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

New strategies cut the cost of health care plans

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Detroit City FC turns to marketing team

JULY 16 - 22, 2018 | crainsdetroit.com

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REAL ESTATE

COMMERCE

Building an Eastern Market portfolio Casualties

of trade war Uncertainties leave local businesses unable to plan By Dustin Walsh dwalsh@crain.com

LARRY PEPLIN FOR CRAIN’S

Sanford Nelson has had a two-year crash course in Detroit commercial real estate.

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SEE NELSON, PAGE 17

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Sanford Nelson has had a two-year crash course in Detroit commercial real estate, with the result being a 142,500-square-foot Eastern Market portfolio quietly acquired over the last 18 months. Son of millionaire serial entrepreneur Linden Nelson, the 29-year-old has his eyes set on a $20 million effort to buy and improve no fewer than 11 properties in the country’s largest public food market. The plan could balloon to $100 million or so, depending on what the father-son team, along with their other investors, do with the properties, including mostly vacant land, they have assembled in that time frame, Linden Nelson said. The portfolio includes perhaps two of the most well-known buildings in the food district: The building that houses

Supino Pizzeria and Russell Street Deli, as well as the Bert's Warehouse building to the north on Russell Street. While real estate investors have steadily streamed into Eastern Market in the past several years, including a New York City-based company that earlier this week Crain's first reported is planning a large-scale mixed-use development across a block and a half of Adelaide Street nearby, it’s important to the Nelsons and their investors that the food district maintain its identity. Sanford, who went to the University of Colorado at Boulder and then the University of Michigan, says Eastern Market can’t turn into a homogenized, watered-down version of itself, as food districts in other major cities have been developed beyond recognition.

Sq Ft Purpose 10,000 All mixed-use commercial, live/work, artist studios 22,000 Half residential, half retail 22,000 All mixed-use commercial, live/work, artist studios 28,000 All mixed-use commercial, retail/office 1,500 Retail 3,000 Live/work artist studio 7,000 Commercial storage 16,000 Commercial storage Acre Slated for a 79-unit mixed use project by Joey Jonna 33,000 Houses Bert’s, an Eastern Market mainstay

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kpinho@crain.com

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By Kirk Pinho

In the past 18 months, Sanford and Linden Nelson and their investors have bought these Eastern Market properties, creating a portfolio of more than 140,000 square feet. I

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Nelson father-son duo plans to maintain food district’s identity

In late June, Livonia-based automotive fastener supplier AlphaUSA sent a shipment of steel to its joint venture in Mexico. Unable to source steel nearby in Mexico and with a shipment deadline fast approaching, the supplier decided to buy steel in the U.S. and send it across the border. Need Unfortunately, to know the shipment  Trump didn’t cross the administration’s U.S. southern growing global border until after trade war is set to July 1 — when leave a trail of Mexico slapped unrealized profits a retaliatory tariff in its path on $3 billion worth of U.S.  Reportedly products, in- planning $200 cluding steel. Al- billion in tariffs on pha’s shipment Chinese goods like was hit with routers, furniture Mexico’s tradi- and handbags tional 16 percent  Crippling local value-added tax, businesses’ ability plus an additionto create strategic al 15 percent tarplans iff, costing the supplier thousands of dollars more. “We had no choice; we had a contractual customer demand,” said David Lawrence, vice president and chief administrative officer for Alpha. “We absorbed the additional cost, and we’re absorbing all the costs for these tariffs, and it’s just not sustainable.” For years, Alpha resisted the idea to expand into Mexico because of the substantial investment. A customer had demanded it put a plant there. Now the family-owned supplier is being hit by tariffs in both nations and Lawrence says the vast majority of its products, mostly made high-volume, low-margin steel fasteners, are unprofitable. SEE TARIFF, PAGE 22

INSIDE

More than tourism drives Traverse City economy << Computer tech legend Casey Cowell puts his energy into Traverse City entrepreneurship. Page 8 Machine shop moves north — and thrives. Page 10

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

MICHIGAN BRIEFS

INSIDE

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

Spectrum, Lakeland Health consider merger

Grand Rapids-based Spectrum Health, one of Michigan’s largest nonprofit health systems, and Lakeland Health, a three-hospital system based in St. Joseph, have signed a letter of intent and expect to merge by Oct. 1, officials said last week. “We have a long-standing relationship with Lakeland Health and admire their excellent clinical care, strong leadership team and commitment to the community,” Richard Breon, Spectrum’s CEO, said in a statement. “Our board has spent the past year diligently focused on our growth and partnership strategy in the context of current and anticipated future trends in the industry, such as consumer-centric care and precision medicine,” Breon said. “This integration brings benefits to both organizations in terms of improving affordability, quality and access.” Some in the Michigan health care industry believe that Spectrum, which includes 12 hospitals, 180 ambulatory care sites, an employed medical group and the Priority Health insurance company, has had similar discussions with other smaller hospital systems. Under the proposal, Lakeland would become a division of Spectrum

and retain a local board and charitable foundation. Lakeland’s three hospitals and outpatient facilities employ more than 4,000 workers and 450 doctors, nurses and other providers. “We are excited about what our two organizations joining together will mean for our community. Lakeland’s number one priority has been to take great care of our friends and neighbors — the integration with Spectrum Health will provide an unprecedented opportunity to do that even better,” Loren Hamel, M.D., CEO of Lakeland, said in a statement. “The benefits of integration will be many. We see great value in sharing and standardizing our approaches to continuously improving the health care we provide, to enhancing the overall health of the communities we serve, to lowering the overall cost of care, and to make our organizations the best places to attract the best talent. Spectrum Health’s top tier performance, geographic proximity and cultural similarity will make this a great partnership.” Dan Hopp, Lakeland’s chairman, said the health system decided it needs to join a larger system to achieve its long-term objectives. “I have been impressed by the cultural fit Lakeland has with Spectrum Health — their commitment to innovation, employee relations and quality aligns well with ours,” Hopp said in a statement.

CALENDAR

CLASSIFIEDS

KEITH CRAIN

OPINION

OTHER VOICES PEOPLE RUMBLINGS

WEEK ON THE WEB

decommissioned and say the supports wouldn’t necessarily make it safer.

Conditions OK’d for medical marijuana

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Enbridge Inc. is asking the Department of Environmental Quality to allow installation of 48 additional supports for its Line 5 pipes.

Opponents speak out against pipeline anchor supports

More than two dozen people spoke out at a public hearing against a proposal for more anchor supports in the Straits of Mackinac to bolster twin oil pipelines, the Associated Press reported. Canada-based Enbridge Inc. is asking the Department of Environmental Quality to allow it to install of 48 additional supports for its Line 5 pipes. A public hearing Wednesday

evening in Mackinaw City drew waterfront property owners, environmentalists and others. Line 5 extends from Superior, Wis., to Sarnia, Ontario. A nearly 5-mile section runs beneath the straits, where Lake Huron and Lake Michigan converge. The company has made several requests to install supports after gaps were discovered beneath the pipes. The DEQ earlier granted a permit for 22 supports. Environmental groups want Line 5

Michigan regulators have significantly expanded the list of conditions approved for treatment by medical marijuana, the Associated Press reported. The Department of Licensing and Regulatory Affairs last Monday added 11 medical conditions deemed debilitating by the Michigan Medical Marihuana Act of 2008. They are: arthritis, autism, chronic pain, colitis, inflammatory bowel disease, obsessive compulsive disorder, Parkinson's disease, rheumatoid arthritis, spinal cord injury, Tourette’s syndrome and ulcerative colitis. Denied conditions include anxiety, asthma, brain injury, panic attacks, depression and diabetes. Existing entries on the list include post-traumatic stress disorder, cancer, glaucoma, HIV, AIDS, Crohn’s disease, Alzheimer’s disease, and severe and chronic pain.

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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 // J U LY 1 6 , 2 0 1 8

ANALYSIS

HEALTH CARE

Senate hopefuls have front-row seat on trade war

Cutting costs of health care

Michigan employers find strategies to stem rate plan increases

If there’s one candidate for federal office this year who understands the potentially adverse implications for the Detroit Three CHAD automakers in LIVENGOOD President Donald Trump’s trade war, it’s John E. James. James, CEO of Renaissance Global Logistics, runs a Detroit-based business that revolves around exporting American-made engines, transmissions and other vital parts for Ford Motor Co. and General Motors Co. to vehicle assembly plants in 19 different countries. If there’s one candidate for federal office who understands the importance of the U.S.-Canadian trading relationship, it’s Sandy Pensler — James’ opponent for the Republican nomination for U.S. Senate in the Aug. 7 primary.

By Jay Greene jgreene@crain.com

Average health care costs in Michigan for midsized employers are projected to increase by 5 percent in 2018 after benefit plan changes, the same rate as last year but higher than the 4 percent increase in 2016, Troy-based Marsh & McLennan Agency LLC said in a new report. Those companies that make no changes in their employee benefit health plans this year face an average 8 percent increase in health care costs, according to 357 employers that participated in Marsh & McLennan’s 15th annual Southeast Michigan Mid-Market Group Benefits Survey. Nationally, employer health care costs are expected to increase 6.5 percent before benefit changes, which is lower than Michigan and much lower than the 9.8 percent increase in 2011, a year after the Affordable Care Act was approved.

Need to know

 Average health care costs after plan changes projected to be 5 percent this year. Without changes, up 8 percent  Most aggressive companies lowered costs by 3 percent  Marsh & McLennan survey of 357 midsized employers in 15th year

Over the past several years, employee share of cost increases have averaged under 3 percent, according to the Mercer National Survey of Employer-Sponsored Health Plans. Employer-sponsored health plans are historically less expensive than individual plans because risk is spread out over more people and employers have more bargaining clout. More than 80 percent of Michigan residents with health insurance receive it through employer-sponsored plans. SEE STRATEGIES, PAGE 20

Insurers offer tools to dig into health costs John James: CEO of Renaissance Global Logistics

By Jay Greene

Sandy Pensler: Owner of Korex Cos.

jgreene@crain.com

Priority Health wants to give employers and health insurance brokers what they want: More data to make decisions about health care costs. So do Health Alliance Plan and Blue Cross Blue Shield of Michigan. Three of the Michigan’s largest health insurers developed various software and support tools that provide employers with detailed reports on how their workforces spend health care dollars and where they access care. Grand Rapids-based Priority Health partnered with a Texas-based software company to develop a webbased reporting program called Employer Insights that offers customized reports on costs for an employer’s workforce. “We rolled out this new tool last month for employers, groups and brokers and also for Priority Health to run reports and data analytics for clients,” said Sherwin Robinson, Priority’s chief underwriter. “They can drill down on data about their population. It allows them to manage the care for (employees) in a much more effective way.” For individuals, Priority Health

Pensler is owner of Korex Cos., which manufactures dishwasher detergents and household cleaners at plants in Wixom, Chicago and Toronto. His products are made for brands such as Clorox, Ultra Shine, OxiClean, Walmart’s Great Value and the private labels of Amazon, Wegmans and Kroger — and then shipped all over North and South America. The two businessmen are uniquely qualified to represent Michigan’s manufacturing interests in the U.S. Senate and before the White House, should one of them unseat incumbent Democratic Sen. Debbie Stabenow in the November general election. But neither James nor Pensler has yet dared to cross a Republican president whose scattershot tariffs and still-evolving trade policies have rattled allies, automakers, suppliers and chambers of commerce that are wary — not to mention weary — of where exactly this trade war is headed. SEE TRADE, PAGE 22

GETTY IMAGES/ISTOCKPHOTO

Need to know

 Priority, HAP, Blue Cross Michigan offering employers requested tools to better manage health care costs and service use by employees  Employers have been demanding access to more detailed data for years  Data allows employers to tweak benefit plans to more effectively address chronic diseases, location and volume of services

began offering in 2015 a health care cost-estimator online tool that helps people choose the lowest-cost provider for hundreds of procedures and tests. For example, Priority Health said the cost for knee arthroscopy surgery can range from $1,279 to a high of $11,131. Priority took action because employers are demanding greater and more timely data to help them lower costs and create benefit plans for employees that addresses specific workforce health needs, Robinson said. Priority partnered with MedeAnalytics Inc. of Richardson, Texas, to customize Priority’s Employer Insights program. SEE DATA, PAGE 20

MUST READS OF THE WEEK Improvements planned for ‘The Monster’

Race organizer proposes paying higher fee

Businesses say parking a problem in Royal Oak

Oakland Hills Country Club to close famed South Course in 2019 for renovation. Page 18

Grand Prix proposes paying 50 percent more or $300,000 to continue to race on Belle Isle. Page 18

Andiamo in Royal Oak closes suddenly as businesses bemoan parking issues. Page 16

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

THERE’S A BETTER WA AY Y TO TRAVEL. Let us show you the benefits! DETROIT CITY FC

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Detroit City FC hosted second division German club FC St. Pauli May 19 in its first international friendly of the season.

Detroit City FC taps marketing agency as it prepares to turn pro By Bill Shea

Need to know

Detroit City FC isn’t sure what league it will be a part of in 2019, but the popular semi-pro soccer club hired an emerging local ad agency to get it ready for wherever it lands. The team hired Detroit-based Lafayette American, launched earlier this year by noted ex-Ford Motor Co. creative guru Toby Barlow, to help it craft plans to pitch itself both to the public and to potential corporate sponsors. Detroit City intends to make further improvements, not yet disclosed, to its home pitch, Keyworth Stadium, that it believes will be necessary as part of a move to a professional league. The club now plays in the National Premier Soccer League, which is mostly unpaid semi-pro teams and is considered the fourth tier of the U.S. soccer pyramid. DCFC for several years has been planning to turn professional in a league higher on the pyramid, but has been stymied as there has been legal wrangling and uncertainty about the leagues between the NPSL and Major League Soccer at the top of the pyramid. There also is discussion of joining like-minded clubs in forming a new soccer league, DCFC CEO Sean Mann said, and talks remain underway toward that end. Detroit City also could return to its current league. “We’re not exactly sure what league we’re playing in next year. “If we can pull (a new league) off for 2019, an announcement would have to come soon,” Mann said of forming organization. That’s because season ticket renewals and other revenue-generating work has already begun for next season. Regardless of the immediate league status, the team knows it needs to continue to make stadium improvements, and corporate sponsorships are the primary way to raise the cash to pay for upgrades and fixes. The team already conducted a grassroots fan investment campaign two years ago — Lafayette American’s Barlow was one of the investors — but getting company sponsorships often is a quicker way to raise money. Lafayette American’s initial work for Detroit City was a pair of billboards, along I-75 and I-94, recently. Additional fan-facing branding work is still in the planning stage, both Barlow and Mann said, and won’t be finalized until the club knows its

American for marketing work

bshea@crain.com

JJDetroit City FC is using Lafayette

JJAd agency will work on fan- and corporate-facing campaigns JJSemi-pro soccer club still undecided on 2019 league

league home for next season. Behind the scenes, Lafayette American already helped the team craft materials and refine its pitches for corporate investment. Mann isn’t ready yet to say what companies they’re seeking for sponsorship deals. Current corporate deals include relationships with Lyft, Henry Ford Health System, Fowling Warehouse, MotorCity Casino Hotel, Faygo, Rip It Energy, MetroPCS, Axle Brewing Co., Stroh’s, Blake’s Hard Cider Co. and Wheelhouse Detroit. The team picked Lafayette American because of the prior relationship with Barlow, an unabashed Detroit advocate. “When he launched his new firm, I reached out to him,” Mann said. Barlow said he has attended games since the club began playing at Cass Tech in 2012. It moved into Hamtramck’s Keyworth Stadium in 2016, and has been drawing more than 5,000 fans per game for league matches, and topping 7,000 for international friendlies against first division teams. Mann said the team is in talks with German teams for 2019, and details should unfold over the next six months. Barlow said he really isn’t a sports fan, but gushes about Detroit City and its story: A few local friends launched a semi-pro team and a zealous local fan base quickly grew up around it — catching the attention of the entire soccer world. “I was amazed, as I think everyone has been, at the enthusiasm of their fans,” Barlow said. “It’s wholly unique. I’ve never seen anything like it. It is born from the neighborhoods in Detroit. How many experiences are there like this in this country?” Lafayette American is acting as much as a consultancy as an agency of record because DCFC’s owners don’t need an ad firm to come in and retool everything, Barlow said. Instead, they just need help refining as the club seeks new investment and to grow the fanbase. “They have a fantastic sense of their brand. They have an intuitive sense of how to merchandise their

games and the look and feel of their team. Our thing is to help build on their success and identity,” Barlow said. “I’m optimistic about their long-term prospects, and getting the field ready for next level of growth.” Mann said Lafayette American will help with a “holistic” approach to marketing. “They help with how we tell our story, find the right audience, both public and corporate,” he said. The business strategy is to seek out local, regional and national sponsors with Lafayette American’s help. Barlow opened the agency earlier this year with Ben Bator, a founder of the humor website “Texts from Last Night.” They have eight staffers and used what Barlow called a “confederacy of freelancers” and specialty agencies to craft campaigns. Among clients are Detroit Bikes, Detroit-based Nextek Power Systems, the Ralph C. Wilson Jr. Foundation, Troy-based Kelly Services, and recently the Frank Zappa family hired them to help with the ongoing tour that uses a hologram of the late singer, Barlow said. The financial terms of the agency’s relationship with Detroit City haven’t been disclosed. The club, which has a couple of friendlies left this month after missing the league playoffs, has a $1.5 million operating budget. Its finances and designs for turning pro separate it from most small teams. Using Lafayette American will sharpen messaging as it seeks a long-term professional league as its home and revenue because all the most critical as the club begins to pay players and add staff. It’s shown a savviness to raising money already: DCFC used a Michigan crowdfunding law to get nearly 500 people to invest in the Hamtramck stadium renovation. After raising $725,500, the investors split $107,000 in revenue-sharing money from the effort in 2016. The campaign paid for structural improvements to the grandstands, bleachers, locker rooms, restrooms and lighting at the 6,000-seat stadium. The venue was Michigan’s first project by the Depression-era federal Works Progress Administration and opened in 1936. Among future improvements could be new turf, the club has said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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dependent mortgage brokers instead of direct-to-consumer loans. In 2017, UWM was the fastest-growing mortgage lender in America, increasing its annual loan volume by 28 percent. No other Top 10 lenders came close. While other mortgage companies, either local to Detroit or spread more nationally, have laid off hundreds of employees or even closed altogether in recent months, United Shore has continued to grow rapidly. United Shore aims to double its headcount to roughly 5,000 people within the next handful of years. That, along with all the perks and amenities it offers, makes United Shore one of the hottest employers in metro Detroit and throughout Michigan. Whether United Shore lives by the motto “Work hard to play hard” or “Play hard to work hard”, the mortgage giant has achieved a lot of success by putting its team members’ interests first.

but make no mistake: United Shore gets real work done, too. United Shore’s primary business unit, United Wholesale Mortgage, has been the No. 1 wholesale lender in the country for more than three years. UWM has quickly ascended to become the sixth highest producing lender in the country overall – Check out unitedshore.com to see all of an amazing feat for a company that does business through its partnerships with in- United Shore’s open opportunities.

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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 // J U LY 1 6 , 2 0 1 8

OPINION EDITORIAL

COMMENTARY

Let’s take rhetoric down a notch

McLellan’s argument long on opinions, unsupported by evidence

chill went through Michigan’s business leadership community last week. The situation resulted from a fight over a ballot proposal its supporters say would stem gerrymandering in Michigan’s legislative districts. The proposal, pushed by a group called Voters Not Politicians, is being challenged before the state Supreme Court by a group called Citizens Protecting Michigan’s Constitution, which is largely funded by the Michigan Chamber of Commerce. The chamber argues that the change would require a constitutional convention. Last week, an out-of-state advocacy group called Represent.Us took the fight in a new and dismaying direction: hardball advertising in the Detroit Free Press targeting the chamber’s board members, including board Chair Mark Davidoff, managing partner for Michigan at the accounting/consulting firm Deloitte. The ads riled up people on There is heavy social media, resulting in debate now about death threats on Facebook for Davidoff. A representative excivility and its place ample: “Can we start killing in a politically these people yet, or just post divided society. thier shame?” (Yes, that’s how it was spelled.) Others advocated for guillotines. Still others alluded to threats to Davidoff’s family, and posted his office phone number. Yes, there’s free speech, but if we want our state to be a better place, this kind of rhetoric and harassment has to end. People can disagree on this ballot proposal, but the chamber is allowed to oppose it in the courts. The money it has put into the group that filed the lawsuit is disclosed. Executives such as Davidoff, who has a record of service to metro Detroit and Michigan that is hard to match, serve on the boards of business organizations like the chamber and charities in order to help the community. They do so as volunteers. They’re not paid for the time they devote to making Michigan a better place. We need the service of our best and brightest business leaders, but if the result is going to be death threats and extending the battle to their own companies, who will be willing to serve? Is it worth dealing with threats to their families and companies? Many will decide it isn’t. And that will be Michigan’s loss. There is heavy debate now about civility and its place in a politically divided society. There’s room for debate about how far protest can go. But the over-the-top, violent rhetoric that this protest brought to the fore is only going to make our problems worse.

ormer U.S. Sen. Daniel Patrick Moynihan once famously said that everyone is entitled to his own opinion, but not his own facts. In a July 2 op-ed for Crain’s concerning the Flint water crisis, my former law partner and good friend Richard McLellan constructs a generalized argument that Attorney General Bill Schuette is somehow “criminalizing” state decision-making through the “overzealous use of criminal laws to regulate public official conduct.” It is an article long on opinions that float rather miraculously in midair, completely unsupported by any sort of evidence. Consider McLellan’s assertions: J That the Flint water crisis illustrates “the lack of criminal penalties to address what is at most the poor execution of existing state and local regulatory matters.” But McLellan does not point to a single example of such “poor execution.” J That the attorney general is using the common law concept of “neglect of duty” to “second guess” official decisions. Here, McLellan trivializes the seriousness of the criminal charges that the attorney general has brought by dubbing them dismissively as involving “neglect of duty” — a statutory misdemeanor — rather than the legislatively and judicially recognized common law felony of misconduct in office. J That the attorney general has a policy of “hostility to state officials.” But McLellan never explains how the attorney general — who has previously served as a state legislator, a congressman, a state department director and a Michigan Court of Appeals judge — has now suddenly become “hostile” to his fellow state officials. And McLellan gives no indication that he has considered, or is even aware of, the detailed factual affidavits that the attorney general has filed in support of the criminal charges he has brought. If facts matter, those affidavits contain the facts. More broadly, and inexplicably, McLellan simply ignores the fact that the Flint water crisis was and is an en-

OTHER VOICES William Whitbeck

vironmental disaster of major proportions. It was not a tornado, or a flash flood, or an ice storm, or an act of God. It was a manmade catastrophe caused in its entirety by the actions of public employees and public officials. And, inexcusably, he ignores the results that have been so plainly and factually on display for years: children poisoned by lead, 12 men and women dying of Legionnaires’ disease and hundreds of millions of dollars needed for repairs and renovations. Apparently, McLellan considers these facts unimportant. Rather, much in the manner of a latter-day Bill Clinton, he tacitly admits that mistakes were made, without ever pinpointing who, exactly, made them. And goodness gracious, he asserts, it’s all so highly regulated and oh so complicated. After all, who can ever know in this complex environment when a simple mistake ends and a serious crime begins? So, if public officials “take risks” — even, apparently, if those “risks” prove to be criminally wrong — that’s just the price we have to pay for a functioning government. And, conversely, holding public officials accountable when there is probable cause to believe they have committed crimes will have a “chilling effect on all public employees who may now be reluctant to take the risk of making tough decisions.” Frankly, this is a fairly full ration of industrial-grade twaddle. Police and prosecutors — including the attorney general, who is the state’s chief law enforcement officer — do not live in McLellan’s world of airy generalities. Theirs is a grim environment, filled

with lies and half-truths, usually grubby, often ugly, sometimes violent. It is a world of painstaking investigation, painful decisions and persistent consequences, almost all of them bad. And in the area of public corruption, it is a world characterized by bribes, extortion, and, yes, official misconduct. Any prosecutor in this world who finds probable cause to believe that a crime has been committed and who, when considering all the facts and circumstances, sees probable cause to believe that a given individual has committed that crime — whether he or she is a high government official or a common thief — must bring charges. To do otherwise would be a dereliction of duty. But McLellan manages to imply that his idealized world is one that would be somehow favorable to business. Anyone who believes that should reflect for a moment on the saga of the Kilpatrick administration in Detroit. Certainly, under that kleptocracy, some businesses did well ... those willing to spread the dollars around, to do the favors, pay the graft and arrange the kickbacks. Those businesses, I admit, flourished. But legitimate businesses who refused to play the game found themselves shut out. And ultimately the game ended, with criminal prosecutions of the major players. Justice was done. Would Crain’s business readers prefer these real-world consequences or would they actually choose to operate in the fog surrounding McLellan’s ethereal air castles? In that world, high government officials would essentially have immunity from prosecution for their criminal misconduct ... because, after all, these officials must be free to “take risks,” even when those risks involve corruption, sickness and death. To me the answer is clear. William Whitbeck is a retired chief judge of the Michigan Court of Appeals who worked for 18 months on the Flint water crisis as special assistant attorney general.

Now is a great time for business

was driving back to my office the other day and was overwhelmed by all the construction going on in our city. To call it a boom is an understatement. When you look at the building and remodeling, you quickly get the idea that the Detroit business community is busier than it has been for decades. We have weathered another winter, and now summer is in full bloom. It would seem to be the best time of the year (unless you’re really into skiing, then you’ll have to wait a few months). Between building construction and

KEITH CRAIN Editor-in-chief

the slow but sure repairs on our roads, we are certainly seeing a great time for our construction industry. It is certainly an informal study, but

if you see all the landscape trucks and businesses out traveling from customer to customer, it becomes fairly obvious the Michigan economy, along with our nation, is enjoying a strong growth. But it is also a great time to enjoy all the activities in our city. Whether you are a died-in-thewool baseball fan and willing to endure the trials and tribulations of our Tigers or are counting the days until football, there are lots of sports to watch and sometimes enjoy. We’ve had several weeks of World Cup action; and although the U.S. did

not make it in, you’ve been able to feel the interest in this tournament. Who knows? Someday we might succeed in getting our own pro-soccer franchise. But businesses all over Southeast Michigan should be enjoying this great economy. If you like cars, then we are about to enjoy a whole bunch of activities, whether it is the 40th anniversary of the Concours d’Elegance of America at the Inn at St. John’s on July 29, or another exciting NASCAR race a Michigan International Speedway next month. And who can forget the excitement of the Unlimited Hydro-

planes on the Detroit River. All those events help bring the roar to Detroit, amid an already roaring economy. We all suffered through winter, and now is the time for many Michigan businesses to reap the benefit of their hard work. Enjoy the summer.

More on WJR Hear Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning on WJR 760 AM’s Paul W. Smith Show.

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

Many steps keep autonomous vehicle testing safe

eith Crain underscores a vital truth in his July 1 column, “Too much, too soon.” Automated vehicles, including driverless shuttles, should be rigorously tested and safely deployed, whether a human or an automated-driving system is “at the wheel.” Mr. Crain and others also have raised some thought-provoking questions confronting the legal and insurance professions as more automated vehicles take to the roads. It was with those very questions in mind that Michigan in 2016 adopted pioneering legislation to support safe operations of automated vehicles on Michigan roads. Specific to Mr. Crain’s points, one bill created the Michigan Council on Future Mobility, comprising 21 governor-appointed industry, academic and government leaders to draft policy recommendations on these fronts. This was forward-thinking. A recent AAA survey found 75 percent of Americans wary of self-driving vehicles. That underscores the need for the council and its robust discussions. Consider examples of currently deployed automated (versus truly autonomous) technology. Vehicle manufacturers are increasingly adding safety features, such as adaptive cruise control to moderate speeds, lane integrity to alert drowsy motorists when their vehicles stray and automatic braking. The gains in safety are showing as these technologies are added to conventional vehicles. In addition, driverless shuttles are being deployed in specific settings for distinct purposes. As Mr. Crain’s column observed, Bedrock is using a driverless shuttle to move its employees around downtown. So what does this mean? The May Mobility shuttle travels slower than 25 miles per hour along a carefully mapped fixed route in downtown Detroit. In fact, during a demonstration run in conjunction with the service unveiling, the vehicles traveled approximately 15-18 miles per hour. Further, the automated driving system has multiple sensors, which, in combination with the mapped route, establish where the vehicle is and what is around it with multiple layers of safeguards. Think belts and suspenders. In addition, the shuttle has an on-board human operator to take control, as well as a home base constantly monitoring its movements. This is very different from the practices in some tragic crashes in the headlines recently. In those crashes, human operators were inattentive or excessively confident in technology, which could not satisfy the demands of the situation. These situations will require much more testing and refinement. For such testing on public roads, Michigan law specifically provides that automated vehicles must have a human operator ready to exercise control at all times either in the vehicle or remotely. And, failing human control, the vehicle must be able on its own to achieve a minimal risk condition. Ultimately, a fully autonomous vehicle will be able to travel safely far beyond predetermined routes. No, this technology is not here today, even though we should wish it were. While we each think of ourselves as good drivers — and are not so sure about everyone else — this technology stands to reduce automobile crashes, at least 94 percent of which are caused by human error, just as advances in

OTHER VOICES

Kirk Steudle and John Peracchio

technology and automation reduced airline crashes over the past two decades. As highlighted in the Mobility Council’s 2018 annual report, Michigan leads the nation in creating an

environment to develop technologies associated with automated vehicles. Most importantly, the state is engaged in a public-private partnership with Continental Automotive Systems to create a hyper-accurate, high-definition map of roadways using state vehicles to gather data. Creating this map database is crucial for the safe testing and development of these vehicles. Finally, the council recognizes the human challenges and tragedy wrought by current motoring. NHTSA records 35,000-40,000 deaths on America’s roads each year, again, the vast majority of which involve human error.

As highlighted in the Mobility Council’s 2018 annual report, Michigan leads the nation in creating an environment to develop technologies associated with automated vehicles. Further, the council acknowledges mobility concerns of elderly people

and those with disabilities, some of our most vulnerable travelers who struggle without safe and reliable transportation options. Yes, we must be careful in the testing and deployment of new technologies, but we must maintain a laser-like focus on very real and significant human needs. Kirk Steudle and John Peracchio are co-chairs of the Michigan Council on Future Mobility. Steudle has served as director of the Michigan Department of Transportation since 2006. Peracchio is a managing member of Grosse Pointe-based consulting firm Peracchio & Co.

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CRAIN’S MICHIGAN BUSINESS: TRAVERSE CITY

MORE THAN CHERRIES

he blue water of Traverse City is known for a few things, chief among them water-driven tourism, wine and tart cherries. That reputation is well-earned. But it’s not all that’s going on in the northwestern Michigan tourist town. For an area that doesn’t have a major university and isn’t close to any of the state’s manufacturing hubs, it has a surprising hub of entrepreneurism.

In these pages, you’ll read profiles of organizations and companies that are helping diversify the economy of one of the jewels of northwest Michigan. They include a company that tracks satellites, a business incubator and one of the largest steel heat-treating operations in the country. Stories start on this page and run through Page 14.

Computer techology legend puts expertise behind startups By Tom Henderson thenderson@crain.com

Casey Cowell is a legend in the world of computer technology. Now he’s putting his time and money toward making Traverse City a hotbed of entrepreneurship. Cowell founded U.S. Robotics Inc. in 1976 when he was 23 and making it the world’s dominant maker of modems, is happy to lend his money, his time and his mentorCasey Cowell: ing expertise to Boomerang Catapult founder. the startup and early stage community of Traverse City. Cowell has had a home in northern Michigan since 1991, and several years ago he decided to become more active in the local business community. That led to the founding of Boomerang Catapult LLC, a funder of startup tech companies that is housed above Georgina’s Restaurant on downtown Front Street. In two years, he invested $6 million in four growing companies that subsequently created 45 jobs. The

Need to know

Cowell founded U.S. Robotics Inc. in 1976 



He founded Boomerang Catapult LLC

In this package  Computer tech legend puts expertise behind startups. This page  Fast growing Northern United Brewing on tap to acquire farm. Page 9  Traverse City move powers machine shop’s growth. Page 10  Incubator 20Fathoms looks to breed new enterprises. Page 10  Faurecia investment allows Promethient to ramp up development. Page 11  Covering the satellites: Space antenna maker gets offer it can’t refuse, moves to Traverse City. Page 12

firm is in due diligence on two more possible portfolio companies. They are Naveego, a maker of data-management software; Promethient Inc., a maker of graphenebased devices for heating and cooling seat assemblies for cars and other vehicles; GeoTix, which allows magazines and newspapers to directly

sell tickets to local events to their readers; Atlas Space Operations Inc., which makes smaller, cheaper antennas for ground-based communication with satellites; and Interactive Aerial, a maker of drones to be used in interior spaces. “We want to be the instantaneous large-scale seed fund,” he said. “If I like an idea, I can say, ‘OK, here’s $500,000. Let’s get together tomorrow and get a business plan going.” Mike Carey, a former Air Force general, came to a meeting of a business group called the Front Street Irregulars last year. He was looking for angel funding for Atlas Space, a startup based in Encinitas, Calif., that he co-founded. Cowell called him three days later and told him he’d write him a check for $500,000 if he moved the company to Traverse City. A Michigan native who was pitching for funds in Traverse City because he was living here and commuting to California, readily agreed. “We cut them a check, and now they are here,” said Cowell. A boomerang returns to its original location when properly thrown, and is a term Cowell uses for talented Traverse City natives who left the area in pursuit of careers who would

be happy to return if high-paying jobs were available; he uses the word “catapult” to refer to the propulsive effect he hopes to have by making large investments in young northern Michigan companies that can attract boomerangs as they grow. “There were a lot of festivals and seasonal activity here, but I was hardpressed to find out where and how the business community was weighing in on policy, so I spent a year talking to business owners,” he said. He found out there was more early stage tech activity going on than met the eye, but not a lot of cohesion, not enough funding options, not enough networking and definitely not the kind of incubators or shared workspaces that became springboards to tech growth elsewhere. “If all we do is trade organically grown vegetables with each other, it’s good, but it doesn’t create much value,” he said. In May 2016, Cowell formed the Front Street Irregulars, named for the Baker Street Irregulars who often helped Sherlock Holmes solve his mysteries. An informal collection of 100 business owners or executives, the Irregulars met five times last year to network and discuss issues of the day. One pressing issue was the lack of

a tech incubator, and Cowell, the Traverse City-based Northern Michigan Angels and others raised $500,000 to get one launched. Called 20Fathoms, it has its grand opening downtown on July 26. (See related story, Page 10.). If there is something Cowell knows about, it is growing young tech companies. Cowell grew up in Detroit, near Seven Mile and Southfield roads, and attended Henry Ford High School. As a kid, he played hockey for nine years with Gordie Howe’s kids, Mark and Marty, beginning in squirts and going through juniors, when they played their home games at the fabled Olympia Stadium. “Over the years I think we won six or seven state titles and four national championships,” he said. Mark and Marty went on to pro hockey; Casey went on the University of Chicago, where he got his economics degree in 1975. The next year, armed with some circuit boards and $200, he and three friends launched U.S. Robotics, a Chicago company that basically invented the modern computer modem and grew to dominate the world’s production. SEE STARTUPS, PAGE 14

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

SPECIAL REPORT: TRAVERSE CITY

Northern United Brewing on tap to acquire farm By Tom Henderson thenderson@crain.com

The partners of Northern United Brewing Co. have great news for fans of old farms near Traverse City. They have agreed on terms and have a closing date set in August on a well-known family farm whose many area fans worried was going to be sold to developers and turned into retail space, condos or bigfoot housing. It will, instead, remain as an apple orchard, with its grand old barn not only kept but fixed up, serving as a base of operations and retail sales for Nomad Cidery. “We will move our Nomad cider operations there. The farmland will stay as farmland and the barn will be converted to our crushing facility,” Northern United co-founder Chet Czaplicka told Crain’s. Northern United is a fast-growing food and beverage enterprise whose operations in northern Michigan include the Jolly Pumpkin, Mission Table and Blue Tractor restaurants, the North Peak Brewing Co., Jolly Pumpkin brewing, Nomad Cidery LLC, the Civilized brand of spirits and Baia Estate vineyard in Northport. “The owner didn’t want to take top dollar and have it turn into condos or a gas station. He knew we’d keep it as a farm,” said Jon Carlson, another Northern partner. In 2017, Northern United and Peninsula Cellars formed Nomad as a joint venture on Old Mission Peninsula, marketing a line of hard ciders made from northern Michigan apples grown on the Kroupa Centennial Farm and other Old Mission farms. Varietals include Courtland, Northern Spy, McIntosh, Baldwin, Greening, Ida Red and Red Delicious. Peninsula Cellars was founded in 1991 by Dave and Joan Kroupa but family farming for the Kroupas goes back much further. He is a fifth-generation farmer and his son, John, a point person on the purchase about to close, is sixth generation. Their family farm was founded in 1897 by another John Kroupa.

Answering an ad Northern United was officially created in 2008 and is based in Dexter, but the genesis of its expanding empire of artisan beer, cider, spirits, bakery, pizza and American, Cuban and Korean restaurants empire goes back much further. It goes back to a small classified ad that ran in Crain’s in 1994, a publication Czaplicka said he had, and has, a passion for reading. “I’m reading Crain’s. I’m 34 years old. The ad said: ‘Investor wanted for brew pub in Ann Arbor.’ I owned a medical company, and I wanted to do something different, invest my money in something,” said Czaplicka, then the founder and CEO of Great Lakes Perfusion Inc., a $30-million-a-year medical device and services company. “I responded to the ad and got called in for an interview. People always say, ‘How did you get into this?’ And I tell them, ‘I answered an ad in Crain’s.’” In 1993, right after graduating from the University of Michigan with ma-

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Northern United co-founder Chet Czaplicka’s response to an advertisement landed him at the company.

Need to know

JJNorthern United is a fast-growing food

and beverage enterprise

JJThe partners have agreed on terms and have a closing date set in August on a well-known family farm JJThe farmland will stay as farmland and the barn will be converted to a crushing facility

jors in sociology and business, Carlson had gone out west, where he had his first craft beer. A beer lover, he said he was shocked to find out how good a beer could really be. “My taste buds went wild. It was life-changing.” He came back to Michigan determined to be a craft-beer maker, too, but without financial resources to make it happen. Bell’s Brewery had established a brand name in Kalamazoo, but there weren’t many other craft brewers in the Midwest. The Old German Restaurant in downtown Ann Arbor was for sale, an iconic century-old restaurant that had fallen on hard times and gone out of business. There were tax credits available to whoever purchased it, and funding for a business on Main Street was available, but Carlson needed more resources to launch a brewery. So he placed the ad in Crain’s. He and Czaplicka hit it off, went into business together and bought the Old German, opening the Grizzly Peak Brewing Co. there in 1995. “We were very early in the craftbeer game,” said Czaplicka. They did fail miserably at one

thing. “We were just going to have one facility,” he said. “Failing miserably is a drastic understatement.” Their second, North Peak Brewing Co., opened just two years later in an old candy factory on Front Street in downtown Traverse City, and they were off and running. Of the former candy factory, which has a wonderful yellow brick exterior, Czaplicka said: “That building was completely decrepit. It had two feet of water in the basement and pigeons had pecked their way in and taken over the second and third floors. There was a ton of pigeon dung that needed to be cleaned up.” Now Northern United has about 800 employees, including about 180 in northern Michigan, operations in Dexter, Ann Arbor, Royal Oak, Detroit, Grand Rapids, Chicago and Old Mission and Leelanau peninsulas, with plans to open a restaurant soon in West Dearborn, and revenue this year of about $34 million.

Reuniting with an Old Mission childhood pal Carlson had a particular interest in expanding their operations north, having grown up on Old Mission. Which is where Greg Lobdell, another co-founder of Northern United, comes in. He grew up on the peninsula, and he and Carlson have known each other since they were 6. They went to Traverse City High School together and were roommates at UM for three years. SEE BREWING, PAGE 13

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

SPECIAL REPORT: TRAVERSE CITY

Traverse City move powers machine shop’s growth By Tom Henderson thenderson@crain.com

George Janis founded Century Inc., a small machine shop, in Wyandotte in 1970. Four years later, he decided he wanted to move the business to Traverse City. He’d vacationed there and thought it would be great place to own a business. The quality of life would be higher and the cost of land and labor would be cheaper than in metropolitan Detroit as the company grew. So he headed north. Even more extraordinary: Five employees went with him. Janis was right on all counts. ToWayne Gibson: day, Century Customers care employs 210 in about quality. 150,000 square feet of space in three buildings on 12.5 acres of land next to the city’s Cherry Capital Airport, and is the second-largest user of electricity in Traverse City behind Munson Hospital. Century even has its own electrical substation. His son, Bill, bought the company in 1980 and is chairman. “We’ve got a number of open vacancies. If I could get 10 CNC machinists, I’d hire them today,” said Wayne Gibson, Century’s chief operating officer, referring to the computer-numeric-controlled tools used in modern machine shops. “I’d like to see us get to 250 employees over the next five years.” The company claims a national and international reach, with customers in 43 states, three Canadian provinces and 16 other countries. And most of them are loyal customers. Jennifer Borkovich, Century’s sales communication manager, says 90 percent of its customers have

Need to know

Century Inc. was founded in Wyandotte in 1970 



Moved to Traverse City in 1974

Today Century employs 210 in 150,000 square feet of space in three buildings 

been with the company for more than 15 years. Century provides machining, welding and heat treating services as well as inspection services through its metallurgical laboratory. Customers include those in aerospace, defense, automotive, energy, medical, mining and food equipment. Century processes 21 million pounds of steel a year for 350 customers, and makes more than 10,000 metal parts and products, ranging from knife blades to jet engine discs to helicopter parts, Gibson said. “We’ve got a customer in San Diego, and how many heat-treat shops do you pass between San Diego and Traverse City? A lot,” Gibson said. “This is an industry where price isn’t an issue. Customers don’t care about price. They care about quality.” Khris Soldner is the southeast region manager for Downing Wellhead Equipment Inc., a company based in Oklahoma City that sells and rents equipment to the oil and gas industries and uses Century to resurface used equipment and get it back to spec. Some parts Century resurfaces for Downing are valves for oil and gas wellheads, valves that weigh 5,000 pounds each. “Century Inc. was a vendor at my last company, where we had great service and results from their resurfacing operation. When I started with Downing in late 2016, I noticed we were in need of another vendor to resurface our equipment,” he said. “I helped them get on the approved vendors list and have been using them solid for over a year now. Cen-

tury is one of the best in the business. ... Great people, product and process.” One of Century’s three buildings houses its heat-treating facility, where metal parts are hardened through a variety of processes. Customers include other machine shops around the country, most of which don’t do their own heat-treating because of the capital outlay for machinery. Borkovich said the operation ranks among the top five heat-treating operations in the country by weight of material processed annually, with an average of 15 tons of metal treated a day. The heat-treating facility houses what are called deep-salt baths, which are used to harden Bell helicopter masts, metal pipes that stand vertically in Bell helicopters and which the blades are attached to. The masts need to be heated while standing vertically, otherwise they’d bend. They get dunked into chambers 110 inches high and are cooked at temperatures ranging from 900 degrees Fahrenheit to 2,000 degrees as the masts are heat treated in a series of increasingly hot baths. Turbine engine discs, gear boxes and auto drive shafts also are heat treated to give them greater strength. Another form of heat treating is ion nitriding, where a peek through a window on the side of one of those towering machines reveals a beautiful purple glow throughout the chamber. At the opposite end of the heat-treating scale, other parts get cryogenic treating, where parts up to 4,000 pounds go into a cold chamber that takes temperatures down to minus 300. “We run this facility 24 hours a day, 365 days a year,” Gibson said. “It’s a big reason we're the second-biggest power user in the city.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

The heat-treating facility houses what are called deep-salt baths, which are used to harden Bell helicopter masts, metal pipes that stand vertically in Bell helicopters. CENTURY INC.

Incubator 20Fathoms looks to breed new enterprises By Tom Henderson thenderson@crain.com

Traverse City will take another step down the tech highway when 20Fathoms, a technology and manufacturing incubator in downtown, has its grand opening on July 26. Executive Director Andy Cole will have room for about 55 tenants in the 5,700-square-foot center, about a third of them already signed up. Finishing construction touches are underway in space formerly occupied by the law firm Smith Haughey Rice & Roegge on the second floor of an office building at the corner of North Park Street and Front Street, downtown Traverse City’s main drag. He said he expects to sign up more local tech startups after they see the facility at the grand opening. On the ground floor of the building is the headquarters of the 4 Front Credit Union, one of the incubator’s main sponsors. The incubator is a 501(c)3 nonprofit and solicited charitable and sponsorship funding, in addition to a

Need to know

20Fathoms, a technology and manufacturing incubator to open downtown 



Will have room for about 55 tenants



About a third already signed up

grant of $92,200 through Traverse City’s Downtown Development Authority from a USDA Rural Business Development grant. Cole is what is sometimes called a boomerang, a native of Traverse City who went off to college, began his career elsewhere and yearned to return home to be reunited with family and with the views of east and west Grand Traverse bays. Cole, 34, is a graduate of Traverse City West High School, got undergraduate degrees in physics and math from Kalamazoo College and in mechanical engineering from the University of Michigan, then got an MBA in entrepreneurship from the business school at Babson College in Wellesley, Mass.

After stints as an instructor at the Startup Institute in Boston and as an adviser at the Boston consulting firm Chadwick Martin Bailey, Cole decided it was time to return to Traverse City. He’d met a woman in Boston who had been a year behind him in high school, Emily Lammers, whose family owns the Gallagher’s Farm Market and Bakery in Elmwood Township west of Traverse City, and they began dating and decided to get married. “As we were starting our family, we wanted to be near family,” he said. Casey Cowell hopes to repopulate Traverse City with boomerangs. He founded Boomerang Catapult LLC in Traverse City to invest in early stage and startup companies and was instrumental in getting 20Fathoms launched. (See related story, Page 8.) “Boomerang” refers to the returning nature of a boomerang, and the goal is to get talented former Traverse City folks back to their hometown. “Catapult” refers to propelling a company

Andy Cole is executive director of 20Fathoms, a tech incubator opening in downtown Traverse City in late july

forward with early equity capital. After returning to his home territory in 2016, Cole was director of operations at TruSelf Organics, a Traverse City company making organic and an-

20FATHOMS

imal-cruelty-free skin-care products. And he began networking with the area’s burgeoning tech scene, including a monthly meeting known as TC New Tech.

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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 // J U LY 1 6 , 2 0 1 8

Faurecia investment allows Promethient to ramp up development By Tom Henderson thenderson@crain.com

“We get 200 people filling up the lower level of the Traverse City Opera House each month,” he said. A recurring theme was the need for a local incubator, and with his background, people thought he was the right person to get it going. “I was accustomed to being in Boston, where there were talent pools like Harvard and MIT. I didn’t have a lot of confidence that we could make it work here. I said, ‘It’s going to be very hard.’” He put a business plan together for an incubator and began shopping it around to local civic and business groups. Cowell was one of those Cole got to know. A successful entrepreneur himself, Cowell had founded U.S. Robotics in Chicago and grew it into the world’s leading maker of computer modems, taking it public in 1991 and selling it in 1997. “Casey said, ‘Look, we have enough people willing to financially support this to bring you on full-time as the executive director. We’re either going to do it or not do it.’ We decided to do it,” Cole said. SEE 20FATHOMS, PAGE 14

Promethient Inc., an early stage tech company in Traverse City, landed the kind of partner in May most startups can only fantasize about. The company got what it describes as a large though undisclosed equity investment from Faurecia Ventures, the investment arm of Nanterre, France-based Faurecia, the sixth-largest auto supplier in the world, with a big American presence. The funding will allow Promethient to ramp up product development and marketing and also provides it with a very large early customer. Equally important, the investment allows Promethient to sell to other auto suppliers and makers, and company founder, CTO and President Chuck Cauchy has been pitching them, too, including a meeting with one of the Big Three in late June. The company uses graphene, a single layer of carbon atoms arranged in a hexagonal lattice, to heat and cool vehicle seats, laid out in a cross-shaped pattern beneath the seat cover. The strongest material ever tested, graphene is very flexible and extremely efficient at conducting heat and electricity. It is used by Promethient to form what is called a “dispersion layer” that is coupled with a thermoelectric device for quick heating or cooling of a vehicle interior. In 2010, Andre Geim and Konstantin Novoselov of the University of Manchester in England won the Nobel Prize for their discovery of graphene. Promethient, which has three patents pending, markets its technology under the brand name of Thermavance. It is a climate-control technology that is adaptable for a variety of vehicle uses, including arm rests, heating and cooling through what is called conductive heat transfer, offering higher efficiency and cheaper costs that the current convective technology used by automakers to help regulate interior climates. Cauchy said the technology is particularly applicable for electric vehicles, where reducing energy use for some applications allows for more range between charges. The company also landed a contract with El Tigre Golf Seats of Elkhart, Ind., to provide graphenebased assemblies, with production to begin in August. “The partnership with Faurecia represents a significant step for us within the automotive industry and clearly demonstrates the value of Thermavance within the marketplace,” said Bill Myers, Promethient’s CEO. Myers said it will be at least two years before Promethient’s technology is in the auto marketplace. Myers joined Promethient last year after it got $150,000 in seed funding from the Traverse City-base Northern Michigan Angels, an investor group, and $500,000 from Casey Cowell, the founder and principal of Traverse City-based Boomerang Cat-

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Need to know

JJPromethient Inc. is an early stage tech company in Traverse City JJReceived large investment from Faurecia Ventures JJTo ramp up product development and marketing

apult LLC, which invests in startup and early stage companies in northern Michigan. (See related story, Page 8.) For the previous two years, Myer had been marketing manager of R.M. Young Co. a Traverse City-based maker of meteorological instruments, and for 10 years before that was owner of Traverse City-based TriLink Technical Services, a management consulting and staffing company. Cowell recruited Myers to Promethient after making his investment. Cowell said he invested because of Cauchy’s 30 years as a physicist and engineer in thermal electronics and the potential size of Promethient’s market. Cauchy founded Promethient in 2012 as a consulting firm, mostly working with one battery company and doing some work with the U.S. Department of Energy. In 2016, after winning $20,000 at a business accelerator event in Grand Rapids and getting some early feedback from Faurecia, Cauchy began looking for investors, securing his seed round last July. His work at Promethient grew out of his involvement with the Tellurex Corp., a Traverse City company that makes thermoelectric devices, including projects for Igloo, Chrysler and GM. He was president and CEO there from 1986-2011. “Chuck has developed commercial and industrial-grade products before. He knows the space and tech,” said Cowell. “It’s a massive market, potentially everything humans touch. The company has strong inroads from Faurecia from the start, a tier one auto supplier that fits our vision perfectly. Faurecia is arguably the best partner we could have in the world for this.” Founded in 1997, Faurecia has 290 sites, including 30 R&D centers and 109,000 employees in 35 countries, with a focus on automotive seating, interior systems and clean mobility. In 2017, it had total sales of 20.2 billion euros. Nik Endrud, vice president for strategy and innovation at Faurecia Seating, joined Promethient’s board. In an email to Crain’s, Endrud said of Promethient’s technology: “In our testing, we have found both the time to sensation and the ultimate difference in temperature to be better than competing technologies. The technology will require (Faurecia) to manage the integration without adversely affecting packaging and seat comfort. (This will) provide solutions faster to our OEM customers.” Cauchy said his business model calls for outsourcing manufacturing. SEE INVEST, PAGE 14

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SPECIAL REPORT: TRAVERSE CITY

Covering the satellites

Space antenna maker gets offer it can’t refuse, moves to Traverse City By Tom Henderson thenderson@crain.com

Mike Carey, a retired brigadier general in the U.S Air Force, was living in Traverse City in March 2017 when he met with the Northern Michigan Angels and then the Front Street Irregulars, a local informal business group, to pitch for funding for Atlas Space Operations Inc., a startup hoping to install smaller, better, cheaper antennas for ground-based communication with satellites. A native of Michigan who graduated from Gaylord High School, Carey was a much-honored, highly pedigreed Air Force officer. Posts included director of Space Forces at the Combined Air Operations Center in southwest Asia; commander of the 90th Space Wing at the Warren

Need to know

JJBoomerang Catapult offered funding if Atlas moved from California to Traverse City JJAtlas buys component parts to build its own much cheaper antennas JJDeveloped its own proprietary software to collect and analyze data

Air Force Base in Wyoming; deputy director of Command, Control and Nuclear Operations at the Pentagon, where he oversaw the nation’s intercontinental ballistic missiles; and commander of Air Force Global Strike Command at the Warren Air Force Base. In 2009, he was posted to Afghanistan to improve the way satellite communications were used to deploy combat troops.

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Atlas plans on carving out market share from the two industry giants, Kongsberg Satellite Services in Norway and Swedish Space Corp., who dominate the market but rely on the traditional giant, expensive antennas. Atlas buys component parts to build its own much cheaper antennas, some of them even portable, and developed its own proprietary software to collect and analyze data. As satellites get smaller and smaller, and the companies using them get smaller, too, big cost reductions should translate into market share. At least that’s the plan. A launch scheduled for September from Vandenberg Air Force Base in California will take as many as 90 satellites into space at once for a variety of customers, and each of them will need tracking. Atlas installs larger antennas, too, but is focusing on what it calls its Links system, an electronically steered array of four small connected antennas that is 28 inches tall, 40 inches in diameter and weighs just 55 pounds. The company sets out four of them over a space about the size of a volleyball court and delivering, the company claims, performance at least equivalent to traditional towering concrete and metal structures aiming their 6.3-meter dishes skyward. Though he was based in Traverse City, as chief strategy officer for the company, Carey regularly commuted to its headquarters in Encinitas, Calif., and planned on continuing to do so. But that quickly changed. Three days after meeting with the Front Street Irregulars, the group’s founder, Casey Cowell, called him early Sunday morning. “Casey said, ‘I hope I’m not calling you too early. Your pitch deck sucked, but I want to make you an offer,’” recounted Carey. “‘If you move the company here, I’ll write you a check for $500,000.’” By “pitch deck,” Cowell was referring to the series of slides Carey showed would-be investors. The money he was

offering was from his Traverse Citybased Boomerang Catapult LLC, a company investing in startup and early stage companies in northern Michigan. Carey told him he would need to check with Sean McDaniel, the company’s founder and CEO, who had once overseen testing and evaluation for the Air Force Space Command’s $11 billion missile program and in 2015 had spun Atlas off from another company he ran, Assured Space Access Technologies, a company based in Gilbert, Ariz., that provides engineering services to the aerospace industry. The other two co-founders of Atlas are Mike Rendine, a retired Air Force colonel who co-founded Assured Space Access; and Brad Bode, a veteran of the aerospace industry who oversaw a variety of software and designs to integrate system architecture for satellite command and control. He developed Atlas’ Freedom brand of proprietary software for ground-to-space communications. “I called Sean and said, ‘What do you think about moving the company to Michigan if we get an investment?’” said Carey. “He was, ‘Dude, I’m from Michigan.’” The Northern Michigan Angels also joined in the funding round, the group’s first collaboration with Boomerang Catapult. The angels invested more than $250,000, with a record number of members participating. The company eventually raised more than $2 million in the round. Jim Cantrell is the CEO of Tucson-based Vector Launch Inc., a veteran of the space industry with SpaceX, Elon Musk’s space rocket company, and now head of a startup company building smaller rockets to carry the current and next generation of small mini-satellites into space. Before raising $50 million for the recent launch of his company, which employs about 130 and is raising another equity round, he served as an adviser to Atlas. “I told him he had a pitch deck that sucked, too,” said Cantrell

with a laugh. “But I was convinced of their product.” Vector Launch is scheduled to have its first orbital launch of a rocket in October, but used Atlas on several suborbital launches. “We use their radio frequency tracking stations to do downrange tracking of our launch vehicles. We view them as really disruptive to the industry. They’re going up against a lot of fixed infrastructure that costs tens of millions of dollars. They can do the job for a tenth of the money, and you’re getting something that works better and is mobile.” Cowell agrees. “Atlas has disruptive, transformative technology in both the antenna — you can carry it in one hand, it talks to multiple satellites simultaneously, it has a larger aperture so you can talk to satellites longer, with much greater download capacity — and their software. “The number of satellite launches is rising dramatically as the cost of satellites and launches is coming down. But ground-to-satellite communication hasn’t changed in 30 years. There’s no other contender out there that I could find. It was a no-brainer.” Barbara Plante is CEO of Mountain View, Calif.-based Boreal Space, which makes the Wayfinder spacecraft that takes small satellites into low-earth orbit and is another Atlas customer. She said she met Carey two years ago when he was making a pitch at the Silicon Valley Space Center. “I was very impressed with their business model, and I knew I’d be keeping them in mind for future ground-station needs.” Last year, she used Atlas’ network of ground stations and its proprietary software to provide data on a launch into low-earth orbit for a customer in Singapore. “Future plans include leveraging Atlas’ integrated ground-station capabilities to support projects that Boreal is working for internet of things connectivity,” she said. “Atlas works hard to bring capable and low-cost data management options to space companies like Boreal Space, helping to level the

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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 // J U LY 1 6 , 2 0 1 8

BREWING FROM PAGE 9

ATLAS SPACE OPERATIONS INC.

Mike Carey, founder and chief strategy officer, and chief engineer Steve Gaines commission an ATLAS Yagi antenna at Invercargill, New Zealand.

playing field and enabling us to compete with big aerospace companies.” “Atlas’ technology disrupts the traditional downlink/data business, and as such they do not need to reside in the traditional space destinations to be successful, and in fact our area may provide an edge in both costs and talent,” said Scott Dennis, a member of the Northern Michigan Angels who himself is a retired Air Force general. “We at NMA are very excited about their execution and traction to date. We think this can put us on a path of increasing the tech hub in the TC area,” he said. As part of getting the word out that it wants to build an aerospace hub in Traverse City, Atlas sponsored the first annual two-day Michigan Space Forum in June. Jim Cantrell of Vector Launch was the keynote speaker. Another speaker was Steve Canny of Venture Southland, an economic development organization in New Zealand. Cowell wrote his check in March 2017. By April, the company had hired its first local employee, Mikel Acasuso, whom Carey had met at TC New Tech, a monthly meetup of area tech folks. Atlas now has 20 employees, 14 of them at its Traverse City headquarters and the rest scattered around the U.S., including two at the NASA Ames Research Center in Mountain View, Calif. One of the local employees is Hanna Pritchard, who has the title of orbital analyst and is in charge of mastering the calculus that figures out how to track the orbits of numerous satellites as they travel above Earth at different heights and speeds. A math major at Eastern Michigan University, she was back in her hometown after graduation but unable to find suitable employment and working part time as a waitress at the local Eagles club. SEE ATLAS, PAGE 14

While Carlson stayed in Michigan, Lobdell moved to San Francisco to pursue a career in architecture. In 2003, Lobdell was back in Ann Arbor, a co-founder of 2mission Design and Development, which is a real-estate development company focusing on historic preservation. Soon after, he joined Carlson and Czaplicka as a partner at Grizzly Peak, a perfect fit because Carlson and Czaplicka did historic preservations on buildings they bought and renovated. In 2006, they bought Bower’s Harbor Inn on Old Mission Peninsula, which divides west and east Grand Traverse bays. One of the region’s most renowned structures, they saved it from being torn down for high-end housing. A summer mansion built in 1928 by Charles Frances Stickney, a Chicago lumber and steel baron, it was converted to a restaurant in 1959 and added to the National Register of Historic Places in 2011. Carlson, Lobdell and Czaplicka turned the fine-dining Bower’s Harbor Inn into the Mission Table Restaurant & Tasting Room, and The Bowery, a casual dining restaurant adjacent to it, became the Jolly Pumpkin restaurant, microbrewery and distillery. The scenic, tree-shaded grounds, atop a sloping hillside overlooking West Grand Traverse Bay, host 70

“We could have sold that property for millions of dollars for condos, but we didn’t want to be known as the guys who did that for money.” Chet Czaplicka said of land on the Old Mission Peninsula overlooking West Grand Traverse Bay

weddings a year. “We could have sold that property for millions of dollars for condos, but we didn’t want to be known as the guys who did that for money,” said Czaplicka, sitting on the patio of his house in Grelickville, a small town just north of Traverse City at the base of the Leelanau Peninsula, the waves on West Grand Traverse Bay gently lapping against his seawall. When Northern United was created in 2008, master brewer Ron Jefferies, who with his wife, Laurie, had created the Jolly Pumpkin line of artisan ales, and master brewer Mike Hall joined Lobdell, Carlson and Czaplicka as co-founders. Laurie oversees their big Dexter brewing facility, and Hall, who has designed and built more than 40 breweries and distilleries around the world, from Siberia to the Bahamas, oversees brewery and cider operations on Old Mission. Lobdell and Carlson are manag-

ing partners and Czaplicka is a notquite-silent partner. He has a master’s degree from the Harvard Business School in negotiation and mediation, which comes in handy when it comes time to negotiate with banks or farm sellers.

The most entrepreneurial nurse? Czaplicka doesn’t have much time for day-to-day activities at Northern United. Perhaps the most entrepreneurial graduate in the history of the nursing program at Wayne State, he is CEO of his own company, Livonia-based Comprehensive Care Services, which is the second-largest perfusion company in the country, with nearly 500 employees in 18 states and revenue of more than $100 million. Comprehensive Care provides services, equipment and medical devices in the field of perfusion, which involves the assisted flow of blood through a patient in the emergency room whose heart has been shut down during open heart, lung or other surgeries. Czaplicka began his medical career as a registered nurse at the Detroit Medical Center, then got a master’s degree in perfusion technology from Wayne State before enrolling at Notre Dame University in a master’s in management program. While there, he founded Great Lakes Perfusion, selling it to Extracorporeal Science in 1996. He continued as president of the perfusion

division until the company was sold in 2001 to German-based Fresenius AG, then founded Comprehensive Care in 2002. That was after winning a federal lawsuit that had tried to bar him from launching a competing company under a non-compete clause he had signed. “I retired for a whopping six months,” he joked. “I called my attorney one day and said, ‘Pat, I’m really bored.’” It wasn’t as simple as just starting a company. First he had to win his suit. “I had a diminution-of-services clause, and they had diminished my services,” he said. This year, Czaplicka spun off a company called Comprehensive Analytics Inc. to provide perfusion-related data to healthcare systems. It employs six. “We’re just getting off the ground. The fiveyear plan is to have $22 million to $25 million in sales.” In his spare time, Czaplicka is part-owner and director at 3T Medical, a Canton Township-based maker of medical devices that recently got equity funding from Ann Arbor-based Plymouth Growth Partners, and a is board member of Ann Arbor State Bank. In 2009, Czaplicka was a founding board member of the bank, which was founded by Ann Arbor banking legend Bill Broucek, who had helped grow the Bank of Ann Arbor before briefly retiring. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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

SPECIAL REPORT: TRAVERSE CITY ceiver that could dramatically exATLAS pand the bandwidth available for STARTUPS FROM PAGE 12

A mutual acquaintance knew Carey was looking for a mathematician and set up a meeting. “I met her and immediately offered her a job. She’s been fantastic,” he said. Atlas’ first customer was, thanks to the founders’ extensive contacts, the U.S. government, which awarded the company a contract to install a satellite somewhere in Equatorial Africa by the first of July last year. “That was a crazy timetable. But we just said ‘OK’,” Carey said. The contract didn’t specify where. It ended up being installed in central Ghana, following negotiations with a local tribal chief, and was online on June 28. The next installation was in New Zealand. The company has done six antenna installations and has 23 more planned, including one in Tahiti under contract by the National Oceanic and Atmospheric Administration. Other new installations include Hokkaido, Japan, and Mohave, Calif. Its antennas monitor satellites or launch vehicles for 18 customers. The company plans to build a test facility just west of Traverse City in Cedar. In June, the Georgia Institute of Technology’s Guggenheim School of Aerospace Engineering announced it had begun a research project in partnership with Atlas Space and Lisle, Ill.-based Xenesis Inc. to study

Ed McCarty, ATLAS director of Government Programs, with an ATLAS Links electronically steered array antenna in the foreground, and an 11m dish antenna in the background at Wallops Flight Facility, a NASA facility in Wallops Island, Va.

how to improve the flow of data from earth-orbiting satellites to ground stations. The project will miniaturize and test a laser communications trans-

downlinking information from the growing number of satellites. In January, Atlas and Xenesis formed a partnership to develop the next-generation laser-based optical communications network, designed for high data flow through inexpensive systems, with a goal of eventually being able to transmit and receive petabytes of data. (A petabyte would be equivalent to the storage capacity of over 1,000 typical modern computer hard drives.) Carey said the company this summer will begin raising a Series A funding round of at least $5 million to accelerate growth and local hiring. Skip Simms, the managing member of the Ann Arbor-based Michigan Angels, which also met with Carey in March 2017, said his group decided to hold off then on investing, wanting to see Atlas gain traction with paying customers. “The space industry is going strong. As a global economy we are more dependent than ever on what’s up there,” said Simms. “A lot of people are trying to address the need. As for Atlas, it’s cool they are in Traverse City and Michigan, but we thought they were a little bit early when we met with them. Having said that, we think they are addressing a need, they’re on to the right opportunity, and we’re still interested in investing in them.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

20FATHOMS FROM PAGE 10

Cowell and five others pledged financial support of $50,000 each. Another investor was the Traverse Citybased Northern Michigan Angels. In all, $500,000 was raised. “We need a center of gravity and community of interest around entrepreneurial and tech activity in Traverse City. This will breed new enterprises,” said Cowell. “Interactions breed opportunities, investment, solutions, etc. Right now, the community for this is fragmented and spread out. To drive the visibility, coalescing forward powerfully and effectively, requires place. We now have a place.” “Immediately after launching Northern Michigan Angels, we saw the need for an incubator in northern Michigan. Most of the limited number of companies knocking at our door for capital were what we call Main Street America type companies,” said Deanna Cannon, executive director of the

The company went public in 1991 when it had $79 million in revenue and was sold to 3Com Corp. in 1997 for $6.6 billion when it had revenue of $2.7 billion and employed 4,000 at its Skokie, Ill., headquarters and nearby plants. The company also made the Palm Pilot. Cowell was president and CEO from 1983 to 1996. In 1989, Cowell was named to the inaugural class of Crain’s Chicago Business’ 40 under 40; fellow winners that year included Oprah Winfrey and David Axelrod, who later would become chief strategist for Barack Obama’s presidential campaigns and was his senior adviser while in office. In 1996, Crain's Chicago named him the executive of the year for 1995, and Business Week named him as one of the top 25 company managers in the world. In 1991, Cowell and his former wife moved to Elk Rapids, a small village on East Traverse Bay, a few miles north of Traverse City, and subsequently moved to Traverse City. He kept a home in Chicago until 2000 but was based out of northern Michigan with a lot of commuting time factored in. In addition to Boomerang Catapult, Cowell is principal owner and president of Durandal Inc., a Chicago firm that offers management services in a range of fields. He is also an adviser to Grand Ventures, a venture-capital firm in Grand Rapids. “Casey is one of the most intelligent, genuine, and successful people I’ve

ever met. He is a tech visionary and one of the best-known and most well-respected entrepreneurs in the country,” said Tim Streit, Grand Ventures’ managing partner. “Returning to Michigan and pouring his time, energy, and capital in to local companies is a testament to his leadership style and commitment to helping others. He is one of my most responsive and high-impact advisers for Grand Ventures, making all of us a stronger team.” The Traverse City-based Northern Michigan Angels co-invested in several of Boomerang Catapult’s deals, including Promethient and Atlas Space. “The Northern Michigan Angels are highly supportive of the mission of Boomerang Catapult to bring boomerangs back to the region by increasing the number of high-paying jobs,” said Deanna Cannon, the angels’ executive director. “Boomerang Catapult has made a significant impact on the economic landscape here with the ability to make investment decisions quickly and launch companies with seed capital. Their work also accelerates the due diligence process with paid staff involved. NMA benefits from this work and is able to expedite our review to become an investment partner in opportunities of interest.” Eventually, Cowell would like to grow Boomerang to the point where it is attracting outside investors in limited-partner funds and with hired investment professionals to run things. “That’s my fondest wish. Then I can go home and let someone else do the work,” he said.

Northern Michigan Angels. “These companies do not typically grow quickly or have an interest in selling in five to seven years, which is how an angel investor typically receives a return on their investments. “It is our hope that once the incubator is fully operational and programs are implemented, entrepreneurs will be immersed in 8- to 10-week training programs and ideally graduate with a minimum viable product or prototype ready to sell. “At that point, our angel group can provide capital need to advance the business plan and pursue sales. NMA members will immediately serve as mentors and financial supporters of 20Fathoms and the team there.” Cole officially began his duties on Jan. 1, scouting out a location, soliciting financial support and recruiting tenants. He also worked at finding an appropriate name for the incubator. It had a tentative first name — Startology — but Cole didn’t think it worked. He wanted something that would reflect

the city and its surroundings. During a visit to the city’s Great Lakes Maritime Academy, he had a eureka moment. He was told that water clarity is measured by how far you can see a specific disc. The visibility in the east and west bays is 20 fathoms, or 120 feet. He had his name. The buildout of the incubator involved knocking down walls and creating large, open spaces, promoting what Cole calls collision by design. People run into each other, bounce ideas off each other, over time working more and more collaboratively. Two things this incubator won’t have are the requisite pingpong and pool tables of other incubators. “We’re going to fill the space with people,” said Cole. As a nonprofit, 20Fathoms operates, now, on sponsorships and charitable donations, but Cole said he hopes to have it be self-supporting in three years. It has a wide variety of pricing plans, from $100 a month to $1,500 a month. For information, go to 20fathoms.org.

FROM PAGE 8

INVEST FROM PAGE 11

Conveniently for him and the company, his landlord is a manufacturing company, PlastikPlus, that already has the machinery to make their heating and cooling units. Promethient employs six directly and has six contractors. Myers said Promethient is targeting four major markets — transportation, including off-road, agricultural and aviation; furniture; medical devices; and garments for the military, police and athletes. He said he has one deal with a manufacturer of

Bill Myers: Targeting four major markets.

Charles Cauchy: Founded Promethient.

power-sports vehicles he isn’t allowed to name and has a prototype being evaluated by a major furniture maker. “The Northern Michigan Angels

like to invest in companies that have more than one application for the technology along with having a management team that can prioritize and bring in sales quickly,” said Deanna Cannon, the angels’ executive director. “Promethient has a great management team that is pursuing a short-term path to cash-flow positive results.” Myers said the company has begun generating modest nonrecurring revenue from engineering projects being paid for by customers and expects revenue to ramp up quickly. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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

CALENDAR TUESDAY, JULY 17 Tech Tuesdays: The Impact Of Robotics and Automation on Small Manufacturers. 8 a.m.-1 p.m. Lawrence Technological University. Session shares how companies are applying automation and robotics technology to improve the delivery of durable goods quicker and at better margins. Presentations by Dan Radomski, mentor in residence, LTU Collaboratory; Corey Carolla, Red Rabbit Automation/Vickers Engineering; Mike Foster, Behco-MRM; Ryan Astor, ARM and LTU Robotics Engineering summer camp students. Lawrence Technological University. Free with online registration. Contact: Mark Brucki, email: mbrucki@ltu.edu. Website: ltucollaboratory.com/events/tech-tuesdays-robotics-and-automation/

THURSDAY, JULY 19 Government Contracting 101. 9 a.m.-noon. Schoolcraft College. What does it take to become a successful government contractor? What services and resources are available to a small business pursuing the government market? Seminar will give insight to companies considering the field of government contracting. Schoolcraft College, Livonia. $45. Contact: Kara or Shannon, phone: (734) 462-4438’ email: ptac@schoolcraft.edu

SPOTLIGHT Detroit: A Tale of Two Cities. 6-8 p.m. Detroit Historical Society. A panel discussion will discuss the city’s comeback and the negative impact of gentrification on poor communities. Panelists include: Chastity Pratt Dawsey, journalist from Bridge magazine; Tawana Honeycomb Petty, social justice organizer Johnson and author; Michael Hodges, fine arts writer for The Detroit News; and Kevin Johnson, Detroit Economic Growth Corp. president and CEO. Detroit Historical Museum. Free. Contact: Charnae Sanders, phone: (313) 833-0277; email: charnaes@detroithistorical.org

state of Michigan. Speakers: Marybeth Koski, Department of Labor, Employment and Training Administration; Collin Mays, talent development coordinator, Southeast Michigan Community Alliance (SEMCA) and Karol Friedman, director, partnerships and talent, Automation Alley. Michigan Manufacturing Technology Center, Plymouth. Free. Contact: Karol Friedman, email: podsiadlikl@automationalley.com

UPCOMING EVENTS

Lead Your Company To The Top: Strategic Planning Workshop. 8:30-10:30 a.m. July 25. Michigan Manufacturing Technology Center. Program to help determine performance in comparison to competitors while identifying potential areas for improvement. Free. Michigan Manufacturing Technology Center, Plymouth. Contact: Theresa Gaston, phone: (734) 4514208; email: inquiry@the-center. org; website: the-center.org

Apprenticeship Info Session: Addressing the Manufacturing Talent Shortage. 9:30-11:30 a.m. July 24. Automation Alley. Information session to learn more about implementing a registered apprenticeship program and about ApprenticeshipUSA, a Department of Labor funded grant partnership between Automation Alley and the

To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

Bernard Financial executive leaves to start development firm

A top executive with Bernard Financial Group left the Southfield-based company at the end of May to start working on his own development projects in Detroit. Kevin Kovachevich, 41, had been with the state’s largest Kovachevich commercial real estate debt originator since January 2000. He most recently was partner and senior vice president. Founder and President Dennis Bernard “gave me an opportunity a long time ago and taught me a lot about the business ...” the Michigan State University graduate said. “But it was the perfect time to branch out on my own and go long on the city of Detroit, really invest in this town.” Kovachevich said his new company, District Capital LLC, doesn’t have any development deals finalized yet.

Superior Industries CFO resigns

Southfield-based aluminum wheel supplier Superior Industries International Inc. said last week that CFO Nadeem Moiz has resigned.

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Moiz, who also served as an executive vice president, will step down from the company for personal reasons, effective July 20, the company said in a news release. The supplier is Moiz searching for his replacement, it said.

WJR replaces Jim Brandstatter

Jim Brandstatter, who has called Detroit Lions games on local radio for 31 years, said last week via Twitter that he’s been removed from those duties by WJR 760 AM. He’ll be replaced this season by former Lions offensive Brandstatter tackle Lomas Brown. “Jim has done an excellent job with the Lions broadcast on WJR the past two years and for many years prior to that. We had an opportunity to hire Lomas Brown to partner with Dan Miller for the Lions broadcasts,” Tom O’Brien, vice president and market manager for Atlanta-based Cumulus Media Inc.’s Detroit stations, told Crain’s via email.

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

Andiamo in Royal Oak closes as businesses bemoan parking By Annalise Frank afrank@crain.com

Andiamo Trattoria in Royal Oak unexpectedly closed July 6, as it and several other businesses bemoan a changing downtown landscape that they say has decreased parking options and cost them sales. The city says parking lot closures are a temporary difficulty that will result in more parking in about a year as a 580-space parking deck takes shape as part of the Royal Oak City Center development project that will also include office space and municipal buildings. Businesses that say their bottom lines have been hurt are clustered around Main Street and 11 Mile Road, by two municipal parking lots closed in May to make way for the development. A total of 223 spaces were taken offline in lots next to the Royal Oak Public Library and City Hall that also abut restaurants, bars and shops. The Royal Oak location of the Joe Vicari Restaurant Group’s Italian restaurant chain has seen a 15 percent sales decline since the lot behind Andiamo closed, and rent negotiations with the building’s owner fell through, restaurant group owner Joe Vicari said. The decision was “purely economic,” he said. That slump piled on a 10-percent decline over the last half-decade or so as Royal Oak began to lose traffic to Ferndale’s and Detroit’s downtowns, and a $150,000 investment in 2016 to remodel the restaurant “to try and regain our market share,” Vicari said. There are seven Andiamo locations left in metro Detroit, after the closing of the 19-year-old Royal Oak spot. Another is to open in Fenton this fall. Employees were not notified that the Royal Oak restaurant would close until Friday, the day of the closure, Vicari said. However, the 55 workers were offered jobs at other locations.

GOOGLE EARTH

Andiamo Trattoria in downtown Royal Oak closed Friday, with owner Joe Vicari citing declining sales partly due to parking difficulties.

Need to know

JJItalian restaurant owner cites falling

sales due to parking lot closures

JJOther restaurants say City Center project has affected bottom line JJParking fee hike approved in June

Enough parking? Royal Oak’s City Center project with Lansing-based developer Boji Group has faced opposition for a variety of reasons. Opponents say it will worsen the city’s parking problems and harm existing businesses; they also contend it’s being financed in ways that are not allowed. As of May, a lawsuit had moved to the Michigan Court of Appeals, after being tossed out by an Oakland County Circuit Court judge. The city and developer broke ground in May as part of a wider $94.2 million project for municipal and private office space. The city released a parking guide to illustrate

parking options and is working with Lyft ride-share service to offer a $5 discount on the price of a ride to or from downtown this weekend. In response to restaurants’ concerns, Sean Kammer, downtown manager for the Royal Oak Downtown Development Authority, pointed to 1,000 existing spaces in structures that are one to two blocks east of Main Street near 11 Mile Road: the Center Street Garage at Third and Center streets, and another lot just north that went online in January. The city also opened 30 spots between the library and City Hall during construction. “In any city, construction can present some frustrations and can be disorienting for some,” Kammer said. “Especially if people are habituated to parking in a particular lot, now all of a sudden their environment is changed and their behaviors when they come downtown must change.” It’s been a challenge to convince Royal Oak business patrons to park in the structures when they’re used to

surface lots, said Judy Davids, spokeswoman for the city. Vicari and Mike Dbouk, owner of nearby Boukie’s Grill, said older customers relied on the adjacent municipal parking and don’t want to make a longer walk, even if it's just a couple of blocks. Boukie’s, at the southeast corner of Main Street and 11 Mile Road, has seen a 42 percent sales drop in the last couple of weeks, Dbouk said. “I don't know if we’re going to continue like this,” he said, though he added he has no immediate plans to close. He blamed the lack of nearby parking for the drop, but also acknowledged some of the loss could be due to the Fourth of July holiday. Adding fuel to the fire, the Take Back Royal Oak Coalition on Monday morning issued a news release stating “Cantina Diablo, Red Fox and Dixie Moon Saloon also have decided to not renew leases in the city because of the permanent lack of critical parking.” But their owners told Crain’s that they have no immediate plans to close. Restaurateur Brian Kramer’s Kramer Restaurant Group owns Cantina Diablo and Red Fox English Pub as well as their 100 S. Main St. building at the southwest corner of Main Street and 11 Mile Road. He said customers’ parking difficulties have affected his bottom line and he is planning a “remodel” that he believes will likely reinvigorate his holdings at that corner. Most significantly, he said, sales have slid around 40 percent since the 70-space lot behind his building closed about a year ago to make way for a 74,000-square-foot office building. It’s expected to open sometime this summer, offering 54 parking spots that will be open to the public only during evenings and weekends. Dixie Moon Saloon owner Shepherd Spencer, part of the lawsuit challenging the City Center development, said he isn’t planning to close

imminently, but he is concerned about a dip in revenue: $200,000 so far this year, compared with $400,000 by this time last year. “It’s devastating us,” said Spencer, who also owns Little Tree Sushi Bar next door.

City: Short-term pain will bring long-term gain Construction pains will fade as work finishes and brings new commerce to Royal Oak, Mayor Michael Fournier said. The 580-space parking deck is expected to open in about a year. And as office buildings open, they’ll draw hungry lunch crowds to Main Street, he said. “Restaurants can’t hold on for two years until it gets better,” Vicari told Crain’s. Not everyone is wringing their hands over the construction and parking issues. A Bar Louie franchisee is working to bring the casual barand-burger chain to the space formerly occupied by Blackfinn Ameripub, which closed in October, according to a city document.

Parkings fees go up The Royal Oak City Commission also approved a public parking fee increase at a June 11 meeting, on recommendation of the DDA based on a March study by Southfield-based Rich & Associates. It would raise on-street rates from $1 to $1.25 per hour in high-demand areas downtown before 5 p.m. and to $1.50 in high-demand areas after 5 p.m. In surface lots, the rates would rise from 50 cents to 75 cents per hour, and from 75 cents to $1 in certain areas. The city also approved $10 rate hikes for monthly garage parking permits. Those fees took effect immediately and are in process of being implemented, city spokeswoman Davids said.

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

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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

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // J U LY 1 6 , 2 0 1 8

MARKET PLACE

NELSON FROM PAGE 1

â&#x20AC;&#x153;Our biggest thing is our commitment to maintaining what Eastern Market is all about,â&#x20AC;? said Nelson, whose company is called Firm Real Estate LLC, based in Detroit. â&#x20AC;&#x153;It can't become like some of the other food districts in this country like the Meat Packing District in New York or the Fulton District in Chicago, where it has been redeveloped to the point where the food industry really no longer even exists there. That cannot happen and will not happen in Eastern Market.â&#x20AC;? Dan Carmody, the president of the Eastern Market Corp. who has been working with the Nelsons on honing their plan, agreed. â&#x20AC;&#x153;We are painfully aware that other food districts like Eastern Market have disappeared when a tsunami of real estate investment popped in,â&#x20AC;? he said.

Big-name backing The Nelson duoâ&#x20AC;&#x2122;s effort comes with the backing of some big names in Detroit business, all of whom have an equity stake in the project Sanford Nelson says will keep current retail and restaurant tenants in their buildings and give them the opportunity to expand, as well as recruit new niche businesses. Others involved include: Don Foss, the billionaire founder of Credit Acceptance, considered the first company to offer subprime auto loans; Marvin Beatty, a Detroit developer who is also chief community officer for Greektown Casino-Hotel; and Larry Mongo, the owner of Cafe dâ&#x20AC;&#x2122;Mongoâ&#x20AC;&#x2122;s Speakeasy on Griswold Street downtown. â&#x20AC;&#x153;I was born and raised in Detroit,â&#x20AC;? Foss, who was not made available for an interview, said in a statement provided to Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s great to see all the activity happening in the city, and I am excited to invest and be a part of the revitalization effort.â&#x20AC;? Beatty confirmed Fossâ&#x20AC;&#x2122; and Mongoâ&#x20AC;&#x2122;s investments in the project. The precise terms of the business structure were not disclosed. He said he has known Linden Nelson for about 15 years and the two have been talking about doing business together for about a decade. â&#x20AC;&#x153;Late â&#x20AC;&#x2122;16, mid-2016, we really started looking at the possibilities and trying to identify where our target area would be and what kind of things,â&#x20AC;? Beatty said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been talking, and we see some great opportunity in areas that others have not yet saw as a real opportunity and we are going to pursue some of those.â&#x20AC;? Sanford Nelson said he first got interested in real estate when he moved to downtown Detroit 4 1/2 years ago. â&#x20AC;&#x153;I began following the progress of various projects around the city and educating myself on the ever changing market conditions in various neighborhoods around Detroit,â&#x20AC;? he said. â&#x20AC;&#x153;What ultimately sparked my desire to pursue real estate development was that I realized as a developer, one can create opportunity for others, be it opportunity for someone to find a place to live, or an opportunity for small-business owners to find space and launch their concept. As a developer, itâ&#x20AC;&#x2122;s very fulfilling for me to be a part of that solution and to cultivate opportunity that will help foster growth in Detroit.â&#x20AC;?

POSITIONS AVAILABLE Engineering - Diesel Test Engineer, Johnson Matthey, Inc. Diesel Test Engineer, Johnson Matthey, Inc., Taylor, MI. Assist in the planning & execution of app. test programs and in the analysis & interpretation of test results. Req. Bachâ&#x20AC;&#x2122;s deg or foreign equiv. in Mech. Engg., Chem. Engg. or rel. + 2 yrs rel. work exp.; OR a Masterâ&#x20AC;&#x2122;s deg or foreign equiv. in Mech. Engg., Chem. Engg. or rel. Apply by mail, referencing Job Code MI2002, Attn: Rebecca Balkiewicz, Johnson Matthey, Inc., 435 Devon Park Drive, Suite 600, Wayne, PA 19087.

REAL ESTATE WATERFRONT PROPERTY

LARRY PEPLIN FOR CRAINâ&#x20AC;&#x2122;S

LAKE MICHIGAN 8"5&3'30/5

Larry Mongo (left), Sanford Nelson, Linden Nelsen and Marvin Beatty have invested in Eastern Market.

Need to know Sanford Nelson has quietly acquired a 142,500-square-foot Eastern Market portfolio over the last 18 months J

J Portfolio includes the building that houses Supino Pizzeria and Russell Street Deli, as well as the Bertâ&#x20AC;&#x2122;s Warehouse

Important to the Nelsons and their investors that the food district maintain its identity J

â&#x20AC;&#x153;As a developer, itâ&#x20AC;&#x2122;s very fulfilling for me to be a part of that solution and to cultivate opportunity that will help foster growth in Detroit.â&#x20AC;? â&#x20AC;&#x201D; Sanford Nelson

First step While larger development plans could be on the horizon, first things first, the Nelsons said in their unassuming office tucked behind an L.A. Fitness gym that Linden Nelson developed at Maple and Crooks roads in Troy. The office, with its single glass door, opens to what ends up being a cavernous gallery of art, cars and movie props. They both said the first step in their project is to bring the Eastern Market buildings they own up to snuff, addressing deferred maintenance. Once that happens, a better determination will be made about whether and how much new space to build. Work on the vacant buildings is expected to begin immediately now that the Rocky Investment Co. deal has been finalized. The time frame for completing the rehabs varies, Sanford Nelson said. â&#x20AC;&#x153;But within the next few months, some of the more immediate maintenance issues will be completed,â&#x20AC;? he said.

Partnership with Bert The sale of Bertâ&#x20AC;&#x2122;s Warehouse, 2727-2739 Russell St., marks the end of a grueling few years for the business. In 2015, it was put to auction twice, where it fetched a high bid of $2 million the second time around. It never actually sold, however. Sanford Nelson stressed that he and his investors do not own the restaurant, but are merely owner Bert Dearingâ&#x20AC;&#x2122;s new landlord.

The Bertâ&#x20AC;&#x2122;s Warehouse sale was first reported by The Detroit News on Wednesday evening. Sanford Nelson said a $1.6 million sale price the newspaper reported was â&#x20AC;&#x153;not accurate.â&#x20AC;? â&#x20AC;&#x153;We did not buy Bertâ&#x20AC;&#x2122;s. Bert owns Bertâ&#x20AC;&#x2122;s,â&#x20AC;? he said. â&#x20AC;&#x153;We partnered with Bert to acquire the property. It is a privilege for us to be partners with a true Detroit icon. That Bert chose us to be his partner speaks to the friendship and trust that has formed between myself, Jai Lee (Bert's son), Bert and my father.â&#x20AC;? A message was left with Dearing Wednesday morning.

Bringing energy Sanford Nelson was having a difficult time getting his foot in the door with the Russo family, which owned the eight-building Rocky portfolio he wanted to buy. As hard as he tried, he wasn't making any headway in reaching the family about a deal. â&#x20AC;&#x153;We needed a tenacious broker,â&#x20AC;? said Linden Nelson, a 1998 Crain's 40 Under 40 honoree who made what was then a $100 million fortune in the 1980s and 1990s after selling Ford Motor Co. on a detachable key ring for valet parkers. That broker was longtime family friend Steve Gordon, founder and president of Southfield-based Signature Associates Inc. â&#x20AC;&#x153;He couldnâ&#x20AC;&#x2122;t get anywhere,â&#x20AC;? Gordon said of the younger Nelson, adding that the father-son team and their other investors have â&#x20AC;&#x153;several other propertiesâ&#x20AC;? under contract. â&#x20AC;&#x153;These Rocky sellers have been approached by everybody and got very comfortable with this buying group, and it could have been done on a handshake.â&#x20AC;? Carmody sees the Nelsons and their investment group as a boon for Eastern Market in the near and longterm future. â&#x20AC;&#x153;They are bringing a lot of energy and the work so far that they are talking about doing fits with our strategy for what needs to happen where it stays about food and is a place where everybody is welcomed and is a place that supports independent small businesses,â&#x20AC;? he said. And in spite of a tough go at the beginning, Gordon is optimistic about the future of the food district with the Nelsons and their investors owning a large chunk of it. â&#x20AC;&#x153;They are going to change the landscape of Eastern Market for the positive,â&#x20AC;? Gordon said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Oakland Hills to close South Course in 2019 for renovation By Bill Shea bshea@crain.com

“The Monster” will go into hibernation next year. Oakland Hills Country Club said Friday that it will close its famed South Course for about 18 months beginning in fall of 2019 for a $7.65 million renovation project that’s a modified version of what membership rejected two years ago. It will reopen in spring 2021. The private course in Bloomfield Township, the site of several major golf tournaments over the years, announced its plans on the 100th anniversary of the opening of the South Course’s formal opening. The club’s 500-plus stock-owning members “overwhelmingly” approved the renovation project in a vote that lasted from mid-June until Thursday, said Oakland Hills President Bill Royce. Vote totals weren’t disclosed. Membership will finance the project via a new assessment, Royce said. The plan is a modified version of an $11 million project that was rejected by members in July 2016. That plan called for removal of trees and foliage in a bid to return the South Course to its largely treeless preWorld War II links conditions. The new plan, which maintains many of the infrastructure improvements, vastly reduces the proposed tree removal and also cuts back things like changes to cart paths. The new project includes replacement of the surface and infrastructure of greens and bunkers to improve performance, creates larger greens, adds better grass, changes placement of some tees, adds a new irrigation system, and removes some trees that affect play around greens, according to Royce. “Ultimately, the reason why we did this was to align with our vision to continue our legacy in champion-

Oakland Hills Country Club in Bloomfield Township hosted the U.S. Open in 2008.

ship golf, to maintain the South Course as a championship venue for the next hundred years and at the same time make it more enjoyable for the membership to play,” Royce said. Oakland Hills hired Hanse Golf Course Design from suburban Philadelphia to handle the project. “He’s doing an awful lot with what it originally looked like, but with trees,” Royce said. Hanse was hired to survey the course for potential work in 2014 over several other designers including golf architect Rees Jones, who had boosted the South Course’s difficulty in 2006-07 to prepare for the 2008 U.S. Open. Jones’ father, Robert Trent Jones, had remodeled the South Course before the 1951 U.S. Open, after which golf icon Ben Ho-

gan famously termed the course as “The Monster” after winning. Since the 2008 U.S. Open, the club’s management has been seeking to ensure the South Course is playable by members while also maintaining its status as one of the tougher sites for major tournaments. Modernization and refreshing a course can be a factor in landing big golf events. Oakland Hills management held a series of informational meetings with members to sell them on the South Course project and get input on what they wanted to see changed or preserved, Royce said. “We did listen to the members and kept more trees and tweaked some of the bunkering,” he said. “We didn’t need to redo cart paths. We cut back without impacting the

overall design.” The North Course will remain open during the project. It doesn’t have the reputation of its sibling links, but has hosted notable tournaments including the 2012 Michigan Amateur and 2016 U.S. Amateur. Famed golf course architect Donald Ross designed the South Course. The Scottish-born Ross, who designed more than a dozen courses in Michigan and more than 400 nationally from 1900-48, famously said of Oakland Hills upon first visiting the site in 1916: “The Lord intended this for a golf course.” “We are now looking forward to getting down to the planning for the project as we look to combine the best attributes of the original Donald Ross design, with the finest aspects of the course evolution that

has occurred over the last 60-plus years. Our goal is to maximize the potential of this exceptional golfing landscape and this masterpiece of a golf course,” Hanse said in a statement. Oakland Hills has hosted six U.S. Opens (the second most in the tournament’s history, which dates to 1895), and in October 2015 the club informed the Far Hills, N.J.-based United States Golf Association, the Open’s organizer and the governing body of U.S. golf and golf clubs, that OHCC is again formally interested in hosting a U.S. Open. “We’re definitely interested in hosting more majors. We’ve been in discussion with governing bodies of golf continuously,” Royce said. Oakland Hills long has had a reputation as an elite club, and club management said the strategy is to continue seeking out USGA and PGA Tour events to burnish that reputation. It also has hosted three PGA Championships, the 1929 U.S. Women’s Amateur, the 1981 and 1991 U.S. Senior Opens, and the 2004 Ryder Cup matches. Oakland Hills traces its origins to October 1916, when it was founded by Norval Hawkins, the first Ford Motor Co. general sales manager, and Joseph Mack, a printer for automotive industry sales materials. There were 140 charter memberships at a cost of $250 apiece, according to the club’s official history. The first club pro was Walter Hagen, one of the most instrumental figures in the development of modern golf whose 11 major championships are third-most in golf history. In recent years, it had cost $72,000 to join the private club, but that number has increased, Royce said. He declined to how much the fee is now, and Oakland Hills does not disclose its finances or annual dues information.

Grand Prix proposes raising fee to race on Belle Isle to $300,000 By Tyler Clifford tclifford@crain.com

Belle Isle Grand Prix has proposed paying a $300,000 annual fee as part of a three-year contract to continue racing the event on the Detroit island, a 50 percent increase from the $200,000 it has been paying. Grand Prix President Michael Montri made the pitch, among other financial offerings, to the state’s Belle Isle Park Advisory Committee on Friday morning. He stressed that the race does more good for the city than the challenges it faces as he highlighted the race organizer’s commitment to help the state fund projects on the island. The pitch comes amid controversy over the race’s presence on public land and how much it monopolizes space on the island park for race setup and tear-down. Ticket prices will not be directly affected by the fee increase, Montri said. “We anticipate that we will absorb those costs in our expenses,” he said. The proposal seeks to help contribute to $14 million worth of project needs that the Michigan Department of Natural Resources has identified to improve the island by 2022. Some of those improvement projects highlighted in the presentation included the island’s Casino, shoreline fishing, the White House and athletic shelter,

Belle Isle Grand Prix has proposed paying a $300,000 annual fee as part of a three-year contract to continue racing the event on the Detroit island.

among other items. Organizers pledged $50,000 annually for a project to be determined by the DNR and another $35,000 annually for a dedicated fund for projects and programming in the paddock. The Belle Isle Advisory Committee allowed for public comment at the meeting to hear out the proposal, but the seven-person panel does not have authority to approve or reject a new deal. The committee will make a recommendation to the state DNR that manages the island. The city of Detroit owns Belle Isle, which was leased for 30 years to the state of Michigan starting in 2014.

The public meeting drew an apparent evenly divided crowd of about 100 people that support and oppose continuing the 2.3-mile street circuit race on the island. Most advocates were dressed in red and cheered on Montri at the conclusion of his pitch. “We are a world-class city, and world-class cities have world-class events,” Montri said to close out his presentation. Those who objected to renewing a contract were just as loud in speaking out against continuing the event on the 982-acre island. “You’re selling the jewel of Detroit to the highest bidder, and money isn’t ev-

erything,” said Angela Lugo-Thomas, a Highland Park resident of nearly four decades. Her grandmother was the director of the Belle Isle Nature Zoo before it closed due to budget constraints nearly 15 years ago. “I don’t have a problem with the race … It just doesn't belong in a public park. It destroys the island, the environment.” Other critics said the race does more bad than good for the island, railing against damages and the amount of time it takes away from public use. One speaker urged the DNR to decline the contract if the race could not be set up and taken down in 30 days. The Grand Prix said it would reduce total time on the island to 62 days, which would be down from 65 days this year and down from 95 days in 2015. Montri said that requires new approaches and processes to setting up the event and more staff. The proposal spells out 39 days of set up leading up to the event weekend, three days of events and 20 days of teardown. About 1,000 people are employed to handle the race setup, the event itself and then the tear-down. An additional 1,100 volunteers are on the island for the weekend. “We think that’s a fair maximum just in case we get hit by weather or something unforeseeable happens,” Montri said. “We did double shifts this year. We worked longer hours and more

compact weekends. We changed our processes. We always look for where we can get an advantage on time.” It is not clear when the DNR will decide on a contract extension. The race costs about $11.5 million to stage and gets more than $1 million of subsidy from Bloomfield Hills-based Penske Corp. to avoid losing more than $1 million a year. The Grand Prix is a 501(c)(3) nonprofit under the Downtown Detroit Partnership. The race originally was run around the Renaissance Center downtown from 1982 to 1991, then on Belle Isle from 1992 to 1997. Roger Penske returned the event in 2007, and it has since run each year with the exception of 2009-11 events as a result of the recession. Tyler Clifford: (313) 446-1612 Twitter: @_tylerthetyler_

BANKRUPTCIES The following business filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit July 6-12. Under Chapter 11, a company files for reorganization. J Protecto Horse Equipment Inc., 22722 Dequindre Road, Warren, voluntary Chapter 11. Assets and liabilities are not available.

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STRATEGIES FROM PAGE 3

Individual premium rates have risen the past two years beyond normal medical trends because the Trump administration has made a number of policy decisions that are shifting more costs to policyholders. Changes include eliminating the individual mandate and removing cost-sharing and risk-adjustment payments to health insurers. Many employer-sponsored plans in Michigan have kept premium increases in check by implementing pharmacy cost-cutting strategies and lowering employee payroll contributions to encourage participating in high-deductible insurance plans that they believe lower overall health care costs, the survey found. Some 25 percent of Marsh & McLennan’s clients, some 96 employers, have taken even more aggressive steps to address rising costs over the years. These so-called “TrendBenders” cut costs by 3 percent last year and project to cut health care costs an average of 3 percent this year. “They (TrendBenders) are doing key things longer and more aggressively,” said Becky McLaughlan, vice president with Marsh & McLennan. “Pharmaceutical costs, especially specialty drugs” continue to drive health care spending. While all 347 Marsh clients expect 5 percent cost increases this year, the 261 non-TrendBender companies averaged a 7 percent cost increase. To cut costs by 3 percent this year, McLaughlan said, the 96 TrendBender companies are offering a higher percentage of consumer-driven health deductible plans to employees with higher enrollment rates than the 261 non-TrendBender companies. Some 45 percent of TrendBenders view steering employees to high-deductible plans a key cost-containment strategy, compared with 34 percent of non-TrendBender companies. “They have a more aggressive communication strategy, payroll availability during the year, they charge less, their contributions are lower to make high-deductible plans more attractive,” said McLaughlan. For example, TrendBender companies charge monthly payroll contributions of $247 for high-deductible

Becky McLaughlan: Drug costs drive spending.

Brian Swanson: Sensitive to employees.

family coverage compared with the other companies that charge an average of $282. The other major reason why companies have been able to cut costs is how closely they manage pharmacy spending, McLaughlan said. For example, TrendBenders are more likely to implement prior authorization and step therapy (72 percent compared with 56 percent) and the use of mandatory generics (54 percent vs. 47 percent) as cost-containment strategies.

One company’s tale E&E Manufacturing Co. Inc. of Plymouth projects to cut costs by 0.2 percent this year and has kept them nearly flat the previous three years by using wellness and health screening programs, offering employees free consumer-driven high-deductible plans through credits if they don’t smoke, engage in smoking cessation programs or undergo biometric screening, said CFO Brian Swanson. “The last three years we have not significantly changed the ratio of what employees paying and we are paying,” Swanson said. “We are very sensitive to employees paying a fair amount. It is very important for us to remain competitive to attract top talent but at the same time we don’t want health care costs to get out of control.” E&E manufactures automotive parts, including welded assemblies, at plants in Plymouth and Athens, Tenn. It employs 300 in Michigan and 350 in Tennessee. The company offers two self-funded plans to employees — a traditional PPO plan and a consumer-driven health plan — through Blue Cross Blue Shield of Michigan. “Five years ago we were more weighted to PPOs. Seventy-five percent (of employees) were in PPOs and

DATA

FROM PAGE 3

A recent survey by the National Alliance of Healthcare Purchaser Coalitions found that 97 percent of human resource practitioners believe they need better tools to evaluate health care cost and use data to make better decisions on benefit plans. For several years, with mixed results, employers have been asking health insurers for more data on price, cost and quality to increase transparency. Some insurers had been reluctant to share data they sometimes consider proprietary and confidential. In response, several employers contracted with such consulting companies as San Francisco-based Castlight and Healthcare Bluebook in Nashville that helped employees access information on price and quality. On quality and patient safety, an increasing number of groups that include Leapfrog, the Joint Commission and the Centers for Medicare and Medicaid Services are publicly reporting patient safety measures.

Aaron Friedkin: Data is critical to decisions

Sherwin Robinson: More detail helps

Now it appears health insurers are developing tools of their own. Health Alliance Plan also partnered with an unnamed health care data analytics company to provide claims data to employer clients of 100 or more enrolled workers, said Marc Vanderburg, HAP’s vice president of business development and consumer solutions. “Employers and the insurance agents who represent them are wanting more real-time data that will help them contain health care costs,” Vanderburg said. “HAP uses claims data to help employer group customers find opportunities to reduce their overall health care costs by evaluat-

25 percent in (CDHPs with) health savings accounts,” Swanson said. “Under PPOs, employees were going to the ER for unnecessary reasons or going to urgent clinics. They could have used telemedicine to get diagnosed and treated. They didn’t care because the money was not coming out of their pockets.” Swanson said E&E altered its benefit plan to encourage greater participating with CDHPs and HSAs. “We have 75 percent of employees with HSAs,” he said, adding that has drastically reduced company health care costs and given flexibility to employees. “The (CDHP) HSA plan is now free if employees use the credits we offer for not smoking, smoking cessation or biometric screening,” Swanson said. In addition, the company matches contributions to the HSA up to $500 for single employee and $1,000 for families “to encourage them to save,” he said.

Cost containment, benefit strategies Like E&E Manufacturing, most of the 347 Marsh clients are managing rising health care costs by encouraging high-deductible health insurance plans, shifting some costs to employees, carving out prescription drug coverage by contracting with pharmacy benefit managers and offering wellbeing and telemedicine services. Another employee benefit that has become popular with many companies is the offering of voluntary benefits. More than 61 percent of employers offer accident insurance coverage, 56 percent offer critical illness and cancer insurance coverage and 36 percent offer whole life insurance coverage, said Jackie Webster, vice president of health and benefits with Marsh & McLennan. “The percentages have been steadily going up over time and are very popular with employees,” Webster said. Some 80 percent of employers offer the benefits to help fill gaps in employer benefits and 67 percent believe the benefits enhance employment without adding to costs.

Pharmacy cost management Prescription drug costs are projecting benefit use and understanding trends.” For example, HAP provides employers with claims data to show spending trends, specific data on high-cost employees “that help an employer focus on the appropriate wellness and care management programs for its employees.” Individual names of claimants are not provided to employers. Other information is trends on prescription drug coverage, location and type of health care services. Like other health insurers, Blue Cross of Michigan has been fielding requests for several years from employers to offer them more detailed information on their health care spending. When employers asked, Blue Cross was only able to provide employers “high-level” claims information on inpatient, outpatient, pharmacy and some chronic condition categories, said Aaron Friedkin, M.D., the Blues’ senior vice president of clinical strategies for health plan business. All that changed when Blue Cross last year helped develop Whyzen, a multi-product employer data report-

ed to rise to 18 percent of total health care costs this year compared with 14 percent in 2007, according to data from Pricewaterhouse. McLaughlan said specialty and biotech drugs, many of which can cost thousands or even tens of thousands of dollars, now account for up to 50 percent of total pharmacy spending, more than double the amount six years ago. One cost-containment strategy a growing number of companies are doing is carving out pharmacy benefits from health insurance contracts. Some 26 percent of compa-

nies are directly contracting with pharmacy benefit managers, up from 16 percent in 2017. “The national market is close to that, so Michigan has caught up,” said McLaughlan, explaining that rising costs are forcing some companies to look for savings. “They believe financial terms are better” by contracting directly with pharmacy benefit managers, she said. “Some PBMs have more flexibility, maybe offer discounts and mail order, or maybe rebates are more favorable.” Swanson said E&E carved out pharmacy benefits to ExpressS-

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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 // J U LY 1 6 , 2 0 1 8

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cripts in 2017. “It has worked out very well and is a big reason why we have cut costs,” he said. McLaughlan said because more employers are carving out pharmacy benefits, some health insurers are fighting back because they have lost business. “Insurers are returning rebates to self-funded employers. They are doing more because of the competition. The market is demanding it,” she said. But she said carving out pharmacy benefits can add administrative headaches and could cause problems for companies that purchase stop-loss insurance for medical and

Blue Cross last year helped develop Whyzen, a multi-product employer data reporting tool for groups with 50 or more contracts.

pharmacy combined. In addition, employees must be given two identification cards. Another growing cost-containment strategy for employers is using prior authorization for some prescriptions. Some 60 percent of employers now mandate prior authorization, up from 48 percent in 2017. “Companies are interested in eliminating waste and to make sure people are not using drugs they don’t need or could use a lower-cost alternative,” said Chris Bouschet, Marsh and McLennan’s senior vice president and managing director and survey leader. ing tool for groups with 50 or more contracts, said Friedkin, who came to Michigan last summer from Blue Cross of Minnesota. Whyzen is one of several software products offered by Blue Health Intelligence, a spinoff company from the Blues’ national association that is now owned by multiple Blues plans, including the Michigan Blues. Other Blues plans are expected to use Whyzen, but Michigan was the first, Friedkin said. “Data is critical to anybody making a decision” on health care costs, especially self-funded employers, said Friedkin, noting that Blue Cross aggregated Blue Care Network managed care data and Blue Cross PPO data so employers have a complete view of their workforce. To support Whyzen, Friedkin created two teams — a customer consulting team and a clinical account management team. The teams visit employers or agents and present detailed data for them to use to reduce costs or refine benefit plans. Whyzen also is used by Blues internally to assess health care cost and use trends, he said.

Employee cost shifting Employers also are continuing to shift about half of rising costs to employees by expanding consumer-driven high-deductible health plans and increasing deductibles and co-payment contributions to plans. Despite a recent Kaiser Family Foundation report that found health insurers shifted costs to patients in employer-sponsored plans more than three times their own costs from 2006-2016, employer cost-shifting to employees this year in Michigan doesn’t appear to be higher than pre“Our clinical account team is staffed by a medical director and nurses. Their sole job is to speak with our customers about clinical issues,” he said. Friedkin said employers also can train their staff to access the webbased data and view and sort it however they want. “We offer training to customers,” he said, adding: “Agents are our primary users.”

Addressing cost concerns Like Blue Cross and HAP, Priority Health clients previously could get claims, membership and premium data on a more limited and generic basis. If they wanted more precise data, Robinson said Priority’s analysts would have to spend time and individually pull it on a monthly or quarterly basis. But now, Priority’s Employer Insights can pull the data on a much more detailed and timely manner. “If a company has diabetics, they can better manage that population to drilling down on per-employee costs,” he said. “It helps for other

vious years on average, McLaughlan said. Because of lower employee premium costs, 30 percent of employees, up from 25 percent in 2017 and 20 percent from 2016, have chosen consumer-driven high-deductible health plans this year. More than half of employers offer high-deductible health plans to employees. Swanson said Blue Cross offers many of E&E employees online tools to help price out health care services. He said the company offers an onsite clinic at both plants staffed by a nurse to address health issues at work and also offers Teladoc telemedicine service at no cost to employees. While high-deductible plan costs have declined, employers appear to be increasing PPO and HMO plan costs. This strategy illustrates how employers are encouraging workers to shift to high-deductible plans. For example, average contributions for a single CDHP is $81 this year, or 18 percent of total costs, for an 8.1 percent drop. Family CDHP contributions average 4.1 percent lower this year to $294 per month, or 21 percent of total costs. “Employers are putting more money (4 percent increase) in health savings accounts” for employees, said Webster. The typical contribution is $500 for a single employee and $1,000 for an employee with family. On the other hand, the average deductible for PPO plans now is $1,014, up from $985 in 2017. The median deductible for single PPO coverage increased to $750 from $600. Contributions to PPO plans for single employees rose an average 5.7 percent to $147 per month, more than double the 2.2 percent increase in 2017. Family PPO contributions rose 4.6 percent to $478 per month, also higher than the 2 percent increase in 2017. Single PPO contributions account for 26 percent of total costs and family PPO contributions account for 29 percent of total costs. For HMO single coverage, employee contributions averaged a 5.6 percent increase to $113, for 24 percent of total costs. Family HMO contributions were up 9.1 percent to $398 per month, or 29 percent of total costs. Jay Greene: (313) 446-0325 Twitter: @jaybgreene chronic diseases as well. It also can tell them on high ER use, how many doctor visits and whether their population has high utilization. They can look at their population and cater their benefits.” During the third quarter of this year, Priority will introduce Employer Insights to its small-group market population under 50 employees, Robinson said. Priority has a total of 800,000 managed care members, including 338,000 in large group and 87,000 in the small group market. “Larger-group customers usually ask the most questions, but all groups need this information to help them reduce claims costs,” he said. Priority Health hired three additional analysts and now has a seven-member team to monitor trends and develop action plans to help employers make decisions and potentially lower their health care costs. “We are very excited about it ... because companies have been asking for it,” Robinson said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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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 // J U LY 1 6 , 2 0 1 8

TRADE FROM PAGE 3

James and Pensler are running traditional campaigns appealing to conservative GOP voters on abortion, gun rights, immigration and national security, while the Republican president is pursuing policies that could harm their own businesses. “I think that logical minds will agree that no one wants a trade war on one hand. And American workers have been taken advantage of by our trading partners,” James said in an interview at his company’s headquarters on Fort Street. A look inside the two businesses James and Pensler operate reveals just how integral global trade is to their success. At Pensler’s Korex plant near Pontiac Trail and Wixom Road, the powdered dishwasher detergent produced by Michigan workers was developed by chemists at a company facility in Canada. Korex’s popular dishwasher gel packs are sourced with American-made chemicals and polyvinyl alcohol, but manufactured at one of the Toronto plants and shipped back to U.S. customers — reflecting just how intertwined the economies of both countries have become. “They absolutely are,” Pensler said. “There’s great synergies in the supply chain across Michigan. They’re very intertwined.” On July 1, Canada slapped a 10 percent tariff on automatic dishwasher detergent produced at Pensler’s Wixom plant, which he acknowledges has “constrained some of our dish product sales.” He did not know how much financial impact it would have to a company that does about $200 million in annual sales. “At this point, we’re not real worried about it,” Pensler said of the tariff. “I think the president will negotiate a solution that ends up being better, with lower tariffs than when we started.”

TARIFF FROM PAGE 1

Alpha is just one victim in the Trump administration’s growing global trade war designed to boost American manufacturing — one that is set to leave a trail of unrealized profits in its path, according to experts. In its latest move, the White House is reportedly seeking to clamp down further on foreign imports, this time planning $200 billion in tariffs on Chinese goods like routers, furniture and handbags, stoking more fear among Michigan businesses already impacted by previous U.S. tariffs and retaliatory foreign tariffs. The list of U.S. tariffs has grown from 18 to more than 10,000, if the U.S. moves forward with the new China tariff threat. The rat-a-tat drumbeat of tariff news — and the unpredictability of where it will all end — are crippling local businesses’ ability to create strategic plans to handle rising costs, said Daron Gifford, partner and consulting services leader at Plante Moran in Auburn Hills. “Frankly, many (businesses) are having a hard time starting the evaluation process,” Gifford said. “The biggest challenge is there are new tariffs seemingly every day. Whether a company needs to re-source materials, change manufacturing strategy or find alternative sourcing, (those) are long-term initiatives they can’t get started on.” Mary Buchzeiger, CEO of Auburn

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

John E. James, CEO of Renassaince Global Logistics, stands in the company’s warehouse in southwest Detroit, where 150 to 250 shipping containers leave daily carrying auto parts for Ford and General Motors to overseas assembly plants.

Sandy Pensler, owner of Korex Companies, stands in the mixng tower inside Korex’s Wixom plant, which produces powder dishwasher detergents. The company has two other plants in Toronto and one in Chicago.

Trade pacts

cles — like the kind built in the factories of James’ customers, Ford and GM. “I think the president has identified the issue and is beginning the conversation,” James said. “A lot of the same people who believed our president who was going to plunge us into nuclear war (with North Korea) this time last year are the same folks who are talking about how these tariffs are going to be Armageddon.”

Trump’s stated trade goals are aimed squarely at undoing what the North American Free Trade Agreement created — a long-stretching global supply chain that reduced the share of U.S.-made components and final assembly of vehicles. Trump has called NAFTA “the single worst trade deal ever approved in this country.” James’ father, John A. James, founded Renaissance Global Logistics in the late 1990s, and the business has become Ford’s No. 1 trading company. It’s a subsidiary of the James family’s James Group International, which began as a trucking company and has evolved into a logistics services firm for the automakers. Much of the James Group’s enterprise is entangled in the trade pacts the president publicly decries. From its 300,000-square-foot warehouse on Fort Street, Renaissance Global Logistics consolidates up to 5,000 different parts for Ford and GM vehicles that are repackaged for overseas distribution. Each week, 150-250 shipping containers packed with Ford and GM

parts get hauled by truck and rail from Detroit to ports as far away as Long Beach, Calif.; Tacoma, Wash.; Jacksonville, Fla.; and Port Rupert, British Columbia, James said. Renaissance Global, which recorded about $30 million in revenue last year, is paid on performance and wringing out efficiencies in the supply chain, James said. James is careful not to criticize or second-guess Trump’s maneuvering but sees his experience as an asset the U.S. Senate could use (the U.S. Constitution, after all, does give Congress, not the president, the power to regulate trade in the Commerce Clause). “It’s important to have people who understand the impact on both family business and multi-national companies, understanding the impact it will have on the supply chain and the bottom line,” said James, who joined the family business in 2012 after serving eight years in the U.S. Army. James sidesteps questions about the potential implications for his company from Trump’s trade policies, particularly if the president were to follow through with threats to impose tariffs on Canadian-assembled vehi-

Hills automotive hinge manufacturer Lucerne International, developed a plan, and quickly, after the parts Lucerne produces found themselves on the administration’s tariffs list in April. Lucerne manufactures its hinges at plants in China, and Buchzeiger said the tariffs would put her company out of business, as there were no manufacturers with capacity to meet her demand in the U.S. “I turned my entire conference room into a war room,” Buchzeiger said. “I’ve never faced anything like this before, but I figured I was well-connected. So I called all of the organizations I was involved with, called our representatives and senators, consulted our attorneys and hired a public relations firm.” Buchzeiger launched a media blitz, publishing op-eds in several publications including Crain’s Detroit Business, before testifying in front of members from the U.S. Trade Representative’s office in Washington D.C. in May. She was ultimately successful in getting her products removed from the tariff list. “The execution our administration is taking (on trade), for lack of a better word, is asinine,” Buchzeiger said. “It’s destroying U.S. companies left and right.” Ann Arbor-based custom home builder Meadowlark Design + Build is losing 1 percent of its profits because of rising softwood lumber costs, said Doug Selby, CEO, and it’s unable to use

alternative materials like concrete and metal because, ultimately, they still cost much more than lumber. The U.S. put a 24 percent tariff last year on softwood lumber imports from Canada, largely supported by U.S. lumber producers in southern states who argue the Canadian government unfairly subsidizes its lumber to keep prices low. However, most lumber used in homebuilding in states like Michigan historically comes from Canada. Prices have risen nearly 30 percent in the past 18 months, Selby said. “As prices go up, it makes it harder to sell products because it ultimately costs the customers more,” Selby said. “I haven’t found a way to accurately pass on the costs that change between bid and construction of a home. We’ve thought about putting in a caveat to our contract to cover rising prices, but most people are stretching their budget to (build a home) anyway, so we’re absorbing the costs, and it hurts.” Alpha is left developing a strategy to combat rising costs, which may include temporary price increases or a contractual provision allowing it to pass those costs through to its customers, Lawrence said. “The (customers) will have to figure out how these costs will be absorbed through their supply base,” he said. “Ultimately, that means the consumer will pay it.” With current new-vehicle prices averaging about $32,000, the 25 percent tariff on steel imports alone would in-

Trump’s tariffs Neither candidate is talking much about trade in their direct-messaging to voters. But Pensler also knows a thing or two about Chinese “dumping,” having lost a tire company to bankruptcy in 2010 as Chinese tiremakers were flooding the U.S. market with tires that cost 30 percent less than the radials his plants in Ohio could turn out. As Pensler’s Denman Tire was bleeding money in late 2009, the U.S. imposed a tariff of 25 percent to 35 percent on Chinese-made tires. It resulted in an immediate drop in Chinese imports — and a surge in imcrease car prices by about $4,000 to $5,000 per vehicle, predicts Jeff Schuster, senior vice president of forecasting at Troy-based LMC Automotive. “When these tariffs were first announced, there was no regard for industries other than steel,” Lawrence said. “It makes the automotive industry expendable, feeling like pawns in a strategy there’s no end to.”

Tariff success story But for Michigan Solar & Wind Power Solutions Inc., the trade war could boost profits. The Commerce Township-based solar energy installer is expected to see a boost in commercial projects thanks to increased domestic manufacturing that results in lower prices for U.S.-manufactured solar panels. “The industry hasn’t been impacted nearly as bad as we, or they, thought,” said President Mark Hagerty. “Since the tariffs were announced, we’ve seen solar installations go up, and we’re set to see prices drop by 30 percent in the next year.” Michigan Solar may be a minority in praising the effects of tariffs — the administration imposed a tariff on solar cells and modules at 30 percent in 2018 before dropping to 25 percent in 2019; 20 percent in 2020; and 15 percent in its final year, 2021. The first 2.5 gigawatts of imported solar cells from a country are exempt from the tariff each year. U.S. solar manufacturers applauded

ported tires from South Korea, Thailand and Indonesia, where no U.S. tariff existed. “That tariff was justified,” Pensler said during an interview at his Wixom plant, which employs 90 full-time workers. “It was rather stark that they could supply the tires cheaper than our material costs. ... We did not have flexibility to adapt.” Pensler said he supports Trump’s approach to negotiating better deals for American industry, even if it has “a little” impact on his bottom line for the foreseeable future. “If we ended up with huge tariffs and they stayed on forever, that would be bad for everyone,” Pensler said. “But I don’t think that's the intent, nor will it be the result.” Like any negotiation, there has to be leverage — and Trump has found it with the tariffs because Americans still consume the majority of Canada and China’s exports, Pensler said. “Unfortunately, just saying ‘pretty please’ isn’t typically enough,” Pensler said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood those tariffs, claiming they face unfair competition from foreign producers. But installers, like Michigan Solar, which represent the vast majority of solar industry employment, cried foul. But Michigan Solar, which employs 20 and expected to generate $2 million in revenue in 2018, uses only domestically manufactured products, so increased U.S. production would lower its costs, Hagerty said.

‘Isn’t going to end well’ “When trade policies are put in place, it’s dangerous to just change them without a lot of planning,” Lawrence said. “There’s been a lot of investment made to support international trade and to change that as a tactic like this is going to do a lot of at least shortterm damage. And for what? We just don’t know.” Buchzeiger believes the administration’s view of trade is going to cripple many industries in the U.S., including automotive, if it continues using tariffs as a battering ram against unfair practices. “This isn’t going to end well,” she said. “I think this is going to send us into a full-on recession sooner than later at a time when we’re all trying to stay on top of our leadership position in manufacturing. ... If you’re in Michigan, hold on to your ass.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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

THE WEEK ON THE WEB

RUMBLINGS

Detroit to learn Final Four fate this week

Suburban Collection launches web series

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

etroit has been named a finalist to host the NCAA men’s Final Four basketball games in 2023, 2024, 2025 or 2026, Mayor Mike Duggan said last Thursday. The Detroit Sports Commission confirmed that it was informed last Tuesday that Detroit was a finalist for one of the years, without being told which, along with Dallas, Houston, Phoenix, Indianapolis, Los Angeles and San Antonio. The original bid was submitted for the years 2023-26 a year ago. Under the bid, games would take place at Ford Field, which hosted the Final Four in 2009. A spokeswoman for the NCAA declined to comment, saying only that the association “plans to announce host cities next week.” A variety of meetings and paperwork submissions occurred throughout the past year to satisfy NCAA requirements. The commission said it expected to know by Monday afternoon or Tuesday morning if Detroit would get a Final Four. The commission’s Detroit Sports Organizing Corp., formed in October to act as ambassadors with NCAA decision makers, was part of the bid process. The 16-member committee is made up of executives from the city’s four pro sports teams, along with political, civic and business leaders. The commission declined to discuss which committee members acted on behalf of Detroit during the bid process. The Detroit Sports Commission was launched in 2001 and was known until 2008 as the Detroit Metro Sports Commission. It markets the city for amateur and college sporting events, acts as a go-between for media and corporate relations and provides organizational services. The commission is a 501(c)(3) nonprofit subsidiary of the Detroit Metro Convention & Visitors Bureau. Duggan’s remarks came during a keynote address during the state chapter of the International Council of Shopping Centers’ Michigan Idea Exchange and P3 Program downtown at Cobo Center. A representative said nearly 350 real estate professionals were registered for the event. Little Caesars Arena this year hosted first- and second-round games of the 2018 NCAA Division I men’s basketball tournament. Ford Field, the 64,500-seat home of the Detroit Lions since opening in 2002, underwent a privately financed $100 million renovation last year that added new clubs, renovated all suites and made other improvements to premium seating along with improved lighting, sound and massive video boards. The 2009 national championship game saw North Carolina beat Michigan State 89-72 in front of a then-record 72,922 fans.

BUSINESS NEWS J The Quicken Loans Inc.-sponsored PGA Rocket Mortgage Classic golf tournament will be played in Detroit in June 2019.

Detroit has been named a finalist to host the NCAA men’s Final Four basketball games in 2023, 2024, 2025 or 2026. Under the bid, games would take place at Ford Field, which hosted the Final Four in 2009.

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

$125,000

The Southwest Airlines Foundation grant the Beach at Campus Martius in downtown Detroit is using to get new furniture, toys, games and programming

1,500

The number Amazon.com Inc. seeks to hire for its Romulus warehouse

The number of new stations Detroit’s bike share program, MoGo, plans to add to neighborhoods and nearby Oakland County cities

J Billionaire Elon Musk pledged to pay to secure clean water for homes in Flint, and local businessman and U.S. Senate candidate Sandy Pensler said he’d add $500,000 in support. J Red Bull has revamped its Detroit arts initiative from the name (it’s now Red Bull Arts Detroit) down to the artist-in-residency program’s selection process as it prepares for its 2019 cohorts. J Revenue at Detroit’s casinos rose 5.3 percent to $119.1 million in June from a year ago. J Wayne State University’s Mike Ilitch School of Business is working with the Detroit Tigers and Olympia Entertainment to offer paid internships to its MBA students. J Planet Fitness scrapped plans to open a gym downtown near the Detroit riverfront, saying plans fell through a couple months ago when the property owner tried to renegotiate terms of the lease after it was already signed. J Detroit has a new neighborhood motorcycle shop, Clutch & Throttle LLC, in the Milwaukee Junction area. J A longtime restaurant in Madison Heights, Col’s Family Restaurant, sustained “significant damage” in a fire last week that sent black smoke billowing from the northeast corner of 12 Mile Road and Stephenson Highway. J The owner of the Boblo Island ferry boat called the S.S. Ste Clair has turned to Kickstarter to fund a restoration after a fire ripped through the structure July 6.

J The Michigan chapter of Represent.Us, a national advocacy group, led a protest outside the Detroit offices of accounting and consulting firm Deloitte last Tuesday, targeting Deloitte managing partner for Michigan and Michigan Chamber of Commerce chair Mark Davidoff for the chamber’s push against an anti-gerrymandering proposal. J Semi-professional soccer club AFC Ann Arbor capped off a strong season on the field but weaker-than-usual turnout in the stands.

he Suburban Collection last week launched its “Suburban Drives Michigan” web series last week, and the first episode featuredone of the state’s most recognizable faces: University of Michigan head football coach Jim Harbaugh. The 10-episode series, which will showcase a range of cars and interesting people of metro Detroit, sets out to explore different communities and answer “What drives Michigan?” Jeffrey Phelps, a Los Angeles-based writer and director, was selected by his stepbrother and Suburban Collection President and COO David Fischer Jr. to host the show in efforts to lure him to move to Michigan. Phelps, who has worked on such movie titles as “Sherlock Holmes” and “Space Cowboys” shot and produced the show. The dealership group created the video series to target customers who spend a lot of time on the Internet, Fischer said in an email. He did not disclose how much was invested in the project, which was a

year in the making. The UM coach can be seen with Phelps cruising Ann Arbor in a 2018 Dodge Challenger SRT Demon, doing doughnuts around the block M on the field at Michigan Stadium (also stressing that the turf is being replaced), discussing his college experience and why he thinks the state of Michigan is a special place. The duo also stopped for a bite to eat at Krazy Jim’s Blimpy Burger near campus. The first three episodes also feature YouTube star Katie Betzing with a Lamborghini Huracan as well as “Walking Man” James Robertson and a Ford F-150 Raptor. A new episode will be posted every other Monday on its YouTube page. Unreleased episodes will feature Detroit Zoo CEO Ron Kagan with a 2018 Fiat Spyder, M1 Concourse founder and CEO Brad Oleshansky with a 1958 Mercedes and Detroit Symphony Orchestra CEO Anne Parsons with a Ford Explorer Platinum, among other pairings.

OTHER NEWS J Detroit City Council last Tuesday unanimously approved a measure that institutes the Cass-Henry Historic District, placing the Hotel Ansonia at 2447 Cass Ave. and Atlanta Apartments at 2467 Cass Ave. and five other buildings under the purview of the Historic District Commission. This means they’re spared from the wrecking ball — at least for the time being. J Eastern Michigan University’s athletic program is the target of a federal investigation following a civil rights complaint and the school’s move to cut four varsity sports amid budget struggles. J A Detroit billboard campaign admonishing state legislators for the high cost of auto insurance in Michigan morphed into an advertising vehicle to aid legislative candidates backed by Detroit Mayor Mike Duggan. J The city of Detroit is seeking Detroit City Council approval to expand a program that’s buying Detroit homes out of foreclosure and reselling them to the people who had been renting them from delinquent owners. J Wayne State University reached a $750 million fundraising campaign goal three months early. J Detroit neighborhood storefront revitalization program Motor City Re-Store is reworking its strategy to prioritize design and assistance before awarding construction grants, after seeing delays. J The 26th Concert of Colors took place in Detroit’s Midtown over the weekend. The music festival has lost significant corporate funding over the last decade but also inspired a sister event in Jackson. J The faculty union at Wayne State University asked President M. Roy Wilson, M.D., for documents and information related to affiliation talks the university has been having since 2016 with Henry Ford Health System.

DOWNTOWN DETROIT PARTNERSHIP

The Campus Martius beach is in line to be outfitted with new furniture, games and entertainment after the Southwest Airlines Foundation selected the public space for a $125,000 grant.

Campus Martius beach to freshen up with grant T

he Beach at Campus Martius is set for a wave of change after the Downtown Detroit Partnership landed a $125,000 grant to revamp the summer destination. After four years of operations, the landlocked beach will get new furniture, toys, games and programming to reach all ages, the DDP said in a news release. The funding from Southwest Airlines Foundation will also be used for infrastructure upgrades including lighting and landscaping as well as a beach attendant. Funds will also be used to help run events such as the Friday Beach Party. Some new events at the ad hoc beach include beach-side beer and wine tastings and Beach House:

Summer Sounds from Around the World. Beach House features Detroit-area DJs spinning from a retrofitted Airstream trailer, the release said. DDP was one of five recipients across the country to receive a grant from the foundation’s Heart of the Community program. The initiative supplies financial and technical assistance to bring purpose to public spaces, a release said. The foundation has worked with New York City nonprofit Project for Public Spaces to provide more than $3.6 million in grants. Detroit 300 Conservancy, a Downtown Detroit Partnership affiliate and the city of Detroit manage Campus Martius.

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