborn

REZ Property LLC, Dearborn

West Tech Park, Farmington Hills

ETC Capital LLC, Farmington Hills

GHD Services Inc.

CBRE Inc., Signature Associates Inc.

288,940

36555 Ecorse Road, Romulus

Johnson Enterprises LLC, Romulus

Keystone Automotive Industries Inc.

Signature Associates Inc., CBRE Inc.

268,800

660 South Boulevard East, Pontiac

Industrial Realty Group LLC, Los Angeles

Mahindra North American Technical Center Inc.

Colliers International Inc.

265,762

Tri-County Commerce Center, Hazel Park

Ashley Capital, New York City

LG Electronics USA Inc.

Signature Associates Inc., CBRE Inc.

238,016

Pinnacle Logistics Center, Redford Township B

General Development Co. LLC, Premier Equity, Southfield

Piston Automotive Group

Friedman Integrated Real Estate Solutions LLC, UGL Equis

236,947

2500 Enterprise Drive, Allen Park C

Metro International Trade Services LLC, Allen Park

U.S. Postal Service

Friedman Integrated Real Estate Solutions, JLL

235,137

Warren Business Center, Warren D

Ashley Capital, New York City

Magna Modular Systems

Signature Associates Inc.

234,158

Livonia Distribution Center, Livonia

Ashley Capital, New York City

Penske Logistics LLC

CBRE, Inc., Vogel Advisors

224,358

Metro International Trade Services LLC, Allen Park

FCA US LLC

Signature Associates, Cushman & Wakefield

222,711

W.P. Carey Inc., New York City

Kerr Corp.

Colliers International Inc.

220,000

Stuart Frankel Development Co., Troy

Yanfeng

CBRE Inc.

219,643

U.S. Real Property LLC, Wixom

Thai Summit America Corp.

Signature Associates Inc.

202,000

Burroughs Payment Systems, Plymouth

Renaissance Global Logistics LLC

Signature Associates Inc., CBRE Inc.

200,000

6 7 8 9 10

151 Lafayette St., Mt. Clemens

28200 Wick Road, Romulus

Oakland Park, Highland Park B

Oak Creek Corporate Center, Wixom

41100 Plymouth Road, Plymouth

15500-15502 E. 12 Mile Road, Roseville

Hofley Manufacturing Co., Roseville

Global Roll Forming Systems LLC

CBRE Inc.

195,355

Oak Creek Corporate Center, Wixom B

U.S. Real Property LLC, Wixom

Eberspaecher Exhaust Technology of the Americas

Colliers International Inc.

193,705

Livonia Corporate Center, Livonia

Ashley Capital, New York City

Experi-Metal Inc.

Newmark Knight Frank, Signature Associates

182,015

Crossroads Distribution Center South, Belleville B

Ashley Capital, New York City

FedEx Smartpost Inc.

Ashley Capital

177,320

Amson Development, Birmingham

AM General

JLL, CBRE Inc.

176,674

Neal Maclean, Royal Oak

International Marketing Specialists Inc.

Newmark Knight Frank

168,231

Romulus Business Center, Romulus B

Ashley Capital, New York City

Progressive Distribution Centers

Signature Associates Inc.

158,154

Brownstown Business Center, Brownstown Township

Ashley Capital, New York City

Amazon.com

Signature Associates Inc., Newmark Knight Frank

156,645

Romulus Business Center, Romulus

Ashley Capital, New York City

Precision MHW LLC

CBRE Inc., Signature Associates Inc.

155,625

Van Buren Business Center, Van Buren Township

Ashley Capital, New York City

Piston Automotive Group

CBRE Inc.

154,530

13301 Stephens Road, Warren

STAG Industrial Holdings LLC, Boston

Anji Logistics USA Inc.

L. Mason Capitani Inc., Newmark Knight Frank

154,377

14253 Frazho Road, Warren B

Ashley Capital, New York City

Magna Modular Systems LLC

Signature Associates Inc., Cushman & Wakefield

152,814

C-III Asset Management LLC, Irving, Texas

Mahindra North American Technical Center Inc.

Colliers International Inc., CBRE Inc.

151,200

Industrial Realty Group LLC, Los Angeles

Automotive Media LLC

Signature Associates Inc.

151,074

Ashley Capital, New York City

Precision MHW LLC

Signature Associates Inc., CBRE Inc

150,474

16 17 18 19

1399 Pacific Drive, Auburn Hills

6101 McKean Road, Ypsilanti

26 27

275 Rex Blvd., Auburn Hills

2040 Centerpoint Parkway, Pontiac

Van Buren Business Center, Van Buren Township

List is based on information from CoStar Group Inc., Crain's research, Loveland Technologies, public land records, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted.

B Lease renewal. C Sublease. D Renewal plus expansion. LIST RESEARCHED BY KIRK PINHO

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 3 0 , 2 0 1 8

CRAIN'S LIST: OFFICE LEASES

Ranked by square feet Rank Building

Owner, owner city

Tenant

Broker

Square feet

Masco Corp., Livonia

Ford Motor Co.

Colliers International Inc., CBRE Inc.

415,606

Granite REIT America LLC, Toronto

Hanon Systems USA Inc.

CBRE Inc.

216,830

AF Jonna Development LLC, Bloomfield Hills

Autoliv ASP Inc.

Signature Associates Inc., The Jonna Cos.

179,300

Oxford Cos., Ann Arbor

The Regents of the University of Michigan

Signature Associates Inc.

125,815

Edge Realty LLC, Oak Park; Gibralt Capital Corp. Vancouver

DXC Technology

CBRE Inc.

122,275

21001 Van Born Road, Taylor B

Haggerty Corridor Corporate Park, Novi

26545 American Drive, Southfield

3621 South State Street, Ann Arbor C

3000 University Drive, Auburn Hills

Northville Tech, Northville C

Redico LLC, Southfield

Hella Corporate Center USA. Inc.

Redico LLC, Mohr Partners

115,000

Grace Lake Corporate Center, Belleville

Sovereign Partners LLC, New York City

General Electric Co.

CBRE Inc.

109,432

Troy Concept Center, Troy C

Clarion Partners, New York City

Valeo North America Inc.

CBRE Inc.

103,826

Northville Technology Park, Northville Township

Redico LLC, Southfield

Tenneco Automotive Operating Company

CBRE Inc.

100,000

Twelve Oaks Professional Center, Novi

C&S Twelve Mile Center LLC, Bloomfield Hills

Yanfeng US Auto Interior Systems LLC

CBRE Inc.

93,194

Stroh River Place, Detroit C

The Stroh Cos., Detroit

U.S. General Services Administration

CBRE Inc.

79,827

Cross Creek Parkway, Auburn Hills

General Development Co. LLC, Southfield

Hutchinson Corp.

Signature Associates Inc., General Development Co. LLC

60,000

Galleria Officentre, Southfield

Friedman Integrated Real Estate Solutions LLC, Farmington Hills; Taconic Capital, New York City

Adient US LLC

Signature Associates Inc., CBRE Inc.

58,132

The Kogan Cos., Bloomfield Hills

Bank of America

JLL

49,716

Skymark Properties Corp., North York, Ontario

Stefanini

Hayman Co., CBRE Inc.

49,071

Bloomwood Office Building,

14 Bloomfield Hills 15

Metro Office Complex, Southfield

One Campus Martius, Detroit

Bedrock LLC, Meridian Health, Detroit

Microsoft Corp.

Bedrock LLC, Cushman & Wakefield

45,000

2311 Green Road, Ann Arbor D

First Martin Corp., Ann Arbor

Toyota Research Institute Inc.

Colliers International Inc.

44,529

Troy Technology Park, Troy C

Friedman Integrated Real Estate Solutions LLC, Farmington Hills

Ally Financial

JLL

43,272

2000 East Taylor Road, Auburn Hills

Time Equities Inc., New York City

RGIS

JLL

42,122

Troy Place, Troy E

Nemer Property Group, Southfield

GP Strategies Corporation

Newmark Knight Frank

41,566

Southfield Town Center, Southfield

601W Cos., New York City

Society of Manufacturing Engineers

Transwestern, JLL

39,000

Trott Financial, Southfield C

Redico LLC, Southfield

Trott Law

Redico LLC, Signature Associates Inc.

38,523

Bedrock LLC, Detroit

Quicken Loans Inc.

Bedrock LLC

38,200

Former Detroit Free Press building,

23 Detroit 24

Lake Pointe Office Centre, Novi F

JFK Investment Co. LLC, Bloomfield Hills

Autodesk Inc.

Colliers International Inc.

36,323

Northridge Office Center, Troy C

The Choice Group Inc., Troy

Geometric Americas Inc.

CBRE Inc.

36,017

Regency Centre, Novi C

Arie Leibovitz, Southfield

Howa USA Holdings Inc.

Colliers International Inc.

34,285

City Center, Troy

Unicorp National Developments Inc., Orlando

Trio Solutions Inc.

CBRE Inc., Transwestern

33,397

Earhart Corporate Center, Ann Arbor

Vereit Inc., Phoenix

Home Point Financial Corp.

Signature Associates Inc., JLL, Scotland Wright Associates

33,309

Troy PentaCentre, Troy

Hayman Co., Southfield

S&P Data

Hayman Co., Friedman Integrated Real Estate Solutions LLC, CBRE Inc.

32,204

Fisher Building, Detroit C

The Platform, Detroit

Detroit Radio LLC

Cushman & Wakefield, JLL

31,598

Chrysler House, Detroit

Bedrock LLC, Detroit

In-House Realty

Bedrock LLC

30,000

List is based on information from CoStar Group Inc., Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted.

B New lease C Lease renewal. D Expansion/extension. E New lease. F Lease extension. LIST RESEARCHED BY KIRK PINHO

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 3 0 , 2 0 1 8

CRAIN'S LIST: LARGEST GENERAL CONTRACTORS

Ranked by 2017 revenue Rank

1 2

Company Address Phone; website

Top local executive(s)

Revenue ($000,000) 2017/2016

Value of new contracts ($000,000) 2017/2016

Local employees Jan. 2018

Total new projects 2017/2016

Southeast Michigan projects started 2017

Barton Malow Co. 26500 American Drive, Southfield 48034 (248) 436-5000; www.bartonmalow.com

Ryan Maibach president and CEO

$2,591.0 $2,425.5

$1,302.4 $1,823.8

1,324

340 283

227

Belfor Holdings Inc.

Sheldon Yellen CEO

1,794.8 1,590.2

1,746.7 1,524.9

2,233

141,912 102,000

3,763

185 Oakland Ave., Suite 150, Birmingham 48009 (248) 594-1144; www.belfor.com

Walbridge 777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com

John Rakolta Jr. chairman and CEO

1,500.0 1,450.0

1,291.0 1,440.0

347

159 158

Commercial Contracting Group Inc. 4260 N. Atlantic Blvd., Auburn Hills 48326 (248) 209-0500; www.cccnetwork.com

Stephen Fragnoli president and CEO

480.0 298.0

392.1 NA

165

NA NA

Aristeo Construction Co. 12811 Farmington Road, Livonia 48150 (734) 427-9111; www.aristeo.com

Joseph Aristeo president

448.6 402.8

556.8 354.0

425

430 390

Ronald Staley, senior vice president, Southeast Michigan operations

305.9 100.0

645.3 830.5

164 104

The Christman Co. The Fisher Building, 3011 W. Grand Blvd., Suite 2600, Detroit 48202-3030 (313) 908-6060; www.christmanco.com Roncelli Inc. 6471 Metropolitan Parkway, Sterling Heights 48312 (586) 264-2060; www.roncelli-inc.com

Gary Roncelli chairman and CEO Thomas Wickersham president and COO Frank Venegas Jr. chairman and CEO

281.0 235.0

294.0 280.0

232

88 85

276.5 273.3

249.2 245.9

378

887 743

887

7 8

Ideal Contracting 2525 Clark St., Detroit 48209 (313) 843-8000; www.idealcontracting.com

David Kelly vice president and general manager

233.9 108.7

189.9 316.2

34 50

Turner Construction Co. 535 Griswold St., Suite 1525, Detroit 48226 (313) 596-0500; www.turnerconstruction.com/office-network/ detroit

Clark Construction Co. 3535 Moores River Drive, Lansing 48911 (517) 372-0940; www.clarkcc.com

Charles Clark CEO

200.0 238.3

NA 218.0

NA 22

Frank Rewold and Son Inc. 333 E. Second St., Rochester 48307 (248) 651-7242; www.frankrewold.com

Frank Rewold president and CEO

182.1 69.5

250.0 211.7

28 29

Dearborn Mid-West Co. 20334 Superior Road, Taylor 48180 (734) 288-4400; www.dmwcc.com

Jeff Homenik president and CEO

177.0 172.0

NA NA

165

NA NA

167.0 203.7

191.0 253.0

170 225

162.0 135.0

154.4 173.4

200

21 25

The Colasanti Cos. 24500 Wood Court, Macomb Township 48042 (586) 598-9700; www.colasantigroup.com

Todd Sachse CEO and founder Steve Berlage president and COO Carey Colasanti CEO Pat Wysocki president Sam Bahou business group leader

165

Sachse Construction and Development Co. LLC 1528 Woodward Ave., Suite 600, Detroit 48226 (313) 481-8200; www.sachseconstruction.com

158.9 253.3

120.0 43.4

100

134 128

Walsh Construction Co. 3011 W. Grand Blvd., Suite 2300, Detroit 48202 (313) 873-6600; www.walshgroup.com

George W. Auch Co. (dba Auch Construction) 735 S. Paddock St., Pontiac 48341 (248) 334-2000; www.auchconstruction.com

Vincent DeLeonardis president and CEO

150.2 172.8

349.0 271.5

105

122 126

122

Oliver/Hatcher Construction and Development Inc. 27333 Meadowbrook Road, Suite 100, Novi 48377 (248) 374-1100; www.oliverhatcher.com

Paul Hatcher president Paul Oliver principal David Burnley president/CEO

147.2 86.7

50.4 79.0

NA NA

145.0 160.0

NA 103.0

NA 8

17 18

Devon Industrial Group 535 Griswold St., Suite 2050, Detroit 48226 (313) 221-1600; www.devonindustrial.com

Alberici Constructors Inc. 26711 Northwestern Hwy. Suite 255, Southfield 48033 (734) 367-2500; www.alberici.com

Mark Okroy vice president and general manager

142.6 106.6

33.2 85.2

6 13

DeMaria 3031 W. Grand Blvd., Suite 624, Detroit 48202-3008 (313) 870-2800; www.demariabuild.com

Joseph DeMaria Jr. CEO Anthony DeMaria president Ryan Marsh president and CEO

102.5 124.1

103.1 86.3

120

36 44

97.0 90.0

NA NA

20 21

Marsh Construction (T.H. Marsh) 100 W. Long Lake Road, Suite 200, Bloomfield Hills 48304 (248) 586-4130; www.thmarsh.com

Spence Brothers 4130 Varsity Drive, Ann Arbor 48180 (734) 213-6033; www.spencebrothers.com

Herbert Spence III president/CEO

90.4 35.4

45.0 97.3

34 59

C.E. Gleeson Constructors Inc. 984 Livernois, Troy 48083 (248) 647-5500; www.gleesonconstructors.com

Charles E. Gleeson II president and CEO

81.0 79.0

115.0 89.0

34 27

Kirco Manix 101 W. Big Beaver, Suite 200, Troy 48084 (248) 354-5100; www.kircomanix.com

Douglas Manix president

78.0 96.0

65.0 90.0

20 25

O'Brien Construction Inc. 966 Livernois Road, Troy 48083 (248) 334-2470; www.obriencc.com

Timothy O'Brien president

65.2 NA

146.7 NA

10 NA

This list of general contractors is a compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Southeast Michigan office. Actual revenue figures may vary. NA = not available. 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 3 0 , 2 0 1 8

CALENDAR

DEALS & DETAILS

MONDAY, APRIL 30 Technology in Industry Reveal. 8-11:30 a.m. Automation Alley. Guide to Industry 4.0 adoption with observations, recommendations and action items to help manufacturers keep pace with rapid technological changes. Detroit Institute of Arts. $50 members; $75 nonmembers. Contact: podsiadlikl@automationalley.com

THURSDAY, MAY 3 Digital Marketing Secrets Revealed. 7:30-11:30 a.m. (rescheduled from March 22). Detroit Regional Chamber. Digital marketing leaders from the Detroit region will look at the current digital marketing landscape. Greektown Casino-Hotel. $55 members, $99 nonmembers. Contact: Jim Connarn, phone: (313) 596-0391; website: detroitchamber. com/digital-marketing

UPCOMING EVENTS The Augmented Workforce: Michigan Designing for the Future. 7:3011:30 a.m. May 11. Robotics and artificial intelligence could reshape multiple parts of society, and profoundly reshape the path to income mobility and growth. Speakers include: Carla Bailo, president and CEO, Center for Automotive Research; Louay Chamra, dean, OU School of

eas of nonprofit management.. Walsh College. $60 members; $110 nonmembers. Contact: Jessica Minnick, email: theteam@troychamber.com; website: t r o y c h a m b e r. w p e n g i n e . c o m / events/13th-annual-nonprofit-management-conference Tom Kelly

Rashida Thomas

Engineering and Computer Science; Jeremy Hendges, deputy director, Michigan Talent and Economic Development; Andy Hove, president and CEO, AM General; Tom Kelly, executive director and CEO, Automation Alley; Jason Lee, executive director, Grow Detroit’s Young Talent; Mary Alice McCarty, director, the Center on Education and Skills at New America; Kristin Sharp, executive director, Shift: The Commission on Work, Workers and Technology; Rashida Thomas, director, Workforce Development and Education, Focus:Hope; and Michele Economou Ursete, executive director, Workforce Intelligence Network. Oakland University School of Engineering and Computer Science. Free. Website: newamerica.org 13th Annual Nonprofit Management Conference. 8 a.m.-3:10 p.m. May 17. Troy Chamber of Commerce. Training for nonprofit professionals, board members and volunteers through breakout sessions on core ar-

Women in Blue Celebration. 8-9:30 a.m. May 23. Detroit Public Safety Foundation. A celebration of the women within the Detroit Police Department, Detroit Fire and EMS and the programs and initiatives taking place to protect women and children in the community. A portion of all individual ticket sales will support the investigation and prosecution of rapists identified by backlogged rape test kits. Judge Rosemarie Aquilina, who presided over the Larry Nassar abuse trial, will be the keynote speaker. A Women in Blue Officer of the Year and Women in Blue Firefighter of the Year will also be recognized at the event. MGM Grand Detroit Grand Ballroom. $125. Contact: Carter Drewry, phone: (313) 628-2169; email: cdrewry@detroitpublicsafety.org; website: detroitpublicsafety.org To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event.”

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

MANUFACTURING Hari Menon

Matt Bell

Quality Manager

Chief Technology Officer

Lucerne International

L. Scott Vallee, Jr. Creative Director

GroupeSTAHL GroupeSTAHL, a global leader in the garment decoration industry, has hired L. Scott Vallee, Jr. as creative director. Vallee will oversee the development and refinement of the GroupeSTAHL brand, online presence, global capabilities and corporate storytelling. He comes to GroupeSTAHL with more than 10 years of experience in marketing and creative direction for brands like Oceanspray, Makerbot, Verizon, PepsiCo, Electrolux and Degree Men. Vallee holds a MFA from The College of Creative Studies.

TELECOMMUNICATIONS

Lucerne International is pleased to welcome Hari Menon as the newlyappointed Quality Manager. Hari will be responsible for the development of Operational Quality Systems, implementation of IATF & APQP, and directing the quality assurance program. Hari brings a wealth of knowledge and experience with over 23 years with General Motors and as a consultant with OM Group, LLC. He is also the author of the book TQM in New Product Manufacturing.

WOW! Internet Cable and Phone Matt is an engineering, operations and technology leader with more than 20 years of telecommunications industry experience. As chief technology officer, he will be responsible for overseeing all aspects of WOW!’s residential and business products. Matt will drive the development of the WOW! technology roadmap to fulfill WOW!’s mission to provide best-in-class products and services that matter most to our customers.

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

ACQUISITIONS & MERGERS J Lambert, Edwards & Associates, Detroit, a public relations agency, has acquired Owen Blicksilver Public Relations Inc., New York, a financial communications firm. Websites: lambert.com, blicksilverpr.com J Icom North America, New Hudson, manufacturer and distributor of alternative fuels systems, and Hiller Truck Tech, Ayr, Ontario, Canada, a truck repair shop, have an exclusive distribution agreement for Icom Dynamic CNG/diesel and LNG/diesel dual fuel systems for eastern Canada including: Ontario, Quebec and the eastern provinces. Websites: icomnorthamerica.com, hillertrucktech. com

CONTRACTS J Gale Group Inc., Farmington Hills, part of Cengage Learning Inc. and a publisher of research and reference resources, has a partnership with Google Scholar to make it easier for academic researchers to access its scholarly content. Gale has integrated Google’s Campus Activated Subscriber Access into its Academic OneFile periodical database, allowing access to content from any off-campus location or device. Website: gale.com

NEW SERVICES J Detroit-based bank holding company Ally Financial Inc.’s Clearlane, an online auto financing platform, has developed Clearmatch, a digital service that will allow customers to be approved for financing on vehicles in dealer inventories. Also, Ally has a strategic relationship with Fair, Santa Monica, Calif., a digital car marketplace, to use Ally’s SmartAuction for remarketing returned cars and offering consumers car financing with Ally’s Clearlane program. Websites: clearlane.com, ally.com, fair.com

Submit Deals & Details items to cdbdepartments@crain.com

PEOPLE MANUFACTURING J Peter M. Kujawski to vice president of business development, LEID Products LLC, Auburn Hills, from operations division supervisor, FEMA, Fort Myers, Fla.

REAL ESTATE Charles Wilson to chief security officer, Rock Family of Companies and Bedrock LLC, Detroit, from vice president, Support Services, Greektown Casino-Hotel, Detroit.

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form. Please limit submissions to management- or partner-level positions.

SPOTLIGHT Southwest Solutions gets interim CEO

The board of directors of Southwest Solutions named Fred Leeb, principal of Leeb Partners LLC, as interim president and CEO of the Detroit-based nonprofit effective May 5. Leeb will take over for John Van Camp, who is retiring, as Fred Leeb planned since last year, capping a 45-year career at one of the largest nonprofits in the region. Leeb brings “the extensive business and nonprofit leadership experience that is critical to positioning Southwest Solutions for a strong future to fulfill its mission of service,” Southwest’s Chairman Seth Lloyd said in an emailed statement.

Area Agency on Aging chief to retire

Detroit Area Agency on Aging’s longtime president and CEO, Paul Bridgewater, is stepping down after leading the agency for more than three decades. He's set to retire once his successor has been named. That could be Paul Bridgewater as soon as next month. T.J. Adams & Associates, which has been conducting a search for the agency’s next president and CEO, is set to present candidates to the board next month, Bridgewater said. Bridgewater, 69, has been with the agency for 38 years. Under his leadership, it has grown from 12 employees to more than 120, operating on an annual budget of $71 million.

Lobbyist to lead Cinnaire in Detroit

Veteran lobbyist Lucius Vassar has joined Cinnaire Corp. as senior vice president, Detroit market leader, the Lansing nonprofit announced. Vassar, 48, brings more than two dozen years of government relations and legal experiLucius Vassar ence to the newly designed role. He left Detroit-based Clark Hill PLC as governmental affairs director to assume his post with Cinnaire on April 12. Vassar will lead a staff of about 15 that is responsible for Cinnaire’s Priority City Initiative in Detroit. The program seeks to help fund affordable housing developments in Detroit through equity investments, loans, low-income housing and historic tax credits.

$ C R A I N ’ S D E T R OCRAIN'S IT BU S I N EBUSINESS S S // A P R I L 3 0 , 2 0 1 8 DETROIT

Page 2

17 April 30, 2018

Mental health agency to close By Jay Greene

Need to know

jgreene@crain.com

New Center Community Services has given notice that it will close May 14 after absorbing 22 percent rate cuts the past year and $4 million in payment cuts the past two years, according to CEO Joy Calloway. Founded in 1979, the nonprofit New Center offers mental health services for 4,800 adult and children in five locations with about 140 employees. Calloway has been CEO the past five years. In a April 20 letter, Calloway said New Center must close because payment cuts the past several years initiated by the Detroit Wayne Mental Health Authority and CareLink, which funds New Center, negatively afJoy Calloway: fected at least CEO for the past 2,000 patients five years. and led the center to turn away more than 800 patients. “The bottom line impact to New Center totaled more than $4 million between the current and last fiscal years,” Calloway said in the statement. “The March 2017 rate standardization resulted in an average 22 percent cut to New Center’s rates with a $2.2 million hit to our bottom line for the fiscal year.” Last December, Calloway, who was up for the top job at Detroit Wayne Mental Health Authority, became the subject of a conflict between Wayne County Executive Warren Evans and DWMHA Chairman Herbert Smitherman. After a DWMHA audit found overbillings by New Center, Evans objected to the author-

JJNew Center nearly out of cash, closing May 14 after $4.2 million in payment cuts JJOne of the largest mental health provider agencies in Wayne County JJFunding cuts could mean other mental

health providers are in danger

ity forgiving only the $95,000 found in a 5 percent sample of the invoices when that sample suggested a potential $2 million could have been overpaid. Calloway cried foul over the process, but later withdrew her name after several weeks of controversy. The Wayne County executive appoints six authority board members, and the mayor of Detroit appoints the other six. “DWMHA is committed to working closely with staff and consumers from New Center Community Services and CareLink (one of four contract agencies under DWMHA) in ensuring that the nearly 4,800 consumers receiving services through (New Center) will be connected to a new provider (agency) of their choice,” Willie Brooks, DWMHA CEO, said in a statement. The state Office of Inspector General of the Michigan Department of Health and Human Services also has an active review underway on New Center. DWMHA is supposed to conduct a second audit this year to determine if a corrective action plan is successfully completed and the billing problems eliminated. The effect of that audit is uncertain now that New Center is closing. Like many mental health agencies that serve the Medicaid population in Southeast Michigan, New Center has been adjusting to payment changes begun four years ago by the

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state Department of Health and Human Services. MDHHS cut state Medicaid funding to the three county authorities in Southeast Michigan — Wayne, Oakland and Macomb — by more than 5 percent each year since 2013. The payment reductions continue through this year. The cuts, called rebasing, were part of an effort to move to a new statewide Medicaid rate for Michigan’s 10 regional mental health authorities. Medicaid also has cut traditional Medicaid funding as the Healthy Michigan Medicaid expansion began in 2013. Nearly half of the 330,000 people served in the state’s behavioral health system live in Wayne, Oakland and Macomb counties. New Center is one of the largest of more than 1,400 provider agencies in Wayne County. Industry insiders say there are many other smaller mental health agencies in Wayne County and other parts of the state that also have financial problems and could be in danger of closing. One source says that Michigan has too many smaller agencies with under 100 patients and there needs to be consolidation to reduce administrative costs and improve efficiencies. One major behavioral health administrator already is in danger of folding. Lakeshore Regional Entity in western Michigan, one of 10 regional prepaid inpatient health plans, has lost more than $10 million, has exhausted its reserves and could close by Sept. 30 unless it becomes solvent. In a report earlier this year, the Michigan Association of Mental Health Boards concluded the state has shortchanged the mental health industry by at least $100 million the past two years. State Medicaid officials have disputed the charge, but the state continues to discuss funding shortfalls.

TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS

The city of Detroit and Detroit schools announced Wednesday a $9 million public-private partnership plan to expand the skilled trades program at Breithaupt Career and Technical School on the city’s west side.

Quicken Loans, Bedrock invest $1M in skilled trades By Tyler Clifford tclifford@crain.com

Detroit officials are doubling down on efforts to improve the city’s schools and skilled-trades training programs with the help of the business community. Quicken Loans Inc. and Bedrock LLC are committing $1 million to help upgrade the Breithaupt Career and Technical School on Detroit’s west side. The Dan Gilbert-owned Detroit-based companies are the first to announce support for a city-led effort to raise $9 million to expand the skilled-trades program at the school. It is the second such investment since the $10 million makeover of the Randolph Career and Technical Center, which opened its doors to adult skilled-trades job training programs last year. Mayor Mike Duggan announced the plan Wednesday at Breithaupt, alongside Detroit Public Schools Community District Superintendent Nikolai Vitti and Quicken Loans and Bedrock representatives. Duggan said the program will help create a pipeline for careers such as welding, which Detroit companies

MARKET PLACE OBITUARIES

William 5. Molnar

Bill died peacefully at his home on April 16. 2018 surrounded by his wife and 2 daughters. He was 86 years old and was born October 16. 1931 in Highland Park. Ml to William Sr. and Julia Ann (Toth) Molnar. His parents and sister Margaret proceeded his death. His brother Charles (Diane) lives in California. Bill is a proud graduate of University of Detroit Jesuit High School and University of Detroit Mercy. He lived his life by the U of D motto "Men for Others". That was a phrase he used throughout his life and was apparent by his actions. He had a great love for the Jesuits and their teachings. Bill strongly supported his alma mater through his generous gifts and sponsorships. Bill was proud to serve his country and was a Veteran of the U.S. Navy. serving during the Korean War Era. His faith was an integral part of his life and he included God in every aspect of it. He was an active member of Holy Name Church where he and his wife Marie attended regular mass. Bill was also a philanthropist. Together with his wife Marie they created the William and Marie Molnar Foundation to help fund many Catholic organizations. Bill and Marie were actively involved at Manresa Jesuit Retreat Center. The Father Solanus Center and The Capuchin Soup Kitchen among many others organizations. Bill has been an accomplished inventor and entrepreneur throughout his life. He invented and patented numerous products. In 1987. he started SlipNOT Metal Safety Flooring. SlipNOT is a Detroit based company that manufactures slip resistant metal flooring products that are designed to increase safety and decrease your risk exposure. Both his daughters are actively involved in the business and have been for over a decade. He lived and breathed SlipNOT until the very end. Bill will always be remembered as a humble man with a vivacious personality and incredible work ethic. He was deeply devoted to his wife. children. sons-in-law. grandchildren and faith. Bill was the beloved husband of Marie (nee Cain) for 48 years. Loving father of Monique J. Molnar (Brian Bates) and Christina Molnar Melrose (Sean). Cherished grandfather of Miles. Matthew. Austin and Quinn. Brother of Charles J. (Diane) and the late Margaret Convissor (the late Larry). Also. many nieces and nephews. Our family is grateful for the loving care of Hospice of Michigan. The Funeral Mass was held April 21st at Holy Name Church. Birmingham. Committal Services and Naval Military were held at Greenwood Cemetery. Birmingham. Memorial tributes to Father Solanus Center or The Capuchin Soup Kitchen or University of Detroit Jesuit High School. Arrangements by A.J. Desmond & Sons

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have had a hard time filling. Time will tell how much of a dent these kinds of programs could make into the Motor City’s unemployment rate that last registered in January at 9.9 percent, according to the federal labor bureau. “I’m not having trouble getting businesses to come [to Detroit],” Duggan said. “We have 5,000 vacant jobs in Detroit, and we need to get Detroiters to fill those.” The investment is the first major contribution to the project, a partnership between DPSCD, Detroit Employment Solutions Corp., the city and Duggan’s Workforce Development Board. Other partners in the effort to revitalize the school include DTE Energy Co., Penske Corp., General Motors Co. and Ford Motor Co., with more to join as the effort gets under way, according to a news release. The city is leading fundraising efforts to reach its $9 million goal. Duggan said he will let the investors, which include philanthropic organizations, announce their funding commitments when they are ready. Tyler Clifford: (313) 446-1612 Twitter: @_TylerTheTyler_

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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 3 0 , 2 0 1 8

LEAR

position in a collision. We’re also working on health monitoring systems. We have Bluetooth capabilities. We have audio capabilities. There is no question in my mind you are going to have smart seats.

FROM PAGE 1

Our backlog [booked business] right now is close to $4 billion, the largest we’ve ever had.

How far away are these innovations?

How does Lear define backlog?

We’re in development programs with two or three customers right now — 2022-2023. It is more about the due care and process in the testing and validation we go through. But with the intuitive seat, we are creating a business that doesn’t exist yet. I don’t have a requirement for a customer yet.

We measure backlog differently than many of our competitors. We measure it as net booked business, contracts. Not wishful thinking or hypotheticals or high probability or multiple year contracts. It’s just a year-over-year contract look at the business. We’re very confident in what we have booked. We’re looking at the amount of quotes we have in the pipeline. They have tripled in the last six to eight months in the areas of connectivity, convergence and electrification.

What percentage of sales is going for R&D, and is that amount increasing?

Yes. It is much more than it used to be. It depends on the product. In our electronics business, it’s somewhere between 8 percent and 9 percent. Wiring is much lower, around 3 percent. Seating is 2 percent. We are spending more than we’ve spent before in pure R&D.

Estimates are all over the map for how fast EVs will be adopted by car buyers. What’s your forecast?

I think the adoption of EVs will be quicker than most estimates. When you get that sensation, that feeling of instant torque, it’s a completely different type of drive. I have not heard anyone who doesn’t like it. And I think the younger generation will pick up on it. Where will Lear be five years from now?

We will be a leading technology innovation company. I think the core of our company, what we hold true, is our operational excellence. That’s always what made Lear great, and that will continue going forward. We’re very good operators, and we do a great job launching products for our customers. What we’re seeing now is this transition coming from some of our acquisitions and some of the targeted companies we’ve gone after, such as

Lear Corp. President and CEO Ray Scott succeeded former CEO Matt Simoncini after the latter’s Feb. 28 retirement.

Arada Systems and EXO Technologies. For instance, when we bought Grupo Antolin’s seating unit, that gave us a reconfigurability aspect. Can you give us an example of that?

Grupo Antolin’s seating engineers were designing rails in the floor of vehicles for a customer that will be launching in a couple of years, and we created an electric seat rail. So, the seats will move on a powered rail. You’ve seen seats where the harness hangs down. Now, we’ve integrated technology into the rail system so you no longer have a need for wires.

In a world of reconfigurability with mobility and even autonomous vehicles, where you can move seats and rotate seats in the vehicle, that’s essential. And we created that through the technology we have with our e-systems. How will Lear be different from Adient or other competitors?

There is no seat company in the world that has an e-systems division and seating, and what we call convergence. Except for the craftsmanship and quality, seats haven’t really changed. Seats today are pretty pas-

LEAR CORP.

sive in the vehicle. But I absolutely believe the seat itself is going to become a smart device. It is the first point of physical connectivity. So when a consumer gets into a seat, we’ve engineered and designed headrests that allow consumers to individualize their internal space. A center stack right now is essentially like this: “I have to listen to that music, I have to take that phone call, and listen to that text message.” We know whose call is coming in. But now, we’ll control that through the seat. With all the technology we have in our e-systems group, you can get into a seat and listen to your individual music, you can take your individual call, and you can take your individual text messages. Think about that with mobility and ride sharing. One of the complaints is that you have to adapt to everyone else’s preferences because of the center stack. What other ways will seats evolve in the mobility and ride-sharing era?

Heating and cooling. I’ve heard that when consumers get into mobility and ride sharing they are almost nervous asking the person next to them, “Hey, do you mind if I turn up the heat?” Or cool down the cabin. Well, we can heat and cool occupants on their own personal preference in the seat system. Through our Bluetooth capabilities, you’ll set those preferences from your phone. So when you get into your seat, it will set you up for proper posture and comfort, your heating and cooling and your music preferences. What roles do seats play with self-driving vehicles?

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That’s the end game. We see cabins changing dramatically, and not just because of personal preference. It’s what you want to do in that space. You’ll have some people who want to recline and get some sleep and others who want to work. In seats today, we have smart tracks and smart recliners that are no longer passive. Because the technology has advanced so quickly, we can now detect when a vehicle is approaching from the rear or front at a certain rate. We can notify that occupant that something is abruptly changing and move the seat forward or move it out of a dangerous

Which side of the house — seating or electronics — does the technology come from to develop these innovations?

The convergence I’m talking about is playing perfectly to our strengths on both sides. With EXO and Arada, we have incredible capabilities with our gateway modules, which are some of the most advanced technologies within the vehicle. They are the communications devices. They do all the communications. We have to have competencies and capabilities with cybersecurity, GPS monitoring, vehicle-to-grid, vehicle-to-vehicle, overthe-air software updates. If you are talking about safety within the vehicle with the occupant in the seat, there is an overlap that is very complementary. There are capabilities we need to continue on this journey in electrification, connectivity and convergence — our three growth engines. Each one of them has to have its own return on investment capital. Is electrification the sweet spot for Lear’s growth?

Some of the biggest accelerated growth opportunities are in electrification. You look at what’s going on right now. It’s estimated that something like 40 percent of all vehicles are going to be electrified by 2027. We do 48-volt architectures, and we supply all the traditional and high-powered wiring. We do battery chargers and some of the best technology in the industry, 22-kilowatt battery chargers. Our first real program was the Chevrolet Volt. We had $2,200 of content on that. What other acquisitions does Lear need to take advantage of the convergence you want?

Though we’re not desperate for any acquisitions, we are constantly looking for tuck-ins. We’ve probably looked at between 25 and 50 companies, from purely engineering companies that fit, for convergence, electrification and connectivity; and at other manufacturing companies that could give us a special capability or that would let us diversify ourselves to a customer or a region. When do you think the industry will see Level 3 and Level 4 self-driving cars?

If you mean self-driving vehicles that can operate in nongeofenced areas, I’d say 2035. I think it is out there. There are a lot of obstacles out there. In a controlled environment, you will obviously see them much quicker.

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 3 0 , 2 0 1 8

DONATIONS FROM PAGE 3

“Quite frankly, to many donors, it’s a hassle to sell an older used car,” he said. “And you get virtually zero for trade in — maybe $500.” Most of the cars the Detroit-based charity takes in are older cars with high miles, and some have mechanical issues. Many donors want to avoid the hassle of haggling with buyers and having strangers at their homes, Frazier said. “If they can do that and help a worthy cause, it’s a win-win.” For the first quarter, vehicle donations to Mother Waddles rose 2.8 percent, he said. That translates to an increase of about 220 cars, given that it took in 7,846 last year and 8,275 the year before. Mother Waddles’ car donation program helps low-income people in Detroit with food, clothing and other emergency needs, Frazier said. In 2016, the year of its most recent 990 filing with the Internal Revenue Service, it reported $6.15 million in total revenue, a figure that included both the value of vehicles donated and the sale price of them. It’s actual revenue was about half of that, or just over $3 million. The convenience of being able to donate vehicles to a charity instead of having to sell them played out once before, Frazier said. Prior to 2004, taxpayers could estimate the value of the vehicle they were donating and claim that as a deduction. In 2004, when the federal government tied the value to the Kelley Blue Book or selling price, donations dropped for about the first six months of 2005, he said. But “they picked right back up because people (saw) they really didn’t have another alternative for these older used vehicles.” This time around, while there may be an initial decrease, he expects donations to help charitable programs to rebound once people realize there’s not much of a viable alternative to disposing of an older, used car, he said. Baltimore-based Vehicles for Change, which brought its mechanic training/vehicle donation program to Southeast Michigan in the summer of 2015, hasn’t yet seen a change in the five to six cars it takes in on average each month at its Detroit location, said founder and President Martin Schwartz. Those donations and a repair shop operation have been enough to keep the people it’s training to be mechanics busy, while supplementing workforce training grants the organization gets. In Detroit, it’s operating on a budget of about $700,000. Beyond Detroit, Vehicles for Change operates in Maryland, Virginia and Washington, D.C., and through a program with Mazda dealerships, along the eastern seaboard. It’s projecting a decrease of just 5 percent in vehicle donations, but not until 2019. “I don’t think we’re going to see change until next year. Most people don’t understand how tax reform is going to impact them (and won’t) … until they actually do their taxes next year,” Schwartz said. Like Frazier, Schwartz believes convenience is a factor in people choosing to donate their vehicles that will keep donations coming. And there will be some donors, those typically donating the nicer cars that sell for $2,500-$3,000, in the tax bracket that still itemizes who will still take the deduction for donations. “It’s going to be interesting to see what happens nationally with this. I don’t think we’re going to know until next April.” Others like Volunteers of America Michigan say the new tax legislation is already affecting its vehicle donation program. For the fiscal year ended June 30, VOAM’s vehicle donations are down 10 percent, a couple of hundred cars, said longtime president and CEO Alex Brodrick, who returned to the organization early this year after retiring last summer. That amount was tempered by healthy donations late in the 2017 tax year. But the trend the last three months presents a much bigger problem, Brodrick said. In February, VOAM’s donations were down 33 percent. In march they were down 17 percent, and in April they

were trending down 35 percent as of last week. “It’s clearly trending down. ... This is potentially very devastating,” he said. VOAM took in 3,100 donated vehicles last year, up from 2,960 in 2016. This year, it’s projecting 2,842 vehicles but watching the Alex Brodrick: numbers closely given that Trend could hit they help to fund social bottom line. services, housing and veterans services in Southeast Michigan and the greater Lansing area. Vehicle donations represented about $2.5 million out of a $19 million budget last year. Brodrick said with new grants and growth in VOAM’s thrift stores, it’s operating on a $20.7 million budget this year.

New strategies “If this trend continues on donations, it will hit our bottom line very hard in the coming fiscal year,” Brodrick said. “We seriously would need to look at how we do business and reboot some things.” That could mean shutting down its two local car lots and selling vehicles at auction, as one possible strategy to respond to decreasing donations, he said. “You don’t want to walk away from it, but it’s also got to be a financially viable program.” Like VOAM, Charity Motors saw vehicle donations fall 14 percent during the first quarter to 381. The nonprofit, which sells cars from its lot on Detroit’s west side through individual sales and weekly auctions, saw a trend of declining vehicle donations over the past several years and expects that to continue with tax reform, said Matt Friedman, co-founder of public relations firm Tanner Friedman in Farmington Hills and a member of the nonprofit’s board. First-quarter donations have typically been slow both because of the weather and because people think about donating later in the year as they consider the opportunity for a tax deduction, he said. But over the past few years, the local market has become more competitive. “There are so many options for car donations in this market, perhaps more than any other market in the country,” Friedman said. In response, Charity Motors has cut back on traditional advertising and increased its digital adverMatt Friedman: tising and expanded its Local market programs into other states competitive. through relationships with nonprofits, towing companies and auction houses, becoming the de facto charity vehicle donation program for other nonprofits around the country, Friedman said. Instead of the vehicle donation proceeds coming back to Charity Motors, donors can designate their vehicle donation to benefit any charity they choose. “This was a strategy to ensure the organization survives changes in the marketplace of all kinds,” Friedman said. Charity Motors is also banking on the fact that there are other factors that motivate car donors. The ability to choose a benefiting charity and to know the car will go to a low-income person who would otherwise not have a car have also been significant incentives, according to feedback from donors to Charity Motors, Friedman said. That was proven, he said, by the survival of vehicle donation programs despite the cashfor-clunkers program the federal government instituted in 2009 to spur automotive sales by providing subsidies of up to $4,500 for trading in old cars for new ones with better gas mileage. “That shows you there’s a resilience here,” Friedman said. “Car donations seem to be part of the car culture of metro Detroit.” 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 3 0 , 2 0 1 8

TIGERS FROM PAGE 1

And revenue derived from fans coming to the ballpark is important for a team whose ownership says it now must live within its means after a dozen years of free-spending on expensive free agents and splashy trades for all stars. Attendance is a snapshot or litmus test of a team’s popularity with fans, a canary in the coal mine that can signal future problems with revenue from not just ticket sales but also merchandise and concession sales and even corporate sponsorships. Bottom line: It’s harder to rebuild with less money coming in, but the Tigers don’t yet face any crisis ... yet.

The numbers The Tigers have averaged 18,869 fans per game at 41,299-seat Comerica Park for their 13 home games so far this season. Subtract the outlier of the Opening Day sellout and Detroit’s average drops to 16,898 per game. The eyeball test suggests actual butts-in-seats total was much lower. Major League Baseball’s attendance average through April 22 was 27,245 fans per game, meaning Detroit averaged 8,376 fewer fans per game than baseball’s arithmetic mean. Last season, the Tigers averaged 27,939 through the first 13 games, which were played on nicer, warmer days. This season is down 9,070 fans per game compared with that same stretch of 2017. Forbes estimates that each fan is worth $42 to the Tigers, so a decline of 9,070 fans per game over the 81game home season would translate into a decline of $35.9 million from the season prior. The Tigers lost $46 million last season on $277 million in total revenue, which included $70 million from ticket sales, according to Forbes. A leaner payroll in 2018 might mean a smaller loss for this season, or even a profit. As policy, the team doesn’t comment on ticket sales or its finances.

Summer boon or swoon? The Tigers have long said their attendance gets a significant boost as spring transitions to summer’s nicer weather and kids are out of school. There’s some truth to that, but it’s not a radical increase: Detroit averaged 27,939 through last season’s first 13 games, played in much better weather, but the per-game average improved only by 722 fans to a final average of 28,661 per game by season’s end. That’s a 2.5 percent increase. If Detroit sees a similar increase this season, the per-game attendance improves by just 471 fans. So much for the Summer Effect. Of course, if this Tigers club starts winning and becomes a dark-horse playoff contender, attendance will increase. But the odds of that seem astronomically slim. The Tigers so far are interesting, but ownership and the front office have publicly committed themselves to a long-term rebuilding project and that probably means more veteran talent is traded this summer. Losing, and losing ugly or just boringly, would siphon more attendance and revenue. What appears to be keeping that from being a financial disaster is the cost-cutting that’s al-

This fifth-inning shot shows that the Detroit Tigers played the Baltimore Orioles in front of sparse crowds on April 18.

“Fans are engaged and following this ballclub, as we can see from television ratings, on social and digital media platforms and with positive momentum in ticket purchases. They are telling us that this group is ‘fun to watch, scrappy, and they play with energy.’ ” — Ron Colangelo, Tigers’ vice president of communications

ready been under way since last season. Detroit entered the 2017 season with a club record $200-plus million payroll. It’s been subsequently trimmed, via trades and other moves, to $130 million. And $19 million of that is for ex-players Justin Verlander, Prince Fielder and Anibal Sanchez. More savings, albeit limited, could be realized if the front office determines it can get worthwhile prospects for veterans such as Jose Iglesias, Michael Fulmer, Shane Greene or Nicholas Castellanos.

The art of crowds A roster of unknown rookies and no-name veterans doesn’t help attendance, and roster composition is one of several factors that determine how busy the turnstiles get. Stars draw crowds.

Among the other factors that drive attendance: How the team is performing, weather, if school is out, quality of opponent, promotional perks, ticket prices, the local economy and if a game is on the weekend or day or night. A mediocre team’s Tuesday day game in overcast frigid April weather against a boring opponent is going to draw far less than an August game for a star-laden team in the pennant race playing its chief rival on a Saturday night when fireworks and bobblehead giveaways are planned. Mother Nature has been as big of a foe as the Indians or Royals. So far this season, Detroit’s home games have averaged slightly below 44 degrees. Several games have been postponed by weather so far in 2018, with two against the Yankees delayed until June. Through last season’s first 13 games, the first pitch temperature averaged 58 degrees, with eight games in the 60s or 70s. Baseball overall has seen attendance declines over the past three seasons, and five out of the past six, according to Forbes. It hit 72.3 million for all of last season, the lowest total and first time it’s been under 73 million since 2002. The league average attendance for all of last season was 30,023 per game. Detroit’s 2017 per-game average of 18,868 ranked 24th among baseball’s 30 clubs, and was 11,155 lower than the league average. Attendance numbers represent tickets sold — season tickets, single-game and group sales — rather than the number of fans through the turnstiles. Free tickets aren’t included in totals. Detroit’s worst attendance number so far this season of 14,858 was a

rescheduled game on April 1. What that number reveals is that the Tigers’ season-ticket base, which always is included in attendance numbers because they’re seats sold regardless if the fan shows up or not, has fallen significantly since last season. Detroit had about 15,500 full-season season tickets sold for 2017, so a total attendance of 14,858 for a game in 2018 means the season ticket base is probably closer to 12,000. If people keep finding the team fun to watch, Detroit could add another couple of thousand season ticket sales, which traditionally continue through May. Season tickets are a team’s lifeblood in terms of fan revenue because it’s cash paid up front. But even then, season ticker holders not showing up hurts because it means they’re not buying beers and hot dogs and hats and souvenirs. Lost sales hurt the bottom line doubly because the team keeps only a portion of the sale, typically 40 to 50 percent, and the concessionaire keeps the remainder. In the case of the Tigers, its Buffalo-based Sportservice that handles concessions and merchandise sales at Comerica Park.

Deep pockets None of this suggests the Tigers are a poverty case. No major league team is, thanks to billions of dollars in shared revenue from national broadcast rights and merchandise deals. Also, the Tigers are owned by the billionaire Ilitch family, so they’re not without deep-pocket financial resources. That said, team owner Chris Ilitch and General Manager Al Avila have

AP PHOTO/PAUL SANCYA

publicly committed to a rebuilding plan predicated on trading veterans for young, inexpensive prospects that can be developed in-house, and using advanced analytics and bolstered domestic and international scouting to restock the farm system. If the current team proves better than expected, and the minor leaguers develop quickly, the Tigers’ rebuilding cycle could be shorter than the typical five years. They certainly like what they see so far, and don’t appear to be worried about attendance. “Fans are engaged and following this ballclub, as we can see from television ratings, on social and digital media platforms and with positive momentum in ticket purchases,” Ron Colangelo, the Tigers’ vice president of communications, said in an emailed statement. “They are telling us that this group is ‘fun to watch, scrappy, and they play with energy.’ We’re confident that attendance will continue to improve as the weather does, particularly now that we’re beyond April, which had six home games postponed due to inclement weather and 10 degree lower than average temperatures.” The team also is banking on promotions. “We have a number of historic celebrations this summer with the Hall of Fame and number retirement ceremonies of Jack Morris and Alan Trammell, in addition to the 50th anniversary of the 1968 world champion Tigers, great promotions and ticket offers that will keep Tigers fans coming to the ballpark,” Colangelo wrote. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 3 0 , 2 0 1 8

PILOTS FROM PAGE 3

In a revised Section 298 boilerplate, the Michigan Legislature in 2017 modified Snyder’s proposal by ordering three pilots and a demonstration program to test the concept. The goal of the tests is to determine whether care can be better coordinated and costs saved between physical health and behavioral health services under a managed care approach. Currently, the state has two separate delivery systems for the $13 billion Medicaid program. Physical health for Medicaid patients is managed by a dozen health plans in a $9 billion prepaid managed care system. Behavioral health services are managed by 10 regional public authorities known as prepaid inpatient health plans, or PIHPs, in a $2.6 billion system. The PIHPs receive state Medicaid dollars for covered behavioral health services and contract with mental health agencies and their providers. In March, MDHHS awarded contracts for three pilot programs to community mental health agencies in Genesee, Saginaw, Muskegon, Lake, Mason and Oceana counties, and authorized a demonstration project in Kent County. The agencies will contract with Medicaid HMOs and coordinate physical and behavioral health services. The pilots and demo begin Oct. 1. While these community mental health agencies were selected by the state, the final contracts with the state will be held by the Medicaid HMOs. State funding for those enrolled in the health plans and receiving services from the agencies would flow through the health plans rather than the local PIHP. But the MDHHS had a problem: What to do with about 25 percent of Medicaid beneficiaries who are not enrolled in a Medicaid health plan but do receive behavioral health benefits? About 700,000 of the 2.5 million people receiving Medicaid benefits in Michigan are not managed by health plans, according to the state’s last count in December. These unenrolled Medicaid recipients receive care through fee-for-service payment arrangements with doctors and hospitals. Matt Lori, MDHHS senior deputy director, said department staff have been evaluating options the past several months to manage the specialty behavioral health benefits for the unenrolled Medicaid population in the pilot markets. Lori said the 25 percent unenrolled in the Medicaid managed care program are “pretty expensive” and including them in the pilots is a first step toward a future possible integration of physical and behavioral health services. “The bottom line with the pilots is we are trying to find some efficiency and savings and plow it back into the program,” Lori said. “It is unfortunate it is so complicated. But we are at the point we need to make decisions and make the system work better.” Robert Sheehan, CEO of the Community Mental Health Association of Michigan, said behavioral health providers have grave concerns with the state’s plan. So does Kevin Fischer, executive director of the National Alliance on Mental Illness, and Elmer Cerano, executive director of the Michigan Protection and Advocacy Service.

“Such a change adds a new payer to the system in these pilot communities — one that was not intended by the budget boilerplate nor the CMHs selected for the pilots.” Bob Sheehan

“It depends on how the people shift over to the new” statewide PIHP. “If they shift, it won’t be that bad. But the people we serve, it is difficult to get them to move to a new provider.” Willie Brooks

“A health plan managing their behavioral health benefits and not their physical health benefits would not be integration.” Dominick Pallone

Sheehan said the state’s plan “paves the way for giving this management role to a single private managed care firm.” Fischer said mental health advocates recommended a single statewide PIHP to manage the state’s Medicaid behavioral health system. “That recommendation was ignored by the Legislature because it didn’t include the health plans,” Fischer said. “The legislature has put MDHHS in this terrible position of trying to now make lemonade with rotten lemons. This is not fair to the people we serve, or the selected pilot sites.” In a recent letter to mental health stakeholders, Sheehan said that by adding the unenrolled Medicaid population to the pilot projects, the state “unnecessarily disrupts the operation of the current PIHPs, in those pilot regions, with no benefit to the enrollees nor the service delivery system.” Contracting with a single statewide PIHP does not help community mental health agencies in the pilot communities or those served in the behavioral health system and potentially weakens the existing system, Sheehan said. “Such a change adds a new payer to the system in these pilot communities — one that was not intended by the budget boilerplate nor the CMHs selected for the pilots,” he said in the April 5 stakeholder letter. “It simply adds another clouding variable to this effort and further erodes local control of the system.” Dan Russell, CEO of Genesee Health System in Flint, one of the agencies selected for the pilot, said the MDHHS threw the pilot regions a curve ball by requiring them to contract with a public PIHP to manage the unenrolled Medicaid population. “We didn’t see it coming. We have a number of concerns and are still digesting it,” he said. “They want us to exclude from the pilot the financial and clinical integration” of the unenrolled Medicaid population. Russell said GHS already is negotiating with six Medicaid health plans in the pilot and working through the details of the 298 integration. “We are concerned about administrative burden and adding another layer onto that by contracting with a statewide PIHP,” he said.

But he said GHS will make work however MDHHS wants to conduct the integration pilots. “We have a history of being on the cutting edge, taking risks, and they usually pay off,” Russell said. “We are the only agency that has a (federally qualified health center). We do things out of the box. If the state wants to do this, we want to be part of it.” Sheehan said the mental health agencies asked the state to allow them to manage the unenrolled Medicaid members instead of having to deal with a new PIHP in the market. “This is just one more example of the department taking actions against the wishes of the system’s stakeholders and without discussion with those stakeholders,” Sheehan said. Kurdunowicz said the department wants to address mental health organization concerns over the pilots. But he said the department has a longer-range goal in mind to move the unenrolled Medicaid population into managed care programs. “The health plans have tried to enroll this population, but can’t do it now (because of federal law). These people have very specific medical conditions that doesn't yet work in a managed care framework,” Kurdunowicz said. Federal waivers would be needed to put the unenrolled into a managed care framework, he said. For now, MDHHS is working with the three pilot programs and one demonstration project to help them prepare to test coordination of physical and behavioral health. Besides GHS, the others are Saginaw County Community Mental Health Authority, and a joint pilot with the Muskegon County Community Mental Health (HealthWest) and West Michigan Community Mental Health. A fourth test site is a demonstration project in Kent County that is under development between Network 180, a Grand Rapids-based mental health agency, and Priority Health in Grand Rapids. Dominick Pallone, executive director of the Michigan Association of Health Plans, which has been pushing for a larger role in the state’s managed care integration efforts, said the Medicaid health plans are not interested in managing only be-

havioral health benefits. “A health plan managing their behavioral health benefits and not their physical health benefits would not be integration,” he said. Pallone said the current dispute appears to be among the state, community mental health organizations and the PIHPs. However, he said he is surprised the state is not allowing the private behavioral health organizations to bid on the unenrolled Medicaid population. "I know they are interested in it," he said.

State plan Under the current plan, MDHHS will issue a request for proposal in May to select one PIHP that would manage specialty behavioral benefits for the unenrolled population in the three pilot markets. MDHHS would select the PIHP in early summer and then it would contract for behavioral health benefits with community mental health agencies in the pilot for that market. “We would have a newly calculated rate for management of the unenrolled population,” Kurdunowicz said. “We would ensure the rates are actuarially sound and have risk corridors in there (additional rate to cover sicker-than-expected patients).” But because this population is not enrolled in a Medicaid health plan, Kurdunowicz said it is not possible to integrate the behavioral health and physical health payments in the Section 298 pilots. In the three pilot sites, the total Medicaid population is 256,000, with 195,000 enrolled in Medicaid HMOs and 61,000 unenrolled. “We need a managed care structure to do that and the (agencies) will be doing that” for all behavioral health patients in their region, he said. “The (mental health agencies) will be contracting with the HMOs and also this separate PIHP. The delegation of management services will be consistent” across all pilots. Willie Brooks, CEO of Detroit Wayne Mental Health Authority, said that taking away funding from a local PIHP for the unenrolled population might not be a problem if the patients are not dislocated from their providers when the change is made. DWMHA is a PIHP and mental health provider agency. “It depends on how the people shift over to the new” statewide PIHP, Brooks said. “If they shift, it won’t be that bad. But the people we serve, it is difficult to get them to move to a new provider.” Brooks said DWMHA will not apply to the state to become the statewide PIHP. “It is not in our plans,” he said. Cerano suggested that the state doesn’t mind if the pilots fail because they are catering to many in the state Legislature who want the health plans to manage the entire Medicaid system. “We urged to state to take a breath and look at how to improve services — which just might reduce wasted costs,” Cerano said. “One PIHP might work, but not a system based on profits that ignores people.” Kurdunowicz said the state wants the pilots to succeed, but acknowledged that the Section 298 pilots will be complicated to manage. “There is no single silver bullet,” Kurdunowicz said. “All the approaches had tradeoffs.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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

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FORD FROM PAGE 1

The project is not set in stone. The Moroun family, which has owned the train station for decades and some of the other properties folded into the plan, are known as tough negotiators, meaning the discussions could collapse and the depot could remain in the family’s hands. Ford already has revealed its intent to occupy The Factory at Corktown on Michigan Avenue and put 220 autonomous/electric vehicle workers in the 45,000-square-foot building. But close to 50 properties, including the train station and small vacant lots, have been linked to Ford in the five weeks since Crain’s first reported

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 3 0 , 2 0 1 8 the company’s discussions with the Moroun family. “We are excited about our return to Detroit this year with our electric vehicle and autonomous vehicle teams relocating to the Factory in Corktown,” Dawn Booker, a spokeswoman for Ford Land Development Corp., the real estate arm for Ford Motor Co., said in a statement. “While we anticipate our presence over time will grow as our AV/EV teams move downtown, we have nothing further to announce at this time.” The result of the property assembly would be a large campus spread across at least 1.1 million square feet of building space sitting on at least 21 acres. Almost all the properties are in the

area generally bounded by Vernor Highway, 14th Street, the I-75 service drive, Trumbull Avenue, Rosa Parks Boulevard and Bagley Avenue. Among them: The Detroit Athletic Co. building on Michigan Avenue, the Moroun-owned former Detroit Public Schools book depository and The Alchemy building on Rosa Parks Boulevard. A series of dozens of vacant parcels immediately north of the Bobcat Bonnie’s restaurant totaling almost 5 acres are also in play. Multiple messages have been left the last several weeks with some of the owners. The train station discussions have continued for months. Crain’s reporters have seen workers for the past several weeks at the building with scaffolding and a construction plat-

form erected on its western side. A spokesman for the Moroun family said last month the crews were doing inspections but declined to provide any additional details about the nature of the inspections. The equipment has since been removed. It’s not known how, if at all, the Corktown campus would impact Ford’s effort to transform its Dearborn headquarters in what two years ago was a planned $1 billion, 10-year effort to consolidate employees and renovate many of its buildings there. If Ford’s plan comes to fruition, the total capital expense could near or surpass that amount; local and state tax incentives would likely be involved. The company also is in the process of re-evaluating its 10-year Dearborn campus transformation plan, pegged

by some as worth $1 billion. Detroit-based SmithGroupJJR had completed its work on a master plan for the project, but when CEO Jim Hackett replaced Mark Fields, a team consisting of Oslo-based Snohetta Architects and New York City-based Gensler, which has an office in downtown Detroit, was brought in to re-evaluate the plan, according to two sources familiar with the matter who requested anonymity. Requests for comment were sent to the Moroun family, which built its empire in the trucking industry. CBRE Inc., which represents Ford on much of its real estate dealings, declined comment. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

JOBS

FROM PAGE 3

The Urban, Ill.-based auto supplier plans to begin production of parts for Ford by October and has started hiring its first groups of production employees who are going through a city-funded training program at Focus: Hope’s Machinist Training Institute on Oakman Boulevard.

Applicants prioritized In sifting through the 16,300-plus applicants, Flex-N-Gate also has prioritized individuals who have two or more years of continuous work experience and have 313 and 734 area code phone numbers that indicate they likely live in Wayne County, said Karie Szalony, director of human resources at Flex-N-Gate’s Warren stamping plant. “Even if it’s not auto-related (work), I want to ensure they’re a reliable employee,” Szalony said. “We can teach you the auto skills.” But with a tight labor market for experienced workers, Flex-N-Gate also has begun interviewing automotive parts production workers facing an impending layoff at Integrated Manufacturing and Assembly in Highland Park, Szalony said. Integrated Manufacturing and Assembly, a seat supplier and joint venture of Lear Corp. and Comer Holdings LLC, informed state officials in March that it would permanently lay off 127 manufacturing employees by May 3. “The market is so tight for talent, that where you can find it, you’re lucky to find it,” Szalony said. Approximately 6,948 of Flex-NGate’s 16,370 applicants — or 42 percent — listed a 313 area code phone number, indicating they likely live in or near Detroit, according to human resources data Flex-N-Gate shared with Crain’s. More than half of the total applicants — 8,442 — applied for production jobs, with just 183 coming from within the 48213 ZIP code. Flex-N-Gate received another 138 applications for jobs in skilled trades, management and professional positions from the plant’s ZIP code among a pool of 7,928 applicants in those job categories requiring more formal education and training, according to company data. The location of the plant along corridors serviced by existing Detroit and suburban bus transportation lines also may be driving some of the interest from applicants who don’t have cars. “So many of the manufacturing jobs are outside of the bus lines, be-

Decondi Kennedy instructs a training class at Focus: Hope last week.

PHOTOS BY LARRY PEPLIN FOR CRAIN’S

Lewis Payne Jr. takes a training class at Focus: Hope last week.

cause they're so far out in Warren, Sterling Heights and Madison Heights,” said Anthony Franklin Sr., 53, of Eastpointe, Franklin was hired into the second cohort of trainees with previous auto parts and materials-handling experience in jobs at Android Industries and Lear Corp. He hopes to work his way into a skilled trade position. “Everybody is excited because it’s new," Franklin said of the plant. “We’re the groundbreakers and get the opportunity to set the pace.”

Focus: Hope classes The Detroit Employment Solutions Corp., the city’s workforce-development agency, has budgeted $150,000 to fund Focus: Hope’s training of Flex-N-Gate workers,

DESC spokesman Robin Johnston said. The second class of 24 trainees finished a weeklong training course last week. Focus: Hope’s training program centers on critical thinking and problem-solving activities designed to sort out which applicants have transferable skills, said Bernard Thompson, a workforce readiness instructor for the nonprofit organization. “This week is designed for you to demonstrate and for me to upscale you to the point where Flex-N-Gate thinks you’re the kind of employee they think they’re going to be to move forward their company with,” Thompson told last week’s group during a Monday morning classroom session. Nick Proctor, director of manufac-

Focus: Hope’s training program centers on critical thinking and problem-solving activities designed to sort out which applicants have transferable skills

turing for Flex-N-Gate, stopped into the Focus: Hope class last week to address the group of new hires. Proctor said the parts they will make for Ford will go into the new 2019 Ford Ranger pickup, which the Dearborn automaker plans to assemble at a retooled Michigan Assembly Plant in Wayne. Ford has set an Oct. 22 target date for starting production of the Ranger; Flex-N-Gate has set an Oct. 1 date to start producing parts for Ford. At Focus: Hope, Proctor surveyed the classroom of new hires, asking who has previous experience working in automotive or manufacturing plants. Franklin told Proctor he previously operated a Hi-Lo forklift. “So you've got some fork-truck driving background? We need some

good ones,” Proctor told Franklin. “We’re having trouble finding them right now. So that might be your first job.” Proctor said hiring from the pool of applicants would slow down until July and August when “it will really start to ramp up pretty fast” as the plant’s stamping presses and injection molding machines come online. “I’ve been through this a few times with new plants and the first 50 to 100 employees are the most critical,” Proctor said. “You set the culture for the next 300 or 400 that are coming after you. So it’s really, really important that we get it off to a good start with everybody working together and working hard.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 3 0 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

El-Sayed proposes programs aimed at infrastructure

DMC exec challenges auto insurers to cuts

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

amping up the importance Michigan’s crumbling infrastructure could play in this year’s election for governor, Democrat Abdul El-Sayed is proposing a new vehicle mileage tax on commercial vehicles to fund additional road repairs, a new statewide property tax to finance school improvements and making water for basic living needs free. The former Detroit health department director, who has run an upstart campaign for governor promising sweeping new programs, wants to create a multipronged statewide infrastructure bank that directs new investments into roads, public transit, underground water infrastructure, renovating and constructing new school buildings and reaching a 100 percent renewable energy goal by 2050. “It’s a big plan,” El-Sayed said in an interview with Crain’s. “But we’ve got a couple of problems with infrastructure: We don’t pay enough, we don’t pay the smart way (and) we’re always putting a Band-Aid on a gaping wound.” El-Sayed’s road-funding plan seeks the creation of a state transportation bank capitalized by $1.5 billion in the first year and $1.4 billion in annual contributions, relying on $600 million in fuel and vehicle registration tax increases that went into effect last year and imposing another $600 million tax increase. El-Sayed said he would target multi-axle commercial trucks with a mileage-based use tax for their additional wear-and-tear on the state’s roads. “If you’re using our public infrastructure to make money, you should be charged a bit more because you’re using that to make money beyond just getting around every day,” ElSayed said. Efforts in recent years to hit semitruck drivers with higher fees have failed to gain in traction in Lansing. El-Sayed’s approach to road funding differs from proposals offered by his Democratic primary opponents, former Sen. Gretchen Whitmer of East Lansing and Ann Arbor businessman Shri Thanedar. Whitmer has proposed getting voter approval to borrow up to $2 billion annually for 10 years for a major infusion of bond-financed infrastructure improvements. Thanedar has called for a statewide vote on $1 billion in road repair bonds and taxing marijuana — “pot for potholes” — and he wants to widen I-94 to three lanes for the entire 275 miles of interstate highway running through Michigan. A draft of El-Sayed’s road-funding plan provided to Crain’s also says new taxes for road repairs could be levied on fuel. The plan relies on tax revenue from the sale of recreational marijuana, assuming a legalization proposal is approved by voters in November. El-Sayed, whose candidacy for governor faces legal scrutiny, also wants to establish a Clean Energy Bank that would be funded by $100 million annually through a new $10.61 per household fee to subsidize the development of renewable energy sources.

TYLER CLIFFORD/CRAIN’S DETROIT BUSINESS

The latest round of Detroit’s Motor City Match program awarded a total of $500,000 to 11 entrepreneurs and a building owner in its 11th round. After years of operating a salon, Dymond Designs Beauty School received the $65,000 top prize.

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

495

The number of employees MB Financial Inc. is laying off in Michigan, following the decision to scrap its national mortgage origination business.

$500,000

The total in awards announced last week for small-business winners of Motor City Match's 11th round.

The number of Detroit Public Schools Community District schools that'll be starting new FIRST robotics teams in the fall with a $100,000 push from Quicken Loans Inc.

BUSINESS NEWS Lear Corp. raised its outlook for sales and earnings for the year after reporting record first-quarter results last week. J Woodpile BBQ Shack of Clawson plans to add a bar to the restaurant it’s opening in The Platform LLC’s Baltimore Station development in Detroit’s Milwaukee Junction neighborhood. J Secure-24 LLC, a Southfield-based managed services firm with 600 employees, was acquired by a multibillion dollar Japanese telecommunications company. J McLaren Macomb hospital has started a $68 million expansion of its emergency department and trauma center that will make it the largest one in the county. The project, to finish in early 2020, will double the size of the existing 23,000-square-foot emergency center. J Eastern Michigan University privatized its parking in a move giving the Ypsilanti-based school a $55 million upfront payment that will be used to renovate campus buildings and bolster its reserves. J Three metro Detroit Planet Fitness franchisees signed a two-year, $100,000-per-year deal to be the Detroit Tigers’ official fitness partner. J The building that houses nonprofit shared workspace Ponyride in Corktown was listed for $3.5 million, or $125 per square foot. J

J The closed Hooters in Troy is being reincarnated as a Latin eatery called Gran Castor from the restaurateurs behind Oakland County hot spots Vinsetta Garage and Clarkston Union. J Original equipment manufacturer Bosal Industries-Georgia Inc. was preparing to permanently lay off 40 employees at its Ypsilanti plant. J Chicago-based luxury consignment boutique Luxury Garage Sale LLC will bring its wares to Birmingham for a monthlong pop-up shop to test the metro Detroit market. J The city of Royal Oak denied Taco Bell Cantina a liquor license, after police opposed the fast-food restaurant owner’s request. J Cooper’s Hawk Winery & Restaurants, a Countryside, Ill.-based chain, is building its first Michigan location at the Mall at Partridge Creek. J The Kresge Foundation is providing $2 million for business students at Wayne State University to get real-world experience managing investment portfolios.

OTHER NEWS J Wayne State University Physician Group told the Detroit Medical Center that a May 15 deadline to extend a clinical services and administrative contract is firm, and if the five-year contract isn’t signed, the university-affiliated medical group plans to let the agreement expire and seek other academic partners. J Center for Michigan founder Philip Power and his wife Kathy gave $1.5 million to the University of Michigan to increase faculty and student engagement with people and organizations working on public policy and real-world issues outside of the university. J Wayne County announced plans to spend approximately $60 million on road work this season, up from $30 million last year, after a challenging winter for drivers. J Michigan’s economic development arm plans to help fund storefront improvements in downtowns and commercial centers with a new $1.5 million initiative. J The city of Detroit was poised to shed the state oversight that lawmakers put in place in 2014 at the end of its historic bankruptcy with a 1 p.m. Detroit Financial Review Commission vote on Monday. J GM River Days enters its 12th year this summer. The June 22-24 festival will feature a performance by Kool & the Gang, air shows and zip lines.

top Detroit Medical Center executive is ready to do a deal with auto insurance companies on reining in how much hospitals charge for auto accident victims. But only if the carriers agree to dollar-for-dollar cuts in the no-fault insurance premiums shouldered by drivers, said Conrad Mallett, CEO of the DMC’s Sinai-Grace Hospital in Detroit. “I will give if you will give, Mr. Insurance Company,” Mallett said Thursday during a forum on auto insurance reform in Corktown hosted by the Citizen Detroit civics education group. “You do a 1 percent cut, I’ll do a 1 percent cut. You do a 20 percent cut, so will we. You do a 25 percent cut, so will we.” “I will write my guarantee down.” Mallett has been critical of his former DMC boss Mayor Mike Duggan’s insurance reform plan that proposed a five-year, 20 percent reduction in the personal injury protection portion of a driver’s premiums in exchange for a $250,000 total cap on benefits.

Insurance companies were less than enthused last fall about Duggan’s mandated cuts and advocated for an escape-hatch clause. Last November, Duggan’s insurance legislation was defeated in the Michigan House. But the issue of auto insurance reform is expected to come back up in the Legislature in the yearend “lame-duck” session after the Nov. 6 election. Mallett also argued that suspected fraud in Michigan’s unlimited medical benefits for injured drivers resides in outpatient rehabilitation clinics, not hospital systems like the DMC. To that end, Mallett invited more oversight and the establishment a long-debated auto insurance fraud authority to root out wasteful medical spending blamed for Michigan having the highest insurance premiums in America. “I’m not afraid of the regulations. I’m not afraid of having what I do examined closely,” Mallett said. “I am not going to stand here and be accused of fraud.”

A bipartisan debate is planned for May 31 at annual Mackinac Policy Conference at the Grand Hotel.

Stage set for Mackinac gubernatorial debate

nn Arbor businessman Shri Thanedar narrowly led former Senate Minority Leader Gretchen Whitmer in the race for the Democratic Party’s nomination for Michigan governor in a new poll the Detroit Regional Chamber commissioned ahead of next month’s Mackinac Policy Conference. In the Republican field, Attorney General Bill Schuette had a 13-point lead over Lt. Gov. Brian Calley — 36 percent to 23 percent — in a poll conducted April 19-21 by Lansing-based Glengariff Group Inc. The Detroit Regional Chamber’s political action committee commissioned the poll the determine the top three candidates in the Democratic and Republican fields and set the lineup for a bipartisan debate May 31 at the chamber’s annual conference at the Grand Hotel. Thanedar, who has blanketed the airwaves in recent months with a multimillion-dollar TV advertising campaign using his own money, garnered 29.6 percent support among the 400 likely Democratic voters polled for the survey. Whitmer, the long-presumed front-runner and favorite of the Democratic Party establishment, got support from 26.3 percent of voters surveyed,

followed by 6.5 percent for Abdul ElSayed, M.D., the former Detroit health department director. Thanedar’s lead in the poll conducted more than three months before the Aug. 7 primary falls within the poll’s 4.9 percent margin of error. Nearly 35 percent of likely Democratic voters said they were undecided. About 34 percent of likely Republican voters said they, too, were undecided on who should succeed twoterm Republican Gov. Rick Snyder, who can’t run for re-election because of constitutional term limits. Snyder has endorsed Calley. State Sen. Patrick Colbeck of Canton Township trailed far behind Calley with 4.3 percent support, according to the poll results. The Detroit Regional Chamber’s PAC is holding a debate on the last night of its annual Mackinac Island confab that will be limited to attendees who donate $200 or more to the chamber’s PAC. The chamber used the poll to limit the number of candidates to three for each political party. Saginaw obstetrician Jim Hines, who will be on the ballot, finished fourth in the polling and won’t be on the debate stage at the Grand Hotel.

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