Crain's Detroit Business, Nov. 12, 2017 issue by Crain's Detroit Business

Women in Leadership: GLWA’s Cheryl Porter Page 4

With scooter buy, Ford pushes into micromobility Page 3

NOVEMBER 12 - 18, 2018 | crainsdetroit.com ELECTION 2018

Whitmer will mean change for business, but what kind?

By Chad Livengood clivengood@crain.com

LARRY PEPLIN

A business community that largely backed her opponent is taking a waitand-see approach to Gov.-elect Gretchen Whitmer, a 14-year veteran of the Legislature who represents a change from Gov. Rick Snyder’s corporate and entrepreneurial style. The future of that relationship will be a crucial question as Whitmer will

have responsibility for guiding the state that put the world on wheels in a time when its signature industry faces massive change and disruption. The outstanding question for many business leaders: Are they getting a middle-of-the-road champion for better roads and schools, or a liberal advocate of $15 minimum wages and repealing Michigan’s right-towork law?

“I think one of those question marks to be answered later is what type of governor does Gretchen Whitmer choose to be,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce. “The honest answer to all of that is time will tell.” Phil Shaltz is not worried about Whitmer’s ability to mesh with a SEE WHITMER, PAGE 20

MARIJUANA BUSINESS

INSIDE: CRAIN’S MICHIGAN BUSINESS

MARQUETTE: TOURISTS AND TECH

Federal laws, state regs to stunt pot investment By Dustin Walsh dwalsh@crain.com

The Donckers ice cream shop and the Delft Theatre in Marquette. COURTESY DONCKERS

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t’s no surprise that Marquette, the largest city in the Upper Peninsula, is a tourist magnet, with its abundant natural beauty and outdoor recreation options. And like many Main Street communities, downtown Marquette is resurgent with restaurants, shops and even a classic ice cream and soda shop. But it’s an unlikely place for an emergent tech hub — one that, thanks to Northern Michigan University, support from the state of Michigan and a collaborative coalition of business leaders, is on the rise, and making an impact beyond the peninsula’s shores. Read more in our special report starting on Page 8.

The growth of Michigan’s soon-tobe established legal commercial marijuana industry will be a slow burn due to federal laws and state regulations. Restrictions tied to federal banking laws and Michigan’s own regulations on background checks prevent the big-name, publicly traded players in Canada and elsewhere from entering the market with large cash infusions that could shock the industry to life once commercial sales of the product are available in late 2019 or early 2020, experts say. Michigan voters passed Proposal 18-1 to legalize commercial marijuana sales and use last week with a 56 percent to 44 percent affirmative vote. The Michigan law allows individuals 21 and older to purchase, possess and use leaf marijuana and marijuana-infused edibles and grow up to 12 marijuana plants for personal consumption. It also imposes a 10-ounce limit for marijuana kept at households with a 2.5-ounce personal possession limit. More than 2.5 ounces kept at households are required to be secured in locked containers. The state will now work to create a licensing system for marijuana-related businesses, such as growers and dispensaries. Retail sales of the products are subject to the state’s 6 percent sales tax and an additional 10 percent excise tax. Michigan is viewed as a target market for Canadian marijuana-focused companies, because of its proximity to Canada and because it’s expected to be the second-largest market in the U.S. behind California. SEE MARIJUANA, PAGE 20

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MICHIGAN BRIEFS

INSIDE

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

Attorney Bernstein to lead Whitmer’s transition team

Farmington Hills personal injury attorney Mark Bernstein will lead a transition team for Gov.-elect Gretchen Whitmer that includes former Detroit Mayor Dennis Archer Sr., pediatrician Mona Hanna-Attisha and Blue Cross Blue Shield of Michigan CEO Dan Loepp. Whitmer announced her full transition committee Wednesday afternoon, one day after defeating Attorney General Bill Schuette in the governor’s race, 53 percent to 44 percent. The transition team will work over the next 55 days on formulating policy, writing a new state budget and hiring appointed staff for the new Whitmer administration ahead of the Jan. 1 inauguration. Whitmer kicked off transition discussions with Gov. Rick Snyder on Wednesday. Other big names in Michigan business circles on the transition committee include Duo Security co-founder Dug Song and Chemical Bank Chairman Gary Torgow. Whitmer’s appointment of Loepp to the transition committee comes after Schuette and her Democratic primary opponents accused her of being politically cozy with executives at Blue Cross, where her father, Richard, was president and CEO from 1988 to 2006.

Loepp publicly endorsed Whitmer before the health insurance giant’s super political action committee donated $68,000 to Whitmer’s campaign on Oct. 19, two days after Schuette’s campaign started running ads accusing Whitmer of being “bought and paid for” by health insurance companies. Bernstein, a University of Michigan regent and influential Democratic Party donor, played a quiet behind-thescenes advisory role for Whitmer’s campaign this year after he opted not to seek the party’s gubernatorial nomination. Bernstein, president and managing partner of The Sam Bernstein Law Firm PLLC, will take on the role of director of Whitmer’s transition office. Archer, Bernstein and former U.S. Attorney Barbara McQuade were part of a committee of Whitmer advisers who vetted and helped select her running mate, Garlin Gilchrist II. McQuade also will be a member of Whitmer’s transition committee. The other business, civic and educational leaders appointed to Whitmer’s transition committee include: J Allan Gilmour, retired Ford Motor Co. vice chairman and former Wayne State University president J Portia Roberson, CEO of Focus: Hope J Kate Pew Wolters, chair of the Steelcase Foundation and a trustee on the board at Grand Valley State University J Former U.S. Rep. Joe Schwarz of Bat-

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Voters in Southfield wait to cast their ballots last week.

tle Creek Mike Prusi, a former state Senate Democratic leader from Ishpeming J Hanna-Attisha, the Flint doctor and scientist who helped expose the city’s lead crisis J

Midterm sees highest turnout in 56 years

More than 4.3 million voters cast ballots in Michigan’s midterm election, the highest turnout rate in 56 years. About 55 percent of the voting-age population participated, according to an Associated Press analysis of unofficial returns. Only the 1962 midterm drew higher turnout. The state has records dating back 70 years. The turnout percentage even equaled or surpassed levels in the

1996 and 1988 presidential races. Higher-than-usual absentee voting had signaled the increased voter interest across the state. In the 2014 midterm 42.8 percent of voters participated. Four percent of this year’s voters were first-timers.

New board to oversee pension investments

A newly created investment board will oversee Michigan’s public retirement fund system that finances pensions and retirement payments for nearly 600,000 people. Gov. Rick Snyder created the State of Michigan Investment Board to oversee investments in the state’s $70 billion retirement system. The system funds pensions and retirement pay-

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ments for about 570,000 retired and current public school employees, state employees, state police employees, judges and military members. State Treasurer Nick Khouri was previously the sole fiduciary of the investment, with the help of an advisory committee, but he told the Lansing State Journal that such arrangements are increasingly a thing of the past. He will be the chair of the new five-member investment board, which also includes the state budget director and three gubernatorial appointees. The executive order that created the board specifies that the unpaid board members will serve four-year terms. Snyder recently announced that the appointees are Dina Richard, senior vice president of treasury and chief investment officer for Trinity Health; James Nicholson of Detroit, chairman of PVS Chemicals Inc.; and Reginald Sanders of Portage, director of investments for the W.K. Kellogg Foundation.

Detroit’s Hometown Bank. Chemical Bank is proud of its storied history of serving Michigan people and communities for over 100 years. This legacy is only strengthened as we make the move from our small-town roots to the Motor City. To learn more, visit ChemicalBank.com. Congratulations to this year’s 20 in their 20s winners!

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HEALTH CARE

NONPROFITS

$5M gift fuels new Beaumont heart center By Sherri Welch swelch@crain.com

SACRED RENAISSANCE

FIRST CONGREGATIONAL CHURCH

The historic First Congregational Church in Midtown is getting help from Philadelphia-based Partners for Sacred Spaces to help it with renovations.

Midtown church getting assist from national group for restoration By Sherri Welch swelch@crain.com

The passion Bob Jaeger developed for Detroit’s historic churches and synagogues as a University of Michigan graduate student in the 1970s has turned into a godsend for First Congregational Church of Detroit. And if Jaeger gets his way, the national nonprofit he founded nearly 30 years ago to help historic churches survive could bring support to other

Need to know First Congregational Church of Detroit is one of 13 churches nationally chosen to get assistance from Partners for Sacred Places 

 National group will provide fundraising training, project consulting and grant dollars  Philadelphia-based nonprofit, founded by a Metro Detroit native, hopes to help other Detroit churches in future

Detroit churches as well. Philadelphia-based Partners for Sacred Places has accepted First Congregational in Detroit’s prominent Midtown neighborhood into a national program that will give the small congregation fundraising training, capital project consulting and, if it can raise matching dollars, a grant of up to $250,000 to help fund much-needed repairs. The timing couldn’t be better for First Congregational, which launched

a $2 million capital campaign a year ago to tackle a number of projects, starting with its crumbling facade. After strong winds in the summer of 2017, the red sandstone on the facade began to break away, creating a safety hazard for the primary entrance to the church. To address that and other issues, a handful of the church’s roughly 50 active members launched a crowdfunding campaign in August 2017. SEE CHURCH, PAGE 19

TRANSPORTATION

Ford buys Spin, launches scooters in Detroit By Dustin Walsh dwalsh@crain.com

and Michael Martinez Automotive News

California electric scooter company Spin launched 400 of its dockless scooters in Detroit last Thursday, but under a new owner — Ford Motor Co. The Dearborn-based automaker acquired the startup in a bid to expand its mobility offerings and reach a new customer base that needs short-distance transportation solutions. Terms of the deal were not disclosed, but the company’s valuation totaled $43.5 million after its latest fundraising efforts. Besides the 400 scooters Spin is launching in Detroit, Ford will roll out scooters in 100 cities over the next 18 months, vastly expediting Spin’s current pace of expansion. Detroit be-

Need to know

California-based company will launch 300 scooters in downtown, Midtown; 100 in neighborhoods 

 Ford plans to roll out scooters in 100 cities over the next 18 months  Spin will operate as independent business unit under Ford X, a new division of Ford Smart Mobility

comes the 13th market for Spin. Spin will operate as an independent business unit under Ford X, a new division of Ford Smart Mobility LLC, the company said in a news release. “We understand mobility is not just vehicles at this point,” Sunny Madra, vice president of Ford X, told Automotive News. “This is our play in addressing the micromobility business.”

Ben Bear, chief business officer for Spin, told Crain’s that the company approached Ford several months ago about becoming a business development partner, which quickly turned into a conversation about the automaker becoming an investor and ultimately ending in an acquisition agreement. While competitors Lime and Bird have been accused of guerrilla-marketing tactics by distributing their scooters in cities without any approvals, Spin approaches cities to work out agreements before it drops off its products — which work via a smartphone app, where users unlock the e-scooters for $1 plus 15 cents per minute of use. Bear said Spin’s government-friendly approach made Ford comfortable. SEE SCOOTERS, PAGE 19

A Spin dockless electric scooter in Detroit’s Corktown.

SPIN

Beaumont Health is building a $9 million outpatient heart center on its Royal Oak campus to better serve the growing number of people suffering from congestive heart failure and to reduce costs related to their care. A $5 million gift from Max Ernst, former executive vice president and COO of Arbor Drugs, and his wife, Debra, is funding the bulk of the project. The 14,000-square-foot Max & Debra Ernst Heart Center will be located next to the east tower entrance of the hospital. When completed a year from this fall, it will consolidate many outpatient heart services into one area to help cardiac patients, especially those suffering from heart failure, more easily access them. Construction began on the new center this month. “A lot of these patients are quite ill and quite elderly and have difficulty navigating through the hospital,” said Marc Sakwa, M.D., chief of cardiovascular surgery at Beaumont Health. Not only are those high-risk cardiac patients difficult to treat, but they often have multiple readmissions to the hospital and visits to the emergency room, which is where a lot of costs are incurred, he said. “By having them in a comprehensive area, we’ll be able to treat these outpatients very, very efficiently and make it easier ... for them to navigate the hospital.” “(And) by taking better care of these patients ... we’ll prevent readmission and lower costs,” Sakwa said. Heart failure is a growing epidemic in the U.S., Sakwa said. According to the Centers for Disease Control and Prevention, 5.7 million adults in the U.S. have heart failure. In 2009, one in every nine deaths included heart failure as contributing cause, and about half of people who develop heart failure die within five years of diagnosis. Heart failure costs the U.S. an estimated $30.7 billion each year, including health care services, medications and missed days of work, according to the CDC. “The population is aging, and people are living longer,” Sakwa said. “In addition, obesity and high blood pressure are creating more complications that lead to heart failure.” Congestive heart failure is the leading cause of hospitalization for people age 65 and older, according to Beaumont. SEE BEAUMONT, PAGE 21

MUST READS OF THE WEEK Kenneth Myers, former Beaumont CEO, dies at 86

Lipari buys deli food maker

Plum Market to open in Detroit’s Ally center

The executive had a 30-year career with hospital system . Page 5

Food distributor is on something of an acquisition spree. Page 5

New location will feature a cafe and a full bar. Page 22

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WOMEN IN LEADERSHIP Lorem ipsum

Cooked in Our House. Enjoyed in Yours.

zingermanscornmanfarms.com/thanksgiving

Cheryl Porter is the COO of water and field services for the Detroit-based Great Lakes Water Authority. ALI LAPETINA FOR CRAIN’S

FACEBOOK.COM/CRAINSDETROIT

GLWA’s Cheryl Porter on the rewards of a career in water Rachelle Damico

Special to Crain’s Detroit Business

You know. The Motor City has both fueled and felt the power of the Laker Effect. Many of our students not only hail from the Detroit area, but they also return there: as analysts and engineers, biochemists and health professionals, as leaders in business and leaders of communities. Support them. Support us. And see the power of what can be.

Cheryl Porter is the COO of water and field services for the Detroit-based Great Lakes Water Authority. The organization provides water services to 127 municipalities and sewer services to 87 communities in eight southeast Michigan counties, including Wayne, Oakland and Macomb counties. Porter’s responsibilities include overseeing maintenance and repairs for water transmission mains and ensuring GLWA’s treated water meets quality standards and regulations. She was part of the team that helped establish GLWA in 2016, when the Detroit Water and Sewage Department began leasing its regional water and sewer infrastructure and facilities to the organization. Prior to joining the GLWA, Porter worked for the DWSD, where she started as a junior chemist and worked her way up to COO. Porter received her bachelor’s degree in chemistry from the University of Michigan. She holds a juris doctor from University of Detroit Mercy’s School of Law and an MBA from Madonna University, which includes a concentration in human resources. What’s your average day-to-day like?

A lot of meetings and conversations. I’m looking at the 10-year, 20year horizon to make sure we’re heading in the right direction. That includes how we address all of the

aged infrastructure we’re dealing with to make sure it’s sustainable for the future within the limited finance and capabilities that we have. We have to be able to make data-driven decisions each day to make sure we’re making the appropriate investments. A lot (of the infrastructure) can last anywhere from 25-100 years. We want to be smart about the choices we make today to make sure this is sustained way beyond ourselves. We’re currently pilot testing technology for our water transmission mains called the SmartBall and PipeDiver. It collects data that allows us to see the condition of a pipe. (The SmartBall technology uses an audio sensor to detect pipe leaks and gas pockets, while the PipeDiver technology evaluates pipes to detect structural weaknesses). This is groundbreaking technology for our water transmission mains, which are generally at least eight feet underground and not readily accessible for monitoring. If there’s a vulnerable section, we’ll get advanced notice so that we can plan to do a replacement without having an emergency situation for that repair. What are some of biggest issues GLWA is facing?

Workforce planning is one of them. We’re not considered one of the “sexy” careers, but we use a vastness of skill sets here. We have engineers, finance employees, HR employees ... there are many career opportunities within this authority.

Regulatory changes sometimes put us under additional requirements and constraints, so we have to work to make sure those happen in the time frames that’s been allotted. How is GLWA working to prevent a crisis like what happened in Flint?

We’re being proactive about updating corrosion control. The best protection is getting the lead out through the removal of the lead service lines at the local municipality level. Studies done in the 1990s looked into what the most effective treatment was for the type of water that we have here. We’re looking at those studies and our current treatment processes now to see what changes need to be made, what equipment is needed, and to make sure we still have an effective corrosion control treatment that will protect the water as changes are being made in all of the different systems that we serve. Do you ever hear any misconceptions about your role?

Most people don’t understand we have to treat the water to a certain standard — both for consumption and for usage in your home. You go home, turn on your tap, flush your toilet and give it no more thought. Most of the time you don’t see us unless something’s wrong, but we’re there to correct or mitigate those situations as quickly as possible. It’s a very rewarding career, and I feel like in a sense I’m giving back. Water is life, and it’s essential to life.

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Lipari buys deli food maker By Kurt Nagl

Need to know

Lipari Foods appears to be on an acquisition spree after its latest purchase, this time a Pennsylvania-based food manufacturer â&#x20AC;&#x201D; its second deal in less than a month. The Warren-based wholesale food distributor bought RM Heagy Foods, a purveyor of deli meats and cheeses known for its customer service, in a deal that closed Friday, according to a news release. Terms of the acquisition were not disclosed. A message was left with Lipari for more information. Heagy Foods, family owned and founded in 1953, brings Lipari a line of

Foods

knagl@crain.com

Jerusalem Foods, which equipped the company with a full ethnic food division, and the March deal to take over Wisconsin-based Jimâ&#x20AC;&#x2122;s Cheese LLC. Lipari has also had an acquisition each year between 2014 and 2016. Founded in 1963, Lipari distributes bakery, dairy, deli, packaging, seafood, meat, specialty grocery, food service, confectionery, convenience food and beverage and health, wellness and beauty products to more than 6,000 retail outlets in 15 states.

JJWarren-based Lipari buys RM Heagy

JJCompany made acquisitions in October and March JJIts goal is to be premier â&#x20AC;&#x153;perimeter of the storeâ&#x20AC;? distributor

specialty deli products that includes Heagyâ&#x20AC;&#x2122;s popular Guernseyâ&#x20AC;&#x2122;s Gift brand. It also helps expand Lipariâ&#x20AC;&#x2122;s widening distribution net and furthers its goal of being one of the premier U.S. distributors of specialty and â&#x20AC;&#x153;perimeter of the storeâ&#x20AC;? groceries. The acquisition follows last monthâ&#x20AC;&#x2122;s purchase of Dearborn-based

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

RM HEAGY FOODS

Warren-based Lipari Foodsâ&#x20AC;&#x2122; acquired Pennsylvania-based RM Heagy Foods.

Kenneth Myers, former CEO at Beaumont, dies

Law Firm of the Year

By Annalise Frank afrank@crain.com

Kenneth Myers, a longtime Beaumont Hospital administrator and leader, died Nov. 2 at 86, according to an obituary through McCabe Funeral Home. Myers started his career with the Burroughs Corp. in Detroit. In 1966, he made his way to William Beaumont Hospital in Royal Oak, where he began as controller and ended his career 30 years later as CEO. At the time Beaumont had hospitals in Royal Oak and Troy. It has since grown into Beaumont Health, an e i g h t- h o s p i t a l health system based in Southfield. Myers also served as chairman of the Michigan Hospital Associationâ&#x20AC;&#x2122;s board and executive committee and Kenneth Myers: was a member of Started career at the Beaumont Burroughs. Hospital board of trustees. He also served on the board of other organizations including the Salvation Army, William Tyndale College and Laban Ministries in the Congo. Gene Michalski, a retired CEO of Beaumont, described Myers as his former mentor, a â&#x20AC;&#x153;guider of the peopleâ&#x20AC;? and a devout Christian. â&#x20AC;&#x153;As a mentor he behaved like you would want a leader to behave,â&#x20AC;? Michalski told Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s like raising your children â&#x20AC;&#x201D; you teach them values by living the values you want them to learn.â&#x20AC;? The University of Michigan graduate grew up in Battle Creek and was an Army veteran, according to the obituary. â&#x20AC;&#x153;Never critical or unforgiving, he only knew how to truly encourage the people who surrounded him,â&#x20AC;? the obituary said. â&#x20AC;&#x153;He was a born leader and inspired countless people throughout his lifetime.â&#x20AC;? Myers is survived by his wife, Nancy; daughters Cynthia, Anne and Sue; son Tom; sister Janeis Yunt; and nine grandchildren. Myersâ&#x20AC;&#x2122; funeral was Friday. Memorial donations can be made to Beaumont Health Foundation. â&#x20AC;&#x201D; Anisa Jibrell contributed to this report.

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OPINION COMMENTARY

Whitmer won on ‘damn roads;’ now she owns them

hould she stand for re-election in four years, the Michigan governor’s race in 2022 could come down to one overarching question: Did Gretchen Whitmer actually fix the damn roads? Whitmer’s campaign slogan of “fix the damn roads” found the pulse of voters as she sailed to a 9-percentage point victory Tuesday over Attorney General Bill Schuette and became Michigan’s 49th chief executive. The newly minted Democratic governor-elect’s first major political challenge may be selling a Legislature with a smaller Republican majority on raising taxes for infrastructure that a larger GOP majority refused to do for Republican Gov. Rick Snyder three years ago. Her Republican opponent struck out with a tax-cutting “paycheck agenda” as Michigan experiences an economic boom and the lowest unemployment rate in 18 years. Schuette’s vow to reduce the state income tax from 4.25 percent to 3.9 percent — a tax cut that amounts to an annual savings of $175 for an individual with $50,000 of taxable income — didn’t come close to resonating with voters as much as Whitmer’s salty message about Michigan’s long-neglected roads and infrastructure. “The result of yesterday’s election is that people really sent us a very clear message: They want us to fix the damn roads,” Whitmer said Wednesday. Now she has the daunting task of delivering before the roads deteriorate further and become more of an economic albatross for Michigan. “Let me tell you, she’s going to be held accountable for fixing the damn roads,” said pollster Richard Czuba, president of Glengariff Group Inc. in Lansing, who called Whitmer’s campaign slogan politically “brilliant.” There’s only a small window for Whitmer to get a Republican-controlled Legislature to swallow the size of tax increase that they rejected in the fall of 2015 when lawmakers passed a $600 million tax hike. That amounted to a 7-cents-per gallon increase in state fuel tax on unleaded gasoline and a 20 percent hike in ve-

gan when taxes mattered a lot, voters apparently weren’t spooked by Whitmer’s clear lurch toward their wallets. That may be a sign that voters understand these tire-rim-bending roads won’t fix themselves. Whitmer has said she wants to boost the $1.2 billion to $2 billion and use the additional state-generated taxes to draw down another $1 billion in matching federal funds. The reality is, the $1.2 billion road-funding plan Gov. Rick Snyder signed in September 2015 was never going to fix all of the roads. In fact, they’re just getting worse with each

passing winter, according to MDOT. For state highways and trunk lines alone, MDOT projects pavement conditions will fall from 75 percent rated as “good” or “fair” today to 66 percent in 2021 and 48 percent in 10 years. During the campaign, Schuette called Whitmer’s willingness to raise taxes “an economic collapse plan.” Based on MDOT’s projections, the current road-funding model is arguably a bridge collapse plan. It only partially paves over the problem. “While transportation agencies are certainly very grateful for the legislative action that will provide some new state funding for transportation beginning in 2017, the reality is that the need for investment, particularly in roads and bridges, will not be fully addressed by that action,” Snyder’s 21st Century Infrastructure Commission wrote in its 189-page report that’s been gathering dust in Lansing for two years. The commission estimated Michigan needs to spend $4 billion more annually on transportation, underground water infrastructure and broadband internet. Whitmer, who spent 14 years in the Legislature, has suggested she would abandon the GOP’s plan to earmark $600 million of the $1.2 billion from the state’s $10 billion general fund, which is under financial stress after growing less than 3 percent since 2000. Whitmer may very well get the support of business groups like the Detroit Regional Chamber and Business Leaders for Michigan, which have opposed the Legislature’s move away from Michigan’s traditional method of funding roads with taxes on the cars and trucks that use and abuse the pavement. “If the Republicans don’t deliver and are seen as overly obstructionist on fixing the roads, I think they’re going to be in for a tougher road in 2020 — and I think they realize that,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. Baruah, a longtime Republican who served in both Bush administrations, said the GOP’s anti-tax message is “just not resonating with vot-

ers anymore.” “If that’s the message they’re going to use to not fix the roads, I think that means political problems for the Michigan Republican Party in 2020,” Baruah said. By ending the general fund raid for road dollars, Whitmer would free up money to help pay for two of her other campaign pledges — a $100 million scholarship program to pay for the first two years of college and stopping the so-called “raid” of $900 million in School Aid funds that helps subsidize the state’s universities and community colleges. Both are going to be heavy legislative lifts, especially since Whitmer has vowed to eliminate the income tax on pension income for Baby Boomers — another $300 million hit to the general fund. Her campaign wish list for the general fund easily tops $1.3 billion. “She’s gonna have to put those much-vaunted legislative skills to work,” Baruah said. There are Republican legislators eager to get rid of the tax on pensions — and they would have done it by now if it weren’t for Snyder’s ability to veto such a tax cut. “I think no matter who controls the Legislature, that’s coming to the desk,” Whitmer told Crain’s on the campaign trail in late September. During the campaign, Whitmer said she’ll present lawmakers with a budget plan by February that funds her $3 billion plan to fix the roads. That will inevitably include a proposed tax and fee increase for road users. If the new Republican leaders refuse to go along with a tax hike, Whitmer has said she’ll mount a ballot campaign for a $20 billion, 10-year bond for roads and infrastructure — a get-out-the-damn-credit-card approach. “If they’re not strong enough to do it, I’ve always said I’ll go to the voters and go for a bond,” the governor-elect said Wednesday. All of this political wrangling will put the years-long road funding debate back in the spotlight in February, March and April — just in time for another pothole season.

support the newly elected governor as far as roads are concerned. This is one issue on which everyone in Lansing should be locked at the hip. If one fails, they all fail. There can and undoubtedly will be strong differences of opinion, and it may well be impossible for Whitmer to get any support in the Legislature. But the one thing that they all better agree on is that fixing our roads is a nonpartisan issue. If there is one issue that touches businesses in profound ways, it has to be our roads and highways. Whether we are talking about trans-

portation of manufactured goods or attracting tourism, Michigan needs the best roads in the nation. In spite of a great job by our present governor, the one issue where state government has failed badly over the last decade is roads and bridges. We have simply not been willing to create the revenue/taxes to build and rebuild our roads, and we have continued to kick it down the road for the next Legislature to deal with. Governor Whitmer ran a campaign on fixing the roads and it was extremely effective. Now she has to

deliver or have a very short political life. And the Legislature must help her or they will be gone as well. We have all learned from our president, promises made and promises kept is a winning formula. Let’s get it done.

JEFF A. KOWALSKY/DETROIT ECONOMIC CLUB

Democrat Gretchen Whitmer sailed to victory Tuesday night over Republican Attorney General Bill Schuette in a race for governor where she made fixing Michigan’s crumbling roads a top priority next year.

CHAD LIVENGOOD clivengood@crain.com

hicle registration fees. That tax hike didn’t kick in until January 2017 — two months after the November 2016 election, of course — and the overall $1.2 billion road-funding plan won’t be fully funded until 2021. Republican lawmakers assumed the gradual increase in funding would satisfy the state’s needs. The rapid deterioration of roads in Southeast Michigan last winter calls into question those assumptions. And Whitmer exploited the GOP’s miscues and brushed off Schuette’s warnings that a Gov. Whitmer would deliver a 20- to 40-cents-per-gallon gas tax increase. She never would commit to an actual dollar amount. But unlike past elections in Michi-

“If the Republicans don’t deliver and are seen as overly obstructionist on fixing the roads, I think they’re going to be in for a tougher road in 2020 — and I think they realize that.” Sandy Baruah, president and CEO of the Detroit Regional Chamber

Now let’s do it E

veryone, including our newly elected governor, realizes that she ran her campaign on fixing the roads and her administration will be judged on her performance in fixing the roads. But I am not sure that our Legislature, which happens to be controlled by Republicans, realizes that their future as politicians in Michigan is also just as tied to “fixing the damn roads.” If for any reason, the Legislature balks at helping Gretchen Whitmer, they will suffer mightily as well. Our entire state government is forever linked to fixing the roads. And it

KEITH CRAIN Editor-in-chief

is about time. It would be easy to assume that Whitmer’s mantra belongs to her alone. It does not. It will behoove the Legislature to

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 // N O V E M B E R 1 2 , 2 0 1 8

Companies build America by hiring veterans

OTHER VOICES Ryan Hosler

Some people killed enemy soldiers. Four years in the military was the wakeup call I needed to become a strong man. But once I completed my tour, I missed the leadership that helped me learn right from wrong,

build a strong work ethic and gain the dedication to finish what I start. The very core of who I am today comes from my military mentors who taught me what hard work means, how to make a commitment and see it through to completion, and how to show up for duty and live with honor. I came to business ownership knowing that what we start, we finish, no matter what. The military taught me there is always a way to get the job done. Today, a few companies prioritize the hiring of veteran businesses. Ford Motor Co. includes veteran-owned businesses in its supplier diversity strategy. I’ve worked with construction

and engineering buyer Mark Strait, a Navy veteran and member of the Fallen and Wounded Soldiers Fund, who has been instrumental in including veterans in Ford’s diversity spend. Certain companies are ahead of the curve in hiring veteran-owned businesses and have self-mandated veteran spend goals. Other companies don’t necessarily have a defined veteran focus, but they acknowledge the importance of employing veterans. It’s a growing interest that needs to gain steam. We hire veterans whenever we can. Even our nonveteran pipe fitters, sprinkler fitters and plumbers say they appreciate working for a company that

is veteran-owned. Many have family members or friends who served, and they understand the sacrifice required to protect our nation. Today’s workplace demands understanding, compassion and attention to detail. As we evolve into true 21st century companies, we must consider the impact veterans can have on our workplace as we build America for a better future. Randy Hosler is CEO of Progressive Mechanical. He was a corporal who served as a combat arms Calvary Scout soldier in the first Persian Gulf War in the 1st Cav Division 7th Cavalry Regiment.

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hen I left the Army, I had a hard time figuring out what to do next. Would I attend college? Find a job — doing what? I thrived under the military’s structure. The real world doesn’t give you a ready-made schedule or purpose. Many of us crave the guidance of a system that helps us find our north star. I’m one of the lucky ones. I eventually found my way and got into mechanical contracting. In 2006, I purchased a company with my nephew, and it’s been an upward trajectory ever since. Leading a veteran-owned business, I remember that wandering feeling whenever we’re hiring. It’s hard to find good employees, and I believe veterans are an undertapped market for any business. According to the Bureau of Labor Statistics, the unemployment rate for veterans who served since September 2001 hovers around 4 percent. Almost half (41 percent) of all post-2001 active duty veterans have a service-related disability, but unemployment rates insdetroit.com | $44.95 among them are not significantly higher than non-injured veterans. Approximately 20.4 million Americans are veterans, amounting to 8 percent of the adult population. A 2016 study by the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes initiative revealed that veterans are a top recruiting target for American companies. However, the report showed that “a civilian-military divide still exists in today’s workforce, and an even greater effort is required moving forward as veterans are brought on board to civilian companies to set them up for success.” One major barrier to success, the study shows, is the sense of shame or embarrassment wounded warriors feel when enduring post-traumatic stress or a service-related brain injury. Business owners must understand the unspoken emotions driving this hesitation on the part of veterans who could be workplace assets, and create strategies for welcoming them into the workforce. Veterans are loyal. They’re dedicated. They know how to work as part of a team. Many assume great risk, bravely. As a member of a Calvary Scout troop, I learned to find the enemy before they found us. We were hardcore, down-toearth people you could count on. I prefer to hire veterans whenever I can — not only to build my team, but to build America. Veterans need help transitioning to civilian life. It’s difficult to leave the structured environment of a 5 a.m. bugle wakeup with every step outlined for you. There’s no time to wonder, no option to blow off tasks. You perform through obstacles. You learn to surmount challenge. And you feel great once you do. In our field, where danger lurks on every job site, we build structure to ensure the safety of our teams, to get jobs done efficiently, on time and on budget. Our industry, and many others, are a natural home for veterans. I enlisted in November 1989, training at Fort Knox and Fort Hood before being deployed to Iraq after the invasion of Kuwait. It was exciting and scary at the same time. I knew I faced danger, but the risks didn’t sink in until I landed on the Saudi Arabian sand and felt an extreme heat I’d never experienced in America. We deployed through the desert, training for combat, fielding artillery hits, dodging small firefights.

Vol. 34 No. 51

Crain Communication

ILLUSTRATION FOR CRAIN’S

BY DANIEL ZAKROCZEMSKI

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FOCUS

CRAIN’S MICHIGAN BUSINESS: MARQUETTE

In this package

n Invent@NMU incubates high- and low-tech businesses across the region. This Page n Building a comeback in downtown Marquette. Page 9 n From commodities trading to the candy business. Page 10 n A historic timber and mining company now owns medical devices, too. Page 10 n U.P.-based CDFI expands to fund businesses statewide. Page 12 n A single voice for economic development in the Upper Peninsula. Page 14 n Marquette broke development records in 2017. Online at crainsdetroit.com Marquette, Michigan, in the Upper Peninsula. GETTY IMAGES/ISTOCKPHOTO

POWERING IDEAS ACROSS THE U.P. Invent@NMU incubates high- and low-tech businesses across the region By Tom Henderson thenderson@crain.com

Ron Aho is the poster child for what Invent@NMU wants to do. The nonprofit helps would-be entrepreneurs figure out if their ideas make sense and, if so, how to get them to market. Its motto is “Design, Engineer, Launch” and that’s what it helped Aho do with his invention, a tool that helps sheet metal workers install duct work faster. Aho had an idea he wanted to explore but couldn’t make the design work on his own. Invent@NMU helped him prototype and ultimately sell the patent to his invention. But what really makes Aho the poster child is this: His tool is not high tech. “Great ideas don’t have to be high tech,” said Ray Johnson, Invent@ NMU’s executive director. “There are a bunch of entrepreneurs here who aren’t doing high tech. We tend to think of incubators as being solely for high tech, which is wrong. All ideas are worth exploring, high tech and low tech.” Johnson became the first CEO of the Innovate Marquette SmartZone in 2015. In 2016, he took on the second title of executive director of Invent@NMU, replacing David Ollila, who created the nonprofit in 2014. The two organizations share space in a former bank branch across the street from the university’s campus.

Need to know

JJInvent@NMU founded in Marquette by

David Ollila in 2014

JJNonprofit business incubator is expanding across the U.P. JJHas launched 12 products or companies from 400 ideas that have come through the door

Ollila is a serial entrepreneur formerly based in Marquette. His idea was to let anyone with an idea for a business or a product get free advice from a team of NMU students with a range of expertise, including design, engineering and marketing. The students, in turn, would get paid for their part-time help and add real-world experience to their resumes. If everyone agreed an idea had merit, the entrepreneur would pay a modest hourly fee to take things to the next level, which might include a patent search, looking at the competitive landscape, prototyping, developing a business plan or figuring out the minimum needed to get to market. There are currently 14 NMU students working at Invent@NMU. Twenty-two former students have used their experience there to find jobs in their field after graduation or to start their own consulting firms. Gov. Rick Snyder toured Invent@ NMU in 2015, and in the last two minutes of his State of the State speech in 2016 — a speech otherwise dominat-

Ron Aho invented the Tinknocker, a tool for sheet metal workers.

ed by the Flint water crisis — Snyder used Invent@NMU as an example of how innovation can happen anywhere. In June 2017, Invent@NMU got a grant of $1.15 million from the Michigan Strategic Fund, which is being used in part to expand its operations across the U.P. “Invent@NMU was an easy one. It’s an awesome program. It helps the entrepreneurial spirit in the community and at the same time provides real-world learning for students. They’re not just writing a pa-

per,” Snyder told Crain’s. In October, Invent@NMU looked at its 400th idea since launching, an average of about one idea every three days coming through the door. At any given time, students work with about 20 clients. Johnson said about half the ideas that come in the door are worthy of a deeper dive, which could entail looking at the competitive landscape, making engineering diagrams or 3D printing rough prototypes. If the would-be entrepreneur is willing, that costs $150.

“Fee for service is important. It’s so the entrepreneur has some skin in the game,” said Johnson. “Once there is skin in the game, things take on a different focus.” Half of those ideas go even further. Invent@NMU charges $30 an hour for whatever services are deemed necessary after the deep dive. Johnson said of those original 400 ideas, 12 products or companies were launched with another 10 or so still moving forward. In October, Invent@NMU expanded to Ironwood, kicking things off with an event at Cold Iron Brewing where it announced the installation of an interactive kiosk at Gogebic Community College for would-be entrepreneurs to learn about the program. Gogebic serves students in and around the towns of Bessemer, Ironwood and Wakefield. In November, the program expands to Calumet, with future rollouts over the coming months planned for Negaunee, Escanaba and Iron Mountain. “It’s a unique way to look at entrepreneurship,” said Jeff Mason, the CEO of the Michigan Economic Development Corp. “It’s a testament to them that they are expanding it across the U.P.” In 2016, Ollila expanded the Invent@NMU concept to the Lower Peninsula, specifically the city of Flint. SEE INVENT, PAGE 16

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 1 2 , 2 0 1 8

SPECIAL REPORT: MARQUETTE

Building a comeback downtown By Tom Henderson thenderson@crain.com

The road less traveled has made all the difference for Robert Mahaney. A native of Grayling who went to Albion College, in 1979 he had an interview with a recruiter for the then-Big Eight accounting firm of Ernst & Whinney. The recruiter asked him where he would like to be posted if the accounting firm hired him. “Marquette,” he said. He thought the Upper Peninsula was cool. “The recruiter fell out of his chair,” recounted Mahaney. “He said, ‘In 22 years of doing this, no one has ever said that.’” Mahaney didn’t stay in accounting long. He got an MBA in finance then went to work for Scotiabank doing mergers and acquisition financing as a vice president from 1985 to 1992. In 1998 he founded his own real-estate development firm in Marquette, the Veridea Group LLC, which has done about 75 projects worth up to $300 million in value. Its properties in Marquette include the Residences at Harbor Vista on the Lake Superior shore near downtown; the Country Inn & Suites; the Fresenius Medical Care clinic; the Holiday Inn Express in Houghton; the Harbor Hills Office Park; the Wells Fargo Plaza; the WJMN-TV Plaza; the Buffalo Wild Wings; and the Crossroads Business Park. The property where the Residences at Harbor Vista were built has an interesting history. Longtime visitors to Marquette will remember the Tiroler Hof Inn, an Alpine-style resort that greeted them on the lakeside as they drove into downtown. It opened in 1964. That was transformed into the Nordic Bay Lodge in 2004, which was demolished in 2015. The first phase of the Residences at Harbor Vista, with 31 apartments, was completed in July. The second phase of 30 or more in a second building is scheduled to be finished next summer, and the first phase of 50 condo units for the project is expected to launch next year. Veridea also manages the Holiday Inn Express in Houghton. Mahaney said the company is now looking at development projects in the U.P., Montana, Idaho and Wisconsin. “We focus on the northern tier of states,” he said. Veridea also manages Residence Inns in Helena and Bozeman, Mont. The Veridea Group bought its first building in downtown in 2002, when vacancy rates were about 75 percent. Mahaney uses it as an example of Marquette’s rebirth. “Rental rates were in the $8-$10 (per square foot) range,” he said. “Today they are at least $15, typically $17-$20, and will be north of $20 in our next downtown project.” That project will be on a parcel of land at Third and Main streets. In July, the Marquette City Commission approved its sale to Veridea for $221,000. Plans call for two levels of underground parking and a five-story, 50,000-squarefoot building. The first floor will have an open market area, restaurant and coffee shop. The upper floors will include a mix of commercial offices and residential lofts. Mahaney estimates the project could add up to 150 people living and working downtown. Veridea’s most high-profile and ex-

pensive project was the three-building Liberty Way development on West Washington Street, which was finished last year. A few blocks west of downtown, on the site of a former Sara Lee bakery, it was financed in part by a brownfield school- and local-tax capture valued at $14.3 million to support demolition and infrastructure improvement. The $42 million project included about 60,000 square feet of below-ground parking and 140,000 square feet of mixed-use commercial, office and residential space. Veridea’s headquarters, a regional mBank office

and Sen. Gary Peters’ U.P. headquarters are housed in one of the three-story buildings. The other three-story building is headquarters to Upper Peninsula Health Plan. A 102-unit Staybridge Suites hotel occupies the four-story building in the center of the complex. Gov. Rick Snyder appointed Mahaney to the board of trustees of Northern Michigan University in 2015. He is now board chair. “Bob is another force to be reckoned with,” said Jeff Mason, CEO of the Michigan Economic Development Corp.

Veridea’s most high-profile and expensive project was the three-building Liberty Way development on West Washington Street.

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SPECIAL REPORT: MARQUETTE

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By Tom Henderson thenderson@crain.com

What to do when you own a business buying and selling commodities in Chicago and you decide you want to do something else for a living? Well, in Tom Vear’s case, you and your wife, Jen Ray, buy an old candy, ice cream and soda shop in downtown Marquette named Donckers, complete with a well-worn hardwood floor, a tin ceiling and swivel seats at the counter. And then you buy the historic shuttered movie theater next door and convert it to a lively restaurant, The Delft Bistro. Vear says he got a taste for the food business when he was the head waiter at his Phi Delta Theta fraternity at DePauw University in Indiana, serving 60 fraternity brothers and the house mother three meals a day. But he put off getting involved in an actual food business. After college, he became a runner at the Chicago Board of Trade in 1980. In 1991, he co-founded Rock Trading in Chicago. “We sold and bought corn options, corn futures, Treasury bond options,” he said. In 2001, he sold his share in Rock to his partner and moved to Marquette, where his wife’s father, Tom Ray, was a bishop in the Episcopal Church. Vear started buying and rehabbing old properties in town, including a house on Third Street, which he later sold to the founders of Blackrocks Brewery. “In the 1970s, Marquette had collapsed. I thought the downtown was worth saving, but it was pretty empty. The Ben Franklin had moved out; the sporting good store had been closed for years. Downtown was maybe 80 percent empty,” said Vear. In 2008, they bought Donckers in the heart of downtown. Fred Donckers founded the business in 1896, operating out of a shack to sell fruit, to-

Jen Ray and Tom Vear bought Donckers, an old candy, ice cream and soda shop in downtown Marquette.

bacco and various sundries to miners. He built the current building in 1909. In 2008, Vear bought it from Fred’s grandson, also named Fred. “I liked the building and wanted to rehab it. And Fred wanted me to keep the candy business and the name,” said Vear. Originally, the Donckers lived on the second floor. Vear put in new stairs and an elevator and opened up a breakfast and lunch counter upstairs. Donckers also does a brisk online business selling a wide range of artisanal chocolates and candy at donckersonline.com. In 2011, President Barack Obama visited Marquette and spent half an hour at Donckers. Jen’s father, the bishop, was a big fan of Obama’s and is beaming in a photo Vear shows visitors. He and Jen liked the building next door, too, the Delft Theater, which had shut down shortly before they bought

it in 2012. In 1914, a group of investors raised the huge sum, by U.P. standards, of $250,000 to open five Delft theaters across the peninsula. Their architecture was modeled after buildings in Delft, a city in the Netherlands. Just four years later, a much larger Delft Theater, seating 1,500, opened across the back alley from the original Delft in Marquette. In October 2014, the Michigan Economic Development Corp. approved a community development block grant of $481,000 to help renovate the older theater, a $1.8 million project that promised to create 25 jobs, at least 13 of them to be held by area residents with low to moderate income. In February 2017, the 200-seat bistro opened for business and soon had the requisite 25 employees. Donckers and the Delft now employ about 50. “It’s doing really well,” said Vear of the Delft. The bistro has private rooms for hosting parties and weddings, has

A historic timber and mining company now owns medical devices, too By Tom Henderson

thenderson@crain.com

J.M. Longyear LLC is a 145-yearold Marquette company with a storied history. It generated fabulous wealth for its East Coast backers in the late 1800s and early 1900s, wealth that flowed from seemingly endless tracts of forest to be lumbered and huge deposits of iron and copper ore. The company continues to generate wealth for the extended family that owns it. It operates a large lumber mill called Northern Hardwoods on 120 acres of land near Ontonagon in the western U.P. that mills 20 million board feet of wood a year; owns 164,000 acres of timberland, stretching from east of Toronto to throughout the U.P.; and has 200,000 ferrous and non-ferrous mineral rights throughout the Great Lakes, with the biggest concentration in

Need to know

JJJ.M. Longyear, 145-year-old Marquette-based company, still mills lumber JJGenerated massive wealth in timber,

mining industry in late 1800s and early 1900s

JJLooking toward the future with a medical device company in its portfolio

Michigan. It directly employs about 140 with hundreds of contractors. By legal agreement, family members can’t participate in managing the business — the company’s founder, John Munro Longyear, had seven children and today they have about 50 descendants who own the company. It is run independently, with Stephen Hicks its CEO and president. The company is headquartered in the Longyear Building in downtown Marquette, which was

built in 1916 and added to the National Register of Historic Places in 2004. Surrounded by history, Hicks runs the company with an eye to the future. Included in Longyear’s portfolio is a medical-device company launched a year ago in Marquette called Able Medical Devices, a maker of medical devices with a focus on the spine. It is well capitalized and has an experienced management team whose average tenure in the industry is 23 years, some of them recruited from RTI Surgical, a former Marquette company that was bought by a Florida company. Having bought the assets last year of a failing medical-device company, Marquette-based Frontier Medical Devices Inc., Able has nine issued patents and nine pending and has Frontier’s fully equipped former 10,000-square-foot facility at the de-

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live-music Wednesdays, weekend brunches and still shows movies daily. The menu is eclectic, ranging from poutine (hand-cut fries, white cheddar cheese curds, braised short ribs, carmelized onion, gravy and fried egg for $12) to chicken and waffles ($18) to white chocolate raspberry french toast ($10) to Hawaiian pig ($12) to falafel ($12). Vear and Ray have also bought the larger Delft Theater and have applied for brownfield tax credits for what they plan as a mixed-use project with condos, offices and retail. Of Tom Vear and Jen Ray, Jeff Mason, the CEO of the Michigan Economic Development Corp. said: “They’re the types of individuals who punch above their weight and make something happen.” Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

“Instead of Frontier spending its time looking over its shoulder for money, we can spend all our time working on products.” Stephen Hicks

commissioned K.I. Sawyer Air Force Base south of Marquette. Able, which has 15 employees, is developing its product pipeline, does prototype manufacturing of its own devices and prototypes for others through contract manufacturing. Gov. Rick Snyder — a former owner of medical devices himself, when he owned the Ann Arbor venture capital firm of Ardesta LLC in the early 2000s — spent an hour and a half at Able’s facility during a tour of Marquette last August. Two of Able’s devices have been approved by the U.S. Food and Drug Administration for commercial use. SEE HISTORIC, PAGE 16

Donckers, an old candy, ice cream and soda shop in downtown Marquette, also offers breakfast and lunch and does a brisk online business selling a wide range of artisanal chocolates and candy at donckersonline.com.

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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 // N O V E M B E R 1 2 , 2 0 1 8

Detroit, MI

Wilmington, DE

Charlotte, NC

Shanghai, China

Cologne, Germany

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 1 2 , 2 0 1 8

SPECIAL REPORT: MARQUETTE

U.P.-based CDFI expands to fund businesses statewide By Tom Henderson

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Northern Initiatives, a nonprofit founded in partnership with Northern Michigan University in Marquette in 1992 and certified as a Community Development Financial Institution Fund by the U.S. Department of the Treasury, has outgrown its name. CDFIs provide loans to small-business owners and community organizations that might not qualify for traditional bank lending, with a focus on low-income, disadvantaged and underserved communities. The Upper Peninsula has no shortage of those, which is why Northern Initiatives was founded. It made its first loan in 1994. While Northern Initiatives is still based in Marquette and still helps companies in the U.P. get started or to expand, it has evolved a big presence in the Lower Peninsula, too. In 1997, Northern Initiatives expanded to the northern Lower Peninsula and is now in 73 of Michigan’s 83 counties and five Wisconsin counties that border Michigan. In 2017, it expanded into Muskegon and Grand Rapids. It has 22 full-time employees and five student part-timers. Since its founding, Northern Initiatives has financed more than $60 million through 1,100 loans, creating nearly 5,000 jobs. About 30 percent of the loans have gone to businesses owned by women and 29 percent to startups, 29 percent to manufacturing companies, 24 percent to tourist businesses, 21 percent to service companies, 11 to retail and 7 percent to professional services. About 300 loans have gone to Marquette businesses over the years, 30 of them still active. NI’s funders include the Kellogg Foundation, the U.S. Small Business Administration and the U.S. Depart-

Need to know

JJNorthern Initiatives founded in 1994 to

provide alternatives to traditional lending JJSince then has financed more than $60 million through 1,100 loans JJCreated nearly 5,000 jobs and expanded beyond U.P.

ment of Agriculture. Dennis West, Northern Initiative’s president, said the average loan his organization makes is about $70,000, with an upper limit of about $500,000. The largest loan it ever made, though, in 2011, was $1.8 million to a company in the Lower Peninsula, DuBois Lumber and Supply in Grayling, after its lender, wanting to lessen its exposure in Michigan, called in its loan. One nearly as large went to Sawyer Lumber of Marquette in 1997, to build a sawmill on the grounds of the decommissioned K.I. Sawyer Air Force Base. The smallest was for $1,000. “It was to a guy we call the road-kill guy. He had a disabled brother, so he needed to have a job that let him stay home a lot,” said West. “So we loaned him $1,000 for a winch for his truck, and he got a contract with Dickinson County to go out and pick up road kill off the highway. “We’ve loaned money to pretty sophisticated manufacturing operations, and some people we’ve loaned money to will be mom-and-pop operations forever, and that’s fine. They can have a very successful business being small.”

Supporting “beerpreneurs” A classic success story for Northern Initiatives has been Blackrocks Brew-

ery LLC. The business was started in 2010 by two Marquette residents, Andy Langlois and Dave Manson, who were laid off during the recession from their jobs as pharmaceutical salesmen. They started in a house they were renting on Third Street, a hip downtown Marquette street with a lot of foot traffic. The brewery began as a small, one-barrel operation, and their motto when was “open till empty,” which they put on T-shirts. They’d open on Thursday and run out of beer in a day or two, then make some more. “Customers were drinking more than we could make, which is a good thing and a bad thing,” said Langlois, whose formal title is brewsician. Manson is ambassador of fermentology. In 2011, they brewed 280 barrels. This year, they expect to make upwards of 10,000. Today, they employ 20, are distributed statewide and have the unique distinction for a small craft brewer of having their beer available both at Ford Field for Lions’ fans and at Lambeau Field for Green Bay Packers’ fans. Northern Initiatives was responsible for some of that growth, first lending the two partners money to go to a three-barrel system, then helping fund their acquisition of the house. “We were in a constant state of trying to grow and we needed cash to do that,” said Langlois. Their landlord, a local entrepreneur named Tom Vear, introduced them to West a little more than a year after they launched. “They stepped in and provided a low-interest loan,” said Langlois. “We were the first money they got,” said West. Manson and Langlois have since expanded to the upstairs and put in two patios. They can seat 70 inside

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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 // N O V E M B E R 1 2 , 2 0 1 8

process. I had signed a lease and we were doing the build out and I needed to get a loan, and it came down to the last day. But we got it.” “He might be the youngest person we ever made a loan to,” said West, over a cup of coffee in Velodrome. Sturmer, who is 23, has since sourced coffee in Guatemala, Honduras, Nicaragua and Papua New Guinea, with trips planned to Africa and Peru. He said Velodrome — he is a passionate cyclist and a velodrome is an arena with a banked track for cycling races — ended the first year in the black, missing his business-plan projections by just $1,200. He employs four and soon will be hiring one or two more.

Sturmer got his loan through Northern Initiatives’ revolving loan fund. Rules are more fluid than with traditional bank lending, but generally to qualify, the entrepreneur is expected to create one job for every $20,000 in loans. Loans can go toward training, working capital, equipment financing and renovation. As loans are repaid, with interest, the money goes back into the fund and is reloaned.

Funding manufacturing, food economy Northern Initiatives also manages a new fund called the Michigan Good Food Fund, a $30 million public-pri-

vate loan and grant fund created to generate healthy food production, distribution, processing, and retail projects for underserved communities throughout Michigan. The maximum loan is $250,000. Projects it is interested in include fullscale supermarkets; mobile markets that can bring fresh food into communities that lack access; processing facilities; food incubators where wouldbe entrepreneurs can try out their ideas or those with small operations can rent space; funding for equipment for drying, packing and delivering local fruit; smaller corner stores selling fresh fruits and vegetables; establishing food cooperatives; and creating farmers’ markets.

Through an affiliation with the Plymouth-based Michigan Manufacturing Technology Center, Northern Initiatives also offers a range of services to small and medium-sized manufacturers to teach them best practices, lean manufacturing, eliminating waste, reducing inventory and shortening lead times. Through a portal it has recently launched, initiateprosperity.org, Northern Initiatives offers more than 100 how-to articles on running or growing a business as well as 21 videos, six financial calculators and webinars and templates. Tom Henderson: (231) 499-2817 thenderson@crain.com

Paul Vafa, Brice Sturmer and Teagan Sturmer of Velodrome Coffee. Co.

and up to 100 outside when weather permits. They have live music five nights a week and a regular fleet of visiting food trucks. In 2016, Northern Initiatives helped another beerpreneur get started, in Manistique. Ten years earlier, Tiffany Gault had worked her way through college tending a bar. When she wanted to buy it, a loan from Northern Initiatives paid for kitchen equipment and working capital and the bar was renamed Tap 21. Offering a wide variety of U.P. craft beers, it employs four full-time and two part-time.

Coffee with a difference Brice and Teagan Sturmer, a husband-and-wife team, and Paul Vafa are the owners of the Velodrome Coffee Co. on West Washington in Marquette, which has been open for just over a year, thanks to a $50,000 loan from Northern Initiatives. Brice had worked for several coffee companies, most recently running a coffee company in Tennessee, before moving to Marquette, where Teagan is from. He wanted to get back into the coffee business, but when he approached some Marquette banks, they didn’t understand the need for yet another coffee shop and didn’t like that he had very little capital. "I basically got laughed out the door," he says. Then he found Northern Initiatives online and set up an appointment. He had a business plan and had signed a lease on a storefront on a busy thoroughfare in town, with a lot of car and foot traffic. To differentiate his shop from others in the market, he planned to visit coffee growing regions and meet with area growers, getting to know them and their practices and picking what he thought were the best providers. “Northern Initiatives cared about helping startup businesses,” said Sturmer. “It was an absolutely stressful

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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 // N O V E M B E R 1 2 , 2 0 1 8

SPECIAL REPORT: MARQUETTE

A single voice for economic development in the U.P. By Tom Henderson

thenderson@crain.com

Need to know

InvestUP launched in 2017 to proactively pursue economic development in the U.P. 

Jeff Mason, the CEO of the Michigan Economic Development Corp., thinks it’s an exciting time to be in Maruqette. “What’s exciting is the combination of placemaking and community development. What’s going on with the tourism industry, with all the entrepreneurs, with the risk-takers, with how the university is helping. It just says a lot about what happens when the private and public sections come together,” Mason said. MEDC staffers visited the city in October and met with community activists, business leaders and entrepreneurs. A microcosm of that intersection of private and public interests is a nonprofit launched in the summer of 2017 called InvestUP. “Gov. (Rick) Snyder was on hand when we launched this,” said Robert Mahaney, one of the nonprofit’s founders and the president and CEO of Marquette-based Veridea Group LLC, a real estate development and management firm. He is also chair of the board of trustees at Northern Michigan University. “The governor has been involved from the onset in bringing this group together. He’s

 Focused on business attraction, talent, and promoting the region as a great place to live and play  Angel network aligned with InvestUP has invested more than $750,000 in portfolio companies

spent a lot of his private time here.” InvestUP was formed to bring together disparate economic development efforts and be an overarching voice for the U.P., Mahaney said. “There were lots of economic development organizations, but they did things at a city or county level. I tried to count them all up and I stopped at 35. They were small, their resources were stretched. No one was out there proactively seeking out economic development across the region. By most metrics, the U.P. was not keeping up with the rest of the folks in the Midwest.” Membership is made up of the leaders of 15 of the most important businesses or organizations in the U.P., and is restricted to those who are or have been members of upper

management. The price of admission, $25,000 a year, is high by U.P. standards. Members include Stephen Hicks, president and CEO of J.M. Longyear (see related story, Page 10), who is vice president of the group; Dennis Smith, the former CEO of Upper Peninsula Health Plan, who is treasurer; Kelly George, the president and CEO of mBank, who is secretary; Fritz Erickson, the president of Northern Michigan University; Rodney Hanley, the president of Lake Superior State University; Ray Johnson, the CEO of the Marquette SmartZone and executive director of Invent@ NMU (see related story, Page 8); Kristen Mariuzza, general manager of Eagle Mine; Brian Sinotte, the CEO of U.P. Health Systems; Dennis West, the president of Northern Initiatives, a nonprofit that provides capital to areas underserved by traditional bank lending; and Karlyn Olsson, the CEO of Marketing Department Inc. Mahaney said InvestUP is focused on business attraction; helping companies drive sales; promoting the U.P. as a great place to live and play; and retaining and attracting talent, including helping the spouses of employees recruited to the area find

Dav Nati Glad

Dennis West, who has been in Marquette for 21 years, said the difference between the Marquette he arrived at and the one he works in today is night and day.

good jobs of their own. “When one of our members is recruiting someone, we put our heads together and say, ‘Who can use the spouse?’” said Mahaney. Dennis West, who has been in Marquette for 21 years, said the difference between the Marquette he arrived at and the one he works in today is night and day. “There are so many more community activities. There’s the farmer’s market every Saturday. The restaurants are so much better. You can find artists in the storefronts. It’s a dynamic downtown, now. The U.P. 200, a dog-sled race in February, brings thousands into town. There’s just so much going on,” he said.

David Nyberg is director of corporate engagement for Northern Michigan University. A native of Gladstone in the U.P., he has concentrated Yooper blood. His great-grandfather was the town blacksmith and his father made fishing lures for a living, and there’s not much better Yooper pedigree than that. He was the Lansing-based lobbyist for the Michigan United Conservation Clubs before returning to the U.P. in 2011. “We have a lot of green space, beautiful public lands, hundreds of miles of trails and a wonderful little downtown on the water. It works,” he said. Hicks grew up in Iron Mountain and has lived in Marquette for more

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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 // N O V E M B E R 1 2 , 2 0 1 8

than 30 years. He attributes the revival of the economy in recent years to tourism and outdoor recreation. According to the MEDC, tourists spent about David Nyberg: $190 million in Native of the area in 2016. Gladstone. “We’ve got great infrastructure. Two thousand people come to town in the winter from around the country for ski races. We’ve got beaches and clear water, a great university, a new hospital,” said Hicks, a former member of the board of trustees at Michigan Technological University and a Snyder appointee to the Michigan Strategic Fund. He is also on the board of the Innovate Marquette SmartZone and a member of the Innovation Shore Angel Network of accredited investors.

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Growing a tech hub The Innovation Shore Angel Network LLC was formed two years ago and aligned itself with InvestUP when it launched last year. It is made up of 24 accredited investors who hold regular pitch contests for would-be entrepreneurs and invest on an individual basis in companies they like. Mahaney said the angel network has already helped forge better relationships between Marquette and the Houghton-Hancock region, where there are a lot of tech startups spun off from Michigan Technological University. “Good tech comes out of Tech and investors in Marquette are helping commercialize it,” he said. The angel group has invested more than $750,000 in six portfolio companies, including several Tech spinoffs — Orbion Space Technology, which won the first-place prize of $500,000 at last year’s Accelerate Michigan Innovation event in Detroit for its propulsion systems to send the next generation of microsatellites into space; FM Wound Care, which is developing nitric-oxide-releasing materials for antimicrobial applications and commercializing a self-sterilizing polymer for wound dressings to reduce bacterial infection; and MicroDevice Engineering Inc., which aims to market a battery-operated device to help blood-donation centers determine blood type and screen for diseases and anemia in would-be donors. “The most important thing about investing in these companies isn’t the money or the return on investment, it’s mentoring and giving our time,” said Rich Vander Veen, the group’s managing partner. “The goal is to increase the prosperity of the U.P.” Last year, the fund approved a $6.5 million award for Northern Michigan University to expand high-speed broadband service throughout the entire Upper Peninsula, eventually building towers to bring broadband to 64 cities and townships. NMU matched that grant with a contribution of $3.2 million. “Marquette is thriving. It’s an exciting place to be,” said Snyder. “I encourage people to go see what’s going on there. It’s one thing to talk about it, it’s another to experience it.” 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 // N O V E M B E R 1 2 , 2 0 1 8

SPECIAL REPORT: MARQUETTE Then one day, my wife asked me what INVENT had happened with my idea. I told her FROM PAGE 8

He was recruited by Phil Hagerman, the co-founder of Flint-based Diplomat Pharmacy Inc. (NYSE: DPLO), to launch a similar business-incubator called 100K Ideas, which is filling Hagerman’s newly rehabbed historic Ferris Wheel Building downtown with promising startups.

Some tinkering and a new tool In 2014, Aho, a Marquette resident and sheet-metal worker, was recovering from rotator cuff surgery and working beside a young apprentice. They were both hammering drive cleats — a long, narrow piece of galvanized steel that is used to bind two wide sheets of steel together in duct work — “and I looked over and I couldn’t keep up. I said to myself, ‘I’m going to try to make something this weekend that will drive this cleat,’” Aho recounted. He had a better tool in mind, one better shaped for the job. “I began noodling around at home, but I’d make something and it would break. They kept breaking and I gave up.

I had given up, and she said, ‘That’s not like you.’” By then, it was 2016. Aho had heard about Invent@NMU on a local radio station. “It said, ‘If you have an idea, come on in and we’ll take a look at it.’” So Aho brought in one of his prototype tools, Ollila looked at it and said it was a great idea. “It started from there,” said Aho. The Invent@NMU team did some minor redesigning and eventually helped build a prototype that worked. Aho’s invention reduced the time it took to drive in a drive cleat by half, from 20 seconds to 10, with a lot less physical labor and less wear and tear on his rotator cuff. A story about Aho that aired on a local TV station in Marquette brought him to the attention of Scott Musser, the CEO of Sturgis-based Midwest Tool and Cutlery Co. Last year, he met with Aho and the Invent team. “He asked me if I wanted to sell the rights. I was still working and I knew I wasn’t going to be able to make all the tools I’d need to make,” said Aho. He turned over his patent rights in the U.S. and Canada to Midwest and went to a trade show in Chicago with Musser last January to begin marketing the

Cathe Hahn, founder/inventor, Patagium Sewing Company and Sugarglider SUP Sail.

tool. It sells online for $73.71. Aho declined to disclose what he gets in royalties but said several thousand have been sold so far this year.

Helping smooth the sail The Patagium Sewing Co. is another business helped along by Invent@ NMU.

Company founder Cathe Hahn had been a sailmaker at the Irish Boat Shop in Harbor Springs for 30 years before moving with her family to Marquette in 2016. “We’d been coming up here for years. It’s just a great place to be,” she said. She had a sideline business making what are called downwind sails for stand-up paddleboards. Instead of moving slowly through the water by strokes with a long paddle, a sail of her design moves things along more quickly. She was trying to get the word out about her sails when she stopped into Invent@NMU one day in the fall of

HISTORIC FROM PAGE 10

“Instead of Frontier spending its time looking over its shoulder for money, we can spend all our time working on products,” said Hicks. “That such a rich tradition of natural resources is now getting into medical devices and diversifying says a lot about what is going in Marquette,” said Jeff Mason, the CEO of the Michigan Economic Development Corp. It is, he says, a perfect metaphor for the economic rebirth of the city; a cutting-edge, fast-growing medical-device startup owned by heirs of a 19th-century fortune made from mining ore and cutting timber, whose managers cherish the past while eyeing the future.

Quite the looker John Munro Longyear was born in Lansing in 1850, the son of John Wesley Longyear, a U.S. congressman who later became a federal judge for the Eastern District of Michigan. In 1873, John Munro moved to Marquette. In the late 1800s, Michigan produced 95 percent of the nation’s copper, almost all of it from mines in the Upper Peninsula’s Copper Country. At the same time, the state produced as much lumber as the next three states combined. As the preeminent “land looker” of his day, Longyear scouted Canada, the Upper Peninsula and Minnesota on behalf of rich backers for ground that he thought likely to contain iron ore and copper. He had, Marquette townspeople and his backers would proclaim, “a nose for ore.” Longyear made a fortune for his backers and, since he worked on

2016. “I kept driving by there and decided to go in one day. I had a sail in my car and brought it in, and things just took off,” she said. Johnson thought she had a great product for a community focused on outdoor recreation. She went to a boot camp there, and students helped get her website, patagiumsupsails.com up and running and did preliminary patent work on her sail design. With encouragement from Invent@ NMU, she broadened her business’ horizons and, thanks to a loan from three of Invent@NMU’s board members, which covered the $1,100 cost of a sign and some rent, opened her Patagium store downtown on Third Street in June. Patagium is the name for a membrane or fold of skin between the forelimbs and hind limbs on each side of a bat or gliding mammal. In addition to making paddle-board sails, Hahn’s store does a full range of repairs on outdoor gear, including tents, sleeping bags, coats and torn sailboat sails. “Everyone up here is outdoors all the time, and a lot of things need repairing,” she said. Hahn has one employee, an NMU student named Sarah Wing who heard about her store, called her up and told her she loved to sew. Was there any chance she could get a parttime job? “I said ‘Are you kidding? Get over here,’” said Hahn. Tom Henderson: (231) 499-0191 Twitter: @TomHenderson2 commission, for himself. That fortune remains intact today through the assets and profits of the Marquette-based company that bears his name. In the 1870s, Longyear had his first success on the U.P.’s Menominee Iron Range. As an agent for the Lake Superior Ship Canal, Railway and Iron Co., he got the rights for what became the Curry, West Vulcan, Norway, Cyclops, Ludington and Chapin mines, Chapin becoming one of the largest underground mines in the U.S. In 1890, Longyear was elected mayor of Marquette and served for two years. In 1892, Longyear built a 50-room stone mansion on a ridge in Marquette overlooking Lake Superior. In 1902, the railroad was coming to Marquette — entirely too close to his mansion, in his opinion. He lobbied to have the tracks laid farther away but lost the argument. So he had his mansion taken apart, put onto 144 railroad cars and shipped to Brookline, Mass., where he had it reassembled and added another 50 rooms to boot. In 1906, Longyear expanded his reach. He co-founded the Arctic Coal Co., which surveyed and mined coalfields on Spitsbergen, Norway, now Svalbard, an archipelago between mainland Norway and the North Pole and one of the world’s northernmost inhabited areas. In 1916, he sold his claims to Store Norske Kulcompagni, a Norwegian company that operates them to this day. The capital city of the archipelago is Longyearbyen, or Longyear City. Longyear died in 1922 in Brookline, Mass. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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

CRAIN'S LIST: LARGEST VETERAN-OWNED BUSINESSES

Ranked by 2017 revenue Rank

Company Address Phone; website

Majority owner(s)

Revenue Local ($000,000) employees 2017/2016 Jan. 2018/2017

Percent VeteranOwned

Branch of service

100.0%

Army

Petroleum retailer and wholesaler

Years served Type of business

Barrick Enterprises Inc. 4338 Delemere Blvd., Royal Oak 48073 (248) 549-3737; www.barrickent.com

Robert Barrick president

$534.4 $491.9

17 20

Petoskey Plastics Inc. 1 Petoskey St., Petoskey 49770 (231) 347-2602; www.petoskeyplastics.com

Paul Keiswetter president

145.0 NA

NA NA

Marines

Blown plastic film and bags

Midwest Steel Inc. 2525 E. Grand Blvd., Detroit 48211 (313) 873-2220; www.midweststeel.com

Gary Broad CEO, president

136.0 NA

NA NA

Army

Structural steel contractors

James Group International Inc. 4335 W. Fort St., Detroit 48209 (313) 841-0070; www.jamesgroupintl.com

John James chairman

128.0 129.0

114 107

100.0

Army

Logistics and supply chain management

ChemicoMays LLC 25200 Telegraph, Suite 120, Southfield 48033 (248) 723-3263; www.thechemicogroup.com

Leon Richardson president and CEO

124.0 108.5

215 199

100.0

Marine Corps

Chemical management and supply

Michael Chirco founder and president

106.9 84.7

81 75

100.0

Army

Real estate

MJC Real Estate Co. Inc. 46600 Romeo Plank Road, Suite 5, Macomb Township 48044 (586) 263-1203; www.mjccompanies.com

BullsEye Telecom Inc. 25925 Telegraph Road, Suite 210, Southfield 48033 (248) 784-2500; www.bullseyetelecom.com

William Oberlin chairman and CEO

102.0 100.0

190 186

50.0

Army

Trendway Corp. 13467 Quincy St. , Holland 49424 (616) 399-3900; www.trendway.com

Don Heeringa chairman and CEO

75.0 NA

NA NA

Army

Multi-Bank Securities Inc. 1000 Town Center, Suite 2300, Southfield 48075 (800) 967-9045; www.mbssecurities.com

David T. Maccagnone CEO

66.4 B 75.5

69 67

62.0

Marine Corps

Argent International Inc. 41016 Concept Drive, Plymouth 48170 (734) 582-9890; argent-international.com

Fred Perenic president and CEO

48.0 NA

NA NA

Marines

Telecommunications

Home and office furnishings

Securities broker-dealer

Manufacturer

SOURCE: NATIONAL VETERANS BUSINESS DEVELOPMENT COUNCIL This list of veteran-owned businesses is an approximate compilation of the largest businesses in Michigan. Crain's collaborated with the National Veterans Business Development Council to compile the list. It is not a complete listing but the most comprehensive available. NA = not available.

B Company estimate.

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Learn more at oakland.edu/veterans.

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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 // N O V E M B E R 1 2 , 2 0 1 8

CALENDAR WEDNESDAY, NOV. 14 Automation Alley’s Integr8 Conference. 7 a.m.- 4 p.m. Program will discuss the smart technologies shaping the future, focusing on the industrial internet of things, robotics, artificial intelligence, cloud computing, cybersecurity, big data, advanced materials/additive manufacturing and modeling, simulation, visualization and immersion. Renaissance

Center. $449 member; $599 nonmember. Email: info@automationalley.com; phone: (248) 457-3200.

THURSDAY, NOV. 15 Building a Culture That Drives Employee Engagement and Commitment. 7:30-8:45 a.m. JVS Business Connections. Learn how employers promote a culture that thrives and drives commitment. Guest speaker:

Deanna Hatmaker. JVS, Southfield. Free; registration required. Contact: Angela Bevak, phone: (248) 2334482; email: abevak@jvsdet.org

FRIDAY, NOV. 16 Women, Empowered. 11:30 a.m.-1 p.m. Auburn Hills Chamber of Commerce. Speakers: Ana Almeida, customer business unit vice president for Ford, GM and FCA, Faurecia; Ora

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainsdetroit.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. ACCOUNTING

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Howard Siegal, audit services partner, has relocated from RSM’s Milwaukee office to join the firm’s growing Detroit team. Since joining the firm in 2004, Howie has been providing audit and accounting services to both privately and publicly held clients in the industrial and consumer products industries. He has extensive experience with SEC reporting, financial statement audit engagements, enterprise risk management analysis, and inventory cost accounting systems and methodology.

Scot Ciarkowski has joined RSM’s Detroit office tax practice, bringing more than 14 years of experience to the growing team. Prior to joining RSM, Scot worked in-house for large public companies where he focused primarily on corporate federal income tax compliance and planning. Additionally, Scot has extensive expertise in identifying and implementing federal income tax accounting methods.

Ben Eisel has been named general manager of the Rudolph Libbe Group’s Plymouth, MI office. In 2010, Eisel joined RLG as a project manager working at multiple automotive and industrial sites including Ford Motor Company. He holds a bachelor’s degree in mechanical engineering from the University of Toledo, and is a board member of the American Farm Museum and Education Center in Blissfield, MI, and a founder and active member of the Assumption Education Foundation.

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Gallagher Sharp is pleased to announce that Jamie McCutcheon has joined the firm. Jamie’s practice is focused on first and third-party auto negligence and PIP litigation, including catastrophic PIP. She also has experience in insurance subrogation. Prior to joining Gallagher Sharp, Jamie served as House Counsel and on the Catastrophic/Large Loss Team for The Auto Club Group. Jamie is a member of the firm’s General Litigation and Insurance Practice Groups. See www. gallaghersharp.com.

Mahindra Automotive North America The National Association of Manufacturers (NAM) announced that Richard (Rick) Haas, president and CEO Mahindra Automotive North America (MANA), has been named to the NAM Board of Directors. As an NAM board member, Haas will work to advance a manufacturing policy agenda that promotes growth and prosperity for all Americans. NAM is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector in all 50 states.

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

Pescovitz

Pescovitz, president, Oakland University; Ursula Scroggs, president and director, DKSS. Marriott Auburn Hills, Pontiac. $45 members; $55 nonmembers. Table of 8: $330 for mem-

bers; $415 for nonmembers. Contact: Taylor Reyes, email: treyes@auburnhillschamber.com; phone: (248) 8537862. 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.”

DEALS & DETAILS ACQUISITIONS & MERGERS J OptimizeRx Corp., Rochester, provider of digital health messaging to the pharmaceutical industry, acquired CareSpeak Communications, Somerset, N.J., provider of interactive health messaging. Websites: optimizerx.com, carespeak.com/corp J Detroit-based private equity firm Huron Capital Partners LLC’s socks and apparel accessories platform, IQ Brands, Advance, N.C., has acquired Wheel House Designs Inc., Morristown, Vt., a producer of novelty socks. The deal marks the fourth acquisition for the IQ Brands platform. Websites: huroncapital.com, iqbrands.net, wheelhousedesigns.com J EventLink LLC, Sterling Heights, an event management company, acquired Synergy Marketing Partners LLC, Naperville, Ill., a marketing agency. Websites: go2eventlink.com, synmp.com J Valassis Communications Inc., Livonia, a media and marketing services company, acquired Market Magazine, Canfield, Ohio, a direct mail magazine that operates in Akron, Canton, Youngstown and Cleveland, Ohio. Websites: valassis.com, marketmagazineonline.com J Mike’s Tree Surgeons Inc., Troy, certified tree surgeons and urban foresters, is merging with SavATree, Bedford Hills, N.Y., a tree, shrub, and lawn care service. Phone: (248) 588-0202. Websites: savatree.com, mikestreesurgeons.com J Saga Communications Inc., Grosse Pointe Farms, a broadcasting company, has entered into an agreement to purchase the assets of WOGK(FM), WNDT(FM), WNDD(FM) and WNDN(FM) from Ocala Broadcasting Corp. LLC. The stations serve the Gainesville-Ocala, Fla., radio market. Website: sagacom.com J Denso International America Inc., Southfield, an auto supplier, acquired Ease Simulation Inc., Port Allegany, Pa., an automotive diagnostics technology company. The company will merge with Denso Products and Services Americas Inc., Long Beach, Calif. Website: denso.com

CONTRACTS J Oakland Community College, a five-campus community college, has a partnership with Autodesk Inc., San Rafael, Calif., a software company, to provide OCC an exclusive Autodesk manager, internship opportunities for students, training for students and faculty and opportunities for sponsorships. Websites: oaklandcc.edu, autodesk.com

J Stahls’, St. Clair Shores, a custom label printer, has a partnership with World Emblem International, Hollywood, Fla., an embroidery service, to serve the National Football League, Major League Baseball, the National Hockey League and the National Basketball Association and the promotional products industry including all ASI, Sage, Distributor Central and PPAI distributors. Websites: groupestahl. com, worldemblem.com, flexstyleemblem.com J Roush Enterprises Inc., Livonia, an automotive supplier, has an agreement with the Military Spouse Employment Partnership, a Defense Department-led initiative that connects military spouses with partner employers who have committed to recruit, hire, promote and retain military spouses. The company now aims to increase employment opportunities for military spouses through this partnership. Websites: roush.com, msepjobs.militaryonesource.mil J G3 Pharmaceuticals, Burlington, Mass., a development-stage biopharmaceutical company, has a license and option agreement with Henry Ford Health System, Detroit, for development and commercialization of galectin-3 inhibitors for treatment of diastolic heart failure. Websites: G3pharmaceuticals.com, HenryFord. com

EXPANSIONS J Athletico Physical Therapy, Oak Brook, Ill., orthopedic rehabilitation services provider, has opened two new locations at 17102 Farmington Road, Livonia, phone: (734) 367-4207, and 49443 Van Dyke Ave., Shelby Township, phone: (586) 580-8460. Website: athletico.com J Living Waters Yoga, Grosse Pointe Farms, has opened a 1,500-squarefoot studio at 110 Michigan Ave., Detroit. The studio will offer yoga classes, workshops, training and community events. Website: livingwatersyoga.com J FZB Technology Inc., an automotive supplier, has rebranded as Dare Auto Inc. and moved its North American operations from 44099 Plymouth Oaks Blvd., Plymouth, into a new, larger facility at 47548 Halyard Drive, Plymouth. The larger space will accommodate the company’s current and anticipated growth of its product and service offerings. Website: dare-auto. us J Stoney River Steakhouse and Grill, Nashville, Tenn., a steakhouse chain, has opened a location at the Columbia Center Campus, 155 West Big Beaver Road, Troy. Phone: (248) 925-4730. Website: stoneyriver.com

RAIN S IDN ETROIT BUSINESS C R A I N ’ S D E T R O I T CB U ’S ESS // N O V E M B E R 1 2 , 2 0 1 8

November 12, 2018

Page19 21

CHURCH

SCOOTERS

They succeeded in raising about $10,000, between the crowdfunding campaign and additional contributions from the congregation, said Brother Al Rice, treasurer of the church, husband of its pastor, the Rev. Dr. Cindy Rice, and business integration manager at Ford Motor Co. Knowing that wasn’t enough to begin facade repairs, the church’s leadership tapped most of the reserves it had acquired through a bequest. All totaled, the church has drawn down about $200,000 to fund repair of the facade and other projects, Al Rice said. With little experience in fundraising and a small congregation, the church’s leaders have their work cut out for them to fund the remaining costs of the capital projects. And that’s where Partners for Sacred Places is coming in. Churches in Detroit and across the country aren’t communicating their broader value beyond serving as a place of worship, Jaeger said. If they can do that, it will help them secure support from the community and keep their historic buildings active. “What we’re going to help them do is ... make the case (for support),” he said.

“Being partnership-oriented, approaching this in a smart way; that’s what attracted Ford,” Bear said. “This is only the first inning in micromobility and it’s a long-term trend. We’re in a unique position to play the long game, the right way. We can now make sure scooters are part of the fabric of mobility in cities and universities across the country.” Ford echoed Bear’s comments. “They do not launch without permission, they share usage data with cities and they work with local officials and university campuses to design educational tools around parking and riding rules,” Madra said in a blog post last week. “This approach aligns well with our values at Ford and with our ambition to be the world’s most trusted company.” Spin will launch 300 of its 400 scooters in Detroit’s downtown and Midtown areas and the remaining 100 in neighborhoods outside of Grand Boulevard in packs of 10, Bear said. The city of Detroit now has a total of 1,200 dockless electric scooters available to rent.

FROM PAGE 3

Historic roots Built in 1891, First Congregational Church of Detroit was designed by Boston architect John Faxon, who patterned the building after churches he saw in Venice and Ravenna, Italy. It was constructed with red limestone brought to Detroit from Michigan’s Upper Peninsula and designed in the Richardsonian Romanesque style that was influential in American architecture for about 10 years, Jaeger said. The church, which includes an addition designed by noted architect Albert Kahn and completed in 1921, was designated a Michigan State Historic Site in 1974 and listed on the National Register of Historic Places five years later. Beyond community programs and weddings, it serves as a voting site for three Detroit precincts and also houses the Underground Railroad Living Museum, a re-enactment of the original Underground Railroad passage that operated in one of the church’s first two buildings near Detroit’s riverfront at Fort and Wayne streets between 1840 and 1863. A core group of about seven volunteer actors guides visitors on a simulated Underground Railroad journey to freedom in Canada. The museum attracted just under 12,000 visitors in 2017 and 2018, Rice said. “We think that once we get that facade restored, there will be a lot more,” he said. Work on First Congregational’s facade, which began in the spring, has slowed while the contractor on the project, National Restoration Inc., works to secure red sandstone to match the church’s exterior.

‘Halo effect’ Like other older churches, First Congregational is important not only for its history but also for its economic impact on the community, Jaeger said, pointing to a study Partners for Sacred Places commissioned from the University of Penn-

FROM PAGE 3

The First Congregational Church was built in 1891.

sylvania School of Social Policy & Practice. The money churches and synagogues in urban areas spend through their operations, including hiring people, space sharing and spending in the surrounding neighborhood, adds up to an average economic impact of $1.7 million per church, per year, according to the “Economic Halo Effect of Sacred Places” study. “That’s the average,” Jaeger said. “Big Catholic churches with schools could have a $10 million impact.” The church also built a banquet center a number of years ago that many people don’t even know is there, said Sue Mosey, executive director of Midtown Detroit Inc. “There’s a lot of opportunity with this facility, if it’s properly financed, to renovate the historic portions and also to make some upgrades to the interior to make it more amenable to more shared uses,” Mosey said. “I think that’s critical for them.” The challenge First Congregational faces is to communicate the role the church plays in the surrounding community, Jaeger said. According to the University of Pennsylvania study, 87 percent of those benefiting from churches in urban areas are not members of the congregation. They are people in the community, who benefit from daycare centers, soup kitchens, concerts and after-school programs, Jaeger said. “We’re hoping a national nonprofit like Partners coming in saying this is a great place ... can be a leverage for other funding to help maximize (First Congregation’s) project,” he said. First Congregational will be required to match any grant it gets up to $100,000 and to raise a two-toone match for any grant dollars above that up to $250,000. “If they can raise more money, then we can give them more money,” Jaeger said.

Full circle Coming back to Detroit and First Congregational is a return to where Jaeger’s passion for restoration of churches began, he said. As a graduate MBA student at the University of Michigan in the 1970s, Jaeger, who’d grown up in Mt. Clemens, fell in love with the beauty of

FIRST CONGREGATIONAL CHURCH

the historic churches in Ann Arbor and Detroit as he stood looking up at the structures with their stained glass windows. He estimates he photographed 30-40 churches in Detroit in the late 1970s, including First Congregational. “I just got gripped by this passion to go find great churches, photograph them and learn about them,” he said. After earning his MBA, he went to work for IBM for three years in New York but wasn’t happy. When he learned Cornell University offered master’s degrees in preservation, he went back to school. While working at Philadelphia Historic Preservation Corp., he talked his boss into starting a program to benefit sacred places in 1985. Four years later, he founded Partners for Sacred Places, a national nonprofit working to help congregations and communities care for and make good use of older and historic religious properties. In 2015, Jaeger and his team were in Detroit looking for opportunities to match local performing artists and groups with religious sites that had space. But because of Detroit’s economic climate at the time, space in the city was so cheap artists could afford to buy their own rather than sharing with a church, Jaeger said. Still, Partners for Sacred Places felt symbolically it was important to have a presence in Detroit. It wasn’t until this fall, however, that the group got its chance. With a nudge from Michigan Historic Preservation Network’s executive director, Nancy Finegood, First Congregational submitted a grant proposal and was chosen as one of 13 churches to get the fundraising training and financial support for their building projects through the National Fund for Sacred Places program funded by the Indianapolis-based Lilly Endowment. The program, which focuses on churches that are still active worship spaces, is administered in collaboration with the National Trust for Historical Preservation. “This has been my life’s work. To come back to Detroit is like closing a circle,” Jaeger said. “Knowing that maybe we can help make a difference is very powerful for me.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

Bird and Lime launched in Detroit over the summer with 300 scooters each, until the city approved a higher total of 400 each with the caveat that the next 100 be outside Grand Boulevard. Ford plans to keep the Spin name and doesn’t expect to put any branding on the scooters, Madra said. Spin will also not move to Ford’s new mobility-centric operations in Detroit’s Corktown, maintaining its San Francisco headquarters, Bear said. Madra declined to say whether Ford expects the business to be profitable, saying only that it thinks “it represents a healthy business for us.” The Spin acquisition comes a week after crosstown rival General Motors Co. announced it would launch a new brand and lineup of electrified bicycles beginning in 2019. Ford also offers bicycles through Ford GoBike, a West Coast bike-sharing service. Dockless electric scooters have exploded in popularity in cities across the U.S. in recent months. Lime and Bird have said customers ordered 10 million rides in under one year. Bird and Lime reached 50,000 rides in less than 60 days in Detroit. By comparison, Madra says, it took Uber three years to reach 3 million rides.

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WHITMER FROM PAGE 1

business community in Michigan that has had one of its own in the governor’s office for eight years. But the owner of an automation equipment distribution company in Flint is worried about the business community “being a little standoff-ish” to a new governor who won a Democratic primary by vowing to hike the minimum wage to $15 per hour, repeal Michigan’s right-to-work law and restore union-scale prevailing wages. “I don’t think I’m as worried about Gretchen embracing business as I am concerned about business wanting to embrace and mesh with her,” said Shaltz, president and owner of Shaltz Automation Inc. Shaltz is among a handful of business leaders in Michigan who quietly supported Whitmer in her successful campaign to succeed Gov. Rick Snyder as the state’s chief executive. She soundly defeated Attorney General Bill Schuette in the Nov. 6 election by 403,000 votes or 9.5 percentage points. With the exception of the Detroit Regional Chamber, business groups were largely behind Schuette in the governor’s race this fall, betting that the GOP nominee would keep in place Snyder’s regulatory and tax policies, which are credited with making Michigan competitive again for capital investment and job growth after a decade-long economic decline. Whitmer’s allies doubt the pragmatic former state senator from East Lansing will try to tinker with the business climate Snyder has methodically built — in large part because Republicans will still control both houses of the Legislature next year. “I think she’s well aware that she’s going to have to work with everyone to get everything she wants,” said Gui Ponce de Leon, founder and CEO of PMA Consultants, a Detroit-based infrastructure construction management firm. Incoming House Speaker Lee Chat-

MARIJUANA FROM PAGE 1

“The potential market size is an important piece, as well as its geographical location,” said Douglas Mains, associate attorney at Honigman Miller Schwartz and Cohn LLP in Lansing, who helped draft the Michigan proposal. “No state around us has recreational yet. We’re already getting lots of calls from Canada. Michigan is just across the bridge. They are very interested in operating here.” Michigan is the 10th U.S. state to legalize recreational adult use of marijuana, joining Alaska, California, Oregon, Washington state, Nevada, Colorado, Vermont, Maine and Massachusetts, along with Washington, D.C. Michigan’s medical marijuana industry, which became legal from a 2008 ballot initiative, was the second largest in the nation with nearly 290,000 card carriers, behind only California until it legalized recreational use in July. Adult recreational use became legal nationwide in Canada on Oct. 17 with expectations of it growing to a $22.6 billion industry, according to a report by Deloitte in 2017. Canada is already home to some of the largest marijuana companies in the world, including Toronto-based Canopy Growth Corp., Edmonton, Canada-based Aurora Cannabis Inc. and Toronto-based MedReLeaf Corp. But trading rules restrict many of these companies from doing busi-

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 1 2 , 2 0 1 8 field and the new Senate Majority Leader Mike Shirkey are unlikely to let a Whitmer-led effort to repeal the 2012 right-to-work law see the light of day in the Capitol. “Some of those things (Whitmer’s Democratic) base would be very much interested in, I feel like we’re probably not going to be looking at it realistically in the next two years,” said Rob Fowler, president of the Small Business Association of Michigan.

some stability to the volatile cost of their employee health insurance plans, Fowler said. “Anything we can do to get after the cost of health insurance … we’re all ears for working to bring down the cost of health insurance,” he said.

Uncertain times ahead

Finding common ground One area where Whitmer is already finding support from the business community — including the Michigan Chamber — is her emphasis on addressing long-term infrastructure needs in both highways and city streets, as well as aging underground water and sewer networks. “Everybody’s going to want to be at the table for that discussion,” said Cindy Pasky, CEO of Strategic Staffing Solutions in Detroit. “She was speaking the right language.” Getting a deal on road funding with Republican lawmakers who have resisted big tax and user fee increases in the past will be a test of Whitmer’s legislative skills, something Snyder and former Gov. Jennifer Granholm struggled with because they never served in the Legislature, Studley said. “Having those legislative skills is something we haven’t had in a while,” said Justin Winslow, president of the Michigan Restaurant Association. As the Senate Democratic leader, Whitmer played a key role in negotiating the deal in June 2014 that led to the last increase in the minimum wage and kept it off the ballot that year, Winslow said. “We have an example at least of her working alongside with groups that she may not 100 percent agree with,” he said. “That’s a good sign going forward.” During the general election campaign, Whitmer repeatedly emphasized bipartisanship, often clinging to Snyder’s signature social policy ness in the U.S. Canadian companies traded on the Toronto Stock Exchange, the biggest in Canada, can’t own and operate U.S. marijuana assets. And any company listed on the New York Stock Exchange or NASDAQ stock exchanges also can’t do business in marijuana in the U.S., thanks to federal banking rules that categorize any federally dictated banking in marijuana as money laundering. Cobourg, Canada-based FSD Pharma is listed on the U.S. over-thecounter stock exchange, but plans on listing on the NASDAQ in the future and desperately wants access to the Michigan market. “Canada will have enough supply to serve Canadians in the next 18-24 months and once that supply curve is met, everyone will be looking elsewhere,” said Anthony Durkacz, co-chairman and founder of FSD Pharma. “At the end of the day, the rules and laws are there and I have zero interest in breaking any laws in any country. That would impact us financially and impact our reputation. But the U.S. is a 10 times larger market than Canada and that’s where we want to be and Michigan is our neighbor and would be a great place to start.” FSD Pharma acquired a 620,000-square-foot former Kraft Foods processing plant in Cobourg, an hour east of Toronto, and is investing roughly $42 million to transform it into the largest marijuana growing and processing facility in the world.

LARRY PEPLIN

Gretchen Whitmer won few friends in the business community with her support for higher minimum wages and repealing right-to-work. She’ll have to work across the aisle to make headway on infrastructure promises.

achievement of expanding Medicaid insurance to 680,000 low-income adults and drastically reducing uncompensated care costs for hospitals. Whitmer has said she’ll make it a priority to keep the Healthy Michigan program in place, while working on policies that can make private health

insurance more affordable. She has proposed creation of a reinsurance program to make payments to insurers to cover their high-cost users that gets passed along to other customers in insurance pools. Small businesses are interested in state public policies that can bring

Need to know

by shielding them from more established competition. “The appetite for investors and outside companies is huge, but if you can’t meet state licensing requirements, you can’t get a license,” Sobczak said. “There are definitely challenges to money coming in, but it leaves the market more open to small startups, etc. But on the other hand, that raises the potential that Michigan is going to get left behind in the national market or crushed by Canadians eventually because we’re not going to be able to scale up.” Mains said he is working with the Coalition to Regulate Marijuana on legislation similar to what’s used in the gaming industry, creating an ownership threshold for the regulatory background check process. In gaming, background disclosures are limited to officers, directors and owners with a 10-percent stake or higher. But getting a bill through the Michigan Legislature seems unlikely as the background checks were part of the medical marijuana citizen initiative in 2008 and a change would require a three-quarters affirmative vote from Legislature. “What sort of appetite in the Legislature is there to take up anything marijuana related?” Mains said. “There’s some marijuana fatigue right now.” However, the Michigan Department of Licensing and Regulatory Affairs’ Bureau of Medical Marihuana Regulation can eliminate the rule one year after commercial recre-

Federal banking laws prevent Canada’s public companies from entering the market J

J State regulations on background checks also make outside investment difficult J Experts predict regulatory change needed in future

More than 1,300 employees worked at the plant when it was owned by Kraft and FSD plans to match that employment total when it reaches full capacity. Currently, it employs 35 with 220,000 square feet of the plant in operation, Durkacz said. But even if the U.S. changes its federal laws on marijuana, Michigan’s own regulations will be an impediment to public companies and other potential investors to the market. Under the current regulations, a recreational marijuana company must first secure a medical marijuana license, which comes with a requirement for criminal and background checks of all owners and stakeholders in the company. For a public company, this would mean a background check on every single person who owns a share in the company — and shares are traded minute-by-minute on the exchanges. The task would be impossible, said Benjamin Sobczak, a partner with Dickinson Wright PLLC in Detroit and Troy. While this may limit the industry’s growth by keeping big-money players on the sidelines, it may help local entrepreneurs and business people

Whitmer’s challenge as Michigan’s 49th governor may be less about winning over the business groups and corporate interests that backed her gubernatorial opponent and more about leading the state through a transformational period in the auto industry. Even after eight years of sustained economic growth, Michigan’s auto-dominated manufacturing industry is adapting to the coming age of electric-motorized vehicles that will require fewer and fewer workers to mold, punch, bend, grind and shine car parts. “She has to be — and I believe she will be — the transitional governor between how we’ve been looked as an economy in this state for the last hundred years and how we’re going to be looked at in the next 100 years,” Shaltz said. Whitmer needs the support of the business community and the Legislature to diversify the economy, said Shaltz, who wants to see Michigan chase after the aerospace and semiconductor industries. “We can’t be a service industry state. And we can’t be a call center,” he said. “We have to make chips.” Given the uncertainty ahead for Michigan’s home-grown auto industry, Shaltz argues it would “be a mistake” for the business community not to embrace Whitmer. “They need to give her as much support, information and guidance and let her do her thing,” he said. “I think this could be a very, very good thing — assuming the economy doesn’t soften too much.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood ational sales begin, Mains said, which may be the easier step. So the rules will likely be in place until late 2020 or 2021, he said. But the Canadian companies, private equity investors and other players aren’t likely waiting for the rules to change. Scot Crow, attorney at Dickinson Wright in Columbus, Ohio, said they are already here. Investors have long used a legal method to remain more anonymous or scale back the regulatory background process for other industries, such as pharmaceuticals. A sister company is created as an investment firm, which is then used to invest in another business. “We have many investors with no interest in being listed on the license,” Crow said. “It’s not as if it’s dead in the water, it just makes it more difficult. It’s occurring in Michigan from clients with capital needs and engaging in financing transactions that either are private equity or publicly traded companies. It’s more complex because of the laws in place and needs competent legal counsel to do so, but it’s happening.” Durkacz said he’s invested in at least five marijuana-based companies in the U.S. through indirect ownership. “As soon as the rules change, it’s going to become a race (to get to the U.S. and Michigan market),” he said. “My intention is to keep investing heavily until that happens.” 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 // N O V E M B E R 1 2 , 2 0 1 8

BEAUMONT FROM PAGE 3

At the new center, cardiologists, cardiac nurses, social workers and dietitians will provide medication monitoring, heart failure management and progressive therapies. Patients will be able to get EKGs and echocardiograms and other tests, see specialists and consult with nutritionists, Sakwa said. The center will be close to the hospital pharmacy to ensure patients have ready access to fill preMark Sakwa: scriptions, he Beaumont cardio said. chief The $5 million gift from the Ernsts builds on an earlier gift of $3 million made in 2009 in honor of Max Ernst’s late, first wife Ellen to fund the Ernst Cardiovascular Center on the Royal Oak campus. The first site that bears the Ernst name is focused on the treatment of issues including vascular heart disease and atrial fibrillation and preventative heart screenings for high school students and adults. Since the center opened in 2010, specialists at the first center have cared for more than 30,000 patients. Ernst is passionate about the stu-

www.crainsdetroit.com

Debra and Max Ernst

BEAUMONT HOSPITAL

Rendering of the Max and Debra Ernst Heart Center under construction on the campus of Beaumont Hospital in Royal Oak. When completed in the fall 2019, it will provide congestive heart failure patients with a single place to come for treatment.

dent-athlete testing and very happy with the number of people the center has been able to help. “When I built the Ernst cardiovascular center … I saw that young men were dying ... no one ever thought to check the heart,” he said. “That was my main objective — to make sure these kids didn’t die on the football field or basketball court.”

Ernst, 81, said he said when the center opened that if he could save one life, it would all be worth it. “Well, I saved a lot more lives,” he said late last week. He learned of the congestive heart failure epidemic from his “good friend Marc Sakwa,” someone he met 30 years ago on the golf course at Tam-O-Shanter Country Club in

CONTRIBUTED

West Bloomfield. “My parents had heart problems, and my mother-in-law has congestive heart failure,” Ernst said. So many people with congestive heart failure have trouble walking and breathing, yet they have to go to so many doctors on so many floors of hospitals to get treatment, he said. With the new center, all of their doctors will be in one place. Ernst, who splits his time between Michigan and Florida, is also a big supporter of the Jewish Federation of Metropolitan Detroit and numerous other charitable causes, he said. “Giving is so much more gratifying than receiving. I learned that early in life (from) my parents,” Ernst said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

Patterson faces Democrat majority on Oakland County commission for 1st time By Bill Shea bshea@crain.com

While the pundits and partisans debate the national scope of the so-called Blue Wave in Tuesday’s election, in Oakland County the reality is clear: Democrats will assume the majority of seats on the county commission for the first time since the mid-1970s. And that may accelerate the county government’s participation in regional issues such as mass transit and economic development. The current 14-7 Republican majority flipped on Tuesday to an 11-10 Democratic majority that begins Jan. 1. The only other Democratic majorities in the board’s history were 1972-1974 and 1976. Tuesday’s result means longtime Republican Oakland County Executive L. Brooks Patterson will face an opposition majority on the county commission since being elected to his role in 1992. None of the four Democrats elected to formerly GOP seats campaigned as economic radicals, so there appears to be little worry of anything upsetting the county’s business-friendly reputation. The clashes may come if the Democrats push regionalism. Patterson prefers to concentrate on the county’s internal economic development and endorses regional issues only when the direct benefits to Oakland County residents and businesses are clear. Patterson issued a statement the day after the election: “The results of Tuesday’s election were not unexpected. My administration has always reached across the aisle, especially at budget time, to pass a bipartisan, balanced, three-year budget. We will continue to do so. “I look forward to working with the new board to continue my administra-

tion’s priorities of protecting Oakland County taxpayers with a balanced, multi-year budget, a AAAbond rating, and a healthy fund balance. In addition, driving job creL. Brooks ation in Michigan Patterson: New through diversifilandscape cation in the knowledge-based economy and supporting small businesses, investing in technology to improve government efficiency and services, and to enable our residents to experience a premiere quality of life through active and healthy lifestyles.” Crain’s requested a chance to talk to Patterson directly about what he sees at potential conflicts with the new board of commissioners, but his office didn’t make him available. Regional cooperation is the chief area that’s likely will be a source of tension between the commission majority and the county executive, said Oakland County Commissioner David Woodward, a Democrat whose 19th District represents Berkley and a portion of Royal Oak. He was first elected to the commission in 2004. “When it comes to a lot of regional issues, Oakland County has been a barrier to progress, and that’s going to change,” he said. Regional transit is especially a potential showdown. Patterson undercut the 2016 tax initiative that would have funded a system of high-speed buses and other transit options across Oakland, Wayne, Macomb, and Washtenaw counties. Its narrow failure at the polls — it lost by just 1,109 votes in Oakland County out of 586,000 cast —

set back any effort at regional transit by years and left the Regional Transit Authority of Southeast Michigan gutted. Patterson, long hailed by supporters and even some detractors for his stewardship of the county’s finances, also has staked out opposition to a new regional economic development effort, Woodward said. Some of the region’s CEOs formed a loose coalition two years ago to back the regional transit effort, making it one of the rare occasions Patterson and Oakland County government found itself at odds with the larger business community. His objection to the tax was that Oakland’s participation wasn’t justified by the level of service its residents would get under the plan. That nameless group of regional CEOs and organizations, during this year’s Mackinac Policy Conference, announced its plans to launch a regional economic development nonprofit public. Patterson hasn’t joined the group and in August drew condemnation when he said he’d “rather join the Klan” than pay dues to the new business attraction group. For him, the organization appears to represent a threat to county autonomy and its ability to lure companies. Phil Bertolini, Oakland County’s deputy executive and CIO, did join in an advisory role. Longtime transit advocate Marie Donigan, an Oakland County political observer and former state representative from Royal Oak, predicts that any squabbling likely will come over the next effort to gin up regional support for mass transit along with economic development efforts that cross borders. “I’m sure the new Democratic leadership will be more eager to participate in regional efforts to bring businesses and jobs to the region while fighting for what’s best for Oakland County,” she

said via email. Patterson appoints members to the RTA board and has veto power over any plan it proposes. He used that power in 2016 to carve out more benefits for the county before allowing it to go in front of voters. Economic issues within Oakland County are likely to be more politically harmonious. Woodward said he he’s optimistic there largely will be bipartisan cooperation between the new board majority, the GOP, and Patterson. “Democrats and Republicans in Oakland County government share a lot of the same priorities,” he said. Democrats on the commission campaigned on investing in people and infrastructure, and protecting the water, Woodward said. Roads are a priority for the board, Woodward said. “Frankly, those should be bipartisan issues,” he said. Detroit Regional Chamber President and CEO Sandy Baruah said he’s not concerned that the board’s control change will have much affect on Oakland County’s business hospitality. “Oakland County has such a strong and growing base of businesses, it’s reputation for attracting business is so strong, that I don’t think changes in the county commission are going to impact that,” he said. Baruah also said he believes Patterson is genuine in his pledge to seek bipartisan compromise because he’s done it when Democrats were the minority, and it’s in the best interest of the county overall. “Brooks is a pragmatic guy. He’ll find a way to work with the new commission,” he said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 1 2 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Wayne State University Physician Group files for Chapter 11 bankruptcy

Plum Market to open cafe with full bar

NOVEMBER 2-8 | For more, visit crainsdetroit.com

he nonprofit University Physician Group, the Wayne State University School of Medicine’s faculty practice, has filed for Chapter 11 bankruptcy reorganization and is seeking to get out of leases in suburban locations to concentrate on Detroit. The medical practice, which employs 873 people, says in court documents filed Wednesday and Thursday in U.S. Bankruptcy Court in Detroit that it plans to continue operating, move its corporate administrative functions to Midtown Detroit and focus on being the “premier academic clinical practice” for the Detroit Medical Center. “This is not a liquidation or a closure — quite the opposite. UPG will remain in operation and focused on delivering outstanding clinical care while supporting the academic mission of the WSU School of Medicine,” UPG CEO Charles Shanley, M.D., said in a message to Wayne State employees. The filing comes several weeks after UPG reached a deal to continue its relationship with DMC, which is owned by the for-profit Tenet Healthcare Inc. (NYSE: THC). The relationship among the practice group, the hospital system, and the university’s medical school has been fraught for years. “The DMC is committed to our collaboration with the Wayne State University Physician Group and we value the access, expertise and specialized care that these physicians provide to our patients,” DMC CEO Anthony Tedeschi, M.D., said in a statement. “We share a long standing history and mission of serving the healthcare needs of the Detroit community and we plan to continue in doing so.” The filing says that over the past decade UPG’s number of physicians has declined by 50 percent, which has hurt clinical revenue and made its leased network of suburban offices untenable. It plans to use Chapter 11 to suspend operations at all suburban sites, it says in court documents. The filing seeks bankruptcy court approval to reject the leases the practice no longer can support. It also seeks permission to pay employees’ salaries, of which it says, “Rumors of a potential bankruptcy filing have put UPG’s employees on edge, and there is substantial concern about the retention of employees following the announcement of the filing of this case.” Wayne State School of Medicine Dean Jack Sobel, M.D., said in a message to employees: “School of Medicine students and residents should know that this is unrelated to the mission of the school and that this decision will not affect their education or residencies.”

BUSINESS NEWS J Ford Motor Co. has chosen the design and construction contractors that will help shape its renovation of

WAYNE STATE UNIVERSITY

The nonprofit University Physician Group is the Wayne State University School of Medicine’s faculty practice.

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

100

The number of “Googlers” now working in Google’s new office near Little Caesars Arena.

1.7 million

Number of Michigan residents expected to travel for Thanksgiving, according to AAA.

The number of states that have legalized recreational marijuana, after Michigan voters approved a measure to make weed legal last week.

the 104-year-old Michigan Central Station in Detroit’s Corktown neighborhood. Christman Brinker, a joint venture whose major Detroit presence is most recently evident in its work with the Ilitch family on the new Little Caesars world headquarters campus downtown, will act as construction manager, according to a news release. Quinn Evans Architects will lead design. The company with offices including in Washington D.C., Ann Arbor and Detroit has worked on more than 60 preservation or restoration projects at national historic landmarks. J Chemical manufacturer Pacific Industrial Development Corp. plans to invest $17.2 million and create 50 jobs near Ann Arbor. The Pittsfield Township-based company will add a third building to its headquarters at 4788 Runway Blvd. with a new 40,000-square-foot structure on adjacent land, said Lee Flake, the company’s CFO. J Continental Services is taking another slice of the local food services market with its acquisition of a Ferndale-based food supplier. The Troybased food management company purchased United Vending & Market Services, it announced Thursday. It’s the fourth takeover for the company in the past year and happens as other local food businesses are making moves to shake up the market. J A business consulting company in Southfield is moving to lay off 209 people by Jan. 11. Concentrix Corp., which sells companies its services in marketing, IT and analytics, is cut-

ting employees at its Southfield office at 100 Galleria Officentre, off Northwestern Highway, according to a notice filed with the state. J Two Nissan dealerships in metro Detroit have closed following a lawsuit targeting a once-prosperous dealership group composed of two ex-NFL linebackers. All Pro Nissan of Dearborn and All Pro Nissan of Macomb closed in the last week — less than three years after its owners had been touted by Nissan as part of a plan to grow market share in metro Detroit. Former NFL linebackers Antonio Pierce and Jessie Armstead and auto industry veteran Michael Saporito own the dealerships. J A New York-based insurance broker and consultant has acquired Royal Oak-based Cambridge Consulting Group. The investment consulting firm’s leadership will remain intact under the asset acquisition by NFP Corp., CEO Daniel Cornwell said. He declined to disclose terms of the deal, which closed Oct. 22. J Giffin Inc. plans to invest $9 million into a new 100,000-square-foot manufacturing center in Auburn Hills, expanding its presence in the Oakland County city, officials announced Tuesday. The supplier is awaiting approval from the city for its plans at 4444 Giddings Road alongside the supplier’s headquarters and R&D center. The new facility will produce paint finishing systems, such as robotic paint spray booths, according to a post from the city. J Union nurses have reached a contract agreement with Huron Valley– Sinai Hospital after more than two years of negotiations and labor disputes.

OTHER NEWS J Two former Fiat Chrysler executives and a union official have been sentenced to prison in a corruption scandal at a labor training center. Jerome Durden, who controlled finances at the Detroit-based UAW-Chrysler National Training Center, was sentenced Wednesday to 15 months in prison. Michael Brown, who helped run the center, was sentenced to a year in prison. United Auto Workers official Keith Mickens got a similar sentence. J Longtime Guardian Industries executive Russell Ebeid donated $4.8 million to St. Joseph Mercy Oakland hospital in Pontiac, which the hospital intends to allocate toward campus redevelopment. Ebeid, who had been a patient at the hospital, died July 30, 2017, in his home at age 77.

lum Market will open a bar, grocery and dining spot in the Ally Detroit Center skyscraper in downtown Detroit next summer. The Farmington Hills-based specialty grocer’s placement in the Bedrock LLC-owned building at 500 Woodward Ave. would mark its second planned location in Detroit. It’s also an expected tenant in the Henry Ford Detroit Pistons Performance Center to open next year in the New Center area. Plum Market is calling the Ally building store a small-format “street concept,” according to a news release. It’ll be the first to open, followed by the similarly formatted Pistons location. The 8,000-square-foot store will offer prepared and quick-made dining options including salads, soups, sandwiches and self-service hot food. It will also sell packaged snacks and groceries, fresh cut flowers, Zingerman’s coffee and baked goods, and have a full-service bar with beer, wine and cocktails. Grocery items will be “select everyday essentials, scaled to fit the smaller

street concept,” spokeswoman Rachel Cannon said in an email. A rentable event space called the Spirit Room will include patio seating in the easily recognizable building between Campus Martius Park and the riverfront. Victor Saroki & Associates is the architect and Jonna Construction is the contractor on the project. Plum Market declined to disclose investment and lease details. Some of the 25-year-old, 979,489-square-foot building’s main tenants are Ally Financial Inc., Townhouse restaurant and law firm Clark Hill PLC. Plum Market will replace the Bistro, which is expected to fully move out by Thursday. Additional details on the change were not immediately available. The Plum Market chain is co-owned by Marc and Matt Jonna and has locations in Ann Arbor, Bloomfield Township, West Bloomfield, Chicago and Detroit Metropolitan Airport. It also recently opened in Oakland University and in Northwestern University just north of Chicago.

HANNAH ROBAR

Garnette Archer of Jo’s Gallery 2, Carolyn Cassin of Michigan Women Forward and Jessica Willis of PocketNest celebrate their victories.

PocketNest, Jo’s Gallery 2 win Women Up competition P ocketNest and Jo’s Gallery 2 each won $10,000 and top honors Wednesday night at the Woman Up & Pitch Competition in Detroit. Ten women entrepreneurs based in Southeast Michigan pitched everything from potato leek soup to financial advice for cash and support services in the second iteration of the event at NextEnergy in Detroit, sponsored by Michigan Women Forward with support from the Consumers Energy Foundation. Garnette Archer won in the lifestyle category for her second-generation art gallery on Livernois in Detroit. Second place went to Birch Bride of Whitmore Lake and the third place winner was Buttons 2 Button of Northville. The growth category was won by Jessica Willis and her Ann Arbor-based PocketNest, an online financial planning tool targeted to millennials. Second place went to FrontWest Customs Brokerage & Ser-

vices of Romulus, and SignOn of Grosse Pointe Farms took third place. Second prize was $5,000, and third prize was $2,500. “This influx of capital can make a big difference to our winning companies as they start or grow their businesses,” Carolyn Cassin, CEO of Michigan Women Forward, said in a news release. Similarly, 10 entrepreneurs will present their ideas in Grand Rapids on Thursday and another group in Jackson on Nov. 14. A total of $108,000 will be awarded across all three locations, according to a news release. Since 2014, MWF has loaned $2.4 million to 93 businesses, in addition to 74 pitch competition prizes and investments totaling $468,400, it said in a news release. The Consumers Energy Foundation has contributed $200,000 to Michigan Women Forward this year toward its Women’s Entrepreneurship Initiative.

CONGRATU

LATIONS TO CRAIN’S LEADERSHIP ACADEMY FALL 2018 INDUCTEES

MARK BAKER

JOSHUA DUNHAM

MICHAEL GHESQUIERE JR.

MICHAEL LAND

ANDREA MEYER

JOE POMARANSKI

ROBERT REAVES

MANISH RUKADIKAR

JOSEPH STEPHANOFF

LISA WRIGHT

Business Banking Market Manager Huntington Bank

President Ghesquiere Plastic Testing, Inc.

Executive Director Center for Success

Commercial Portfolio Manager, Team Leader Huntington Bank

Commercial Team Leader Huntington Bank

Vice President IMPACT Management Services

Crain’s Leadership Academy is a nomination-based program, facilitated by the Collective Academy, that focuses on developing the strengths of rising leaders at local companies. For more information or to inquire about future cohorts, contact Keenan Covington at kcovington@crain.com

Director, Institutional Effectiveness Wayne State University School of Medicine

Lead Financial Analyst ITC Holdings

Businesses Planning and Development Manager DTE Energy

Director, Strategic Support St. Mary Mercy Hospital, Livonia