MiBiz January 18, 2021 edition

New political boundaries to emerge in 2021

Jane Ghosh takes helm at Discover Kalamazoo

PAGE 16

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JANUARY 18, 2021 • VOL. 33/NO. 7 • $3.00

Despite new state law, no solid plans for Kalamazoo event center

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HELP ON THE WAY More flexibility comes with latest round of PPP loans

By KATE CARLSON | MiBiz kcarlson@mibiz.com KALAMAZOO — A new funding tool recently signed into law is intended to help finance an event center in downtown Kalamazoo, but it’s unclear if there is a desire or solid plans to move forward with the venue.

House Bill 4816 was sponsored by former state Rep. Brandt Iden, R-Oshtemo Township, and was signed into law by Gov. Gretchen Whitmer on Dec. 30. The Regional Event Center Financing Act creates a financing program for potential venue projects in Kalamazoo, Ottawa, Muskegon, Ingham and Washtenaw counties.

“The impetus for this legislation was basically to allow access to another economic development tool that larger communities have like Grand Rapids and Detroit,” Iden told MiBiz. “I have always supported an event center downtown because I believe that Iden if urban core centers don’t grow, then they have a tendency to just die out.”

Iden was term-limited out of office at the end of 2020. He served on the Kalamazoo County Board of Commissioners for two years before he was elected to the state House of Representatives in 2014.

“The event center was only ever discussed in concept. There were never formalized plans or a formal agreement about the size and scope of the project,” Iden said. “It’s always been preliminarily discussed as a high-level concept for the community.”

The new legislation requires an event center financing program to describe the proposed size, location, cost and financing structure of the proposed facility, and to specify an assessment to be levied under the program, which can’t exceed 4 percent of county-wide hotel room charges. The assessment would effectively be a small increase to a county’s hotel lodging tax.

The financing act defines an event center as a convention hall, auditorium, stadium, music hall, See KALAMAZOO EVENT CENTER on page 3

Trade, labor shortage among top ag priorities this year PAGE 11

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

T

he new round of federal Paycheck Protection Program loans includes a number of changes from the prior funding intended to aid small businesses hurting from the COVID-19 pandemic.

As with the first round last spring and summer, borrowers working through a lender can again use PPP funding from the U.S. Small Business Administration to pay operating expenses.

The new $284 billion PPP round extends eligible expenses to property damage incurred in last summer’s civil unrest that was not covered by insurance, supplier costs and worker protection expenditures. As well, eligible expenses now include costs to adapt to the pandemic such as facility modifications, software and cloud computing and delivery services.

See PPP LOANS on page 12

ILLUSTRATION: KAYLEE VAN TUINEN

State expects ‘extremely high’ demand for $58.5M in small business COVID-19 relief

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

T

he latest state effort to provide financial aid to Michigan small businesses and entertainment venues that are ailing from the COVID-19 pandemic and resulting restrictions

has a relatively short application window based on previous demand.

Applications for the $55 million Michigan Small Business Survival Grant Program open at 9 a.m. on Jan 19. The application process closes at noon on Jan. 22.

Entertainment and live music venues can apply for the $3.5

P

INSIDE:

Industry 4.0 SEE PAGE 4

million Stages Survival Grant Program beginning at 9 a.m. on Jan. 21. The applications window for Stages grants closes at noon on Jan. 28.

The small window for the Small Business Survival Grant Program stems from an expectation that demand will easily outstrip available funding

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because of a “far, far greater need that exists than any amount of resources that we are facilitating,” Michigan Economic Development Corp. CEO Mark Burton said last week. Grant programs last year to provide relief for thousands of small businesses statewide quickly See MEDC GRANTS on page 10

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KALAMAZOO EVENT CENTER Continued from page 1

arena, meeting rooms, exhibit area and related public areas owned by a municipality or related event center authority.

In order for a county to use the Regional Event Center Financing Act, 60 percent or more of the county’s hotel owners would have to vote for its approval.

The new act mandates that 0.25 percent of the revenue from the assessment must be used for recreational services, and the rest could be used to cover costs including paying administration, enforcement of the ordinance, financing of property acquisition, construcHall tion and related maintenance costs.

“This is one of the ways I believe we can bring businesses to downtown and hopefully post-pandemic bring development to downtown Kalamazoo,” Iden said.

Other funding would likely have to be identified for an Sones event center if the development is pursued because the assessment likely would not cover the entire cost, Iden said.

No specific plans For at least the past two decades, there have been rumblings from different groups about constructing a downtown Kalamazoo event center. Despite

“We are delighted that the legislation passed that would allow the community to make a decision on the future event center, but our focus right now is on COVID-19 recovery.”

discussions over the past If Ka lamazoo or t he two years, county officials other four counties chose have yet to see a specific to utilize t he f inancing proposal, said Kalamazoo tool, the next steps would County Board Chair Tracy require the county board of Hall. A potential event cencommissioners to vote on ter did not come up during the financing act. the county board’s annual While Hall said she is retreat on Jan. 8, Hall said. more favorable to this new For mer Southwest financing act than a previMichigan First is the latously proposed food and est group in Kalamazoo beverage excise tax, many to c h a mpion a dow nof her constituents were tow n event center. The — CARLA SONES opposed to previous event econom ic development center plans. She also has Interim CEO, Southwest Michigan First agency has conceptually quest ions about specifproposed a plan twice to ics of the event center and the county board over the where other funding would years for an event center ranging in cost from $80 come from outside of the lodging assessment in million to $110 million, with the capacity to hold the new law.

6,800-9,000 people.

Southwest Michigan First asked the county Former Southwest Michigan First CEO Ron board in 2019 to put a food and beverage excise Kitchens was most recently the spokesperson for tax on its upcoming ballot that would fund the the project. According to media reports, Kitchens construction of the event venue by collecting a last month said construction on a project could surcharge on 1 percent of food and beverage sales break ground in 2024. Reports also put a $110 mil- from Kalamazoo County restaurants. A similar lion price tag on the project to be located between proposal to fund the venue was proposed the North Westnedge Avenue and North Park Street year before, but it never made it onto the ballot. downtown.

No community members or groups have reached Kitchens stepped down from his role effective out to the county about the proposed event center Jan. 15 to accept a similar position in Alabama. since Iden’s bill passed, Hall said.

Kitchens did not return repeated requests for a comAccording to Southwest Michigan First’s Junement from MiBiz. July 2018 edition of its publication, 269 Magazine, Southwest Michigan First Interim CEO Carla the idea for a downtown event center in Kalamazoo Sones said the organization is currently focused on was pitched by community leaders for the first time COVID-19 business recovery efforts and its national in 2003. search for Kitchens’ replacement.

“This new financing act does provide an inter“We are delighted that the legislation passed that esting option,” Hall said, “one that might be more would allow the community to make a decision on palatable to some of my colleagues than the (food the future event center, but our focus right now is on and beverages excise) tax that was proposed a couple COVID-19 recovery,” Sones said. years ago.”

A recap of recent stories from MiBiz.com.

now intends to develop a new office building of 80,000 to 100,000 square feet on Fairbanks Street that will connect to the Brass Works Building.

The facility is primarily occupied by Spectrum Health, which plans to renoGrand Rapids-based health system vate the building.

Spectrum Health has purchased the Brass Works Building on Monroe Avenue north of downtown and is scaling back plans for the construction of a new office building on adjacent land.

The health system’s Continuing Care division paid $24.7 million to buy the Brass Works Building from Canal The Grand Rapids Drive has opted Street Group LLC, according to propout of the current 2020-21 NBA Gerty records with the city of Grand RapLeague season while promising major ids. The transchanges on the horizon for next year. action, which The NBA G-League, which operates also included as the minor league ranks of the NBA, a small surface recently announced it would hold an abparking lot behind the building, closed breviated season hosted exclusively in on Dec. 30, 2020.

Orlando to limit exposure to COVID-19.

Spectrum Health said the Brass In an announcement and accompaWorks Building will incorporate into nying video released by the Drive, the plans for what’s known as the Center organization’s upper brass said that — for Transformation and Innovation that in conjunction with its NBA affiliate the will provide a single location for adminDetroit Pistons — it decided to forgo the istrative offices, training and meetings. season. Only 17 of the G-League’s 29 The project originally included a organizations have opted to participate.

300,000-square-foot office building on The 2020-21 season marked the the site of the adjacent former Gill Infinal year that the Drive would operate dustries Inc. facility. Spectrum Health as a G-League affiliate to the Detroit

Grand Rapids Drive scrap 2020-21 season, tease new NBA affiliation for next season

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Publisher Brian Edwards / bedwards@mibiz.com Associate Publisher Denise Montambo / denise@mibiz.com Editor Joe Boomgaard / jboomgaard@mibiz.com Managing Editor Andy Balaskovitz / abalaskovitz@mibiz.com (energy, policy) Senior Editor Jayson Bussa / jbussa@mibiz.com (manufacturing, tech, sports) Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writer Kate Carlson / kcarlson@mibiz.com (real estate & development, small biz) Contributing Reporter Marla Miller VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Digital Specialist Danielle Affholter / daffholter@mibiz.com Graphic Designer Kaylee VanTuinen / kvantuinen@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com Sales & Marketing Associate Lauren Frailey / lfrailey@mibiz.com Circulation For address corrections or subscriptions, contact MiBiz at 1-877-443-1977 or subscribe@mibiz.com

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BIZ BRIEFS Spectrum buys Brass Works Building for $25M, scales back nearby development plans

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Pistons, which recently acquired the former Northern Arizona Suns and renamed it the Motor City Cruise.

The Drive is poised to link up with another NBA organization for the coming year and “remains committed to Grand Rapids,” said Ben Wallace, co-owner of the Grand Rapids Drive and a former star for the Pistons.

MSU, Perrigo partnership to combine research and market expertise

A new partnership will connect Michigan State University’s clinical and research acumen with Perrigo Co. plc’s expertise in product innovation, manufacturing scale and retail distribution.

The collaboration “brings together premier industry and academic thought leaders that share a passion for enhancing the health and well-being of society, with a focus on research and clinical outcomes, retail and pharmacy experiences and technology and product innovations,” Perrigo said in an announcement on the partnership.

The partnership follows Perrigo’s decision last fall to develop a new $44.8 million North America headquarters on the site of MSU’s Grand Rapids Innovation Park in downtown.

Top Colliers execs depart, form new brokerage

A group of top leadership at Colliers International’s West Michigan office have left the firm to launch Advantage Commercial Real Estate Services LLC. The new commercial real estate brokerage is located in the Watermark Tech Office Park in Cascade Township.

Ten senior commercial real estate professionals, who have completed more than $2 billion in transactions, along with support staff will initially launch the firm, which is focused on brokerage services in office, investment sales, vacant land, site selection, multifamily, retail and industrial properties.

Industrial broker John Kuiper serves as CEO of Advantage Commercial Real Estate Services, which also includes Mark Ansara, Tim Van Noord, David Rapp, Duke Suwyn, Steve Marcusse, Michael Visser, Gary Albrecht, Trent Wieringa and Mike Murray.

MiBiz is published every other week by MiBiz, Inc., P.O. Box 1629, Grand Rapids, MI 49501. Telephone (616) 608-6170. Fax (616) 608-6182. E-mail: info@mibiz.com.

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3

FOCUS: INDUSTRY 4.0

Additive manufacturing grows from buzzword to key industry player

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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s owner of Forerunner 3D Printing LLC, Paul DeWys utilizes the evolving process of additive manufacturing to primarily produce short runs of complex parts for area businesses, or help them bring those same capabilities to the shop floor.

However, he knows that this manufacturing process has a lot more potential.

“My goal is that I want to have a production shop just like if you walked into any injection mold shop,” said DeWys, who also operates DeWys Engineering. “I absolutely am DeWys working toward the goal of having a 25,000-squarefoot building with 35 production printers producing 24/7. Anyone you talk to in additive — everyone should be going that route.

Lindemann That’s the future.”

In the scope of Industry 4.0 and advanced technology, additive manufacturing has been a buzzword for a couple of decades, standing as an attractive alternative to injection molding and other traditional manufacturing processes.

In the early 2000s, though, the idea of 3-D printing had a bit more bark than it did bite.

“What happened is 3-D systems and all these companies came out and they went to every fricking shop they could get into and they promised the world,” DeWys said. “They said, ‘We’re going to change the way you do business,’ and everyone got excited. And then they just completely fell on their faces. They over promised and under delivered. A lot of the non-millennials — the older generation — have a bad taste in their mouth.”

Fast for ward roughly a decade, and 3-D printing has not only found valuable roles in many manufacturing segments, but because of the evolving complexity of machines and development of more robust materials, many manufacturing and automation professionals agree that mass production capabilities are not far off.

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JANUARY 18, 2021 / MiBiz

Growing adoption A growing number of manufacturers are taking a hard look at 3-D printing. Sculpteo, a French 3-D printing business with a domestic office in San Francisco, released a report called “The State of 3D Printing,” which surveyed 1,300 manufacturers that use the technology. The report found that 51 percent of respondents use it for production while 80 percent said it significantly improved speed of innovation.

Additionally, the Bay Area’s Grand View Research Inc. valued the metal printing market alone at $772.1 million in 2019.

Prototyping and low-volume runs of complex parts is a sweet spot for additive manufacturing. In these scenarios, it’s hard for manufacturers to justify the cost of tooling associated with injection molding.

DeWys said manufacturers need to find that financial threshold between additive and injection molding to find which method will ultimately lead to lower costs for parts.

Forerunner 3D encountered this very scenario with a client that produces a mount for GoPro cameras called StaBowMount. DeWys and his crew initially printed the StaBowMount, which only needed 20 to 30 units per quarter.

That demand ballooned to thousands, which prompted them to invest in injection molding.

“We’re that initial bridge that gets from an idea, where they don’t know how much they’re going to sell, to a point where they are established and know their volumes and can go with confidence in buying an injection mold,” he said.

As for industry sectors that are embracing additive manufacturing, DeWys said he is mainly seeing stratification around the age of engineers, with the younger generation showing more interest.

Additive manufacturing has found a place in almost all industries, though — even old industries like foundries, which have not seen a need for modern innovations in centuries. DeWys said he has seen some success in printing foundry patterns and core boxes.

DeWys and Forerunner 3-D provide their expertise to a fellow automation specialist in Holland-based Mission Design & Automation. Forerunner 3-D prints nesting parts and custom mounts for holding gardening systems. “(3-D printing) gives you those tools to do prototypes quickly,” said Scot Lindemann, CEO of Mission. “A lot of our custom automation is, by definition, a prototype machine. So it let’s you

Paul DeWys (bottom left) of Forerunner 3D LLC in Coopersville, which serves as a production 3-D printing shop, working with a variety of companies to print primarily short runs of small or intricate parts with machines shown here.

COURTESY PHOTOS

go through those iterations of testing equipment really quickly, and modifying something and giving a customer something that will work a little better. If you used traditional tooling, you might just say it’s good enough.”

A glimpse of the future Troy-based Automation Alley, both a statewide and nationwide Industry 4.0 knowledge center, has proven the benefits of mass 3-D printing production through its recent Project DIAMOnD (Digital, Independent, Agile, Manufacturing on Demand).

Project DIAMOnD is a grant program open to Oakland and Macomb County manufacturers. Those that were accepted into the program received a 3-D printer for free. The program will distribute 300

printers in total, 200 of which already have been deployed.

The companies can use the printers for their own use and benefit. However, all 300 printers are tethered together through blockchain technology so that, when needed, they can be commandeered and used to produce one uniform part.

In the early portion of the COVID-19 pandemic, the printers were used to print PPE and ventilator components.

The program not only benefits manufacturers, but also creates a reliable, local supply chain.

“Even if you don’t need PPE in the future, this network can now print anything,” said Tom Kelly, executive director and CEO of Automation Alley. “Now that we have 300 printers, we’re actually

the largest 3-D printing farm in the world.

We have 300 printers on our network and they all live and behave as one. We’re bigger than GM. We’re bigger than Ford.”

Project DIAMOnD also provides a look into the future of additive manufacturing, which when paired with additional Industry 4.0 technologies, could essentially operate in a lightsout format.

“There will come a day when almost all the production is automated,” Kelly said. “It will be a combination of 3-D printing and CNC machines, with autonomous robots moving parts between the two and taking finished goods and putting them in a box. But, those plants will still need a lot of skilled people to keep those machines going.”

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5

FOCUS: INDUSTRY 4.0

Virtual and augmented reality emerges as manufacturing training tool

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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oseph Van Harken and his company Th3rd Coast Digital Solutions have long provided companies with cutting-edge digital training solutions.

Many of these solutions were video based until 2015, when Th3rd Coast developed a HoloLens-based augmented reality training program for its Lansing-based client Emergent BioSolutions Inc. The program featured 360-degree video and fully immersive computer-generated imagery (CGI).

With buzz rising over virtual and augmented reality technologies, Van Harken said it was clear that this was a space in which his company belonged.

“It became very apparent the immediate benefits from those programs — the value was immediately realized and spoke volumes,” said Van Harken, cofounder and chief strategy officer for Th3rd Coast Digital Solutions. “It made our decision easy. We’re going to put more of our focus into the enterprise and training side of things.”

Joe Van Harken, co-founder of Th3rd Coast Digital Solutions.

Augmented reality is when a user utilizes a device to view real world environments overlaid with computer-generated perceptual information with which the user can interact. Virtual reality provides an immersive experience where a user operates in a simulated environment.

Both technologies, referred to as extended reality (XR), have long been evolving and now are finding a place in manufacturing.

Training game-changer Some manufacturers are early adopters of these technologies for a variety of applications, from employee training to product development and marketing.

Forging a strategic partnership with Bostonbased computer software and services company PTC — and its AR software development kit (SDK) Vuforia — Th3rd Coast is heavily involved in the XR space.

Van Harken said it’s a welcome addition to manufacturing.

“A lot of people in those spaces are really in an analog state — pen to paper, no traceability, no digital threads through anything,” he said. “So, just getting anything digitized in that realm is a huge

step forward. But, if you can create more efficiencies with how to train people faster and better, then you create a more agile and nimble workforce that can adapt to various changing conditions in the factory.”

Still, barriers exist in adapting XR technology, as seen in the fact that primarily large manufacturers are the ones adopting it. Education is a key part of the challenge, according to Van Harken.

To address this need for market education, Van Harken and Th3rd Coast established a nonprofit news network on XR technologies. The network, found at th3rdeyexr.com, highlights different ways that enterprise users are applying these technologies.

Training is one primary application for XR, providing an immersive experience even when a user is not necessarily on the shop floor. Through these technologies, manufacturers are able to transcend ineffective user manuals and other analog training materials.

Additionally, it’s difficult to pass down knowledge from employees who were trained with analog materials decades ago.

“When they retire, in the past, that knowledge has retired with them,” Van Harken said. “One thing

COURTESY PHOTO

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AJACS FIRST TO PROVIDE NEXT GENERATION OF AMADA SERVO STAMPING PRESSES IN WEST MICHIGAN

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s Industry 4.0 continues to drive investment decisions for manufacturers, one Grand Rapidsbased company hopes to bring the latest advancements in stamping technology to West Michigan and beyond.

AJACS will be the first authorized representative in Michigan, Indiana, Illinois and Wisconsin to offer the next generation SDE/SDEW AMADA digital electric servo stamping presses from their Grand Rapids headquarters.

The new SDE/SDEW series of AMADA stamping press includes enhanced features and controls including an integrated motion creation and editing software, nine types of slide motion control, settings for energy reduction and less oil usage and touch screen control. As opposed to older, flywheeldriven stamping presses, servo presses offer an unparalleled amount of control of the machine through software and programming.

AJACS will feature one of the new AMADA SDE/SDEW stamping presses at its Grand Rapids location, as part of a mini-show room where customers are encouraged to test the machine and its features for themselves.

“The AMADA brand is a highly valued partner, which is why we wanted to

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JANUARY 18, 2021 / MiBiz

get something that you could actually touch and feel,” said Mike Worst, Product Manager of Press Equipment at AJACS. “It’s hard to show people this type of technology with just brochures. It’s like trying to sell a Cadillac. People want to see it and touch it. We really hope that this helps educate the market and drive new opportunities for partnerships.”

Worst noted that one of the main advantages of the new AMADA SDE/ SDEW line is its integrated SMAPS software, which allows for offline design and editing of slide motion paths for the machine.

“The software allows customers to design the slide motion path from their desks,” Worst said “Let’s say you get a new part and you’re not exactly sure how you’re going to process it in the press. This software will help you maximize your output and help you select the right path and verify the path you’re creating.”

AJACS offers two additional pieces of AMADA software for the SDE/SDEW press, including a pressure waveform analysis software (WANMS) which generates an analysis of waveforms, forces, motion and other data from the stamping press in real time. Additionally, AJACS also offers the APINES software which provides a virtual environment to monitor machine condition and

production status data in real time through an internet browser application.

AJACS also provides the requisite coil equipment to complement the AMADA presses.

“Our metal stamping customers are continuing to go more and more high tech,” Worst said. “Our machine allows them to incorporate this new technology and software and really differentiates a customer from their competitors.”

AJACS, which first entered the metal forming industry in the 1960s, decided to partner with AMADA as part of a larger growth strategy aimed at diversifying the number of products it provides to its customers. While the company traditionally focused on tooling equipment for the past 50 years, AJACS executives believed the company could strengthen its relationship with its current customers by adding cutting-edge stamping equipment as well.

“Our customers can have one contact and one relationship that can support them in a multitude of areas within their business,” Worst said. “We can now support them with the equipment, the

tooling, and some of the automation that surrounds their work as well.”

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that XR/AR solutions provide is a method for earlyextracting and documenting that knowledge to be able to pass it on. That’s the best way they learn.”

By using XR technology to train workers in the moment, Van Harken said that it can lead to a wellrounded workforce that contains fewer specialists and more generalists. And, for an industry that suffers from a chronic talent gap and workforce shortage, wooing a new generation to the job is vital.

Budget buster?

Price is another barrier that can block small manufacturers from reaping the benefits of XR technology.

However, as it evolves, the hardware and technology is slowly becoming more affordable.

For instance, an OculusGo — a virtual reality headset developed by Facebook Technologies — is available for around $200. Walmart Inc. purchased thousands of the devices as it dedicated a large portion of its training to virtual reality.

Hudsonville-based Immy Inc., which recently started doing business as Optique, has an optic display system in the works that is poised to become more accessible to manufacturers of all sizes.

“Our technology and our approach — it’s very different in the fact that it’s very cost effective to manufacture and produce,” said Optique CEO Sam Vilardi. “So, I think the barrier to entry for us isn’t going to be nearly what the competition is so it will allow us to work with smaller manufacturers.”

Outside of training, product design and development is another prime application for XR technology. Vilardi pointed to Steelcase Inc. as an example of a company that utilizes this form of technology to bring together design and development teams from across the country.

Augmented reality overlays real world environments with computer-generated perceptual information that a user can interact with. This technology is effective in employee training, product development and other areas of manufacturing operations. COURTESY PHOTO “You start to create this experience that allows you to design more effectively and more efficiently because there are a lot of nuances in design,” Vilardi said. “Some people struggle visualizing without being able to see it and touch and feel it. This technology brings it that much closer.”

Optique also looks to improve upon one other factor that can sour manufacturers on using the technology.

“The reason these hardwares have not gained adoption, to be blunt, is they leave a lot to be desired for,” Vilardi said. “The experience sucks.

A lot of them create nausea, motion sickness and eye fatigue.”

Marketing tool Furniture manufacturer Trendway Corp. worked in conjunction with Th3rd Coast to bring augmented reality to its company — but not for training or product design.

The Holland-based company developed an application in 2018 called the Trendway AR Office Builder.

Through a smartphone camera, the app allows the user to digitally place Trendway’s furniture throughout a real world space, giving customers an idea of how it would look.

The app also links the user to product information on Trendway’s website while housing videos where product experts walk through pertinent information associated with the product.

“In our case, we put together idea starters — it could be packages or full office setups,” said Nancy Stryker, Trendway’s director of marketing.

While the app wasn’t borne out of COVID, the pandemic has forced Trendway to start forging ahead with technology it had already been considering, as is the case with many other manufacturers.

“COVID really accelerated that need and desire for these technologies,” Str yker said.

“We’re finding that it’s something that will only continue to grow.”

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7

FOCUS: INDUSTRY 4.0

Small and medium manufacturers lag behind in Industry 4.0 race

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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s a company that has operated for more than 70 years, Jenison-based Nu-Wool Co. Inc. certainly was not oblivious to the fact that higher levels of technology and automation could transform its production process, according to executives..

But, like most small to medium-size manufacturers, they were a little hesitant to embrace it.

“I think it’s sort of that ripping the Band-Aid off theory,” said Matt Henderson, vice president of Nu-Wool, which produces cellulose insulation out of mostly recycled newspapers.

“Until you do it, you hear all these horror stories. We fall into the small-medium-size business. For us, a lot of times Henderson it seems the focus is always on big manufacturers. I think that it’s kind of scary for a smaller manufacturer that doesn’t have the resources to really support it.”

Nu-Wool took a leap forward two years ago when it invested more than $200,000 in an automated packaging system, complete with a robot.

Before that, Nu-Wool utilized a semi-automated bagging system and workers to manually stack pallets and load trucks. The company was filling five truck loads each shift, with roughly 1,200 bags in each trailer.

The decision to embrace automation came from the fact that workers were experiencing a high level of low-impact injuries and labor was growing harder to find.

With the system, the company was able to spare four employees on each shift from loading and packaging.

“We didn’t have a programmer on staff,” Henderson said. “We have no one that understood robotics on staff here when we decided to do it. I guess

8

JANUARY 18, 2021 / MiBiz

it’s like biting the bullet and winging it and seeing what happens. This was our biggest barrier to entry.”

The new solution was not an instant success. In fact, Nu-Wool’s early experience with the system was quite rocky. Henderson said that — had it not partnered with Walker-based automation service provider Feyen Zylstra LLC to iron out the kinks — Nu-Wool’s robot would likely be sitting in a warehouse right now.

With Feyen Zylstra helping to dial in the system, Nu-Wool achieved its return on investment in less than two years.

Now, Nu-Wool is working with Feyen Zylstra to mine data from its system for predictive maintenance and efficiency purposes. Henderson said the company is also exploring avenues to automate its sorting process in which metal and other materials are removed from the raw newspaper material before it is processed.

“I would love to have a manufacturing plant with one or two people at it,” Henderson said. “The technology is not there — at least not at a cost-effective rate for us right now.”

Barriers to entry Nu-Wool’s dilemma is a common one, and much of the reason why manufacturing behemoths have remained on the cutting edge of Industry 4.0’s latest innovations, from machine vision and big data to sophisticated AI. But that doesn’t necessarily have to be the case.

Dan Radomski is the director of Centrepolis Accelerator at Lawrence Technological University in Southfield. His accelerator has attracted Industry 4.0 tech startups from around the globe, giving Radomski a firsthand look at cutting-edge innovations that are just now finding a place in manufacturing.

Centrepolis has corporate partners that feature the likes of Magna International Inc., Lear Corp., Siemens Ag, Denso Corp. and Whirlpool Corp.

These are sophisticated innovations that smaller manufacturers could easily adapt, as well.

“Plenty of them are very practical,” Radomski

Mission Design & Automation in Holland works with manufacturers of all sizes and industries to design, develop and integrate automated systems. COURTESY PHOTO said. “In fact, we partner with a lot of the regional manufacturing associations and we have regular events where we only bring the more practical technology companies (to present to smaller manufacturers), especially what we know are applicable to small and mediums.”

Still, he doesn’t see much interest, which is concerning for him.

“Trust me, other manufacturers in other parts of the world will adopt these technologies and become more efficient and by that they’ll be more competitive globally and will win more business,” Radomski said.

“You can’t continue to just work on low margins and think you can bid projects and win them.”

The right partner is important for smaller manufacturers to bridge the knowledge gap. For Nu-Wool, it was Feyen Zylstra. Mission Design & Automation also works in this capacity.

The Holland-based business custom designs automation systems, and CEO Scot Lindemann said that working closely with the client is what helps companies like his stand out from a traditional OEM. “I think the strength of a good systems integrator is being able to go in and evaluate with the customers and figure out where their needs are and where their payback will be,” Lindemann said. “To make sure the technology and application fits both those criteria.”

Lindemann said that, while some companies may have dabbled with automation in the past and were left with a bad taste in their mouths, technology has already evolved quite rapidly in a short period of time.

The COVID-19 pandemic is one factor that has forced the hand of some smaller manufacturers.

“Typically the smaller they are, the less likely they’re going to be looking at implementing new technologies, but I think COVID has changed that completely,” said Ken Seneff, co-founder of Lean Rocket Lab in Jackson, which is a manufacturing technology-focused business incubator. “Everyone, up and down the stack, is looking at technology.”

While a fully automated, AI-driven, lights-out production system isn’t necessarily the play for smaller manufacturers, Seneff said there is still plenty of advanced technology that easily scale to their needs.

“Certainly (large and small manufacturers) will be looking at different types of technology and different scales,” Seneff said. “Some technology is only going to be useful at an enterprise scale versus certain technologies that will only be useful at a smaller company scale.”

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FINANCE

Sturgis Bank raises $15 million to continue Southwest Michigan expansion

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

T

he $15 million Sturgis Bancorp Inc. raised through a debt offering will go to support further growth across Southwestern Michigan.

The parent company of Sturgis Bank & Trust recently converted loan production offices in Portage and St. Joseph into branches and plans to open another branch by June in St. Joseph, a market where the bank is “experiencing tremendous growth,” said President and CEO Eric Eishen.

“There is a lot of opportunity,” Eishen said. “Things are going well. As long as we can grow the bank profitably, why not?”

The growth has come after Sturgis Bank & Trust Eishen hired a number of experienced bankers who previously worked at much larger regional banks, Eishen said. Bank consolidation, most notably the August 2019 merger between TCF Financial Corp. and the former Chemical Financial Corp., has enabled Sturgis Bank to attract veteran bankers that were drawn to a smaller bank where “they have the power to make decisions” and greater flexibility, Eishen said.

“As we’ve seen some of this consolidation happening, some of those bankers want to go back to their roots and it’s given us a unique opportunity to hire some people that were market leaders in their community and wanted to get back into community banking,” said Eishen, who sees further talent migration in the market with the pending $22 billion merger between TCF and Huntington Bancshares Inc. that was announced in mid-December.

“Right now the stars are aligned for talent acquisition, and you can just keep doing what you’ve done and not grow, or take advantage of that opportunity right now,” he said. “You strike when the iron’s hot, and right now the iron’s hot.

There’s a lot of really high-quality bankers that are looking to come back into the community bank model.”

Converting the Portage loan office into a branch came after Sturgis hired a couple of veteran bankers in that market.

Portage and St. Joseph represent two markets “that we really did not have a very big presence in and where we were able to acquire some of the talent, and that’s where most of our growth is currently happening,” Eishen said.

The planned branch opening later this year on Cleveland Avenue in St. Joseph will give Sturgis Bank & Trust 14 offices across the region.

To support further growth, the corporation (OTCQX:STBI) had two options to raise capital: issuing debt or additional shares.

The latter option would have resulted in diluting earnings for shareholders, leading Sturgis Bancorp to opt for issuing subordinate notes, Eishen said.

West Conshohocken, Pa.-based Boenning & Scattergood Inc. served as financial adviser and the placement agent for the debt offering.

Grand Rapids-based Warner Norcross + Judd LLP served as legal counsel.

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Steady growth Sturgis Bancorp has enjoyed strong growth in the last year. At the end of the third quarter of 2019, the corporation had $604.7 million in total assets, an increase of 27.7 percent from a year earlier. Deposits grew 37.8 percent in the same period of 2020 to $486.4 million and net loans increased 23.5 percent to $435 million.

Much of the growth was organic and came from strong activity in mortgage loans as consumers refinanced to a lower interest rate, Eishen said. Loans last spring through the federal government’s Payroll Protection Program “ballooned up the balance sheet a little bit,” he said.

Through the third quarter of 2020, the corporation had year-to-date net income of $4.4 million, or $2.10 per share. That compares with $3.7 million, or $1.76 per share, through three quarters in 2019.

Sturgis Bancorp consists of Sturgis Bank & Trust, plus subsidiaries Oakleaf Financial Services Inc., Oak Mortgage LLC, Oak Insurance Services LLC, and Oak Title Services LLC. While Sturgis Bancorp focuses on driving organic growth, particularly in Portage and Berrien County and surrounding areas, it would consider an acquisition if the right opportunity came along. The corporation is not looking to do a deal, and given present capital

levels, “any bank we could take on is pretty limited,” Eishen said.

The corporation last made an acquisition in April 2015 when it bought the former one-office West Michigan Savings Bank in Bangor in Van Buren County.

Sturgis also would consider additional loan production offices that would lead the bank’s entry into a market.

“It’s a very low-cost way to enter a market and kind of puts you (in a place) to see if that market is hungry for the community banking model. If it is, then you can always convert to a full-service branch like we did in Portage and St. Joe,” Eishen said.

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9

FINANCE MEDC GRANTS Continued from page 1

depleted available funding, he said.

A $10 million grant fund in December “very literally was exhausted in minutes,” Burton said.

Given the “enormous demand” expected for the new grants, the MEDC opted to set a short application period, he said.

“We believe that the demand will continue to be extremely high and will continue to outpace any of the resources we’re making available,” Burton said. “It’s just the experience that we have seen in the demand for these and keeping a window open longer. We don’t want to continue that sort of false hope when it comes to people putting in applications well beyond the funds being exhausted.”

The Michigan Strategic Fund board voted unanimously on Jan. 14 to formally authorize both grant programs, made available through a COVID-19 relief package that state legislators passed in late December and Gov. Gretchen Whitmer signed into law.

Strategic Fund board member Susan Tellier, of Caledonia, was concerned that the small application window was “harsh” and will only “exacerbate the frustration of the small business owners” already struggling through the pandemic.

The MEDC did set a period between Strategic Fund board approval of the grant programs and opening applications so it and local economic development organizations had time to promote and create awareness, “as well as to give an opportunity for the small businesses to be prepared with the materials that they need to submit the application,” said Josh Hundt, MEDC’s executive vice president and chief business development officer.

‘Overwhelming need’ When the application process opens for either grant program, Burton expects high demand for the “desperately needed relief.”

“There continues to be an overwhelming need for relief from the economic impact of COVID-19 from small businesses all across the state. While Michigan continues to see progress from public health restrictions compared to other states, we also recognize that many of our small businesses have made significant sacrifices over the course of this effort to save lives and to repeatedly flatten the curve,” Burton said.

Both grants are based on need and are not first-come, first-served.

The MEDC expects that grant funds will

begin flowing to approved recipients by the end of January, with a “significant majority to be fully allocated and distributed to the small businesses

by Feb. 28,” Hundt said.

The biggest demand for grants will clearly come from restaurants and small businesses in the hospitality industry that have felt the brunt of the state-ordered restrictions, said Eric Seifert, principal of Muskegon-based Left Coast Capital Resources LLC. “They’re hurting,” said Seifert, who is part of a review committee in Muskegon that will vet local grant applications. “It’s a killing field out there.

It’s really sad.”

Small businesses, venues prioritized Under the $55 million Michigan Small Business Survival Grant Program that’s modeled after similar efforts last year, the MEDC will work with 15 local economic development agencies across the state to review applications and award funding.

Small businesses that “have realized a significant financial hardship because of the COVID-19 emergency” and have been temporarily closed because of state orders can get up to $20,000 in grant funding, according to an MEDC memo. Small businesses that remained open but had their operations limited are eligible for a grant up to $15,000.

The grants are for small businesses that have one to 100 full- and part-time employees and operate in an industry affected by state orders that can demonstrate a resulting income loss.

Grant recipients can use the funding for working capital to cover payroll, rent, mortgage payments, utility expenses or other similar expenses.

Through the $3.5 million Stages Survival Grant Program, the MEDC will provide $40,000 in grant funding to live music and entertainment venues that were “negatively impacted by the COVID19 virus and related measures to protect public safety,” according to the MEDC. The Stages Survival Grant Program is designed for music and entertainment venues in the state with fewer than 30 employees full time and were operating as of Feb. 29, 2020. Eligible venues include those that generated at least 33 percent of 2019 gross revenues from live music or ticket sales, or at least 70 percent through cover charges, ticket sales, production fees, nonprofit educational initiatives, or the sale of beverages, food, and merchandise at events. The venues will also have to show that revenue in the second quarter of 2020 was no more than 10 percent of the second quarter of 2019.

Venue operators must not have a majority ownership by an issuer of securities listed on a

national security exchange, or own venues in more than one country or in more than two states.

The Michigan Independent Venue and Promoter Association will accept, review and approve grant applications on behalf of the MEDC. If awarded under the Stages Survival Grant

Program, live music and entertainment venues are ineligible for the Business Survival Grant program.

MEDC Chief Operating Officer Amanda Bright McClanahan estimates that Michigan has about 100 entertainment and live music venues that are eligible for the venue grants.

SMALL BUSINESS SURVIVAL GRANT PROGRAM The Michigan Economic Development Corp. is again working with 15 local economic development organizations for the new $55 million Michigan Small Business Survival Grant Program that opens for applications at 9 a.m. on Jan. 19. Here are the organizations, how much they’ve been allocated, and the counties they serve. For more details and contacts, go to Michiganbusiness.org/survival

ORGANIZATION

$ ALLOCATED

COUNTIES

Invest U.P.

$2.5 million

Alger, Baraga, Chippewa, Delta, Dickinson, Gogebic, Houghton, Iron, Keweenaw, Luce, Mackinac, Marquette, Menominee, Ontonagon, Schoolcraft

Networks Northwest

$2.5 million

Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee, Missaukee, Wexford

Otsego County Economic Alliance

$1.92 million

Crawford, Montmorency, Ogemaw, Oscoda, Otsego, Roscommon

Target Alpena

$1.92 million

Alcona, Alpena, Cheboygan, Iosco, Presque Isle

The Right Place Inc.

$5.25 million

Barry, Ionia, Kent, Lake, Mason, Mecosta, Montcalm, Muskegon, Newaygo, Oceana, Osceola

Lakeshore Advantage

$1.92 million

Allegan, Ottawa

Middle Michigan Development Corp.

$1.92 million

Arenac, Clare, Gladwin, Gratiot, Isabella, Midland

Saginaw Future

$1.95 million

Bay, Saginaw

Flint & Genesee Chamber Foundation

$4.42 million

Genesee, Huron, Lapeer, Sanilac, Shiawassee, St. Clair, Tuscola

Lansing Economic Area Partnership

$3.05 million

Clinton, Eaton and Ingham

Southwest Michigan First

$4.15 million

Berrien, Branch, Calhoun, Cass, Kalamazoo, St. Joseph, Van Buren

Ann Arbor Spark

$4.7 million

Hillsdale, Jackson, Lenawee, Livingston, Monroe, Washtenaw

Oakland County

$6.07 million

Macomb County

$4.15 million

Detroit Economic Growth Corp.

$8.55 million

Wayne

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FOOD BIZ

Trade policy, labor availability among key agriculture issues in 2021

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

A

s an industry that bounced back relatively quickly after the initial shock of the COVID-19 pandemic, agriculture in Michigan and across the U.S. faces key issues that will shape its fate in 2021, experts say.

While the pandemic fallout certainly leaves farmers, food processors and retailers with plenty to contend with, the uncertainty will no longer rattle the industry as it focuses on its more inherent needs and deficiencies involving federal trade policy, labor availability and adapting to shifting consumer behavior.

“COVID is obviously a big deal, but had we been talking 10 months ago or nine months ago, there was so much uncertainty on what COVID looked like,” said Trey Malone, assistant professor for the Department of Agricultural, Food, and Resource Economics at Malone Michigan State University.

“I’m not saying we figured out how to do it, but at least we know what to expect better,” he added. “The thing about markets is that, what drives changes in markets is uncertainty, and trade is a big piece right now.”

Bednarski

New year, new leadership Like virtually any other instance of sweeping leadership change, the U.S. agriculture industry is bracing for potential changes under President-elect Joe Biden and his candidate for agriculture secretary, Tom Vilsack, who served in the same role under President Obama.

With Democrats set to control the executive and legislative branches of the federal government, Vilsack’s appointment would signal that policy pertinent to agriculture and rural economies will still likely not shift too far left.

“It’s literally the same guy that was under (Barack) Obama,” Malone said. “I would anticipate that, obviously public policy is going to change, but it’s not going to be a terrifying change.”

“The Biden administration has made it pretfavorably as a result, setting the stage for better ty clear that COVID is kind of the top priority,” prices and profits in 2021.

Malone added. “Because of the changes in trade “It’s essential that the next administration folthat have happened over the last four years, that’s a low through on enforcing both major trade agreebig hole that is probably just going to stay there for ments to all U.S. farmers to rely on the market ina little bit. That’s a big deal.” stead of ad hoc federal disaster programs for their Michigan Farm Bureau President Carl Bedfarm income,” Bednarski said. “Any trade disrupnarski told MiBiz that Vilsack’s previous experitions will quickly and negatively impact the comence in the role will allow him to hit the ground modity markets and farm economy.” running when the new administration takes over this week, ensuring that farmers continue to reWorkforce shortage ceive the assistance and expertise that they rely on.

The Farm Bureau is a founding member of the The long lingering agriculture workforce shortage Food and Agriculture Climate Alliance, a parthas only worsened as a result of both recent public nership between farming, forestry and environpolicy and COVID-19. mental groups that has been at the negotiating Travel restrictions and immigration policy leaves table to promote policy changes. the industry hungry for a viable guest worker visa proPublic policy throughout the pandemic has gram that will drive more work to food producers. benefited the agriculture industry, particularly “Absent legitimate immigration reform, we both phases of the Coronavirus Food Assistance continue to encourage streamlining the H2A SeaProgram, which provided both producers and consonal Guestworker program, using online digital sumers with assistance. forms and processing, to shorten the current sixThe Farmers to Families food box to eight-month lead time required program also saw the formation of to secure those guest workers,” Bed127 million boxes of fruit, vegetable, narski said.

FOOD BIZ dairy and meat products packaged This will be an initiative that the NEWS and distributed to food banks and — Michigan Farm Bureau looks to sink Sponsored by: other organizations. The USDA’s Agriits teeth into this year.

DAN VOS cultural Marketing Service partnered “Michigan Farm Bureau is workCONSTRUCTION with national, regional and local disCOMPANY ing on a series of labor education tributors to purchase up to $4.5 bilmeetings for our members in early lion in fresh produce, dairy and meat 2021,” Bednarski said. “Labor availproducts from American producers of all sizes. ability and the regulatory burden that surrounds Still, farmers are itching to look to the market the labor issue has been identified as a major confor their income, which shines a light on the curcern for the agriculture industry.” rent state of trade.

Malone said that, despite the Trump adminisThe United States-Mexico-Canada Agreement tration’s focus on foreign immigration, they mainly (USMCA) and China trade agreements taking full left agriculture policy alone. But it’s not an issue effect in 2021 will bolster trade, experts say. Howthat will go away any time soon. ever, worldwide recovery from COVID will also “Since I’ve been alive, people have been talking have a say in the matter. about labor shortages in agriculture,” Malone said.

U.S. agricultural exports to China, in particular, “I think that’s not going to go away. I think there have been accelerating each month, with a record is some promise for the industry that we’ll actu$17.5 billion in sales reported in October 2020 ally see a little bit more of a codified approach to alone. The commodity markets have responded ag policy.”

“It’s essential that the next administration follow through on enforcing both major trade agreements to allow U.S. farmers to rely on the market instead of ad-hoc federal disaster programs for their farm income.”

— CARL BEDNARSKI President, Michigan Farm Bureau

Shift in consumer demand Another industry-defining byproduct of the pandemic has been the changing of value chains. The pandemic has driven more people to eat at home as opposed to restaurants. Producers, processors and packagers have had to adjust accordingly.

In its recently released report, “2021 The Year Ahead: Forces That Will Shape the U.S. Rural Economy,” CoBank — which provides loans and financial services to cooperatives, agribusinesses and rural public utilities — crowned producers and processors with retail grocery contracts as winners in the pandemic. The uptick in quick-service restaurant demand also benefited some producers.

With restaurants across Michigan and the U.S. facing an uncertain future, that shift in supply chain should likely stick around for 2021.

“As thousands more full-service, sit-down restaurants are expected to close in the first winter months of 2021, supply chains will be transitioning to serve rising consumer demand for home meals,” according to the CoBank report. “While the deployment of a COVID-19 vaccine across the U.S. population will underpin a recovery in the food service sector, widespread economic benefits are not expected until the second half of 2021.”

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MiBiz / JANUARY 18, 2021

11

SMALL BIZ: COPING WITH COVID-19 PPP LOANS

Continued from page 1 “I think what the SBA is trying to do is make sure that if we spent some of these PPP funds on other types of expenses, then it’s going to be OK,” Dave Echelbarger, managing partner at EHTC CPAs & Business Consultants, said last week during a Grand Rapids Area Chamber of Commerce virtual town hall on the new PPP round.

“The idea here is to make sure those expenses aren’t going to put them in trouble in any way, shape or form,” Echelbarger said.

Expenses covered under a PPP loan also are now tax deductible, and forgivable loans are not considered taxable income.

Echelbarger The SBA opened applications for the new PPP round last week. Small businesses can apply for a forgivable loan through March 31.

The PPP is open to small businesses that received a loan in last year’s first round, have 300 or fewer employees, and can show a 25 percent gross Pridnia revenue decline from a quarter in 2019 to the same period in 2020.

As well, small businesses with 500 or fewer employees that are seeking their first PPP loan

can apply, as can sole proprietors, independent contractors and people who are self-employed, and nonprofits filed as 501(c)(6) organizations.

That includes trade associations, “as long as they are not strictly related to lobbying activities,” John Pridnia, managing principal in West Michigan for accounting and advisory firm Rehmann, said last week during a Small Business Association of Michigan webinar.

The new PPP round also has a simpler application for loans of $150,000 or less. Borrowers only need to state that they used the money for eligible expenses and maintain documentation for four years.

“The forgiveness application started (last year) with a fairly in-depth reporting of what you needed, how you met the test (and) everything else.

They came out with a simplified process basically attesting you used the funds for the right reasons,” Pridnia said.

‘Another bridge’ The new PPP round “is just another bridge to save those small businesses” as vaccines are now getting distributed, Rob Scott, administrator for the SBA’s Great Lakes region, told MiBiz in an interview.

“We certainly want to help as many small business owners and save as many jobs out there as possible,” Scott said.

The SBA in the first round of the PPP last year approved 5.2 million loans totaling $525 billion through the end of the program on Aug. 8. In Michigan, more than 128,000 small businesses re-

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JANUARY 18, 2021 / MiBiz

ceived PPP loans totaling $16 billion.

The SBA expects what Scott called a “mixed” and more targeted demand for loans in the new round. Different states have different COVID-19 restrictions in place now, he said, which could affect the type of applicants.

The restaurant and hospitality industries will undoubtedly have the largest demand for aid, Scott said. In the Great Lakes region, Michigan will continue to prohibit indoor dining until at least Feb 1.

“It’s very different from before,” Scott said. “Before, everyone needed it because we were completely shut down as a country. Restaurants were shut down, so the demand was astronomical in the first round. In the second round, there is demand there but it’s different. The restaurants in Michigan need it bad.”

In an annual survey by the Grand Rapids Area Chamber of Commerce, nearly half of more than 700 members responding said they need financial assistance to remain viable. Nearly a quarter of members responding to the survey said they were “at risk of closing under current conditions within the next 12 months,” according to the Grand Rapids Chamber.

“This information is concerning and shows a huge threat to our economy,” said Andy Johnston, vice president of government affairs at the Grand Rapids Chamber.

PPP applicants can seek up to 2.5 times their average monthly payroll costs for a maximum $2 million loan. Borrowers have to spend at least 60 percent of the money over an eight- to 24-week period on payroll costs. If they go 24 weeks, they should find it “pretty easy to get to that calculation and have 60 percent of your fund spent on payroll,” Echelbarger said.

“Certainly other costs will make up that 40 percent, including the additional costs that they allow,” he said.

Outside of PPP loans, the pandemic relief legislation that Congress enacted last month also allows the SBA to provide borrowers payment deferrals for six months on new and existing loans made under the agency’s 7(a) lending program, up to $9,000 a month, Scott said. The

legislation also increased the federal government’s guarantee on the loans to 90 percent from 75 percent, he said.

Targeted relief In enacting a new PPP round with the Consolidated Appropriations Act that passed in December, Congress also created special carve outs that include $10 billion for loans for “the smallest of small businesses” and sole proprietors, plus $15 billion for a separate grant program for entertainment venues that have been closed during the pandemic, Scott said.

However, entertainment venues cannot get both a PPP loan and a Shuttered Venue Operator grant, Pridnia said.

Hotels and restaurants that were closed or have had their operations limited because of the pandemic and state-ordered restrictions can apply for a PPP loan of 3.5 times their average monthly payroll cost, “which is pretty significant and really helps those businesses that have been hit the hardest, especially restaurants shut down for many, many weeks and months here in Michigan, so that’s certainly a big help,” Echelbarger said.

Congress also changed eligibility to the federal employee retention tax credit. In the prior PPP round, borrowers could not claim the tax credit, said Mike Young, senior tax manager at EHTC. The “huge change” lowers the hurdle and makes the employee retention tax credit more attractive to small businesses that got or are applying for PPP funding, and is “one that we feel will really roll this out to a whole host of employers that otherwise were thinking, ‘Hey, I took my PPP funding and that’s it. That was the end of my decision tree, if you will,” Young said in the Grand Rapids Chamber’s virtual town hall.

“Now this is really sparking that conversation up again,” Young said. “Prior to the (Consolidated Appropriations Act), we were looking at this as an either-or. So going into applying for the PPP loan, companies were running the analysis as to whether or not they were better off to take the employee retention credit, or receive a loan under the PPP.”

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Stoney Ridge Vineyards & Winery ‘weathering’ a pandemic opening

The tasting room at Stoney Ridge Vineyards & Winery has yet to see full capacity after opening in June 2020. COURTESY PHOTO Seven Steps Up in Spring Lake hopes state and federal relief funding will help bridge the venue until live performances resume. COURTESY PHOTO

Seven Steps Up owners praise latest federal relief, hopeful to resume shows in the fall

By KATE CARLSON | MiBiz kcarlson@mibiz.com

SPRING LAKE — It has been nearly a year since Seven Steps Up in Spring Lake had a crowd of people packed together for a live music performance, but owners Gary and Michelle Hanks hope to see shows return in some capacity in 2021.

“A lot of it will depend on how quickly the vaccine gets out and when we see any kind of normalcy returning to the musician-touring world,” said Michelle Hanks. “There are currently no tours happening and no planned tours, although we’re having some discussions with booking agents and artists about next fall.”

Last summer, the Hanks told MiBiz they were hoping to salvage some of the performances that had been canceled since mid-March and postpone them for later in the year, which didn’t materialize because of a second wave of COVID-19 cases.

More than 100 shows were planned for 2020 at Seven Steps Up before COVID-19 hit.

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The couple is now cautiously setting their sights on resuming shows at the renovated historic landmark in the fall of 2021, depending on the success of the vaccine deployment.

Meanwhile, the $15 billion in COVID-19 federal relief funding that is earmarked for live venues, independent movie theaters and cultural institutions is a lifeline that should be able to keep their business afloat until they can host shows again, Hanks said.

The $15 billion in grant funding was included in the $900 billion spending package that was signed by President Trump in late December.

“If we can get some of this federal funding, that will get us through a couple more months down the road and we feel very hopeful that we will be able to make it through this,” Hanks said.

Seven Steps Up is a member of the National Independent Venue Association, which had lobbied state and federal lawmakers for venue relief funding for months.

“I’m not any less busy than I was when we were able to be open,” Hanks said. “My husband and I are

still spending tons of hours trying to make sure we’re pivoting and looking at what changes we have to make and how much things are going to cost.

It’s still taking a tremendous amount of time.”

Seven Steps Up also received $38,000 from a crowdfunded GoFundMe campaign, as well as a $35,000 grant from the national Live Music Society to help cover operating expenses.

Owning the Seven Steps Up building instead of leasing is a major benefit, but they still face maintenance expenses despite the absence of shows, Hanks said.

That absence of shows makes reopening with capacity restrictions nearly impossible from a financial standpoint — especially for smaller venues like Seven Steps Up, which is designed to accommodate crowds of up to 130 people.

“We have no expectations, it’s a survival thing,” Hanks said. “The goal is surviving. A year ago we were planning so far in advance and thought we knew exactly what was going to happen next.”

By KATE CARLSON | MiBiz kcarlson@mibiz.com SPARTA TOWNSHIP — Stoney Ridge Winery LLC officially opened in June 2020 after a few soft opening events at the start of the pandemic.

While the owners haven’t yet seen what a 100 percent capacity tasting room looks like, they have spent the past six months remodeling, expanding outdoor capacity and producing new wines after ideal summer conditions — all in anticipation of a postpandemic rebound.

The tasting room and vineyard located off M-37 in northern Kent County has opted to not add semi-outdoor seating like igloos or tents because of how windy the property can get. The retail part of the vineyard is open for in-person shopping, and wine is also available for curbside pickup and delivery.

“Even though we’ve only been open a few months, we have regulars and received a huge outpouring of support from the area, so it’s been good,” said winery owner Mary Smearman Flanery. “Our customers have been really loyal and positive.”

The owners — Smearman Flanery and husband, Dale Flanery, who owns the vineyard side of the business — were initially planning to open the tasting room in April 2020.

State COVID-19 restrictions led the couple to pursue finishing construction on Stoney Ridge Vineyards’ outdoor covered patio area sooner than they had planned. The project was originally planned for a few years down the road, but will now create increased seating capacity when indoor dining is allowed.

“We used the shutdown to remodel, so when spring comes we’ll increase outside seating and we’ll be

putting out a new patio and outdoor seating,” Smearman Flanery said.

“Once the weather starts to warm up and more vaccines go out, I think people will be cautiously optimistic about going places again.”

Smearman Flanery hopes to introduce food in 2021, as well as some outdoor weddings, events and wine dinners. Stoney Ridge was able to host a few successful small outdoor weddings in the summer. Now the owners plan to expand event offerings in the future.

“We’d love to be able to do a car show, or craft fair type of event,” Smearman Flanery said. “It’s hard because I come up with all these ideas but I can’t implement them. This year was a tough year to even open up.

We’re weathering it and we’re in a decent position, but by no means can this go on for a long time. We’re maintaining right now.”

However, Smearman Flanery said it has been a banner year for wine production because of the weather, creating ideal growing conditions for grapes.

“We have a couple of new wines we’re working on coming out with.

We’re bringing two new ones in the spring and a couple new ones in the fall that weren’t able to get much press because we were shut down close to the time they came out,” she said.

The business purchased grapes from growers in Ludington, Coopersville and Leelanau totaling about 65,000 pounds, Smearman Flanery said. Stoney Ridge Vineyards has “a lot of wine in process,” she added.

“This year has been a phenomenal year because of the hot, dry summer,” Smearman Flanery said.

“The quality of the fruit has been amazing — this has been one of the best years for wine.”

MiBiz / JANUARY 18, 2021

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ENERGY

Statewide building code update an opportunity to tackle efficiency, climate change

By KATE CARLSON | MiBiz kcarlson@mibiz.com

M

builders, but it would definitely still be up to the builders to decide at the end of the day. And they are allowed to do what they want as long as they are meeting the baseline state code.”

ichigan’s statewide building codes are set for an update this year.

While there could be Ready for updates some new energy efficiency measures added, the codes are Michigan’s building code is on a sixfar behind where they should be to year cycle but is based on energy readdress climate change, according to quirements adopted eight years ago, some local design firms and environ- said Matthew VanSweden, director of consulting at Grand Rapids-based mental advocates.

Buildings are some of the biggest Catalyst Partners. As co-chair of the contributors to climate change, and local American Institute of Architects codifying various energy usage re- chapter’s environmental committee, quirements can help address the is- he works to promote and advocate for sue, said Charlotte Jameson, program higher performance buildings.

Michigan’s construction code was director for legislative affairs, energy and drinking water at the Michigan last updated in 2015 and will be updated sometime in 2021. The energy porEnvironmental Council.

Building construction and op- tion of the state code is based on the Inerations generate nearly 40 percent of ternational Energy Conservation Code annual global greenhouse gas emis- from 2018, which references standards sions, according to the Global Alliance from 2013 created by the American Sofor Building and Construction’s 2018 ciety of Heating, Refrigerating and Air Global Status Report. Electricity gen- Conditioning Engineers.

Some contractors prefer the six-year eration and transportation are other cycle and the inability for municipalitop contributors.

“The critical piece from our perspec- ties to override the state with potentialtive is the energy efficiency provisions ly more restrictive local building codes.

Brad Laackman, president and and that we’re making sure our buildings are more efficient and are working CEO at Honor Construction Inc., said toward things like electrification-ready the relative lack of local control lets his firm more easily keep up with code requirements,” Jameson said. requirements.

Electrification-ready “It is a confluence buildings are built to ENERGY for me, because in terms allow homeowners to NEWS of technology improveswitch appliances to run — ments in building, six on electricity rather than Sponsored by: years is like millions of natural gas if they prefer.

SMALL BUSINESS ASSOCIATION OF years,” Laackman said.

The building electrifiMICHIGAN “Either the code would cation movement is alhave to be simplified if it ready taking off in states like California, and counts on a growing was updated more frequently, or keep it clean energy electricity supply to help on this same cycle where it’s a heavy lift every time it’s updated.” reduce greenhouse gas emissions.

VanSweden noted, however, that Michigan’s state building code is significant because provisions within it pro- Midwest states lag behind others when hibit local governments from adopting it comes to building sustainability rebuilding codes that are more stringent quirements.

“From a building best-practice than the state codes, Jameson explained.

“Cities like Grand Rapids, Ann Ar- perspective, the coasts are 10 years bor and Traverse City are looking to behind European codes, and the Midramp up climate action, so there will west is 10 years behind the coasts,” be some advocacy to make sure there VanSweden said. “Building something are some of those (environmental ef- to code is really the worst building you ficiencies) in the state code,” Jameson can legally build.”

He added that the prevailing atsaid. “Cities can still negotiate with Visit www.mibiz.com

titude in the market is to build something to code, which most assume includes strong efficiency measures, for example. But that’s “a backwards way of thinking,” VanSweden said.

Going above and beyond Some initiatives and local incentives can guide projects to be built with efficiencies that go above and beyond the code, which VanSweden and his committee at the AIA advocate for.

For example, housing projects that use low-income housing tax credits — a key U.S. Department of Housing and Urban Development tool to build affordable housing — are required by many local agencies to also meet certain green building certification programs.

“That’s driving the effort in the residential market because if low-income housing can do it, it looks bad if market rate can’t” meet the same green building requirements, VanSweden said.

“We also try to advocate for larger incentive policies and we can work with the city to incentivize higher performance buildings.”

In 2006, New York architect Edward Mazria launched an initiative called 2030 Districts. The goal was adopted across the U.S. architecture industry with a mission to change how buildings are designed and constructed as a central way to help solve the climate crisis. The intention was to carve a path toward building carbon neutral, or net zero, buildings by 2030.

“A lot of these codes set their sights on that (2030) target as they have been incrementally updated,” VanSweden said. “The long arch is trending toward being net zero by 2030, but we won’t quite meet that with the codes unless something significantly changes.”

Grand Rapids in 2015 joined the 2030 District initiative, a public-private partnership committed to increasing building efficiency on a local level.

“Work that’s happening out there

Holman

Jameson

right now, we could be better and doing more currently in construction, but we are tracking in the right direction,” said Cheri Holman, executive director of the U.S. Green Building Council of West Michigan, which manages the program. “We need to make sure that everybody understands the benefits that can be hard to quantify.”

Return on investment, racial equity Holman said some misconceptions still exist among developers and builders that higher efficiency equate to higher project costs. Part of the solution is getting more incentives to developers for projects because not all projects are owner-occupied, which makes it harder for longer-term return on investments to be seen, she said.

“There is always a balance between the cost to build and the benefits you’ll see in operation,” Holman said. “We know that if you build a high performance building you’ll see your investment come back to you through operation, and that will always happen.”

The cost of adding energy efficient amenities to buildings has come down significantly in recent years, said Zachary Verhulst, founder and managing principal of PURE Architects in Grand Rapids. PURE Architects as a firm has made a 2030 commitment, and has committed to its own metrics for building efficiencies and green building practices that are considered 80 percent better than the current state code, Verhulst said.

Laackman

VanSweden

Verhulst tries to appeal to developers or business owners with the longterm economic return that comes with green buildings.

“At the outset of each project, we create a framework for goal-setting that is a new way to look at the overall project that’s not just project construction,” Verhulst said. “Many times for us it’s how much does your building cost well into the future, not just when you build it. Then it starts to become a math problem and not so much an emotional decision.”

The COVID-19 pandemic has led to a heightened focus on how indoor spaces are designed when it comes to things like indoor air quality, as well as equity in how buildings and communities are designed when the occupants are largely made up of people of color.

Verhulst’s firm is also trying to address that gap in the code.

“Many times these codes are not written in the context of the community you’re building for,” he said.

VanSweden refers to this issue as a lack of “humanization” in codes.

If codes are not humanized, they just become this burden that you have to design to, he said, leaving a racial equity component to building and design.

“Connecting our consumption to the populations that consumption disrupts has been the main driving factor for why this work matters,” VanSweden said. “We’re able to connect those dots a lot more regularly and clearly. At Catalyst, we’re trying to create content that helps people do that.”

MiBiz / JANUARY 18, 2021

15

POLICY

Redistricting commission gears up for drawing new legislative boundaries

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

T

he next 10 months will culminate in a landmark year for Michigan politically as new legislative district boundaries are drawn by an independent commission tasked with quashing partisan gerrymandering.

The next several months will be filled with public comment and expert insight, as the Independent Citizens Redistricting Commission is required to hold 10 public hearings before maps are drawn, and five more after maps are drawn. The Proposal 2 constitutional amendment approved by 61 percent of Michigan voters in 2018 will redraw the state’s congressional, state Senate and state House districts.

“It’s an exciting opportunity for our state to be much more fair, transparent and nonpartisan about this issue,” said Sue Hammersmith, who was selected last month to be executive director of the Independent Citizens Redistricting Commission.

Hammersmith is the president of Blissfieldbased nonprofit consulting firm Better Philanthropy LLC and has worked in the nonprofit space in Ohio and Michigan for more than

30 years, most recently as the president of the Lenawee Community Foundation.

She will oversee the public comment and map-drawing process over the next 10 months.

The 13-member commission — made up of four Hammersmith Democrats, four Republicans and five who don’t identify with a major political party — first met in September and has five scheduled meetings in January. As of late December, the commission had already received “a few hundred pages” of public comment, Hammersmith Wang said.

Over the course of the year, various experts will be involved in the map-drawing process after a request for proposals is issued.

Hammersmith said commission members have already received orientation from officials in California and Arizona with similar redistricting commissions.

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The new districts will be drawn based on an equal population (about 780,000), compliance with the federal Voting Rights Act, a single continuous shape and not giving an unfair advantage to any political party or candidate.

The law also requires the commission to consider “communities of interest,” or areas with shared interests, including geographic, economic and cultural similarities.

“The only way to understand where our community boundaries are is to gather public input,” said Nancy Wang, executive director of Voters Not Politicians, which organized the Prop 2 ballot initiative.

The new boundaries will primarily rely on 2020 Census data. Every 10 years following the U.S. Census, legislative districts are redrawn to reflect population changes. Historically, that information has come in around Feb. 1, although officials anticipate the 2020 data to come in around June or July.

“There’s definitely a delay there, but at the same time, most of (the commission’s) work can be done without the final Census data,” Wang said of tasks such as establishing community boundaries and generating maps using old population data.

Hammersmith added that it will make the commission’s deadlines “somewhat tighter than we anticipated. We’ll have to be very efficient at getting everything we can get done ahead of that Census data.”

District changes, challenges The new maps will be in effect for the August 2022 primary. While political analysts have speculated, it remains unclear how the final state House, Senate and congressional districts will be drawn. For example, some have predicted shifts among West Michigan’s 2nd, 3rd and 6th congressional districts, currently held by Republican Congressmen Bill Huizenga, Peter Meijer and Fred Upton, respectively.

However, Michigan’s slow population growth since 2010 — while other states have seen

growing populations — likely means the state will lose one of its 14 congressional districts.

“Everyone I’ve ever talked to has said we’ll lose a congressional district,” Wang said. “That’s going to be huge.”

Lansing-based political newsletter Gongwer reported in November that West Michigan’s population growth, particularly in Kent and Ottawa counties, could mean Meijer picks up a Kent County community from Huizenga while also losing Calhoun County.

State Republicans have controlled the past two reapportionments, and have drawn districts to their benefit, even though Michigan’s population shifts have now led to a 7-7 split in the congressional delegation. Former Michigan Republican Party Executive Director Jeff Timmer, who is now a senior adviser with the Lincoln Project, told Bridge Michigan this month that the process of creating “safe” districts for candidates has fueled the hyper-partisan nature of politics today.

That hyper-partisanship has continued to play out around the redistricting commission.

Since Prop 2 passed, opponents have attempted to chip away at the commission’s integrity, either in public forums or lawsuits.

In July, a federal judge dismissed a lawsuit from Michigan Republicans seeking to block the commission.

Wang said she expects the opposition to continue, particularly with criticism about whether the commission and the process overall will remain nonpartisan.

“There’s definitely interest by some people to undermine people’s faith in it,” Wang said. “At the end of the day, the (state) Constitution has all these safeguards in place.”

She added that, based on public meetings so far, the commission is in “really good shape.”

“All 13 members have really stressed during the public meetings that they really take this job seriously,” Wang said. “They know they’re stewards of this voter-approved process and want to conduct themselves in a way that inspires public confidence.”

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REAL ESTATE & DEVELOPMENT

Uncertainty in coworking space market causes creativity, flexibility

By KATE CARLSON | MiBiz kcarlson@mibiz.com

T

he COVID-19 pandemic has led to widespread uncertainty about the future of commercial office space, including for the relatively new sector around coworking, or flexible workplaces.

David Wiener, senior vice president of Colliers International’s West Michigan office, said the coworking office market is currently frozen with little activity in new spaces opening while most coworking spaces in larger metro areas remain mostly shut down because of COVID-19 restrictions.

“There are a number of issues that we’re seeing,” Wiener said. “It could depend a lot on what type of regulations there are locally or from the state. In 2021, if a lot of people can get the vaccine and get people back to work, then I think things will change. But right now most people are seeing coworking not coming back fully until 2022.”

Coworking spaces provide flexible leases for workers, including freelancers or contractors, seeking office space. As the COVID-19 pandemic sparked a widespread shift to working from home, the future of coworking spaces remains unclear. They could play a larger role if companies scale back their office footprints and opt for more flexible spaces for employees, experts say.

“Locally, they’re just trying to weather the storm and see what will happen,” Wiener said. “Nationally, we’ve seen a lot (of coworking businesses) cut their staff and they are not able to have any revenue coming in.”

The Treehuis coworking space in downtown Holland at 31 E. Eighth St. started off strong in 2020 and in a healthy spot financially, said owner Brian Burch, who is also managing partner at Holland-based public relations firm Burch Partners Inc. Then the statewide stay-home order “decimated” membership, Burch said.

“When people said, ‘Hey, I can do my work at home,’ that’s exactly what they did,” Burch said. “The decision to keep people in their homes had ripple effects throughout the year, but since that order was lifted in June we’ve clawed our way back.”

Seeking a ‘third space’ Despite the pandemic-related uncertainty, experts predict coworking spaces to continue growing over the next decade. Commercial real estate firm JLL has reportedly predicted that 30 percent of all office space will be flexible by 2030, while other reports have shown the amount of flexible office space in the top 23 U.S. markets increased 2.5 percent through the third quarter of 2020 compared to 2019.

All of Treehuis’ permanent members who had their own permanent desk at the coworking space stayed with the business, but the number of members who work out of the space a few times a week has declined, Burch said. The space also hosts meetings and events, which have not been able to take place in 2020.

A Paycheck Protection Program loan got the business through summer months, but the fourth quarter of 2020 was “horrific once again,” Burch said.

Still, Burch is optimistic that the coworking model will remain an important piece for many employees long term by serving as a crucial third space outside of an office or home.

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Historic preservation projects to get financing boost with reinstated tax credit Coworking space at the former Blue35 in Grand Rapids. COURTESY PHOTO

If more companies downsize office spaces, more people could turn to coworking spaces in the interim as well, he said.

“They just have to get out of the house, and you can’t just go to coffee shops or to the places they are used to going to get work done,” Burch said. “What we’ve done our best at is to create those private spaces where members are not sharing the same area with people like they once were.”

Treehuis now has “phone booth” rooms for Zoom calls which are semi-private, as well as sanitizing stations and strict COVID-19 guidelines, Burch said.

“I think the work from home trend is happening but I don’t think that’s a long term trend that is a viable solution,” Burch said. “People want third spaces to work.”

Wiener sees larger companies, in particular, becoming more flexible and therefore attracting interest in coworking spaces. This is also true of the office market in general, where there has been an increase in subleased space.

Getting creative Custer Inc.’s coworking space, WorkLab, at 99 Monroe Ave. NW in Grand Rapids was recently listed by Colliers to promote subleased or shared lease options because the company is struggling to find people to occupy coworking and meeting spaces during the pandemic, said Vice President of Education and Strategic Accounts Mark Custer. The office currently remains a coworking space.

As some larger companies are condensing or eliminating office space during COVID-19 restrictions, people still need and desire office space, Alysha Lach White, owner of Little Space Studio LLC, said last month during a MiBiz roundtable. The coworking space at 111 S. Division Ave. in Grand Rapids caters to creatives and business professionals that are part of the gig economy or are freelance-based.

The pandemic halted the launch of the company’s membership program as well as construction planned for the business’ second floor within the Harris Building, which is slated for more permanent office space for members.

“Coworking is just not popular right now,” Lach White said. “(We are) taking in the reality that our industry is fundamentally changed, but because we’re serving creatives we were really agile and realizing how we could pivot some of our business models.”

Little Space launched a digital membership that wasn’t part of its business plan pre-pandemic, Lach White said. The company is also teaching staff how to produce live-streamed content, and it just added a professional recording studio that is available for booking, she said.

“We definitely had to take time and pace ourselves because we were so tight on funds, but at the same time it allowed our membership to see under the hood and come along with us and see us build piece by piece,” Lach White said.

Lach White sees a future for coworking spaces, particularly those that are set up to serve creative professionals and allow for meaningful networking, she said.

“We’re getting even more requests now for office space and for memberships,” Lach White said last month.

“And we’re up to 55 members already. Most are digital, but a lot of them are waiting for our second floor to open.”

Little Space has also seen new interest from potential users, including a new partnership with Local First, which had to condense its office space and is now working out of Little Space, Lach White said.

“When you’re surrounded by people who are struggling, you get really creative to meet people’s needs,” she said.

By KATE CARLSON | MiBiz kcarlson@mibiz.com

O

wners of historic homes and buildings will soon be able to apply for funding through a newly reinstated state tax credit for historic preservation projects that was eliminated in 2011 as part of former Gov. Rick Snyder’s tax reform strategy.

Senate Bill 54 was sponsored by Sen. Wayne Schmidt, R-Traverse City, and signed into law by Gov. Gretchen Whitmer on Dec. 30. The new legislation amends the state Income Tax Act to provide a historic preservation tax credit of up to 25 percent of qualified costs to rehabilitate historic buildings, structures and sites that are certified by the State Historic Preservation Office.

The funding tool’s reinstatement is beneficial for communities across Michigan, but especially for the city of Kalamazoo, which has the highest number of historic buildings in the state per capita at 2,060 properties. About 15 percent are commercial buildings while the rest are residential, said Sharon Ferraro, historic preservation coordinator at the city. Before the tax credit was eliminated in 2011, property owners in Kalamazoo spent more than $3.6 million to rehabilitate historic buildings.

The reinstated historic preservation tax credit is geared toward residential uses and smaller commercial buildings, which fills a gap since homeowners can’t apply for the federal historic preservation tax credit, Ferraro said.

“With an older building, you need a Ferraro little more to fix it up,” Ferraro said. “Having a tax credit available to fit into your financial plan is quite often the thing that makes it possible for a business or commercial investment.”

Two historic preservation redevelopments in downtown Pesch Muskegon — Amazon Apartments and Artworks Apartments — likely wouldn’t have happened if not for the federal and state historic tax credit before it was eliminated in 2011, said Jamie Pesch, the city of Muskegon’s historic district director.

“We don’t have a ton of commercial (historic) buildings, but the ones we do have have definitely seen their struggle in the city,” Pesch said.

‘Tangible tie to the past’ Before property owners or long-term lease holders can apply to use the new tax credit, the State Historic Preservation Office needs to conduct a formal rulemak-

ing process, which will include public comment over the next several weeks.

“These are buildings that are already here and hooked up to infrastructure,” Ferraro said. “It’s more economically responsible and more sustainable to preserve what’s here than build new.”

Pesch called historic preservation a “tangible tie to the past.”

“These are probably the most visible things that exist in the community that people can point to,” Pesch said.

“All these buildings have stories and authenticity.”

Since 2011, Pesch said a number of historic homeowners have asked the city about incentives for making repairs that can be costly for older homes.

“There was nothing to fill the gap when it went away,” he said. “The state was really the main source of additional funding that was available for those people. I think we’re going to get a lot of interest from them.”

The city of Muskegon has more than 400 properties across its historic districts in and around downtown that span a mix of residential and commercial with just a few vacant lots, as well as a historic park, Pesch said.

With trends toward remote working and downtown office buildings emptying, Ferraro said there could be potential for the tax credit to help renovate office buildings into residential uses in some instances. Regardless of how the tax credit is used on the commercial side, “It’s another possible funding opportunity on the plate for businesses,” she said.

‘Place matters’ Under the historic preservation tax credit, the total of all pre-approved credits could not exceed $5 million in a calendar year, and taxpayers couldn’t claim a credit of more than $2 million for a single property.

When Sam Cummings, managing partner at CWD Real Estate Investment Inc., redeveloped a building at 25 Ionia St. SW in Grand Rapids several decades ago, he leveraged the site’s historic status to help make the project economically feasible, he said.

Cummings said he is in favor of the state tax credit, and of historic preservation in general. But he understands the logic behind its elimination in 2011, he said.

“The former governor was an accountant, so he was against having an unquantified tax credit out there, having an unquantifiable thing on the balance sheet for the state of Michigan,” Cummings said. “My hope is that it’s wildly successful now and in the next year and budget cycle we will be armed with data from its success and the legislature will increase the amount.”

Having data about how the tax credit is used — particularly now with a cap — will benefit the program long term, he said.

“Place matters and good design matters,” Cummings said. “Good architecture is lasting value and there’s no question historic properties and districts provide our placemaking. Preserving history is a valuable thing.”

MiBiz / JANUARY 18, 2021

17

HEALTH BIZ

CrossLiner promises ‘breakthrough, next generation’ innovation for cardiac procedures

By MARK SANCHEZ | MiBiz msanchez@mibiz.com KALAMAZOO — The newest invention from Tim Fischell and his business partner offers what’s promised as a safer and simpler device to use in cardiac catheterization procedures.

Cro ssLin er In c., f o r m e d i n Kalamazoo by Fischell and Dr. Frank Saltiel, closed in December on $700,000 in capital raised from 20 investors, according to a filing with the U.S. Securities and Exchange Commission.

The partners have since received “a little bit more” in commitments from additional investors, bringi ng C r o s s L i n e r closer to the goal of raising $1 million in a Series A Fischell capital round, said Fischell, the company’s CEO and a serial inventor and entrepreneur who has successfully brought other medical innovations to market.

All of the capital raised for CrossLiner came from angel investors, about twothirds of whom are interventional cardiologists, Fischell said.

CrossLiner will couple the private

investment capital with $2.1 million in two federal Small Business Innovation Research grants to commercialize the medical device, Fischell said.

CrossLiner’s device is a guide extension that helps catheter tubes through an artery during a procedure to deliver coronary stents in patients, said Fischell, who’s also a professor of medicine at Michigan State University and director of cardiovascular research at the Ascension Borgess Heart Institute in Kalamazoo.

Fischell describes the CrossLiner device as a “breakthrough, next generation” innovation that “has the potential to essentially make obsolete” existing products on the market.

The device has promise amid an aging population where cardiac procedures are becoming more complex, Fischell said.

“This is one of the coolest things I’ve ever done,” he said. “It’s used whenever t here would be a challenge delivering a stent down a coronary (artery), and that can be the first time, it can be the second, third, fourth or fifth time. As people get older and they’ve had three or four stents already placed in their right coronary artery and they have a new blockage, delivering new stents down that vessel becomes harder and harder. Without

something like a CrossLiner, you just fail. You just cannot deliver a stent.”

The CrossLiner device has a $100 million to $200 million a year market potential that one analysis indicated could grow to as much as $800 million worldwide in the years ahead, he said.

“T h is is a g row i ng busi ness,” Fischell said.

Fischell invented the device with Saltiel, the chief of cardiology and chair of the Ascension Borgess Heart Institute.

Fischell was behind other successful startups that brought medical innovations to market. They include the AngelMed Guardian System, an implantable diagnostic device now launching in the U.S. that monitors and warns cardiac patients of an impending heart attack. Fischell co-developed AngelMed with his father, Robert Fischell, and brother, David Fischell.

Another innovation and startup company Fischell was behind is Ablative Solutions Inc. Formed in Kalamazoo and now based in San Diego, Calif., Ablative Solutions is presently doing a pivotal clinical trial at 70 sites in the U.S. and Europe for the Peregrine catheter system to treat uncontrollable hypertension by deactivating nerves in renal arteries.

Ablative Solutions has raised $130 million over the years to develop the Peregrine system. The company two years ago closed on a $77 million

Series D financing round that included Netherlands-based Gilde Healthcare and ranks as one of the largest reported venture capital deals in Michigan.

Next steps for CrossLiner The new investment round and grant funding provides CrossLiner plenty of capital needed to support commercialization of two versions of the device through 2021. Fischell expects CrossLiner to seek U.S. Food and Drug Administration review toward the end of the second quarter and approval by the end of 2021.

Biomerics LLC, a contract manufacturer in Brooklyn Park, Minn., will produce the medical device.

Partners in the business may sell the innovation, Fischell said. The partners have been talking to potential strategic acquirers, he said.

“We have a lot of interest in this product,” he said. “We think there’s a good chance this technology will be acquired in ’21.”

If CrossLiner does not sell and decides to launch the device on its own, it will need to pursue a Series B capital round to build out sales and marketing and ramp up production.

“If we can negotiate a deal that is appropriate for our shareholders, we may

CrossLiner Inc. promises a safer and simpler device to use in cardiac catheterization procedures.

COURTESY RENDERING

exit. If we don’t, we may raise additional capital and commercialize this ourselves,” Fischell said. “We’re looking for a possible acquisition, but in lieu of that we think we’ll have zero problems raising the capital that we will need to go it alone and commercially launch this ourselves by the end of the year.”

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Telehealth app started in West Michigan sees ‘huge growth’ during pandemic

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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n $800 medical bill following his spouse’s 2014 emergency room visit that resulted in antibiotic and pain relief medications led Chris Bailey to think deeper about telehealth and better ways of connecting with doctors when needed.

In the following years, Bailey launched Care Convene LLC, which he describes as a “virtual health ecosystem” for patients and care providers to initiate video visits and integrate a personal health record that aggregates a user’s health information, along with other features.

The company today looks to ride the wave of telehealth growth spurred by the COVID-19 pandemic and the Bailey growing push in health care to better use technology in patient care and managing illnesses.

In building Care Convene, Bailey — originally from Grand Rapids — and his business partners created a platform that he says goes well beyond basic video visits and better organizes patients’ medical information that often gets “scattered across data silos.”

“You can go to the hardware store and buy a screwdriver, but if you really want to have a tool kit to solve a number of problems, you need all of the tools that go along with that, and that’s what Care Convene is set up to do,” said Bailey, Care Convene’s cofounder and CEO. Bailey cites his own situation where his personal health data is stored in five different patient portals between care providers, insurers and his own Garmin device.

Different care providers often use varying telehealth platforms and electronic medical record systems. Care Convene aims to serve as a conduit that bridges those differences in a single application, Bailey said.

“There are all the silos out there and they’re not helping anybody. We are building a system where a patient can have a one-to-many relationship with their clinicians,” Bailey said. “We talk about putting the patient in the middle (in health care) all of the time. Let’s really put the patient in the middle and make this a one-to-many relationship from a patient perspective.”

He added that under Care Convene, patients could use one app for all clinical

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The Care Convene app aggregates users’ health care information to create better interactions with health professionals. COURTESY PHOTO relationships. The Care Convene platform also integrates chronic disease management and health monitoring, and provides users a personal health journal.

Users can also look up symptoms they’re experiencing and report it to their care provider so “they can respond, instead of me trying to figure out what to look for, when to call and play phone tag with the care manager,” Bailey said.

“Telehealth and virtual health is a much bigger opportunity and it’s really about building that digital relationship between the patient and the provider care team,” Bailey said. “The end game is consumer engagement. At the end of the day, you can put millions of dollars into all kinds of things, but if you can’t get the patient to understand their illness and they don’t know how to navigate the system efficiently, it’s worthless.”

Growth during pandemic The company was “crazy busy” and experienced “huge growth” amid the outbreak of the COVID-19 pandemic last spring, Bailey said.

Care Convene’s business through 2020 followed the exponential growth that telehealth has experienced in the COVID-19 pandemic. As MiBiz reported this month, care providers see telehealth quickly becoming a common way to connect physicians and patients, manage chronic illness, patient referrals with medical specialists, and improving access in rural markets.

Dr. Fred Reyelts, a family practitioner and medical director for innovation at Mercy Health, said he’s interested in innovations that can take telehealth further into the future.

“That will be interesting. We’ll be open to it and we want to be some of the first to try it,” Reyelts said generally of telehealth innovations. “We want to see how we can make it fit and if we have to do some modification with it.”

Care Convene can complement a care provider’s existing telehealth platform with additional features, said Bailey, who’s also the director of national engagement and consumer health strategy for Michigan Health Information Network, which provides connectivity between care providers to exchange data electronically.

Care Convene is working with more than 3,000 care providers in Michigan and has been doing projects in Texas, Bailey said. The company also has been working with care providers to incorporate its features onto their telehealth platform, he said.

The company as well has three projects ongoing on a feature to alert a user’s primary care provider in real time if they are in an ER, or when they’re admitted to or discharged from a hospital, which can aid in post-hospitalization care and reduce readmissions, Bailey said.

He sees the digital health field opening wider in the years ahead and both providers and consumers increasingly embracing the technology.

“What I think is the real opportunity is when consumers can have their information in their system and that system can help them make decisions about their health,” Bailey said. “It isn’t going to diagnose, but it is going to provide them with a longitudinal perspective of what’s happened to them and help them understand that and then share with a provider to bring them completely up to speed on where they’re at.”

reporter’s NOTEBOOK Mark Sanchez writes about finance, health biz and life sciences.

616-608-6170 • msanchez@mibiz.com

A different Metro Health again seeks to do open-heart surgery At some point in 2021, the Michigan Department of Health and Human Services will make a decision that may very well lead to altering the competitive balance for heart care in West Michigan.

A decade after an unsuccessful bid, Metro Health is again seeking state approval to perform open-heart surgery, creating new competition for the existing programs in the region at Spectrum Health and Mercy Health Muskegon.

In a certificate-of-need (CON) application to the state, Metro Health wrote that its proposal aims to “meet an unmet need” and provide “choice within the market” for adult open-heart surgery and therapeutic cardiac catheterization for “current patients and physicians.”

That’s the same argument that Metro Health made in 2010 when the state denied a request to launch open-heart surgery, citing an inability to meet CON standards in place at the time.

The obvious difference between then and now is Metro Health’s ownership by the University of Michigan Health System, which is known for high quality. Among the latest accolades are Newsweek’s 2020 list of top hospitals in the world, where University of Michigan Health Systems’ Michigan Medicine — the academic medical center in Ann Arbor — ranked best in the state and 15th globally.

U.S. News and World Report also ranked Michigan Medicine 14th in 2020 in an annual list of top hospitals for cardiology and heart surgery.

As the state reviews the application that Metro Health filed in December, health care consultant Mike LaPenna has no doubt it will get the OK to do open-heart surgery.

“They’re going to get it this time, hands down. No problem, I think,” LaPenna, principal of The LaPenna Group Inc. in Grand Rapids, said in a recent conversation we had about Metro Health’s new bid to launch open-heart surgery.

Executives at both Metro Health and University of Michigan Health in Ann Arbor declined to discuss the CON application until after the state rules on the filing. In the application, Metro Health indicated it meets current CON standards to do open-heart surgery and projects to treat 311 cases a year, just above the 300-case threshold required.

More than four years after the acquisition by University of Michigan Health System, the Metro Health of today is a much different health system than the one that tried unsuccessfully to secure state approval a decade ago. Metro Health “is a (University of Michigan) hospital,” with a revamped medical staff structure, LaPenna said.

“This is a totally different organization and the connection with (the university) is the key,” he said. “It’s absolutely not the same hospital.”

Presuming Metro Health meets state requirements and gets approval, the health system has a number of factors on its side to form a successful open-heart program that includes coronary artery bypass surgery and cardiac valve repair.

Among them is geography in suburban Wyoming, where it moved into a new hospital 13 years ago. The location can draw heart patients from western Kent County and from eastern and southern Ottawa County down the M-6 and I-196 corridors, LaPenna said.

Spectrum Health’s Meijer Heart Center on the Butterworth Hospital campus and Mercy Health Muskegon are the two closest hospitals to Metro Health that perform open-heart surgery. Metro Health stands to dilute the market share of both with a competing program, although LaPenna believes it may draw more heart patients that need surgery away from Mercy Health Muskegon than from Spectrum Health, which opposed Metro Health’s 2010 request to the state.

Other regional hospitals that perform open-heart surgery are Spectrum Health Lakeland in St. Joseph, Bronson Methodist Hospital and Ascension Borgess in Kalamazoo, and in Lansing at Sparrow Hospital and McLaren Greater Lansing.

Metro Health Hospital also sits right in the middle of a growing epicenter and population with a relatively modern facility. The alignment with the University of Michigan will draw patient referrals as well, LaPenna said.

State approval to do open-heart surgery would take Metro Health “to another tier,” he said. Right now, Metro Health has “great heart people out there, but they don’t have the full range of heart options,” requiring heart patients who need surgery to go elsewhere as well as physicians based there losing their patients.

“There’s complementary care that keeps the patient centralized in an area where the community of specialists can cross refer,” LaPenna said.

Performing open-heart surgery can pay dividends beyond attracting more heart patients to Metro Health, LaPenna. Medical specialists and subspecialists when recruited by a hospital tend to consider what clinical programs it provides.

An endocrinologist treating diabetics, for example, will want to keep their patients within the health system if they someday require heart surgery, LaPenna said. Not having that option available and having to refer those patients elsewhere is “like having a crown with one jewel missing,” he said.

MiBiz / JANUARY 18, 2021

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Karen Kania and Peg McClure support nonprofits addressing basic needs.

In particular, they’re focused on safe housing and alleviating hunger. They believe that if a person can’t nourish their body, they can’t nourish their spirit.

As Karen and Peg considered what would happen to their assets after their lifetime, their professional advisor connected them to Grand Rapids Community Foundation.

After their passing, the McKania Fund for the Economically Disadvantaged will be established at the Community Foundation to continue their legacy of providing for people facing housing and food insecurity.

L E T U S H E L P YO U G E T S TA R T E D We’re here to help you understand your options and explore creative ways to leave your mark on the community and causes you love. Give us a call at 616.454.1751.

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NONPROFIT ORGANIZATIONS

United Way simulation tool shares experience of ALICE households

Utility foundations use deep nonprofit network to distribute millions in COVID relief funds

By Marla Miller | MiBiz mmiller@mibiz.com

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By Marla Miller | MiBiz mmiller@mibiz.com

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he corporate foundations of the state’s two major energy utilities have distributed nearly $26.5 million in direct relief funds to meet basic needs such as food, shelter and personal protective equipment since the COVID-19 pandemic began.

In early January, the Consumers Energy Foundation announced another round of grants totaling more than $480,000 to help Michigan nonprofits deliver critical services in communities across Michigan. Several West Michigan organizations received funding, including Start Garden ($30,000), Degage Ministries ($10,000) and Urban Roots ($5,000).

The Consumers Energy Foundation is the charitable arm of Jackson-based Consumers Energy and has provided $5.4 million to support COVID-19 relief efforts since March.

The Detroit-based DTE Energy Foundation also responded with more than $21 million in COVID-related funding. The foundation typically awards $18 million in grants on an annual basis, but the foundation’s board Bloodworth approved an initial $3 million for COVID relief and added another $20 million by April, said DTE Foundation President Lynette Dowler.

“On the heels of COVID, the first course of business was to make sure our kids and seniors had food susDowler tainability,” Dowler said, noting the $3 million went to helping food banks such as Kids’ Food Basket and Howell-based Gleaners Community Food Bank distribute food.

Deep nonprofit network The foundation’s leadership worked with a network of nonprofit partners to supply food, shelter and other PPE necessities. Some initial statewide priorities included donating more than 2 million KN95 masks for first responders and essential service providers, supporting more than 500,000 families with basic needs, and funding more than 3 million meals.

“We have a pretty powerful supply chain,” Dowler said. “We were on the front end of purchasing masks and donating PPE to hospitals and health care workers and expanded that to police and fire departments.”

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Grand Rapids-based Kids’ Food Basket delivered 33,000 meals to children in the first week after the state ordered all K-12 schools to close. COURTESY PHOTO for Michigan Association of United Ways and Michigan Community Action and supported 1,000 nonprofits statewide. The foundation also awarded $1 million in grants to the state’s 45 domestic violence shelters funded by the Michigan Department of Health and Human Services.

Dowler said the foundation has a base of about 400 nonprofits it works with statewide and predominantly reached out to those existing partners to offer COVID relief grants.

“We made some flexible grants to keep the nonprofit up and running in a successful way,” she said. “We had an invitation-only process, and we created a streamlined application process that was centered on giving them flexibility.”

address food insecurity, including mobile food distributions across the state.

The grants also extend to smaller, locally focused nonprofits such as Urban Roots, a Grand Rapids nonprofit that operates a community farm, market, garden education classes and more in the Madison Square neighborhood.

Urban Roots was a first-time applicant, and the $5,000 Consumers grant will renew its Your Share box program offered in the fall. The program provides fresh, locally grown produce boxes to at least 100 families in the Madison Square neighborhood. The boxes will be distributed in February and March to support people who have been financially harmed by COVID-19.

“Right now, it is just a critical time for our neighbors in the Madison neighborhood,” Shifting priorities said Urban Roots Executive Director Jessica Similarly, the Consumers Foundation’s board Harrison. “We have been searching for any met early on and realigned its funding priorities businesses and organizations to help our orgato support people working on the front lines to nization during this time. We are really hondirectly meet basic needs such as food and shelored that Consumers Energy trusted us to help ter, said Carolyn Bloodworth, secretary-treasurer the residents in the 49507 ZIP code.” of the Consumers Energy Foundation.

The Consumers Foundation increased its “The pandemic changed how we mantotal philanthropy in 2020, contributing more aged our philanthropy,” Bloodworth said. “We than $9 million to charitable causes. The trend needed to be urgent, we needed to be thoughtof direct assistance for food, housing and small ful about what we were doing, but we also business support will likely continue into 2021, wanted to be very responsive.”

Bloodworth said.

The Consumers Foundation loosened some “The impacts on the nonprofit sector are grant guidelines and began accepting appligoing to be felt for quite some time to come,” cations on an open basis, she said. meeting quarterly to review The DTE Foundation has NONPROFITS and approve applications. reserved the remaining $2 milNEWS Besides responding to basic lion of $23 million earmarked — needs, the Foundation also for COVID relief to utilize in this Sponsored by: responded to operational year’s first quarter. The foundaGRAND RAPIDS COMMUNITY needs of nonprofits taxed tion also plans to hold the line FOUNDATION with budget deficits and other on traditional grants and save challenges.

20 percent of the $18 million it “There are many nonprofits that were strugusually awards in case the need continues, gling to keep their doors open and serve the cliDowler said. entele that they serve,” Bloodworth said. “They “Partnership means you’re committed did not have the time or capacity to be sending to somebody in good times and bad times,” grant applications out to multiple entities.”

Dowler said. “Last year, for our nonprofit The latest Consumers Energy Foundation partners, was the worst of times in many grants support direct response efforts for food cases. We felt as a foundation the worst thing and shelter, as well as funding for entreprewe could do was step away or step down. The neurs hit hardest by the pandemic. The Food best thing we could do is be there for them Bank Council of Michigan received $200,000 to and show up in a big way.”

n online simulation tool rolled out by Heart of West Michigan United Way in September is designed to build empathy and help people understand what it’s like to live as an ALICE (Asset-Limited, Income-Constrained, Employed) household.

The Making Ends Meet online simulation, developed in partnership with Grand Rapids-based Well Design Studio, allows users to pick different characters and scenarios as they try to get through the month with a limited amount of money. Participants can walk in the shoes of Anthony, a single male who works part-time at a restaurant; Carissa, a single mom with a child; Kara and Eric, a young family; and Sandra and Ed, an elderly couple on Social Security.

Heart of West Michigan has since entered into licensing agreements with other West Michigan United Ways to use it.

Heart of West Michigan and corporate and nonprofit partners pushed the tool out on social media and distributed it with fundraising campaign materials. They typically use in-person simulation activities for workplace campaigns, but the ongoing pandemic reduced the number of workplace visits.

“The one opportunity that we saw with this was people working from home, being virtual, not having that group setting to go through — we needed something that would kind of sit on its own and share the message,” said AJ Quackenbush, director of corporate philanthropy at Heart of West Michigan United Way. ALICE households earn too much to meet poverty guidelines but don’t make enough to cover the costs of living in their county. They often live without a safety net, and one car repair, medical expense or job loss can lead to stress, debt and desperation.

An estimated 28 percent of Kent County households qualify as ALICE, and 37 percent of households struggle to cover the basic necessities of housing, child care, food, technology, health care and transportation.

The incomes are based on real data from the United Way’s ALICE report.

“I think a lot of people just don’t understand why a family would have a hard time making ends meet on a salary of $45,000 or $50,000,” said Maribeth Groen, assistant director of marketing and communications at Heart of West Michigan. “It’s not just that a family needs to learn how to budget … it’s little things like your brakes going out on your car that could make a huge impact. Until people really see these scenarios firsthand, they may not understand what it’s like.”

The tool can be updated with different scenarios and customized to fit different community needs or income data. For example, people who live in more rural counties face different transportation issues than their counterparts in the city.

Josh Leffingwell, partner at Well Design Studio, said the goal was to help increase awareness for real-life situations and flip the typical narrative of people living at or near poverty.

“What this is really about is people who are struggling to truly make ends meet, but these folks all have jobs,” he said. “They are all trying to make that paycheck last for the entire month without going into debt.”

The Making Ends Meet simulation is available at makingendsmeet.hwmuw.org

MiBiz / JANUARY 18, 2021

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Kalamazoo tourism official discusses new role, preparing for post-COVID comeback A Q&A with Jane Ghosh, president and CEO of Discover Kalamazoo

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fter ping-ponging around the globe in various professional roles, Jane Ghosh finally ended up back in Kalamazoo, where her new job involves promoting the city she calls home. In December, Ghosh was named the new president and CEO of Discover Kalamazoo, which promotes tourism to Kalamazoo County. With an economics degree from Harvard University, Ghosh has marketing experience with titans like Johnson & Johnson and Kellogg Company. She will apply that experience to help raise the profile of Kalamazoo in a time when dining, entertainment and many other forms of hospitality have slowed during the COVID-19 pandemic.

Does growing up in Kalamazoo allow you to approach this job more effectively than someone who hadn’t?

I certainly think it will help me very much. When you look at convention and visitors bureaus across the country, you will see some people that go from city to city and take the skills that they have developed to another city, while others have a passion for their own hometowns. I am definitely in that latter camp. While I don’t have experience in the tourism industry, I do have a love and passion for my town and I have a lot of marketing experience, which is very relevant.

How difficult has it been to settle into a new role during a volatile time like the COVID-19 pandemic?

I think any job you take is going to have its challenges. It’s just another challenge and I’m grateful to be in the position where I can help try to lead the team to what I think is going to be a very bright future. While I have not been through COVID, I’ve been through my share of leadership challenges in the past and I have those experiences to bring to bear on this.

With significant limitations on dining, sports and other events, how has Discover Kalamazoo been able to support these businesses in the community?

The team has done a phenomenal job trying to be a beacon of positivity in 2020. And really recognizing that even though we can’t be attracting the sporting events and other events that we might have done in 2020, it’s still really important to have a thriving business community in Kalamazoo to preserve for when they do come back. They’ve done a great job.

Right now we have a program called Carryout Bingo. We created bingo cards. If a family gets carryout from five restaurants in a row, they can come into one of our local shops and get a “Kalamazoo: Made For You” T-shirt. It’s a creative way to continue to find what opportunities we can use to continue to drive prosperity so when events come back, we’re still a thriving community.

Where does Kalamazoo stand in terms of slowly bringing back larger events or meetings?

We look at the data we have on lodging. Like any other community in Michigan, obviously all of our occupancy rates went down significantly at the beginning of COVID. April was the low point. We are starting to outperform the Michigan average in the last couple of months.

We’re doing a little better and I’m optimistic. We’re starting to hear from groups that are trying to find safe ways to bring back events in 2021. We’re also actively talking to groups about planning for 2022. For the most part, what I can sense is that groups that are planning meetings and events are feeling very confident about 2022.

Kalamazoo and Portage grabbed national headlines recently because of Pfizer Inc.’s role in producing a COVID-19 vaccine. Is that something that the city can capitalize on in terms of tourism?

I absolutely think we should be able to leverage that in the sense that it puts Kalamazoo that much more on the map. It’s just one more point of interest and one more thing to talk about.

We’ve talked as a team on how we can leverage that because people are searching for things about Kalamazoo and Portage in Google searches.

A tourism bureau’s financial health generally mirrors the health of local tourism.

What can you do to create an organization that sits on firm financial foundation?

The great news is that I inherited an organization that has been very prudent financially. We are actually in a reasonably strong position. They had a (financial) reserve so that business could carry on despite the pandemic, which is great foresight from the people that came before me. As we look at our investments into the future, as soon as the hotel occupancy rates come back up, the revenue comes right with it, and that’s just further investments we can make into our future.

Interview conducted and condensed by Jayson Bussa. COURTESY PHOTO

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JANUARY 18, 2021 / MiBiz

IN THE NEWS M&A

n Grand Rapids-based private equity firm Blackford Capital acquired Avon, Mass.-based AquaLeisure Industries Inc., a maker of leisure products for water sports and recreation. The 50-year-old company produces swim goggles, pool floats, learnto-swim and other products that are sold at retailers under a variety of brand names.

A q u a - Le i s u r e ’ s management team remains with the company. Terms of the deal were undisclosed. Grand Rapids-based Varnum LLP served as legal adviser in the deal for Blackford, which was also advised by Grant Thornton LLP on financing and tax matters. Chicago-based Rush Street Capital served as debt financing adviser.

Grand Rapids-based Mercantile Bank provided debt financing and New York-based Muzinich & Co. provided debt and equity financing. n The assets of Ludington-based Lake Michigan Car Ferry Co., the owner and operator of the historic S.S. Badger car ferry, and related company Pere Marquette Shipping Co., which operates the tug-barge Undaunted-Pere Marquette 41 on the Great Lakes, were acquired on Dec. 30 by Middleburg Heights, Ohio-based Interlake Holding Co., Interlake Holding President Mark Barker said the company is “fully committed” to continuing the S.S. Badger’s cross-lake passenger, car and truck service. The vessel serves as the connection along the U.S. 10 highway in Michigan and Wisconsin. Terms of the deal were not disclosed. Interlake operates a fleet of nine Great Lakes freighters. n Cheboygan-based Hart Medical Equipment LLC acquired McLaren Home Medical Equipment, formerly known as VitalCare in Cheboygan, Gaylord, and Petoskey in Northern Michigan. The deal furthers Hart’s strategic plan to expand geographic coverage and leverage additional scale, the company said in a statement. n Ludington-based Quick-Way Inc., a bulk liquid commodities carrier, has acquired most trailer assets from Clare-based Northern Tank LLC, according to a report in Bulk Transporter. The deal adds 10 tank trailers to Quick-Way and allows the company to expand in the Midland area. Quick-Way also has drivers in Kalamazoo, Chicago and Kankakee, Ill., according to the report. Terms of the deal were not disclosed. n Kalamazoo-based Stryker Corp. (NYSE: SYK) acquired Dania Beach, Fla.-based OrthoSensor Inc., a producer of sensor technology for musculoskeletal care and total joint replacement. In announcing the acquisition, Stryker said OrthoSensor’s technology advancement when “coupled with expanded data analytics and increasing computational power, will strengthen the foundation of Stryker’s digital ecosystem.” Terms of the deal were undisclosed. n Performance Systematix Inc., a Grand Rapidsbased food packaging company, has been acquired

by Naperville, Ill.-based Selig Group, a portfolio company of privately held Chicago-based holding company CC Industries Inc. Performance Systematix manufactures a range of container and packaging venting products for global customers, which complements Selig’s capabilities as a flexible packaging manufacturer, according to a statement. Terms of the deal were not disclosed. Performance Systematix will become a subsidiary of Selig and continue to operate from its location on 33rd Street SE in Grand Rapids.

Wheaton, Ill.-based Huck Bouma PC served as legal counsel to Performance Systematix, which was advised by investment banking firm Stout Risius Ross LLC. Chicago-based Gould & Ratner LLP advised Selig and CC Industries on the deal. n Traverse City-based High Street Insurance Partners Inc. acquired Beltsville, Md.-based Day Deadrick & Marshall Inc. and Oregon City, Ore.-

based Premier Northwest Insurance. Shareholders of both companies remain active with High Street. Terms of the deals were undisclosed. Since forming in 2018 with the financial backing of Detroit-based private equity firm Huron Capital, High Street has closed on 17 acquisitions. n Lansing-based food and animal safety products manufacturer Neogen Corp. (Nasdaq: NEOG) acquired Bray, Ireland-based Megazyme Ltd., a supplier of analytical products deployed in food and beverage quality control laboratories. Megazyme’s business complements Neogen’s existing food diagnostics products and helps expand the Michigan firm’s slate of solutions it provides to the industry.

Terms of the deal were not disclosed. n Rosemont, Ill.-based private equity firm Wynnchurch Capital L.P. acquired Greer, S.C.-based Huntington Foam LLC in late December, according to a statement.

Huntington Foam, a maker of engineered foam products for the appliance, cold chain, automotive and building products industries, operates a plant at 1323 Moore Drive in Greenville. The company will become part of Wynnchurch portfolio company Drew Foam Companies Inc. Terms of the deal were not disclosed. n Tallmadge Township-based businesses The Bolt Bin, West Michigan Technical Supply and Clear Vision Inspection have been acquired by brothers Jordan Vander Kolk and Travis Vander Kolk. Tim Irwin, the former owner of the Ottawa County businesses that serve as a one-stop-shop in the fasteners industry, was advised on the deal by Grand Rapids-based M&A firm Calder Capital LLC. Terms of the deal, which closed on Dec. 31, were not disclosed. n Grand Rapids-based office technology solutions provider Applied Imaging has acquired Lasers Resource Inc., a Grand Rapids-based managed print services specialist, in a deal that closed Dec. 1, 2020. The company will rebrand all Lasers Resource locations as Applied Imaging, and plans to keep on all employees. Terms of the deal were not disclosed. Additionally, Applied Imaging’s NetSmart Plus division acquired Holland-based Blackport Solutions LLC in a deal that closed Dec. 14. The deal expands NetSmart Plus’ services to include Voice over IP (VoIP) systems and carrier services under the Blackport Solutions brand.

EXPANSION

n Novi-based The Shyft Group Inc. (Nasdaq: SHYF) plans to fill hundreds of new jobs at its manufacturing campus in Charlotte to meet growing commercial fleet and speciality vehicle needs.

Formerly known as Spartan Motors, the corporation cited rising fleet vehicle demand in 2021 for the hiring frenzy. The Shyft Group operates a variety of commercial vehicle brands, including Utilimaster, Royal Truck Body, DuraMag, Strobes-R-Us, Spartan RV Chassis and Builtmore Contract Manufacturing.

The Lansing Economic Area Partnership (LEAP) teamed with various economic development partners for recruiting and job training for The Shyft Group, which will nearly triple its workforce in the region with the expansion. n Gage Cannabis Co. opened a medical cannabis dispensary in Grand Rapids this month, marking its sixth retail store in Michigan. The dispensary, located at 3075 Peregrine Drive NE next to Celebration Cinema North in Grand Rapids, launched with medical sales only, but the company is pursuing recreational sales at the location. Gage operates five retail locations in Adrian, Ferndale, Lansing and Traverse City, as well as a Cookies store in Detroit.

The company plans to open more than 20 locations in Michigan by the end of 2021. Gage also has three cultivation facilities in Warren, Harrison and Monitor townships.

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ichigan and the nation need the same kind of concerted effort to deploy broadband internet access as 90 years ago when America set out to electrify rural areas following the Great Depression, economic developers say.

The COVID-19 pandemic has heightened the need to fix a lack of affordable high-speed internet access in some markets of the state that economic

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How should marketing change in the wake of COVID-19?

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SERVING

Experts warn of possible mental health ‘aftershock’ from COVID-19

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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ichard Reiffer and his staff at Grand Rapids-based Fusion IT LLC tend to take a proactive approach when it comes to advising clients on digital strategies.

So when COVID-19 transitioned into a full-blown pandemic in early March, the team was already telling the midsize companies it works with to start facilitating effective remote work.

Fusion IT, which works with businesses Reiffer an ongoWESTERN MICHIGANonBUSINESS ing basis as a managed service provider (MSP), even developed white papers to serve as a reference for effective work from home strategies.

“We started warning our clients early and most of them acted on it to get equipment if they didn’t already have equipment capable of running their remote work,” said Reiffer, the company’s vice president of strategic initiatives. “For a while there, the backlog to get laptops was about six months.”

The ongoing pandemic has ushered in a tidal wave of remote working for companies that were either forced to send workers home or did it out of precaution. Many of these companies’ MSPs have become the brain trust for workfrom-home setups and strategies.

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

developers say is critical for both businesses and households.

Eliminating the so-called “digital divide” must become as important as extending electrical and telephone service into rural markets in the 1930s, Birgit Klohs, CEO of The Right Place Inc. in Grand Rapids, said durKlohs ing a recent virtual panel discussion at the Michigan Economic Developers Association’s annual conference.

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SINCE 1988

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EXPLORING WHAT’S NEXT Experts preview workplace changes as economy slowly re-emerges

COPING WITH COVID-19 Spectrum Health prioritizes buying local

STATUS QUO

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Virus concerns drive additional due diligence in M&A transactions

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Solar industry on edge

COVID-19 highlights structural changes needed for unemployment system, researchers say

Automotive analysts see shifting dynamics amid coronavirus spread

The issue has become increasingly important during the pandemic as companies conduct business v irtua lly and students learn remotely, Klohs said. The pandemic brought greater awareness to the issue and how in some areas the digital divide “is more like the Grand Canyon,” Klohs said.

“Our children shouldn’t be sitting in cars in the parking lot of a restaurant to get Wi-Fi so they can do their homework. I think that’s just Third World,” Klohs said.

See MEDA on page 3

West Michigan cities weigh policy changes to bolster affordable housing

Aerospace suppliers brace for continued turbulence

f the SARS outbreak 17 years Drew Phillippy is president of Grand Rapids-based Purple East, which

By MARK SANCHEZ | MiBiz ago in Asia is an accurate indirecently emerged from bankruptcy under a new law meant to help small msanchez@mibiz.com cator, behavioral health care businesses. providers could see a patient eople who have been working from surge in the coming weeks and home for weeks because of the months as the COVID-19 pandemic COVID-19 pandemic will return to a takes an emotional toll on people. decidedly different workplace than One-third of the people in Asia they had previously once the economy gets were unable to return to work full Uneven footing going again. time after the SARS pandemic, six Changes will span a range of workplace in 10 experienced fatigue, and half With remote work a growing trend environments, including offices, shop floors, had difficulty sleeping. before the COVID-19 pandemic, PAGE 12 PAGE 14 breakrooms and conference rooms. Wearing In Hong Kong, the suicide rate many companies already had a face masks and having more distance spiked nearly 32 percent for two rough infrastructure in place to between workers become the norm, years after SARS. Hong Kong also MARCH 16, 2020 • VOL. 32/NO. 11 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com For small businesses facingwill bankruptcy, the new make the transition smoother, along with routine temperature checks and experienced “increases in persistent Reiffer said. federal Small Business Reorganization Act is proving continually cleaning and sanitizing the workdepression, anxiety, panic attacks, Still, some businesses had to place, tools, equipment and lifeline. workstations.A Grand psychomotor agitation, psychotic to be a cost-effective and timely swiftly make up ground while some Those and other pracsymptoms, delirium, and suicidRapids retailer offers an early test case. SEE PAGE 14 of it was dictated by their respectices are all part of the proality,” accordtive industries. verbial “new normal” for ing to a white GR debates increasing See WORK FROM HOME on page 12 STORY BY ANDY BALASKOVITZ // PHOTO

BY KATY BATDORFF employers working to navpaper from Pine sites for marijuana igate the deadly pandemic Rest Christian businesses; equity, that has disrupted daily rouMental Health local ownership tines, thrown the economy Services on the concerns remain into recession and may linpotential menSmall businesses around West Michigan have been affected in many ways P E R I O D I C A L S ger for many months until a tal health effects Kennedy

By SYDNEY SMITH | MiBiz by the ongoing pandemic. While some are seeing increased business, most Eastburg vaccine is developed. of the COVID-19 ssmith@mibiz.com “As business leaders, you have to make pandemic. companies are being forced to deal with the fallout by getting creative, mansure you’re taking the responsibility for your The white report pulls data from GRAND RAPIDS — Following aging cash and finding new ways to stay engaged with customers and cliemployees,” Kentwood-based Autocam a number of sources to issue a call to mixed messages from the Grand Medical Devices LLC CEO John Kennedy action for care providers to prepare ents. In this Coping with COVID-19 special report, MiBiz speaks with two Rapids City Commission late last said during a recent back-to-work webinar for the “aftershocks” from the pandozen West MichiganBycompanies to hear how they’re navigating the current MARK SANCHEZ | MiBiz month, marijuana advocates hosted by Advantage Benefits Group Inc. “It’s demic and “minimize the fallout of msanchez@mibiz.com hope city officials will ultimately incumbent on us as businesses to make sure COVID-19 on mental health in our uncharted waters. SEE PAGES 12-19 open more properties for medicommunities.”

See WHAT’S NEXT on page 8 he coronavirus outbreak that’s batcal and recreational facilities. “ Th e w ar n in g sig n s are tered Wall Street and caused supply On Feb. 25, the commission there right now that we could in PAGE 7 Visit mibiz.com for ongoing coverage of the business implications COVID-19 in West Michigan. chain disruptions for some manuwent back and forth on appliMichigan experience of a significant facturers has yet to interrupt transcations for both types of facilisurge in behavioral health needs actions, although more conversations are ties. The city has approved 24 that emerge out of this COVID crioccurring as part of due diligence, according licenses for medical marijuana sis,” Pine Rest CEO Mark Eastburg to M&A professionals. businesses, while another 14

By ANDY BALASKOVITZ | MiBiz benefits for people active in their state’s Program loan — told MiBiz. “We ought to be precall hosted by the West Michigan Policy Deals that are inInprocess involve a deeper are waiting for approval. The abalaskovitz@mibiz.com system.

Michigan, this means workwhich requires 75 pared as a state and a community Forum. As of early May, Sturgis Molded dive into due in situations city hasn’t finalized recreers diligence unemployed as a result ofwhere the panpercent of the loan for that in case that happens.”

Products was running at about 10 pers some employers express demic could receive upistoacquiring $962 a week. to be used for payone company ational marijuana zoning regT he s t r e s s, a n x iet y a nd cent capacity involving transportation concern about retainThe federal benefits available roll in order to be depression the pandemic trigand medical devices. The company has another that are sources raw for ulations and won’t start accepting workers who are earnup to 39 weeks, while state benefits forgiven — faced gers can come from the loss of a about 200 employees. materials or components ing applications until April 20. more income through were expanded to more workers backlash from job or income, grief, tand “I’ve called people and there has

By JESSICA YOUNG | MiBiz Ea rlier his uncermont h at t he Westing Michiga n from China.

Buyers areand Hours after voting to delay unemployment benefits than their extended for 26for weeks. employees, since tainty about the future.

At Pine been communication that said, ‘I make jyoung@mibiz.com Automotive Suppliers Symposium in Grand Rapids, asking more informarecreational and pause mediPresta normal paychecks, researchers say Media have shown conthe loan effectively Rest, “we’re experiencing a of rise more by not coming in,’” Presta told Mike Wall, director automotive analysis in Grand tionreports about supply chains, cal applications, the City long-term structural fixes are needed cern among employers means workers would be paid their many of the stressors that are MiBiz. “That’s out there.” he automotive industry is scrambling to in strike Rapids at IHS Markit, forecasted light vehicle sales backup plans who and pay theless Commission reversed course state andinfederal programs. than the amount of of replacement benefits worktypical wages. known riskunits for suiSturgis Molded Products’ operaa balance between near-term execution and toofincrease 16.8 million in the U.S.tothis year, the segcapabilities after the six commissionThe $2.2 trillion CARES Act passed ers aresuppliers. receiving. In at least one case Kelly Presta, vice president at Sturgis said.includes cars, utility vehicles tors and first-line positions make unsteady industry disruption from the cide,” novel Eastburg ment that and pickup ers could not agree on how to Brown in late March included provisions to in Washington state, a company Molded Products Co., shared these less than the maximum amount coronavirus outbreak. trucks.

“It’s still very new. move forward. A last-minute See MENTAL HEALTH on page 6 add $600 in weekly unemployment that received a Paycheck Protection concerns during an April 22 conference See UNEMPLOYMENT on page 5 That’s according to industry experts who say the Already, that outlook is changing as COVID-19 conEveryone’s trying to figure it out on the fly, dispute among commissioners effect of the virus, which has been spreading around tinues to develop across the country, he told MiBiz. but if clients were selling source parts from also involved equity and local the globe since late December and shut down producAs of this report, IHS Markit was still finalizing a China, you’re going to have to make sure ownership.

P global E R I O revised D I C sales A L projection, S tion in specific regions, has shifted forecasts for but Wall expects the new forethey have a backup supply-chain plan in Commissioners were conautomotive production and U.S. sales downward. cast to drop to 16.5 million units. case there is a major disruption,” said Mike sidering zoning amendments Indeed, Gov. Gretchen Whitmer announced “Everything is happening so quickly and there is Brown, who leads the M&A practice at investrecommended by the Planning the state’s first two presumptive positive cases so much volatility that given the circumstances, 16.5 ment bank Charter Capital Partners LLC in Commission that would have in Oakland and Wayne counties on March 10, fol(million) will still be a very good year,” Wall said.

Grand Rapids. eliminated a waiver process See SHIFTING DYNAMICS on page 4 lowed by a state of emergency declaration. for sensitive land uses like reliSee DUE DILIGENCE on page 9 gious institutions and opened more properties for cannabis development.

Marijuana advocates have PAGE 11 sought to relax distance requirements in order to expand the number of properties qualified for marijuana business use,

By ANDY BALASKOVITZ | MiBiz seeking a constitutional amendment graduated, or progressive, income tax. schools and road and water infrastrucwhich they say could also help abalaskovitz@gmail.com to change Michigan’s flat 4.25 percent The Democratic-backed proposals have ture starting in 2022. The plan would address concerns over a lack of income tax to a graduated structure failed to gain traction in the Republicanreduce the state income tax rate for local ownership. s progressive political advobased on income. The Board of State held state House and Senate. individuals with income of $175,000 or Joe Neller, co-founder and cates seek lower state income Canvassers is expected to decide in the In t he late 1960s a nd 1970s, less and joint filers with income at or chief government affairs offitax rates for most Michigan coming weeks whether organizers can Michigan voters by wide margins below $350,000. According to organizcer at Dimondale-based Green residents while higher earncollect signatures in hopes of putting rejected ballot proposals for a graduers, 95 percent of Michigan residents Peak Innovations LLC, said the ers pay more for infrastructure needs, the question to voters in November. ated income tax. Such a change would would pay a lower state income tax rate Planning Commission rejected the state’s leading business group is “If this qualifies for the ballot, require a constitutional amendment. than they do now. a provisioning center proposed bracing for a highly contentious politfrankly, it would be war,” said Rich However, supporters say growing Of the 41 states with income taxes, by his company because of the ical campaign.

Studley, president and CEO of the income disparities and declining pub33 have a progressive structure. Federal site’s proximity to a church, Organizers behind the Fair Tax Michigan Chamber of Commerce. lic services have shifted public opinion. income tax also follows a graduated even though the company had Michigan campaign, which was For years, the Chamber has opposed The Fair Tax Michigan plan would raise model. a waiver from the church. announced in late February, are efforts in the state Legislature for a See INCOME TAX on page 3 $1.5 billion in additional revenue for See STATUS QUO on page 8

Former Muskegon coal plant to get new owners

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Panel: Rural broadband development should mirror electric grid build-out

Managed service providers play key advisory role in shift to work-from-home

By KATE CARLSON | MiBiz kcarlson@mibiz.com

W

est Michigan cities are examining new policies to expand affordable housing and create a supportive environment for developers as studies show an ongoing need for more units.

The renewed discussions this year among city officials in Grand Rapids, Holland, Kalamazoo and Grand Haven come as the COVID-19 pandemic has driven high unemployment and financial strain, raising concern among officials who say it could exacerbate the need for affordable housing.

Cities are attacking the problem in a variety of ways, including revamping outdated zoning codes to make it easier for developers to include affordability in housing developments, as well as prioritizing affordable or mixed-use housing for incentive tools such as brownfield credits.

Despite the effort being made to add more housing stock at varying price points, housing advocates and local planners are still confronting a stigma associated with — and community opposition

to — such housing, including high-density rentals.

The Lansing-based Michigan Municipal League has stepped in to help local governments solve their housing puzzle. The MML plans to issue guidance in early 2021 on code reform that can help increase affordable housing units.

That includes incentivizing affordable housing developers through tools like brownfield credits, streamlining zoning codes and a refined application process.

“What happens is you have developers sinking a lot of money into the process and it makes it harder for them to build housing developments affordably,” said MML Policy Research Director Shanna Draheim.

Meanwhile, studies continue to show a need for affordable housing throughout the region. A recent Housing Next study shows at least 5,340 more rental units and 3,548 more owner-occupied units are needed in the next five years in Grand Rapids to meet housing demand. Housing North, a nonprofit that spans 10 counties in the northwestern Lower Peninsula, showed last year the region would need about See HOUSING on page 11

INSIDE:

Mergers & Acquisitions SEE PAGE 16

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Construction industry adapts to new safety protocols

Michigan Chamber prepares for ‘war’ over graduated income tax proposal

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Leaders push for action to raise wages PAGE 21

INSIDE:

3.29.2021

Utilities & Energy M&A Roundtable

Contract Deadline: 3.17.2021

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Drinking Economy Craft Beverage Roundtable Contract Deadline: 3.31.2021

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5.10.2021

Diversity/Equity/Inclusion Commercial Lending Quarterly: Commercial Real Estate Lending Update Contract Deadline: 4.28.2021

5.24.2021

Food Systems

Business of Senior Care

Contract Deadline: 5.12.2021

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WE STRONGLY SUPPORT LINE 5 AND ITS CONTINUED OPERATION. We back Line 5, because Line 5 heats our homes, powers our worksites, and keeps energy affordable across Michigan.

Line 5 means jobs. Tens-of-thousands of them.

During Michigan’s recovery from COVID-19, those jobs are more important than ever.

Union jobs. Manufacturing jobs. Chemistry jobs.

Service industry jobs. Small business jobs.

Make no mistake – shutting down Line 5 means shutting down Michigan businesses, higher energy prices and lower tax revenues that pay for our schools and roads.

Instead, let’s build the Great Lakes Tunnel – a job-creating project that gets Line 5 out of the water and buries it safely, deep below the lakebed where the risk of a spill into the Straits is virtually zero.

We’re standing together to protect Michigan’s energy supply.

To protect Michigan’s environment. To protect Michigan jobs.

Join us.

greatlakesmichiganjobs.com/line5

Consumer Energy Alliance Detroit Regional Chamber Jay Dee Contractors Lake Superior Community Partnership Lansing Regional Chamber of Commerce LMS Liquid Meter Services, Inc Michigan Aggregates Association Michigan Association of Convenience Stores Michigan Building and Construction Trades Council Michigan Chamber of Commerce Michigan Chemistry Council Michigan Laborers District Council

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JANUARY 18, 2021 / MiBiz

Michigan Laborers-Employers Cooperation and Education Trust Michigan Manufacturers Association Michigan Oil and Gas Association Michigan Petroleum Association Michigan Pipe Trades Association Michigan Propane Gas Association Midland Business Alliance National Federation of Independent Business Operating Engineers 324 Pipeliners Union 798 – United Association Saginaw County Chamber of Commerce Small Business Association of Michigan

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