MiBiz March 2, 2020 edition by MiBiz

Startup raises $1.3 million to expand

Manufacturers scrutinize supply chains amid virus outbreak

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MARCH 2, 2020 • VOL. 33/NO. 10 • $3.00

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

SAFETY FIRST:

MSU to open satellite Conquer Accelerator in Grand Rapids

Some employers consider adjusting policies for marijuana, offering second chances By MARLA MILLER | MiBiz mmiller@mibiz.com Some West Michigan employers are altering their policies and procedures to adapt to the new operating environment in which legal cannabis is becoming more readily available at retail locations across the region. As they weigh how to recruit and retain qualified workers in this new environment, human resources professionals are asking regularly about topics related to drug testing during monthly roundtables hosted by the Muskegon-based Employers Association of West Michigan. “We’ve seen maybe about 20 percent of employers who have removed it from their preSabourin hire testing,” Lisa Sabourin, president and CEO of Employers Association of West Michigan, said of pre-employment drug testing. Most employers removing drug testing requirements tend to be light manufacturers and assemblers, according to Sabourin. Other employers are instituting last-chance agreements for current employees who fail a drug test. Pre-employment drug testing remains mandatory in most manufacturing, health care and transportation jobs. Industries such as aerospace and aviation, as well as companies that do work for the Department of Defense and Department of Transportation, are federally regulated and must adhere to federal drug-free regulations. The Employers Association of West Michigan has encouraged companies to train supervisors, managers and team leaders on See MARIJUANA POLICIES on page 10

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By MARK SANCHEZ | MiBiz msanchez@mibiz.com

location this June in Las Vegas, Nev. Mustapha wants to partner with more physicians throughout the country for further expansion of the niche treatment that can prevent amputations and the physical debilitation of patients, plus the emotional trauma for them and their families. “It’s a great model and it’s a great center for care,” said Mustapha, co-founder and CEO of ACV Centers in Grand Rapids. “The patient need is what is driving us right now. The growth in the requirement for care for patients is driving us to accept growth outside of the first center that we opened.” An interventional cardiologist, Dr. Mustapha

GRAND RAPIDS — A business accelerator in East Lansing wants to extend into Grand Rapids this fall to tap into the local entrepreneurial ecosystem and support more hightech startups. Grand Rapids would become the second location for Conquer Accelerator, a partnership between Spartan Innovations L3C and venture capital fund Red Cedar Ventures, both of which are subsidiaries of the Michigan State University Foundation. “What we’re doing is takUrban ing our program that we’ve had success with here and bringing it over to Grand Rapids,” said Frank Urban, director of venture creation in life sciences for Spartan Innovations. “That’s definitely an ecosystem we’re interested in,” Urban said of Grand Rapids. “We have been fairly MSU-centric in the past, but we’re starting to open up a little bit to the surrounding ecosystems around our MSU community.” Founded in 2015 with a goal of building profitable, self-sustaining companies,

See ACV CENTERS on page 9

See CONQUER ACCELERATOR on page 20

ACV Centers CEO Dr. Jihad Mustapha, left, co-founded the practice with Dr. Fadi Saab, right. Dr. Abraham Mata, center, moved from Texas to join the practice. COURTESY PHOTO

SPECIALTY MEDICAL PRACTICE PURSUES SELECTIVE GROWTH STRATEGY Grand Rapids-based ACV Centers to open in Las Vegas in June By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — Two years after forming a specialty medical practice to prevent leg amputations via a procedure he developed, Dr. Jihad Mustapha is ready to begin growing the care model well beyond West Michigan. Advanced Cardiac & Vascular Centers for Amputation Prevention PLC plans to open a

After 616 Lofts fallout, Coppess attempts a comeback By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — A little more than a year after his flagship company removed him as a manager and declared bankruptcy, developer Derek Coppess has re-emerged on the scene with a new real estate venture. After a year out of the spotlight, Coppess has landed once again as the frontman of an ambitious development company, Grand Rapids-based The Establishment Group LLC. The new firm bills itself an “urban revitalization company” whose expertise is intended to help other local

developers realize their visions for projects. With a promotional video for The Establishment Group, Coppess and his new partners reference the past successes at 616 Lofts LLC, but make no mention that the former company is bankrupt and no longer manages any of its signature properties. Ever the optimist and the forwardthinker, Coppess also suggests that The Establishment Group will be bigger and better than 616 Lofts. “Always from the very beginning, I wanted to build a prototype in our city that I could duplicate in different markets because I knew we would run out of old

buildings, I knew we’d run out of opportunities,” he says in the promotional video. In 616 Lofts, Coppess became the face of a well-oiled $100 million development machine that completed seven large-scale apartment buildings and added 300 housing units in Grand Rapids. Creating 616 Lofts helped Coppess “fall in love with leadership and human development,” and the high-profile company is “such an important part of my story,” he says in the video. In its debut project, The Establishment Group recently partnered with West Michigan developer and investor See COPPESS on page 7

Former 616 Lofts founder Derek Coppess is back on the development scene in Grand Rapids with a new venture, The Establishment Group. COURTESY PHOTO

Politics delays action on Pure Michigan funding PAGE 11

INSIDE:

Deep Dive: Outdoor Recreation SEE PAGE 17

GRAND RAPIDS CHAMBER PRESENTS 2020 HEALTH CARE SUMMIT

he Grand Rapids Chamber is presenting the 2020 Health Care Summit on March 24 at Prince Conference Center.

Worried about the cost of health care and its impact on your business? You are not alone. The West Michigan business community has long cited health care and health care costs as one of the top issues they want their Chamber to address. In response, the Grand Rapids Chamber has been pleased to present the annual health care summit for more than ten years. At the 2020 Health Care Summit, we will address the questions that are top-of-mind for the West Michigan business community: Why does health care cost so much? Are we getting our money’s worth? What are other businesses and health care leaders doing about it? This event will bring together health care systems, providers, businesses and government to discuss innovative programs and ideas to meet our health-related challenges. Collaboration among these community partners is critical to finding the solutions our business community desires to positively impact costs, quality of care and outcomes. At the March 24 event, we will explore case studies, industry trends, and new ideas to keep the workplace happy, healthy and

productive, while also positively impacting the bottom line. New this year, we are thrilled to offer breakout discussions on top-of-mind topics. Attendees have the opportunity to dive deeper and reflect with peers on the topic of their choice: human resources, small business decisionmaking on insurance, health care policy or mental health. 2020 Health Care Summit Speaker Lineup: Keynote: The Future of Health Care and Payment Reform • Stephen Carrier, Senior Vice President, Network and Provider Partnerships, Blue Cross Blue Shield of Michigan Panel Discussion: Health Care Costs & Quality • Dr. Matt Biersack, Chief Medical Officer, Mercy Health Saint Mary’s • Gwen Sandefur, MHSA, Chief Care Transformation Officer, Spectrum Health, and President, Spectrum Health Hospital Group • Dr. Mark Traill, Diagnostic Radiology, Metro Health - University of Michigan Health

Health Care Cost Study • Jason Reep, Executive Director, The Employers’ Association

Update: Pine Rest Psychiatric Urgent Care Center • Megan Zambiasi, MA, MBA, Director of Clinical Practice, Hospital Based Services, Pine Rest Christian Mental Health Services & Director, Pine Rest Psychiatric Urgent Care Center

Attending the Health Care Summit

Join the Grand Rapids Chamber to delve into these topics and more at the 2020 Health Care Summit, sponsored by Blue Cross Blue Shield of Michigan. Tickets are available now. Register or purchase a table for your team or clients at grandrapids.org/healthcare.

Business Case Study: C2 Health Nurse Navigator • David Muir, President, Paragon D&E, and Chairperson, Mary Free Bed Rehabilitation Center Board of Trustees

A healthier community doesn’t just lower health care costs. It also impacts the bottom line indirectly, with increased productivity, reduced sick time and absenteeism, and increased lifespan and happiness.

UPCOMING ISSUES

Hudsonville community bank completes $8 million raise

State maps optimal EV charger network

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JANUARY 7, 2019 • VOL. 31/NO. 6 • $3.00

Law tying state rules to federal standard no big deal, biz groups say

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

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With $77M investment, Ablative could draw attention to Michigan’s life sciences industry

By ANDY BALASKOVITZ | MiBiz By MARK SANCHEZ | MiBiz Netherlands-based Gilde Fund in Kalamazoo co-led the venabalaskovitz@mibiz.com msanchez@mibiz.com Healthcare led the Series D financing ture capital round, which includes an round in Kalamazoo-based Ablative unnamed major strategic investor and KALAMAZOO — The $77 million usiness and environmental Solutions, which developed a cathseveral local investors, some of whom investment in Ablative Solutions Inc. groups were equally surprised eter system to treat uncontrollable have backed the company since its ranks as the largest known venture at one of Rick Snyder’s final acts hypertension by deactivating nerves beginning in 2011. Ablative Solutions of Kalamazoo capital deal ever in Michigan, possias Michigan governor: Signing a bill in renal arteries. The investment will fund the comdeveloped a catheter system to bly helping draw more attention to making it more difficult for state agenPetoskey-based BioStar Ventures, pany over three to four years through treat uncontrollable hypertension the state’s life sciences research and cies to adopt rules stricter than federal Michigan Accelerator Fund 1 in Grand a pivotal late-stage clinical trial in the by deactivating nerves in renal development. regulations. Rapids, and Novus Biotechnology See ABLATIVE SOLUTIONS on page 5 arteries. COURTESY PHOTO But while environmental groups say the move jeopardizes natural resources and public health, business advocates downplay the concerns. “I think everyone was a little surprised he signed it,” said Jason Geer, director of energy and environmental policy with the Michigan Chamber PAGE 11 of Commerce. Sponsored by state Rep. Triston www.mibiz.com By SYDNEY SMITH | MiBiz Cole, R-Mancelona, ssmith@mibiz.com H.B. 4205 prohibits Geer state agencies from GRAND RAPIDS — Executives at nonadopting rules more stringent than profit development organizations think federal law “unless the director of the dissolution of the Kent County Land the agency determines that there Bank Authority will affect their operais a clear and convincing need to tions, even if some of the specific effects exceed the applicable federal stanwill remain unknown until the agency is dard.” The law also exempts emerGroups still hope to form healthWest Michigan manufacturers mostly are keeping the status quo with their pre-employment drug screenofficially closed. gency situations and special educaplans if appeal proves successfuling practices even after Michigan voters legalized cannabis use in November. MIBIZ FILE PHOTO: KATY BATDORFF The Kent County Board of Commissioners tion programs. on Dec. 20 voted to dissolve the Kent County “It just requires that if a departBy MARK | MiBiz Land Bank Authority, which is operating as ment wants toSANCHEZ promulgate a rule more msanchez@mibiz.com Innova-Lab, after a lengthy discussion of stringent than federal, they just need the organization’s mission. Ultimately, the to explain it,” Geer said. “I don’t see remedy everIt’s comes, Thewhy Employers’ majority of commissioners decided the land this asf aa hindrance. showing Association wantsstandards to offer members bank had completed its initial mission, espewe’re going beyondstill federal an option forwe’re employee cially in light of improvements in the real and justifying why doinghealth it.” coverage. The association was all set this past estate market since 2011. While more than a dozen states spring to launch an association health plan. Still, the end of marijuana proHowever, nonprofit developers who have similar laws that apply to enviManufacturers face questions Partnering with insurer Priority Health, The hibition will not mean a free-forhave come to rely on the Land Bank to ronmental standards, Michigan’s Employers’ Association planned to offer HMO over drug policies after all for citizens, according to Tami clear messy titles argued the organization applies across all state agencies. and point-of-service products to member VandenBerg, board member of still can play a role in the current market, Snyder vetoed similar legislation in Michigan legalizes marijuana employers, according to a filing with state MI Legalize, an organization that particularly given the affordable housing 2011, saying at the time he was conregulators who approved the coverage last fall. helped bring the legalization inistruggles in the region. cerned it would state’s Then came a“inhibit March 28the federal court ruling By JESSICA YOUNG | MiBiz tiative to voters. “It doesn’t seem like it cost the county ability to work withabusinesses and order by that struck down 2017 executive jyoung@mibiz.com The Michigan Regulation and really anything to have it in place,” said citizens to ensure regulatory President Trumpthat and our subsequent rules issued VandenBerg Taxation of Marihuana Act allows Jeremy DeRoo, executive director of LINC structure fits Department Michigan’s unique proby the U.S. of Labor that broadow that all adults in Michigan can legally individuals 21 years of age or older UP, a Grand Rapids-based real estate develfile.” In a bill-signing statement last of small ened the ability use marijuana, employers are weighto possess, consume, transport or process limited oper. “It seems to be more of an ideological month, Snyder said businesses his previous toconjoin together ing how the new law — and misunderamounts of marijuana or marijuana concentrate. difference between some of the commiscerns were addressed and that state health to form association standings about it — could affect their Smoking marijuana remains illegal in all public places. sioners and the role of a quasi-government rules can still be stricter “when accomplans. workforces. “People get a little too excited,” VandenBerg agency in the real estate market.” panied by the appropriate explanation “We ended up pulltold MiBiz. “You’re not going to be arrested for it. As it stands, the current Land Bank and support.” ing that off the table after Proposal 1 to legalize recreational cannabis passed 56 percent to 44 percent on the November That is a huge, huge win. That doesn’t mean you has 12 months to handle its liabilities and Geer wasn’t the only surprised thatone result from the court,” Jason Reep, presiballot and went into effect Dec. 6, making Michigan can smoke in your apartment if your landlord isn’t fulfill its agreements before it concludes. that Snyder backed said the bill. dent for The Employers’ the only state in the Midwest where adults can allowing that.” What happens after the Land Bank ceases See FEDERAL on page 3 Reep STANDARD Association, based in See LAND BANK on page 2 legally consume marijuana at any time. See DRUG POLICIES on page 4 Grand Rapids. The Employers’ Association stands among a handful of organizations in Michigan that P E R I O D I C A L S had their plans scrapped by the federal court ruling. Reep still holds out hope for launching PAGE 18 an AHP if an appeal turns out successfully. That could occur if the Department of SERVING MICHIGAN BUSINESS SINCE 1988 www.mibiz.com LaborWESTERN prevails in appealing the ruling by U.S. District Court Judge John Bates of the District of Columbia. As well, Congress could enact

Grow Michigan plans second mezz fund JULY 8, 2019 • VOL. 31/NO. 19 • $3.00

3.16.2020

By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — The opportunity to lease brand new office space in the heart of downtown Grand Rapids offered Van Wyk Risk Solutions the chance to grow into a new location. This month, Van Wyk will be the first tenant to move into the new Warner Building, located at 150 Ottawa Ave. NW in downtown Grand Rapids. After outgrowing its space on Wealthy Street in East Grand Rapids, the insurance agency will occupy 17,500 square feet on the 10th floor of the Warner Building. Although the company viewed about 20 different potential office locations, the Warner Building came out on top because of its location, quality and amenities, and because it offered the firm the chance to move into new Class A office space, said Max Van Wyk, chairman and CEO of Van Wyk Risk Solutions. “When you’re starting from scratch in a space, I think it’s always easier and more convenient to have new space, because you can build it out the way you want it to be,” Van Wyk told MiBiz. “We needed to look at spaces where we could accommodate everyone in a central location and provide the amenities our employees deserve.” The vacancy rate for office space in the central business district and suburban market in Grand Rapids remained below 10 percent for the first time in 30 years, according to a report from the Grand Rapids office of Colliers International. The report highlighted the need for more new construction or renovations in older buildings, as companies continue to seek out amenity-rich offices to attract and retain their employees.

Contract Deadline: 4.29.2020

3.30.2020

Transition/Succession Planning Real Estate Spotlight: Barry County Contract Deadline: 3.18.2020

5.26.2020

Education & Talent Development Deep Dive: Immigration Part 2 Real Estate Spotlight: Berrien County Contract Deadline: 5.13.2020

4.13.2020

Commercial Lending Report Deep Dive: Immigration Part 3 Contract Deadline: 5.27.2020

Drinking Economy Real Estate Spotlight: Mason County Contract Deadline: 4.15.2020

6.22.2020

NAIAS Report/Auto Industry Forecast Real Estate Spotlight: Kalamazoo County

BUSINESS AS USUAL?

WATERLOGGED WONDERLAND

Corporations re-examine their Unseasonably rainy weather coupled with near record-high shareholder Great Lakes water levels have left many West Michigan business commitment

owners hoping the region will PAGE 10 dry out in time to salvage the season for visitors and tourists. SEE PAGE 12 SEPTEMBER 3, 2019 • VOL. 31/NO. 23 • $3.00

STORY AND PHOTO BY MARLA MILLER

Lawmakers push economic case for ‘licenses for all’

Grand Rapids explores potential for Craft beverage producerssolar suepower MLCC,at allege 8 sites unconstitutional state laws, enforcement

See AHPs on page 7

By JOE BOOMGAARD | MiBiz jboomgaard@mibiz.com GRAND RAPIDS — Tensions between Michigan craft beverage producers and the state regulatory agency appear to be ratcheting up with the filing of a new federal lawsuit, MiBiz has learned. In the case filed last week in the U.S. District Court for the Western District of Michigan, Sawyer-based Greenbush Brewing Co., Hudsonvillebased Farmhaus Cider Co., the Michigan Cider Association and Grand Rapids-based Vander Mill LLC are suing the Michigan Liquor Control Commission. The parties allege the

New $20M PE firm to target rural Michigan companies

M&A remains active among West Michigan manufacturers

PAGE 11

INSIDE:

West Michigan Deals SEE PAGES 11-21

agency’s enforcement actions and licenses, was in violation of state law Regardless of the federal question revisions stateBALASKOVITZ liquor code enacted regarding the state law, Greenbush By to ANDY | MiBiz over its bonded transfers of cider, last fallabalaskovitz@mibiz.com are unconstitutional, and that which it purchased from Vander Mill. owner Scott Sullivan said the comthe state laws are preempted by federal In the court documents, Greenbush pany met the requirements in the laws regarding production sale aresaid the enforcement division told the revised Michigan Liquor Control GRAND the RAPIDS — Cityand officials of alcohol, particularly which is at acompany it “was required to ferment Code that would allow it to particireviving plans forcider, a solar project classified as wine. pate in the bonded transfer of wine. former Grand Rapids landfill as theevery drop of wine that it sold,” seized Plaintiffs, who say their businesses Greenbush produces some of its own city sorts through broader questionsall of its cider inventory and told the are being financially harmed because wine and cider under the new definiBy JESSICA YOUNG | MiBiz about potential generation at sevencompany to stop using its small wineof the actions, also allegeproperties. the new law maker license, effectively barring the tions, thereby qualifying it under state jyoung@mibiz.com other city-owned is unconstitutionally law to be eligible for bonded transfers. The Grand vague, Rapidsleaving Office ofproducer from selling all cider and wine. beverage producers open to “arbitrary “This has happened to a number hen Grand Rapids-based Sustainability is leading an Energy The lawsuit challenges the constiand capricious” actions. of breweries before us, and for whatMulti-Automatic Tool and Advisory enforcement Committee that, amongtutionality of the seizure, which was Theother lawsuit stems is from the MLCC theeffected without a search warrant. The ever reason, no one has been willSupply Co. started searchtopics, considering enforcement division’s finding on June ing to stand up and take MLCC head ing for prospective acquisipotential for solar projects to helpstate currently is holding about $7,200 19 thatmeet Greenbush, which holds both in Greenbush’s property, according to on,” Sullivan told and MiBiz. “IfCulver, I thinkright, formed their own company to Cedar Run Decoy founders Corey Lucas, left, Boyd tions several years ago, the move came as a 100-percent renewable microbrewer and small winemaker SeeinLAWSUIT on pagePHOTO: 3 JESSICA YOUNG stores today. a reaction to many of the company’s cusenergy goal for city operations bycourt filings. produce traditional waterfowl gear not found tomers buying directly from small shops. 2025. Convinced that he needed to diverA study conducted by the U.S. sify his business in order to compete, Department of Energy’s National President James Byl went looking for Renewable Energy Laboratory opportunities, but it looked at eight sites — including took a few years for the Butterworth Landfill on the the pieces to fall into city’s southwest side — for potential place and find the solar installations. After faulty modright target. eling this summer produced results By JESSICA YOUNG | MiBiz “We hunt and we spend a lot of time out there “I began to look showing most projects would have jyoung@mibiz.com talking about how we can do things better and how three years ago, but the cost the PAGE 4 city over the 25-year life of some of the products we were using just weren’t companies that I saw the projects, officials are revisiting BATTLE CREEK — Cedar Run Decoy Co. LLC aims working for us,” Lucas said. “We wondered why at the time just didn’t the study, said Alison Waske Sutter, SEE PAGE 16 back to we couldn’t just simplify things, get back to the to provide hunters with new ways to get seem to be the right who leads the sustainability office. Byl the basics of waterfowling. basics.” fit,” Byl told MiBiz. “We anticipate the results will The startup grew out of the frustration owners As a result, the experienced hunters decided “Five, six, seven years ago, coming out of show it does make sense economiCorey Lucas and Boyd Culver experienced in tryto team up and build their own products, at first the recession, I think I needed a few years cally and financially for us to install ing to find traditional gear — think hand-carved for themselves and now for others hunting from to rebuild as well. Now, banks are willing to solar at some facilities,” Waske Sutter decoys common in their grandfathers’ generation the potholes of the prairies to the big waters of the lend and it seems like a good time.” told MiBiz. — amid the motorized cheap plastic products freGreat Lakes region. In July, Multi-Automatic, a minorityThe biggest of the eight is the quently stocked at most sporting goods shops. owned wholesale distributor of machine Butterworth Landfill site, which See CEDAR RUN DECOY on page 6 could potentially host a 15-megaSee M&A ACTIVITY on page 5 watt project, according to studies. The city pursued a 2.25 MW project there in 2016, but the plan was abandoned after the developer “disappeared” and stopped communicating, city officials said previously. $2 million, according to federal securities filings. The city hopes to issue a request Partners hope to incentivize developers to add ‘hundreds’ of units The group as of early July said in the filing that it for proposals by the end of the year had secured more than $1 million from investors. for a new project that would simiBy SYDNEY SMITH | MiBiz and securing local planning approvals from a The six investors in the fund include the larly be developed by a third party. ssmith@mibiz.com municipality, said Ryan Kilpatrick, executive direcCommunity Foundation, Holland-based finanFor at least some of the remaintor of Housing Next, an initiative focused on supcial/investment services firm Brooks Capital ing sites, however, Waske Sutter HOLLAND — A new fund aims to cover pre-develporting housing solutions in Ottawa County. Management LLC, the West Coast Chamber of anticipates the city building and opment costs to incentivize developers to add “Very often, the development community is Commerce, and members of the Padnos family owning the solar projects. affordable housing in the Holland and Zeeland going to build what they know is successful in a who own Holland-based Louis Padnos Iron and The federal study looked at areas, MiBiz has learned. market,” Kilpatrick told MiBiz. “It’s a risk and it Metal Co. Two other investors asked to remain seven city-owned sites: the Lake The goal for the Holland/Zeeland Housing Pretakes a lot of front-end work to convince a municanonymous. Michigan water filtration plant in Development Fund Inc. is to create projects that ipality that it’s the right project. Our goal would be The capital should be enough to accomplish the Ottawa County, the Market Avenue would make financial sense for a public or private to position a development appropriately for the mission of the fund, said Mike Goorhouse, presiretention basin, City Hall, the Grand developer to take on after pre-development work right group.” dent and CEO of the Community Foundation. The Rapids Police Department downis completed. Housing Next, the Community Foundation of investors are hoping to initiate “hundreds” of units town station, the Bridge Street Fire The pre-development work can include site the Holland/Zeeland Area and several investors across the targeted communities, he said. See SOLAR on page 3 control, environmental inspections, site planning helped organize the fund, which is targeting to raise See HOUSING FUND on page 15

Manufacturers prepare ahead for cyber threats

6.8.2020

Contract Deadline: 4.1.2020

4.27.2020

See CLASS A OFFICE on page 9

Industry 4.0

Court ruling dashes plans for new AHPs

Amenity-rich Class A office space still in demand in GR, suburban markets

Deep Dive: Immigration

Contract Deadline: 3.4.2020

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

‘FLIGHT TO QUALITY’

5.11.2020

Business of Senior Care

Closing of Kent County Land Bank presents unknowns for nonprofit developers

Could better commuter transit aid talent attraction?

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‘BACK TO THE BASICS’ Startup CedarINSIDE: Run Decoy brings traditional waterfowling Commercial gear back to the market

Lending Report

New fund aims to spur affordable housing development in Holland

Great Lakes VCs invest locally PAGE 8

INSIDE:

Multifamily development SEE PAGE 12

Contract Deadline: 6.10.2020

MARCH 2, 2020 / MiBiz

sales@mibiz.com | editor@mibiz.com | 616-608-6170 Visit www.mibiz.com

Published since 1988 MiBiz® is a registered trademark of REVUE Holding Co., Inc.

Publisher Brian Edwards / bedwards@mibiz.com Associate Publisher Denise Montambo / denise@mibiz.com Editor Joe Boomgaard / jboomgaard@mibiz.com Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writers Sydney Smith / ssmith@mibiz.com (real estate, economic development) Jessica Young / jyoung@mibiz.com (manufacturing, agribusiness, nonprofits) Contributing Reporters Andy Balaskovitz, Marla Miller Copy Editor Claire Boomgaard VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com

Environmental groups praise Consumers for new 2040 clean energy target By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

onsumers Energy has upped the ante on its own long-term clean energy plan, announcing in late February it expects to hit net-zero carbon emissions for its electricity portfolio by 2040 as part of its climate change efforts. In its 20-year Clean Energy Plan approved by the Michigan Public Service Commission in June, the company agreed to reduce its carbon emissions 90 percent by 2040. The Jackson-based utility will reportedly have two natural gas plants operating into the future, meaning offsets from those power sources may come from carbon sequestration, landfill methane capture or major tree planting. “We don’t have all the answers yet, but our Clean Energy Plan is a great start,” Consumers

“Consumers Energy’s actions are a stark contrast to DTE Energy, which has continued to over rely on dirty, expensive fossil fuels that pollute our air, land and water. Michiganders are demanding cleaner, more affordable energy, and DTE should take a page out of Consumers’ book.” — NICK OCCHIPINTI Government Affairs Director at the Michigan League of Conservation Voters

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President and CEO Patti Poppe said in a statement. “We have the know-how and the time to continue innovating and creating to solve this problem.” The company anticipates a 56 percent renewable energy portfolio by Poppe 2040, with an additional 12 percent from energy storage and 10 percent from natural gas. Reducing demand through customer energy efficiency programs will account for the remaining portfolio, which will avoid the need to build three new gas plants, company officials have said. Under sweeping statewide energy laws passed in 2016, regulated utilities will file integrated resource plans to track long-term energy goals. Consumers expects to formally file its next plan in 2021. Net-zero carbon goals are increasingly common among utilities, energy companies and other corporations but clean energy advocates say more details are needed about how exactly the companies will get there. Consumers and other utilities also have pledged to reduce methane emissions from their natural gas supply chain, power plants and purchasing. However, clean energy advocates say Consumers’ net-zero pledge is unique by not relying on carbon offsets while building new natural gas plants.

Environmental support To environmental groups, Consumers has stood in contrast to the state’s other large investorowned utility, Detroit-based DTE Energy. DTE filed its first integrated resource plan after Consumers, and the MPSC on Feb. 20 recommended significant changes to it, including allowing for more third-party development of renewables and increasing energy efficiency spending.

The Michigan League of Conservation Voters and Sierra Club both called Consumers’ plan a “stark contrast” to DTE, which has plans to build a new $1 billion natural gas plant in Southeastern Michigan in the coming years. “We applaud Consumers Energy for proactively addressing its carbon footprint and helping combat climate change by eliminating the use of coal and helping customers use energy more efficiently,” Nick Occhipinti, government affairs director for Michigan LCV, said in a statement. “Consumers Energy’s actions are a stark contrast to DTE Energy, which has continued to over rely on dirty, expensive fossil fuels that pollute our air, land and water. Michiganders are demanding cleaner, more affordable energy, and DTE should take a page out of Consumers’ book.” The Sierra Club, however, is calling for a quicker shutdown of Consumers’ J.H. Campbell coal-fired plant in Port Sheldon in 2030. In its current plan, Consumers plans to close two units at the Campbell plant in 2031 and the third unit in 2040, previously telling MiBiz there are “logistical advantages” to keeping its three remaining coal units operating at a single site. Consumers will close the remaining units at its D.E. Karn plant near Bay City ahead of Campbell. Meanwhile, Consumers plans to displace its retiring coal and nuclear portfolio mostly with renewables, including 6,000 megawatts of solar by 2040, and energy efficiency. “Consumers Energy is taking another bold step in committing to net zero by 2040, setting a stark contrast to DTE’s 2050 goal,” Mike Berkowitz, representative for the Sierra Club’s Beyond Coal Campaign, said in a statement. “However, we believe that West Michigan communities shouldn’t have to wait two more decades for clean air, clean water, and a stable climate. This net zero commitment must include a plan to retire their polluting J.H. Campbell coal plant by 2030, and facilitate a supported transition for impacted workers and community members.”

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MANUFACTURING

CONSIDER THE SOURCE West Michigan manufacturers search for supply chain solutions amid coronavirus outbreak By JESSICA YOUNG | MiBiz jyoung@mibiz.com

he ongoing coronavirus outbreak in China is forcing West Michigan manufacturers to find creative solutions to avoid production disruptions. Coupled with trade tariffs and other issues in the region, manufacturers increasingly are realizing they need to intimately understand their downstream supply chains and prepare for the worst at all times. “Our clients are looking for any solution they can come up with, and the solution they ultimately choose will just be a matter of time,” Scott Hill, partner at the Grand Rapidsbased law firm Varnum LLP, told MiBiz. “Just not knowing yet where the chips will fall, there’s a lot of damage control happening right now in terms of if you can’t get 100 percent of your supply, can Hill you at least get 50 percent?” Even before the outbreak of coronavirus, which began to take shape in January, many manufacturers had already begun moving their supply chains out of China because of risk and expenses stirred up by U.S. trade policies. Benton Harbor-based appliance manufacturer Whirlpool Corp. (NYSE: WHR) is largely dual-sourced, which gives the business “a little bit of hedging,” company chairman and CEO Marc Bitzer told investors during an earnings call on Jan. 28. “Throughout the last couple of years, (for) the most critical components, we went aggressively for dual-sourcing,” Bitzer said. “We’re single-sourced only in very, very few components.” Coming out of the recession, single-sourcing became the trend in order to mitigate costs, according to Hill. Dual-sourcing — which is the practice of using two suppliers for a given

component — can work to lower risk, but the system is complicated and often more expensive than single-sourcing, especially for critical parts that need to be verified by an OEM. “You have to balance as a supplier whether you want to go down the route of dual-sourcing because the fact is you’re probably going to pay a little more to have that risk protection,” he said. “The unknown then comes in when you have dual sources, if one shuts down then do you automatically have the other source to protect you?” Often, dual-sourcing cannot protect an entire supply chain. Factories enter into agreements that lock in a percentage of the total components that will come from each source. During a crisis or shortage in a particular region, this could mean that some supply of components can flow into the supply chain, but the missing pieces still will not be replaced. “It’s not a ‘flip the switch’ kind of thing,” Hill said. Manufacturers that have shorter durations in their supply agreements are probably better positioned at the moment than those with longer-term contracts. “In the longer-term relationship, you might get a couple of percentage points off from a pricing standpoint, which is good, but you’re locked into a situation,” Hill said. “If you look at somebody who has still two and a half years to go on a three-year-long term supply agreement as compared to somebody who is ready to exit in six months, you can better position yourself in the future with a shorter duration. I could see where manufacturers are entering into shorterterm arrangements and paying a little bit more in the short term for flexibility.”

Additional costs Nearly every manufacturer with an international supply chain has dealt with added expense, uncertainty and risk as the U.S. and China have been locked in a bitter trade battle that began in 2018.

The conflict has seen the world’s two largest economies impose tariffs on hundreds of billions of dollars worth of goods from both countries. Negotiations are continuing but have proven tricky. In the meantime, manufacturers who source raw metals, electronics or other components directly or indirectly from China have dealt with the ongoing uncertainty of the trade war by shifting their supply chains or finding ways to eat the added costs. The coronavirus has just further fueled this strain between U.S. and Chinese manufacturers, sources said. The crisis fell in tandem with the Chinese New Year holiday, which lasted until Feb. 8. As an official public holiday, many Chinese people planned to take a week off from work for the celebration. As the virus spread from person to person, the holiday break was extended because of quarantines and travel restrictions to contain the virus. Chinese workers finally began trickling back into work last month, a week or more later than usual. However, most of the available evidence indicates many healthy workers, either facing quarantine measures or simply scared of catching the virus, still remain home. Rockford-based shoe manufacturer Wolverine World Wide Inc. (NYSE: WWW ) expects the virus will cost the company approximately $30 million in the first half of 2020, according to an earnings call last week. That’s on top of about $15 million in incremental costs associated with the trade dispute. This financial loss comes even despite the company diversifying its supply chain away from China in recent years, according to Wolverine CEO Blake Krueger. Wolverine expects China to represent less than 20 percent of its global production in 2020, down from about 40 percent in 2019.

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“We are fortunate to have greatly reduced our reliance on China sourcing over the last five years. However, we expect some production delays from China factories and a potential slowdown in the supply of some raw materials sold by China vendors to manufacturers outside of China,” Krueger said in the call, adding that the situation will be difficult to quantify until factories have more clarity on the return of workers from the Chinese New Year. “So far, the return rate of workers to factories has been better than expected and is not expected to have a material impact on production in Q1,” he said. At Allegan-based Perrigo Co. plc (NYSE: PRGO), CFO Raymond Silcock told analysts last week that the coronavirus should not cause any disruption for the company. “Obviously the situation continues to evolve, but currently we don’t anticipate it having more than a modest impact on our results,” Silcock said. “Most of our manufacturing facilities are in the U.S. and Europe, although some of our products are manufactured and we source raw and other materials from around the world, including in China. “All of the plants in which we manufacture and from which we source our products are currently running. While we have incurred small incremental air freight costs to date this year, we don’t expect these to have a material impact on our results in Q1, and based on what we know today, we don’t expect more than a modest impact on our fiscal year.”

Complex system Getting people to return to work is just the first step in a complicated process to get factories restarted and producing at a meaningful rate. Jim Gavin, purchasing manager for ADAC Automotive, said some of the Grand Rapidsbased Tier-1 supplier’s direct suppliers needed to get specific approval from the Chinese government to return to production. “They had to show they had procedures in place, (the government) had to know that all their workers would have an adequate supply of masks, and they had to show that they’re not going to contaminate people through the way they’re going to have people congregate with each other,” Gavin said. As MiBiz previously reported, a tooling engineer from ADAC was near Wuhan when the public health crisis broke in late January and had to be flown out of the country on a chartered jet from the U.S. Embassy. Upon landing at a U.S. Air Force base in California, the employee was under quarantine for two weeks. To mitigate any supply disruption, ADAC maintains a “safety stock” of components in a U.S. warehouse that holds about four weeks of inventory, according to Gavin. ADAC also had several ocean containers of products that were shipped before the Chinese New Year. Gavin said these stockpiles could keep the company at full production until late March or early April. However, ADAC is a single cog in the notoriously multifaceted automotive supply chain. “It only takes one part to shut down,” Gavin said. “What’s really going to be the issue is how long the OEMs are going to be able to keep production going with all of their suppliers.” Visit www.mibiz.com

FINANCE

Grand Rapids an outlier in bank branch openings By MARK SANCHEZ | MiBiz msanchez@mibiz.com

s much of the banking industry went in the opposite direction, Spartabased ChoiceOne Bank opened branches starting in late 2018. New offices in Rockford and downtown Grand Rapids expanded ChoiceOne’s footprint and contributed to the market ranking as one of the top 10 metropolitan areas in the U.S. for bank branch openings from 2018 to 2019. In fact, the Grand Rapids metro was a bit of an outlier from an ongoing national trend, according to an analysis by Magnifymoney.com, a unit of LendingTree.com, that used data from the FDIC Summary of Deposits for June 2019. ChoiceOne Bank’s new locations and other openings in the local market from 2018 to 2019 stood in contrast to the overall trend in the U.S. banking industry that’s been reducing its brickand-mortar locations. However, even the Grand Rapids area has fewer bank branches than it did just a few years ago. Many of the markets that added branches last year are smaller or mid-sized metropolitan areas such as Toledo, Ohio; Springfield, Mass.; and Des Moines, Iowa, each of which ranked just Potes above Grand Rapids on the Magnifymoney list. Quite often, community banks opened new branches in those markets in a move to extend or protect their market turf from much-larger national competitors “who may not have as sharp of an eye on the smaller metros as the community banks,” said Chris Horymski, a senior research analyst at Magnifymoney. That’s likely because large, national banks generally are more focused on growing digital services and have shrunk or resized their sprawling branch networks over the years, Horymski said. The trend has provided an opportunity for community banks in growing mid-sized metro markets such as Grand Rapids, he said. “Those are the new battlegrounds for the banks remaining,” Horymski said of mid-sized metro markets around the nation. In the Grand Rapids area, ChoiceOne Bank added the Rockford and downtown locations even as digital banking grows and foot traffic to bank branches declines, limiting how many more branches the bank may develop in the future as it grows, CEO Kelly Potes said. “We don’t think that we have to add as many as what the regionals are shrinking, but as a smaller community bank, we do have to have some branches that are convenient for our clients and our potential clients,” he said. As more people bank digitally, any new branches it might develop would likely incorporate technology and be much smaller than in the past, although ChoiceOne’s downtown Grand Rapids location is “fairly good size” because it serves as a regional hub, Potes said.

“We don’t think that we have to add as many as what the regionals are shrinking, but as a smaller community bank, we do have to have some branches that are convenient for our clients and our potential clients.” —KELLY POTES CEO, ChoiceOne Bank

“I would think anything in the future that we would do, if we need to, it would be a smaller footprint and there would be more automation within the branches,” Potes said. For instance, the downtown Grand Rapids and Rockford locations ChoiceOne opened in 2018 use interactive teller machines for their drive-up windows that are connected to the bank’s call center in Sparta. That kind of technology is indicative of the way many banks have retooled branches or developed new locations today. Bank of America, for example, now has three so-called “advanced financial centers” in the Grand Rapids area that use video conferencing instead of teller windows to greet and assist customers. As banks have further deployed digital services and relied less on physical branches, the top 100 markets across the U.S. lost nearly 1,300 bank offices since 2018, according to Magnifymoney’s analysis. Among the 100 largest metropolitan markets, 79 now have fewer branches than in 2018. The number of branches grew in 15 metro areas and was unchanged in six. Despite the outliers such as Grand Rapids, the combined branch closures in the top 10 markets for losses vastly outpaced the gains in the top 10 market for new bank offices by a nine-to-one ratio. Large cities shed the most bank branches. New York lost the most branches in 2019 with 379 fewer offices than a year ago, or about half of all losses nationally. Chicago lost 74 branches and 57 branches closed in Washington, D.C. The trend toward fewer bank branches stems in part from demographics. A younger generation that grew up in the Digital Age simply prefers online banking or using a bank’s smartphone app. In results from a small online survey conducted by Magnifymoney that shows just how much banking has changed, three out of four people said bank branches are becoming “a thing of the past.” It comes as no surprise that Millennials and members of Gen Z were most likely to hold that opinion. The bigger eye-opener: More than two-thirds of Baby Boomers felt the same way. Nearly eight in 10 Baby Boomers said they did their banking digitally, while one in 10 hadn’t even been inside a bank branch in the last year.

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FOOD BIZ

Feds to investigate USDA aid to farmers after Senate finds ‘deep inequities’ By JESSICA YOUNG | MiBiz

of Market Facilitation Program (MFP) payments, Uncertainty lingers which were distributed to farmers earning less Part of the problem with the MFP program was than $900,000 a year who produced one of the ollowing a request from Michigan Sen. the speed at which it was rolled out, according agricultural products that faced retaliation from Debbie Stabenow, the U.S. Government to Lippstreu. Chinese tariffs. Accountability Office will investigate Because the MFP program was launched The vast majority of the top MFP payment the integrity of the U.S. Department of quickly to temporarily avert a crisis for many rates — about 95 percent — went to southAgriculture aid to farmers affected by farmers, it was unique from other USDA proern farmers, who have been harmed less than the U.S. trade war with China. grams that are administered with more robust other regions, according to the Senate report. Sen. Stabenow, who is ranking member of the oversight in place, he said. Moreover, the data found that farms owned by U.S. Senate Committee on Agriculture, Nutrition, “There was some uncertainty in the beginbillionaires as well as foreign-owned companies and Forestry, made the request to GAO in January ning and I think you’ve seen some continuing also received a disproportionate amount of aid, after a Senate review found “deep inequities” in uncertainty overall in the industry,” Lippstreu including $90 million awarded in purchase conthe distribution of the funds. said. “How USDA is calculating the payments that tracts to a Brazilian company. The move comes as farmers and are made to the farmers and different industries The MFP pay ments, which agribusinesses have expressed conover time have raised concerns that a program went directly into farmers’ bank cerns with a lack of scrutiny into how like this, if it’s not done in an equitable manner, accounts, were distributed in Sponsored by: the funds were divvied up. runs the risk of picking winners and losers among three phases. The first round of DAN VOS “At a time when virtually everydifferent commodities and crops and different payments began in August 2019 CONSTRUCTION one in agriculture is under pressure, segments of the country. Geographically, that’s and was comprised of the higher COMPANY both from the macro factors facing been a concern since the beginning.” of either 50 percent of a producthe economy and also the trade The disparities in payments can also be found er’s calculated payment or $15 per wars, there is certainly a lot of focus on how among commodity lines. For example, corn and acre. For producers who received payments in USDA is dispersing payments, how it’s doing its dairy farmers were given “very small payments” the first round, their second-round payments math and determining what it believes to be fair relative to the economic damage they suffered were 25 percent of their calculated payments and equitable,” Chuck Lippstreu, president of the from the trade war, according to Lippstreu. and were issued in November 2019. The third Michigan Agri-Business Association, told MiBiz. Since the aid payments have already been disand final round of payments was announced According to the Senate report, billions of doltributed to farmers, it remains unclear what conon Feb. 3, 2020. lars in mitigation payments to help farmers has sequences the USDA or farmers could face when As of Feb. 24, Michigan farmers had received been distributed unevenly across the country, the investigation concludes. The Trump adminabout $260 million of the $14.34 billion in MFP benefitting some regions more than others. istration has announced that aid payments to payments distributed to farmers so far, accord“It’s clear that the Trump Administration’s farmers will end after the February round in lieu ing to the latest report from the USDA. The vast trade assistance payments pick winners and losof a trade deal negotiated with China that will majority of that funding — about $240 million ers rather than help the farmers who have been secure $40 billion to $50 billion in agricultural — has gone to people who grow non-specialty hit the hardest by this President’s trade policies,” exports to China over the next two years. crops such as wheat and soybeans. About $19 Stabenow said in a statement. “This investigation “The era of economic million has been distributed will shed more light on what has been happening, surrender to China is over,” to growers of specialty crops “We’d rather be talking and bring accountability and fairness to a prolike cherries and grapes. about expanding trade Vice President Mike Pence gram that has spent billions of taxpayer dollars.” said at a Michigan Farm Dairy farmers and others and exports around The investigation will determine whether the Bureau meeting last week. who own livestock received the country, but model the USDA used to distribute payments has Still, he added, the adminisapproximately $872,000. accurately reflected trade damages felt by farmtration has “a ways to go” to By comparison, farmbecause we have the ers, how higher payment limits have increased alleviate the damage of the ers in California, a state that MFP program, which distributions to large complex farm operations, last three years. produces about 5.25 times and whether the USDA is effectively preventing “There’s a lot of work more food by value than has been important, fraud, waste and abuse in the program. that still needs to happen Michigan, received a total let’s be sure that it’s “This is a picture-perfect example of the and there is a lot of uncerof $300 million. Farmers being done in a fair importance of congressional oversight,” tainty with current events in Texas, which grows less and equitable way.” Lippstreu said. “This is a great example of why in China,” Lippstreu said. than half of the value of food it’s important to have leaders in Congress who “Farmers and everyone in as California, have received are focused on agriculture and why it’s important more than $1 billion. — CHUCK LIPPSTREU agriculture would prefer to for us to have Senator Stabenow on the Senate be able to trade and export, “All it takes is a look at the President of the Michigan Agri-Business Association ag committee.” we would prefer to not map to at least have legitibe having this discussion mate questions about how about the Market Facilitation the payment rates are laid Questions remain Program. We’d rather be talking about expandout,” Lippstreu said. Farmers who have been hit by the U.S. trade war ing trade and exports around the country, but In addition to Texas, the states that have with China have been issued about $28 billion in because we have the MFP program, which has received the most funding from the MSP proaid funding from the federal government since been important, let’s be sure that it’s being done gram are the midwestern states of Iowa, Illinois, 2018. The most recent aid has come in the form in a fair and equitable way.” Minnesota and Kansas. jyoung@mibiz.com

FOOD BIZ

MARKET FACILITATION PROGRAM DATA Last Updated: February 24, 2020 STATE Alabama Alaska Arizona

TOTAL FUNDING $121,693,457.91 $95,278.40 $54,574,760.80

Arkansas

$441,221,407.89

California

$300,226,050.94

Colorado

$104,857,633.57

Connecticut Delaware

$1,072,356.77 $18,142,086.78

Florida

$24,093,866.03

Georgia

$310,541,726.16

Hawaii Idaho Illinois Indiana

$179,348.53 $74,102,914.88 $1,450,003,841.56 $725,043,098.97

Iowa

$1,581,181,464.84

Kansas

$1,008,765,781.51

Kentucky

$229,776,711.13

Louisiana

$162,560,040.48

Maine Maryland Massachusetts Michigan

$2,327,188.01 $55,392,495.03 $6,793,515.43 $259,923,587.17

Minnesota

$1,065,405,621.36

Mississippi

$323,300,505.25

Missouri

$632,267,239.85

Montana

$128,525,660.58

Nebraska

$960,016,035.01

Nevada New Hampshire New Jersey

$4,124,887.52 $612,018.43 $9,931,941.48

New Mexico

$37,242,827.53

New York

$65,372,567.72

North Carolina

$194,188,116.27

North Dakota

$692,919,682.37

Ohio

$523,314,151.88

Oklahoma

$206,465,645.38

Oregon

$42,010,134.45

Pennsylvania

$79,276,369.58

Puerto Rico

$1,343,338.77

Rhode Island South Carolina South Dakota Tennessee Texas Utah

$121,409.84 $60,104,221.00 $523,320,503.21 $231,528,874.92 $1,072,213,478.92 $10,864,152.86

Vermont

$5,954,228.22

Virginia

$72,523,811.27

Washington West Virginia Wisconsin Wyoming Grand Total

$106,339,866.03 $3,505,337.61 $347,447,292.27 $7,695,405.40 $14,340,503,937.77

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REAL ESTATE & DEVELOPMENT COPPESS

Continued from page 1 Brian Papke for a proposed 36-unit mixed-use building in the heart of the Creston Business District at the vacant site of a failed 616 Lofts project first proposed in 2014. Coppess juggled forming The Establishment Group as he wrestled with mounting legal troubles: In the span of nearly three years, he has faced at least 10 lawsuits involving former investors, some of which have been dismissed or settled. MiBiz has spoken with more than a dozen former and current colleagues and investors in 616 Lofts and The Establishment Group, and reviewed various court documents since 616 Lofts filed for bankruptcy more than a year ago. From that reporting, a common theme emerged: Coppess’ contribution to the demise of 616 Lofts as well as lingering questions about his past and current ventures suggest he might have ground to make up in regaining trust in the community where he again hopes to develop.

Establishing a vision For many observers in Grand Rapids’ development community, the bankruptcy of 616 Lofts was unsurprising given what they describe as an unsustainable business model at a company led by a dreamer who eschewed the day-to-day tasks of operating the company. Coppess relished his role as the frontman, garnering headlines and racking up numerous awards, including 2013 emerging entrepreneur of the year honors from the Grand Rapids Downtown Alliance. As 616 Lofts expanded its holdings, Coppess’ profile grew along with it. Whether in blogs on 616 Lofts’ website or for the Grand Rapids Business Journal, he often spoke about the importance of establishing the socalled “tribe” to the success of his business. “People don’t buy what you do, but why you do it,” Coppess told MiBiz for a 2012 report. “Knowing the ‘why’ of what you’re doing inspires leadership, and when you have that ‘why’ that helps attract people to you.” 616 Lofts hit the market in Grand Rapids at a time when interest in building new apartment units was seemingly at its highest in the early recovery years after the Great Recession. Buoyed by strong interest in new projects and spurred by investor capital, 616 Lofts went on to produce multiple successful projects, including Lofts on Michigan, Lofts on Alabama, Lofts on Ionia and Lofts on Prospect. To 616 Loft’s credit, the company did “establish a new mojo” that downtown Grand Rapids was lacking, Mike Corby, executive vice president at Grand Rapids-based Integrated Architecture, told MiBiz last year. The projects from 616 Lofts “brought urban living back to life” in the Grand Rapids market, he said. Other executives seemed to agree. “They had a unique approach to property management that embraced the individuals and supported the community,” said Kara Wood, the former managing director of economic development services for the city of Grand Rapids who had reviewed 616 Lofts’ projects on behalf of the city. “They’ve worked very collaboratively not only with their residents, but with the businesses in the area, encouraging their residents to do business with or frequent the local businesses,” Wood said.

Small business, big consequences Growing up in Lake Odessa, Coppess began learning about real estate at an early age by helping his father, a schoolteacher, build a spec house each summer. While attending school at the College of William & Mary in Williamsburg, Va., his interest in real estate was further bolstered when he became the self-described “trash boy” for a property management company there. Coppess left college because of a sports injury and returned to West Michigan, where he went on to launch his first venture. At 21, he formed Visit www.mibiz.com

Coppess Group LLC and began buying duplexes, eventually managing a couple of hundred units. The company would later serve as a launching pad of sorts for 616 Lofts. Coppess told MiBiz his work at the Coppess Group went well until his main investor and mentor, Murray Hough, died in 2016. Hough was a “tremendously successful” businessman who was the president of RMH Management until his passing, according to his obituary. The relationship soured when Hough’s widow, Violet Hough, sued Coppess in 2017, alleging he used false pretenses to secure an investment of several hundred thousand dollars in 2009 from her late husband and failed to pay off promissory notes. In total, Coppess Group owed her more than $241,000 in defaulted payments, according to court filings. According to a settlement from August 2019, Coppess and his wife, Amanda Coppess, were ordered to pay $375,000 to Violet Hough. At least nine other lawsuits filed against Coppess and affiliated entities reinforce the same theme: Individuals made investments, were kept in the dark about where their money actually went, and were not paid back in the end. Several of the lawsuits allege Coppess was deceptive; others accuse him of falsifying documents to swindle potential investors into putting money into projects that never came to fruition. In an interview with MiBiz last year, Coppess said the Hough case was emotional for him because Murray Hough, a distant relative and longtime mentor, taught him about business deals via Coppess Group. He claimed Murray Hough refused to take the payments Coppess owed. “What’s hard is there’s so many times I tried to pay him back because I didn’t need the capital anymore, and he’s like, ‘No, it’s great,’ just because it kept us connected,” Coppess said, calling it “the saddest day in my life” when the lawsuit was filed. “I’d never been in anything like that, so I didn’t even know what it meant, really.”

Building a brand Through his experience owning and operating duplexes, Coppess said he began seeing the opportunity to fill a growing need for apartments in downtown Grand Rapids. With an interest in the front-facing side of development, he set out to create a new company where he could focus more on development rather than on operations as he did at Coppess Group, Coppess told MiBiz. He talked of seeing vacant buildings and envisioning what they could become, the community they could create. The visionary side of Coppess is what led to the creation of 616 Lofts, an umbrella company that did not hold ownership stakes in any of its affiliated properties. At 25, he began building the team and enlisted his friend Marjorie Steele to help create the brand for 616 Lofts. Steele, a Grand Rapids-based independent contractor in branding and creative direction, served as creative director for 616 Lofts from 2012-2014, and was for a time involved in The Establishment Group, Coppess’ latest venture. Reflecting on her experiences at 616 Lofts and elsewhere, Steele said Coppess was creative in the way that he made projects work. “Look at what he did with (Lofts on) Ionia — that was a brilliant development. The Kendall Building — I am proud of those projects,” she said. A self-described “maximizer,” Coppess often talked of his tribal leadership mentality, which involved forming a close-knit staff and being passionate about the people behind the work and the “why” behind what they did at 616 Lofts. In focusing on assembling his tribe, Coppess amassed a staff of around 30 people to run a company that managed seven apartment buildings in and around downtown Grand Rapids. A former 616 Lofts employee who spoke with MiBiz over the last year on the condition of anonymity said the amount of money being spent on staff and events from 2016-2017 “didn’t add up with revenue generation.” In 2017, staff began “disappearing.”

616 Lofts redeveloped the Kendall Building in downtown Grand Rapids and at one point had its headquarters in the building. The property was later sold to the current owner, Waséyabek Development Co. LLC. MIBIZ FILE PHOTO: KATY BATDORFF “Derek was always elusive during this time about how things were going,” the person said. The person in 2017 also gave a loan to Coppess, who missed several payments. Over the past year, MiBiz contacted numerous people who worked at 616 Lofts or invested in its projects, many of whom did not respond or declined to comment on the record. Another individual said he has since “put that chapter behind me.”

Unraveling begins According to testimony during the bankruptcy case, investors in 616 Lofts gradually became aware of the company’s financial turmoil starting around March 2017, when a bank contacted one of them to seek payment because Coppess could not be reached. As well, several of the company’s high-profile projects began to sputter. That included the $14 million Lofts on Wealthy project, in which 616 Lofts proposed turning the former Kregel publishing headquarters into a 75-unit mixed-use development. “We got paid for everything but the last project, which was the Lofts on Wealthy project, which we were not fully paid on,” said Corby of Integrated Architecture, which worked on several of 616 Lofts’ projects. “I can’t speak for anyone else on any of the other projects, but for the other projects, for the most part, we were fully compensated.” One executive who stepped in to run 616 Lofts at the request of investors estimated its payroll was about three times the income from management fees that it received, according to testimony during the bankruptcy proceedings. Investors who testified that they had been kept in the dark opted to remove Coppess as the manager of the company, but kept him on as an employee. Jeff Moyer, the Chapter 7 Bankruptcy Trustee assigned to the case, said the company’s headcount of 30 people seemed out of whack with what was needed to run the business. “To run seven projects? I guarantee I could run the whole show with maybe four or five people,” Moyer told MiBiz at the time of the bankruptcy. When it became clear that 616 Lofts was facing serious trouble, Coppess in June 2017 struck a relationship with KMG Prestige Inc., a property management company based in Mt. Pleasant. KMG Prestige now manages the rebranded Lofts of GR, which is made up of some of the 616 Lofts portfolio. The move resulted in some in-house layoffs, with Coppess telling MiBiz at the time that he did the deal so he could focus on other projects. In late 2018, as investors started filing lawsuits against 616 Lofts and related entities, the creditors and members of 616 Lofts agreed: It was time to declare bankruptcy.

Making things right Coppess insists he will pay people back the debts they are owed and “make it right.” He has not

filed for personal bankruptcy, and told MiBiz last year that he has no plans to do so. “I was taught you make sure you pay whatever you sign up for and, honestly, this is like the extreme ownership piece of it,” he said. “I’m not gonna play victim on it (and) hide. I’m taking anything that comes at me — good, bad, whatever — and dealing with it. And I’ve been able to learn a ton from it.” One lesson Coppess learned is that he doesn’t want to be an operator going forward, instead opting to focus on his creative side. “For me to build a nationwide property management company is not something I’m planning to do,” Coppess said. “It’s more of getting me back to my creative strengths and just getting me in a spot where I can use my creative strengths in development, but also nurture people that also want to get in the same field.” Instead of designing The Establishment Group with a “Derek-centric” model, Coppess said he instead is surrounding himself with people he trusts, and with whom his values align. In the past, he didn’t think much about alignment, but in this new venture, it’s “hitting me in the face,” something he says he has never experienced before. Along with Coppess, The Establishment Group is made up of Isaac Oswalt, the founder of 21 Handshake, a digital marketing firm; Arthur Vachon, a real estate agent in Caledonia; and Joel Dunn, who lives in Grandville and appears to be a representative of It Works, a multi-level marketing company that sells body wraps and other products, according to his website. Neither Vachon nor Dunn could be reached for comment via calls, emails and social media messages. During her involvement with The Establishment Group until spring 2019, Steele said she saw patterns reminiscent of her tenure at 616 Lofts. The “searing red flag” came about as her invoices went unpaid, which Steele documented in emails and invoices for The Establishment Group and provided to MiBiz. Although she was eventually paid for the branding work, Steele said she has declined to work with The Establishment Group going forward.

New venture Along with its first project proposal, The Establishment Group paid $1.4 million to acquire a site previously owned by an affiliate of 616 Lofts, which had planned to turn the Creston neighborhood property into a mixed-use project that never came to fruition. The original plans spurred business investment in the surrounding Creston neighborhood, with new business owners excited about the promise of increased activity in the area. But because of the long-vacant lot and Coppess’ renewed involvement, The Establishment Group also has to rebuild some trust with the neighborhood, according to Megan Kruis, executive director of the Creston Neighborhood Association. Kruis told MiBiz The Establishment Group was not forthcoming about Coppess’ involvement. Instead, she found out that he was part of The Establishment Group via its promotional video that featured Coppess. “The fact remains that the current status of that property is not what we want it to remain,” she said. “But I do think the extent to which the previous developer of that property is involved now … there is a lot of trust that would have to be rebuilt in the community.” Grand Rapids-based Construction Simplified is serving as the general contractor on the newly proposed project, which was designed by Wyoming-based Richard Postema Associates Architects and Engineers PC. While the success of the project and The Establishment Group remain unknowns at this point, the “super future-oriented” Coppess said he sees it as an opportunity to keep moving forward with his vision. “We have a super, really cool venture that’s launching that I’m super proud of, so for me it’s more so, let’s leverage anything into the future,” he told MiBiz. “Let’s go.” MiBiz / MARCH 2, 2020

REAL ESTATE & DEVELOPMENT

— REAL ESTATE SPOTLIGHT: NEWAYGO COUNTY —

Newaygo County working on development opportunities By SYDNEY SMITH | MiBiz ssmith@mibiz.com

S 3 QUESTIONS WITH:

Randy Poll, realtor with Greenridge Realty Inc. For 18 years, realtor Randy Poll has worked in Greenridge Realty Inc.’s Fremont office. While the commercial real estate market in Newaygo County is slow, he said people are interested in moving there to find lower pricing than in Grand Rapids, as well as to enjoy the abundance of recreational opportunities in Newaygo County.

What’s your general impression of commercial real estate in Newaygo County? Commercial listings take noticeably longer. In the city of Fremont, we’ve got several different properties, and most of them were on the market for six months to a year, sometimes longer. I had one that started out high priced and it took almost two years to get it down to where somebody would buy it. Most of it is retail in our city and in Newaygo. There’s a lot of retail space that has become available. There’s marijuana properties that have changed hands this year.

Does the residential market seem to be doing a bit better? The Grand Rapids market has been crazy for a couple years. There’s been very little inventory and things have been moving very quickly. We’re only about 40-45 minutes away, so as things get difficult to buy in Grand Rapids, people are gravitating north and coming into our area, even if they have to commute. I think it’s going to be a very active market this year. It looks very strong. We had a very strong first quarter, and interest rates are still near record lows.

ituated about 35 miles north of Grand Rapids, Newaygo County is a mostly rural area of Michigan that boasts an abundance of natural resources, but struggles with infrastructure. Driven by its major employers, Gerber Products & Nestle Nutrition, Magna Mirrors and Spectrum Health, the county also faces issues many others face in 2020: a struggle for talent and a lack of housing at a variety of price points. “We’ve seen reinvestment in our manufacturing facilities. We’ve had some recent success stories with manufacturing that has not only preserved jobs, but increased jobs,” said Newaygo County Administrator Chris Wren. “We continue to see a strong tourism boom. We have a lot of assets people enjoy with lakes, rivers and trails.” Wren also said he is seeing a push from northern Kent County into Newaygo County as people are being priced out of Grand Rapids’ housing market, which presents opportunities for developers looking to build multifamily housing. “We have a lot of opportunities for development,” said Julie Burrell, business development coordinator at The Right Place Inc., who focuses specifically on Newaygo County. “Just like any other county in Michigan, we need housing at every price point,” she said. The Right Place has worked in Newaygo County for the last five years, focusing on business retention and expansion services. Because Newaygo County is more rural and far less populated than neighboring Kent County, for example, it faces its own unique challenges. “From my experience, as you get farther out of a metro area, you have to approach economic development a little differently,” said Travis Alden,

NEWAYGO COUNTY REAL ESTATE BY THE NUMBERS RESIDENTIAL n Units sold in 2019: 673 Average sales price: $158,842 n Currently listed: 1,087 Average list price: $200,065 COMMERCIAL n Sold in 2019: 13 Average list price: $209,859 n Current listings: 63 Average list price: $248,731

Todd Blake, the city’s finance director. The city hopes to complete the process by 2021.

NEWAYGO COUNTY AT A GLANCE

OPPORTUNITIES & CHALLENGES

County seat: White Cloud Median household income: $46,724 Major employers: Magna Mirrors, Spectrum Health Gerber Memorial, Gerber Products & Nestle Nutrition Population: 48,892 (2018 estimate) SOURCE: U.S. CENSUS BUREAU

SOURCE: GREENRIDGE REALTY INC.

director of business development with a focus on rural development at The Right Place. “It’s not just business retention, expansion, attraction, although that’s still a cornerstone of it. You’re getting into things like community development, housing, transportation, entrepreneurship, recreation.”

REAL ESTATE MARKET Several significant commercial real estate transactions took place in the last couple of years in the city of Newaygo. NAI Wisinski of West Michigan worked to sell the Pine Lake Village Apartments near Newaygo’s main retail area. The company also did some work for Spectrum Health and in the main retail area in Newaygo. AutoZone recently received approval to develop a store in the city of Newaygo. In 2019, the Newaygo County market included 13 commercial sales and 165 land sales. The residential market was busier with 673 units sold in 2019 at an average price of $158,842. Todd Leinberger, a retail sales agent at NAI Wisinski, said more development opportunities exist

in the city of Newaygo, specifically on vacant land that could be used for multifamily housing. However, developers often run into challenges because of construction costs, he said. “The rents you can charge in a more urban area like Grand Rapids are significantly higher than in a market like Newaygo,” Leinberger said. “Developers have to work on tax credits and tax structured deals, and those can be challenging as well.” Marijuana also presents opportunities for the Newaygo County real estate market. Skymint White Cloud opened last year with medical marijuana sales and in February debuted adult-use recreational marijuana sales. Skymint also operates a medical marijuana provisioning center in the city of Newaygo. Other properties in the county have changed hands to start the process of opening marijuana businesses. The Fremont Industrial Park, owned by the city of Fremont, also has 51 acres of available land for businesses to locate there. The city of Fremont is in the process of issuing a request for proposals to expand wastewater services to make room for growth at the industrial park, said

With the Muskegon River and White River watersheds, dozens of inland lakes and portions of the Manistee National Forest in its boundaries, Newaygo County offers ample recreation opportunities, Wren said, noting the county can be attractive to people who enjoy a quieter lifestyle because of its remoteness. However, those remote areas also present challenges when it comes to providing broadband access throughout the county. “Once you get outside the populated areas, it’s a significant struggle,” Wren said. Newaygo County Advanced Technological Services, a public network owned by the county and that also serves the Newaygo County Regional Educational Service Agency, is working to help expand broadband to areas that lack it. The distance between population clusters does present issues for expanding broadband. The Right Place is also working to market Newaygo County’s Opportunity Zone, which is 63 square miles and begins just south of downtown Newaygo and extends to the southwest. It offers 17 miles of Muskegon River frontage. Like other counties in West Michigan, Newaygo County also has a low unemployment rate that can pose its share of challenges for companies. Partnerships with Michigan Works! and The Right Place are helping to retain and attract talent, and the career-tech center also offers a talent development program, Wren said. Even with the existing challenges, Wren is optimistic for the future in Newaygo County. “This year has a lot of promise,” he said.

COMMERCIAL SITES IN NEWAYGO COUNTY

Where do you see opportunities in Newaygo County? I think a big opportunity is land that can be developed for condos. We have an older age group that’s prevalent, and there’s really very limited condos for those that are tired of doing yard work or want to get into something where they don’t have to work on that. That’s a real big need. I also see that there’s a need for affordable housing. There’s a big push for that in our county too. Interview conducted and condensed by Sydney Smith. COURTESY PHOTO

MARCH 2, 2020 / MiBiz

COURTESY PHOTO

579 S. Park St.

A 26,800-square-foot building in Newaygo is the only vacant industrial building in the county. The multi-tenant industrial property is located at 579 S. Park St. and is on the market for $938,000. — COMPILED BY SYDNEY SMITH

COURTESY PHOTO

8 82nd St.

This 1-acre parcel of land is surrounded by retailers in Newaygo, as well as other vacant land that could be developed into more retail or multifamily housing. It is on the market for $245,000.

COURTESY PHOTO

Fremont Industrial Park

Owned by the city of Fremont, the Fremont Industrial Park has 51 acres available for industrial opportunities, and this can be divided into smaller parcels. The park is located at Industrial Drive and West 48th Street. Prices are negotiable based on investment and job creation.

Visit www.mibiz.com

HEALTH BIZ

Investors ‘put some gas into the engine’ for Facility Health to scale By MARK SANCHEZ | MiBiz msanchez@mibiz.com BELMONT — A Grand Rapids-area software company that uses artificial intelligence to help health care providers monitor and maintain their facilities and equipment plans to scale operations with the backing of nearly $1.3 million in capital raised from investors. Facility Health Inc. wants to build product and sales staff and diversify into other sectors beyond health care that can benefit from improved planning for capital expenditures. The company secured the capital investment after more than tripling revenue on a year-overyear basis to $2.5 million in 2019. Facility Health for 2020 is on track to again more than triple revenues, co-founder and CEO Christian Fernando told MiBiz. “We feel like we’re getting some momentum from the marketplace that, ‘Yes, this is not just unique, but we need this right now and it’s very applicable in capital planning,’” Fernando said. “Now Fernando that we’ve gotten to a point where we feel that this can be scaled, it was time to get a little bit of capital and put some gas into the engine to grow this thing.” Belmont-based Facility Health works with about 15 health systems in Michigan, Indiana, Florida, North Carolina, Colorado and Arizona. Those clients collectively have 50 million square feet of space and 75,000 infrastructure assets with a combined replacement value of $4 billion, Fernando said. The company’s software uses artificial intelligence and predictive analytics to help clients plan their capital budgets and decide when to upgrade or replace equipment or infrastructure such as heating and cooling systems. That can help avoid breakdowns and costly disruptions, as well as mitigate risk, particularly for clinical areas such as operating rooms when medical equipment goes out and forces a shutdown for repairs.

Solving problems Facility Health raised the seed capital round from 12 investors, according to a recent filing with the U.S. Securities and Exchange Commission. Grand Rapids-based Wakestream Ventures LLC led the investment round in Facility Health. Other investors included Grand Angels Venture Fund III and members of the affiliated Grand Angels investor groups across the state, as well as Invest Detroit Ventures and the Ann Arborbased Michigan Angel Fund. “Facility Health is solving an age-old problem around capital planning for highly regulated and asset-dense industries, like health care, where the (capital expenditure) budget is much smaller than the real need,” Kim Pasquino, a partner at Wakestream Ventures, wrote in an email to MiBiz. Facility Health’s software “helps by allowing the continuous capital plan to be accurate and applicable at all times,” Pasquino said. Grand Angels views Facility Health as a hightech software company that creates “significant value for regulated businesses by helping them manage their physical infrastructure,” said Managing Director Paul D’Amato. D’Amato cites examples including the ability of health systems to improve how they allocate and spend money to maintain and replace equipment such as power generators for emergency rooms, heat exchangers and air filters in operating rooms, or even roofs on their facilities. Visit www.mibiz.com

“Hospitals and hospital groups are very complex organizations where people’s lives depend on everything working 100 percent of the time,” D’Amato said. “Facility Health helps hospital organizations achieve the highest level of health care and reliability through a knowledge base of predictive analytics and machine learning.”

‘Collaborative effort’ Facility Health began in early 2016 from what Fernando describes as a collaborative partnership between himself, co-founder Hans Nelson and executive leaders. Each brings an expertise and background to the operation, he said. Fernando previously was vice president of product at Blue Medora LLC, a Grand Rapidsbased enterprise software firm. Nelson, Facility Health’s chief engineering and strategy officer, has more than 15 years of health care engineering experience. Mark Mochel, senior vice president of customer growth, is a board member for the Michigan Society of Healthcare Engineers and has more than 20 years of experience in technology deployment and program management. Brian Crum, senior vice president of product, is a certified health care facility manager who formerly worked at Spectrum Health and first identified the potential for addressing a problem, Fernando said. “It’s a collective. It’s not one person. All of us do it together,” he said. “It’s a very collaborative effort from all of our parts.” Facility Health starts out with a new client by doing a condition assessment of infrastructure and equipment and uses algorithms and predictive analytics to develop future costs and a capital plan for maintenance and replacement, Fernando said. On average, 45 percent of the assets at a 500,000-square-foot hospital are past their useful life and would cost $30 million to replace, Fernando said. Through better monitoring and maintenance, a health system can extend the life of infrastructure and equipment, he said. “We can start putting projects together and then we have data around that to say, ‘OK, what are some ballparks and what is that going to cost?’” he said. “Everybody does that to some extent now. We feel we’ve found kind of a unique way to bring a powerful data set, and we keep on saying, ‘It’s all about the data.’ It gives the technicians, the managers, the directors in the executive suite a way to talk about this problem with the same kind of data in a similar language. “We can show the data that might lead to something happening and we can show how big the problem is across the system, and then we come up with costs and say, ‘This is what you can do to mitigate that, not just over one year but over five, 10 years.’”

Growth ahead Facility Health employs 10 people and Fernando expects to add seven to 10 positions by next year. The company began with a focus on health care “because that was kind of an obvious place to start and we knew some people, and we were able to build and validate the product and get it out within that space,” Fernando said. Facility Health has considered extending into the food processing industry and late last year was approached by a large real estate company that owns 35,000 buildings worldwide and was interested in the company’s service. The company did a test project, its first outside of health care, and “we’re making inroads there,” Fernando said.

ACV CENTERS Continued from page 1

it. Actually, it was a straight-forward decision. It doesn’t take much thinking to dedicate your life to making a difference in these patients’ lives,” said Mustapha, who believes critical limb ischemia, or CLI, is undertreated. “This disease, the need for (treatment) exceeds any other disease,” he said. “It’s one of the deadliest diseases, yet so quiet.”

years ago developed a treatment for critical limb ischemia in which blood flow to the extremities is severely restricted, often leading to amputation. Since opening on East Beltline Avenue in January 2018 and adding a second location in November 2018 in Lansing, ACV Centers has Additional expansion treated some 1,500 patients, preventing hunPrior to co-forming ACV Centers with his dreds of amputations and continuing to mannephew, Dr. Fadi Saab, Mustapha worked from age patients for a condition that lacks a cure. 2009 to January 2018 at Metro Health, where With high interest from colleagues across the he helped to establish the vascular and carnation as awareness grows, ACV Centers now looks diovascular programs. He previously was with to branch out. ACV Centers is involved in “mulWest Michigan Heart prior to its acquisition by tiple discussions” about potential new locations Spectrum Health. with physicians, some of whom “are just waiting ACV Centers today has a clinical and adminpatiently, some who would have liked to have gone istrative staff of 75 people at the Grand Rapids in yesterday, if they could,” Mustapha said. and Lansing locations who specialize in treating “The number of physicians that call us peripheral artery disease and the complications to try to create a similar center to this, either of critical limb ischemia. in Michigan or outside of Michigan, is high,” Most recently, ACV Centers expanded its Mustapha said. “When we think the time is right, capabilities via the January merger with Grand we’ll bring them on board here, train them, and Rapids Cardiology, a move that “takes us to a then open a center for them.” new level of patient care,” Mustapha said. ACV Centers intends to move methodically “We wanted to provide complete, compreto expand. New locations depend on connecting hensive cardiovascular care,” he said. and partnering with physicians who are willing Led by cardiologist Dr. to go through the rigorous, six-month training in Grand “Because it’s unique Ronald VanderLaan, Grand Rapids Cardiology and its Rapids. The training focuses and special, the staff now practice under the on the procedure and techvision is to take ACV Centers branding. The niques ACV Centers uses cardiology practice continues to restore blood circulation our time in finding to operate out of its office on in the legs of patients who the right team and East Beltline Avenue as ACV typically are “very sick” and then grow into that Grand Rapids Cardiology. already scheduled for amputeam, and not open “Our two practices share the tation, Mustapha said. Critical limb ischemia is a center and then go same values when it comes to a compassionate, highly detailed the advanced stage of periphout and try to find a approach to patient care, so the eral artery disease, or PAD, team to put in it.” partnership seemed very natthe narrowing or blockage ural,” VanderLaan said at the of blood flow to the legs. The disease affects about 8.5 mil— DR. JIHAD MUSTAPHA time of the merger. “By joining forces, we hope to draw on our lion people in the U.S. who CEO of ACV Centers collective expertise to build a are over 40 years old, accordcardiac and vascular center ing to the U.S. Centers for for excellence. Both of our practices are in a strong Disease Control and Prevention. The condition position to serve patients, and this partnership will is caused by the buildup of plaque in arteries. only allow us to grow our services while focusing on the patient-centric care all our patients expect and Selective growth value from us.” Mustapha does not have a specific number of locations in mind that ACV Centers could have More docs needed in the years ahead. The goal instead is to ensure The opportunity for ACV Centers to open a pracACV Centers partners with physicians who can tice in Las Vegas came when Mustapha met a colprovide comprehensive care and maintain highleague in Chicago at an annual symposium on quality clinical outcomes for patients. CLI that he started a decade ago. The physician Prospective partners “have to prove to from Las Vegas, Dr. Rick Bernstein, had attended us first that they are worthy” and can follow each year of the symposium and a few years ago ACV Centers’ clinical protocols, policies and approached Mustapha to ask if he could someprocedures. how work with ACV Centers. “We are being selective. If a patient enters an “When the opportunity came up, we finally ACV Center (elsewhere) one day, I know that this told him ‘yes, but in order for you to work under patient will receive the best care that’s in the counour name, under the ACV standard of care, you try because the physician will be trained with us have to come train with us,’” Mustapha said. and we know them and we know what they’re going A cardio-thoracic and vascular surgeon, to do,” he said. “Because it’s unique and special, the Bernstein accepted and joined the staff of ACV vision is to take our time in finding the right team Centers in November. and then grow into that team, and not open a center ACV Centers has been asked by hospitals and then go out and try to find a team to put in it. to establish similar programs at their facilities, “We cannot lose track of the primary reasons Mustapha said. Similar to the potential in openwe are opening these centers. If we can keep ing new center locations, the most difficult part doing this, focusing on the patients first and remains “finding the right mix of physicians or the business second, we’ll always be successful.” specialties together” to treat CLI, Mustapha said. Mustapha started his career doing both carACV Centers also has been training interdiac and vascular work, having been trained in ventional cardiology fellows at Michigan State both areas. He first performed his procedure University’s College of Human Medicine and is dismore than 12 years ago on a woman with severe cussing extending it to medical residents. Mustapha PAD, preventing an amputation. hopes to see more physicians trained in treating CLI. After years of practice, he had found he was treat“We can’t find enough doctors in the couning more patients with vascular disease than cardiac try,” Mustapha said. “We’re hoping over time that disease. His interest continued to grow in treating we see more and more physicians have an intersicker patients with advanced vascular disease, parest in this specialty and actually go beyond it and ticularly after learning that the condition has a higher just have the passion that we have, and combine mortality rate than heart attacks and many cancers, their skills and passion and, hopefully, be part of yet has few treatment options, he said. what we’re doing.” “I decided to dedicate the rest of my career to MiBiz / MARCH 2, 2020

ECONOMIC DEVELOPMENT MARIJUANA POLICIES Continued from page 1

the signs of substance use and signs of impairment on the job. As well, Sabourin notes that she knows of no companies that have removed drug testing from on-the-job post-accident testing. “The biggest issue with marijuana is the safety side,” Sabourin said. “It’s not a matter of whether it’s legal or not legal; all employees have to be safe in the workplace and safe for people they work around.” For employers sending people for preemployment testing, about one-third of applicants cannot pass the test, according to Sabourin. Unlike with alcohol, which can be tested right away using a breathalyzer, tests for marijuana cannot yet detect impairment on the job. The current tests do not allow an employer to determine if someone used cannabis on the weekend or during the lunch break at work. “Everybody is scrambling to find employees, and there is a whole population of people who only use the substance on the weekend and never come to work impaired,” she said.

Second chances Eagle Alloy Inc., a large steel casting facility in Muskegon, isn’t presently hiring and hasn’t changed its drug policy to date, according to co-chairman John Workman. However, finding people who can pass a drug test, particularly now that cannabis is legal, does become an issue for manufacturers, foundries and factories given the tight labor market, he said. Workman notes that more employers are starting to omit THC from pre-employment drug screens. Eagle Alloy has started to make exceptions for THC and give both new applicants and existing employees a second chance. “In the past, we have just said no,” he said. “If it’s a hard drug, we say no. If it’s THC, we give them an opportunity to work it out. … Our objective is to counsel them so they don’t use again.” Eagle Alloy employs more than 200 people and is one of three independent companies that make up The Eagle Group, one of the largest private employers in the greater Muskegon area. Under the company’s current policy, applicants are required to take a pre-employment drug test, and if they test positive for any illegal hard drugs, such as heroin or cocaine, they are not hired. In the

Members of Local numerous jobs, including truck drivers, flight crews Union 174 carry a and railroad workers, must abide by federal law. drug card and are People who apply to Erdman Machine know expected to pass a that, and existing company employees appredrug test, including ciate the drug-free environment, said President for marijuana, and Scott Erdman. stay drug free. “It’s easy for me to talk about because we’re “If we call somebound by federal regulations about how we run one for a job, we let our business,” he said. “Zero tolerance is zero Workman Bennett Erdman Poort them know before the tolerance.” drug screen,” he said. The company uses the services of Manpower, “Everyone is supposed to have a drug card to go Workbox Staffing and Fast Track to pre-screen case of testing positive for THC, successful applito work. We meet the demands of the specific applicants, and they let people know up front cants are placed on a 30-day probation with a councontractors, and some contractors require their about the company’s drug-free policy. selor, the same protocol for existing employees. own drug screen.” “Those who want to be in this industry “The way our policy sits, it’s a good one,” As more states legalize cannabis for recrewon’t participate in marijuana,” Erdman said. Workman said. “It’s a progressive one. Hopefully, ational use, Bennett thinks the federal government “Everybody knows what we’re all about. If they we can help the person get off of drugs if will have to take a stance on the issue. He foresees want to stick around, they won’t do that.” possible.” it will go the way of Nevada, which passed a law It’s the same for defense contractors — Several years ago, Eagle Alloy switched to a prohibiting most employers whether in manufacturing or saliva drug test, which drastically shortens the from denying employment services — who do work for time that illegal substances can be identified to because of the presence of the U.S. military, said Pamela roughly 48 hours, depending on the person, in marijuana in a pre-hire drug Poort at the Muskegon order to better test for impairment on the job. screen, or that THC will evenProcurement Technical “That is the closest thing we could come up tually be removed from the Assistance Center (PTAC). with that might indicate ‘under the influence’ or drug screen panel. “All federal contractors, ‘fit for duty,’” Workman said. “It doesn’t really belong in to include defense and all Existing employees are randomly tested, the same drug class as herother federal agencies, are and if they test positive, the company requires oin,” Bennett said. under federal law, and canin-house drug counseling with a counselor from — JOHN WORKMAN nabis is not legal federally, In addition, many conFresh Coast Alliance. They are randomly tested Co-chairman of Eagle Alloy Inc. so the same rules apply to struction workers are tranagain within 30 days. If they are clean, they come sient, moving from state to contracts/grants federally off probation. state for work, so a federal as they did in the past,” she “If they can control their use, we feel they policy makes the most sense. said. are much less likely to be under the influence “I think the more states that legalize it recreFor its part, Employers Association of West at work,” he said. ationally, eventually someone is going to have to Michigan, which serves nearly 200 employers Since recreational cannabis became legal, move,” he said. “Hopefully, it’s the federal governalong the lakeshore, will continue to field quesEagle Alloy added “fit for duty” training for superment so it’s uniform.” tions, offer resources and help companies finevisors and management to observe and monitor Until then, Bennett said Local 174 is committune their policies. employees suspected of drug use. ted to providing a drug-free workforce and memMost companies are trying to sort out what “If they fail the ‘fit for duty’ testing, they are bers expect that. they will allow and prohibit and whether to offer given a drug test and sent home,” he said. “If they “There is zero tolerance on any job site,” he a last-chance agreement, Sabourin said. test positive, and having failed the ‘fit for duty’ said. Although abiding by federal regulations and testing, they are terminated.” addressing safety are the biggest concerns for employers, many companies also worry that Staying drug-free Zero tolerance marijuana use could affect productivity and overThe construction industry also faces similar At Whitehall-based Erdman Machine Co., a proall work performance. dilemmas as manufacturers when it comes to vider of high-tech tooling and machining ser“We certainly don’t want finance or I.T. peosafety on the job, especially with workers opervices for the aerospace, automotive and medical ple impaired at work, but the biggest concern ating heavy machinery and power tools. Most industries, employees must submit to a pre-hire is safety,” Sabourin said. “Many of them have companies have their own policies regarding drug test and random drug screens. just held their policy to what it was before it was drug testing and maintaining a drug-free job site, The company, which employs about 85 peolegalized just for the safety concerns. ... They can’t said Ryan Bennett, business manager of the West ple, enforces a zero-tolerance policy for drug use have planes falling out of the sky because mariMichigan Plumbers, Fitters and Service Trades because of federal aviation regulations. Because juana is legal in Michigan. It’s still illegal federLocal Union 174. marijuana remains illegal at the federal level, ally.”

“If it’s a hard drug, we say no. If it’s THC, we give them an opportunity to work it out.”

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ARE YOU RUNNING YOUR BUSINESS OR IS YOUR BUSINESS RUNNING YOU? Gino Wickman April 29, 2020 7:30am – 12:00pm The Grand Rapids Downtown Market

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Politics clouds Pure Michigan budget restoration, despite bipartisan support

awmakers on both sides of the aisle are largely in agreement that the Pure Michigan travel campaign does a lot of good for the state and deserves proper funding. Yet the question remains: Why haven’t political leaders in Lansing been able to find the money to get Pure Michigan ads back on the air in time to promote the state as a destination for the busy summer travel season? At a legislative panel with two colleagues at the recent Pure Michigan Governor’s Conference on Tourism in Grand Rapids, state Sen. Ken Horn offered a simple answer: Politics over the state budget and not wanting to give the other side any edge have essentially gotten in the way. In this case, deep differences with Republicans who control the state Legislature led Democratic Gov. Gretchen Whitmer last October to line-item veto 147 items totaling nearly $1 billion from the budget approved by lawmakers for the state’s present 2020 fiscal year. That included $37.5 million for Pure Michigan. Horn, R-Frankenmuth, did offer the tourism promoters and industry executives hope that Pure Michigan funding may soon get restored for this year, although political maneuvering has been hindering that prospect, despite broad support. In the far broader and contentious budget debate in Lansing, Pure Michigan funding became “collateral damage,” Horn said. As legislators and the governor consider possibly restoring some of the allocations cut last fall, and with disagreements about budget priorities lingering, if one issue gets pushed too hard by one lawmaker, that gives somebody else political leverage to demand something in return, he said. “If she feels like she’s pushing too hard, we have leverage on her,” Horn said. “If we feel that Pure Michigan becomes so important to us that we’re going to die on this hill, the governor’s going to have some expectations of us in terms of what we’re going to do with some other funds. “It’s still a standoff and I don’t know how it’s going to be resolved.” His comments offered people in attendance a simple dose of reality on how it works when legislators have to annually divvy up a limited pool of public money amid differing ideologies, priorities and intensely competing interests. Still, given the wide support in Lansing for Pure Michigan, Horn believes $20 million to $30 million for Pure Michigan in the present fiscal year could be restored soon, “then we’ll fight for more money.” That next fight comes as lawmakers begin to weigh the governor’s $61.9 billion budget proposal for the 2021 fiscal year that would allocate $15 million for the campaign, less than half of what Travel Michigan has received annually in recent years to promote the state as a travel destination. The amount proposed by Whitmer provides “the ability for the tourism industry to continue contributing additional funding to this statewide effort that encourages travelers to experience Michigan’s four-season natural beauty, its unique urban destinations and its

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world-class cultural attractions,” according to budget documents. The scenario provides a reminder of how tourism industry advocates have had to battle since Pure Michigan began in 2006 to secure annual funding for the campaign, which has been silent since October following the governor’s line-item veto. In a video message played at the tourism conference, Gov. Whitmer said she supports Pure Michigan and that the campaign “makes me proud to be a Michigander.” However, the state budget faces “tremendous and increasing structural challenges” that required “hard choices when it came to prioritizing available general fund dollars.” “We must balance key investments like Pure Michigan with the pressing need to improve education and the skills of Michigan citizens, to protect our families and public health, and to clean up Michigan’s drinking water,” Whitmer said. “These are issues we have to focus on right now to put our state in the best position to be successful long term.” Whitmer described her $15 million proposal as still a “significant” investment in Pure Michigan. Travel Michigan Vice President Dave Lorenz told MiBiz that the amount proposed for Pure Michigan for the 2021 fiscal year that starts Oct. 1 does not signify any waning support in Lansing. “This has never been about a disagreement about the efficacy of the program,” Lorenz said. As far as the $15 million proposed for the 2021 Lorenz fiscal year, Lorenz called it “an opening number” and “a start.” He expects to see the amount changed during the budget review process. “This is the administration’s opening position and they will go back and forth between the legislature and they will come up with, I think, adequate funding in ’21 because it benefits everybody,” Lorenz said. As spring approaches and prospective travelers plan this year’s vacations, Travel Michigan, an arm of the Michigan Economic Development Corp., has already missed out on receiving the best rates and prime ad placements for a summer campaign, Lorenz said. Travel Michigan has “been making changes to our plan, adjusting to the new realities as they go,” he said. “We will be prepared if we get funding tomorrow or in a month to maximize that,” Lorenz said. “We’re going to change the way we’re going to market. We’ll still use a mix of media and we’re going to do a very innovative buying process and placement process.” He declined to offer specifics on what’s in store, although Travel Michigan would use more digital and social media and perhaps “media stunts to get attention.” The lack of Pure Michigan ads since October has led to a 20-percent decline in traffic to Travel Michigan’s website from prospective travelers seeking information on travel destinations, Lorenz said.

has acquired a new website: bodkinsassociates.com The undersigned served as exclusive web development adviser to Bodkins & Associates.

Affordable, common-sense websites

MiBiz / MARCH 2, 2020

FOCUS: CYBERSECURITY

STAY VIGILANT

Businesses must prepare ahead for cyber attacks By MARK SANCHEZ | MiBiz

with those,” she said. “Hackers are getting more and more sophisticated. Back 10 years ago, you could easily spot a phishing email because there he email looked legit, so an employee were a lot of grammar and spelling mistakes and at a small Michigan manufacthings like that. turer opened it and clicked on an “Today, they can hire translation services on attachment. the web to make sure phishing emails are proofThat was a bad move. The email read before they go out, and with everybody in contained a ransomware attack by a hacker that their normal day-to-day rush, people don’t pay quickly downloaded and installed a malicious attention and they click on something they software that encrypted the company’s servers shouldn’t.” and data, then demanded payment to release it. Dore and other experts say that amid growing “They were essentially shut down, couldn’t cyber threats, companies need to remain vigilant function,” said Jessica Dore, a leader in the techin protecting themselves. They should regularly nology solutions group for CPA and consulting update and patch their software, strengthen and firm Rehmann LLC. routinely update employee passwords, add layers of authentication for system login, train staff about new and emerging threats, back up their data, and plan and prepare for how they’ll respond to an inevitable attack. “It’s not a situation of protecting yourself for if it happens. It’s when it happens,” said Amanda Regnerus, executive vice president of products and services at Grand Rapids-based data services Dore Regnerus Bidle provider US Signal Co. LLC. “Everybody needs to make sure they’re protected and The client had backed up a majority of its are protecting themselves because, as you see, data, so staffers at Rehmann were able to recover the statistics are not going down.” and reinstall the data, although it took four days to rebuild the system and get the company back Tarketing small business operating, Dore said. Phishing attacks can lead to hackers stealing senThe story involving the Rehmann client illussitive company and customer data or intellectrates the kind of constant and evolving threats tual property, or rerouting money such as payroll businesses face today from increasingly sophisfunds, said Trevor Bidle, vice president of inforticated hackers and scammers who many times mation security at US Signal. are part of well-organized, well-run criminal One of the biggest forms of phishing comes enterprises. via hackers trying to steal login credentials, Bidle Phishing attacks have grown substantially said. If successful, “then they can turn around, in the last two years, Dore said. As well, hackdive through your email and expand and attack ers today are far better at disguising phishing other people, or use the information in your attacks so they’re not as easily spotted as they email.” once were, and victims often mistake phishing “We’ve seen it where they’ll steal inforemails as legitimate, she said. mation out of people’s email and use it to “We’ve had a number of organizations get hit msanchez@mibiz.com

NATIONAL CYBERCRIME TYPES: 2019

MARCH 2, 2020 / MiBiz

CRIME TYPE

# VICTIMS

conduct pay roll attacks, changing where your paycheck goes,” he said. “For small businesses, that can be very harmful. They can also change where payments from customers come from or go to.” One of the biggest mistakes small businesses make these days is to presume they are not vulnerable, Bidle said. A tendency persists among some small business owners who think that hackers won’t target them because of their size, Bidle said, noting the opposite is true. Many small businesses lack the I.T. staff and resources needed to protect themselves, or simply can’t or don’t want to spend the money for the protection, leaving the company more vulnerable, Bidle said. Hackers also tend to view small businesses as being more apt to pay the ransom in a ransomware attack, Bidle added. “Especially from a ransomware perspective, small business is a great target because a lot of times those businesses don’t have the backups or the business continuity plan to stay in business, so they have to pay the ransom,” he said. “Unfortunately, paying the ransom fuels the attackers, but in the small business realm, sometimes it’s the only way you can keep your business going.”

“Especially from a ransomware perspective, small business is a great target because a lot of times those businesses don’t have the backups or the business continuity plan to stay in business, so they have to pay the ransom. Unfortunately, paying the ransom fuels the attackers, but in the small business realm, sometimes it’s the only way you can keep your business going.” — TREVOR BIDLE Vice President of Information Security at US Signal Co. LLC

Training required The first line of defense for businesses is awareness and training employees on existing and emerging threats, experts say. Even if a company has the latest software patches installed and security systems in place, regular staff training on threats can prove beneficial, said attorney Jennifer Puplava, who chairs the computer systems and technology committee at Mika Meyers PLC in Grand Rapids. “Yes, your technology is in place, but education is the answer in all businesses. If you’re a business of more than one, you need to make sure that everyone in your business understands that this is a risk and understands how to identify potential threats and avoid them,” Puplava said. “And you can only do that by education, and that means you have to talk about it.” Employee training on cybersecurity is increasingly available through business groups and I.T. vendors. Experts also suggest that companies have a third-party assessment done on their vulnerability. Properly trained staff can identify a phishing attempt that even technology or software cannot, Bidle said.

# VICTIMS

CRIME TYPE

Phishing/Vishing/Smishing/Pharming

114,702

Lottery/Sweepstakes/Inheritance

7,767

Non-Payment/Non-Delivery

61,832

Misrepresentation

5,975

Extortion

43,101

Investment

3,999

Personal Data Breach

38,218

IPR/Copyright and Counterfeit

3,892

Spoofing

25,789

Malware/Scareware/Virus

2,373

BEC/EAC

23,775

Ransomware

2,047

Confidence Fraud/Romance

19,473

Corporate Data Breach

1,795

Identity Theft

16,053

Denial of Service/TDoS

1,353

Harassment/Threats of Violence

15,502

Crimes Against Children

1,312

Overpayment

15,395

Re-shipping

929

Advanced Fee

14,607

Civil Matter

908

Employment

14,493

Health Care Related

657

Credit Card Fraud

14,378

Charity

497

Government Impersonation

13,873

Gambling

262

Tech Support

13,633

Terrorism

Real Estate/Rental

11,677

Hacktivist

Other

10,842

SOURCE: FBI INTERNET CRIME COMPLAINT CENTER

For example, an employee may notice the language in an email or the signoff at the end doesn’t mesh with how an executive writes, or it uses words they wouldn’t use or makes an unusual request, Bidle said. An employee also may notice a misspelled name within the email. “Humans can spot anomalies that machines can’t,” Bidle said. “This is a risk you have to recognize and encourage and train your employees to always have a suspicious eye or a curious eye through your email and protect your data.” Bidle cites a case at US Signal in which an attacker tried to impersonate an executive. The giveaways that the email was a fake included that it requested something “that was out of sorts” and how it was signed, he said. “Everyone knows how he signs his email and it didn’t fit the pattern,” Bidle said. “For all of the machine-learning and A.I. that is out there, humans still tend to be the best at looking at something and going, ‘Does this fit?’” In a majority of the cases in which Rehmann conducts an incident review following a cyber attack on a client, it finds a lack of training that could have made a difference, Dore said. While training takes time and costs money, it improves chances of preventing or minimizing an attack and is better than reacting after an incident occurs, she said. “What we see is that organizations are not doing that regular training. They’re not educating employees on those threats that are out there and the employees fall victim to them, and then it essentially goes from there,” Dore said. “If you’re not training them on a regular basis, how are they going to know how best to protect the organization?” Sometimes a post-mortem conducted on a cyber attack also shows a company was not regularly updating and patching its software. Some organizations “have a really terrible patch management program, so they’re not keeping their systems up to date,” Dore said. “That’s basic blocking and tackling in the I.T. world, keeping those systems up to date,” she said.

Be prepared At US Signal, Bidle said, “almost every incident we work on, you find something that could have been done better.” Putting needed protections in place and preparing for an attack can mitigate losses and See STAYING VIGILANT on page 15 Visit www.mibiz.com

CYBER ATTACKS RAMP UP Complaints to the FBI’s Internet Crime Complaint Center more than doubled from 2015 to 2019 and losses more than tripled. Here’s a look at the number of reported complaints and losses annually during that time:

YEAR

COMPLAINTS

LOSSES

2015

288,012

$1.1 billion

2016

298,728

$1.5 billion

2017

301,580

$1.4 billion

2018

351,937

$2.7 billion

2019

467,361

$3.5 billion

TOTAL

1.79 MILLION

$10.2 BILLION

Cyber attacks becoming more prevalent, costly By MARK SANCHEZ | MiBiz msanchez@mibiz.com

esearch findings are demonstrating just how prevalent and costly cyber attacks have become. Coveware, a Connecticut-based firm that responds to ransomware attacks, recently reported in a blog post that the average payment by clients hit by an attack was $84,116 in the fourth quarter of 2019. That’s more than double what Coveware clients who were attacked paid on average in the third quarter to get their data released. Ransomware incidents lasted an average of 16.2 days, according to Coveware. Complaints to the FBI Internet Crime Complaint Center grew more than 62 percent between 2015 and 2019 to 467,361 cases reported to law enforcement globally. Associated losses in the same timeframe more than tripled to $3.5 billion. Cumulatively from 2015 to 2019, the FBI received 1.7 million complaints about internet crimes that generated total losses of $10.2 billion. In Michigan, the FBI recorded 2,029 internet crime complaints, ranking 17th among the states, for $13.4 million in losses, Average total cost which ranked 21st. of a data breach, The total cost to according to a a company from the report from IBM resulting business and Ponemon disruption and lost Institute business, as well as responding to and managing a data breach, averaged $3.9 million globally, according to the 2019 Cost of a Data Breach Report from IBM and the Traverse Citybased Ponemon Institute. The loss of business or sales resulting from a data breach was the biggest cost, averaging $1.4 million. In the U.S., the average cost from a data breach was nearly $8.2 million across businesses of all sizes, the highest average in the world. The larger the company, the larger the cost, according to IBM and the Ponemon Institute. Companies globally with 500 or fewer employees that suffered a breach recorded an average loss of $2.7 million. That grew to $5.1 million for businesses that employ 25,000 or more people. The per-employee average costs globally hit small businesses harder. That ranged from a low of $204 for the largest employers, to $3,533 for companies with 500 to 1,000 employees. “Thus, smaller organizations had higher costs relative to their size than larger organizations, and a breach could harm their ability to

3.9M

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recover financially from the incident,” according to the IBM-Ponemon Institute report. The IBM and Ponemon Institute report is based on interviews with more than 3,200 professionals at 507 organizations that experienced a breach between July 2018 and April 2019. Phishing or some variation of phishing was by far the most prominent form of attack with more than 114,700 cases reported to law enforcement, according to the 2019 FBI report. The FBI report also noted a growing use of attacks known as business email compromise (BEC) and email account compromise (EAC). Those are sophisticated scams targeting individuals and businesses for a transfer of funds or data. Oftentimes, BEC/EAC attacks involve scammers spoofing the email account of a company executive. An unsuspecting employee receiving the email, believing the email to be legitimate, wires money as instructed or parts with sensitive information such as bank account numbers. The FBI report said 2019 saw an increase in BEC/EAC attacks on business payroll accounts using spoof emails sent to HR or the payroll department. Overall in 2019, the FBI Internet Crime Complaint Center received 23,775 BEC/ EAC complaints with adjusted losses of more than $1.7 billion. Since 2013, BEC/EAC attacks have evolved from hacking or spoofing email accounts of chief executives or chief financial officers to compromising personal and vendor emails, requesting large amounts of gift cards, asking for W-2 form information and, lately, diverting payroll funds, according to the FBI. IBM and the Ponemon Institute say those kinds of malicious data breaches are now the most common attack and the most expensive, costing companies an average of $4.4 million. Malicious or criminal attacks that were the root cause of a data breach accounted for 51 percent of all attacks in 2018-19, up from 42 percent six years earlier. In US Signal Co. LLC’s recently released State of the Data Center report, nearly two in five survey respondents reported they had been affected by a ransomware attack in the last twelve months. Discovering a breach can take “months or longer” in 56 percent of the cases Verizon analyzed for its 2019 Data Breach Investigations Report. The IBM-Ponemon Institute report put the time to identify and respond to a breach at 279 days. Hacking and cyber attacks have become a lucrative business for those behind them, said Trevor Bidle, vice president of information security at US Signal. “It’s very much a business enterprise,” Bidle said. “Until we can de-incentivize the bad actors, this is going to (continue) as a lucrative criminal enterprise.” MiBiz / MARCH 2, 2020

FOCUS: CYBERSECURITY

AWARENESS KEY TO ENSURING CYBER SAFETY FOR BUSINESSES By MARK SANCHEZ | MiBiz msanchez@mibiz.com

ven if you take reasonable efforts to keep your data secure, individuals and businesses remain vulnerable to data breaches orchestrated by scammers and hackers, said attorney Jennifer Puplava. As chair of the computer systems and technology committee at Mika Meyers PLC in Grand Rapids, Puplava is involved in the annual Data Privacy Day each January to promote awareness of the ever-growing threat to cybersecurity and of data protection practices.

She recently spoke to MiBiz about the problem and what people can do to help their chances against hackers.

How prolific is this problem? It’s everywhere. It’s an increasing problem and it’s only going to get worse. That’s why this initiative was started years ago to try to get people to realize that they need to pay attention to this, and there are certain simple steps that everybody should take that doesn’t make the problem go away, but it makes it more difficult for people to grab your data and do bad things with it.

We’ve seen all kinds of different scams, everything from old-school check kiting. You paste together something that looks like a real check and it ends up turning into a question about a check that a company thinks is supposed to be going to a vendor. It isn’t to try to get them to cash a check, it’s to get them to try to share their banking information. It’s so hard to stay on top of all of the different scams.

Do people even immediately realize when a breach has happened? It’s difficult and complicated because it’s so sinister. Someone can get your information and

then just sit on it for a while and do nothing so that you’re not aware of it. Someone gets your bank card information, and they may go out and rack up a thousand bucks on something but you know immediately that’s a problem. That’s not so much the case when they’re stealing your data. They’re just waiting for the right opportunity to use it. The scariest situations that I’ve seen have been where someone has hacked into a system and then waited until the right moment to take action. They’ve infected a system and they can see things, they can read things, send things out, they can freeze up computers, and it’s not as if they do it on the day that they get access. And it’s not an isolated incident.

For small businesses, what’s the easiest step they can take toward prevention? Be careful when they’re sharing. It’s very easy when online to fill out forms and there will be pre-checked boxes. Everyone’s seen on their screen pop-up boxes saying, ‘Oh, you’re agreeing to our privacy policy.’ How many people actually read those? It’s important to actually read and understand who’s collecting your information and what’s going to be done. It’s a pain and people don’t want to do it, but it is very important to actually take the time to understand what you’re sharing and with whom — and that goes for both individuals and businesses. The next thing that people and businesses could check is what are they allowing by way of cookies. Only accept necessary cookies. You go to all kinds of websites and they want you to agree to all of the things and they’re collecting all kinds of information in the background and you’re not aware of it. Go through and change the way that that’s done. By limiting the amount of information that businesses are allowed to collect from you, that doesn’t necessarily get rid of all of the bad guys, but it helps limit the amount of information you have out there available for theft.

Does that mean adding layers to access a system?

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Another method that we’ve been pushing out that people don’t like but it’s something to consider is multi-authentication. If you’re pulling up a business account on your computer at home, do you have to then verify that it’s you by a second means, or are you able to just log in and get going? Having a separate authentication put in place for all of your email, for your financial accounts, for those sorts of important, sensitive information and uses, that really can help keep bad guys out of the mix. And it’s a pain at first, but it becomes easy after a while.

What’s the biggest misunderstanding people have about cyber attacks? They think that it’s not going to happen to them. They think that they’re too smart and that they’re not going to get trapped because they think, ‘Oh, I see all of these emails and they’re all scams and it’s not going to be a problem for me.’ Everyone will get hacked. It’s not a question of whether, it’s a question of when.

Do small businesses still think they fall under the radar for hackers? Small businesses are more cost conscious. They think, ‘I don’t want to invest a lot of money into fancy security or do anything like that.’ I think that’s a misunderstanding of what they need to do. They don’t have to spend a ton of money to educate their staff of five that, ‘Hey, don’t click on an attachment unless you verify it’s correct by making a phone call’ or ‘we’re going to use multi-factor authentication if you’re going to be working remotely to get into our system.’ It Visit www.mibiz.com

isn’t so much a question of cost as it is one of education.

Is there enough public awareness of the problem? There’s not. It’s improved. The whole point of Data Privacy Day is to help build that awareness because, unfortunately, a lot of clients come to me for the first time after something has happened and they have to deal with the fallout. It’s better to plan in advance and try to take every step you can to minimize the potential exposure you might have so that if something bad does happen, so if you do click on the bad link or the bad document, you minimize the impact that might have on you, whether you’re a business or an individual.

What’s the biggest mistake businesses make in terms of cybersecurity? They move too fast. They want to keep their business running and they’re hustling. Let’s say you have a small office of five and you get an email from the boss that says, ‘I need you to send me the employment record or the W-2s for our employees. Send it to me. I need it right now.’ If you’re the lowest man on the pole, you’re going to send it to your boss because you want to make the boss happy and you know the boss needs it right now. It’s a better practice to actually walk down the hall and say, ‘Did you send me that email? Do you really need that?’ or to pick up the phone. That’s probably one of the biggest challenges for businesses, to realize you may need to take a minute to verify you’re not getting scammed, even if it may delay your response to a customer or to a boss or to a prospect.

STAYING VIGILANT Continued from page 12

disruption, he said. US Signal has worked on incidents in which a client that was prepared was able to recover data in as little as 15 minutes. In other situations where a company didn’t have a full response plan, “it’s taken us two weeks to get them back up,” he said. “And then there’s other customers that lost substantial chunks of data because they didn’t really have stuff backed up that they should have.” Another basic defense is multi-factor authentication that requires two pieces of data to log into a system. Employees may not like multi-factor authentication at first, but they soon get used to it, and it’s an effective defense, Puplava said. “At the beginning, it’s disruptive because

you’re putting something new into your routine, but after a while, it just becomes part of your daily routine. It becomes something you don’t think about going through all of the steps making sure you’re secure,” she said. “All of the security measures in the world won’t help you if you’re not actually using them.”

Due diligence Cyber threats and the significant risks they pose to companies have grown to the point where owners and senior leadership must make cybersecurity a top strategic priority, according to Bidle. Given the prevalence and sophistication of cyber attacks today, executive leaders of companies large and small need to know how to protect their businesses, he said. “It’s no longer a bottom-up approach. This

is top down. Ownership, boards, anyone that has responsibility for management needs to understand what their company is doing,” he said. “It can’t just be delegated to an individual team member.” That heightened attention to cybersecurity should go externally as well. In the age of online procurement, companies of any size should look across their supply chain and know what vendors do, Dore said. She recalls how the massive data breach at Target Corp. in 2013 that affected 41 million consumers originated when a third-party vendor had its credentials stolen. “They’re able to get into the vendors, then they can hop over to their clients’ networks as well,” Dore said. “Organizations have to do proper due diligence. Whenever they allow other organizations to be connecting to their environment, they need to make sure they have controls in place.”

Do we need to remember the people doing this are pretty sophisticated in conning people? They are so sophisticated. They will create an email, they’ll rip off logos. Here’s another potential way they can scam you: Let’s say they’ve already gotten access to your system and they’re just lying in wait. They can actually send an email within the system saying, ‘Hey, I need to wire some payments. What’s our routing information again?’ Someone might check that email address and say, ‘Oh, yeah. This is from inside the house. I have no problem with this.’ People can get scammed that way, too, which is why making sure that you’re secure, and not just doing it once but doing it regularly, is important.

When we hear stories about businesses getting hit and having their customer data stolen, the tendency is to get angry. Do we need to keep in mind that these businesses are also victims of a crime? They are, and it’s happening more than you might realize. You hear about the big breaches like the Targets of the world or the Experians, because so many people’s records have been affected that it becomes public knowledge. You may not hear about the smaller breach where only the individuals who were affected receive notices from the company, but there are a lot of breaches that happen on a daily basis, and it’s increasing.

Just as you secure your business by making sure you lock the door behind you when leaving the office each night, do you need to think the same way about data? I tell my clients there’s no such thing as perfect security. There are things that you do. That doesn’t mean you’re going to be successful because criminals are determined, they are motivated, they want their end game. But that doesn’t mean you should leave your doors unlocked and show them in. You should lock your doors. You should have passwords for all of your accounts using multifactor authentication. Being careful what you share online, being careful what clicks you make when you’re provided a hyperlink — all of those things help to shore up your defenses. Visit www.mibiz.com

MiBiz / MARCH 2, 2020

FOCUS: CYBERSECURITY

New statewide service offers assistance in response to cybercrime By JESSICA YOUNG | MiBiz jyoung@mibiz.com

nstances of cybercrime and online fraud against businesses and individuals are farreaching, but now, a new resource offering advice and assistance for victims is also spreading throughout the state. In 2019, 467,361 cybercrime complaints were recorded with the Federal Bureau of Investigation, a 33-percent increase over the previous year. Reported losses from these crimes last year were in excess of $3.5 billion and experts estimate that these figures represent only a small fraction of the cybercrimes that actually occur. Although widespread, cybercrime is still new enough that not everyone — including local law Gavit enforcement — knows how to respond, according to Demitria Gavit, state program director for the Cybercrime Support Network (CSN). “A lot of cybercrime gets misdirected,” Gavit said. “It’s mostly because people don’t know who to call.”

C S N i s a p u b l i c - p r i va t e - n o n p ro f i t collaboration launched in July 2019 as the state’s first cybercrime support and recovery hotline. People and businesses in the state can now call “2-1-1” to report and find resources to recover from cybercrimes like identity theft, hacked accounts, financial fraud, stalking or harassment. The program fills a “missing niche,” according to Gavit, who said victims previously had either not been reporting the crimes or had been calling the 911 emergency line. “911 should be for immediate physical emergencies,” she said. “Nine times out of 10, in cybercrime, there’s going to be financial loss when somebody is a victim. That person is going to feel like it’s an emergency, which is why they’re calling the police department, but it’s an inappropriate use of 911.” Furthermore, cybercrimes can originate from anywhere in the world, and local police agencies, which are often not funded, staffed or trained to fight cybercrime, may not even have jurisdiction, according to Gavit. “There’s really not a whole lot that the police can do,” she said. The CSN service is currently in 14 counties: Antrim, Benzie, Grand Traverse, Ionia, Kalkaska, Kent, Lake, Leelanau, Mason, Mecosta, Montcalm, Newaygo, Oceana, and Osceola. In

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The Cybercrime Support Network has launched a new service that allows people and businesses to call 211 to report and find resources to recover from cybercrimes. COURTESY IMAGES

2020, the program will expand further throughIndividuals need to be extremely skeptical out the state, Gavit said. and double-check everything, Gregory said. When victims call the 211 hotline, they are con“In the same way your bank and online nected with trained call specialists who can assess accounts have started to require two-factor the situation and place them in touch with organiauthentication, apply that to your life,” she said. zations that can help. This program complements “Verify requests in person or by phone, doubleand works in collaboration with law enforcecheck web and email addresses, and don’t folment to improve service. low the links provided in Unlike with 911 dispatch, any messages.” CSN wants to take as many “A lot of cybercriminals Email or email account cybercrime calls as possible. compromise (EAC) has are not attacking “We want to help peobeen a major concern big businesses with ple before cybercrime among businesses for large amounts of events, we want to help years. In 2019, the FBI money. Instead, they’re caretakers that may be recorded 23,775 comdealing with victims of plaints about this type of targeting a lot of smallcybercrime, we want peocybercrime, which resulted dollar victims and ple to call if they get a weird in more than $1.7 billion in small business owners email and even though losses to businesses. they may not have fallen These scams typically especially.” victim to it, we want that involve a criminal spoofinformation recorded,” ing or mimicking a legiti— DEMITRIA GAVIT she said. “It really is a sermate email address. For State Program Director for the Cybercrime vice that is absolutely for example, an individual Support Network everybody.” will receive a message The top three cyberthat appears to be from an crime types reported by executive within the comvictims in 2019 were phishing and similar ploys, pany or a business with which an individual has non-payment or non-delivery and extortion. a relationship. The email will request a payment, The most financially costly forms of cyberwire transfer or gift card purchase that seems crime involve business email compromise (BEC), legitimate but actually funnels money directly romance or confidence fraud, and spoofing, or to a criminal. mimicking accounts that are known to the vicThe FBI also reported seeing an increase in tim to gather personal or financial information, the number of business complaints related to according to the FBI’s Internet Crime Complaint the diversion of payroll funds that appear to be Center. from an employee requesting to update direct Donna Gregory, the chief of the center, said deposit information. The change instead routes that in 2019, the organization didn’t see an uptick an employee’s paycheck to a criminal. in new types of fraud, but rather noticed crimiSmall businesses are particularly susceptible nals deploying new tactics and techniques to to attack, according to CSN’s Gavit. carry out existing scams. “A lot of cybercriminals are not attacking “Criminals are getting so sophisticated,” big businesses with large amounts of money. Gregory said in a statement. “It is getting harder Instead, they’re targeting a lot of small-dollar vicand harder for victims to spot the red flags and tims and small business owners especially,” Gavit tell real from fake.” said. However, she added, through resources like While email is still a common entry point, CSN, victims of all of these smaller attacks can frauds are also beginning on text messages — a help the FBI track trends with data, paint a better crime called smishing — or even fake websites picture of cybercrime nationwide, and eventually — a tactic called pharming. get ahead of cybercriminals. Visit www.mibiz.com

MIBIZ DEEP DIVE /

OUTDOOR RECREATION

THIRD OF A 3-PART SERIES

Wolverine World Wide’s Merrell brand used the Upper Peninsula as the backdrop for its 2018 advertising campaign. COURTESY PHOTO

Apparel companies embrace Michigan’s outdoor recreation Crystal Mountain Resort in Thompsonville, pictured here, has taken steps to diversify away from skiing given the volatility of Michigan’s winters in an era of changing climate patterns. COURTESY PHOTO: CRYSTAL MOUNTAIN RESORT

By JESSICA YOUNG | MiBiz jyoung@mibiz.com

Climate change sparks unpredictability for M Michigan’s outdoor recreation industry By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

he effects of climate change in Michigan may create winners and losers when it comes to participants in outdoor recreation, but experts largely see unpredictability ahead as businesses try to adapt to coming changes. In recent studies, researchers have noted winter activities are particularly at risk, while more frequent water level fluctuations and snowfall patterns make it difficult for communities reliant on natural resources. While the shifts may benefit some industries over others, ongoing climate uncertainty for the industry appears to be a constant. “Climate change, along with other sustainability issues, is one of the top things the industry is looking at,” said Brad Garmon, director of the state’s Office of Outdoor Recreation Industry. “It reflects on, for the large part, that outdoor recreation consumers … are putting their money where their mouth is.”

Adaptation and mitigation For some Michigan companies, recent investments have fallen directly under a climate adaptation or mitigation umbrella. Jim MacInnes, CEO of Crystal Mountain Resort, says climate preparedness is a “multi-faceted approach” that has been years in the making. The Thompsonville-based resort north of Manistee has been adding more summer activities — a new golf course and mountain biking trails, for example — to diversify from downhill skiing. “It helps us be more year round and less impacted in the winter by climate change,” MacInnes said, adding that the company has continued to add snowmaking capacity. “What seems to have happened over the years is the snowmaking windows are shorter, especially as you approach winter.” MacInnes said the resort also will invest nearly $100,000 in a stormwater management project to deal with more intense rain events, as well as renewable energy, energy efficiency and electric vehicle projects to “walk the walk.” Through utility power purchases, Crystal Mountain Resort is now run on 62 percent zero-carbon electricity, he said. The investments are on top of new lodging and amenities added over the past two decades. “We’ve tried to build Crystal out as a community as opposed to a ski resort,” MacInnes said. Garmon said climate change discussions involving outdoor recreation in Michigan also involve infrastructure, such as preparing for fluctuating water levels and keeping open certain roads in rural areas of the state. “Clearly there’s an infrastructure concern in Michigan — how closely that’s tied to climate change depends on who you talk to,” Garmon said. Visit www.mibiz.com

Unpredictability and risk The effects of climate change may indeed produce winners and losers in the outdoor recreation industry — for example, longer seasons for warm-weather sports while shorter seasons for skiing, snowmobiling and ice fishing. But climate change will likely bring more volatility and more severe weather events, which for companies like Crystal Mountain “adds more business risk. The volatility really affects a lot of businesses that have to invest in capital equipment,” MacInnes said. “It’s really variable,” he said. “Some years, the ski business is good, others not so good. Over time, we’re probably going to lean away from our winter business. I do think there will be winners and losers in the long run.” A Great Lakes climate assessment released last year by more than a dozen researchers and experts said winter activities in the Great Lakes region “could experience the largest impacts of climate change.” The report identified 122 ski resort-style businesses in the Great Lakes, while “only 80 are currently in areas that receive enough snow now to regularly support such activities.” By the end of the century and under a high-emissions scenario, none of the ski resorts in the Great Lakes region would be viable due to a lack of snow and conditions required for snowmaking, according to the report. Bridge Magazine reported in February that other ski resorts and businesses dependent on winter ice fishing have struggled from this year’s warm temperatures and reduced ice cover. The unfavorable weather, meanwhile, has had negative effects on towns that depend on outdoor recreation for support. As Tim Barr, the owner of Art’s Tavern in Glen Arbor, told Bridge: “Nothing’s normal anymore. … You just never know what’s going to happen.” In October, U.S. Sen. Debbie Stabenow released a climate change report that discussed effects on outdoor recreation through shortened winter seasons, reduced lake cover and Great Lakes algal blooms. In 2016, the U.S. EPA said warmer winters in Michigan “could harm the local economies that depend on them. … Since the early 1970s, winter ice coverage in the Great Lakes decreased by 63 percent.” However, some parts of the Great Lakes region have seen increased annual snowfall, “which could benefit winter recreation at certain times and locations,” the EPA said at the time. Meanwhile, U.S. Department of Agriculture researchers summarized in 2018: “Recreation will respond differently to warmer futures, increasing potential evapotranspiration, and mixed precipitation outlooks by activity, location, and for participation versus consumption.” While recent winter-themed events took place in the Upper Peninsula in February, the “fluctuation and unpredictability of (climate change) will continue to be an issue. Downstate has had a pretty strange winter. It’s unpredictable about what it means for recreation in Michigan,” Garmon said. “The marketplace around outdoor recreation is evolving to more of a sustainability direction.”

ichigan residents have taken to wearing their state pride on their sleeves. Over the last decade, that’s led homegrown manufacturers and retailers to create uniquely Michigan brands while raising awareness of the state’s outdoor recreation opportunities. After the state of Michigan launched its “Pure Michigan” advertising campaign in 2008, an onslaught of copycat Michiganbranded apparel, gifts and homemade decor sprang into artist markets and small retailers throughout the state. But the products weren’t marketed to tourists at souvenir shops. They were made by Michiganders for Michiganders, and even some of the state’s biggest companies began to cater their products and advertising to the swelling sense of state pride. A few of those companies broke away from the pack, and MiBiz spoke to two firms to get an understanding of how Michiganbranded products have grown into a multimillion dollar industry.

The Mitten State A year after the Pure Michigan campaign launched, a pair of business partners — who had been raised in the state but left to live elsewhere — landed back in Michigan and started The Mitten State, a Grand Rapidsbased manufacturer and retailer of statethemed apparel and gifts. “There was a lot of Michigan pride and they ended up drawing out that moniker of the state of Michigan and it just took off from there,” said Scott Zubrickas, vice president of The Mitten State. The Mitten State grew from a holiday season kiosk at Woodland Mall into a company that generates annual revenues between $1.5 million and $2.5 million. Before the company had an online presence, its sales mostly came from a few small retailers and residents of the state who “just loved Michigan,” Zubrickas said. Now, 50 percent of the company’s sales come from outside of Michigan, according to Zubrickas. “There are a lot of people who are giving these (products) as gifts or buying it because it’s something that they remember, like drinking a Faygo or drinking Stroh’s with their dad. Maybe they don’t live in Michigan anymore, but it gives a little bit of a feeling of home,” he said. See APPAREL on page 19

MiBiz / MARCH 2, 2020

MIBIZ DEEP DIVE /

OUTDOOR RECREATION

THIRD OF A 3-PART SERIES

Local outdoor retailers find success in niche market By SYDNEY SMITH | MiBiz ssmith@mibiz.com

etailers serving the outdoor recreation niche say focusing on that specialty has helped them remain viable operations in West Michigan. As national outdoor retailers like Moosejaw and REI move into West Michigan, the local operations credit their niche branding and community engagement as giving them a leg up in an increasingly saturated outdoor retail market. “Specialty retailers in general are making their mark and bringing specialized services and direct customer contact back into the world of retail,” said Mike Murray, a senior vice president at the West Michigan office of Colliers International. “People who are very into (outdoor recreation) tend to gravitate toward those stores that are involved in the community.” MiBiz spoke with West Michigan-based outdoor retailers about how they have worked to grow amid challenging times for retail.

Bill & Paul’s Sporthaus Grand Rapids Charter Township-based Bill & Paul’s Sporthaus recently began work on an expansion, dubbed Beyond Bill & Paul’s, at 551 Settlers Drive in Ada. The shop, which was founded in 1961 with a focus on skiing, plans to open the more than 3,600-squarefoot store as part of the sweeping Ada village redevelopment. Bill & Paul’s also underwent a renovation in late 2018 at its flagship store at 1200 East Paris Ave. SE, which involved gutting and redesigning the interior of the store. Jon Holmes, director of e-commerce and marketing for the company, has been with Bill & Paul’s for 27 years. The store has grown steadily because of Michigan’s ties with recreation, Holmes said. He also hypothesizes that’s why more national outdoor retailers have located operations in West Michigan in recent years. “The types of people moving into Grand Rapids are starting to find those activities, so it’s natural that there would be more retailers taking advantage of that,” he said. Specialty stores that focus on outdoor recreation benefit from low-cost, big box stores going out of business, because “customers need to go somewhere,” Holmes said. Customers at these specialty retailers are usually quite invested in the activity for which they’re shopping. “The people who are going to buy the least expensive products are going to shop online,” he said. “But those that are invested in their activities will still want to come talk to people who know what they’re representing and look at the gear before they spend money on it.” Remaining viable in the outdoor recreation retail business also involves communicating with customers and paying attention to their evolving wants and needs, as well as keeping staff educated on new equipment and trends, Holmes said. “You can’t just be stuff in a box anymore and expect people to come buy it,” he said.

Gazelle Sports First founded in Kalamazoo, Gazelle Sports has been catering to walkers and runners for the last 35 years. Since opening in 1985, the company has expanded to Grand Rapids, Holland, Northville and Birmingham and has about 200 employees. “We definitely lean hard into running and walking,

MARCH 2, 2020 / MiBiz

Michigan’s $7.8 billion boating industry continues to evolve By JESSICA YOUNG | MiBiz jyoung@mibiz.com

M Gazelle Sports has found a niche in outdoor recreation by serving runners and walkers. COURTESY PHOTO and living a healthy lifestyle,” said Chris LampenCrowell, co-founder and owner of Gazelle. “For us, that is really critical. We’re not only thought of as experts, but we build relationships with people who are going for that same kind of life.” Lampen-Crowell also serves as a member of the Michigan Outdoor Recreation Advisory Council, where he lends his voice to efforts that enhance the outdoor recreation experience in the state. Even though Lampen-Crowell enjoys lots of other outdoor activities like kayaking and biking, Gazelle has found its niche with the running community, which helps when it comes to building a loyal customer base, he said. Cara Zerbel, community engagement manager for Gazelle, said each store location has specialized events and camps for that specific running and walking community. Gazelle also helps to foster interest by helping runners train to achieve their running goals. This engagement strategy has provided the company with a leg up on national retailers, she said. “Our focus on what we’re best at, on what our area of excellence is, helps us to stay focused and ensure we’re addressing the needs of that community directly,” Zerbel said. “While the other larger national retailers have such a breadth of offering, we have the opportunity to dig really deeply into what our community is really looking for and the needs of that community in each of our locations.”

Switchback Gear Exchange Switchback Gear Exchange, located at 2166 Plainfield Ave. NE in Grand Rapids, sells gently used outdoor gear and bicycles. Ryan Olthouse, an owner of the shop, said Switchback has no desire to be a “new, boutique-y, spend-y” retail outlet because of the company’s commitment to sustainability. “There’s a lot of (gear) that just ends up making its way to the corner of a garage,” he said. “We try to get the word out and intercept that as much as possible.” Switchback was founded in Marquette in 2010, and opened its Grand Rapids shop in 2014. The Grand Rapids location has expanded multiple times to make room for more retail space and a bike shop. Switchback sources bikes from around the country to sell in the shop, and will buy gently-used outdoor gear from people who visit the store. The business also offers Outdoor School, which provides hands-on educational opportunities in outdoor recreation activities such as backpacking, hiking, camping and biking. Switchback will also help people plan outdoor experiences. In the time Switchback has been in business, Olthouse has observed the customer volume getting larger. Nationally, he perceives people are becoming healthier and more aware of the benefits of outdoor recreation. In West Michigan, that is underscored with the investments public bodies have made in recreational activities, like bike trails. Switchback is involved in advocating for these investments with the International Mountain Bicycling Association or Grand Rapids Bicycle Coalition. “Grand Rapids is getting more recognized,” Olthouse said. “With what I see, Grand Rapids is becoming more and more healthy and more and more outdoor-oriented,” he said. “That’s a goal we like to participate in.”

ichigan’s outdoor recreation industry has fueled a thriving boating sector, and boat manufacturers in the state are developing new ways to grow the next generation of boat builders and enthusiasts. The state’s marine market is valued at $7.8 billion, the third-largest in the country. Nearly 1 million boats are registered in the state, according to Michigan Boating Industries Association, which estimates that nearly half of all Michiganders take to the water each year to boat and fish. MiBiz spoke with two manufacturers in the boating sector to get a sense of some of the ways the marine industry is supporting the future of outdoor recreation.

Mercury Marine Wisconsin-based Mercury Marine and its training division, Mercury University, are partnering with Great Lakes Boat Building School in Cedarville, located in the eastern Upper Peninsula of Michigan, to offer students a 12-month, 42-credit-hour marine engine maintenance program beginning in September. Qualified marine technicians are needed to keep the region’s boat industry growing, Nick Van Nocker, training technology manager at Mercury Marine, told MiBiz. Until recently, the engine manufacturer has primarily focused its education programs on Mercury Marine’s dealer network, but now has expanded its efforts to include technical colleges, according to Van Nocker. “Michigan is one of our biggest markets out there, but it’s an area that we don’t have a real strong training presence in yet,” Van Nocker said. When students finish the course at Great Lakes Boat Building School — which includes extensive hands-on training on equipment supplied by Mercury — they will receive a certificate demonstrating their successful completion and their familiarity with Mercury’s maintenance procedures and engines. The work will count toward becoming a certified Mercury technician once the student is employed by a Mercury dealer. The program is an expansion for Great Lakes Boat Building School as well, which has historically only used wooden boats in its training programs, according to Van Nocker. The school has signed an exclusive partnership with Mercury Marine and will only train on its engines. “This is a way that we can pull people from different areas of the country because the Great Lakes is such a big boat building area,” Van Nocker said. “I don’t think a lot of people understand how many jobs are just inside of this region and how many dealers we have inside of this region that can employ students coming out of these programs.”

Manitou Pontoon Boats Lansing-based Triton Industries Inc., maker of Manitou Pontoon Boats, has nearly doubled in size in the last four years, according to company operations director Cory Highfield. The manufacturer, which Lansing-based Triton Industries is trying to became a division of Quebecfind ways to lower the barriers to entry into based BRP Inc. (Nasdaq: DOOO) the boating industry. COURTESY PHOTO via a 2018 acquisition, has grown alongside the overall pontoon boat industry. Since the recession, the popularity of pontoon boats has grown quicker than both runabout boats and towboats, Highfield told MiBiz. The appeal of pontoon boats came partially because of a shift in reputation for the boats that often include deck plans fitted with expansive lounge areas, stand-up bars or sun pads. “There was a stigma that was associated with pontoon boats for a long period of time,” Highfield said. “They were viewed as the vehicle that you would take your sunset cruise on with grandma and grandpa. Now, we’re penetrating into a younger demographic and it’s seen as more of a family vehicle than as an older person’s vehicle.” The company is acutely aware of the effect these expanding families also will have on its business and has focused on reducing barriers to entry into boating and increasing the accessibility of its products. “We need to continue to introduce people to boating, and because of the price of some of our products, it’s not something that younger people that have families and college debt have the disposable income or are willing to use the disposable income that they have on,” Highfield said. “If you’re not a boater and you haven’t been around boating at a very young age, it’s harder to get people into boating at an older age when they have that disposable income.” Private companies and industry associations want to bring boating within reach to more people. Boating clubs are an example of how manufacturers can help potential customers dip their toes into boat ownership, according to Highfield. “When you arrive, the boat is already on the water and it’s got a cooler full of your favorite beverages. It’s basically as easy as handing you the keys, you get on the boat and you’re off for the day,” he said. “For those Millennials, they value the experience much more than they value the ownership. As an industry, we have to learn how to adapt to that.” Visit www.mibiz.com

Groups work to build diversity, inclusion into outdoor recreation efforts By SYDNEY SMITH | MiBiz ssmith@mibiz.com

according to the report. Disparities also exist among hunting and fishing participation in Michigan. In 2018, the most recent year for which data are available, women made up just 20 percent of the more than 1.1 million licensed anglers in Michigan, and just 10 percent of licensed hunters, according to the DNR. Even so, the participation rates for women in the traditional forms of outdoor recreation are changing. According to a pair of studies involving the DNR and Michigan Technological University, women are among the fastest-growing cohorts of hunters and could make up about 20 percent of the hunting population by 2035. “As gender norms have changed, so too has the role of women in hunting. … State agencies are increasingly recognizing that women are a key stakeholder group that was largely ignored for generations and that could be a potential source of new hunters,” researchers wrote in the report. Likewise, the researchers found that women anglers could make up 24 percent of all anglers by 2035, given that women born after 1983 “show an increased likelihood to fish compared to prior generations.”

ome Grand Rapids residents have never stepped foot in the Grand River. In fact, a very small population of people currently use the river to recreate. Through its work to restore the city’s namesake rapids in the Grand River, Grand Rapids Whitewater is also looking to expand who uses the river and build equity into the $45 million project, which is set to begin in the river in 2021. To achieve this, the city of Grand Rapids leveraged funding from the Battle Creek-based W.K. Kellogg Foundation to hire Ciarra Adkins as an equity analyst. Adkins oversees diversity, equity and inclusion efforts for the river restoration project and governance. “There is an opportunity for economic prosperity within the environmental world that typically people of color are not a part of,” Adkins said. “We’re trying to be intentional as the city, and with a lot of our partners, to make sure economic opportunities that arise from our river improvements make space for women and people of color to be able to participate.” According to Washington, D.C.-based nonprofit Outdoor Foundation, Expanding opportunities the philanthropic arm of the Outdoor Industry Association, minorities In Adkins’ work expanding boundaries in Grand Rapids, she focuses consistently have lagged behind for years in participating in outdoor recon contracts for individuals that will be doing work on the Grand River reation. Caucasians have the highest participation rates, although there project, assessing the diversity of workforces and hiring local firms. The have been “promising” increases among underrepresented groups. goal is to look at every economic opportunity that Participation for Hispanic populations has doubled is or will be tied to the river restoration and build over the last decade, and African American and Asian equity into each step, Adkins said. populations also have increased participation, but “The (river) banks are really where a lot of the more slowly. money and opportunity is going to come,” she In 2019, 45 percent of outdoor recreation parsaid. “We want minority contractors to be able to ticipants were women, which was the highest level benefit from the work that’s being done in the river, on record, according to the Outdoor Foundation. but we also want minorities and women-owned Organizations across the state are looking to businesses to benefit from the banks. We’ll have all make outdoor recreation more inclusive and welthese recreating features — why not have a minorcoming to all people. Livonia-based Michigan ity business run the kayak shop, or whatever it is Alliance for Environmental and Outdoor that we ultimately end up doing?” Education is working to create a statewide netDisparities in who participates in outdoor recwork and advocate for professionals who educate reation exist for many reasons. Adkins said historiMichigan citizens in environmental literacy, stewcally people of color were not welcome in green ardship and outdoor recreation. spaces, dating back to segregation and the Civil Lisa Perez is a board member at the organizaRights era. At the same time, many recreational tion, and chairwoman of its diversity and incluopportunities require pricey gear or money for sion committee, which was created within the last licenses. five years. The more inclusive outdoor recreation “They also might not feel welcome in certain can be, the larger the participation will be, which areas,” Adkins said. is good for Michigan in general, she said. The organization has focused on outreach to organizations that focus on diversity in outdoor Building equity recreation, like Outdoor Afro, a national nonThe uneasiness of being outdoors is something profit with networks around the country that Alice Jasper discovered in a recent episode of lead outdoor recreation activities focused on the WGVU’s Changing Narratives series. Jasper, who African American experience. The Alliance for works as Michigan program manager at Local Environmental and Outdoor Education works to First, an advocacy group for local businesses, was network with organizations like this and create part of a cohort that learned how to produce narprofessional opportunities. — CIARRA ADKINS ratives for broadcast media with WGVU. “There’s a lot of folks involved in different types EQUITY ANALYST IN THE GRAND RAPIDS Her episode, “Color Out Here,” focused on the of outdoor recreation,” Perez said. “They might not OFFICE OF EQUITY AND ENGAGEMENT relationship between people of color and outdoor be the typical ones we might think about. They recreation. She and others talked about experimight be enjoying it in ways that are different in ences they have had while recreating outdoors, and the harassment outdoor recreation. That’s where it comes upon us as an organizathat comes with it depending on the area. The same issue exists for tion to know that it’s really important to expand those boundaries.” women. “A lot of (the disparity) is the intimidation to learn new things, and Providing access there’s also the very legitimate fear that people of color have being The Michigan Statewide Comprehensive Outdoor Recreation Plan particularly in remote areas,” Jasper said. prepared in 2018 for the Michigan Department of Natural Resources There is no “silver bullet” to making the outdoors more inclusheds some light on the disparities in outdoor recreation. sive of all people, but Jasper suggests the industry include people of A survey conducted by Public Sector Consultants for the report color in its advertisements, and be more collaborative with groups found that the participation rate for African Americans and Latinos like Outdoor Afro or Latino Outdoors, a national organization that in statewide outdoor recreation activities was about 25 percent lower offers free outdoor activities to Latino communities. than for white Michigan residents. Adkins also suggests building equity into formal planning proAs well, non-white residents had satisfaction rates 10-15 percent cesses, which is a focus in Grand Rapids’ strategic plan. For Adkins, lower than white residents regarding the quality and quantity of outsuccess will be measured by having equity-based policies in place door recreation opportunities close to home. that reach far beyond the river restoration. “Our recreation systems should provide access and meaningful “And seeing diversity down at the river,” she said. “To see a multioutdoor recreation opportunities for all. To advance this effort we tude of faces and backgrounds, and to see that the river is no longer need to further evaluate the ways in which we locate and design our a divider between two sides of the city, but a connector, I think we facilities and programming to serve all populations and user groups,” will have been successful in our endeavors.”

“We want minority contractors to be able to benefit from the work that’s being done in the river, but we also want minorities and womenowned businesses to benefit from the banks. We’ll have all these recreating features — why not have a minority business run the kayak shop, or whatever it is that we ultimately end up doing?”

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Executives at Merrell said the brand’s use of the Upper Peninsula in its advertising helped expose more people to the recreational opportunities in the state. COURTESY PHOTO

APPAREL

Continued from page 17 Michigan nostalgia is a brand in and of itself at The Mitten State, which produces apparel featuring everything from Smokey the Bear to vintage logos from General Motors. The company is also a licensee of popular universities and sports teams in the state — agreements that they’ve established separately from traditional license holders like the National Hockey League and the National Basketball Association. The Mitten State’s outdoor-themed line of apparel, which spotlights natural resources like lakes and forests as well as popular activities like fishing, biking, snowmobiling, hiking and more, is one of the company’s top sellers. “The cool thing is that everybody that works here, we’re all from the state ourselves and it’s all stuff that we personally do,” Zubrickas said. “We know that in the wintertime, we either hibernate or go out and celebrate, so we’ve got really comfy stuff for when you’re just chilling at home and then we have the design aspect of what you do outside.” The company has participated in multiple fundraisers with its apparel and The Mitten State donates a portion of its park-themed T-shirt sales to the Michigan Department of Natural Resources. “We feel like we’re representing the beauty of Michigan and we’re making a brand and a business based on that,” Zubrickas said. “We should be giving back to help keep those places clean and pristine.”

Merrell/Wolverine World Wide Michigan’s Upper Peninsula was prominently featured in a 2018 advertising campaign for products from Rockford-based footwear and apparel marketer Wolverine World Wide Inc. The dense forests, crumbling cliffs and icy landscape of the U.P. inspired the creators of the company’s Merrell brand of outdoor footwear while they imagined the environments in which the gear would live, according to Lauren King, senior marketing manager for Merrell. “Residing and working in an area that allows you to live your brand purpose and wear the products you help create is inspiring and adds to the culture we have here,” King told MiBiz. “We love sharing our team out on the trails here in Michigan with our consumers.” Some of the “most rewarding” parts of the campaign were the positive responses the company received from people who also live in Michigan, according to King, who said Merrell partnered with Pure Michigan to roll out the campaign. The advertising also worked to share the state’s landscapes with outdoor enthusiasts and Merrell customers who had never visited Michigan. “The reactions from those outside the state were equally exciting as many had not seen the U.P. landscapes before or considered it a hub for outdoor recreation,” King said. Presently, the company also collaborates with Michigan House at the South by Southwest film festival in Austin, Texas and the Outdoor Retailer expo and conference in Denver to “elevate Michigan as a mecca for outdoor recreation,” according to King. “We know some of the best adventures are the ones close to home,” she said. “We want to celebrate our backyard and the place we create in.” MiBiz / MARCH 2, 2020

SMALL BIZ CONQUER ACCELERATOR Continued from page 1

Conquer Accelerator annually selects five hightech, startup businesses for 10 weeks of extensive training, and ongoing entrepreneurial support and mentoring. Each of the startups chosen from a field of applicants also receives a $20,000 investment from Red Cedar Ventures in exchange for 5 percent equity or a convertible note. Urban specifically cites Spectrum Health as a partner that Spartan Innovations already works closely with, plus the university’s College of Human Medicine and the Grand Rapids Research Center that could support Conquer Accelerator in Grand Rapids. “We have some strategic partners and potential straSponsored by: SMALL BUSINESS teg ic pa r t ners i n ASSOCIATION Grand Rapids,” he OF MICHIGAN said. In its first four years, the business accelerator supported the formation and funding of 20 startups, 15 of which are still operating. Nine of the 15 companies are based in East Lansing, and four of those operate out of the incubator space. The startups going through the program were able to leverage the initial backing from Red Cedar Ventures to collectively attract $2.3 million in follow-up capital investments and create 30 jobs. R e d C e d a r Ve nt u r e s a n d S p a r t a n Innovations have since recorded one exit and are in negotiations for another of its portfolio companies, Urban said.

SMALL BIZ NEWS

Michigan State University is bringing its Conquer Accelerator to Grand Rapids, where it aims to leverage the school’s growing presence at the College of Human Medicine and Grand Rapids Research Center, as well as connections with other organizations, to help develop startups. COURTESY PHOTO “We’re getting a lot of traction out of the startups,” Urban said.

Local support The Grand Rapids Local Development Finance Authority, which operates the city’s SmartZone, last month approved a memorandum of understanding with the MSU Foundation for a local Conquer Accelerator. The LDFA would pay up to

in external funding and have a scalable distribu$120,000 to cover a portion of the costs to extend tion model or proven ability to scale sales, he said. the business accelerator to Grand Rapids. “Ideally they’ll have a functional prototype Conquer Accelerator’s goals are “exactly in line or proven product success,” Klooster said. “This with the goals and priorities of the SmartZone” to isn’t the program for somebody with an idea nurture and build profitable high-tech startups that where they haven’t had some work put into evalcreate jobs, said Jonathan Klooster, acting economic uating that idea yet.” development director for the City of Grand Rapids. Spartan Innovations initially plans to operate “It actually is a perfect fit to achieve the priorithe Grand Rapids Conquer Accelerator with staff ties of the SmartZone,” Klooster said. from East Lansing. The organization intends to The MSU Foundation intends to base a train and turn over control of the business accelerConquer Accelerator out of MSU’s Grand ator to a local team within Rapids Research Center a few years to “make it on Michigan Street in “It’s very intensive and it’s strictly a Grand Rapids downtown, Urban said. really intended for those thing with all Grand Pending negotiation Rapids mentors and all of a final contract with companies that are ready Grand Rapids teachers the LDFA for Conquer to spend an intense 10 and utilizing everything Accelerator, Spartan weeks with a lot of experts from Grand Rapids,” In n ov a t i o n s t e n t a coming in to help them Urban said. tively plans to launch “Our goal is not to go the 10-week program move the needle on their out there and run this in Grand Rapids in mid business, and they’re going program like we run it in September, Urban said. to have to be companies East Lansing and using all Advertisements and of our people. The goal is requests for proposthat Red Cedar Ventures to take the program that als from startup busiwants to invest in.” we built in East Lansing nesses likely will go out and bring it out to Grand in March, he said. — JONATHAN KLOOSTER Rapids, train people in Urban expects to Acting Economic Development Director for Grand Rapids how to run receive interest from 15 Grand Rapids the program, and allow to 20 startups. Grand Rapids to eventu“We don’t think we’ll ally run the program, and have a problem getting then they can tailor it for Grand Rapids,” he said. five teams,” he said. “There’s enough entrepreneurship and ideas out of Grand Rapids.”

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The LDFA can bring to Conquer Accelerator several partners that are in the SmartZone, such as Spectrum Health, the Van Andel Institute, Grand Valley State University, Start Garden and The Right Place Inc., to identify startups that are prepared to participate in the training, Klooster said. The program “is not going to be for everybody,” he said. “It’s very intensive and it’s really intended for those companies that are ready to spend an intense 10 weeks with a lot of experts coming in to help them move the needle on their business, and they’re going to have to be companies that Red Cedar Ventures wants to invest in,” Klooster said. Startups should have founders that “demonstrate a willingness to learn and the ability to accept and integrate feedback without being defensive,” and offer a product or service “that solves a problem for a specific customer,” Klooster said. They should operate with less than $1 million

Expanded offerings In its first few years, Conquer Accelerator primarily selected student-run startups and broadened eligibility beyond campus in the fourth year. In the fifth year, the business accelerator will consider startups formed by university staff and faculty. The training focuses on areas such as business planning, patent and copyrights, customer discovery, securing capital, and seeking federal grants for technology development from the National Institutes of Health, National Science Foundation and the Small Business Innovation Research (SBIR) program. Conquer Accelerator in the 2018-19 fiscal year submitted 16 SBIR applications for highly competitive federal grants for startup clients, Urban said, noting that eight were funded. Spartan Innovations eventually wants to extend Conquer Accelerator beyond just Grand Rapids and into other markets around the state. It will focus first on areas where “MSU has assets” that can support the business accelerator, Urban said. Visit www.mibiz.com

NONPROFIT ORGANIZATIONS

Nonprofit programs address barriers to employment in West Michigan By JESSICA YOUNG | MiBiz

for the rides are split between the employer and employee. According to Coleman, employers are willing ncreasing prosperity and the decade-long to bear the brunt of the expense because the proeconomic expansion have provided a record gram provides a significant return on investment number of jobs in Michigan, yet people relative to labor costs, which often account for a who want to work are still facing barriers large portion of total overhead costs. to employment. Of the 50 businesses that participate in Now, business owners and local nonprofit the Wheels to Work program, 20 percent have organizations are coming together to tap into seen an increase in production and 82 percent those segments of the workforce report an increase in attendance, that have yet to benefit from the according to a survey conducted surge in job opportunities. by Hope Network. Coleman said The labor shortage in 40 percent of participants in the Michigan has stifled growth in the program reported that they would Sponsored by: state’s top industries, including not be able to continue working GRAND RAPIDS manufacturing, agriculture and their current job without Wheels COMMUNITY hospitality. Out of every 100 peoto Work. FOUNDATION ple in the labor force, more than The program sees hundreds of 96 of them have jobs. Economists new riders every quarter and procall the situation “full employment,” meaning vides about 12,000 trips per month, a number virtually all who are able and willing to work are that will significantly increase this year because employed. of an expansion to industrial areas in Muskegon, Yet, untapped pockets of Michigan’s workaccording to Coleman. force are still looking for employment and unable “People want to work,” she said. “They just to access the jobs available, according to Debbi need a way to get there.” Coleman, transportation business development specialist at Hope Network. Demonstrating need “We get calls and emails from people looking Since 2016, the U.S. economy has added nearly for jobs every single day,” Coleman told MiBiz. 7 million jobs, according to the Bureau of Labor Hope Network’s Wheels to Work program proStatistics. However, historically and at present, vides transportation to and from work for people employment opportunities are not spread evenly in West Michigan. Because the average monthly across the population. cost to own a personal vehicle is more than $400, For example, between January 1972 and a lot of workers simply can’t afford to drive themDecember 2019, other than in the aftermath of selves to work, according to Coleman. They must various recessions, the African American unemthen rely on other modes of transportation like ployment rate has stayed at or above twice the public buses, which don’t always run in industrial white unemployment rate, according to data areas where employers are based, nor do they from the Center for American Progress. In fact, always operate during second and third shifts. the only time that the African American unem“Our biggest need is those people who live in ployment rate was significantly less than twice the inner city that are going into manufacturing the white unemployment rate was during the positions and do not have any access to public Great Recession. transit because of their shift,” Coleman said. Furthermore, while the overall unemployThe Wheels to Work program covers all of ment rate hovers around 4 percent, the youth West Michigan, but the largest concentration unemployment rate in West Michigan is around is in Grand Rapids and the surrounding areas. 20 percent, according to Justin Beene, founder People who use the program are picked up at of the Grand Rapids Center for Community neighborhood-based hubs and dropped off Transformation (GRCCT). directly at their workplace. The Center for Community Transformation Although the program was started with seed was recently awarded a $1.5 million grant from funding from Heart of West Michigan United the U.S. Department of Labor to extend its Way and from the Meijer Foundation, the proYouthbuild program, which helps youths from gram was designed to be self-sustaining. Costs jyoung@mibiz.com

NONPROFIT SECTOR NEWS

“As we make investments in our community, we have to ensure that financial opportunities are available to all.” Reneé Williams

The Grand Rapids Center for Community Transformation received a $1.5 million grant from the U.S. Department of Labor for its Youthbuild program. COURTESY PHOTO neighborhoods in southeast Grand Rapids earn different,” Beene said. “We’ll see a lot of young their GEDs as well as a nationally recognized cerpeople who we place who have to deal with sextificate in either construction or hospitality. ism or racism in the workplace.” “We want to make (Youthbuild) as effective as possible, both to meet the needs of the industry Relationships matter as well as build on the strengths of our young Relationship-building is the key to connecting people,” Beene told MiBiz. people to careers where they will thrive, accordA significant portion of the program’s particiing to Beene, who said he gets frequent calls from pants are youth of color, and the need is clear. employers who need to fill jobs but don’t necesAlthough the Youthbuild program only accepts sarily want to commit to ongoing mentorship or 20 people at a time, about 90 people apply each community building. cycle, according to Beene. The average age of par“We have lots of busiticipants is 19. nesses and lots of people “We can’t even take who really do care, but them all and it shows that our (community’s) meththere are actually lots of odology hasn’t always young people who need to worked,” he said. “We finish school and who are get a lot of phone calls interested in maybe going of, ‘hey, we could hire 10 into the trades,” he said. people right now,’ but the The program partners challenge is it’s not that with private companies simple. We need you to like Wolverine Building come and build relationGroup Inc., Building ships with these young Bridges Professional people beforehand and Services L3C, Feyenthat’s a shift, but employZylstra LLC and Nugent ers know they have to start Builders Inc. to place peodoing something a little ple who have completed different.” the program into jobs. The heightened presHowever, even with many ence of local companies job openings in the confor groups of people who struction and hospitalare looking to join the ity industries, Youthbuild workforce will ultimately still faces challenges when connecting participants to — JUSTIN BEENE give those businesses access to untapped talent, careers. Founder of Grand Rapids Center for according to Beene. “There are a lot of Community Transformation “The opportunity in CEOs who have had a developing these partton of interest in working nerships is really to have with us and partnering, a presence and some name recognition to get out but when it comes to the foreman and the projand build relationships before they’re needed,” ect manager, maybe even HR manager, having he said. the same level of passion and grace, that’s a bit

“We get a lot of phone calls of, ‘hey, we could hire 10 people right now,’ but the challenge is it’s not that simple. We need you to come and build relationships with these young people beforehand and that’s a shift, but employers know they have to start doing something a little different.”

Meet our One Hundred New Philanthropists Reneé Williams partners with Grand Rapids Community Foundation to leave a personal legacy. She says that financial stability is essential for creating a thriving community. Learn more about how you can make an impact through philanthropy by contacting Jenine Torres at 616.454.1751 or jtorres@grfoundation.org.

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MiBiz / MARCH 2, 2020

Q&A Dr. Laurel Ofstein

IN THE NEWS

Associate Professor, Western Michigan University

M&A

Women entrepreneurs face significant challenges in growing their companies, but there are ways to improve the business environment to make it better. That’s the central theme of a study released by Bank of America and Babson College that identified what entrepreneurs can learn from industry-leading women business owners. Laurel Ofstein, an associate professor of management in the Haworth College of Business at Western Michigan University, contributed to the study and helped interview 30 women entrepreneurs who have achieved an average of $43 million in revenue. Ofstein spoke with MiBiz about how women entrepreneurs overcome obstacles related to market misperceptions, network exclusion and underfunding. What made you want to research women entrepreneurs? There’s a lot of research on women starting businesses and that it can be very challenging, but we wanted to look at women who have reached $5 million in revenue per year in their businesses, which means they are very successful and larger than most businesses. We were looking to see what challenges they were going through in growing even bigger, and what allowed them to get that large. We were initially looking at barriers to growth, things like running into obstacles, raising money, difficulties in accessing networks. Through the examples women provided, we were also able to identify some action strategies for how to help other women achieve. The research highlighted misperceptions for women-led businesses. What were some of those? The first was market misperceptions. An example is with Farmgirl Flowers: The founder focused on flower delivery, and sometimes that market was perceived as, ‘isn’t that sweet, a woman is focusing on flower delivery.’ But she was into it because she knew it was a big market that was ripe for innovation. There are misperceptions about the size and the financial opportunities in some of the markets these women-led businesses chose. What did the research tell you about inclusion in the workplace? We find that women who try to network within their industries, trade shows or other events were often perceived as not the right fit for the organizations they tried to join. A lot of the time, the events happen in the evening or at the bar, on the golf course. While women are perfectly capable of attending those things and being part of the group, they just didn’t see the point, so they were often excluded from those times when decisions were made outside of regular business hours or just in places where they weren’t as welcomed. How were the women able to grow their own businesses? Because the venture capital that’s available to women entrepreneurs is much more limited than to men historically, women have had to build their businesses organically, kind of over time, reinvesting in their own businesses as opposed to getting cash infusions from outside investors. Sometimes their businesses weren’t able to grow as fast because of having to rely on that organic growth. Instead of just looking for that elusive venture capital, (they were) finding angel investors or other kinds of grants that are specifically focused for women-owned businesses. Is that slower organic growth process necessarily bad in the long term? Women really perceive building their business as a marathon and not a sprint, so growing organically allowed them to really focus on their culture and build a strong business that wouldn’t just be sold off in a few years, but could grow and retain talent. What were some other strategies the study came up with? Buy from women-owned businesses. Making an intentional choice, either as a woman business owner to buy from women business owners, use them as suppliers, collaborate with them, consider helping fund other women-owned businesses to help to amplify the attention on these women-owned businesses. We’ve heard a lot about mentoring. Sometimes because of limited networking opportunities, there aren’t always as many women leaders who are able to be mentors to some of the up-and-coming women. We are encouraging women to be a mentor to other women who are helping to build their businesses. What do you hope people will take away from the research? I’m hoping it shines a spotlight on the fact that there are large, very successful women-owned, women-led businesses, and that women leaders are just as capable at achieving growth across industries as male business owners. I hope it raises awareness of the need to include women in working events to make sure the invitations are made to all people working in the industry and that the events are accessible and family-friendly for all genders. I hope that by publicizing this research here locally we don’t just see it as a job for communities where these large businesses live, but that we use these actionable strategies to make some changes here locally in West Michigan.

Interview conducted and condensed by Sydney Smith. COURTESY PHOTO.

MARCH 2, 2020 / MiBiz

n Allegan-based Perrigo Co. plc (NYSE: PRGO) plans to acquire the oral product line from Stamford, Conn.-based High Ridge Brands Inc., which filed for bankruptcy in December. The $113 million cash deal follows a bidding process and auction held Feb. 20 in U.S. Bankruptcy Court in Delaware. The acquisition requires the approval of the Bankruptcy Court and could close in the first quarter. The acquisition would contribute more than $100 million in net sales to Perrigo in the first full year and build on the July 2019 acquisition of Grand Rapids-based Ranir Global Holdings LLC for $750 million. n Grand Rapids-based Steelcase Inc. (NYSE: SCS) has divested coated steel manufacturer PolyVision Corp. of Atlanta to an affiliate of Industrial Opportunity Partners, an Evanston, Ill.-based private equity firm. The $74 million deal allows Steelcase to focus on “disciplined portfolio management in pursuit of growth.” Steelcase plans to use $41 million of the proceeds to pay off a note and use the remainder to invest in growth strategies, according to a filing with the Securities and Exchange Commission. PolyVision makes a CeramicSteel product used in chalkboard and whiteboard surfaces and architectural cladding. Steelcase acquired PolyVision in 2001 for approximately $176 million, including $103 million in debt, according to SEC filings at the time. n Howard Miller Clock Co. of Zeeland has divested its wood furniture manufacturing division, Alexis Manufacturing Co., to Brooklyn, N.Y.-based Roll & Hill Furniture LLC, according to a statement. Alexis Manufacturing operates a 30,000-square-foot facility in Walker and has manufactured complex wood components and wood seating for 75 years. The company serves the residential and hospitality market and also supplies to other OEMs in the fine furniture industry. Howard Miller Clock owned the company since 1983. Terms of the deal were not disclosed. n Grand Rapids-based Charter Capital Partners was the M&A adviser for Hancock-based Keweenaw Financial Corp., the parent company of Superior National Bank & Trust, in the $42 million acquisition of North Star Financial Holdings Inc., the Bingham Farms-based parent company of Main Street Bank in suburban Detroit. The combined bank will have 11 offices in the Upper Peninsula and Southeast Michigan with more than $800 million in total assets. Grosse Pointe Farms-based Olejniczak Advisors LLC, a financial services industry strategic consultant, and Grand Rapids-based law firm Warner Norcross + Judd LLP also advised Superior National on the deal. n Kalamazoo-based Michigan Mobile Canning LLC has been acquired by Manchester, N.H.-based Iron Heart Canning Co., according to a report in industry trade publication Brewbound. Both companies provide mobile beverage canning services for breweries, cideries, wineries, distilleries and other beverage companies. Founded in 2013, Michigan Mobile Canning operated from locations in Kalamazoo and Indianapolis. Terms of the deal were not disclosed. In a post on social media, an exec at Michigan Mobile Canning said all staffers at the company were staying on with the new ownership. n Industrial scales and weighing systems supplier D.C. Martin & Sons Scales Inc. of Wyoming, Mich. has been acquired by Columbus, Ohio-based Mettler-Toledo International Inc. (NYSE: MTD). D.C. Martin & Sons Scales operated as a familyowned business since its founding in 1955 and has grown to serve multiple industries including food processing, pharmaceutical, discrete manufacturing, agriculture and distribution. The company employs 19 people locally. Mettler-Toledo is a multinational manufacturer of scales and analytical instruments. Grand Rapids-based M&A firm Calder Capital LLC represented the company in the sale. Terms of the deal were not disclosed. n Holt-based Business Management Resources Inc., a provider of managed accounting services to restaurant chains, has been acquired by Cincinnati, Ohio-based accounting and advisory firm Clark, Schaefer, Hackett & Co. Business Management

Resources founder James Back and three employees will join Clark, Schaefer, Hackett’s East Lansing office. Terms of the deal were not disclosed. n Dykstra IT LLC, a provider of fully managed information technology services, recently merged into Quantum Leap Inc., a telecommunications provider. Staff from Dykstra IT moved into Quantum Leap’s facility on 44th Street in Grand Rapids and founder Drew Dykstra became a partner. Quantum Leap often used Dykstra IT when installing phone systems. The merger as well expands Quantum Leap’s client base and will help to drive growth. Terms of the deal were undisclosed.

EXPANSION

n Pangea Reptile LLC, a manufacturer of pet products and distributor of small reptiles, is investing $1.3 million to expand its location in Zeeland Charter Township. The company, which currently employs around 20 people, bought an existing 35,000-square-foot facility on Pentatech Drive in Zeeland in 2019, according to a statement from Lakeshore Advantage Corp. The expansion is expected to increase the company’s manufacturing footprint by 17,000 square feet and add 13 jobs. n Supply chain management and warehouse supply company JetCo Federal Supply is expanding with a new space in Cascade Township. JetCo Federal entered a long-term lease for a new 16,100-squarefoot mixed-use space at 5575 Kraft Ave. SE in Cascade Township. The company currently has an office at 525 Ottawa Ave. NW, just north of downtown Grand Rapids. First Companies Inc. of Grand Rapids is the contractor on the project. The new office space will house 26 employees, and features a training room, conference rooms, a kitchen and bar area, reception area and warehouse. • Kalamazoo-based Bronson Healthcare Group plans to develop a new $21 million outpatient surgical center for orthopedic cases. Construction on the surgery center could begin this spring off Beatrice Drive at I-94 and 9th Street in Texas Township, pending state certificate-of-need approval. Completion is targeted for late 2021.

REAL ESTATE

n Mary Free Bed Rehabilitation Hospital has purchased parcels at 438 La Grave Ave. SE and 443 Jefferson Ave. SE in Grand Rapids for future expansion. Mary Free Bed acquired the properties in December for $1.3 million. The properties total nearly an acre combined and include a 20,000-square-foot commercial/industrial building and a small parking lot. Mary Free Bed got interested in the properties when it heard the former owner was looking to sell, according to a spokesperson. The timing of developing the properties remains unknown, and the organization has no plans for either parcel at this time.

MANUFACTURING

n Zeeland-based furniture maker Herman Miller Inc. (Nasdaq: MLHR) is partnering with a division of Logitech International (Nasdaq: LOGI) for the research, design and manufacture of furniture solutions for esports athletes and gamers. The exclusive partnership builds off both companies’ design and engineering expertise, according to a statement. As part of the partnership, Herman Miller and Logitech G will seek feedback from esports teams and incorporate that into new products, the first of which, a gaming chair, is set to launch this spring. According to a December 2019 report from Business Insider, the growing global esports market was expected to exceed $1 billion in revenue in 2019 and reach $1.5 billion by 2023.

CLOSURE

n Mokena, Ill.-based Bear Down Logistics Inc., a final mile logistics company that lost a contract to deliver packages for e-commerce giant Amazon.com, expects the close its Walker East facility, located at 2935 Walkent Drive NW in Walker, on April 13. The company operates a fleet of vans that deliver packages to customers. The company said in a notice to the state that the permanent closure will result in 110 people losing their jobs. Visit www.mibiz.com

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MiBiz / MARCH 2, 2020

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