MiBiz November 9, 2020 print edition by MiBiz

Construction firms report project delays, high materials costs

Michigan State Land Bank Authority leader talks new priorities

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Spectrum Health plans $72M projects

Hundreds apply for incentive program luring full-time residents to SW Michigan

New facilities to support rehabilitation, nursing home care and outpatient orthopedic surgeries in Kent County

By KATE CARLSON | MiBiz kcarlson@mibiz.com BENTON HARBOR — Berrien County economic development officials received more than 200 applications in the first week of a new program offering up to $15,000 and other incentives for people to move to the Southwest Michigan region. The Move to Michigan program, which the county’s economic development organization Cornerstone Alliance launched in the last week of October, set an initial goal of attracting 25 new households to the county. The program is pitched as a way to lure pandemic-weary Chicago residents with more space and affordable property amid a mass work-from-home shift. As of Nov. 2, Cornerstone received 205 applications from residents in 18 states. About half of the applicants are from Chicago. “We talk a lot about incentives for companies (to move to the area) and then we talked about this approach that would instead recruit people,” said Cornerstone Alliance President Rob Cleveland. “At its core, economic development is about people. That’s ultimately how you build a community.” The reception of the proCleveland gram has been “overwhelmingly positive” from community leaders and investors in Cornerstone Alliance, Cleveland said. The region has struggled for years with Berrien County’s aging population, said Dick Stauffer, supervisor of Lincoln Charter Township. Berrien County’s population declined 2.2 percent to 156,808 people from 2010 to 2019, according to U.S. Census data. See MOVE TO MICHIGAN on page 3

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

Perrigo’s nearly $44.8 million headquarters planned along Grand Rapids’ Medical Mile will help build relationships with Michigan State University, officials say. COURTESY RENDERING

MSU officials see close alignment with Perrigo’s planned GR headquarters By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — Perrigo Co. plc’s planned North America headquarters in downtown Grand Rapids adds a major new player to the Medical Mile academic, research and health care cluster as well as a potential new partner for Michigan State University. Under CEO Murray Kessler, Perrigo’s strategic focus on wellness and affordable “self-care” consumer products aligns “so

much with what our mission is,” said Norman Beauchamp, MSU’s executive vice president for health sciences. MSU and Perrigo are already preliminarily discussing potential collaborations and partnerships, Beauchamp said. Perrigo represents the kind of private sector partner that MSU has sought for years as it built a broader research base at the downtown Grand Rapids Innovation Park, he said. “It was exactly consistent with our vision of who we wanted

to bring to the Innovation Park,” Beauchamp said. “We couldn’t have found a company more aligned with what we’re trying to do.” Beauchamp lists a number of potential areas of collaboration between MSU and Perrigo, such as accelerating discovery and the process to bring innovations to market. He envisions combining the university’s “discovery-driven culture with the kind of drive to innovate and bring-to-the-customer culture of industry.” See PERRIGO on page 6

GRAND RAPIDS — Spectrum Health plans to develop two new facilities for rehabilitation and nursing home care in Grand Rapids, plus a third center specializing in outpatient orthopedic surgeries. The health system plans two new rehab and nursing centers with a total construction budget of $55 million for sites on Leffingwell Avenue south of Leonard Street and on Fuller Avenue two blocks north of Spectrum’s existing Rehabilitation and Nursing Center. The 200 rehab and nursing beds planned between the two locations will replace 250 beds now housed in the aging Kent Community Hospital that Spectrum Health acquired from Kent County in the 1990s. In planning the projects over several years, Spectrum Health opted to develop two smaller rehab and nursing centers rather than a larger single facility, said Chad Tuttle, Spectrum’s senior vice president for hospital and post acute operations. “Spectrum Health is absolutely committed to providing the highest quality of care to these patients,” Tuttle said. “The reality is that for nursing homes to provide a home-like environment, size works against you. We realized we can provide an even better experience of care for our patients if we do two smaller facilities as opposed to one large facility.” Patient areas at Spectrum’s existing Rehab See SPECTRUM HEALTH on page 18

Recreational cannabis poised for major growth in Grand Rapids Up to 28 locations could seek approval for adultuse sales in city By ANDY BALASKOVITZ and KATE CARLSON | MiBiz abalaskovitz@mibiz.com, kcarlson@mibiz.com GRAND RAPIDS — The retail market for recreational cannabis is primed for significant growth in the city of Grand Rapids as local officials prepare to consider more than a dozen

business applications in the coming months. While one recreational dispensary has been operating since Oct. 23, three others have special land use approval to move forward. Two more, which are already operating as medical cannabis provisioning centers, are seeking approval this week from the Grand Rapids Planning Commission. All told, Grand Rapids could approve up to 28 retail recreational cannabis sites by March, city officials tell MiBiz. While industry experts say

it’s unlikely that many businesses would be operational because of market saturation and the high upfront costs of opening stores, cannabis activists nonetheless hail it as a significant advancement after criticizing the city for moving too slowly to allow retail stores. Many industry insiders believe the market activity could propel Grand Rapids as a cannabis leader in the state. “Adu lt-u s e s a le s i n Gr a nd Rapids as a whole has been a long time coming,” said John McLeod,

president of Oak Flint LLC, which seeks to open a growing, processing and retail facility in Grand Rapids. “I’m very excited for Grand Rapids to experience an actual regulated adult-use market.” Joshua Smith, supervisor of Michigan Supply and Provisions at 2741 28th St. SW, shared a similar sentiment. Michigan Supply and Provisions, which sells medical marijuana, is going before the Planning Commission for a special land use permit on Nov. 12. See CANNABIS on page 7

GR-area companies introduce health screening innovations PAGE 11

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Food Economy SEE PAGE 14

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MOVE TO MICHIGAN Continued from page 1

“It’s certainly a unique approach from an economic development standpoint and will be beneficial to the township,” Stauffer said. “Whenever you can draw new residents to your area, it’s a good thing. It is equivalent to recruiting a new company to the area.”

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How it works The Move to Michigan program seeks to attract full-time residents to Berrien County, where communities typically rely on summer tourism as an economic driver. The program offers a $15,000 grant that is forgiven in $5,000 increments over three years. Applicants are required to purchase a home for at least $200,000 within four ZIP codes — 49022, 49085, 49103 and 49127. Applicants must be considered a full-time resident and prove they have full-time employment and are working remotely for a company outside of Southwest Michigan. In addition to the cash, participants can also pick from annual rail ticket passes, various memberships and free access to co-working spaces and county parks. “This is a creative approach and I think the area has a lot to offer because of the parks and that it’s close to Lake Michigan,” Stauffer said. “And the smaller community has real character.” T he prog r a m i s f u nded by a pr ior Cornerstone real estate investment, Cleveland said. Based on the high demand that exceeds the amount of funding for the program, Cornerstone will set up a scoring system for applications. Cleveland said details of that process are still being worked out.

Following a trend T he pr og r a m l au nc he d a s S out hw e s t Michigan’s real estate market booms, attracting homebuyers looking to retreat from the Chicago area. Realtors who work in the lakeshore community told MiBiz in September that 2020 was the busiest summer they have ever seen, and believed remote working was partly the reason for many people moving to the area. Crain’s Chicago Business has reported that home sales were up about 85 percent in the region for July and August compared to the year prior. Integro Builders LLC moved its headquarters from Chicago to Southwest Michigan in Grand Junction in early October. Integro

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Cornerstone Alliance’s new Move to Michigan campaign seeks to lure full-time residents to Berrien County with $15,000 and other incentives. SOURCE: MOVETOMICHIGAN.ORG

Builders CEO Allyson Case Anderson previously told MiBiz that people have been moving from Chicago to Michigan in increasing numbers this year because they want more space and f lexibility. There is an “exodus coming from Illinois, particularly from the pandemic,” she said. The pandemic also has driven lakeshore communities like Saugatuck to focus more on attracting year-round residents as opposed to mostly relying on the summer tourism season. “Our state is getting older and its population is decreasing,” Cleveland said. “We are trying to reverse those trends. We are competing in Michigan for everything. This program was intended to give us a competitive advantage over other areas where people are trying to move.”

“It’s certainly a unique approach from an economic development standpoint and will be beneficial to the township. Whenever you can draw new residents to your area, it’s a good thing. It is equivalent to recruiting a new company to the area.” — DICK STAUFFER Supervisor, Lincoln Charter Township

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MANUFACTURING

Pandemic poised to usher in automation industry boom By JAYSON BUSSA | MiBiz jbussa@mibiz.com

aramount Tool Co. Inc. in Holland has been in business since 1967, giving its team a front-row seat to the automation industry’s evolution over the last five decades. As a custom machine builder that primarily works with automotive clients but also services the furniture, agriculture, heavy equipment and aerospace industries, Paramount is staying busy facilitating shifting customer demands against the backdrop of the COVID-19 pandemic. “Historically, (automation) really happens in bursts — it’s not a steady, constant stream,” s a i d Pa r a m o u n t To o l Sales Director Joe Carlisle. “Usually, that’s indicative of an economic shock or something where humans become more expensive. It’s just kind of the typical nature of what we do. … I think the Carlisle impetus for change is usually a shock to the system.” That shock has been one that manufacturers throughout West Michigan have contended with for the last eight months, when the emergence of COVID-19 brought some segments of the industry to a complete standstill Ermatinger while others had to shed

Officials at Holland-based Paramount Tool say advances in automation often come from a “shock to the system,” such as the COVID-19 pandemic. COURTESY PHOTO

portions of its workforce either temporarily or permanently. Manufacturers are turning to automation to overcome the negative symptoms that the pandemic has inflicted on their companies — and local automation businesses are benefiting as a result. In fact, not only are automation companies tasked with meeting the short-term needs of their clients, but some also suggest this might usher in an automation boom with long-term effects.

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Opportunity in crisis Automation was evolving at a steady clip even before the pandemic. A report from the Federal Reserve Bank of Philadelphia revealed that the U.S. had 0.49 robots per 1,000 workers in 1995, which more than tripled to 1.79 robots per 1,000 workers in 2017. Industry executives expect to see a comparable boom out of the COVID-19 pandemic that came with the recession around 2008 and 2009. “It’s an economic crisis that drives a lot of this,” Carlisle said. “(In 2009) companies started to look at different avenues to do things and that was one of those big spikes. Here we are in 2020, a decade later, we have another one of these — we’ll call it an opportunity. It’s economically driven.” During the pandemic, automation companies have found a more captive audience among clients and potential clients. Many manufacturing executives have used the slow period to reassess operations and general efficiency. It’s because of this opportunity that Paramount Tool ramped up its marketing efforts. “We ended up doubling down on our marketing campaign. For us, it ended up being really positive,” Carlisle said. “Everyone was working from home. We had a captive audience in the sense that they didn’t have all these projects going on. “For us, that marketing piece got us in front of a lot of new people, being able to talk to them and work them through new technology — stuff they really hadn’t looked at in the past.”

COVID hurdles Workforce shortages — a challenge before the pandemic — became even more pressing for manufacturers, which found themselves looking to fill the gaps with automation. “(The boom in automation) has been driven by people, primarily the lack of getting people,” said Mark Ermatinger, CEO of Zeeland-based Industrial Control Service Inc., which provides automation solutions, products and training. “They still have a labor problem.” He cited a plastics company that reduced its footprint and staff after losing some automotive business. “Now they’re busy and it’s hard to get people to come back,” he said. Ermatinger, who is also the founder of the Advanced Manufacturing Expo, said he has seen a definite rise in automation demand that’s concentrated in large, capital equipment with high ROI. He added that most manufacturers are simply looking to bolster operational efficiency rather than lean on automation to enhance the quality of their products.

“The better the times are, the higher the expectations for quality control,” Ermatinger said. “That’s because (clients) can buy a part from many different sources, so the pressure to make those parts consistently is quite high — competition is quite high. For most (manufacturers), it hasn’t been a quality issue. The pandemic has slowed everyone down, which means the desire to automate for quality purposes has decreased. Right now, they need to be efficient.”

Erasing barriers As manufacturers turn to automation as a lifeline, far fewer barriers exist to get there than once thought. Joe Campbell, Universal Robots’ senior manager of applications development in North America, said sticker shock and a lack of understanding were typical objections to automation, specifically the collaborative robot arms Universal produces. The company is based in Denmark but operates a facility in Ann Arbor. With lower prices and a greater consciousness of the ROI, Campbell is finding that a whole new crop of manufacturers is embracing some form of automation. “We’re selling to companies that I never would have made a sales call on in my 40-year career,” Campbell said. “They’re too small. You have a 10to 15-man shop and the probability that they’re going to buy a quarter-million-dollar robot cell is next to nothing. It just doesn’t happen.” Campbell said Universal Robots helps ease the learning curve through a free online tutorial program called the UR Academy, which trains users in the fundamentals of operating and programming cobots. The benefit of a cobot over traditional automation is that it is flexible and can be redeployed. Traditional automation is bolted to the ground. During the pandemic, Campbell said Universal Robots has seen “exceedingly high” interest among manufacturers. He dispelled another common misconception that automation requires an all-or-nothing approach. “We tell our clients that you don’t have to solve a million dollar problem — maybe start with a $75,000 problem first,” Campbell said. “We use this phrase a lot: We believe our cobots are ‘incremental automation.’” With the pandemic inducing a quicker shift to automation, Ermatinger is optimistic about the manufacturing sector. He sees the industry rebounding to pre-pandemic levels over the next couple of years. “After 2022, you’re going to see a good solid eight years of the roaring ’20s again,” he said. “In preparation for January forward, we see automation as continual growth and high growth.” Visit www.mibiz.com

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Navigating the uncertainty of 2020: How small to mid-size manufacturers can survive and thrive through crisis This year has brought unprecedented challenges to West Michigan’s manufacturers. From closures in the spring and pivoting to the production of essential supplies, to restarting operations and adjusting to the “new normal”, local manufacturers are in a state of flux. It can be difficult to know where to go from here, particularly when the future is uncertain. The Michigan Manufacturing Technology Center – West (The Center-West) has several decades of experience providing personalized consulting services to small and mid-sized manufacturers, oftentimes guiding them through various crises. This work has ensured our region’s manufacturers remain strong and globally competitive. When facing tumultuous circumstances, many businesses find themselves in survival mode and feel they’re on an island. This is where The Center-West can help. The team has identified several common challenges resulting from the pandemic and created custom solutions to navigate them successfully. One of those companies was Jireh Metal Products, a local family-owned business who is a direct supplier to OEMs and other Tier 1 suppliers. The pandemic and associated Executive Orders meant Jireh Metal could only fulfill essential business, which resulted in declining sales. They immediately recognized the need for assistance and contacted The Center-West. The Center-West introduced Jireh Metal to the PIVOT 2020 Toolkit, which allowed them to outline their industry’s challenges and develop scenarios which impacted how they responded to situations as they became reality. They also relied on their membership in The Right Place | The Center-

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West Manufacturer’s Council to develop relationships with other manufacturers and share best practices. The results speak for themselves: Jireh Metal has done what they needed to do to keep their people safe at work and retain key talent while also growing into new markets. As business is rebounding, they are hiring. Josh Bischoff, Jireh Metal’s Director of Operations and Strategy, credits The Center-West’s support for their success. “Through our engagement, we have been able to improve many areas of our operation. With support, we outlined our industry challenges and developed multiple scenarios that would allow us options as we monitored the business and industry. Many of those scenarios then became reality, which we navigated with more confidence and awareness through the focused sessions and discussions within our team.” Jireh Metal’s approach to tackling pandemic-related challenges allowed them to weather the storm, while many local manufacturers are still working on similar issues. If your company is facing any of the common challenges below, The Center-West team can guide you forward. Challenge 1: Difficulty planning for an uncertain future During this time of uncertainty it’s difficult to plan past today, let alone prepare for the next opportunity. That’s why The Center-West developed the PIVOT 2020 Tool Kit, designed to offer methodical scenario planning and explore options to deploy limited resources. The team is also offering Post COVID-19 Operational Planning, which includes operational development or review, workplace evaluation, and risk assessment.

Challenge 2: Declining sales Today, perhaps more than ever, small to mid-sized manufacturers are faced with cashflow management challenges. The Cash Flow Analysis Tool evaluates payroll, accounts receivable, and accounts payable with concise data and not emotion. This helps all stakeholders have shared investment and easily see how the forecast affects them. Challenge 3: Lack of leadership development The recent crises have been a pressure-test for leadership and culture as new values and perceptions form. Several user groups have been created to develop leaders and increase manufacturing competitiveness. Join industry peers in learning best practices – and how to avoid costly mistakes. There are numerous user groups to fit your needs, including a Mid-level Manager Group, Plant Floor Manager Group, Shop Floor Lean, and more. While these are some of the common challenges local manufacturers are facing, it’s certainly not an exhaustive list. The Center-West is here to offer personalized guidance for any trial you may be facing. Contact us at thecenter@rightplace.org or visit our website to get your manufacturing operations back on track.

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MiBiz / NOVEMBER 9, 2020

MANUFACTURING PERRIGO

Continued from page 1 Perrigo’s consumer focus can help MSU researchers better understand: “What is really needed by people? What is missing in the market?” Beauchamp said. “So, if a big focus of MSU’s discovery is how do we make and come up with affordable solutions (in health care), and Perrigo’s is to distribute those, you can see how it actually comes together in a wonderful way to hasten the pace of bringing health to people faster,” he said. “It’ll increase product viability and decrease product cycle time by connecting like that.” Beauchamp also sees potential alignment with MSU’s biomedical engineering department that’s developing smart sensors used in homes to monitor patients’ medical condition and transmit data to care providers.

Logistics and supply chain management also could become another area of collaboration, he said. Perrigo’s nearly $44.8 million, 63,550-squarefoot facility will rise at 430 Monroe Ave. NW in MSU’s downtown Grand Rapids Innovation Park. Rockford Construction Co. will build the facility. Perrigo, which also considered the Chicago area and southeast Florida for the North American headquarters, received a $2 million state grant from the Michigan Strategic Fund to offset higher costs of building in the state. Perrigo (NYSE: PRGO) expects the project will create 170 jobs. In addition to the state grant, the city of Grand Rapids will consider a $1.5 million property tax abatement for the company.

‘Promising collaborations’ As Perrigo proceeds with plans for the new North American headquarters, the next step for

possible collaborations with MSU is to identify goals and potential mutual benefits and create a common vision, Beauchamp said. “We need to look at the strengths in the university that could bring value in terms of innovation to Perrigo, and what areas of work that Perrigo has that it’s compelling for us to connect to,” Beauchamp said. “It’s really going to be cultivating those personal ties that are going to lead to the most creative and promising collaborations.” Beauchamp also described “very positive conversations” so far with Ranir LLC, a Grand Rapids-based producer of oral care products that Perrigo acquired in 2019. In an interview with MiBiz, Kessler said he believes the company’s new North American headquarters will fit in neatly with Grand Rapids’ burgeoning health care and research sector along the Medical Mile. “In my mind, (Medical Mile) could become the Silicon Valley of self-care,” Kessler said. “It’s

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“It was exactly consistent with our vision of who we wanted to bring to the Innovation Park. We couldn’t have found a company more aligned with what we’re trying to do.” — NORMAN BEAUCHAMP Vice President of Health Sciences, Michigan State University

a huge opportunity with like-minded people that all see the value in health care and wellness.” The headquarters plan comes two years after Kessler became CEO and started Perrigo’s transformation into a self-care company. Kessler said the Medical Mile is a modernized environment that will help it recruit diverse talent and help continue its shift to self-care products. “Over the past two years, we have changed almost everything at Perrigo across the system,” Kessler said. “This is another key component of that (to) reshape ourselves and create that new energy.” Kessler said Grand Rapids offers talent-attraction benefits compared to its current North American headquarters in rural Allegan. Perrigo is domiciled in Dublin, Ireland, but is run from its existing offices in Allegan, where the company was founded more than 130 years ago. Meanwhile, the company’s new headquarters would remain relatively close to its facility in Holland Township, where it invested $13.6 million in a 66,000-square-foot expansion earlier this year. “People that are coming and helping to reconfigure the company would all stay in Grand Rapids,” Kessler said. “Grand Rapids has already been effective in drawing people.” Kessler lived in Grand Rapids briefly and says he was surprised by its amenities and nightlife. “Grand Rapids doesn’t jump off the page at me when I’m thinking of metro areas, but it has everything,” Kessler said. “We were going to see Broadway shows, the symphony, opera, and going to great restaurants. That creates energy and a greater opportunity.” Grand Rapids’ amenities and affordable cost of living have also helped MSU attract research talent from places like Stanford University, Harvard University and New York, Beauchamp said. “It’s got such an engaging environment from the arts, sports, the outdoors and the schools, and then you look at beautiful facilities,” Beauchamp said. “It almost gives us an unfair (advantage) on the folks on the coasts.” MiBiz Staff Writer Kate Carlson contributed reporting to this story.

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REAL ESTATE & DEVELOPMENT CANNABIS

Continued from page 1 Smith said the Grand Rapids market has attracted the attention of executives at parent company Ascend Wellness Holdings LLC, which operates dispensaries across the country. Corporate officials are “excited about what’s happening in Grand Rapids,” Smith said. “They think Grand Rapids is going to be one of the biggest markets in Michigan, and they think Michigan itself will be a big market for cannabis sales.” Green Skies - Healing Tree LLC, which does business as 3Fifteen and operates medical marijuana dispensaries on Plainfield Avenue and Division Avenue, wants to open as many as seven recreational stores in Grand Rapids. The properties are in various stages of redevelopment and some are being prioritized to open before others, said Green Skies spokesperson Andrea Hendricks. The company plans to open its next store at 330 Ann St. NW. Although Green Skies hopes to open several retail stores in Grand Rapids, “once all of those retailers are up and operating, we’re going to see saturation,” Hendricks said. “I do anticipate a lot of these will take a while to open.”

Regulatory process For cannabis companies, local land use approval effectively serves as a green light for stores to open, signaling crucial local approval for a state-issued license to operate. Instead of setting a limit on the number of recreational cannabis dispensaries that can operate in the city, Grand Rapids has taken a land use-based approach, said Grand Rapids Planning Director Kristin Turkelson. Only certain land uses are permitted to have cannabis facilities, and the number of dispensaries is further limited by separation distances required between facilities and sensitive uses, such as schools and places of worship. Retail applicants have two paths for approval in Grand Rapids. A retailer colocated with growing or processing can ask for an administrative review, which doesn’t require approval from the Planning Commission. Standalone retailers require Planning Commission approval before applying for a state license. The Nov. 12 Planning Commission meeting is the first to consider granting special land use approval to standalone dispensaries to start selling recreational marijuana. The city is accepting adult-use applications in different rounds, and is first considering applications from medical cannabis provisioning centers that did not require a waiver from the city to open. Ten facilities fall into this category, and will be considered through mid-February 2021, Turkelson said. The Planning Commission then will start considering the next round of applications for facilities that required waivers to open. Currently, 21 standalone provisioning centers have received land use approval for medical marijuana sales. Another seven are on sites with multiple cannabis uses and can go through the administrative review process. If every existing medical provisioning center applies to sell adult-use cannabis and receives approval from the Planning Commission or planning staff, then at least 28 dispensaries could open for adult-use sales in Grand Rapids. Visit www.mibiz.com

Fluresh is the first retail recreational cannabis store in Grand Rapids. COURTESY PHOTO

“Based on what we know currently, there is very little land left for a cannabis facility to be proposed in the city,” Turkelson said. This could change, however, if a daycare, religious institution or other sensitive use closes, potentially freeing up more space for cannabis business. While it’s unclear how many recreational dispensaries may be operating by next year, the city is poised for a major shift. “As this new industry grows in our community, we are working hard to ensure that it has a positive impact in our City,” Mayor Rosalynn Bliss told MiBiz via email. “With only one recreational cannabis facility currently open, it is too early to assess the long-term impact at this time.”

Social equity Amid this growth, some cannabis advocates are also watching the city’s social equity initiative to ensure diversity in development. So far, Five Lakes Farm LLC, which does business as Pharmhouse Wellness, is the only applicant to have its application prioritized under the equity initiative, which includes qualifiers such as diversity and equity in hiring, local ownership and whether applicants have been affected by prior cannabis convictions. “I am a local, I have lived in the city for a long time and have a history of being affected by the war on drugs and have family members with a similar experience,” said Pharmhouse owner Casey Kornoelje. “It truly is ironic. Every day I wake up and basically pinch myself because I can’t believe that what I’m doing now for a living previously put me in handcuffs.” The city also scores applications based on a Marihuana Industry Voluntary Equitable Development Agreement (MIVEDA), which prioritizes facilities on a rating system. Bliss said the process has created a “positive impact” for applications employing city residents. “The equity policy for recreational facilities is still in process, so we don’t have a report — yet our intent is that it will be aligned with our diversity and inclusion goals,” Bliss said.

“As this new industry grows in our community, we are working hard to ensure that it has a positive impact in our City.” — MAYOR ROSALYNN BLIS City of Grand Rapids

Construction firms see project delays, high materials costs By KATE CARLSON | MiBiz kcarlson@mibiz.com

est Michigan construction firms are reporting dramatic increases in the cost of materials and project delays because of the COVID-19 pandemic, particularly in the restaurant, office and retail sectors. The combination has created an environment of uncertainty for commercial construction firms. Norm Brady, CEO of Associated Builders & Contractors Western Michigan chapter, described a “cautiously optimistic” outlook among the group’s members, even though projects are increasingly delayed. “They are happy to see the bid volume is relatively strong, although there have been some projects that have been pushed,” Brady said. “We’re going to see a real pullback in retail and hospitality, especially since we have built so many hotels over the past couple years, and office construction will be softer.” Brady Orion Construction Co. Inc. President Roger Rehkopf reports work has been “a little bit slower,” which he attributed in part to election uncertainty. “I’m tr ying to be optimistic that things will get turned around as the election wraps up,” Reh kopf sa id. “Nobody really knows if taxes are going to Rehkopf change, so hopefully people will get their confidence back when this is over. We think there are some people that will wait it out a little bit.” He noted hotels and a student housing project have been put on hold for the company. Orion also has multiple stalled commercial office projects as companies try to figure out how employees will work remotely into the future. The third-quarter vacancy rate for downtown Grand Rapids office space is 9.73 percent and 6.89 percent for the suburban market in Grand Rapids, a slight increase from the second quarter, according to a recent Colliers International report. In an October survey by Associated General Contractors of America (AGC), 75 percent of respondents reported a postponed or canceled project, up from 60 percent in August and 32 percent in June. “The pandemic is suppressing demand for new office buildings, hotels and shopping centers even while it inspires many people to build bigger homes,” AGC CEO Stephen Sandherr said in a statement. “Without new federal investments in infrastructure and other needed relief measures, commercial firms will have a hard time retaining staff or investing in new equipment and supplies.”

High materials cost Meanwhile, high and volatile construction materials costs are “just another deterrent” for developers trying to get projects off the ground this year, said Orion Construction Marketing Director Corey Bixby. Because of the lumber market’s uncertainty, suppliers are providing estimates that are only good for seven days when they would previously honor prices for a month or two, he said. “Oriented Strand Board used to sheath walls, sub floor and roof decking is especially high right now, but our suppliers are telling us that the markets will begin to equalize over the coming months,” Bixby said. “It is pushing some of our new project start dates into the winter, so we will have to adjust and make considerations for winter conditions for projects that would have been going vertical earlier this year.” Orion was seeing lumber prices spike from 24-40 percent, but the company expects to see prices trending down soon, said Rehkopf. “The reason for the shortages is plant shutdowns, and even when they opened back up, they opened with a reduced staff,” Rehkopf said. Hurricanes and wildfires across the U.S. this year have likely contributed to high lumber prices, Rehkopf said. These high and volatile materials costs for construction adds more uncertainty to projects. “Lumber and copper has gone up and of course we’re concerned about it for a couple reasons,” Brady said. “Mostly because when construction gets more expensive, we have less of it.”

Project spending, design pipeline Though total construction spending is growing slightly, the commercial sector continues to lag while architecture firms expect a drop in revenue in the last quarter of 2020. Construction spending in September totaled $1.41 trillion at a seasonally adjusted annual rate, a 0.3-percent increase from August and 1.5-percent higher than in September 2019, according to an Associated General Contractors of America analysis released Nov. 2. Private nonresidential construction spending declined for the third consecutive month, falling 1.5 percent from August to September. Public construction spending decreased 1.7 percent in September, the fourth monthly decline in a row. The Architecture Billings Index for September 2020 was 47, up from 40 the month prior, according to the American Institute of Architects. Indicators of work in the pipeline were more encouraging in September than August, but architecture firms reported an expected dip in revenue by an average of 1.9 percent from the third quarter to the fourth quarter of 2020, according to the AIA. Despite the setbacks, Brady still thinks commercial contractors will generally recover financially after gaining ground on project backlogs from 2019. A survey conducted by the national ABC organization indicated that in the fall of 2019, contractors had an average of nine months of work backlogged. The most recent backlog report is at about seven months. MiBiz / NOVEMBER 9, 2020

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FINANCE

UFCU to take commercial lending to ‘next level’ with Edgewater Bank acquisition By MARK SANCHEZ | MiBiz msanchez@mibiz.com ST. JOSEPH — The proposed acquisition of Edgewater Bancorp Inc. would give United Federal Credit Union greater expertise to further grow commercial lending. Commercial loans today account for about 12 percent of United Federal’s $2.42 billion loan portfolio, or more than $291.4 million. The addition of Edgewater Bank’s commercial banking operations will enable the credit union to dive even deeper into commercial lending. “We see it as a strong area of growth for us in the future,” said United Federal President and CEO Terry O’Rourke. “What they bring is expertise, decades of experience, knowledge, relationships and reputation to help us advance our own commercial lending area,” O’Rourke said. “This partnership will help us take it to the next level.” Under the deal, United Federal would acquire the assets and liabilities of Edgewater Bank. The acquisition would add to United Federal’s branch network in Berrien County, plus loan offices in Greenville and Fremont. The deal would strengthen United Federal’s market position within its home turf. Both United Federal and Edgewater are based in St. Joseph. “We’ll be a financial powerhouse here in Sponsored by: Southwest Michigan,” TCF BANK O’Rourke said. Edgewater Bancorp shareholders would receive $39.47 to $43.22 in cash consideration for each share of common stock, equating to a transaction value of $28.9 million to $31.6 million. Pending regulatory and Edgewater shareholder approvals, the companies expect the deal to close in the first half of 2021. Richard Dyer, Edgewater’s president and CEO, would become community president and lead commercial banking for United Federal in Michigan and northern Indiana.

FINANCE

Commercial lending boost The ability to grow the commercial lending side of the business and write larger business loans was among the drivers of the deal, Dyer said. Edgewater Bank has a $3 million in-house and legal cap on commercial loans. Under United Federal, the lending limit would “increase

significantly” and commercial borrowers now with the bank can access larger credits as they grow, Dyer said. “That will allow me to take care of not only existing (clients), but pick up some new businesses that I know really well but we haven’t been able to be comO’Rourke petitive because of size,” he said. “That’s a huge plus for me. It’s going to make a big difference.” Edgewater Bank has five offices in Berrien County — Bridgman, Buchanan, Coloma and two in St. Joseph — with $249.1 million in total assets and total deposits of Dyer $195.9 million as of Sept. 30. The bank has had to pass on opportunities or needed to syndicate larger commercial loan requests with other borrowers, Dyer said. “I’m running into more and more instances where as my clients are growing, they’re outpacing my legal lending limits as a smaller community bank,” Dyer said. “Now I’ll have the size and the resources. I don’t have to excuse myself out of a relationship because it’s too large for me.” Once the deal closes, bank customers can become members of the credit union. Four of the five Edgewater Bank offices will become United Federal branches. Edgewater’s Buchanan branch will close and consolidate into a nearby United Federal office.

Technology investments Another key deal driver for Edgewater was the need for banks to continually invest in costly technology, Dyer said. The steady migration toward digital banking over the years has accelerated during the COVID-19 pandemic, he said. “Technology is something that’s moving forward at a fast clip and through the pandemic it just escalated in pace. For a bank my size to keep up with changing technology, the cost of technology — both from an infrastructure and a personnel point of view — was very difficult,” Dyer said. “Through the pandemic, it just told us that technology is more and more critical, so let’s partner up with someone that does it really, really well.” Dyer cites commercial lending as one

UNITED FEDERAL CREDIT UNION

EDGEWATER BANCORP INC.

St. Joseph

Terry O’Rourke

Richard Dyer

37 (Michigan, Arkansas, Indiana, Nevada, North Carolina, Ohio)

5 (Berrien County)

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$3.25 billion

$249.1 million

Total deposits

$2.52 billion

$195.9 million

Total loans

$2.42 billion

$183.2 million

Members

177,698

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Headquarters Chief executive Offices

example of the accelerated growth of banking technologies in the pandemic. Before COVID-19, the bank rarely closed a commercial loan electronically. As “people still are slightly bashful about getting together,” the bank closed on an estimated 85 commercial loans electronically, Dyer said. “The pandemic taught us that there were a lot of different ways — a better, convenient way — to handle some of these closings, and it was more convenient for our customers,” he said. “So let’s embrace it instead of running from it.” United Federal has invested “very heavily” in banking technology in the last three years, and “that will benefit Edgewater and its customers,” O’Rourke said. One of the largest credit unions based in Michigan, United Federal has more than 177,000 members and 37 offices across the state — with nine in Southwest Michigan — as well as in Arkansas, Indiana, Nevada, North Carolina and Ohio. As of Sept. 30, the credit union had $3.25 billion in total assets, $2.52 billion in total deposits, and $2.42 billion in total loans (including $291.4 million in commercial loans), according to a quarterly financial report to the National Credit Union Administration.

Community-driven deal The deal between Edgewater Bank and United Federal took root as O’Rourke and Dyer — who have known each other and worked in the same market for years — began casually talking about it a year ago. O’Rourke described it as “what-if” conversations focused on opportunities and challenges for both institutions. Over time, the conversation evolved and the two CEOs began talking about bringing the bank and credit union together rather than continuing to compete in the Berrien County market they share. “The more we talked, the more we realized that through this partnership we could leverage each other’s strengths and areas of expertise,” said O’Rourke, who described the deal as “all about the community.” “We both wanted to fortify that real local focus,” he said. “Together we can do more for the financial well being of everyone that calls Southwest Michigan home.”

Attorney Michael Bell of Honigman LLP, who specializes in credit union acquisitions of community banks, and Charley McQueen with McQueen Financial Advisors Inc. advised United Federal on the transaction. Edgewater Bank was advised by Luse Gorman PC and Donnelly Penman & Partners Inc.

“The more we talked, the more we realized that through this partnership we could leverage each other’s strengths and areas of expertise.” — TERRY O’ROURKE President and CEO, United Federal Credit Union

The United Federal and Edgewater deal is the second this year involving a large credit union’s acquisition of a smaller community bank. South Bend, Ind.-based Teachers Credit Union at mid-year acquired New Buffalo Bancorp Inc., the parent company of New Buffalo Savings Bank. The acquisition gave the $3.88 billion (assets) Teachers Credit Union three offices in Berrien County to go with a branch in Niles to serve the Michiana market and customers living and working on either side of the state line. New Buffalo Bancorp said Oct. 28 that directors approved a distribution of $26.25 to shareholders under a liquidation plan they approved a year ago. In Hastings, Grand Rapids-based Mercantile Bank Corp. plans to sell a branch office to Lake Trust Credit Union as part of an ongoing initiative to shrink its office footprint. The deal with the Brighton-based Lake Trust Credit Union should close in early 2021 and includes the 4,300-square-foot office on State Highway 43 and about $16 million in deposits. Lake Trust will relocate an existing Hastings branch on North Church Road after remodeling the former Mercantile office.

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Low Availability Spurring Change in West Michigan’s Industrial and Manufacturing Spaces

espite all the challenges of 2020, West Michigan continues to see growth in the industrial/manufacturing segment and a lack of available inventory for businesses looking for space to meet their current and future needs.

square feet of office space in the front. However, as companies have opportunities to reimagine their space, buildings will become more high-tech and open with flexible, configurable spaces to meet the businesses’ changing needs.

Wyser Innovative Products, professionals in laser cutting, manufacturing, and fabrication, walked this very road several months ago. The company was experiencing fast growth and needed more space. Rather than seeking out an existing facility, they chose to partner with developers on the construction of a new building where they had a say in the design and could eventually attain full ownership.

“Finding space for an industrial/manufacturing company used to be about finding the right sized box. Now, it’s about much more. Companies are looking for space that is customized for their unique operations and optimized for efficiency. Businesses are also recognizing, now more than ever, the impact that space has on individual performance and team synergy. As a result, industrial and manufacturing buildings are becoming highly technical and specialized in ways we have never seen before.” ~Ty Hallock

“When we first began to evaluate our options, there wasn’t much available, and quite frankly, there still isn’t. If we had chosen to move operations to an existing building, we would have had to make too many compromises.” ~John Kyser, Owner With a lack of existing inventory, and the need for space to accommodate companies experiencing growth, we are seeing a shift in the overall design, layout, and features typically found in industrial buildings. Looking ahead, we anticipate more companies will require open, flexible, energy efficient workspaces, as well as space that allows them to consolidate all business functions into one location. Historically, industrial and manufacturing structures have looked pretty much the same – buildings consisting of four walls, a few overhead and drive-in doors, warehouse/ manufacturing areas which are broken up by supporting columns and a couple hundred

NOVEMBER 9, 2020 / MiBiz

New industrial/manufacturing spaces are moving to include: • LED Lighting: Provides greater energy efficiency that is more cost effective and better for the environment. • Tall Ceilings: On average, five to ten feet taller than in the past. This extra height feels less restrictive and offers more room to operate (i.e. large machinery). • High-End Finishes: Custom glass, glazing, and metal panels, as well as varied roof lines and changes in parapets all contribute to a more attractive space that employees enjoy working in. • Increased Column Spacing: A critical structural support in these types of facilities,

columns can limit flexibility and function. Newer buildings have been redesigned to require fewer columns allowing for open space and flexibility. • Customized Layouts: Unlike the “cookie-cutter” facilities of the past, which required companies to forcefit their operations into the standard space provided, buildings are now being designed according to the specific operations of each business. • Space for Growth: Constructing from scratch allows companies to build according to their long-term business goals, which often includes adding space for future expansion. • Building to Own: Business owners are taking advantage of the opportunity to invest in their future by structuring agreements that result in part or full building ownership. Developers are seeing the benefits of this new building model, too; however, they are discovering that these new features aren’t as easily incorporated into traditional steel structures preferred in the past. As a result, we are starting to see more precast buildings, like the new, multi-tenant, industrial/manufacturing development, constructed by First Companies, along 68th Street. Constructed completely

of precast panels, this building (with a second like it on the way) is well insulated and incorporates LED lights making it highly energy efficient. The concrete panels, expertly designed by Kerkstra Precast, provide tall ceilings and require only one row of wellspaced support columns giving its tenants plenty of open space for flexible layouts. “I have seen a number of large, national developers move towards total precast structures as it provides increased flexibility and energy efficiency, making it a better longterm investment. The number of total precast buildings isn’t as concentrated in the West Michigan area just yet, but given we are able to achieve a heightened level of efficiency and specialization, it’s only a matter of time. This is certainly a trend worth keeping an eye on.” ~Greg Kerkstra, Owner, Kerkstra Precast

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SMALL BIZ

Pandemic drives health screening innovation for GR-area companies By JAYSON BUSSA and MARK SANCHEZ | MiBiz jbussa@mibiz.com, msanchez@mibiz.com

Efficiency driving innovation

In a survey conducted this summer by Menlo Park, Calif.-based consulting hen Jeanne Rathbun and firm Robert Half International Inc. of her team at Criterion more than 2,800 senior managers in 29 Manufacturing Solutions large cities nationwide where compaInc. noticed a growing nies employ at least 20 people, more need for health screenings to safely than one-quarter of respondents said bring employees back to work, they their firm launched a new product or leveraged decades of experience in service during the pandemic. custom automation to develop a more In addition to Criterion, a medical streamlined solution. staffing firm in Grand Rapids devel“We started to see the picture — oped a new mobile app for employees hand screening and using touchless to do a daily health screening, which thermometers — and we saw that was started in the spring. For both compagoing to be a problem for people to try nies, the innovation was driven by the to do it all manually,” said Rathbun, need for an efficient way to perform president and CEO of Comstock Parkdaily employee screenings. based Criterion. “At that Diversified Medical point, we started talkStaffing LLC received ing about whether we referrals and requests could provide a better last spring from employsolution.” ers that were reopenSponsored by: Criterion’s Touchless ing and needed staff to SMALL BUSINESS Entry Screening kiosk screen employees and ASSOCIATION OF MICHIGAN was the end result of take temperatures as t he compa ny ’s pu rthey arrived at work, suits. It’s an all-in-one President Charlie Ferro digital kiosk allowing people to scan said. After a couple of weeks working in with an identification card, take with paper forms, Ferro decided: “I a temperature check and answer didn’t like the product we were delivapplicable health-related questions ering. It seems messy and it seems like — all without physically touching we can add a lot of more value to what the device. we were charging clients.” If a person does not meet the speFerro reached out to Mike Kunzler cific requirements for entry, the sys— managing partner of Grand Rapids tem immediately emails an alert to technology company The C2 Group designated staff members to inform — for help developing a wellness app them of the failed test. Once a person employers can use for daily employee becomes familiar with the kiosk and screenings. its daily prompts, a thorough COVIDThe two created a new entity 19 check-in can be completed in less around the Portico app suite they’re than 10 seconds. now marketing to employers as a betRathbun said Criterion is develter way to manage daily employee oping and tweaking the system as the screenings, track results and meet company receives feedback from its state and federal requirements. clients. Employees can answer health Criterion’s new kiosk is just one screening questions before arriving of many examples of how compaat work each day, leaving only a quick nies have quickly pivoted during temperature check before they go in, the COVID-19 pandemic to bring an Ferro said. The Portico app was “born innovation to market and address an out of a need, and we needed to make emerging need. it more efficient,” he said.

SMALL BIZ NEWS

“Essentially, we systemized the process of checking somebody in,” he said. “If you’re trying to get a thousand people in the door at 9 a.m. and can take this from a three-minute to a 30-second process, that makes a big difference.” The app automatically emails supervisors when an employee has a high temperature or reports symptoms. It also allows managers to ensure employees have done their daily screening. The automatic reporting alleviates the potential for missing a person with possible symptoms, and a potential outbreak, because the person performing screenings didn’t report it or supervisors forgot to check the record that day. “Now it’s becoming pretty important for employers to know what’s happening and be able to report where a breakout happened,” Ferro said. “Was there a little flare up over in this part of the production facility so they can clamp down on that?” The app also can help an employer better meet federal privacy regulations by avoiding “personally identifiable health information sitting in a paper folder in your entryway,” said Chris Singel, product development lead for Portico. “Well, that’s not great and probably doesn’t meet HIPAA rules.”

Finding customers West Michigan manufacturers and health care providers such as longterm care facilities are early targets for selling app subscriptions. The app is “super flexible” and readily updated to add new features or customize questions, Ferro said. Companies also can use the app for screening clients or other visitors to facilities. At Criterion, the company’s work in custom automation meant that it already had an extensive network of clients to help test the product. The company started beta testing the kiosk in July and spent three months combing through feedback and finding ways to make improvements.

The development of Criterion Manufacturing Solutions’ health screening kiosk was driven by the pandemic. COURTESY PHOTO “It has been very well received,” Rathbun said. “Just yesterday, two companies that had a unit said they needed a second unit. … Almost every place that we put a demo unit, they purchased a unit.” One pa i n poi nt c ompa n ies are encountering when checking employees into a building per CDC and state regulations is that most temperature scanners are ineffective when placed outdoors. However, Rathbun said Criterion’s latest innovation is able to operate outdoors. When the COVID-19 pandemic subsides and companies are no longer tasked w it h conduct ing

mandatory health screenings on employees, Rathbun said the touchless approach to answering a questionnaire can be used for other applications, giving the kiosk some long-term stay ing power in the marketplace. “I think the biggest thing we offer that gives a lot of versatility of the product is the touchless interface,” Rathbun said. “We’ve had discussions with several HR representatives that said even if we didn’t have COVID, we might put this out for employee surveys. … There are a lot of different applications for that very fast, touchless methodology.”

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MiBiz / NOVEMBER 9, 2020

SMALL BIZ: COPING WITH COVID-19

Lawmakers consider bills to bolster mental health care access By MARK SANCHEZ | MiBiz msanchez@mibiz.com

gainst the backdrop of what behavioral health experts say is a worsening crisis in the COVID-19 pandemic, state lawmakers are weighing a number of bills to increase access to mental health care in Michigan. Bills pending in Lansing would require Medicaid to reimburse care providers treating alcohol use disorder, allow for temporary crisis units to treat patients, and enter Michigan into a multi-state consortium allowing psychologists to treat patients who are out of state via telehealth. Another would allow advanced practice professionals — physician assistants, certified nurse practitioners and certified clinical nurse specialists — to conduct patient mental health exams and issue a certification needed to admit a patient to an inpatient psych unit. The bill, S.B. 826, would bring Michigan’s Mental Health Code that dates back to 1974 in line with the Public Health Code so advanced practice professionals can practice at the same scope in mental health as they do in medical care. “Over the past four decades, advanced practice registered nurses such as nurse practitioners and clinical nurse specialists have proven that they can improve the access, cost, and quality in the delivery of mental health services,” Margaret Keeler, a nurse practitioner in Lansing, said in Oct. 13 testimony to lawmakers. “The inclusion of nurse practitioners and clinical nurse

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specialists in Michigan’s Mental Health Code will positively impact the provision of comprehensive services for people with mental illness.” The legislation offers one way to address a shortage of mental health professionals in the state during a crisis “which has only been stressed further during this pandemic,” said bill sponsor Sen. Curt VanderWall, R-Ludington. The state Senate in late September voted unanimously to adopt the legislation and sent it for consideration in the House. The House Health Policy Committee held its first hearing on the bill last month.

‘You could not pass this bill fast enough’ Legislators are considering S.B. 826 and other bills as incidence rates of mental illness and substance use increase sharply in the pandemic. Bret Jackson, president of the Economic Alliance for Michigan, considers rising incidence rates as “the second wave of the COVID

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crisis, which is the mental health crisis that we’re facing.” Jackson cited data showing addiction cases in Michigan increased 40 percent since February, post-traumatic stress disorder cases grew 50 percent, social anxiety disorder cases increased 80 percent, general anxiety disorder cases doubled, and depression cases grew 140 percent. “Our health care system had a shortage of professionals prior to COVID and today the system is simply underwater,” Jackson told the Health Policy Committee. “You could not pass this bill fast enough.” Jackson told MiBiz that he’s hopeful the committee and full House will adopt the bill in the lame duck legislative session. In other legislation, the House Health Policy Committee unanimously backed H.B. 5408, which would require the Michigan Department of Health and Human Services to draft fee-forservice Medicaid payments for alcohol use disorder. The bill also would allow non-physician care providers to treat alcohol use disorder and receive Medicaid reimbursement.

Providing Medicaid reimbursement for the disorder would not affect the state financially, said Dr. Cara Poland, a physician with the Spectrum Health Medical Group in Grand Rapids who is board certified in addiction medicine. She cited a U.S. Surgeon General report on substance use disorder that said the health care system saves $4 for every $1 spent on treatment. “If we treat addiction upstream, the health care system as a whole saves,” Poland said. The bill is pending in the House Ways and Means Committee.

Expanding telehealth In legislation that unanimously cleared the state Senate on Sept. 30 and is now under review by the House Health Policy Committee, Michigan would join 14 other states in a consortium in which psychologists could treat patients outside of Michigan through telehealth. Bill sponsor Sen. Peter MacGregor, R-Rockford, said the Psychology Interjurisdictional Compact “is intended to create that continuum of care for patients who are experiencing crisis while out of the home or away from the home.” In testimony to lawmakers, Dr. Judith Kovach — a Southfield psychologist representing the Michigan Psychological Association — described a situation early in the pandemic in which an elderly patient who lives in Florida part of the year started to experience anxiety attacks. “Because of the special circumstances in the pandemic, I was able to talk with them, but in

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normal circumstances I would not have been able to help them, and they are long-term patients,” Kovach said. “They don’t necessarily want to start seeing somebody new.” S.B. 758 would provide “a mechanism to set rules for future telepsychology services” and allow psychologists to practice across state lines without having to go through the process of obtaining a license in other states. “The last several months have shown us the importance of telepsychology services to assist the citizens of Michigan in accessing mental health care. Virtually all mental health services have been delivered by telephone and video sites,” Kovach said. “The results have been very effective in meeting the state’s mental health needs.” However, the bill faces opposition from the state Department of Licensing and Regulatory Affairs (LARA), which in general worries about Michigan becoming part of multi-state medical licensing compacts that are led by an independent commission. “We have broad concern about the implications of subjecting Michigan and its licensed professionals to an unelected commission that has the authority to adopt rules and policies that have the effect of law in Michigan,” said Derek Sova, an analyst in LARA’s Office of Policy and Legislative Affairs. A psychologist outside of Michigan also would not have to adhere to the same licensing requirements as professionals based in the state, Sova said. He cited examples of state law requiring professionals in each licensing cycle to complete continuing education courses in pain management and identifying human trafficking victims. “I certainly understand and appreciate the goals of this legislation, but I believe it’s worth

considering that there’s more to these compacts than just their claimed benefits,” Sova said. If a psychologist in another state wants to practice in Michigan, LARA can expedite licensing as it did early in the pandemic, Sova said.

Crisis stabilization units Under another bill working through the state Legislature, mental health care providers could set up crisis stabilization units to treat people for up to 72 hours. The units have been used in other states “to provide a clinically and cost effective crisis treatment option in secure therapeutic settings that are less intensive than hospitals,” Beverly Ryskamp, chief operating officer at mental health care agency Network180 in Grand Rapids, said in testimony to the Senate Health Policy and Human Services Committee. Quite often it takes more than a day for a person experiencing an episode to get admitted to a psychiatric facility as an inpatient, Ryskamp said. That can leave them sitting in a hospital ER, or in some cases even jail, as they await transfer, she said. “Crisis stabilization units will reduce the number of individuals who end up in jail or an emergency department when they need to be in a treatment setting,” Ryskamp said. “The focus on immediate treatment means crisis stabilization units can provide a better experience for the individual (with) fewer steps and quicker care.” The bill — H.B. 5832, sponsored by Rep. Mary Whiteford, R-Casco Township in Allegan County — passed the state House in June on a near unanimous vote. The Senate Health Policy and Human Services Committee in late September passed the bill, which now awaits action by the full Senate.

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FOCUS: FOOD ECONOMY

Resilient and agile Restaurant industry tackles a potentially long-term transformation as consumer behavior and buying patterns shift By KATE CARLSON | MiBiz kcarlson@mibiz.com

Some restaurant owners have faced a tough choice of closing temporarily instead of staying open, Estrada said. “Restaurants that are trying to fight the system or just get upset and angry — that is not going to get you anywhere,” Berg said. “The rules are not changing. I just look at what we can do as opposed to what we can’t do.” Restaurant owners must balance fixed costs like paying rent with variable costs involving staffing, menu item costs, and methods of food delivery. “We’ve looked at everything,” said Cindy Schneider, who owns San Chez Bistro and Roam by San Chez in Grand Rapids. “We realized we don’t need as many towels and linens — those deep dives we do into everything we pay for right now is front and center.”

estaurant owners have had to get creative and at times take extreme costcutting measures to keep their doors open this year, indicating the COVID19 pandemic’s long-term effects for the industry. These shifts are already evident seen in the way restaurants design menus, source ingredients, staff floors and kitchens, arrange seating both inside and outside, and interact with thirdparty delivery services. Restaurants were among the first businesses to have operations restricted under state COVID19 orders. They face additional requirements and indoor dining limitations under a recent Michigan Department of Health and Human Services emergency order that came as cold weather could Preparing for winter take away valuable outdoor seating. State agencies and municipalities have worked According to a survey conducted by the with restaurants, bars and downtown shops to Michigan Restaurant and Lodging Association, alleviate some of the financial strain caused by 23 percent of Michigan operators out of about the pandemic through allowing social districts, 4,000 locations said it is unlikely their restaurefreshment zones and the ability to sell to-go rant will still be in business six months from cocktails. But that has all come largely during now. Nearly 75 percent of restaurant owners in summer months. the state reported that they do not expect their Downtown Grand Rapids Inc. (DGRI) is now sales to return to pre-pandemic levels within the accepting applications for a Winter Ready grant next six months. program. The initiative is designed to help busiCOVID-19 will likely reduce the number of ness owners adapt outdoor operations to colder restaurants in operation. The restaurants that temperatures. Downtown restaudo stay open will have more spacedrants, bars and retail establishments out seating while they will have to can apply for grant funding for use a more multifaceted approach materials that could include tents, to reach customers, said James Sponsored by: outdoor heaters, fuel and lighting. Berg, managing partner at Essence DAN VOS The city of Grand Rapids recently Restaurant Group LLC, which owns CONSTRUCTION seeded $200,000 for the program but The Green Well and Bistro Bella Vita COMPANY could potentially add more funding, in Grand Rapids. said Mark Miller, DGRI’s managing “Once we get to the 100 percent director of planning and design. reopening stage, people are not going to want “Overall, I think there is a lot of interest to sit right next to a stranger like they did a few because restaurant owners realize they will need years ago,” Berg said. “I have to be resilient and to keep some kind of seating expansion for peoagile to accept the fact that things are going to ple to dine in,” Miller said. change.” Under the program, business owners would Daniel Estrada, CEO of 86 Repairs Inc., which be reimbursed up to $15,000 for the costs to helps restaurants increase efficiency in equipinstall outdoor structures. Additional funding ment repairs and maintenance, said the panfor specific projects that exceed that amount demic’s long term effects on restaurants will would need Downtown Development Authority influence how they structure operations and approval, Miller said. maintain the ability to adapt. Schneider applied to the grant program to “One of the things I would take away from the procure outdoor heaters at her restaurants. last seven to eight months is this industry is very “We don’t see people wanting to sit outside innovative in the way it operates, and it has to when it’s super cold and snowy,” Schneider said. be because the margins are tight,” Estrada said.

FOOD BIZ

San Chez Owner Cindy Schneider says “we’ve looked at everything” to help reduce operational costs during the pandemic. MIBIZ FILE PHOTO “For us, the small sale we could get is not worth giving up our brand for a third party,” Berg said. Estrada is seeing an increasing number of restaurants getting creative and making their own channels for delivery rather than relying on a third-party service. These delivery services generally charge restaurants a fee of about 20-30 percent on the order, and also charge the customer a delivery fee. “Consumers are starting to get more educated about this and more are ordering right through the restaurant,” he said. “But every restaurant has to figure that out, and there is marketing value of Takeout, delivery being on those platforms.” With recent COVID-19 cases at While the fees make it difrecord highs in Michigan, restauficult for restaurants to make rants are seeing increasing nermoney using third-party delivery vousness among patrons, causservices, it is also costly to do ining businesses to pivot to more house delivery, said Peter Krupp, takeout and delivery options. co-owner of CDKI Holdings LLC, The Green Well and Bistro which owns two Sandy Point Bella Vita are not available on Beach House locations, Mexo and third-party food delivery services the StreetEatsGR food truck court. such as Uber Eats, Grubhub and “The cost of a driver and a DoorDash, Berg said. This is to vehicle — it’s a tough one, but protect the restaurants’ brand we probably will explore it in — JAMES BERG the near future,” Krupp said. and because the delivery services Managing Partner, Essence come with a high cost to restau“What we hope is to try to make Restaurant Group LLC rants and consumers, he said. the pickup as easy as possible. “We work so hard to build We have curbside pickup so you our brand and sharing that with don’t have to get out of your car.” a third party is so difficult,” Berg said. “The cusSan Chez and Roam use Uber Eats and tomer could get the product and it could be an DoorDash, but the restaurants also offer pickup hour later. Our product also doesn’t meet the delivand curbside service. ery schedule that some other restaurants do.” “We don’t like paying those fees — they’re a Berg is considering potentially creating a little bit steep — but being on those platforms menu of delivery options that is smaller than reminds people we’re still here and you can eat his restaurants’ regular menus and doing delivwith us,” Schneider said. “It’s necessary to survive ery in-house. right now.”

“But I think it will be used more in the spring because we might be able to open outdoor spaces earlier in the season.” At The Green Well and Bistro Bella Vita, Berg plans to apply for the program and construct an outdoor space where patrons can have a drink and wait for their table this winter. “That would allow people to wait in a socially distanced space so they don’t have to wait in their car and they can have a drink if they want,” Berg said. “We’ll see how it works.”

“I have to be resilient and agile to accept the fact that things are going to change.”

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SpartanNash adapts to shifting consumer behavior By JAYSON BUSSA | MIBiz jbussa@mibiz.com

he COVID-19 pandemic has led many households to bear down in their homes over the last eight months, leading to an uptick in grocery store sales. In fact, many grocery stores struggled to keep shelves stocked with the panicked buying that took place in the pandemic’s early stages. Grand Rapids-based SpartanNash Co. — the fifth largest food distributor in the U.S. — was on the front lines of those efforts with its 155 corporate-owned retail stores and distribution business that delivers to 2,100 independent locations across the country. It’s also a leading distributor of grocery products to U.S. military commissaries. MiBiz spoke with Lori Raya, a member of SpartanNash’s corporate leadership team who is responsible for merchandising and marketing strategy, including product assortment, sales planning, sourcing and distribution for SpartanNash’s independent customers and corporate-owned stores.

With COVID-19 cases rising once again ahead of the holiday season, do you foresee consumers stockpiling food and supplies similar to how they did in the spring? We’re seeing some early indicators right now that customers are starting to increase their basket size again — certainly not to the levels that it was in March, April or May. We are forecasting that basket size will continue to grow on kind of the key commodities. I don’t think it becomes — and I don’t really want to use this word — but the panic that it was. I think people have learned how much food they need to kind of navigate a week or two or maybe they

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don’t want to go out and shop. I think they’ve managed through that but we are starting to see several categories where customers are starting to buy more products again.

Having weathered the early portion of COVID already, do you feel like SpartanNash has made adjustments and learned lessons that will better equip it for a potential second wave of demand surge? Absolutely. I’m so proud of our company for how we really stood to support. With our business model, we have over 2,000 independent retailers and our corporate stores, and we have our military segment. We learned a lot

on how we have to work with suppliers to get products. Whether it’s the farmers or what we’re doing with meats and produce to make sure we keep the product flowing. We learned a lot about different suppliers and different resources we have — and how to communicate.

Are consumer demands and habits hard to forecast during such an uncertain time? I think we learned a lot on where we feel like customers will go if there is this surge. I think it will be the same categories as it was previously — it will be the soups, the baking products, the pasta-type items, the pasta sauce — quick, easy and convenient meals. So I think we feel like we’re in a really good spot knowing those categories and we’re working with our suppliers to have the product and make sure we send it out to our stores to take care of our consumers.

How has SpartanNash automated the grocery shopping experience, and has the pandemic advanced the evolution of any of those concepts? For us, one of the biggest accelerations was our e-commerce business — the whole platform. We have (online grocery shopping platform) FastLane, which is what we leverage here in the greater part of the Michigan market,

and our Martin’s (Super Markets) stores have groceries to-go. We were proud of our results and as the pandemic hit, just the useage. Much like other folks that use e-commerce, we had spots where we were so busy that we couldn’t take orders and deliver for a week. We learned very quickly that we had to add more technology into our stores to pick and add more slot windows and capacity. I think the pandemic accelerates the e-commerce usage from customers three to five years and expands it into other demographics and age groups. Our Boomers have really been the group that accelerated this and are using that platform.

How crucial is it that customers feel safe in your store and how is that achieved? I can’t underscore (enough) the effort that went underway from our corporate retail stores and the guidance we provided to our independent retailers. I think if you go back and look at SpartanNash for quarter one and quarter two, our corporate retail comp sales surpassed most others in the rest of the market. We had great results. … We mobilized very quickly to put hand sanitizer stations, we put our plexiglass up at our checkout stands literally almost overnight in 155 stores and the social distancing and one-way aisles, staff wearing the face coverings.

Lori Raya, executive vice president and chief merchandising and marketing officer at SpartanNash Co. COURTESY PHOTO

I think that’s part of the reason that we performed so well during those time frames is because our customers trusted us. And, when you earn that trust, you gain new customers and we did gain thousands and thousands of new customers in our stores during that time frame.

Do the trends as of late leave any other pressing issues inside your organization? I would tell you that our business growth continues to be strong and we’re looking to hire associates at our stores and DCs (distribution centers). We have a huge effort underway to staff up. And I know people are looking for employment.

MiBiz / NOVEMBER 9, 2020

FOCUS: FOOD ECONOMY

Farmers navigate shifting supply and demand equation By JAYSON BUSSA | MiBiz jbussa@mibiz.com

eff VanderWerff is one of the rare professionals whose day-to-day operations have remained virtually unchanged throughout the COVID-19 pandemic. VanderWerff and his brother operate a 50-acre fruit orchard in Sparta. He also works with his father and uncle on a severalthousand-acre cash grain operation. “COVID or not, we still have to put a crop in the ground,” said VanderWerff, founder of Gold Coast Sales LLC. Life on the farm might be business as usual, but the greater agricultural ecosystem VanderWerff’s farm feeds into has undergone a

major shift to meet the morphing food demands brought on by the pandemic. Adjusting to the new normal of the pandemic is just one of the many dynamics that has emerged in Michigan’s agriculture economy,

Shift in demand The pandemic’s biggest effect on the food industry is drastically shifting consumer demands. A drop in demand from institutional clients — such as schools and restaurants — and surging demand from retail clients changed the way food is supplied. During this adjustment, consumers have encountered empty shelves at grocery stores, but it was not because supply was insufficient.

“The point I kept trying to make to people all spring was there was never a shortage of food — there was a shortage of food in the way that you wanted to consume it,” VanderWerff said. “I had to remind people that when you go to the store and buy VanderWerff eggs, you buy them a dozen at a time. When iHop buys eggs, they buy them by the case of 144 eggs. If you wanted to buy 144 eggs at a time, there were more cases than you could shake a stick at, but you weren’t going to buy them that way.” This has left the food system balancing between temporary or permanent changes to

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the ways in which they package and deliver food while farmers continue to chug out their usual supply. “We as growers are looking at the processors saying, ‘Hey, we need to change the model here — this is how people want to get our product,’” VanderWerff said. “But you have to view it from the processors’ perspective, too. … Do I want to spend $10 million re-tooling my line for a situation that might only last a couple months?”

Captive consumers Even through the murkiness of the pandemic, Michigan State University’s Department of Agricultural, Food and Resource Economics recently released a report called “Envisioning the Future for Michigan’s Agricultural Economy.” In the report, 10 different agricultural economists responded to a series survey of questions to highlight emerging issues and trends in the industry. MSU Assistant Professor Trey Malone, who helped prepare the final report, admitted that “any crystal ball will be flawed.” But immediate effects of the pandemic show significant losses in output, which were primarily offset by federal financial relief. “We found that the losses in total output have been substantial but record amounts of agricultural support from federal dollars has buoyed and supported much of the industry, especially on the row crop side,” he said. Malone said those losses were tied to the huge blow to restaurant sales and other institutional buyers. However, the MSU report highlights plenty of reasons for optimism among industry members. Rising global population and income, farms adopting more advanced technology, access to alternative markets, and the uniqueness of Michigan’s agricultural resources were four positive trends the economists identified that create growth opportunities. Michigan’s diverse agricultural output has been put on full display. Most agricultural economists agree that the pandemic has made many consumers much more food conscious, which gives farms and food businesses the chance to tell their stories and speak to a captivated audience that is looking for safe, sustainably produced, family-farmed Michigan products. “Trying to create these opportunities for consumers to engage with your agribusiness is something I’ve been sounding the marching orders on for quite some time,” Malone said. “I think everybody out there right now wants to know what’s going on at farms — people are asking questions they may have never asked before. The industry itself has this opportunity to show people where their food comes from and how hard it is for someone to grow their own food.” This phenomena has been seen in the fact that U-Pick farms and businesses saw a major increase in sales, according to Malone, and hope to continue the momentum as they enter the Christmas tree season.

Hurdles ahead That said, the industry will have to reckon with a variety of issues that threaten its vitality. The MSU report identified declining profitability for small and medium sized farms as one key trend that could dog the industry. Michigan’s food industry is seeing consolidation as small and medium sized farms find it increasingly difficult to sustain themselves. Also, an increase in regulations involving the environment, food safety and labor top the list of negative trends, in addition to such hindrances as climate change and trade conflicts. Workforce shortages have also seemed to perpetually plague the industry, and the problem worsened with the pandemic. “We saw a major workforce challenge in the food processing areas and some meat processing industries,” said Ernie Birchmeier, livestock and dairy specialist at the Michigan Farm Bureau. See AGRICULTURE on page 18 Visit www.mibiz.com

SPORTS

West Michigan-tied XFC offers mixed martial arts fans a new product By JAYSON BUSSA | MiBiz jbussa@mibiz.com

global mixed martial arts organization with direct ties to West Michigan is poised to return from a years-long hiatus on Nov. 11 with a night of fights in Atlanta. Xtreme Fighting Championships is slated to take over Atlanta-based, Live Nation-owned concert venue The Tabernacle this week for an event called XFC 43. The event will be the league’s first action since Dec. 5, 2015 when it held XFC International 13 in Sao Paulo, Brazil. Spring Lake resident Myron Molotky will be front and center as the organization’s president. Molotky became the face of the company in 2011, and he — along with some West Michigan brethren — are aiming to recharge a brand that sat on the shelf for nearly half a decade. The XFC will compete in an increasingly crowded market of leagues and independent promotions, which are all positioned behind undisputed industry leader Ultimate Fighting Championship (UFC). “UFC has done a fantastic job keeping their brand moving (through the pandemic) — so of course I have much respect for that,” Molotky said. “From our standpoint, there is a lot of space in MMA right now. When we were in Brazil, we were considered top three of four in the world. Our goal is to rise to that level or beyond.”

Resurrecting the brand The XFC was established in 2006 in Florida. The fighting promotion operated on a regional level, extending up the East Coast. Molotky became involved in 2011, teaming with league CEO Steve Smith, who has a background in finance and was also a former executive with World Wrestling Entertainment (WWE). Before becoming XFC president, Molotky was a former Golden Gloves boxer and also a lifetime hockey player. He was the back-up goalie for both the Grand Rapids Griffins and the Muskegon Fury during his tenure. “Being around professional athletes for quite some time, I knew what their driving force was,” Molotky said. “Being the older guy in the locker room, I got a really good sense of the mind of the athlete.” The new leadership at the XFC was focused on taking the organization to an international level, which is why it planted its flag in Sao Paulo, inside the country considered to be the birthplace of MMA. It then gained significant exposure through RedeTV!, one of Brazil’s five major television networks, and fielded a roster of 180 fighters. However, the market would eventually sour, leading to the hiatus. “Brazil went through the World Cup and went through the Olympics and just the devastation financially in the Brazilian markets, we really had to take a look,” Molotky said. “Do we continue a money dump growing the brand or do we go on the sidelines? The investors at that time said we’re going on the sidelines. “ Fast forward a few years later, and the XFC has retooled itself. One of the primary differences between the XFC and similar leagues is that Xtreme Fighting Championships Inc. (OTC: DKMR) is a publicly traded company.

recently inked a partnership with Grand Rapidsbased public relations and investor relations firm Lambert & Co. As part of that partnership, the XFC will leverage TiiCKER, a fintech start-up launched in July by Lambert & Co. CEO Jeff Lambert. TiiCKER helps publicly traded companies streamline the usually daunting task of marketing directly to shareholders. This comes with offering incentives to those who choose to buy shares through TiiCKER. Ultimately, XFC’s approach to the business side of its organization is what spoke to Lambert & Co. and TiiCKER. “XFC (has) a different model where they are empowering their fighters to own a piece of XFC,” said TiiCKER COO Mike Houston. “And, we think that’s fantastic — that’s really the upside.

The fighters are incentivized to help build that brand and their own brand.” Another big way XFC will reach MMA fans nationwide is through a broadcasting deal with NBC Sports, which was announced in September. The final two hours of XFC’s Nov. 11 event will air on NBC Sports Network. “We’re really excited about it,” Molotky said. “They had gone through a little bit of a phase with MMA where they, to be honest, weren’t excited about talking about it at first. We settled on NBC because we developed a strong level of trust between their leadership team and our leadership team.” Tom Sullivan, owner of LEAD Marketing Agency in Grand Rapids, has extensive experience in sports marketing. He saw the benefits of a broadcasting deal when his firm worked with the now-defunct arena football team the Grand Rapids

Rampage. The Arena Football League signed a deal with NBC, and he said the exposure that comes with broadcasting could give the XFC a nice boost. “It’s a win for NBC because they get sports programming and it’s a win for XFC because they get exposure,” he said. “They can also then monetize sponsorships broader because more people will see it on television than what they would have seen in a small, local arena.”

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Riding the MMA wave The XFC jumps back in the market as the sport is more popular than ever. According to data from Nielsen Sports, MMA has become the third most popular sport in the world, trailing only soccer and basketball. Nielsen estimated that roughly 451 million fans were interested in MMA worldwide. The XFC will not only compete for eyeballs, but also to coax investors to scoop up shares of the company. To help in those efforts, XFC Visit www.mibiz.com

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HEALTH BIZ

Spectrum Health’s planned $23 million facility on Leffingwell Avenue will house 80 rehab and nursing beds. COURTESY RENDERING

SPECTRUM HEALTH Continued from page 1

and Nursing Center on Fuller Avenue date back nearly a half-century. The six-story facility was not designed as a nursing home and was converted for that use following Spectrum Health’s acquisition, Tuttle said. The existing Fuller Avenue facility also has few private rooms and is not easily modified, he said. Once Spectrum Health completes and moves rehab and nursing care to the two new locations, the vacated facility will revert back to Kent County, which owns the land. “That building has served an incredibly valuable purpose in the county for a very long time. It’s really provided tons of value to the county, but we’re not sure how much more value can be extracted out of the building,” Tuttle said. The new Leffingwell Avenue facility planned for a 27.4-acre Spectrum HealthTuttle owned site will house 80 rehab and nursing beds. The $23 million facility will predominantly treat cardiovascular, orthopedic and neurology patients and feature all private rooms, Tuttle said. Spectrum Health hopes to begin construction on the Leffingwell site after this winter, targeting occupancy Elmouchi in spring 2022, Tuttle said. At Fuller and Cedar Street, Spectrum Health will build a second rehab and nursing center that’s still in the design phase. The center will house 132 beds — 120 for rehab and nursing care and 12 for hospice care. Spectrum Health recently acquired the site in October for $2.5 million from Versiti Michigan Inc., according to property records. Design work for the new Fuller Avenue facility continues. Progressive AE Inc. is the architect and Christman Co. is the construction manager for both projects.

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Orthopedic shifts In a separate development, Spectrum Health plans to build a $17 million outpatient orthopedic surgery center at East Beltline Avenue

AGRICULTURE Continued from page 16

“(Nationwide) there were times when about 50 percent of our core processing capacity was shut down and you had about 35 to 40 percent of the beef processing capacity shut down,” he said. “When you have a break in the chain, which we had, that has an impact,” he added. “Food processing labor was a challenge. We also had a challenge in our fruit and vegetable area because a lot of that is a hand harvested crop. There were some challenges with some (government-mandated safety) orders put in place with how many people could work where.” A big part of the industry’s rebound can be attributed to the demand for corn, soybeans

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NE and 3 Mile Road in Grand Rapids Township. The 15,277-square-foot surgical center will rise on property adjacent to Spectrum Health’s Integrated Care Campus and include four operating rooms and one procedure room. Spectrum Health expects to eventually perform about 5,000 orthopedic procedures annually at the new outpatient surgery center. Through the new center, Spectrum Health plans to transition many of the outpatient orthopedic surgeries and procedures — such as knee and hip joint replacements — now performed at its hospitals into a lower-cost setting, said Spectrum Health West Michigan President Darryl Elmouchi. Advancements in care, surgical techniques and technology enable care providers to transition more surgeries to an outpatient setting without requiring a hospital stay, a trend that Spectrum Health expects only to grow. “We feel that the future of orthopedic care is going to be more outpatient and moving procedures that have historically been done in hospital-type settings to outpatient settings,” Elmouchi said. “Our goal is to be a high quality, low cost orthopedic surgery center. The reason for that is when you congregate one service in one spot, you can have much more expertise.” Spectrum Health primarily does orthopedic surgeries at the Blodgett Hospital campus in East Grand Rapids and an outpatient surgical center on Lake Drive that does multiple types of procedures, plus at most of its regional hospitals. Orthopedic surgeries involving trauma are done at Butterworth Hospital in downtown Grand Rapids. The health system will continue to perform orthopedic surgeries in hospital settings for patients who want it done locally, such as at Zeeland Community Hospital in southern Ottawa County or in Ludington. While Spectrum Health seeks to lower costs everywhere it performs orthopedic surgery, Elmouchi expects health insurers will increasingly encourage and offer incentives for patients to go to outpatient centers such as the one planned for East Beltline, Elmouchi said. Spectrum Health aims to open the new outpatient orthopedic surgery center in 2022, he said. While Spectrum Health has no active plans for other outpatient surgical facilities for specific types of procedures, Elmouchi said “it’s definitely a possibility over time.” “If we do this well and we’re able to make it equally as good, if not better, and lower the cost,” Elmouchi said, “I can definitely envision this in other settings and for other specialties.”

and other products from around the world. For instance, China has seen an epidemic of African swine fever, which has greatly affected its swine population. The country is in great need of corn and soybeans to restore that population, which is driving up commodity prices there. That’s why Birchmeier advised farmers to watch for traditional marketing opportunities while still trying to seize on new, local opportunities. Still, Birchmeier could not discount the fact that the consistency of farmers like VanderWerff is what has ultimately kept the industry marching forward through this uncertain time. “The consistent part about all of this is that our farmers are still farming and are able to do so everyday,” Birchmeier said.

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Q&A Dr. Jurgen Luders Chief of Neurosurgery Mercy Health Hauenstein Neurosciences Dr. Jurgen Luders connected years ago with Golden, Colo.-based Reven Pharmaceuticals Inc. after a friend and former colleague at the Cleveland Clinic told him about his own involvement with the company. Luders visited Reven to learn more and ended up joining its advisory board. He later became medical director at Reven, which is developing a powerful anti-inflammatory drug called Rejuveinix, or RJX, that shows promise in preventing and reversing conditions caused by inflammation. Luders — the chief of neurosurgery at Mercy Health Hauenstein Neurosciences who is board certified in regenerative medicine — spoke with MiBiz about his work with Reven, RJX’s potential for treating COVID-19 patients, and innovation in health care.

What’s the promise of Rejuveinix, the drug you’re involved in developing? If you look at most disease processes, the majority have a basis in inflammation. For example, if you look at plaque buildup in blood vessels, that’s an inflammatory response in the blood vessels. That’s your body producing that. If you can help that, then all of a sudden you’re able to treat any heart disease, cerebrovascular disease, cardiovascular disease and peripheral vascular disease, so you’re preventing heart attacks and strokes. That in itself is massive. You can also prevent other inflammatory diseases such as Crohn’s, which is an inflammatory bowel disease, and multiple sclerosis, which is an autoimmune disease. Those are all things we’ll be able to treat. It’s a total game-changer.

The company also indicates that RJX can treat diabetes. What has your testing shown there? We treated more than a thousand patients in South Africa on a compassionate care basis with critical limb ischemia — people who have real bad diabetes and they lose their limbs. Every single one of them, we saved their limbs. It is a massive problem in this country and the cost to our health care system is massive. What this drug will do is reverse the need for that kind of intervention. (RJX) demonstrated dramatic improvement in wound healing of diabetic limbs as well as reversing diabetic neuropathy. FDA Phase 1 trials in 76 healthy patients (in the U.S.) showed not only no significant adverse effects but also a significant drop in inflammatory markers, in addition to dropping blood sugar levels on average 10 points.

How has the COVID-19 pandemic affected the development of RJX? We were about to start our Phase 2 clinical trial for critical limb ischemia right when COVID hit. That was a trial that was going to look at wound healing and reversing peripheral vascular disease for critical limb ischemia. The FDA changed its rules. You weren’t allowed to start a new Phase 2 trial unless it was for COVID purposes, which is kind of ironic because the more information that came out about COVID, the more we realized it isn’t the virus itself that causes all of the problems, it’s this inflammatory cytokine storm that occurs and causes acute respiratory distress, and that’s what causes damage to your lungs, heart and liver. So, we went to the FDA to see if we can treat COVID patients with RJX.

What response did you get? We have four submissions to the FDA. Two Investigational New Drugs — one for critical limb ischemia and the second for COVID-19, which we just received a letter from the FDA stating their plan to expedite the review. We’re hoping to start our Phase 2 trial for COVID-19, hopefully, by early November.

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What are the innovations coming out in your field of neurosurgery? When you’re talking about innovation from a neurosurgical perspective, along the lines of brain surgery and spine surgery, some of the biggest advancements we’re seeing right now are in the field of robotics and navigation and imaging techniques. For example, when we put screws in someone’s back, we used to do it free hand. Now we have a full navigation system that really helps speed up the surgery and makes it much more precise, which allows for a quicker surgery where you’re going to have less blood loss, better outcomes and a lower risk. As a surgeon, I love these new innovations. It allows us to go further forward than we were ever able to before, and we can do it in a safer way and we can do it quicker.

Are we in a new era of innovation in medicine? I think we are, but I would say the new era is beyond improving on surgical performance. Where this is taking us in the next 10-20 years, there’s going to be a huge revolution in health care and medicine from a scientific perspective.

Do you see the pandemic creating a greater emphasis on wellness and health prevention or accelerating research and innovation? The biggest thing that I find in this is that people in general are much more interested in their own health and wellness. This has really brought that to the forefront. It’s interesting as of late we’ve gotten much more interest in our wellness center. I can tell you, the most important thing for anyone’s health is a desire to be healthy, being active and improving your diet. I’ve seen a super-increased interest in people taking care of themselves, and once it starts there, then innovation in health care is going to be there.

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MiBiz / NOVEMBER 9, 2020

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. grfoundation.org

NOVEMBER 9, 2020 / MiBiz

L E AV E YO U R M A R K

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NONPROFIT ORGANIZATIONS

Nonprofits partner to support individuals incarcerated for cannabis By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

national organization and a Michiganbased nonprofit are partnering to raise $30,000 in support of people currently or formerly incarcerated for cannabisrelated crimes, hoping to bring an element of justice for those jailed for offenses that would now be legal in Michigan. The Denver-based Last Prisoner Project has teamed up with the Redemption Foundation, the nonprofit arm of the Redemption Cannabis brand founded by Ryan Basore, to launch the Michigan Cannabis Prisoner Release Campaign, which seeks to secure the release of nonviolent “cannabis prisoners” in Michigan. That includes Mi c h a e l T h o m p s o n , w h o remains in prison in Muskegon after a 42- to 62-year sentence in 1994 for selling 3 pounds of Basore marijuana to an undercover informant. The fund aims to provide legal and other financial support to cannabis prisoners. “The goal is to help out anyone who’s been affected by the war on cannabis and their families,” said Basore, who was released from federal prison in late May 2015. Basore was part of a seven-person medical marijuana caregiver cooperative near Lansing that was raided by the U.S. Drug Enforcement Agency. The campaign — which also includes the Cannabis Caucus of the Michigan Democratic Party and FORCE Detroit and has support from more than two dozen private cannabis businesses and groups — comes amid a rapidly shifting legal landscape for cannabis. Michigan voters approved a cannabis legalization ballot measure in 2018, while four more states — South Dakota, Montana, New Jersey and Arizona — approved recreational cannabis in the Nov. 3 election. Fifteen states have now voted to approve or passed legislation legalizing recreational marijuana. Meanwhile, Gov. Gretchen Whitmer last month signed a bipartisan bill package expanding Michigan’s criminal expungement process, which includes favorable measures for prior cannabis convictions. The legal and political climate around cannabis in Michigan has seen a sea change since Basore was convicted. Attorney General Dana Nessel has replaced former Attorney General Bill Schuette, for one. A growing number of lawmakers on both sides of the aisle are supporting the industry and criminal justice reform efforts, Basore said. Advocates also credit the Whitmer administration for making data on cannabis-related incarcerations more readily accessible, which is helping the campaign, said Sarah Gersten, executive director and general counsel for the Last Prisoner Project. The Last Prisoner Project formed about a year ago. Its board members and ambassadors include multiple celebrities, including actor Jim Belushi, musician Melissa Etheridge and TV personality Montel Williams. “Michigan is by far the state where we’ve gotten the most traction in terms of this groundswell of support from organizations, but perhaps most importantly from elected officials like the Attorney General’s Office and the Department of Corrections,” Gersten told MiBiz. “It’s clear elected officials in Michigan really want to reform the system.”

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Community Rebuilders has launched a new program that seeks to place dozens of unsheltered individuals experiencing homelessness in the Monroe Center and Rosa Parks Circle area into permanent housing. MIBIZ PHOTO: KATE CARLSON

New targeted program aims to address homelessness in downtown Grand Rapids By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

“We’re just seeing a larger homeless population in the downtown area than we have encountered before,” Lehman said. “The Homeless Outreach Team is responding in those areas to see if we can be that GRAND RAPIDS — A nonprofit housing advocacy organization has middle person to meet the needs of homeless individuals while at the launched a new program aimed at reducing the number of individu- same time making sure we have a healthy environment.” als experiencing unsheltered homelessness, targeting a high-traffic Although some housing advocates say preliminary numbers are area in downtown Grand Rapids. unverified, and can’t necessarily point to a direct link to the COVIDCommunity Rebuilders’ Geographically Targeted Housing 19 pandemic, they are noticing a shift in recent years. Outreach will focus first on the Rosa Parks Circle and Monroe Courtney Myers-Keaton, coordinator with the Grand Rapids Center area of downtown, and is expected to target Area Coalition to End Homelessness, which is Kent other areas in the city in the future. The nonprofit set County’s continuum of care, said claims about an a goal to place 30 youths and 30 adults in housing by increased number of individuals experiencing homethe end of the year. lessness still need to be verified. Sponsored by: The organization placed eight unsheltered indiTypically, the counts are done annually in January GRAND RAPIDS viduals in housing in the first week after launching and provided to the U.S. Department of Housing COMMUNITY the program last month. Of 37 people identified for and Urban Development. The coalition did a “point FOUNDATION the program, 14 are working with specialists to secure in time count” in late September that showed 156 permanent housing. unsheltered individuals in the city of Grand Rapids. “We’re taking a broader systems approach and really pushing this The January 2020 count for all of Kent County showed 86 unshelidea that you create a prioritization list to match anticipated open- tered individuals. ings in housing,” said Community Rebuilders Executive Director The September count was a pilot and doesn’t have any prior years Vera Beech. for a comparison. As well, it was completed in the late summer as Community Rebuilders coordinates a team of outreach provid- opposed to the winter. ers making connections with people living on the street. The team “Is there increased visibility of people on the streets? Absolutely,” includes other nonprofits, shelters and the city of Myers-Keaton said. “I’d say Grand Rapids’ Homeless Outreach Team. we suspect there might be an The teams help set up short-term housing in increase in homelessness, but hopes of finding permanent accommodations, we’ve been seeing that trend as well as various health care support. The group happen over the past few years.” prioritized the Rosa Parks Circle/Monroe Center The pandemic also may be area based on the number of unsheltered indi- playing a role in pushing more viduals there, as well as it being a “high traffic individuals to the city center business area,” Beech said. where more resources are avail“The idea is to work on one area at a time and able, she said. Beech keep on going,” Beech said. However, if the pandemic Typically, unsheltered individuals are identified but confront a lingers for months and requires long waiting list to get into affordable housing based on a lack of capacity restrictions at shelters, availability. advocates are concerned it “With dynamic prioritization, we’re saying upfront we’re going to could strain available resources. identify 60 of the most vulnerable in our community in a particular “We do have a concern that, geographic area and are going to meet their needs first,” Beech said. come this winter, we will have “It’s really shifting the focus to getting people housed versus just serv- to look for other ways to ensure ing people with resources while on the street.” people are sheltered appropriThe effort comes after city officials identified an increase in ately or are connected to housunsheltered individuals experiencing homelessness. ing quicker,” Myers-Keaton said. Grand Rapids Fire Chief John Lehman, who oversees the city’s “We’re worried that reduced — JOHN LEHMAN Homeless Outreach Team of two firefighters, two police officers and (shelter) capacity will have an Grand Rapids Fire Chief local addiction and social work experts, is seeing “anecdotal evi- effect on how many people can dence” of a rise in homelessness in Grand Rapids. get into shelter.”

NONPROFIT SECTOR NEWS

“The Homeless Outreach Team is responding in those areas to see if we can be that middle person to meet the needs of homeless individuals while at the same time making sure we have a healthy environment.”

MiBiz / NOVEMBER 9, 2020

IN THE NEWS M&A

Doerr Q&A Emily Executive Director, Michigan State Land Bank Authority Emily Doerr was hired last month as the new executive director of the Michigan State Land Bank Authority. In her new role, the Flint resident will lead the strategic direction of the State Land Bank, which serves 37 counties in Michigan and owns 2,676 land parcels. The state agency is a repository for properties that go back into public ownership and include residential parcels, sites that could support economic development and land conservation. Doerr was previously the vice president of housing development for Metro Community Development, the city of Flint’s community and economic development program manager, real estate manager for Consumers Energy, and the business attraction manager for the Michigan Economic Development Corp. She spoke with MiBiz about her vision for the State Land Bank. What are some of your specific goals in your new role? We’re transitioning to having a bigger focus on land banking, and being more proactive with developers and saying, ‘OK, you have a number of sites you’re trying to get for your development.’ We can hold those sites for them and minimize their risk while they’re getting local approvals. A specific goal we’re looking at is there is a need for more affordable and workforce housing. We really want to continue collaborating, especially with other state agencies like the Michigan State Housing Development Authority and the Michigan Economic Development Corp., to bring more workforce housing to communities. That is a priority and need for communities all over the state. There are funding tools such as brownfield TIFs that can be utilized when parcels are under our ownership. What role does land conservation play in your work? We are definitely interested in conservation as an excellent way to recycle land. If there are parcels we own adjacent to existing trails, parks or wildlife conservatories, we’re interested in cleaning the property up and turning it over to conservation and recreational uses. How do you anticipate the pandemic affecting the State Land Bank’s work? COVID-19 has obviously had so many negative effects for so many people. It’s a longer process for us. If there are properties that people stop paying taxes on because of the pandemic — if they lost their job or for whatever reason — it is a three-year cycle until the land comes under our authority. We don’t want people losing their properties because of the pandemic. As an organization, we have figured out how to do work remotely and respond to applications in a specific way. This is work that requires official signatures, getting deeds stamped, all that stuff that is not really always digital and you need hard copies. That took a bit more time at first and they had to transition, but now our team has figured out how to work remotely. Kent County dissolved its land bank in 2018, prompting an agreement with the State Land Bank. What has been the transition process for land bank operations in Kent County? The Kent County land bank being dissolved and the parcels coming back to the state is a first in the state of Michigan. Any of the other land banks that were started at a county level are still in operation. With those parcels back in our ownership, we’ll evaluate the proposals that come in and try to make sure we are meeting the community’s desires for what is happening with the land. There are so many people interested in buying property in Kent County — there are people all over that want to buy those parcels. It’s really a testament to how much value there is in the land in the county and that’s great to see. Why were you interested in pursuing this position? It’s very cool to be part of such a great team with so many people and initiatives even though we are all working from home currently. The land bank is a very powerful redevelopment tool. There are special tools we have that are really reserved for parcels that are under land bank ownership. Developing projects and workforce housing is not getting any easier, and at the land bank we really try to be problem solvers. Seeing how all of these moving parts work together, it’s definitely not easy work but it’s really interesting and important work. It’s work that helps to get property values to rise, which is always a good thing.

Interview conducted and condensed by Kate Carlson. COURTESY PHOTO

NOVEMBER 9, 2020 / MiBiz

n Building products dealer and manufacturer Zeeland Lumber & Supply Co. has been acquired by one of the largest specialty building product distributors in the country. Illinois-based US LBM Holdings LLC announced its acquisition of Zeeland Lumber & Supply, which operates three manufacturing facilities and three building material yards scattered throughout Michigan and Northern Indiana. US LBM will now operate 16 locations in Michigan after the acquisition. n Nationwide engineering and environmental consulting firm Barr Engineering Co., which has offices in Kentwood and Ann Arbor, has acquired Grand Rapids-based King & MacGregor Environmental Inc. Barr Engineering is an employee-owned company headquartered in Minneapolis. King & MacGregor specializes in natural resource consulting and environmental services, particularly wetland and water body assessments, the design of constructed wetlands and environmental reviews and permitting. n Grand Rapids-based private equity firm Auxo Investment Partners continued its investment in cutting die manufacturers with a recent acquisition. The firm announced it has acquired GC Dies, a steel rule die cutting manufacturer with a 37,500-square-foot facility in the Chicago area. The Elmhurst, Ill.-based manufacturer, which has 50 employees on staff, specializes in flat corrugated, rotary corrugated and flat steel rule die production.

HEALTH CARE

n Metro Health – University of Michigan Health has opened an office in Hudsonville exclusively for pediatric care. Dr. Caitlin Mlynarek and Dr. Kurt Meppelink moved from Metro Health’s Hudsonville office on 32nd Street to the new pediatrics office at 2917 Port Sheldon St., which is designed specifically for a pediatrics practice and “to put children at ease and help them be comfortable talking about their health,” Mlynarek said. n The Grand Rapids African American Health Institute has named Vanessa Greene as CEO. Greene started this month as leader of the organization, which works to address racial and ethnic disparities in health care. She joins GRAAHI from Hope College, where she held leadership positions spanning nearly 17 years that focused on diversity and inclusion. Greene most recently served as Hope College’s associate dean of students and director of the Center for Diversity and Greene Inclusion, where she led strategic vision, planning and the implementation of diversity, equity and inclusion efforts with a focus on the well-being of students, faculty and staff of color. n Mount Prospect. Ill.-based Weil Foot & Ankle Institute, a large podiatry practice that has 21 clinic locations in Illinois, Indiana and Wisconsin, acquired Foot and Ankle Specialists of West Michigan PLLC in Grand Rapids. Foot and Ankle Specialists of West Michigan has nine physicians at six clinics in the region. n Stryker Corp.’s sales and earnings rebounded in the third quarter after falling sharply in the prior three months and early weeks of the COVID-19 pandemic. The Kalamazoo-based Stryker (NYSE: SYK) on Thursday reported $3.73 billion in sales for the July-through-September period, a 4.2-percent increase from the $3.58 billion in the same quarter last year. Stryker recorded quarterly net income of $621 million, or $1.63 per diluted share. That compares to $466 million in net income, or $1.23 per diluted share, in the third quarter of 2019.

FINANCE

n Mercantile Bank moved into Ohio with the opening of a Cincinnati mortgage lending office. The move into the Cincinnati mortgage market is the first time the Grand Rapids-based bank has operated any office outside of Michigan. The move comes as the bank has enjoyed strong growth in its mortgage business this year, driven in part by low interest rates that have led many people to refinance.

RETAIL

n Home furnishings retailer Loves Furniture & Mattresses opened two Grand Rapids-area locations on 28th Street SE and on Alpine Avenue in Comstock Park. A Loves location in Norton Shores opened last month.

ECONOMIC DEVELOPMENT

n Chief executives expect the state and U.S. economies to stabilize or perform better in the months ahead and continue to rebound from sharp pandemic-related declines in the spring. More than eight in 10 of the Business Leaders for Michigan members surveyed recently said they expect the U.S. economy to either stay the same or improve in the next six to 12 months. Nearly 80 percent expect the same for Michigan’s economy. That’s a reversal from the last Business Leaders for Michigan outlook survey in July when more than half of respondents expected the state and nation to worsen economically. n As part of a series of nationwide projects to improve rural water infrastructure, the U.S. Department of Agriculture announced an $18 million investment to modernize wastewater infrastructure in Manistee. The city plans to upgrade the interceptor, construct an above-ground equalization tank and invest in other improvements at the wastewater treatment plant.

EDUCATION

n Western Michigan University will cut ties with Cooley Law School, ending an affiliation that began seven years ago and was supposed to lead to further joint programs. Citing how “hopes have not been realized,” university trustees last week unanimously agreed to terminate a 2013 affiliation agreement with the Lansingbased law school. The approval triggers a three-year process to formally end the law school’s affiliation with WMU, as required under the original agreement. n The Michigan Department of Labor and Economic Opportunity (LEO) has been awarded $28 million by the U.S. Department of Education. The grant, which equates to $4 million per year for seven years, is for Michigan Gaining Early Awareness and Readiness for Undergraduate Programs (MI GEAR UP), which focuses on increasing the number of low-income students who are prepared to enter and succeed in postsecondary education. The program includes college exposure, information on financial aid and admissions, and help to build critical thinking, test taking and study skills.

BANKRUPTCY

n Woodland Mall owner Pennsylvania Real Estate Investment Trust (PREIT) has filed for Chapter 11 bankruptcy as mall tenants across the company’s portfolio have struggled to pay rent during the COVID-19 pandemic. PREIT (NYSE:PEI) and CBL & Associates Properties Inc., which owns Laurel Park Place in Livonia and Meridian Mall in Okemos, both filed for Chapter 11 bankruptcy on Nov. 2. n The operator of Max’s South Seas Hideaway — a downtown Grand Rapids tiki bar owned by former BarFly Ventures LLC President Mark Sellers III — has filed for Chapter 11 bankruptcy. It’s the third set of bankruptcies associated with Sellers filed within the past five months as his current and former restaurants and bars accumulated debt following the pandemicrelated shutdowns. Authentiki LLC and wholly owned subsidiary MSSH LLC each filed for Chapter 11 bankruptcy protection on Oct. 29 in the U.S. Bankruptcy Court in the Western District of Michigan. n Against the backdrop of the COVID-19 pandemic that has ravaged some segments of the manufacturing industry, Albion-based Velocity Manufacturing LLC has filed for Chapter 7 bankruptcy. The company, which features four different divisions, filed its petition with the U.S. Bankruptcy Court for the Western District of Michigan on Oct. 23. The filing shows plummeting revenue paired with mounting debt. Visit www.mibiz.com

GROWTH ALTERNATIVES DURING COVID-19: Mergers & Acquisitions and Strategic Alliances Whether you are a buyer or a seller, Foster Swift attorneys can help you navigate the challenges, minimize risk and realize the opportunities in today’s market.

To learn more: JOEL FARRAR jfarrar@fosterswift.com / 517.371.8305

FOSTERSWIFT.COM LANSING / DETROIT / SOUTHFIELD GRAND RAPIDS / HOLLAND / ST. JOSEPH

UPCOMING ISSUES

11.23.2020

Education & Talent Development Contract Deadline: 11.11.2020

Nonprofits seek restored charitable giving tax credits

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SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

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Action Metro Health pursuing open-heart surgery program in GR Grand reboot eyes By MARK SANCHEZ | MiBiz msanchez@mibiz.com

etro Health-University of Michigan Health likely will proceed with seeking state approval to perform open-heart surgery in Grand Rapids, a move that would bring more competition for the procedure to the local market. In a filing last week to the Michigan Department of Health and Human Services, Metro Health indicated it may pursue regulatory authority to launch coronary artery bypass surgery, cardiac valve repair or replacement, repair for birth defects of the heart known as

septal defects, and “other identified appropriate services.” Metro Health would spend $3.2 million to renovate and remodel space at its Wyoming hospital to perform heart surgeries, according to the Oct. 8 letter of intent to the state. The move comes nearly four years after Metro Health was acquired by University of Michigan Health System and Michigan Medicine, its academic medical center in Ann Arbor. “Michigan Medicine is world-renowned for cardiovascular care. This new program will bring that expertise to West Michigan, giving patients choice and access to the most sophisticated treatments and world-class cardiovascular

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

care. We are proud to help make this a reality,” Metro Health President and CEO Peter Hahn said in a statement to MiBiz. The letter of intent to the state signals a care provider’s interest in seeking a certificate of need (CON) to Hahn launch a new clinical service. Care providers typically will file a letter of intent that places them in line for state review during that quarter as the provider makes a final decision on whether to proceed.

See METRO HEALTH on page 3

Aerospace suppliers brace for continued turbulence

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

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

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

f the SARS outbreak 17 years By MARK SANCHEZ | MiBiz ago in Asia is an accurate indimsanchez@mibiz.com cator, behavioral health care providers could see a patient Hikers in Pictured Rocks National Lakeshore in the Upper Peninsula. PHOTO COURTESY OF PURE MICHIGAN 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 Byhad MARK SANCHEZ they previously once| MiBiz the economythe getspandemic, and with the were unable to return to work full msanchez@mibiz.com restoration of limited funding, going again. time after the SARS pandemic, six Travel Michigan Vice President Changes will span a range of workplace in 10 experienced fatigue, and half he Pure Michigan camDave Lorenz sees an urgency to environments, including offices, shop floors, had difficulty sleeping. that touts the Wearing ramp the Pure Michigan camPAGE 12 PAGE 14 breakroomspaign and conference rooms. In Hong Kong, the suicide rate state as ahaving travel destinapaign back up this fall — in face masks and more distance spiked nearly 32 percent for two tion should soon some form — to support the between workers will return 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 to spur andtemperature winter travel industry that’s popualong with fall routine checkstourism and experienced “increases in persistent and helpcleaning tourism-reliant smallthe worklated by many small businesses. continually and sanitizing depression, anxiety, panic attacks, businesses that were hitworkstations. hard When working with limited place, tools, equipment and psychomotor agitation, psychotic this summer by the COVID-19 funding, Travel Michigan would Those and other pracsymptoms, delirium, and suicidpandemic. put its resources into tices are all part of thetypically proality,” accordA s M ic h iverbial g a n’s “new t ou r inormal” sm the for“big season” and promote ing to a white GR debates increasing industry continues to reel from to nav-See PURE MICHIGAN on page 15 employers working paper 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 ger for many months until a tal health effects Kennedy P E R I O D I C A L S 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. “ T he wa r n in g s ig n s a re tered Wall Street and caused supply On Feb. 25, the commission there right now that we could in PAGE 12 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 — call hosted by the West Michigan Policy told MiBiz. “We ought to be preDeals that are inInprocess involve a deeper are waiting for approval. The abalaskovitz@mibiz.com system. Michigan, this means workwhich requires 75 Forum. As of early May, Sturgis Molded pared as a state and a community dive into due in situations city hasn’t finalized recreers diligence unemployed as a result ofwhere the panpercent of the loan Products was running at about 10 perfor that in case that happens.” s some employers express demic could receive upistoacquiring $962 a week. to be used for payone company ational marijuana zoning regcent capacity involving transportation T he s t r e s s, a n x iet y a nd concern about retainThe federal benefits available roll in order to be and medical devices. The company has depression the pandemic triganother that are sources raw for ulations and won’t start accepting workers who are earnup to 39 weeks, while state benefits forgiven — faced about 200 employees. gers can come from the loss of a materials or components ing applications until April 20. more income through were expanded to more workers backlash from “I’ve called people and there has job or income, grief, tand 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 been communication that said, ‘I make tainty about the future. At Pine 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 more by not coming in,’” Presta told Rest, “we’re experiencing a of rise 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 MiBiz. “That’s out there.” many of the stressors that are 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. Sturgis Molded Products’ operaknown riskunits for suia 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 tors and first-line positions make said.includes cars, utility vehicles 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 as $600 in weekly unemployment received a Paycheck 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 COVID-19 conEveryone’s that trying to figure it out on Protection 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. See DUE DILIGENCE on page 9 for sensitive land uses like religious 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 See INCOME TAX on page 3 efforts in the state Legislature for a $1.5 billion in additional revenue for See STATUS QUO on page 8

P COPING With limited funding WITH restored, Pure Michigan T shifts focus to fall and COVID-19 winter tourism

Former Muskegon coal plant to get new owners

Spectrum Health prioritizes buying local

STATUS QUO

— C ORON AV I RUS I N M IC H IG A N —

Virus concerns drive additional due diligence in M&A transactions

Golf courses bounce back with banner summer

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

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downtown amphitheater By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com GRAND RAPIDS — The business group that pushed several major developments over the past 25 years has multiple new priority projects, including a downtown Grand Rapids amphitheater. Grand Action, which reconvened earlier this year after a nearly three-year hiatus, is studying the feasibility of an amphitheater, expanded convention center space and a professional soccer field. On Oct. 2, the Grand Rapids-Kent County Convention/Arena Authority board approved a resolution authorizing the authority to “proceed with efforts to determine whether there is an appropriate site for the location of an amphitheater.” Grand Action has effectively taken over those efforts from a task force appointed by the CAA Board. Grand Action has “embraced this potential (amphitheater) project and likely will get involved in its planning and fundraising for it,” Steve Heacock, president and CEO of Grand Rapids Whitewater and CAA board member, said during the meeting. “We don’t know that for certain yet, but that’s a very, very good potential.” Heacock added that multiple studies over recent years have all concluded a downtown amphitheater would result in positive economic activity, and that “site selection is the next big step.” Two potential sites on Market Avenue along the Grand River have been previously mentioned: 201 Market SW, where the city recently walked away from a separate $270 million development deal, and 63 Market Ave. SW, the site of the former Charley’s Crab restaurant. The three development projects have been on the radar of civic leaders, developers and city officials for nearly five years. Grand Action, which dissolved at the end of 2017 and relaunched in March under new leadership, has retained consulting firm CSL to provide a new market feasibility study on the projects. The study is expected in late November. Grand Action 2.0 is led by Carol Van Andel, Dick DeVos and Tom Welch, regional president of Fifth Third Bank. DeVos is the only holdover from the previous Grand Action team that was also co-chaired by John Canepa and David Frey, both of whom retired. Formed in 1992, the original Grand Action group pushed major downtown developments such as Van Andel Arena, DeVos Place Convention Center, the relocation of Michigan State University’s medical school to Grand Rapids and the Secchia Center, the Downtown Market, renovation of DeVos Performance Hall and the Grand Rapids Civic Theater.

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sales@mibiz.com | editor@mibiz.com 616-608-6170 MiBiz / NOVEMBER 9, 2020

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