MiBiz June 22, 2020 print edition

Pair of VC-backed startups inch closer to market

Indiana CU eyes GR, Kzoo markets for expansion

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VNN Inc. co-founder steps down from VC-backed startup after ‘passions changed’

By JAYSON BUSSA and JOE BOOMGAARD | MiBiz editor@mibiz.com

VNN Inc. co-founder Ryan Vaughn departed the company in April, although he remains a shareholder. In his decade at the company, Vaughn raised about $21 million in investor capital from local and national sources. COURTESY PHOTO

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yan Vaughn can count many accomplishments over the last decade after co-founding and scaling VNN Inc., originally known as Varsity News Network.

That includes raising around $21 million in investor capital for the company, a Grand Rapids-based information technology startup that offers schools a platform to post content about sports programs.

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fter canceling this year’s ArtPrize because of concerns over COVID19, organizers of Grand Rapids’ flagship arts event and the largest art competition in the world have avoided questions about whether it will return.

Staff declined to give interviews, while chairman and founder Rick DeVos did not respond to requests for comment.

Board member Marc Schwartz issued a statement to MiBiz saying the board “will continue to evaluate things, and at the right time, make decisions regarding the possibility of future events.”

“Our decision to cancel ArtPrize was a result of uncertainties related to the COVID-19 pandemic,” said Schwartz, whom lifestyle publication SEEN Magazine described in 2017 as a “full-time Detroit arts ambassador and advocate.”

“Given the prospect of continued uncertainties related to the See ARTPRIZE on page 3

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Groups say their assistance with Kent County relief fund merits compensation

After 2020 cancellation, future of ArtPrize remains unclear

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

“I’m blown away when I think about that number,” Vaughn told MiBiz. But even as VNN continued to add clients across the country, Vaughn’s 10-year run with the company ended in April, about two years after he says he started to lose the passion for the work, which would eventually become disruptive to his executive leadership role.

“It’s kind of like you finally get enough gold stars and then you realize you don’t care about gold stars anymore,” Vaughn said. “Most of my VNN career — and frankly my

The City of Grand Haven was an early adopter in creating social zones that allowed restaurants and retailers to expand onto sidewalks and city streets.

MIBIZ PHOTO: MARK SANCHEZ

RESTAURANTS, BARS EXPAND OUTSIDE WITH SOCIAL ZONES

By KATE CARLSON | MiBiz kcarlson@mibiz.com

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W’s Food & Spirits had never offered outdoor seating in the more than two decades the restaurant and bar has been in operation at the corner of North 7th Street and Washington Avenue east of downtown Grand Haven.

That all changed this year when 50-percent capacity restrictions brought on by the COVID-19 pandemic forced owner Chris Weavers to get creative in finding a pathway to remaining profitable.

The Grand Haven establishment took advantage of the city’s new social zone program that allows businesses to use outdoor space such as sidewalks, parking lots and parts of city streets for their operations. JW’s now has nine outside tables in an area the city assisted in blocking off with concrete barriers.

“This is going to more than make up for the 50-percent capacity (restriction) and it’s just a fun, exciting atmosphere,” Weavers said. “My dining room is quite small. Without this outdoor seating, it would have been impossible to turn a profit.”

Weavers

See SOCIAL ZONES on page 15

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

GRAND RAPIDS — In partnering on a $25 million small business relief fund, Kent County and the Grand Rapids Area Chamber of Commerce want to tap a number of community and entrepreneurial support organizations to get the word out to companies and provide volunteers to vet grant applicants.

How e v e r, St a r t Ga rd e n and Grand Rapids Area Black Businesses — two of the organizations that the Grand Rapids Chamber lists as potential partners in the Kent County Small Business Recovery Program — question the volunteer part.

They’d like to see the $750,000 the county will pay the Chamber to administer the grant program get funneled down and compensate the groups who are called upon to assist in the effort, rather than provide free labor.

“This should be a robust community effort, and it’s pitched as it’s going to be a robust community effort, so it just seems, arguably, that the community should get paid for those services,” said Darel Ross, a director at Start Garden.

“There’s a pattern and history in Grand Rapids of larger organizations that do not have

a histor y of equity or equitable causes in their work.

When funding opportunities come, all of a sudden they Ross form these alliances and partnerships where basically the smaller organizations and the minorities do the work for free,” Ross said. “There definitely could have been more intentionality and sensitivity around making sure that the partners with a history of the work and who actually care about equity work, making sure they are at the table in a way that is monetized.”

The Grand Rapids Chamber’s proposal to the county for managing the grant funds lists municipalities and chambers of commerce across Kent County as partners for outreach and providing representatives for selection committees, plus several community and entrepreneurial organizations.

That includes organizations such as the West Michigan Hispanic Chamber of Commerce, West Michigan Hispanic Center, Grand Rapids Black Chamber, Grand Rapids Area Black Businesses, the See RECOVERY FUND on page 17

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Philanthropy gets creative to address nonprofits’ acute needs PAGE 21

INSIDE:

Automotive Industry Forecast SEE PAGE 4

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Capital raises bring pair of Genesis Innovation-backed startups closer to market

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

GRAND RAPIDS — New capital investments involving existing investors will bring two health care startups backed by Genesis Innovation Group LLC closer to the market.

Investors recently committed $650,000 to HAPPE Spine LLC, a Grand Rapids-based startup developing and commercializing a porous, bioactive material for orthopedic implants. The investment capital came from existing financial backers of HAPPE Spine that include the Holland-based Genesis Innovation Group and its venture capital fund, Cultivate(MD), plus individual private investors, said Genesis CEO Rob Ball.

Another company formed

by Genesis Innovation Group, Genesis Software Innovations LLC, raised $427,230, according to a recent filing to federal securities regulators. The capital Ball investment for Genesis Software also came from existing investors, Ball said.

HAPPE Spine uses a material developed by Ryan Roeder and researchers at the University of Notre Dame that allows for the full or partial construction

ARTPRIZE

Continued from page 1 event cancellation, we had to make the unfortunate decision to take a pause in our operations,” he added.

City officials had continued planning for the event in the week leading up to the announcement of the cancellation, while the organization itself said as recently as May 29 that “new safety guidelines” were forthcoming to allow the event to continue this year.

Richard App, a former ArtPrize artist and curator, said he is “cautiously optimistic” the event will return post-pandemic. App is now the small business retention and attraction specialist with the Grand Rapids Area Chamber of Commerce, and acts as a liaison between the Chamber, the city of Grand Rapids and Downtown Grand Rapids Inc. “I think they’re erring on the side of caution, which I respect very much,” App said. “The truth of the matter is it’s up to the board of directors to decide. I’d love to see them back. It has been a great success for the city, but I also don’t know the inner workings of exactly everything it takes to make this work. I couldn’t bet one way or the other on it.”

According to Steve Fridsma, who organizes Monroe Community Church’s ArtPrize venue, this isn’t the first time speculation has surfaced about the event’s future. He said some in the community questioned the move in 2019 to hold ArtPrize biennially with a scaledback event known as Project 1 in the off years. 2019 was Project 1’s first year, and projects 2 and 3 are planned, according to ArtPrize’s website. It was also a shift from having hundreds of artists pay to enter the competition to ArtPrize paying a select few to display projects here.

“When they announced they’d go every other year, I heard people say this is a sign of the end. I didn’t feel that way personally,” Fridsma said.

“It’s a lot of work — I actually kind of like having a year off.”

COVID challenges ArtPrize’s 2018 operating budget was $3.2 million, nearly 60 percent of which was funded by corporate Visit www.mibiz.com

of artificial bone applications. HAPPE Spine is developing a device for spinal fusion and expects to file an application to the U.S. Food and Drug Administration by the end of the year to move into the marketplace, Ball said.

“This capital gets us to that moment,” he said.

HAPPE Spine previously raised about $2 million. As the company moves toward commercialization, it will need to secure additional capital, and to decide whether to go to market alone, pursue a strategic partnership, or sell the intellectual property, Ball said.

“All options are on the table, but we’ve had significant, inbound strategic interests in the technology,” he said. “We’re open to a strategic partnership as well.”

At Genesis Software, the new capital raised from 15 investors will take the company up to the FDA application process. The company developed a software platform that leverages artificial intelligence to allow surgeons to better plan surgical procedures.

Using CT or MRI imaging, the software provides measurements, information and a three-dimensional view of a patient’s anatomy that the surgeon can use prior to a procedure “to plan his intention and what

sponsors including Founders Brewing Co., PNC Bank, Consumers Energy, Herman Miller Cares, Haworth Inc. and Wolverine World Wide Inc. The remainder of the last ArtPrize budget was composed of foundation grants, revenue from advertising and retail and registration fees. About $320,000 was taxpayer funded from state, local and federal governments.

The global pandemic “created many obstacles” for ArtPrize to host the event, including raising concerns over travel and the unpredictability over what type of gatherings would be permitted by then. Schwartz said the ArtPrize team worked through the spring to “find a way to hold a safe and robust event.

There were just too many unknown factors. Cancellation was announced 90+ days prior to the scheduled event and before the opening of the ‘Connections’ period where registered venues and artists match up.”

Grand Rapids City Manager and ArtPrize board member Mark Washington said the city respects organizers’ decision “and the many other organizations that have canceled their events due to COVID19. We look forward to the return of ArtPrize and the many other events that were canceled next year.

ArtPrize has been and will continue to be an outstanding experience for our community and the world.”

Evette Pittman, special events supervisor with the city of Grand Rapids, said the city had weekly meetings with ArtPrize until the week before the cancellation. She said the city will continue to work on arts projects this year, which may include publicly displaying murals painted on boarded up storefronts after May 30 protests. She said the storefront mural project “has created a mini-ArtPrize feel.”

“While it may seem COVID has won the round, our industry will win the battle,” Pittman said.

Most agree ArtPrize — at least in its original format — should not have happened this year because of the pandemic.

“I kind of expected it. I’m actually relieved,” Fridsma said. “The thought of 4,000 people coming through our doors in a period of three weeks gave us some concern. In general, we’re disappointed but relieved.”

to do to help correct” a condition.

“This is more about precise device decision making: Which exactly is the best device for the patient and where is it best placed to provide the best outcomes for the patient?” Ball said.

Genesis Software co-developed and tested the platform with a “significant group of surgeons,” Ball said. The company’s initial focus is orthopedic procedures, although it’s also looking at the software’s use in cardiac procedures and other applications, he said.

“We are in full development mode and we are, similar to HAPPE, filing (with the FDA) on the technology later this year,” Ball said.

The Genesis Software platform stems from Genesis Innovation’s prior involvement in IMASCAP SAS, a French developer of pre-operative software that was acquired in December 2017

by The Netherlands-based Wright Medical N.V. for $88 million. Kalamazoo-based Stryker Corp.

(NYSE: SYK) is in the process of finalizing a $4 billion deal to buy Wright Medical this summer.

“We have some experience in what these types of products can do in the marketplace,” Ball said.

Monroe Community Church, which was a finalist for outstanding venue in 2017, was planning a second venue in a “big wide empty warehouse” for this year’s event.

Over the past few months, the warehouse space has been used to store personal protective equipment for Spectrum Health, Fridsma said.

The church had started sorting through entries to host and was fielding interest from artists. One possibility was to do mostly exterior murals.

“What I do hope is they defer ArtPrize for a year and not go back to a Project 1 type of thing,” Fridsma said. “We missed hosting.”

Diedre Deering, president of the Monroe North Business Association, also said she wasn’t surprised by this year’s cancellation due to COVID19, but she’s hearing disappointment that it won’t be configured as a mostly outdoor event. Downtown restaurants have also reportedly expressed disappointment, hoping ArtPrize would be a reprieve after the pandemic-related closures.

Meanwhile, artists had been preparing for months for the event to continue this year in some form.

“ArtPrize canceling a few months before it was slated is very difficult for me to understand as an artist, arts curator or whatever else you would consider my title,” Hannah Berry, founder of Lions & Rabbits, said in a statement. Lions & Rabbits coordinated the downtown Windows mural project on storefronts after damages sustained following May 30 protests.

The company owns an arts space in the Creston business district and has led several Grand Rapids arts projects in recent years.

“From an artist’s point of view, it sucks,” Berry said, who also expressed gratitude toward ArtPrize staff. “Most artists have finished their work at this point.”

Schwartz said “we will be providing support to artists that had been working with ArtPrize on specific grant proposals.”

Looking ahead Berry said ArtPrize’s cancellation this year comes at a confusing time for small businesses who have at least partly counted on the event.

“I see all over Facebook people saying stuff about how people shouldn’t be mad about ArtPrize canceling — these are not the small business owners,” Berry added. “The small business owners in Grand Rapids are tired, confused and now left without a giant economic driver for their businesses. When I think about the center city’s rental rates and the pull to be in the downtown, I do genuinely think of ArtPrize’s allure.

“Ultimately, I want to challenge ArtPrize to still give without organizing. I think for the city and for artists alike, ArtPrize is a gatekeeper for change and it’s a shame that no matter what the scale was that it isn’t going to go through.”

Against the uncertainty, other downtown business owners reflected on ArtPrize’s effect over the past decade.

“My overwhelming sentiment is gratitude,” said Sam Cummings, managing partner of CWD Real Estate Investment LLC. “I cannot think of something that happened at a better time for our city. I don’t know what the future holds, but it was incredible. Whether that was a decade of experience that is just a stepping stone for us and it has run its course, who knows?”

The move to Project 1 was, in part, to give organizers some breathing room between what is ultimately massive planning and coordination for ArtPrize, organizers have said in the past.

“Was it a pain in the ass? Sure,” Cummings said. CWD is the “official real estate provider” that rents space for ArtPrize. Planning between the two entities would start in the spring with details solidified by June or July, he added.

“There is always an ongoing dialogue,” Cummings said. “It’s a tricky balance. It was a good challenge.”

Despite coordinating with ArtPrize, Cummings said he’s not close enough to the organization to “have any insight” on its future.

As with businesses in other sectors, it’s not clear whether COVID-19 is a temporary obstruction or a reason to call it quits.

“Everybody can certainly understand why they’d choose not to go forward with it this year,” he said.

“Then I guess going forward, we’ll just have to see.”

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FOCUS: AUTOMOTIVE INDUSTRY FORECAST

Auto dealers say demand remains strong, as worries grow over new car inventories

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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he projected slide in new vehicle sales globally and nationwide paints a grim picture for the industry, but local auto dealership executives say there’s a disparity between the numbers and what they’re seeing on their lots.

Because of the global COVID-19 pandemic, which has crippled auto production throughout the last three months, the sales forecasts offer anything but encouraging news.

An IHS Markit forecast released earlier this month projected drastically lower sales expectations for the year. Global auto sales are expected to sink to 70.3 million units in 2020, a 22-percent slide from last year.

Domestically, IHS Markit Wall is now forecasting a 26.6-percent decrease from last year, with auto dealers expected to move an anemic 12.5 million units for the year. The original forecast from January called for 16.8 million new vehicle sales.

These projections are beginning to rival those of 2010, when the nation was climbing out of the Great Recession and only 11.6 million cars and trucks were sold for the year.

Originally, IHS Markit expected only about a 12-percent dip in global sales, but the uncertainties that the pandemic has introduced into the industry are now raising the threat of a more profound effect.

Mike Wall, director of automotive analysis for IHS Markit in Grand Rapids, touched on a few caveats to the numbers, suggesting the total for U.S. auto sales in 2020 would likely shake out at around 13 million units.

“You might say (13 million) is still far off from 16.8 million, but bear in mind that a good two million units of that will probably be associated with the sheer decline and falloff of daily rentals,” Wall said.

He said that companies are already done with their rental buys for the year as that sector has taken a major hit given the low volumes of travel during the pandemic. To that end, rental giant Hertz declared bankruptcy in May, citing

the collapse of travel in the wake of various stayhome orders nationwide.

“There is a sizable decline on the fleet side, but we’re actually seeing retail holding quite well,” Wall added.

Still, Bank of America’s “Car Wars” forecast suggested that this slump will stick around for the long haul, taking several years before the industry can even approach the level of 17.1 million cars that were sold in 2019.

Still ready to buy?

While the numbers might be depressing for auto retailers, some dealerships are still hanging tough, and in some cases thriving.

For instance, in the face of the bleak outlook, the Kalamazoo-based Zeigler Automotive Group managed to record the best month of auto sales in company history in May, both with cars and in the motorsports division of the business that sells motorcycles, ATVs and personal watercraft.

In May, Zeigler sold 3,700 vehicles, which eclipsed its previous best mark of 3,500 vehicles sold back in August 2019.

President Aaron Zeigler said that he is seeing people who are ready to buy for a number of reasons.

“There is a lot of pent-up demand out there,” he said. “We kind of looked at it from a couple of different fronts. One is there really hasn’t been much to spend money on in the last couple months. Everyone’s credit card bills seem like they’re at record lows. … People have money right now and they seem to be spending it.”

As well, many consumers also saw an influx of extra cash.

“A lot of people got a raise on unemployment when you think about it like that, and then they got a stimulus check from the government for $1,200 and there was no tax on that,” Zeigler said.

“I think many people are flush with cash. We also sell a lot of business vehicles, too, and many businesses made out pretty well with the PPP program, so they have cash.”

The company rode that May momentum into what Zeigler called a strong June, but he certainly is monitoring some inevitable issues the industry is facing.

“The biggest challenge is going to be that the industry is going to run out of cars,” he said.

Fox Motors President and COO Diane Maher said the company bolstered its online offerings during the pandemic, although she expects about a 50-50 split among customers who want to complete transactions virtually once the industry gets back to normal. MIBIZ FILE PHOTO: KATY BATDORFF

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JUNE 22, 2020 / MiBiz

Aaron Zeigler, president of Zeigler Automotive Group, said the company recorded its best-ever month of sales in May, despite the COVID-19 pandemic. MIBIZ FILE PHOTO: KATY BATDORFF “Sales are substantially higher than what manufacturers thought and they’re trying to gear back up and it will take them a while to catch up. We’ve been out for about 45 days trying to buy cars.

Our inventory has about 1,500 less than what we would normally have in stock.”

Pickup trucks will be the first to dry up, as demand in this ultra-profitable segment of vehicle sales has not relented while production of these and other vehicles came to a screeching halt at the height of the COVID-19 pandemic.

Demand continues to be highest for trucks, SUVs and crossovers, proving that uncertain economic times are not making consumers shy away from the pricier buys.

Zeigler and other dealership executives plan to adjust their inventories accordingly.

“We normally do 50-50 new and used, so we might pivot and do 40 percent new and 60 percent used,” Zeigler said. “The used cars are out there. It’s on the new side where things will be tight through probably the end of August.”

Forced to adapt Evolving — and quickly — was a must for dealerships during the last few months. This didn’t just mean stocking more hand sanitizer in the showrooms or implementing proper social distancing practices. Dealerships also had to hone their technology to bring every aspect of the car-buying experience online. The state shut down all auto sales on March 24 and on April 9, they were able to reopen by conducting much of the sales process online.

That meant developing these digital tools and capabilities, or at the very least refining existing ones.

“We already had it where you can buy a car 100 percent through our website,” Zeigler said, noting the company’s operations in other states have allowed virtual sales for years. “Very few people do that even though the technology is available.

But 100 percent of customers do go online and maybe do 80 percent of the experience online.”

Diane Maher, president and COO of Grand Rapids-based Fox Motors, said that her company’s digital capabilities also were fairly advanced before the pandemic and subsequent shutdown.

For a number of years, Fox Motors has touted its “Buy Your Way” initiative, which allows customers to tailor their car-buying experience with the option of doing it almost all online.

However, the pandemic served as a catalyst for further developing the technology to make Fox Motors more effective.

Touchless service is one such solution that the dealership introduced during the pandemic, where clients can drop off their vehicle and keys for service without interacting with anyone directly. Dealership representatives communicate with clients via text and email.

“Our technology vendors (Cox Automotive) have stepped it up like 10,000 times and have gotten a lot of things through the development

phase because they’ve had to,” Maher said. “I think it’s been really good for the industry as a whole as far as the technology that is around now and it lets us do it this way.”

Still, motorists shouldn’t expect the car-buying experience to become exclusively digital anytime soon. Maher points to the fact that many clients of Fox Motors prefer the person-to-person interactions with the sales and service consultants with whom they have created relationships.

“The biggest challenge is going to be that the industry is going to run out of cars. Sales are substantially higher than what manufacturers thought and they’re trying to gear back up and it will take them a while to catch up. We’ve been out for about 45 days trying to buy cars. Our inventory has about 1,500 less than what we would normally have in stock.”

— AARON ZEIGLER President of Zeigler Automotive Group

“I still don’t believe that all the customers will want to transact with us (entirely online), but at this stage, my best estimate would be about 50-50,” she said.

While Fox Motors may not have recorded a banner month like Zeigler, Maher also noticed a much more subtle hit to demand than one might expect during such an unprecedented economic event.

In April, Fox Motors achieved about 65 percent of its sales goal, but recovered in May, when the company reached about 80 percent of its sales mark. June was trending to see Fox Motors hit its sales expectations.

“There was a couple month bump and it appears that demand and people’s desire to buy vehicles is strong,” Maher said. “They don’t seem to be scared off by this — it’s encouraging.”

Incentives have also made it one of the best times to buy a car in recent history, with long loan terms and 0 percent interest.

Still, Maher is bracing for supply issues that the industry is likely to face in the months ahead.

“Used (vehicles are) definitely robust at the moment — our new to used ratios are climbing,” she said. “We currently have a decent supply of new cars. We have a little bit of a fear that around the August timeframe we could get light in certain brands. We’ve been talking to manufacturers and they are feverishly trying to up their production and get more vehicles out there. I don’t think anyone anticipated that demand would be this high right now.”

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5

FOCUS: AUTOMOTIVE INDUSTRY FORECAST

Automotive suppliers welcome break from most 2020 auto shows

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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uto manufacturers, dealers and OEMs will catch a break from the busy auto show circuit this year after the COVID-19 pandemic essentially wiped out the ability to hold crowded events.

This will either be a welcome reprieve or a missed opportunity for these companies, depending on their marketing strategies.

“I certainly do understand the thinking around, ‘We have another auto show to do and there is the new so-and-so model — OK, big deal,’” said Mike Wall, director of automotive analysis at IHS Markit in Grand Rapids. “Believe me, the industry is still driven by a model cycle, for sure. As new models are coming out, you have new technology and you want to get that out to the masses. You want to get that story out.”

Those stories were not told at the North American International Auto Show in Detroit, which was slated for its first summer installment this year. The June 9-20 series of events were canceled, falling in line with a long list of counterparts around the world, including the New York International Auto Show, Geneva International Motor Show and Auto China (Beijing).

The next NAIAS is planned for June 11-26 of next year.

In fact, the Chicago Auto Show was the last big show to take place in the United States in early February with nearly 1,000 vehicles at McCormick Place.

Because of the COVID-19 pandemic, most auto shows have been canceled for the year. The next North American International Auto Show in Detroit is scheduled to take place from June 11-26, 2021. MIBIZ FILE PHOTO The Consumers Electronics Show (CES) also went on as planned in Las Vegas in January, featuring 160 automotive technology companies and also 10 automakers, including the likes of Ford, GM, Nissan, Honda and BMW. That show stressed the latest innovations in tech. For instance, GM showed off its integration of Amazon’s Alexa Auto voice-controlled virtual assistant in a new Cadillac CT5.

Auto show obsolete?

These auto shows are going dark at the same time more and more automakers are scrutinizing their value. Many of these companies are facing the dilemma of whether to invest in these shows — many of which are slowly dropping in popularity — or to harness their own digital tools to reach out directly to consumers via off-site and offcycle unveilings.

Crain’s Detroit Business reported prior to 2019’s NAIAS that Mercedes, BMW and Audi were all pulling out of the show to reassess their auto show footprint.

“What we’ve seen is automakers have been

doing a very good job at tailoring their messaging via Facebook or live feed — pick your poison, but they’re going virtual and going through social media channels to get those new vehicle launches out there, and this was before the pandemic,” Wall said. “This was already happening.

We were seeing automakers pulling out of select auto shows over the years. That’s one of the reasons we saw Detroit shift to June, and it wasn’t all Detroit either — it was all the auto shows, even the international ones, wrestling with this.”

Wall added: “Automakers have finite resources and they want to get the most bang for their buck.

If you’re going into an auto show and you’ve got 25 other automakers and you’re all shoulder to shoulder vying for the eyeballs of either the media on certain days or the public on other days, you begin to wonder if it’s all worth it.”

Not a critical touch point Like many suppliers, ADAC Automotive in Grand Rapids routinely sends a team to NAIAS, but executives never saw it as a crucial means for connecting with potential customers.

“We don’t traditionally look at the auto show as a critical customer touch point,” said Jeff Dolbee, CFO at ADAC Automotive, a Tier 1 supplier specializing in door handles and vehicle access solutions.

“There are meetings that take place, probably as much out of convenience because you have the right folks in the same place at the right time.

But we don’t use the auto show in any way to leverage our showing of new technology to customers and things like that.”

At the same time, Dolbee admitted that losing all these high-profile auto shows around the country could certainly result in a blow to consumer excitement.

“From my own anecdotal perspective, I think that there is some loss of consumer excitement,” he said. “For a consumer, especially if you’re in the market for a car, you get to go to one spot and most of the cars that you’re going to be considering are going to be sitting there somewhere on that showroom floor where you can walk back and forth.

“My view is there’s got to be some level of loss as a result of that, but people don’t drive from all over the country to come to Detroit.”

Tier 1 supplier Gentex is taking a similar approach as ADAC Automotive.

The Zeeland-based company manufactures automatic-dimming rearview mirrors, camera-based driver assistance systems and the HomeLink Wireless Control System. Insead of exhibiting at shows like NAIAS, it’s moved directly to customer sites.

However, with today’s health crisis, even those more intimate exhibitions have been put on hold.

In response, Gentex has worked to beef up its digital tools to provide the same in-depth look at its products for potential clients.

“My team has been busy developing new digital sales tools that our sales teams can use online with customers,” said Craig Piersma, director of marketing at Gentex. “We’re creating new videos, websites, e-brochures and other online materials that can be reviewed by customers remotely or during virtual meetings.”

However, Piersma admitted that, regardless of how advanced these digital tools might be, it doesn’t quite trump the in-person experience.

“We’ll take vehicles and display properties and set them up on site with our automaker customers so they can view and test drive new technologies,” Piersma said. “The face-to-face, hands-on interaction is far more effective than virtual meetings.”

MiBiz Editor Joe Boomgaard contributed to this report.

6

JUNE 22, 2020 / MiBiz

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Automotive supply chain adapts to month-by-month scenario planning

By JESSICA YOUNG | MiBiz jyoung@mibiz.com

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utomotive manufacturers are back up and running after months of production shutdowns following widespread outbreaks of COVID-19.

The gradual restart of the industry’s supply chain began sluggishly because of lowered capacity, parts shortages, on-andoff work stoppages caused by lingering cases of the coronavirus and many uncertainties ahead. However, automotive manufacturers are sprinting to replenish inventory and push on with operations.

After a “hard shutdown” in March, Grand Rapids-based Tier 2 automotive supplier Cascade Die Casting Group Inc. has jumped from operating at about 40 percent capacity at the beginning of June to about 75 percent by the end of month, according to company President Pat Greene. Normally, about 80 percent of Cascade’s business is tied to the automotive sector.

“It has been a slower restart than we expected,” Greene Greene told MiBiz. However, the automotive sales forecast jumped substantially in just the past few days.

“Our world has changed rema rk ably i n t he la st two weeks,” Greene said.

“We are busy and I did not expect that two weeks ago.”

Schuster A large concentration of Cascade Die Casting’s automotive business is tied to pickup trucks, which Greene expects to stay at “pre-COVID volumes from now until the end of the year.”

The company began phasing back into operation at the end of April in anticipation of the reopening of Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles US, which temporarily discontinued vehicle manufacturing in late March.

“You don’t just flip on the lights and go back to work,” Greene said. “In our business, you’ve got to start with the furnaces and make sure they’re clean and operating well, and then you better really focus on the equipment that has been sitting idle and make sure that that is all capable of running again and that it’s not going to be shutting you down as soon as you try to start operating.”

However, the biggest challenge for manufacturers has been adhering to new safety guidelines and ensuring that the people returning to work can remain safe from the deadly virus, according to Greene.

Cascade Die Casting is practicing new social distancing norms, employees are wearing protective masks, lunchrooms and communal spaces are closed and everyone’s temperature is checked each morning, Greene said.

The company also has hired regular cleaning crews to come through the workstations three times each day, and trained machine operators to thoroughly clean equipment before changing shifts.

“It’s been a lot of work to get ready for getting back into production and our (operation) is simple compared to a 5,000-employee automotive assembly plant,” Greene said.

Indeed, OEMs have faced a bumpy road.

In Michigan, the automakers started to return to production on one or two shifts last

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month after Gov. Gretchen Whitmer greenlit a phased restart of the industry. However, some employees who came back to work were infected with the virus, and shortly after operations resumed, factories were closed again temporarily for cleaning. A Ford pickup truck factory in Dearborn, which employs about 4,000 people, has already been closed twice in the past few weeks because of COVID-19 cases.

At least 25 people employed by Detroit automakers have died from the virus this year, according to the United Auto Workers.

More inevitable disruptions at the OEMs will ripple through the tiers of the complex automotive supply chain, and vice versa.

“It takes 3,000 parts to make a Ford F-150 and if one of those parts is not available, they don’t make the vehicle,” Greene said. “I think the biggest issue that might be under-recognized right now is the impact of the entire supply chain coming back up after being down for this period of time and any interruptions there.”

Attempting to plan Planning for many different post-shutdown scenarios seems to be how most of the automotive supply chain is functioning at the moment, according to Jeff Schuster, president of Americas operation and global vehicle forecasting at LMC Automotive US Inc. “The only way you can really look at all of this is through scenario planning,” Schuster told MiBiz. “It just illustrates the uncertainty that you know that the market faces.”

Last month’s restart actually played out “as well as was expected and maybe a little bit better than it could have gone,” he said. “It was slow with some starts and stops and some general disruptions from not only reported positive (COVID-19) cases, but I suspect there were others as well, but they generally got the lines back up and running fairly quickly.”

Manufacturers wanted to get production running as quickly as possible, especially in light of fears of a reported shortage of light-duty pickup trucks. Some manufacturers had “lofty stretch goals” to get back to pre-coronavirus levels by sometime this month, which Schuster said is “an unrealistic target.”

However, automakers are continuing to add shifts and move forward, which is positive for the industry.

“There are ways to get some of the volume back without stressing the new system and the new environment we’re in,” he said. “By the end of the year, we could see volumes that could be stronger than what we saw a year ago in a given month — which is some indication of what was happening in the previous year — but it’s not going to be a substantial increase or output change.”

Unfortunately, it will be nearly impossible for auto suppliers to plan for any more stops and starts related to positive cases of the virus within workplaces or even a “second wave” outbreak, Schuster said.

“That’s where you shift from a forecast and planning to situation management,” he said.

“So far, the starts and stops at Ford haven’t really been that disruptive from an output standpoint, but I think you have to look at these cases as a viable situation given what we know so far about the virus and how it spreads, but I don’t know that you can actually plan for it.”

Be prepared For several weeks, uncertainty surrounded portions of the supply chain that are tied up in

Mexico after the country’s government delayed its own plan to restart factories.

“Our Tier 1 customers are in Mexico and they were saying they were coming back to work on May 18, then they said the government said they can’t, and then they said ‘Yep, the government says we can.’ Well, what’s the right answer?” said Greene of Cascade Die Casting.

“We’ve been doing all of this work getting ready and they didn’t even know what to do — and there’s a lot of part supplies that come out of Mexico.”

Most, if not all, Mexico manufacturing locations came back online by June 1.

Greene plans to be operating at greater than 90 percent historic volume levels in July, when automakers will forgo their usual summer break. However, Greene is cautiously planning and preparing for three different production scenarios.

“We have a worst-case plan, middle of the road and a best-case plan,” he said, noting that the pessimistic plan would result from a second wave of the coronavirus.

“You’ve got to be prepared for all three of them because we don’t want to bring people back and then lay them off again, but we’ve got to have that best-case plan in our pocket and be ready to produce,” Greene said. “It’s unprecedented that we’re literally taking it month by month.”

The primary driver of the jump in production over the past couple of weeks is

“It takes 3,000 parts to make a Ford F-150 and if one of those parts is not available, they don’t make the vehicle. I think the biggest issue that might be under-recognized right now is the impact of the entire supply chain coming back up after being down for this period of time and any interruptions there.”

— PAT GREENE President of Cascade Die Casting Group Inc.

replenishment of inventory that decreased during April and most of May, but the challenge for automakers is predicting the future beyond the next several months.

“All suppliers in our position are having a difficult time concluding on what the future will hold after inventories are replenished,” Greene said. “Then, we are faced with the big question: Will customers buy cars, trucks and appliances? We expect that inventory will be replenished by November or December, and then the customer demand will dictate whether we have a slowdown.”

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TECHNOLOGY VARSITY NEWS NETWORK Continued from page 1

working life — I was chasing gold stars. I was trying to be all I could be and make a big impact and all that stuff.”

Vaughn and Matt Anderson launched VNN in 2010, initially as a blog. The co-founders developed the idea for what eventually became a marketing and communications engine for high school sports programs via Momentum, an accelerator program and predecessor of Start Garden.

As the duo continued to develop more complex and effective ways to help high school sports programs operate, Vaughn became the face of the company, successfully convincing groups such as Grand Angels, Start Garden (now Wakestream Ventures), Northern Michigan Angels, Muskegon Angels, Capital Community Angel Investors and the Michigan Angel Fund to invest in the model.

“I was with Ryan from day one and one of his first investors,” Kevin McCurren, the commercialization program director at Gateway Grand Rapids for Michigan State University, said in an email to MiBiz. “I invested in VNN because of Ryan. He is a rare CEO who lasted through 10+ years of running a startup and raising over $15M of capital. I can think of only a few that have done it successfully.”

As Vaughn’s passion ebbed, it exacerbated internal struggles at VNN, culminating with the company deciding to bring on Rick Ehrman as the company’s new CEO in July 2019.

Ehrman had exited Minneapolis-based SportsEngine, which offers similar services and products as VNN, only for youth sports.

SportsEngine had recently been purchased by NBC Sports Group.

The addition of Ehrman meant Vaughn would have to step back from the central role at the company. Vaughn said his position with VNN changed rapidly.

“It was clear pretty quickly that it wasn’t going to be a fit long term,” he said. “My interests had changed and passions changed. At some point, Rick decided that he wanted to move on (without me). From my perspective, that was disappointing because it was sort of surreal to get let go from your own company.”

Ehrman stepped into the top executive role armed with a familiarity with VNN. His previous company, SportsEngine, at one point entered

VNN Inc. offers a platform for high school athletic departments to post content and share information. COURTESY PHOTO

into due diligence for a possible acquisition of VNN, which later invited Ehrman to be on its board of directors.

For his part, Ehrman acknowledged Vaughn’s charisma and ability to create ideas from the ground up and raise money, but he came to the company with a strong focus on using M&A to grow VNN. “We miss him for sure,” Ehrman said of Vaughn, who remains a shareholder in VNN. “I still bounce ideas off him as advisory.”

Despite losing the high-profile face of the company, Ehrman believes he was able to win over early investors from the Vaughn era of VNN with plans that were heavy on metrics.

“I think that was a breath of fresh air to the institutional investors,” Ehrman said. “I laid out a really succinct plan on what we were going to do — a 30-, 60- and 90-day plan — and thankfully all those things happened, which is immediate credibility.”

Leadership needs evolve Venture capital executives and other people involved in the startup community in West Michigan say it’s common for a founder to reach

a point where he or she needs to make a transition, either within the company or to a new venture.

In part, that’s because the company demands different skills from its leaders as it matures and evolves.

“It is the rare individual that has the skills and knowledge to identify an idea or market need, to launch a business and convey a passion to early employees and investors (all good founder skills) and then also have the skills to manage a growing base of employees, investors, vendors, distribution partners, etc. once the business starts to grow to scale,” said John Kerschen, managing director of Charter Capital Partners, a Grand Rapids-based investment banking firm and manager of various venture capital funds.

“The skills of a founder and visionary are often quite different from those of a CEO leader,” Kerschen said in an email to MiBiz. “Those changing requirements might also contribute to the loss of passion from a founder.”

Kerschen noted a founder transition is part of “a natural evolution of a growing, successful business” and not a negative reflection on either the company or the leader. As well, the change can be good for a company, which can often

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JUNE 22, 2020 / MiBiz

flourish under an executive with a different skill set that’s perhaps more tailored to what the business needs at that moment, he said.

“As you might expect, the employees might actually welcome the change as they likely see the next level skills the business needs that the founder might not possess,” Kerschen said.

As an investor in VNN, McCurren certainly views Vaughn “as a success, not as a failed CEO.” He knows from firsthand experience that a company has different demands on a founder. Over his career, McCurren launched and grew a $15 million startup, but learned his skill set was in starting companies, not operating them.

“Eventually, we all know that we have the potential to be replaced,” McCurren said, adding that Vaughn made the right call in stepping down as CEO of VNN. “Though painful, he realized that he could not continue to serve VNN and its capital needs. The key decision is what is best for the company, not you as CEO.”

Forging ahead As a company, VNN faces plenty of challenges in the months ahead, notwithstanding the question of whether or not high school sports in Michigan and throughout the rest of the country will return to action this fall in the middle of the COVID-19 pandemic.

However, Ehrman said the company started to plan for this scenario back in March, when the pandemic was starting to take hold, even developing plans that assumed the situation might become worse.

Despite the uncertainty, Ehrman said that VNN is still holding strong with its two-pronged revenue stream of selling advertising in the local markets in which it operates and selling software to high schools.

“The advertising side has been a bit softer than we would like, but this time of year it is anyway,” Ehrman said. “I’ve been trying to evolve the business to get my sales team to (focus on selling) software to high schools. We have acquired more clients in the last 60 days than they had all last year.”

Part of that has to do with athletic directors that are limited in what they can do right now and therefore are readily accessible. Ehrman pointed to features like digital ticketing, online fundraising and seamless mass communication as key selling points during a time of chaos like this.

“Athletic directors are still working — they have more time now than they ever have,” Ehrman said. “They don’t have any events or student athletes right now. We’ve held webinars in the last 60 days that have had about 1,000 people show up where we used to get like 30.”

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COVID-19 raises questions for health insurance rates

T VNN Inc. co-founder Ryan Vaughn became the face of the company as it grew and scaled over the last decade. COURTESY PHOTO

Ehrman also had his team change its approach to selling, which helped VNN pick up a quick 150 new customers.

“Our traditional model was sort of a bottomup (model), where we had sales people driving around in their cars meeting with individual athletic directors and high schools,” he said.

“We’re having much more success selling topdown. We’re selling at the conference level, the district level and in some cases the state level.”

As well, Ehrman looks to remain active on the M&A front, even after VNN completed two recent acquisitions, including a deal for Provo, Utah-based RallyAroundUs LLC, an online fundraising platform. A couple of additional deals are forthcoming, as VNN looks to add to its own business and rely less on partnerships.

“We’re looking at several acquisitions — we have two in the pipeline right now,” Ehrman said.

“This is a very fragmented industry that is ripe for consolidation.

(By my resume) I probably look less like an operator and more like an M&A guy. There will be some M&A transactions that are noteworthy in the coming weeks.”

now that it was often an ego-driven endeavor for a 25-year-old entrepreneur.

“I wanted to build something because it would help me have the career I wanted and it would be something cool and people would look at me and say, ‘Oh, that’s awesome,’” Vaughn said. “That was so important to me early in my career — that I was perceived a certain way.”

At VNN, Ehrman is understanding and respectful of Vaughn’s journey, while also pushing forward with a plan he feels is best for the company.

“I do think it’s probably tough when it’s part of your identity and I really think it became that for him,” Ehrman said of Vaughn walking away from the company.

“I do think he’s realized since then that people don’t think of him as Ryan Vaughn the founder of VNN — it’s Ryan Vaughn, the serial entrepreneur.”

As McCurren sees it, the transition for Vaughn and VNN came down to a matter of raising capital to continue to grow the company.

“Once you start taking outside money and it gets beyond 50 percent, you relinquish full con‘Needs to be done’ trol of the company. Ryan tapped Meanwhile, Vaughn is using his all of the capital resources that “sabbatical” to explore his next he could access,” McCurren steps as he shifts his professional said, noting that Ehrman “has focus to pursuits that “make a the potential to bring in new difference” and are “useful.” money.”

He said he has no timeline Moreover, the company’s or formal plan for his next profocus shifted considerably from fessional pursuits, but did menits formative days, he added. tion that he started a meditation “When VNN first started, we group for business founders that saw it as a technology company, — RYAN VAUGHN quickly grew; he now runs about but as it evolved we realized it is Founder of VNN Inc. six of them. a media company,” McCurren “I don’t know if that’s a busisaid. “Media companies require ness — I don’t necessarily need much more capital to scale verit to be a business,” Vaughn said. sus technology companies.”

“It’s just work that needs to be done.”

For Vaughn, there remains a sense of pride In some respects, he’s come full circle and in his accomplishment with VNN, yet a wonis back to blogging, sometimes about leaderder for what would have happened if he had ship, entrepreneurism and meditation, and in not had to seek out that nearly $21 million in other cases about current events like the struginvestor capital. gle for the Black Lives Matter movement and “It’s impressive but also not impressive confronting inherent racial bias. because I certainly wish we could have He’s also taking time to reflect on his experiraised less money and gone further,” he ence with starting and leading VNN, realizing said.

“It’s kind of like you finally get enough gold stars and then you realize you don’t care about gold stars anymore.

Most of my VNN career — and frankly my working life — I was chasing gold stars.”

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he premium credits Priority Health and Blue Cross Blue Shield of Michigan are providing small employers this summer stem from lower medical claims after the onset of the COVID-19 pandemic.

That’s because many people put off getting medical care during the public health crisis and hospitals were unable to perform non-elective procedures, surgeries and diagnostic tests.

For both health insurers, opting to provide premium credits to employers was a preferred response to a one-time event, rather than to temporarily lower their rates and then raise them back up again at a later date.

“It prevents those unreasonable rate swings, and that’s really the goal: … just try to keep the market stable. We don’t want to have rates going up and down dramatically over temporar y fluctuations,” said Chase Osbourne, chief underwriter at Grand Rapidsbased Priority Health.

“Our goal is to get the funds sort of handed back faster via preOsbourne mium credits to our small groups and our large groups.”

Osbourne and his Blue Cross Blue Shield of Michigan counterpart, Kirk Roy, spoke during a recent webinar hosted by Advantage Benefits Group Inc. Roy in Grand Rapids.

As a result of the lower medical claims trend during the pandemic, Priority Health is providing a 15-percent credit for June and July premium bills for small businesses with two to 50 employees, and for individual policyholders enrolled in the MyPriority health plan.

Large group and fully funded employers will receive a premium credit in the fourth quarter, once Priority Health determines the amount of excess revenue available in the health plans beyond the normal margin and administrative costs. Large group employers are rated on their claims experience, “so we’re going to continue to evaluate really what that total cost looks like,” Osbourne said.

“We want to make sure we are giving credit where credit is due, so the plan right now is to roll things out starting in the fourth quarter with renewals and just kind of take it one month at a time. We want to make sure we give that credit back to groups due to the displacement of cost and care in 2020,” he said.

Blue Cross Blue Shield this summer is giving fully insured employers in the small group market who have 50 or fewer employees a 30-percent premium credit in July.

Looking ahead to 2021, Blue Cross Blue Shield has proposed small increases for small group policies: a statewide average of 0.9 percent for its PPO plans, and 1.9 percent for HMOs. Priority Health recently filed a request with state regulators for a statewide 2.56-percent average rate increase in 2021 for the small group market.

For larger groups whose premiums are set based on their claims experience, Priority Health intends to make actuarial adjustments for premium credits later this year, and then “set rates (for 2021) based on what we think the future costs are going to be,” Osbourne said.

“The goal is always about looking at what the future cost is going to be and we use the history to help us make those decisions, but when we do see large, temporary things that pop up – and COVID is a great example – it’s appropriate for us to make an adjustment to kind of smooth things out for them.”

At Blue Cross Blue Shield, “we’ll sort of make a one-time adjustment” with a “combination of usual trends” to set rates for large group policy renewals, Roy said.

“What we’re not going to do is, ‘Oh, we’re scared because there’s uncertainty so we’re going to load up the rates,’” Roy said. “We’re going to be pricing fairly aggressively.”

The inability to do elective procedures and surgeries until recently generated significant operating losses at hospitals.

Roy expects that some hospitals may seek to alter reimbursement agreements and raise charges for medical care and what health insurers pay. Blue Cross Blue Shield will push back at those requests.

“Our contracts don’t allow for that,” he said. “I think there will be some negotiations, some pushback on that, but on behalf of our customers, we plan to hold firm with that, and anything that we would do would feel like a one-time credit of relief (for care providers), rather than build future unit prices that would disadvantage us as a business or all of our customers.”

One uncertainty for health insurers with physician offices reopening and hospitals resuming elective procedures and surgeries is whether they’ll soon see higher medical claims from pent-up demand, and what happens after any immediate spike.

Blue Cross Blue Shield experienced a “steep dropoff” in claims for March that started “sort of bottoming out” in mid-April before coming back up in May, Roy said.

Some hospitals reported June was off to a strong start, and others even said their inpatient units were full, he said.

“So, this question around how much of this deferred care is just a rush for people to get stuff in before the second wave, but then they’ll still be fearful of going for routine care — that’s the big unanswered question right now,” Roy said. “Do we pop back up in the summer while things are good and then does that pent-up demand keep going or does it stay down?”

MiBiz / JUNE 22, 2020

9

ECONOMIC DEVELOPMENT

‘A LITTLE LIGHT’

Landmark LGBTQ ruling sets stage for statewide civil rights action, debate over religious exemptions

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

A

landmark U.S. Supreme Court ruling on June 15 bars workplace discrimination based on sexual orientation and gender identity, and also highlights additional work that needs to be done in Michigan.

Advocates in the LGBTQ and business community say that work includes expanding the state’s civil rights law to prevent discrimination in housing, health care and public accommodations, but also settling what’s been a major debate over religious exemptions in such cases.

Democratic lawmakers in recent years have tried and failed at legislative expansions of the Elliott-Larsen Civil Rights Act of 1976. The Republican-controlled House and Senate have declined to advance legislation despite broad support from the public and businesses.

Following the Supreme Court’s latest ruling, which some advocates say is arguably as significant as its ruling on marriage equality, organizers behind a ballot initiative to amend Elliott-Larsen were analyzing their next steps. The Michigan Court of Claims earlier this month granted the campaign more than two additional months to gather signatures in the hopes of making the 2022 ballot.

Despite looming questions over LGBTQ equality in Michigan, the June 15 ruling came at a trying time for the country.

“Given everything that’s going on, I think our community as a whole needed a win at this time,” said Thomas Pierce, executive director of the Grand Rapids Pride Center. “A lot of people have been feeling really down and a lot of pressure from different aspects of life — health, jobs, finances and the political climate. This gave people a little light when I think they needed it the most.”

Jay Kaplan, staff attorney for the American Civil Liberties Union’s LGBT Project, said it’s difficult to understate the significance of the Supreme Court’s ruling given its conservative makeup.

“It might not be as sexy as marriage equality, but it’s probably one of the most significant Supreme Court decisions on behalf of LGBT rights,” Kaplan said.

The case also had Michigan origins. Aimee Stephens, a transgender woman from Southeast Michigan, sued her employer after she was fired in 2013 during her transition. Stephens’ case was combined with two others in Georgia and New York, and was decided on a 6-3 ruling that found sexual discrimination and gender identity falls under the definition of sex in the Civil Rights Act of 1964. In the majority’s opinion, Justice Neil Gorsuch — appointed by President Trump — wrote that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

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“It might not be as sexy as marriage equality, but it’s probably one of the most significant Supreme Court decisions on behalf of LGBT rights.”

that you shouldn’t rent a Stephens passed away house to a homosexual. last month after compliI’m not aware of one,” he cations from kidney failsaid. “I’m also not aware ure. Kaplan said he and of any religious institution Stephens spoke about the that says you shouldn’t case “many times.” provide baked goods based “She played an incredon sexual orientation. I ible role in telling her don’t believe freedom of story to the world, sharreligion means I assert it ing her private life story to do whatever I want.” as a way to illustrate the In a statement after harm done to transgen— JAY KAPLAN the Supreme Court ruling, der people and to help Staff Attorney for the American Civil Attorney General Dana others,” Kaplan said.

Liberties Union’s LGBT Project Nessel called the ruling “Her one wish was that a “major victory for civil she lived long enough to rights,” but added, “this read the opinion. She’d is not the end of the story. be so pleased, happy and It is just the beginning of the progress yet to be gratified at what this means particularly for the made on the important issue of equal protection. transgender community.”

The Supreme Court’s decision, although groundbreaking, is relatively narrow.”

Religious exemptions Pierce at the Pride Center agrees: “We are still A year ago, Gov. Gretchen Whitmer joined seeing a lot of barriers and discriminatory pracDemocratic lawmakers in supporting legislatices in the way of housing.” tion to expand Elliott-Larsen to include protec“This was a win, I think we use this and keep tions for the LGBTQ community. At the time, pushing forward,” he said. “When big things hapthe Republican leaders of the state House and pen like this, we take that and settle a bit, but Senate said they wouldn’t advance the bill unless now is not really the time to do that. November it included religious exemptions, basically allow2020 is going to be a very big year in our country, ing entities to refuse service to others if it conespecially for the LGBTQ+ community.” flicts with their religious beliefs.

Kaplan said the defense has been used over the Business support past decade and is similar to those cited to supAlthough expanding Elliott-Larsen has stalled port segregation in the 1960s based on religious for years in Michigan, support has been growing beliefs. Kaplan said the Michigan and U.S. conamong the state’s business community. A coalition stitutions clearly protect religious beliefs when it that included DTE Energy, Consumers Energy deals with exercising their own faith. Citing recent and Dow Chemical Co. was an early backer of the examples, Kaplan said baking cookies or planning Fair and Equal Michigan campaign, which is colweddings aren’t religious practices. lecting signatures to put the question of expanding To include these types of activities, Kaplan the state’s civil rights law before voters. said, amounts to “using religion to discriminate.”

Business advocates say in addition to equality, “It was never the intent of the constitution to the issue is about making Michigan competitive. use religion as a sword to harm other people,” “We want it to be addressed federally but Kaplan said. Referring to the religious arguments also here because we want Michigan to have made in defense of segregation, he added: “The the most talented and highly diverse workforce courts didn’t buy that then, and they shouldn’t in the country,” said Andy Johnston, vice presibuy that now.” dent of government and corporate affairs with State Rep. David LaGrand, D-Grand Rapids, the Grand Rapids Area Chamber of Commerce. called the religious exemption issue a “legitimate “Over the past decade and a half, there’s just been topic of discussion, but it’s also true that we cona continual growing chorus that this isn’t just the strain people’s asserted expression of religion in smart thing to do, it’s the right thing to do for the many contexts.” whole state.”

LaGrand is an ordained minister in the “theoWhile more than 30 municipalities have logically conservative” Christian Reformed non-discrimination ordinances that include Church, “which means I take religious exempLGBTQ protections locally, LaGrand said: “That’s tions and concerns very seriously.” great, but it would be nice if the state got its act “My first instinct is: Show me an organized together.” religious group that has officially taken a position

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‘We’ve made some bad beer’ Quick decisions, making messes and staying humble drive explosive growth for Founders Brewing Co.

By NATHAN PECK | MiBiz

“The ‘uber’ beer geeks took notice. They shouted about us, and that allowed us to move in a positive direction. The attention put us in the limelight and made us the darlings of the industry,” Stevens explained. “The beer geeks are the reason this beautiful ike Stevens, president of Founders Brewing Co., can little disaster we call the craft beer industry exists.” laugh now about some of the poor choices the Grand Yet, by the mid-1990s, the company was also butting up Rapids-based craft brewer made over the years. against a series of constraints: a small production space, a lease He even cops to perhaps the worst sin of all for on a space that was too small for the growing business, and an a craft brewery. organizational structure that had Engbers and Stevens handling “We’ve made some bad beer,” Stevens said with too much of the day-to-day operations. a laugh.

It’s not the sentiment that one would expect to come from the brewer of one of the world’s top-rated stouts, but it was the company’s willingness to try new ideas and fail that marked the To address those concerns, the late businessman Peter Cook, a point at which Founders Brewing Co. transitioned from a smallmentor to Stevens, pressed the company to formalize its relascale, also-ran to an internationally renowned brewer of some tionship with its board. Cook pushed them to focus on the of the boldest beers on the market. core of their business and leave other concerns to their growIn the mid-1990s, Founders Brewing was in trouble. In its ing staff. small production and taproom space on Monroe Avenue just “He wasn’t into discussing finances — he didn’t really underblocks from downtown Grand Rapids, co-founders Dave Engbers stand what we were doing,” Stevens said. “We and Mike Stevens realized that going with what the were undercapitalized, he told us. ‘Don’t worry industry demanded at the time was not leading about the mess you’re creating, that’s what investhem to success. Tossing out the accepted playtors are for.’ When you have drive, when you book, the duo instead opted to make the beers they have a product that is selling, don’t look back — were seeking: big, bold and unlike other offerings let others clean up your mess.” currently on the market.

The effect was two-fold: Engbers and Stevens As part of that shift, Founders’ taproom became had to formalize their roles within the organizaa testing ground where the company released its tion, and the company began to bring in experts new and experimental brews. Some flopped. A few grabbed drinkers’ attentions. Today, a handful — MIKE STEVENS to handle areas where there were deficiencies. of those beers are among Founders’ most popuFounders Brewing Co. Whereas the two frequently touched all aspects of their business, they were forced to step back. lar brands: Dirty Bastard, Breakfast Stout (and its Their board had always included investors, but amped-up, barrel-aged brother, Kentucky Breakfast they now had a group with expertise that could Stout) and Double Trouble. But back then, they were help guide them forward. only experiments written in chalk on the daily specials board.

“It held me accountable to shareholders and the people who “We tried making a lager when we shouldn’t have. We’ve done have a stake in the business,” Stevens said. “It made me better. some things with spices that didn’t turn out well,” Stevens said.

Dave and I had to be better.”

“But if we didn’t do that, we wouldn’t have made KBS.” But the transition was at times difficult.

In pockets across the U.S., on blogs and message boards, “Personally, I’ve had more roles here than anyone. When Founders’ beers began attracting the attention of a growing numwe started, there was just three of us. We all helped … brewing, ber of craft beer aficionados. As the company’s beers started winning awards, the American drinker began turning away from the pale, fizzy domestics in favor of bolder craft brews.

See FOUNDERS BREWING on page 12 npeck@mibiz.com

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Make messes

“It feels like we’ve been building the plane while flying it.”

hilanthropic families throughout Western and Northern Michigan are putting their faith into action with their money.

And they’re turning to a local affiliate of the National Christian Foundation (NCF) to help them.

Locally, 350 families served by the organization’s West Michigan office contributed $36 million to individual “Giving Funds” at NCF and recommended more than $31 million in grants in 2012 to charities of their choice, said Jamie Kuiper, president of NCF’s West Michigan office headquartered in Grand Rapids.

“That’s a lot of money,” Kuiper said.

“Our office is the third largest NCF office in the country measured Kuiper by fund balance.”

Kuiper declined to identify any of the 350 families.

“We have some major donors, but I can’t tell you who they are,” he said. “They want to remain anonymous, and we provide a mechanism for anonymous giving.”

Mike Stevens, president Founders BrewingGiving Co. NCF’sofdonor-advised Funds offer PHOTO: JEFF HAGE families an “easy-to-establish, low-cost, flexible” vehicle for charitable giving that’s an alternative to establishing a private foundation, according to the organization.

Donors’ efforts have helped to make the Atlanta-based National Christian Foundation 19th largest philanthropic 2014 OUTSTANDING GROWTHthe AWARD organization in the United States, according to a 2012 article in The Chronicle of Philanthropy. In late July, officials with the NCF announced that they had reached a milestone their giving history when Grand Rapids-based craft brewerin founded in 1997 by Mike Stevens andthey Dave Engbers granted their four billionth dollar

FOUNDERS BREWING CO. ■

to the Association of Faith Churches and The NCF West Michigan affiliate has Ministers International, a Minnesota- an 18-member board which includes Jerry based international ministry that plans Jonker, chairman of the board and a partto use the money to support an orphan- ner in Grand Rapids-based Home Acres age in Thailand that provides housing and Supply Co.; Wendell Christoff, co-owner schooling for children rescued from the of Litehouse Inc., a salad dressing, sauce sex trade. and dip manufacturer with operations That grant was recommended by giv- in Lowell; and James Dally, a Kalamazoo ers in Midland through their Grounds for businessman. a Better World Giving fund. The group is Dally said the ability to have direct served by the NCF’s Eastern Michigan involvement in where his donations are office located in Birmingham. going and the asset-based giving approach “We are a well-kept secret,” Kuiper said. are appealing to him and his family.

“A big part of it is our business model. Our However, his faith in God is what really local operating budget is about $360,000. led him to the organization. He said he was SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 We don’t spend much on marketing.” referred to NCF by successful friends who The local affiliate had total revenue of were also involved in faith-based giving. more than $499,000 and expenses of about “Biblically, it’s very clear that ‘he that $384,000 in 2011, according to the most refreshes others will be replenished,’” recent IRS Form 990 available.

Dally said. “I’ve applied those biblical Donors to NCF are attracted to the principles to what I do.” mission andBy ministry of the organizaWhat Dally does is manage several NICK MANES | MiBiz tion foundednmanes@mibiz.com in 1982. The three Christian West Michigan-based businesses. He is the financial experts who laid the groundwork founder and owner of Biddergy.com, an A West Michigan medical device development for the NCF were looking for a way to “simonline consignment and business liquidaand manufacturing company is consolidating to plify the process of giving, multiplyitsthe tion auction Kalamazoo and expanding operations, while website; Adventure Learning still planning to leave a footprint in Grand Rapids. results and glorify the Lord.”

Centers, which operates child care centers Oshtemo Township-based Keystone “We went on to introduce one of the first in Solutions Portage, Caledonia and Kentwood; and Group invested about $500,000 into a new Christian-focused donor-advised Mavcon a construction and develop24,000-square-foot facilityfunds, with a clean room Inc., in what we nowKalamazoo call the Giving said company. All three businesses are where itFund,” will move all ofment its product development and manufacturing Larry Burkett, a best-selling author andoperations. based at offices in the Kalamazoo/Portage With theofnew building up and running, entrepreneur, who is one NCF’s founders. area.

Keystone plans to consolidate all of its manu“We also developed special resources and expertise as well as facturinga to the siteexpertise and moveinout of aThe facility asset-based giving, tax smart the character and integrity of the individnear thewhich GeraldisR.the Ford International Airport in Rapids. way to donateGrand non-cash assets such as real uals involved with NCF is what Dally said Having two separate manufacturing facilities estate and business interests.” keeps him involved. made it difficult to show customers Keystone’s full The localset of affiliate was originally Founder Burkett said over the past three capabilities, said Robert Nesky, Keystone’s founded in 2000 asofthe Michigan decades, NCF has become the nation’s director salesWest and product development.

“Our intention was always to have largest the business Christian Foundation, but joined forces provider of donor-advised funds IN givers. roof, but it has taken to actuwith the NCFunderneath because ofone the resources and a while focused primarilyMADE on Christian ally put that together,” said Nesky, noting that the expertise it provided.

“Any charity MICHIGAN that doesn’t violate our consolidation plan had been in the works for some “The reason for“It’s thea affiliation with NCF statement is eligible to seekGroups fundKeystone Solutions time. good thing we waited because our busi- of faith provides product was that the tools they are able to offerWe giving afrom said.

“Ourdevelopdonors ness has actually expanded. now have largerus,” Kuiper ment services and contract the two older facilities ers are muchfacility morethan sophisticated,” Kuipercombined.” are people who share our worldview as it manufacturing at a new The Grand Rapids location stemmed from a said. “We were one of the first two or three relates to material possessions and what 24,000-square-foot , ISO previous acquisition. affiliates. Now there 28.” operates in a variety God of has called us13485-certified to do.” facility with Whileare Keystone sec-

FEBRUARY 17, 2014 VOL. 26 • NO. 9

Keystone relies on product development business to drive contracts

■ Originally located in the Brass Works Building on North a clean room in Kalamazoo. tors ranging from automotive and aerospace to Monroe Avenue; moved to 235 Grandville Avenue in 2007 renewable energy, majority Michigan. of its business The about firm, MiBiz, whichvisit was founded ■ Sold 111,000 barrels of beer in 2013 COPYRIGHT 2013 © MIBIZ. Print subscriptions are free to qualified individuals who are employed in Westthe and Southwest For further information www.mibiz.com.

■ Volume grew 63% comes from serving West Michigan’s burgeoning in 1997 and had revenues of ■ Off-premise sales were up 46% medical device industry. around $5 million last year, ■ On-premise distribution rose 58% The company, which employs around 10 engiconsolidated its manufacturing under one roof with the new facility, but still plans to maintain a ■ The Association for Corporate Growth West Michigan will neers, had around $5 million in sales last year, but presence in the Grand Rapids area, where it is a member of MiDevice, a consortium of medical present its 2014 Outstanding Growth Award to Founders has grown about 30 percent over the past five years, device manufacturers. Keystone offers clients a full range of product design, contract manuBrewing Co. on March 18. The event runs from 5:30-8 p.m.

Nesky said. at the Amway Grand Plaza in Grand Rapids. Visit acgwmich. facturing and logistics services. It mainly serves the medical device, automotive, aerospace and org for more information.

While the business is currently about evenly renewable energy sectors.

200,000 180,000 160,000 140,000

FBC BARRELS PRODUCED

120,000

190,000

2014 proj.

112,000

100,000 80,000

70,886

60,000 40,000 20,000

40,937 17,330 6,127 11,898

24,501

0 2007 2008 2009 2010 2011 2012 2013 2014* SOURCE: FOUNDERS BREWING CO.

split between product development and contract manufacturing, executives want to put more emphasis on the manufacturing side as part of the consolidation.

Operating in an ISO 13485-certified facility, Keystone plans to grow the product development side of its business, which should translate into additional opportunities in contract manufacturing, Nesky said. “(Product development), more and more, feeds into our contract manufacturing, specifically when it comes to medical devices,” Nesky said. “By expanding our facility and having us underneath one roof, we’re not jockeying around to two different facilities.

It really helps show (our customers) what our infrastructure is, and it paints a much better picture for them that as they develop their products, Keystone could also be the contract manufacturer of some of those products. It has had an immediate impact on our business and our pipeline.”

Many of Keystone’s clients value that they can work with a single company to develop a product, manage the manufacturing and production

process, and then distribute it, according to previous MiBiz reports.

“There are several companies on the west and east coasts that compete with them because that’s where the big medical technology companies are based,” Hank Brown, former CEO of Tangent Medical Technologies in Ann Arbor, said in a previous MiBiz report on the company. “Keystone is a unique brand in the Michigan market.”

Tangent worked with Keystone to develop a new kind of catheter called NovaCath.

Keystone executives make it clear that the firm is not an OEM, but is instead focused on both design and manufacturing. The products they make do not contain the Keystone brand, but rather the names of its clients, who also entrust the company to handle the logistics of distributing the products directly to hospitals and other medical facilities.

While the company is moving the vast majority of its business to the Kalamazoo area where the

company was founded in 1997, Keystone still sees significant value in the Grand Rapids market. For that reason, the company plans to open an office primarily focused on sales at a to-be-determined downtown location in the first or second quarter of this year, Nesky said.

The reasoning behind keeping a presence in Grand Rapids, Nesky said, is primarily due to Keystone having a number of customers in the area.

The company is also involved in organizations such as MiDevice, a consortium of two dozen medical device-sector firms led by The Right Place Inc. “Keystone is a great company with terrific leadership and we congratulate them on the planned downtown office,” said Eric Icard, a business development manager at The Right Place who leads the MiDevice consortium. Both Nesky and Keystone founder and President Jim Medsker “have been strong advocates for medical device manufacturing in West Michigan and are extremely active in MiDevice.”

COPYRIGHT 2014 © MIBIZ. Print subscriptions are free to qualified individuals who are employed in West and Southwest Michigan. For further information about MiBiz, visit www.mibiz.com.

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MiBiz / JUNE 22, 2020

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SMALL BIZ

Kildee, Upton push $50.5B federal aid package for small businesses

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

wo Michigan congressmen behind legislation that would create a $50.5 billion relief fund for small businesses nationwide hope to get it included in the next federal aid package that may come before Congress this summer.

The proposed RELIEF for Main Street Act would allocate funding to aid companies with 20 or fewer full-time equivalent employees, or no more than 50 employees for businesses in a low-income and rural communit y.

The bipartisan legislation would use the well-established Sponsored by: SMALL BUSINESS federal Community ASSOCIATION Development Block OF MICHIGAN Gra nt for mu la to d i st r i but e f u nd s to communities that have already launched or would create a local relief fund to assist small businesses affected by the COVID-19 pandemic.

Proponents of the proposal want to provide aid to small businesses that have been unable to access or did not meet guidelines for the U.S. Small Business Administration’s Paycheck Protection Program that nationwide has provided forgivable loans to more than 4.5 million small businesses for $511 billion. The SBA still has more than $100 billion in PPP money to lend.

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SMALL BIZ NEWS

The RELIEF for Main Street Act is “intended to add one more tool in the toolbox that we need to deal with the financial impact from the coronavirus pandemic,” said U.S. Rep. Dan Kildee, D-Flint, the legislation’s main sponsor.

Kildee “There is no one silver bullet that is going to solve the many problems we face as the result of this. This is a health crisis that is at the same time an economic crisis, but what we need to be able to do is scale and tailor the response to the crisis itself to the real needs that are out there,” Upton Kildee said during a recent webinar hosted by the Michigan Municipal League.

Kildee and co-sponsor U.S. Rep. Fred Upton, R-St. Joseph, touted the legislation during the MML webinar and urged local leaders to advocate for the bill’s passage. Other sponsors include Reps. Brian Fitzpatrick, R-Pa., and Dwight Evans, R-Pa. Companion legislation in the U.S. Senate has been introduced and sponsored by Sens. Cory Booker, D-N.J., and Steve Daines, R-Mont.

Talks in Washington, D.C. continue about a possible new federal aid package that could come up for consideration in July and include assistance to cities and states, Upton said. He

and Kildee hope to get the RELIEF for Main Street Act inserted into that legislation.

“That’s when we have our hand up,” Upton said, calling the legislation “an important foot in the door to try and recover from this terrible crisis that’s impacting maybe our state worse than many others.”

“We need to be prepared, and part of getting our economy moving again is everybody needs to get moving again, and this is a special lifeline, I would call it, to our small businesses, particularly in some of our urban settings,” Upton said. “This would provide the funds for small businesses with fewer than 20 employees, particularly minority-owned businesses and low-income and rural communities — folks who are the most vulnerable.”

Kildee concedes that getting the legislation attached to the new federal aid package is “going to take some heavy lifting.” Kildee, Upton and other backers are working to build further bipartisan support for the bill.

“This is a bill that when you talk to your member of Congress, partisan ideology doesn’t even come up. This is about helping small businesses, helping Main Street, helping communities large and small through something that nobody planned for, that nobody could have predicted,” Kildee said. “The cost of it, while it’s not insignificant, is nothing compared to the cost of us not intervening, because when we lose those businesses, we lose the employment and we lose the fabric of a downtown, a small town, a Main Street, and that’s really hard to replace.”

Speeding recovery

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But we did.

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JUNE 22, 2020 / MiBiz

The RELIEF for Main Street Act has the backing of 95 mayors across Michigan who in May signed a letter of support. They include Kalamazoo Mayor David Anderson, Battle Creek Mayor Mark Behnke, Muskegon Mayor Stephen Gawron and Lansing Mayor Andy Schor.

In their letter to Congressional leadership, the mayors noted that the COVID-19 pandemic “is wreaking havoc on small businesses across cities, suburban municipalities and rural towns, particularly micro businesses that employ fewer than 20 employees and offer services vital for our communities — restaurants, bars, coffee shops, barbershops, hair salons, auto repair shops, family farms, dry cleaners and many others.”

Local relief funds created in communities around the state “are massively oversubscribed,” and federal funding for them “builds on what is already working,” the mayors wrote.

“This will enable more small businesses to survive this economic crisis, ensuring that the recovery will be quicker and more evenly distributed across cities, suburbs and rural areas and regions of the country,” according to the letter. “It will also enable our communities to evolve products and strategies that are more aligned with the reopening of the economy, particularly around the revival of Main Streets and other key business districts.”

A number of grants or loan funds have sprung up this spring in communities around the state. Among them were initiatives in Battle Creek, Grand Rapids, Muskegon, Grand Haven, Holland, Lansing and Kalamazoo.

Emergency grant and loan funds in Battle Creek awarded nearly $1.6 million to local small businesses and nonprofit organizations, said Battle Creek Unlimited CEO Joe Sobieralski. The BCU grant fund was backed with $250,000 in initial support from the W.K. Kellogg Foundation and $350,000 from the Consumers Energy Foundation.

Federal legislation that leverages existing funds is “an excellent idea, and it’s necessary,”

Sobieralski said. He specifically cites situations in which new small business owners were preparing to open when the pandemic hit. Because they lacked a tax return for the prior year, they could not qualify for a PPP loan, Sobieralski said.

“There are perhaps dozens of cases like that in each specific community,” he said. “It could be a highly effective program for the square peg in the round hole. There are folks out there that didn’t fit the mold for what the PPP was designed for.

“It’s very scary times for businesses that are in those situations.”

Filling a need In a recent survey by the Small Business Association of Michigan, nearly one in seven respondents out of a sample of 600 said they were unsure they would survive the pandemic.

“It could be a highly effective program for the square peg in the round hole. There are folks out there that didn’t fit the mold for what the PPP was designed for. It’s very scary times for businesses that are in those situations.”

— JOE SOBIERALSKI CEO of Battle Creek Unlimited

Sobieralski expects the economic effects on small businesses from the pandemic will last well into 2021. He believes that some form of aid for small employers needs to continue at least through next spring, especially if the second wave of the pandemic hits later this year.

If bars, restaurants and event venues are only allowed to operate at 50-percent capacity for months, or if a second wave of the COVID-19 pandemic hits in the fall, “it’s going to be hard,” Sobieralski said.

“When are we going to understand what our new normal is going to look like?” he said.

“I’m thinking programs like this are going to be needed to get folks to about March 2021 or June 2021.”

Among the latest relief efforts, the Michigan Economic Development Corp. last week awarded nearly $1 million to 22 communities statewide to assist 229 small businesses located in downtowns, neighborhood business districts and commercial areas.

The MEDC’s Match on Main program awa rded up to $ 50,000 to communities.

West Michigan recipients include Paw Paw and Zeeland, which received $50,000 apiece.

The City of Zeeland used the funds to assist 10 small businesses, and Paw Paw aided 12 companies.

Kent County also created a new business relief fund this month using $25 million from the $114.6 million it received through the federal CARES Act. The Grand Rapids Area Chamber of Commerce will manage the Kent County Small Business Recovery Program that’s intended for small businesses that started before Feb. 28 and have up to 25 fulltime employees.

Approved June 11 by county commissioners, the program will offer grants of $5,000 to $20,000 to small businesses, depending on their size, operating costs, and how well they score against a set of metrics.

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SMALL BIZ: COPING WITH COVID-19

Wise Men Distillery successfully creates hand sanitizer business amid pandemic

By KATE CARLSON | MiBiz kcarlson@mibiz.com KENTWOOD — The coronavirus pandemic has caused many businesses to make staff cuts, but Wise Men Distillery LLC hired two new employees to assist with its shift to producing large quantities of hand sanitizer for manufacturers and state agencies.

The distillery and tasting room opened last year at 4717 Broadmoor Ave. SE in Kentwood, and produces gin, rum, vodka, whiskey and bourbon. Out of necessity, the company had to consider other opportunities to generate business when it was only able to sell bottled spirits from its tasting room after the state-mandated shutdown of dine-in services at restaurants and bars, which ran from March 16-June 8.

“We couldn’t have people come in and try our stuff anymore,” said Jason Post, a coowner and head distiller at Wise Men Distillery. “We had bottles available for sale, but that was diminishing rapidly — our bottle sales were going down.”

Wise Men’s staff sat down to talk about producing hand sanitizer after seeing other distilleries starting to shift production in an attempt to stay open

Wise Men Distillery created a separate division, Wise Men Sanitizer, after receiving FDA approval for its product.

COURTESY PHOTO

and help fill the high demand for the product. The company’s efforts kicked into gear when leaders of the local Amazon distribution center reached out to distillery staff to ask if they could produce sanitizer for its facility and employees.

The shift to sanitizer production also was made possible in part by a postponed spirits order that left the company with a sizable inventory and freed up its stills, according to Post.

“We have ended up selling (Amazon) close to 5,000 gallons of hand sanitizer between them and another partner,” Post said.

“It helped us set up a new line

and create new jobs. We were able to hire people during this pandemic to come in, fill bottles and create work for people who needed it and keep our regular employees on.”

Wise Men Distillery also ended up producing 30,000 gallons of hand sanitizer for the state of Michigan, which was distributed to medical centers, the National Guard and hospitals throughout the state. The distillery has also donated close to 10,000 gallons of sanitizer to local fire, police departments and municipalities around the state, Post said.

The distillery created a separate Wise Men Sanitizer division once its hand sanitizer product received FDA approval.

Customers will continue to be able to walk in and buy the sanitizer at the distillery’s Kentwood location.

“We are really fortunate we are small enough and we were able to turn on a dime and start producing sanitizer,” Post said.

The company hired two fulltime employees to help meet the demand, Post said, adding that family members also volunteered to fill large orders.

While those large orders have now slowed, Post expects hand sanitizer will be a requirement at most workplaces in the

near future.

With the Wise Men Distillery tasting room in Kentwood reopened, the partners’ focus is shifting back to producing spirits.

As well, construction of a 24-seat off-site tasting room in McKay Tower in downtown Grand Rapids is poised to resume in the near future after delays stemming from the pandemic and, more recently, a May 30 uprising that resulted in smashed windows and damage to about 100 downtown businesses.

“Fairly shortly, we should get construction crews in there,” Post said.

Even though there is a 50-percent capacity restriction in place for restaurants and bars, Wise Men Distillery will likely benefit from downtown social zones that will extend outdoor seating for establishments, he said. The downtown tasting room, which also will sell the company’s bottled spirits, should have more opportunities for walk-in business compared to its flagship location.

“There’s not many liquor stores downtown but there are more and more people living and working down there,” Post said. “We’re out here in Kentwood and don’t have a lot of foot traffic.”

Muskegon gym switches to online, outdoor group fitness classes during shutdown

By KATE CARLSON | MiBiz kcarlson@mibiz.com MUSKEGON — The coronavirus pandemic has pushed the owner of the Waters Edge Fitness gym to get creative by offering online resources for members over the past several months that the facility has been shut down.

Waters Edge Fitness’ physical location at 2465 Lakeshore Dr. in Muskegon has been closed since March 16 in accordance with Gov. Gretchen Whitmer’s executive orders to limit certain in-person businesses to stop the spread of COVID-19. Despite the temporary closure of the space, co-owner Marrisa Evans has worked alongside gym instructors to engage members throughout quarantine with online classes.

“I was offering free Zoom sessions for people just because I knew others were struggling financially as well,” Evans said. “Some people have been able to support by donating a membership or two, or buying classes ahead of time.”

Even though the gym was not pulling in revenue the past few months, Evans and her husband own the building, so they were not losing much money except to pay for utilities and electric bills at the space. Evans said she contacted every member when the gym shut down, and some people chose to keep automatically renewing or extending their memberships despite the closure.

Another solution for Waters Edge included providing private online workout classes to members during the closure. The online tools also have given people a way to more easily try out a range of classes the gym offers, Evans said, noting that she expects to continue offering them when the gym is able to reopen.

“Going virtual has really opened some doors for me as far as marketing and reaching out to members,” Evans said. “It’s been fun, and a good learning experience overall.”

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Muskegon-based Waters Edge Fitness has shifted to holding virtual classes or outdoor sessions, including on Pere Marquette Beach. COURTESY PHOTO Last week, Evans also was able to hold her first outdoor fitness class since the shutdown.

“It was so nice to see the smiles on people’s faces and the laughter,” Evans said. “It was hot but it was a lot of fun.”

Between 20-25 people came to the outdoor drum beats class, Evans said. Waters Edge has held other outdoor high intensity workouts outside its location and on the beach at Pere Marquette Park, located just down the street.

Stations for the group workout were spaced six feet apart, with other safety measures in place like not sharing equipment for circuit workouts and providing hand sanitizer, Evans said.

Evans is pleased that so many people have taken advantage of online classes during the shutdown, but she misses witnessing friendships forming in the gym and group fitness classes.

“They’re missing that social interaction,” Evans said. “We see friendships and bonds and we’re not able to do that right now, which is a concern of mine for people’s mental health.”

Evans is guessing gyms will be able to reopen in early July. Waters Edge will follow CDC guidelines and people will be able to work out in masks if they choose to, she said.

“We’re really looking forward to sweating with people in person again,” Evans said. “We’re looking forward in general to people feeling good about themselves and making their health a priority in more ways than one, especially with COVID-19.”

Family Anvil Tattoo owner Marc “Crab” Reagan leases space in a strip mall in Caledonia for his shop. COURTESY PHOTO

Family Anvil Tattoo ‘crazy busy’ as shutdown finally ends

By JAYSON BUSSA | MiBiz jbussa@mibiz.com CALEDONIA — Mark “Crab” Reagan spent his morning wandering around his tattoo shop cleaning, organizing, providing a handful of clients with art consultations — pretty much anything other than actually tattooing.

That was his life for three months.

“You’re still paying rent in the shop — your landlord still has to pay his bills,” said Reagan, who owns and operates Family Anvil Tattoo in Caledonia. “But you can’t make money. I’ve never been told that I can’t make money. It’s been very, very stressful.”

Reagan is a 30-year veteran of the industry, owning shops in both Battle Creek and Kalamazoo from 1996 to 2009. He had 11 people working for him before selling off those shops and retreating to the more rural area of Delton, where he went into business for himself.

About two and a half years ago, Reagan made the move to Caledonia, leasing out space at 9864 Cherry Valley Ave. SE in a strip mall he shares with businesses including Boondox Motorsports and a PFCU branch location.

He said that locating his shops off the beaten path has helped with overhead, contending with rent that is much more manageable.

“I’ve seen people closing shops,” Reagan said. “A lot of shops, the rent is high because they’re in a high-traffic area and they have five or six guys working. When you have all that business stop, and you have a seven or eight thousand dollar rent payment, three months of that, it buries you. It’s hard to plan for.”

Reagan’s business was classified in the same industry segment as hair salons, spas and other non-essential personal care businesses that were out of commission the longest. He was able to resume tattooing clients on June 15 and filled up his appointment sheet to make the most of it.

“We have been crazy busy. People have been contacting me the second they found out when we could reopen,” Reagan said. “All of the appointments that I had (scheduled during the shutdown), people are rebooking those. And, some new people are booking.”

To pass the time and stay financially afloat, Reagan had spent the previous three months honing his craft in other ways, providing artwork for clients and even designing some business logos.

Still, the shutdown has proven devastating, putting a pinch on his financial life at home.

“This has been shattering everyone’s life, especially for tattoo artists,” he said. “We don’t have a retirement plan, we don’t have a 401(k), we don’t get unemployment normally. We do now. It’s the first time we’ve been able to get unemployment, because we’re a cash business. It’s been very stressful.”

While he remains skittish at talk of a potential second wave of COVID-19, Reagan said he is confident in his business as long as he has an opportunity to operate without interruption.

“When operating at full capacity, I make a good living because I charge a good rate for what I do,” he said. “I’ve been tattooing for 30 years. You’re not just paying for a generic service — you’re paying for me specifically. I have a market that follows me — they come specifically for me and they have for 25 to 30 years. I still tattoo a lot of the same people.”

MiBiz / JUNE 22, 2020

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JUNE 22, 2020 / MiBiz

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REAL ESTATE & DEVELOPMENT SOCIAL ZONES Continued from page 1

Many cities across West Michigan are working with businesses to temporarily close some downtown streets to create social zones, a move that allows for more outdoor seating at restaurants and bars that are grappling with reopening under 50-percent capacity constraints.

Social zones also make it easier for those businesses to extend their operations into other types of public spaces, including parks, parking spaces and sidewalks.

The social zones are intended to give the businesses a way to increase the number of patrons they can serve under the new capacity restrictions and requirements that tables be spaced six feet apart to guard against t h e s p re a d o f Miller COVID-19.

Traverse City was among the first to close down streets to make room for more outdoor dining space when bars and restaurants in parts of Northern McGinnis Michigan and the Upper Peninsula reopened for dine-in service on May 22.

Now that restaurants and bars statewide have been able to open since June 8, communities are considering various approaches to rolling out social zones, with some municipali-

The process typically takes about 24 hours for a business to get approval. The Grand Haven City Council approved a resolution that requires the approval from McGinnis, the police chief and the public works department for requests related to social zones.

The city streamlined the application process to one page where a business has to show proof of insurance, promise to keep the space clean and follow CDC guidelines like wearing masks and social distancing. Fees have been removed for businesses to apply for the additional outdoor space.

“The city has been very accommodating,” JW’s owner Weavers said.

“They approved my outdoor seating permit within hours, and I applied to the Michigan Liquor Control Commission to get my alcohol permit (for outdoor dining), and in less than a week’s turnaround, I had approval for both.”

Helping recovery

As this report went to press, downtown Grand Rapids’ first social zone was set to take shape along Monroe Center St. NW between Pearl Street and Ionia Avenue.

“What we’re doing is providing one of the few things we can actually provide, which is more space in a time period when people need more space because of the restrictions,” said Mark Miller, managing director of planning and design at Downtown Grand Rapids Inc. Expanding seating space for restaurants, bars and coffee shops has been the focus in Grand Rapids, but the social zones also are meant to assist retail shops in allowing sidewalk sales, Miller said.

As well, gyms are included in social zones to allow for the possibility of conducting outdoor classes without the usual and more time-consuming process of applying for permits. All a business has to do is make a call to the City of Grand Rapids Parks Department to hold events like outdoor fitness or yoga classes.

“We think about these things as a very flexible use of public space. It will prob— MARK MILLER ably ebb and flow as the process develops,” Miller said.

Managing Director of Planning and Design at “Most importantly, we hope Downtown Grand Rapids Inc. that our businesses will start to recover a little bit.”

The city commission passed a resolution to allow for the ties taking quicker action than others. formation of social zones throughout Among West Michigan cities, the city from June 1 to Nov. 30, which Grand Haven was an early adopter in could end up being extended, accordthe push to create social zones, ease ing to Miller. The zones would allow the permitting process for outdoor for outdoor dining and the consumpseating and close streets to expand tion of alcohol in designated areas if dining space. The zones also can benit’s purchased from a restaurant that efit retailers, who face similar restrichas a license to sell beer or wine. tions on the number of people who Some establishments have liquor are allowed into their stores to ensure licenses that only allow for to-go sales proper social distancing among of canned beer or wine, but a person customers. could buy a sealed container of alco“We got out in front of it and got hol and consume it in a designated the public hearing process done in social zone, Miller added.

May to steamroll that stuff out of “It’s all dependent on the license the way, so now this problem is dealt the restaurant or bar has with the with administratively to grant perstate,” Miller said. “We’re leaving a lot mission,” Grand Haven City Manager of stuff up to business owners because Pat McGinnis said of the process for they know their clientele.” approving social zones.

“We think about these things as a very flexible use of public space. It will probably ebb and flow as the process develops. Most importantly, we hope that our businesses will start to recover a little bit.”

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The city blocked off portions of Washington Avenue in downtown Grand Haven to allow bars and restaurants to use the space for additional seating. MIBIZ PHOTO: MARK SANCHEZ

Eager to act In Grand Haven, the two major street closures so far include parts of Washington Avenue downtown, including in front of Odd Side Ales.

The city also blocked street parking in front of JW’s and Stanz Cafe.

“We think people can come here and eat dinner and have cocktails in a safe way and stay outdoors and stay six feet apart from others,” said McGinnis, the Grand Haven City Manager. “Their space inside got cut in half, so their space outside tripled.”

Thirty parking spots out of 1,400 have been closed in downtown Grand Haven to accommodate the social zone program, McGinnis said. While that’s not a huge loss, some customers might have to walk an extra block to their destination, he added.

In addition to Grand Haven, lakeshore communities including Holland and Zeeland also streamlined the permitting process for restaurants and retailers to expand outdoor seating.

Knowing more customers will feel comfortable eating outside, Holland restaurant owners were eager to add outdoor seating, said Downtown Holland Marketing Coordinator Kara de Alvare.

“Essentially any restaurant that already had outdoor seating, we allowed them to fill out a really simple form to use parking spaces in front of their business (for dining space),” de Alvare said. “We wanted to make it as easy as possible.”

The city approved the process before sending applications to downtown businesses, so they basically could opt in by filling out the form.

While some retail shops signed up, most were waiting to evaluate their business for the first few weeks after reopening. However, “restaurants were very eager” to expand dining outside, de Alvare said.

Hops at 84 East, The Curragh Irish Pub and City Delicatessen are among restaurants that expanded seating on sidewalks and in parking lots in front of their businesses.

In Zeeland, restaurants and businesses have gradually expressed interest in expanding operations outside of their four walls, said City of Zeeland

Marketing Director Abigail de Roo. So far, the Mainstreet Beanery coffee shop has been approved for additional seating on the sidewalk, along with Don’s Flowers & Gifts. Zeeland has implemented a similar streamlined structure as neighboring municipalities, with no fees for businesses to apply for expanded operations.

The Zeeland City Council on June 15 also authorized the temporary closure of parts of Main Avenue for potential future use by downtown restaurants and retailers.

“We don’t know yet that we have enough businesses to take up that space in the street,” de Roo said. “I imagine we might grow into that plan.

As confidence with consumers returns, we’ll see more demands for seating.”

Tripelroot brewpub owner Laura Gentry said closing part of Main Avenue would make customers feel safer if she were to expand seating onto the sidewalk or the parking spaces in front of her business.

“We are a family-friendly place, so I don’t think parents will want to sit right out by the street with cars driving past unless it’s closed off,” Gentry said.

Tripelroot used to have community seating with long tables where people from different parties would sit next to one another. The setting helped form the atmosphere Tripelroot is known for, Gentry said, but the pub had to reformat its space because of COVID-19.

Since Tripelroot reopened, it has not yet reached 50 percent capacity. Even so, Gentry remains optimistic outdoor seating could improve business.

“That’s really exciting because it would give restaurants a better space and better area that would be new to customers,” she said.

‘Iterative process’ The city of Grand Rapids has approached social zones by allowing an organization to apply for permits on behalf of the businesses located in designated areas. For example, Downtown Grand Rapids Inc. applied for the zone in the downtown district. Miller of DGRI said other neighborhoods like Uptown and Eastown are in the process of considering how to implement social zones in their areas as well.

“These social zones are encroaching into public space, and that public space could be streets, sidewalks, parks and city-owned parking lots,” Miller said. “Any of those things are open to potential expansion into them. But it’s not an individual doing it, it’s an organization.”

DGRI has taken the initiative to work closely with the city and business owners to apply for permits and organize downtown into four different areas — Bridge Street, Center City, Heartside and Monroe North — where there will be some sort of social zone.

Other potential temporary street closures could include half of Ionia Avenue to still allow for one-way traffic, part of Bridge Street, and Sheldon Street bordering the Grand Rapids Children’s Museum and The Apartment Lounge. The museum has plans for a soft reopening that includes outdoor displays, Miller said.

The Heartside zone will probably include closing parking spaces in front of the Pyramid Scheme. Co-owner Tami VandenBerg previously told MiBiz that reopening the Pyramid Scheme — which is closed currently — would not be sustainable long term under capacity restrictions, partly because it has no outdoor seating.

DGRI has come up with an operational plan for each zone, how the areas will be cleaned and when the zones will be deployed, Miller said.

The downtown group purchased 200 tables and about 700 chairs to provide businesses with extra infrastructure so they would not have to buy it all, Miller said. They are also in the process of purchasing more concrete barriers to temporarily shut down streets.

Some restaurants have requested more of an open seating food hall situation, Miller said, while others have a more specific, controlled experience in mind with table service from the time customers sit down to the time they leave.

“For us and for the city, this is really largely an iterative process,” Miller said. “We’re going to close some of these areas in phase one, see what happens, figure out is there demand for this, and we’ll come back and sort of do a phase two. It’s almost like a real-time experiment to figure out what to do.”

MiBiz / JUNE 22, 2020

15

FINANCE

Indiana credit union eyes additional Michigan expansion after New Buffalo deal Grand Rapids, Kalamazoo offices among the possibilities

By MARK SANCHEZ | MiBiz msanchez@mibiz.com NEW BUFFALO — The largest credit union in Indiana looks to further expand in the Michigan market after acquiring the parent company of New Buffalo Savings Bank.

The deal gave South Bend-based Teachers Credit Union three offices in Berrien County to go with a branch it opened in 2003 in Niles to serve the Michiana market and customers living and working on either side of the state line.

Teachers Credit Union President and CEO Paul Marsh said his organization was actively looking to Marsh extend its footprint and had considered a couple of deals when the opportunity arose to acquire New Bancorp Inc., New Buffalo Savings Bank’s holding company. The deal offers a “great fit” culturally and geographically for TCU, which aims to reach further into the state, Marsh said.

“This is just a natural progression for us into Michigan,” he said. “I see expansion farther into Michigan.”

TCU looks to grow strategically into contiguous states: Michigan, Ohio, Kentucky and maybe Illinois, plus further across Indiana, Marsh said.

He views TCU “as a Midwest powerhouse and we just continue expanding our footprint.”

Future market entries in Michigan for TCU could include the Grand Rapids and Kalamazoo areas, he said.

While TCU does not have specific tarMore deals ahead? gets for Michigan, Marsh wants to double the TCU’s extension further into the Michigan credit union’s overall footprint within 10 years. market could occur by acquisition, buying Michigan ultimately could account for one-third branches from another financial institution, to 40 percent of the credit union’s overall busior new office development, Marsh said. A couness, he said. ple of years ago, the credit union bought three “I see it being a healthy part of our business,” former bank branches in Indianapolis, for Marsh said. “I see some real opportunities.” example.

TCU has some heft to pursue that ambitious “There’s no one size fits all,” he said of TCU’s growth goal, with 57 offices total — 54 of which approach to expansion. “There’s a lot of different are in Indiana — and nearly 301,000 members. opportunities.”

At the end of the first quarter, TCU had $3.38 The deal for New Buffalo Savings Bank, first billion in total assets, an increase of more than announced in April 2019, closed June 5. The New 18 percent from a year earlier, according to a Buffalo Savings Bank offices in New Buffalo, quarterly financial report filed with the National Three Oaks and Sawyer reopened the following Credit Union Administration. Total deposits as Monday as TCU branches. of March 30 were $2.86 billion, up 4.3 percent Now that the deal has closed, New Bancorp from the same period in 2019, and total loans Inc. and New Buffalo Savings Bank will dissolve stood at $2.69 billion. as a corporation within 120 days of the acquisiTCU recorded $4.2 million in net income for tion’s closing date. the first quarter and $24.2 million for all of 2019.

New Bancorp President By comparison, the and CEO Richard l a rg e s t c re d i t u n i o n Sauerman joined TCU as based in Michigan is Lake vice president of comMichigan Credit Union mercial lending. He’ll lead in Grand Rapids, which at commercial lending across the end of the first quarter the credit union’s foothad $7.42 billion in total print, Marsh said. assets and more than The acquisition gave 381,000 members, followed by Dearborn-based — PAUL MARSH TCU a little geographic diversity and additional DFCU Financial Credit President and CEO of Teachers Credit expertise in commerUnion with $5.14 billion in Union cial lending, particularly assets and 230,000 memfor U.S. Small Business bers, according to NCUA Administration loans data. East Lansing-based where the credit union previously “dabbled our Michigan State University Federal Credit Union toes,” Marsh said. The credit union at the end of ranks as the third-largest in Michigan with $4.49 the first quarter had $377.1 million in total combillion in total assets and 290,000 members. mercial loans to members, a 9.2-percent increase New Buffalo Savings Bank at the end of the from a year earlier. first quarter had $112.2 million in total assets and TCU also picked up a New Buffalo Savings $90.8 million in deposits, according to a quarterly Bank commercial loan office in Troy that the financial report to the FDIC.

“I see [Michigan] being a healthy part of our business. I see some real opportunities.”

TEACHERS CREDIT UNION ■ ■ ■ ■ ■ ■ ■

Headquarters: South Bend, Ind. Offices: 57 Chief executive: Paul Marsh Total assets: $3.38 billion* Total deposits: $2.98 billion* Total loans: $2.69 billion* Member commercial loans: $377.1 million* ■ 2019 net income: $24.2 million ■ Q1 2020 net income: $4.2 million *As of March 31, 2020 SOURCE: NATIONAL CREDIT UNION ADMINISTRATION

credit union plans to expand, Marsh said. He describes TCU’s commercial lending posture as “mostly proactive,” and competing with larger regional banks.

“You have to go out and look for business,” he said.

Credit unions keep buying The deal for New Buffalo Savings Bank marks the latest transaction in recent years in which a credit union has bought a small community bank.

There were 16 community bank acquisitions by credit unions across the U.S. in 2019, up from nine transactions in 2018, according to a May article on the online banking publication Bankingdive.com.

Michael Bell, an attorney at Royal Oakbased Howard & Howard PLLC who specializes in credit union acquisitions of community banks, said that although he remains busy, the trend seems to have eased in 2020 because of the COVID-19 pandemic.

“I have certainly seen some deals go on a short pause, but things have not stopped altogether,” Bell said. “Whenever this ends or gets more normalized, I absolutely expect a sharp uptick in activity. There will be more sellers selling, and cash buyers will have a very strong currency.”

Lately, Bell said he has “started to see a possible uptick in activity. We will see if it holds.”

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16

JUNE 22, 2020 / MiBiz

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Kent County commits $25M to small business recovery assistance grants

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

orming a relief fund to aid small businesses hurting from the COVID19 pandemic was an early idea Kent County commissioners pursued when they began considering two months ago what to do with $114.6 million in federal aid funding.

After receiving the money in late April that was allocated through the CARES Act that Congress enacted in response to the pandemic, commissioners sought to move quickly to assess what was needed “because we knew time was of the essence,” said Mandy Bolter, who chairs the Kent County Board of Commissioners.

As a subcommittee went about its work, the Grand Rapids Area Chamber of Commerce was managing its own relief fund for small businesses “and providing us with some great data on businesses who are saying, ‘I can’t stay open for more than another month,’” Bolter said.

The subcommittee held nine meetings over four weeks and heard from more than 30 community groups, Bolter said. Using a portion of the CARES Act funding for relief grants surfaced as a top priority, she said.

That idea comes to fruition June 22 with the start of an online application process for the $25 million Kent County Small Business Recovery Program created in partnership with the Grand Rapids Chamber. “$25 million is a lot of money coming to small businesses and, hopefully, we can get this out right away,” Kent County Administrator Wayman Britt said.

Approved June 11 by Kent County commissioners, the aid program will provide grants of $5,000, $10,000, $15,000 or $20,000 to small businesses. Grant amounts will depend on an applicant’s size, operating costs, and how well they score against a set of review metrics.

The grants are intended for the more than 29,000 for-profit small businesses based in Kent County that were formed prior to Feb. 15 and have up to 25 fulltime-equivalent employees.

Recipients can use the grant funding as working capital to cover pandemic-related Villarreal expenses such as business interruption, personal protection equipment, needed facility modifications to comply with COVID-19 regulations, wages, rent, utilities, labor and other fixed costs. “$25 million is going to be a game-changer for us here in Kent County,” said Talen Dante Villarreal, vice president of business and talent development at the Grand Rapids Chamber.

F

‘Front of the line’ The Grand Rapids Chamber, which is managing the grant program with Kent County, will initially take applications the first week only from small businesses that previously have been unable to access or were declined any other local, state or federal COVID-19-related aid. After the first week, the Small Business Recovery Program’s application process will open June 29 for another week for all other small businesses in Kent County, Villarreal said.

The two-phase process is intended to help small businesses that have the highest needs and have not received any prior form of aid and Visit www.mibiz.com

“get them to the front of the line” in the first week, Villarreal said.

The online application is available at the Chamber’s website, grandrapids.org As Kent County commissioners on the subcommittee began their work to allocate the CARES Act funding, they reviewed loan and grant programs The Right Place Inc. administered locally with funding from the Michigan Economic Development Corp., as well as the Grand Rapids Chamber’s own grant initiative that provided about $1.4 million in assistance to 125 small businesses.

In deciding to create a much-larger relief fund for small businesses, subcommittee members were “recognizing that people need to work,” said Commissioner Jim Talen, the minority vice chair of the Kent County Board of Commissioners who served on the subcommittee.

“There are tons of people ready to go back to work and businesses that are struggling to bring them back to work,” Talen said. “People need to work and if the businesses aren’t there, people can’t work.”

Grant recipients will receive technical assistance on cutting costs, connecting with other resources and projecting six-month cash flow.

Business consultants will follow up with grant recipients after 30 days, do a 60-day “well check,” and check in again after 90 days “to see if they might need other kinds of help and support like business model change, marketing, or other help with cash flow,” said Andy Johnston, vice president of government affairs for the Grand Rapids Chamber.

Providing the technical support follows the Kent County Small Business Recovery Program’s goal of supporting small businesses and enabling them to survive the pandemic and the resulting economic downturn, and bolster the recovery locally.

“The money can only go so far,” Johnston said.

“With the expertise we have at the Chamber, we’re able to provide additional technical assistance from our subject matter experts that we think will help to improve the survivability of some of these businesses. That’s what it’s really all about. If we can help support these small businesses through this time, Kent County is going to be in a much stronger position coming out of this.”

Quick turnaround The technical assistance will look at a grant recipient’s business model and “help determine what can we do, what else can you do to be a sustainable business and to mitigate this negative impact in the economy right now,” Villarreal said.

Review committees of five members each, consisting of representatives from partner organizations “that would like to be part of this process,” will recommend who should receive funding,Villarreal said. The Chamber will assist small businesses in the grant application process and aims to review grant applications within five business days.

“This is a very quick turnaround process.

We are intentional there because we know that businesses are, unfortunately, closing each and every day. A day or a week could be the difference in them staying open,” he said.

The county will make the final decisions on grant awards.

The online application platform that Villarreal describes as “very user-friendly” will initially ask for applicants’ information on themselves and their business, how they’ve been affected by COVID-19 and state executive orders, and financial data. The application process requires at least two financial documents “that can help them tell their story about how they’ve been impacted,” Villarreal said.

“We’re not requiring a specific one, but the more documentation that they can provide, the stronger their story is for the reviewers,” he said.

RECOVERY FUND Continued from page 1

Small Business Development Center, Experience Grand Rapids, NAACP, Amplify GR, LINC Up, Local First, Michigan Women Forward, the Neighborhood Business Alliance, Start Garden and Grand Rapids Opportunity for Women.

Offering compensation would help the partner organizations “do long-lasting work” toward equity and inclusion, Ross said.

“This is a time where we could really build some effective organizations,” he said. “It’s a hell of an opportunity for the Chamber to put its money where its mouth is.”

Despite his concerns, Start Garden “will always make sure we are a conduit to opportunities to the community,” Ross said.

‘WE HAVE TO DO BETTER’

every single corner of this county.”

Commissioners decided to partner with the Grand Rapids Chamber for the grant program because it “had a track record” in managing a grant fund, Bolter said. Earlier in the pandemic, the Chamber formed and ran a fund that provided about $1.4 million in assistance to 125 small businesses.

“What we were so fortunate as a county to have, the Chamber had already set up a very robust, very detailed, very data-driven plan and program, so we didn’t have to be at a disadvantage of trying to do that ourselves, or some of the other groups in the community that they work with,” Bolter said.

The Chamber also has the structure and staff needed to provide the technical assistance and administer the grant fund, according to county officials. Immediately bringing in other organizations to support the effort was “probably the number one concern” of a county board subcommittee that reviewed how to allocate CARES Act funding, Bolter said.

“In this process, we really need them to participate with us and help us,” she said. “We need a group effort and we need to come together. We’re excited about this because it’s an opportunity to bring us all together.”

Similar criticism came from Jamiel Robinson, the CEO of Grand Rapids Area Black Businesses.

Robinson said that if the Chamber is going to get paid by the county to run the Small Business Recovery Program, other organizations that support the effort should receive some compensation as well.

Robinson suggested that the Chamber contract with the other organizations for the professionals, time and expertise it needs to review and score grant applications, and to promote the fund.

“If you receive $750,000 to administer this, it seems like those dollars should go Robinson Bolter Britt toward that,” said Robinson, who cites the $100- to $125-per-hour rate the Chamber will get to manage the fund.

‘GET IT DONE’ “You’re looking for work to be done essentially The application process for the Kent County Small pro bono, even though the work you’re doing isn’t Business Recovery Program opens June 22, startpro bono,” he said. “If you’re putting a dollar amount ing with small businesses that previously have not on what your time is worth, are you then saying to received any local, state or federal assistance. The those around the table their time isn’t valuable?” applications process opens further June 29 to all small The COVID-19 pandemic disproportionately businesses in Kent County affected by the pandemic. affected the African American community, and In seeking to partner with local communities with aid from the CARES Act and state efforts, “you and organizations for volunteers to help with the did not see a lot of African American businesses be selection process, the Chamber is “reaching out able to access the relief,” Robinson said. to organizations whose mission is to serve small He said his perspective “is nothing personal businesses,” said Andy Johnston, vice president against the Chamber.” Other organizations feel of government affairs. Volunteers would need to the same way, but are reluctant to speak out pubcommit 16 to 20 hours to the process. licly, Robinson said.

“What we’re asking of partners is just to share Robinson likens the situation to if Congress the information with constituents and if they’d had allocated to one bank all of the federal like to be part of the review process, we’d love to money for the Paycheck Protection Program have them,” Johnston said. and expected every other bank to market, supThe Chamber is providing “the most signifiport and process customer loan applications cant amount of labor and administration of the without compensation. program. We’re basing it off of the work we did “Since we’re experiencing record-high unemfor the rapid relief fund and we’re rededicating ployment, use some of those dollars to hire peoa significant portion of our staff administer the ple to do the work, instead of trying to rely on entire program,” he said. populations who have constantly been marginalKent County Administrator Wayman Britt said ized, oppressed and excluded economically and the federal CARES Act money comes with sevasking them to continue to give of themselves and eral requirements and regulations. The county give of their time,” he said. “If we as a community, needed a “solid partner” to make sure it complies as a city and as a county, continue to do the things with the requirements to prevent any clawback of the way we have always done them, we’re going the money by the federal government, Britt said. to continue to get the results that we always have.

“We have partnered with an organization that “Businesses need relief, so I’m definitely can get it done the way the county wants to do excited that relief is coming from that standpoint, it,” Britt said. “They can get it done quickly and but we have to do better as institutions when they will be able to get it done in a way that reprewe’re looking at equity and inclusion.” sents the way the county operates, how we want DATA-DRIVEN PLAN to make sure we are fiscally responsible, and we’re Kent County created the Small Business Recovery not missing anything when it comes to following Program using a portion of $114.6 million in fedall protocols from the federal government.” eral money received April 24 through the CARES By working through the Grand Rapids Act that Congress enacted in response to the Chamber and with partner organizations, “we COVID-19 pandemic. can have an even better and more robust process County leaders say their goal through the outof finding out where the needs are and making reach to numerous organizations is to ensure the sure the minority community, the Latin American grants are distributed equally to small businesses community, the African American community affected by the pandemic. The county had to move have an opportunity to take advantage of this quickly to put together the grant fund because “we opportunity,” Britt said. knew time was of the essence” for small business “We are in fact making sure every sector of this owners that need help, said Mandy Bolter, who community is getting the support that they need chairs the Kent County Board of Commissioners. in a very deliberate, thoughtful way,” Britt said.

“We just wanted to get that going as soon as “That’s ultimately how we’re going to be judged: possible,” Bolter said. “We’re going to try to hit Did we or did we not get the job done?”

MiBiz / JUNE 22, 2020

17

FOOD BIZ

Pandemic exacerbates concerns for migrant farm workers

By JESSICA YOUNG | MiBiz jyoung@mibiz.com

lot of workers who often come into close contact with one another in the field. Asparagus is usually picked ozens of crops grown in from a trailer where farmworkers sit West Michigan are handsix in a line, shoulder-to-shoulder. picked by seasonal and Blueberry farms use common weigh migrant farmworkers. stations. People who harvest apples While those who work normally work in teams. in agriculture are considered essen“If all of the guidelines are followed tial to critical infrastructure during the and you do social distancing, we’re COVID-19 pandemic, picking the progoing to be producing half the amount duce that consumers are now buying in of food,” Hendricks said. high numbers could come at substanOn top of dense working conditial cost to farm workers’ own health. tions, many migrant and seasonal That’s according to Teresa farmworkers also live in communal Hendricks, senior litigator and execspaces. Approximately 900 migrant utive director of Grand Rapids-based housing sites are licensed in the Migrant Legal Aid. Lower Peninsula, including 4,500 liv“I anticipate farm workers being ing units with a capacity for 25,000 forced to work in dangerous condipeople, according to the Michigan tions because they don’t want to lose Department of Agricultural and their job, they don’t want to get retaliRural Development. ated against and they can’t afford not People who live in migrant housing to work,” Hendricks told often share living, sleepMiBiz. ing and bathroom faciliThe highly contagious ties, making it almost coronavirus has spread impossible to follow social Sponsored by: rapidly around the world distancing guidelines, DAN VOS since it was first recogsources say. In addition, CONSTRUCTION nized late last year. Most migrant workers have hisCOMPANY reports of person-to-pertorically been vulnerable son transmission have to unsafe and contamibeen among household units or in nated living conditions as well as sysother congregate situations where the temic wage theft, labor trafficking, child secondary attack rate has been estilabor and dangers posed by pesticides. mated to exceed 10 percent, accord“Based on my experience with coming to the U.S. Centers for Disease pliance with regular obligations for field Control and Prevention. sanitation and working conditions, we Michigan’s agriculture industry already are having to do a lot just to supemploys migrant farmworkers each port those, and now you add these addiyear in planting, cultivating, harvesttional requirements and I don’t think it’s ing and packaging meat and produce. going to be any better,” Hendricks said.

As key vegetables and fruits come into “It’s more likely to be worse because the season over the next few months, way we harvest our crops and the way farms will increasingly need migrant that we have our workers has just never and seasonal workers to take on many been designed to be done in a way that labor-intensive jobs. makes it safe under COVID-19.”

“The first crop that brings in a lot of workers is asparagus, which usuFollowing guidelines ally runs between Mother’s Day and Gov. Gretchen Whitmer issued an Father’s Day,” Hendricks said. executive order on June 1 that covered Throughout the summer and into temporary new requirements related fall, hand harvesting crops like blueto the housing and working conditions berries, cherries and apples takes a

D

FOOD BIZ

of migrant and seasonal agricultural workers during the pandemic.

As part of the new rules, living units must have beds that are separated by at least 6 feet or more in all directions when possible, and camp residents are encouraged to sleep head-to-toe.

Whitmer also ensured priority COVID19 testing for migrant workers and people in food processing facilities, and the Michigan Department of Health and Human Services expanded testing criteria to include migrant farmworkers even if they are asymptomatic.

Sparta-based Schweitzer Orchards hires 25 to 30 migrant farmworkers each year, according to operator Nick Schweitzer. Many of the farm’s seasonal workers have long-lasting relationships with Schweitzer, who is a fifth-generation apple grower.

Taking preventive measures now will help keep workers safe as well as keep the business running smoothly, he said. Fortunately, during the apple harvest, each individual worker keeps and cleans his own set of equipment and people in the field already stay generally socially distanced, he said.

Workers arrive at the family farm in early August and stay in 13 living units on the property through November.

Schweitzer’s main concern is with the existing living units and some communal spaces within them.

“We do have one issue with part of our campus setup because there’s a community bathroom,” Schweitzer said. “We have some units that have their own bathrooms within the housing unit, but in these other ones, you have to go to a community-based bathroom and shower room. So, that could be a problem.”

The farm is also required by the new executive order to keep “isolation housing” for people who are suspected to have the virus but have not yet received a positive result from a COVID-19 test, which could become problematic during the peak harvesting season in September when the largest number of people are living on the farm.

The Schweitzers had planned to build a new building with four units this spring which “would have helped,” Schweitzer said, but the project was postponed earlier in the year due to a non-COVID medical emergency in the family. Now, those resources are freed up for the updates that are necessary to older units.

‘They just feel unsafe’ However, geographic and community isolation is already one of the many reasons why migrant workers are more vulnerable to mistreatment and unsafe working conditions, according to Migrant Legal Aid’s Hendricks.

“I’m getting calls now that are from people who are absolutely frightened out of their minds that they might endanger their family,” she said. “They have children with immunocompromised conditions. They have elderly parents living with them. They have a lot of people living in their household and then they have 15 or 17 people on their job that have tested positive for coronavirus. They just feel unsafe, unprotected and afraid to speak up.”

Hendricks added that already “three out of four calls” she gets are about workplaces that she considers “problematic.”

There are already reports of farm workers catching and spreading the

deadly virus in a number of other states that started harvesting crops earlier in the year and during the early crop harvests in Michigan.

In April, Pero Family Farms LLC in Benton Harbor, which employs migrant and seasonal workers in food processing, shut down for two weeks to sanitize for safety in light of positive tests. The operation’s response to the outbreak was an example of a company “doing the right thing,” Hendricks said.

Outside of potential deadly consequences for families in Michigan and further strain on the health care system, virus outbreaks across farms during harvesting periods would further disrupt the state’s food supply chain.

Nationwide, immigrants make up close to half of all field workers in the agriculture industry, according to data from immigration research and advocacy organization New American Economy. To address labor challenges stemming from travel restrictions related to the global spread of the virus, the Department of Homeland Security introduced a temporary rule to allow farms to employ immigrant workers who are already in the country and allow those temporary workers to stay beyond three years, which is the usual maximum length of stay in the country.

However, without the proper safeguards in place, more workers simply translates to more potential victims, according to experts.

“I think we are going to have food shortages,” Hendricks said. “We haven’t yet seen how bad an outbreak can be at a particular place and how much certain food types are going to be affected.”

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JUNE 22, 2020 / MiBiz

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SPORTS BIZ

ROOT FOR THE HOME TEAM(S)

Northwoods League organizations add teams for summer-long round robin home stand

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

T

he Kalamazoo Growlers are bringing baseball back to Southwest Michigan, and the organization is making up for lost time in a big way.

On June 15, the Growlers, which are a part of the collegiate summer wooden bat Northwoods League, announced that they would kick off the abbreviated 2020 season on July 1 alongside the Battle Creek Bombers.

In addition to the duo, the Growlers organization announced the formation of a second team, dubbed the Kalamazoo Mac Daddies, a homage to the popular side dish of macaroni and cheese.

The Growlers, Mac Daddies and Bombers will play one another in a 60-game season featuring a round robin format. The season will see 40 games at Homer Stryker Field in Kalamazoo, home to both the Growlers and the Mac Daddies, and 20 at C.O. Brown Stadium in Battle Creek. Both facilities will be filled to far less than half capacity.

The Traverse City Pit Spitters, under the same ownership group as the West Michigan Whitecaps, made a similar announcement.

As well, the Pit Spitters formed two additional new teams — the Great Lakes Resorters and the Northern Michigan Dune Bears — to fill out its pod.

All 57 season games will be played at Turtle Creek Stadium in Blair Township, south of Traverse City. When the season kicks off, the Traverse City organizations will only allow 500 fans per game.

“I’m really excited about what we rolled out in Traverse City today,” said Pit Spitters CEO Joe Chamberlin, whose team will now oversee the Resorters and Dune Bears. “I think it’s a creative way to make baseball work this summer.

So far, the reaction has been really positive and really strong.”

The winners from the Kalamazoo/Battle Creek and Traverse City pods will meet for an end-of-the-season playoff series.

All the organizations have extensive COVID19 preparedness plans in place and will feature measures ranging from the elimination of selfserve drinks and buffet food to strategic seating arrangements to ensure fans can properly distance themselves from one another.

Creating new teams For the Growlers, creating a new team from the ground up fell into place a little more seamlessly than many might expect.

The Kalamazoo Mac Daddies brand already existed, but only as a novelty that the organization was planning to use for a Father’s Day promotion. Because many of the components of a team were already in place, Growlers Managing Partner Brian Colopy said that it made sense to scale the idea into an actual functioning team.

“Luckily we had this all moving and the jerseys and the plans in place,” he said. “I’d say it

creative team that really jumped on these was really natural to make that our third team brands and worked out what I think are pretty in this area and go with it. Everything was really cool concepts.” built for it — now we’re building the rosters, In a n ea rl ier i nter v iew w it h MiBiz , which is a process and getting players in and Chamberlin said that, because the team is so talking to coaches. reliant on ticket revenue, the decision to return “We get our players from recruiting schools would be based on how many fans are allowed from all over the country, but mainly we’re in per game. starting here locally — Western Michigan, When the trio of teams kick off on July 1, 500 (Kalamazoo) College — and expanding out to fans are allowed in the ballpark for each game, places like Central Michigan (University). We a number that will likely grow as the season want to start with players and colleges within progresses. the state to do our duty and help our local teams Chamberlin said that as a second-year orgato get experience. They’re all amateurs and nization, Traverse City saw hoping to get to the next level. value in not going dark for the We wanted to help the teams in whole year and staying in the our own backyard.” line of vision for area baseball Still, creating and managfans. ing yet another baseball team “When you’re in this busicomes with plenty of logistiness, there are always so many cal difficulties, but those are factors outside of your control challenges that Colopy said are whether that’s weather or if the worth it, not only to the colleteam is any good,” Chamberlin giate players that get to showsaid. “There are a lot of things case their talent, but for the 100 that us as operators can’t conpart-time staff members that trol that always make any seause both ballparks for summer son a little bit of a gamble, but employment. we would not have made these “There are budgets built into decisions if we didn’t think that that, where we’ll have to pay financially this could turn out for equipment and pay to get positive for us.” players fed and housed — it’s a — JOE CHAMBERLIN Also, with similar collebig undertaking but we have a CEO of Traverse City Pit giate leagues across the counduty to do that, that’s why we’re Spitters try folding up shop for the year, here,” Colopy said. “If we can do many highly talented college that in a limited capacity this baseball players are up for year, we’re going to.” grabs and looking for a place The Growlers will welcome to showcase their talents. fans in reduced capacity and grow that num“We wa nt t he baseba l l to be good,” ber throughout the course of the season. Never Chamberlin said. “I think the fact that there will attendance reach more than 30 to 33 perare a lot of other leagues that aren’t going this cent of capacity. year, that this late in the game we could still put The Growlers, Mac Daddies and Bombers together competitive and high-talent rosters. I have invested in additional cleaning, staffing think you can always throw a roster together, and training to aid in fan safety. New features but this summer we were uniquely positioned include designated entrances for each seatto deliver on the promise of putting prospects ing area and limited concession menus. Fans on the field.” must also wear masks when walking around In 2021, Chamberlin said the Traverse City the park. operations plan to return to life as a single “We’re always talking to our health departbaseball team. But for this year, his staff has a ment and other officials here, and we have the daunting task ahead. opportunity to be a place to showcase that “It’s essentially a 57-game home stand things can be done the right way and done in a that we’re signing up for, and operationally, safe environment,” Colopy said. “We’ll change that’s going to take some work to pull off,” and adapt to regulations and CDC recomChamberlin said. mendations — those can change sometimes weekly.”

“It’s essentially a 57-game home stand that we’re signing up for, and operationally, that’s going to take some work to pull off.”

‘A 57-game home stand’ The Pit Spitters organization is now solely responsible for baseball in Traverse City this year, operating all three teams.

“It’s been a lot of work in a short period of time,” Chamberlin said. “The creative stuff — the branding and the … business side of the equation — we were able to control and felt comfortable pulling that off. We had a great

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19

SPORTS BIZ

STUCK IN NEUTRAL West Michigan race tracks weigh options during pandemic

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

O

w n i ng a nd operat i ng t he Kalamazoo Speedway has always been a labor of love for Gary Howe — he’s never drawn a paycheck off of it in nearly two decades.

Lately, though, it’s been a bit more laborious.

“The race track is no different from any other small business in the country,” said Howe, who has owned the paved 3/8-mile, high-banked oval track for 19 years. “It’s not going to be an overall good year, but we accept that.”

During a normal season, the sound of revving engines starts up in April at the facility at 7656 Ravine Rd. in Kalamazoo. However, because of the COVID-19 pandemic and resulting shutdown of many businesses throughout the state, life at the Speedway has been stuck in idle.

In June, Howe and his crew finally were able to open the track to test-and-tune practice sessions for drivers. Under this format, drivers pay for a pit pass and no fans are allowed into the facility.

Staffing the track with a full safety crew and ambulance costs Howe about $2,800, and the practice sessions tend to break even.

“Based on the insight from the health department, outdoor entertainment venues such as race tracks may very well only be able to fill to 25 percent capacity. That means about 1,600 people can get in there. We can make a show out of that.”

— GARY HOWE Owner of Kalamazoo Speedway

Howe said that he expects racing to start up at the facility the first week of July, meaning the crew of 65 employees that work a typical race day will have missed half of the season this year.

“This is a business that runs on 25 days a year and I’ve said to a lot of people, when you try to run any business 25 days a year — but you still have 12 months of payments and overhead — it’s a tough business,” Howe said. “We’ve lost half that now. It is what it is.”

Like many amateur sports entertainment businesses, the Kalamazoo Speedway relies almost solely on gate money to fuel its operations, which means that even if Howe and his crew are able to put cars on the tracks, they also need to put butts in the seats.

The Speedway grandstands can seat 6,400 people, but regulations from Gov. Gretchen Whitmer’s office will almost certainly ban any sort of venue filling its seats to capacity.

“Based on the insight from the health department, outdoor entertainment venues such as race tracks may very well only be able to fill to 25 percent capacity,” Howe said. “That means about 1,600 people can get in there. We can make a show out of that. We can’t quite make a show out of 500 — 1,000 is kind of the limit.

If they’re saying 500, we’re looking at losing $6,500 a night.”

“We got to make it where it’s feasible for the racers and the ownership,” he added. “It has to be a two-way street.”

Howe and his wife, Donna, make a full-time living through owning and operating Howe Patio & Windows Inc. in Plainwell. His success in that job allows him to absorb small shortfalls at the Speedway, but like many other owners of the 43 different race tracks in Michigan, he isn’t equipped to handle a major loss.

“We still need it to cover its own nut,” Howe said of the track’s $2 million in annual operations costs. “It’s no big deal if we’re down $25,000. Bottom line is, hell, you can’t go losing $100,000 or $150,000. We’re not millionaire groups. We’re blue-collar workers.”

Confusion abounds While all race tracks across the state were late in kicking off their seasons, confusion over

US-131 Motorsports Park in Martin offers motorists a chance to run their street-legal vehicles on the dragstrip. COURTESY PHOTO interpreting the various executive orders has left some tracks waiting on the sidelines. The Kalamazoo Speedway has taken a similar approach as Berlin Raceway in Marne, which also is allowing only practices. The Hartford Motor Speedway in Van Buren County in Southwest Michigan also is waiting out the season.

Management at Berlin did not respond to requests for comment, but recently posted on social media: “We have been granted permission to host these open practices and if everything goes well and we do our part by sticking to these specific guidelines, it will only help us get back to racing with spectators sooner rather than later.”

Meanwhile, surrounding tracks have begun to return to racing in various forms — everything from significant crowds to drivers and crew only. These tracks include Galesburg Speedway (Galesburg), US-131 Motorsports Park (Martin), Grattan Raceway (Belding), GingerMan Raceway (South Haven), I-96 Speedway (Lake Odessa) and Thunderbird Raceway (Muskegon).

While Howe said he certainly doesn’t blame his peers for returning to racing as quickly as possible, he is frustrated that some are able to draw significant crowds while his crew continues to wait.

“I only speak for my track — I have five concession licenses and one liquor license,” Howe said. “I can’t do anything that jeopardizes them.”

‘Moving in the right direction’ US-131 Motorsports Park in Martin is one of the tracks to return to action, doing so at the beginning of May, but its owners have not yet allowed spectators.

The drivers and crews who have shown up for local bracket racing are subjected to temperature checks at the gate and are socially distanced in their pit areas.

“There was no way we could not open,” said Stephanie Peterson, marketing and media relations director for the dragway. “We’d have to close the business if we could not open. That wasn’t really an option. Of course, if we were all on lockdown, clearly we wouldn’t do things illegally, but this is definitely moving in the right direction.”

Simply allowing cars on the dragstrip hasn’t put Peterson and her team in the clear. In fact, US-131 Motorsports Park relies significantly on the revenue generated by its high-profile events that fill the grandstands. These include: Night of Thunder (June 20), Northern Nationals (Aug. 7-8) and the 16th Annual Funny Car Nationals (Sept. 11-12).

The Night of Thunder event was cancelled recently and now Peterson is monitoring the upcoming two events in hopes they go off without a hitch.

“We know we can’t get all three of them, so then you look at the budget and think, ‘What if we get two of them?’ or ‘What if we only get one of them?’” Peterson said. “I don’t know what it looks like if we get none of them.”

Unlike its circle track counterparts, US-131 Motorsports Park is able to diversify its service offerings to create different revenue streams. Not only does the facility host local bracket racing on a weekly basis and its big marquee events, but it also welcomes the general public to run their street-legal vehicles on the track.

“We really just kind of take it day by day and are thankful for what we got,” Peterson said.

“We look forward to when we can open our doors to everyone.”

US-131 Motorsports Park, left, has opened for local bracket racing since the beginning of May, but has not allowed spectators into the events. Likewise, Kalamazoo Speedway, right, has remained closed to spectators, but in June began opening for drivers to use the facilities for test-and-tune sessions. COURTESY PHOTOS

20

JUNE 22, 2020 / MiBiz

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NONPROFIT ORGANIZATIONS

Philanthropy steps up to help as crisis hits nonprofits hard

By JANE SIMONS | MiBiz jsimons@mibiz.com

T

range of services to the nonprofit sector, the Ford Foundation’s step helped catalyze the philanthropic sector to take action.

“When the Ford story came out, it created a greater awareness for the need to increase giving levels,” Eddy said, noting that more than 760 foundations of all sizes have signed on and made a similar commitment in the ensuing period.

“There’s a recognition from foundations that this is not business as usual,” Eddy said. “While they may have given a grant for something specific, if that operating nonprofit can’t open its doors every day, that specific intent may get delayed. Funders want to see nonprofits continue and provide programs and services that they funded with that grant.”

From a strategic standpoint, “these foundations are realizing that if they made a two-year $100,000 commitment and the nonprofit closes, they’ve lost that $50,000,” Eddy said. “If the nonprofit doesn’t exist, then all of their historical investments get wiped away.”

Foundations throughout Southwest Michigan and other areas of the state mobilized their efforts shortly after the state-mandated closures went into effect and the far-reaching effects of the virus began to surface.

“There are dozens of pooled relief and response funds across the state led by or in partnership with foundations that are directly supporting nonprofits that are experiencing high demand for services,” Caldwell said. “In addition, more than 20 Michigan foundations have signed on to a national pledge committing to provide greater flexibility in their grantmaking and in their broader work with their nonprofit partners to best support them during and after this crisis.”

he announcement last month that five of the most influential U.S. charitable foundations would be substantially increasing their giving levels was met with gratitude by philanthropic leaders in Southwest Michigan.

The Ford Foundation led the effort with its announcement on June 11 that it will borrow $1 billion to substantially increase the funding it distributes. The foundation will issue a combination of 30- and 50-year bonds, a rare financial maneuver among nonprofit groups. The Battle Creek-based W.K. Kellogg Foundation was among the foundations to increase its commitments.

The foundations’ commitment to increase levels of giving came as a direct response to the coronavirus Caldwell pandemic and the global fallout that has ensued.

“T h is major comm i t m e n t l e d b y W. K .

Kellogg Foundation, Ford Fou nd at ion a nd ot her funders in the space echoes the calls from the charitable sector that we must be innovat ive, nimble a nd leverage partnerships to Goorhouse address the unique challenges facing nonprofits, especially those who serve our most vulnerable populations,” said Kyle Caldwell, CEO of the Council of Michigan Foundations (CMF).

A new analysis by Candid, the nonprofit Filling gaps formed by the merger of Foundation Center and On March 24, a coalition comprised of The GuideStar, found that while some foundations Community Foundation of the Holland/ may be able to temporarily increase their payZeela nd A rea (CF H Z ), t he out rates, “the current situation is Grand Haven Area Community far more complex than what we Foundation (GHACF) and the experienced in 2008 and 2009.

Greater Ottawa County United Philanthropic giving in response Sponsored by: Way announced that they had to this crisis could reach unprecGRAND RAPIDS secured commitments of more edented levels.”

COMMUNITY than $400,000 to their respec“Therefore, foundations will FOUNDATION tive Emergency Human Needs need to closely examine what’s Funds, established in response viable for their continued philto the COVID-19 outbreak. That fund grew to anthropic efforts to effectively support commu$900,000, which was distributed within eight nities now and for years to come, recognizing weeks to area nonprofits working to meet basic there’s still great uncertainty about the support needs, said Mike Goorhouse, president and that will be needed long term,” Caldwell said.

CEO of CFHZ. According to Heather Eddy, president and In late May, Goorhouse announced the creCEO of Naperville, Ill.-based Kistner Eddy ation of the Community Stabilization Fund, Executive Services (KEES), which offers a broad

NONPROFIT SECTOR NEWS

which was seeded with an initial $200,000 from a local endowment. He said several generous local families and corporations joined the effort, enabling CFHZ to launch the fund with a total of $800,000.

“We were spending a significant amount of time analyzing state and federal funds coming into our community and looking at what are those places that public dollars aren’t getting to or aren’t sufficient to meet needs,” Goorhouse said. “We used that analysis to strategize five areas where we could focus our funds to respond to places in the community that didn’t get money or didn’t get enough.”

Those areas include: • Preventing individuals who are barely making it now from slipping into a spiral of poverty, • Targeting resources for migrant and immigrant communities, • Expanding mental health and substance abuse services, • Helping the unemployed navigate the public health insurance system, and • Providing additional education-focused assistance for children ages 5-8.

Goorhouse said the Stabilization Fund is a more planned and targeted approach. He said the foundation is currently identifying partners in the community.

“The plan is to have the funds distributed

by October or November,” he said. “The funds will go to nonprofits. We are also exploring the possibility of a direct cash assistance program that would direct cash into the hands of individuals rather than running it through nonprofit organizations.”

Similar to the CFHZ and so many other foundations, the Kalamazoo Community Foundation’s response was swift and targeted.

Senior Community Investment Officer Sandy Barry-Loken said the foundation increased its giving levels starting the second week of March.

“We have been working jointly with the United Way of Battle Creek Kalamazoo Region to jointly distribute dollars to the communities in response to COVID-19,” Barry-Loken said. “Early on, our combined donor relations teams began making outreach in the community and extensive outreach one on one to individuals and corporations and some private foundations as well.

“We jointly raised just over $2.5 million for the response to the impact of COVID-19 on the most marginalized and vulnerable in our community.”

Families step up Among larger family foundations, Caldwell said the Southfield-based Max M. and Marjorie S. Fisher Foundation has shared publicly that it

has committed funds beyond its 2020 program grantmaking budget in light of COVID-19.

“That’s one example. We know family foundations have been engaging in deep listening with their nonprofit and community partners to understand their challenges and needs throughout this pandemic,” Caldwell said.

“These partnerships — much like the missions and resources of each foundation — are unique; therefore, so are the response efforts.

Foundations are deploying mission-aligned resources in a myriad of ways, leveraging the tools they have available.”

Keith Hopkins, president of Ada-based Hopkins Fundraising Consulting LLC, is unsurprised by the increased support from foundations of all sizes in Michigan in response to the pandemic. He said it’s “really good to see public and private foundations” stepping up at such a critical time.

“When the full impact of COVID-19 started to hit, major family foundations reached out to nonprofits they support and started cutting checks that were not the typical checks,” Hopkins said. “I know of a couple of family foundations in two counties that forwarded gifts ahead of time.

They were going to send the checks in June and instead gave in April.”

If there’s a silver lining to any of this, Hopkins said it’s the size of the gifts that have been coming in.

“I’ve been really heartened and pleasantly surprised about the size of gifts to organizations I’ve been helping. I’ve had four or five campaigns where I’ve had six- or seven-figure gifts,” Hopkins said.

Addressing equity concerns Caldwell said nonprofits and foundations are all being challenged and there are many facets to their economic concerns. However, nonprofits that serve marginalized communities are being further challenged as those communities are being disproportionately affected by the pandemic, he said.

“There are many challenges that have been emerging from our communities that philanthropy is working to address,” Caldwell said.

“The digital divide facing students who may not have access to reliable, high-speed internet or connected devices is an equity issue that’s been central to conversations as we look ahead to what the return to learning may look like this fall. Data from the state has shown how the COVID-19 pandemic has disproportionately impacted communities of color throughout our state. Many foundations are working to deepen understanding of existing racial inequities and (take) action to advance racial equity to support justice for all.”

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21

Q&A Rodger Price

IN THE NEWS

Founder, Leading by Design LLC

M&A

Rodger Price formed Leading by Design LLC in Holland in January 2014 to develop business leaders with a sense that West Michigan was “already this hotbed of great leaders.” He believes that by cultivating that culture, the region can become a leader in leadership development, similar to what Silicon Valley is to technology. A one-time engineer who led leadership development and training at the former Prince Corp. and Johnson Controls Inc., Price pivoted when the COVID-19 pandemic hit. He condensed a flagship year-long program down to four months, and then a four-week course focusing on immediate challenges. He also now offers free “acute” coaching for leading in crisis. Price spoke with MiBiz about leadership, particularly in a time of crisis.

What must all leaders do during a crisis?

You need to have your best thinking. We know from brain research that when you get anxious, your executive function starts to shut down. The first thing is you need to somehow gain some calm. One of the things we know we can do to help leaders get clearer thinking is to just listen to them. Let them process. We can actually ‘listen’ them into clarity.

Then you have to think about: What are some of the options? You can have that attitude of ‘amazing things can happen,’ but we have to be able to look for them. We’re right in the middle of that ourselves right now. You have to stay calm so that you can think clearly, and then you have to look for where the opportunities are in this, and then you have to look at what’s true. You have to face the realities and not just bury your head in the sand.

How do you define leadership?

The vital few things that make a leader a great leader are those three things of being someone worth following — and we never tell someone what those attributes are, but we explore it with them. Certainly, integrity, transparency, authenticity, competence and all kinds of things go into being someone worth following. Then secondly, building an amazing team and, thirdly, making sure you create clarity around ‘who are we, where are we going, and how do we behave as we’re doing all of that.’ Those three things make up 80 percent of what it means to be a great leader.

How do you know when somebody is ready for a leadership position?

I don’t think you do. I think it’s trial and error. Remember the Peter Principle from the ’60s (the tendency to promote people to the highest level of their incompetence). When I promote somebody, I don’t know if they can do it or not. We’ll find out. The problem with the Peter Principle is once they were promoted higher and higher, maybe five levels up and they finally hit their level of incompetence, the issue then is you can’t keep them there. But if you are afraid of promoting someone into their level of incompetence, you might not ever promote anybody. You see some things that you can predict that they’ll be able to do really well, but you don’t know until they have that big job and that’s when it becomes real. Now there are things we can do to help them, but ultimately we have to try it and see, and then if it doesn’t work we have to help them with that, too.

Given the crisis that we’re in, what’s the one mistake a business leader must avoid doing?

Leadership is often this paradox of two very different things, almost opposites. One is you have to face the reality that is creating that fear, but you must not give in to fear.

You must have confidence that there is something out there that is going to work, so you have to kind of wrestle with both of those opposites. If all you do is go Pollyanna-like, you can crash and burn. If all you do is let fear drive you, you might survive, but your competitors are going to fly by you, those who are saying, ‘We see opportunity here.’

Can anybody become a leader?

Anybody can become a better leader than they are, but people do, in my opinion, have ceilings. There are basically six things that we explore inside a person that define their design, and it’s out of this where you go, ‘Wow, you’re a natural leader,’ or ‘You’re going to have to work really, really hard at this if you want to be a great organizational leader.’

In business, what’s the difference between a manager and a leader?

We like to talk about managers as incredibly important and they focus on doing things right, and a leader is more interested in ‘are we doing the right things.’ One of my favorite quotes is: ‘The only thing worse than doing something poorly is to do something with excellence that should not be done.’ So, management is going to be about, ‘Let’s make sure we do things with excellence.’ Leaders are going to be about, ‘Let’s make sure we’re working on things we should be working on.’ Management is more about, ‘What’s in front of me today and this week and this month?’ Leadership is more about looking out there, looking next year. Especially in our response to the pandemic, you don’t have to look out to be a leader (and ask), ‘What are you going to do?’

Interview conducted and condensed by Mark Sanchez. COURTESY PHOTO

22

JUNE 22, 2020 / MiBiz

n The assets of Lansing-based H2O Hydroponics LLC have been acquired by Denver-based GrowGeneration Corp. (Nasdaq: GRWG), a chain of specialty hydroponic and organic garden centers with 27 locations. GrowGeneration previously acquired the assets of Grand Rapids Hydroponics Inc. in September 2019. The company cited Michigan’s legalization of cannabis for recreational use, including the ability to grow up to 12 plants within a residence, as a driver for its continued push into the market. Terms of the H2O deal were not disclosed. n The planned $21.9 million merger of Community Shores Bank Corp. into ChoiceOne Financial Services Inc. heads to a close after earning shareholder approval. Shareholders at Muskegon-based Community Shores Bank approved the deal June 17.

The two banks will consolidate in the fourth quarter with Community Shores taking on the ChoiceOne name. ChoiceOne presently has 29 offices in West and Southeastern Michigan with about $1.5 billion in assets. Community Shores has about $220 million in total assets with three offices in Muskegon County and one in Grand Haven in neighboring Ottawa County. n A pair of Indiana cooperatives have formed a strategic joint venture to acquire an Allegan County agricultural retail business owned by CHS Inc. Crawfordsville, Ind.-based Ceres Solutions and Avon, Ind.-based Co-Alliance LLP expect the deal to close later this year and are currently conducting due diligence at the business, located at 4671 E. Washington St. in Hamilton, southeast of Holland.

INVESTMENTS

n Grand Rapids-based Red Cedar Investment Management is a sub-advisor for the fixed income North Square Strategic Income Fund launched by Chicago-based North Square Investments. The portfolio managers of the North Square Strategic Income Fund are Red Cedar’s John Cassady III, David Withrow, Michael Martin, Jason Schwartz, and Julia Batchenko. Red Cedar has 13 employees and $1.3 billion in assets under management.

HEALTH CARE

n Spectrum Health, the largest care provider in Western Michigan, has committed at least $100 million over the next decade to address racial and ethnic disparities and improve equity in health care.

That amount represents a 40-percent increase in what Grand Rapids-based Spectrum Health now spends on initiatives to improve health equity and reduce disparities. The health system’s commitment includes $20 million to $25 million over a decade at Spectrum Health Lakeland in St. Joseph, which it expects to generate and spend annually through the creation of a $50 million capital fund to support initiatives on health equity across its market in Southwestern Michigan. n Ascension Borgess and Ascension Medical Group Michigan opened a new pediatric care office at 1428 Milham Road in Portage. Ascension Medical Group Borgess Pediatrics opened on Monday, June 8 and is currently accepting new patients. The 3,100-square-foot clinic has eight exam rooms, one procedure room and four providers: Dr. Mary AvendtReeber, nurse practitioner Emily Geldersma, and physician assistants Emily Putnam and Kristy VanBeek. n Holland Hospital completed a three-year expansion and renovation of the Boven Birth Center, which now includes 21 private mother-baby rooms, eight labor-delivery-recovery rooms, two operating suites, four private triage rooms, a well-baby nursery, and a special care nursery. The birthing unit has space to accommodate 2,200 births annually. n True Women’s Health, a menopause and sexual health wellness clinic, opened in the Grand Rapids area at 2144 East Paris Ave. The clinic offers a wellness program and a concierge program. Both offer comprehensive individualized care including an annual physical, basic wellness assessment, treatment of menopause symptoms and guidance on reaching health goals.

n Allegan-based Perrigo Co. plc plans to enter the CBD market through a strategic investment and longterm agreement with Colorado supplier Kazmira LLC. Under a deal, Perrigo plans to make a $50 million investment for a 20-percent stake in Kazmira. Perrigo will pay Kazmira $15 million when the deal closes, and the balance within 18 months.

HIGHER EDUCATION

n The founding dean at the Western Michigan University Homer Str yker M.D. School of Medicine in Kalamazoo plans to retire early next year. The medical school, known as WMed, launched a national search for a successor to Dr. Hal Jenson, who came to Kalamazoo nine years ago and plans to retire in early 2021. WMed directors will accept nominations and resumes for the dean’s position through the summer to present to the search committee in September. The search committee aims to name a new dean in early 2021.

EXPANSION

n Citing a growing customer base along the Lakeshore, Grand Rapids-based I.T. firm The KR Group opened a new office in Spring Lake. In addition to its Grand Rapids location on Front Avenue, the company, which specializes in designing, implementing, managing and maintaining I.T. infrastructures, is now also located at 424 Oak St. in Spring Lake.

ECONOMIC DEVELOPMENT

n A youth employment program is slated for launch this summer, employing 1,000 Grand Rapids residents ages 15-21. The city is facilitating the program in partnership with dozens of local businesses and organizations, including Spectrum Health, Meijer Inc. and Downtown Grand Rapids Inc. and plans to offer 50 positions across city departments as part of the GRow1000 initiative. Participating businesses and organizations will offer young people 120-hour work experiences over six weeks starting July 13. n Michigan lost another 1,000 clean energy jobs last month, bringing the state’s total losses to 31,000 in the sector since the coronavirus pandemic spread in mid March, according to an analysis of federal labor statistics. The analysis from BW Research Partnership on behalf of business and environmental groups is the latest documenting the clean energy job losses as a result of COVID-19. Since mid March, more than 620,000 workers — mostly in the energy efficiency sector — have filed for unemployment.

REAL ESTATE

n The former B.C. Cobb coal plant on Muskegon Lake is anticipated to be “one of the top marine port terminals” on the Great Lakes after officials announced the site’s remediation and sale to new owner Verplank Dock Co. Verplank will use the site to consolidate its Muskegon Lake commercial dock operations after acquiring the property from North Carolina-based Forsite Development Inc. n The Hinman Co.’s 13-story, 140,000-square-foot hotel located at 10 Ionia Ave. NW in downtown Grand Rapids is expected to be completed two months later than anticipated because of construction delays stemming from COVID-19. When construction began in early 2019, the Residence Inn by Marriott extendedstay hotel was scheduled to be completed by Sept. 1.

This date has changed to Nov. 1 because non-essential construction work was forced to temporarily shut down as part of Gov. Gretchen Whitmer’s stay-home order. n The Urban Institute for Contemporary Arts plans to relocate and sell its building at 2 Fulton St. SW in downtown Grand Rapids after financially struggling to maintain the facility over the last few months during the COVID-19 pandemic and state-mandated shutdown. The UICA will put its building up for sale this fall and move its operations to the Woodbridge N. Ferris building at 17 Pearl St., which is on the campus of Kendall College of Art and Design of Ferris State University. The organization has been on a hiatus since mid March.

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UPCOMING ISSUES

7.6.2020

Small Biz M&A

Contract Deadline: 6.24.2020

7.20.2020

West Michigan’s Tribal Economy Contract Deadline: 7.8.2020

8.3.2020

9 West Michigan Industries Distrupted by AI Industry 4.0 Contract Deadline: 7.22.2020

8.17.2020

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

Aerospace suppliers brace for continued turbulence

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MAY 11, 2020 • VOL. 32/NO. 15 • $3.00

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

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

Contract Deadline: 8.5.2020 www.mibiz.com

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

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

I

f the SARS outbreak 17 years

By MARK SANCHEZ | MiBiz ago in Asia is an accurate indimsanchez@mibiz.com cator, behavioral health care providers could see a patient eople who have been working from surge in the coming weeks and home for weeks because of the months as the COVID-19 pandemic COVID-19 pandemic will return to a takes an emotional toll on people. decidedly different workplace than One-third of the people in Asia they had previously once the economy gets were unable to return to work full going again. time after the SARS pandemic, six Changes will span a range of workplace in 10 experienced fatigue, and half environments, including offices, shop floors, had difficulty sleeping. breakrooms and conference rooms. Wearing In Hong Kong, the suicide rate face masks and having more distance spiked nearly 32 percent for two between workers will become the norm, years after SARS. Hong Kong also along with routine temperature checks and experienced “increases in persistent continually cleaning and sanitizing the workdepression, anxiety, panic attacks, place, tools, equipment and workstations. psychomotor agitation, psychotic PAGE 12 PAGE 14 Those and other pracsymptoms, delirium, and suicidtices are all part of the proality,” accordMARCH 16, 2020 • VOL. 32/NO. 11 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com verbial “new normal” for ing to a white employers working to navpaper from Pine igate the deadly pandemic Rest Christian that has disrupted daily rouMental Health tines, thrown the economy Services on the into recession and may linpotential menSmall businesses around West Michigan have been affected in many ways GR debates increasing ger for many months until a tal health effects Kennedy sites for marijuana by the ongoing pandemic. While some are seeing increased business, most Eastburg vaccine is developed. of the COVID-19 businesses; equity, “As business leaders, you have to make pandemic. companies are being forced to deal with the fallout by getting creative, manlocal ownership sure you’re taking the responsibility for your The white report pulls data from aging cash and finding new ways to stay engaged with customers and cliconcerns remain employees,” Kentwood-based Autocam a number of sources to issue a call to Medical Devices LLC CEO John Kennedy action for care providers to prepare ents. In this Coping with COVID-19 special report, MiBiz speaks with two said during a recent back-to-work webinar for the “aftershocks” from the panBy SYDNEY SMITH | MiBiz dozen West Michigan companies to hear how they’re navigating the current hosted by Advantage Benefits Group Inc. “It’s demic and “minimize the fallout of ssmith@mibiz.com incumbent on us as businesses to make sure COVID-19 on mental health in our uncharted waters. SEE PAGES 12-19 communities.”

See WHAT’S NEXT on page 8 GRAND RAPIDS — Following “ Th e w ar n in g sig n s are mixed messages from the Grand there right now that we could in Rapids City Commission late last Michigan experience a significant

By MARK SANCHEZ | MiBiz month, marijuana advocates surge in behavioral health needs msanchez@mibiz.com hope city officials will ultimately that emerge out of this COVID criopen more properties for medisis,” Pine Rest CEO Mark Eastburg he coronavirus outbreak that’s batcal and recreational facilities.

By ANDY BALASKOVITZ | MiBiz benefits for people in their state’s Program loan — told MiBiz. “We ought to be precall hosted by the West Michigan Policy tered Wall Street andactive caused supply On Feb. 25, the commission abalaskovitz@mibiz.com system.

In Michigan, this means workwhich requires 75 pared asimplications a state and aofcommunity Forum. As of early May, Sturgis Molded Visit mibiz.com for ongoing coverage of the business COVID-19 in West Michigan. chain disruptions for some manuwent back and forth on appliers unemployed a result oftransthe panpercent of the loan for that in case that happens.”

Products was running at about 10 perfacturers has yet toasinterrupt cations for both types of facilis some employers actions, express although demic could receive up to $962 aare week. to be used for payT he s t r e s s, a n x iet y a nd cent capacity involving transportation more conversations ties. The city has approved 24 PAGE 2 PAGE 13 concern about retainfederal areaccording available for roll in order to be depression the pandemic trigand medical devices. The company has occurring asThe part of duebenefits diligence, licenses for medical marijuana ing workers who are up to 39 weeks, while state benefits forgiven — faced gers can come from the loss of a about 200 employees. to earnM&A professionals. businesses, while another 14 APRIL 27, 2020 • VOL. 32/NO. 14 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com ing more income through were more workers backlash from job or income, grief, and uncer“I’ve called people and there has Deals that areexpanded in processtoinvolve a deeperand are waiting for approval. The unemployment benefits than their extended for 26 employees, since tainty about the future. At Pine been communication that said, ‘I make dive into due diligence inweeks. situations where city hasn’t finalized recrePresta normal paychecks, researchers say Media have shown conthe loan effectively Rest, “we’re experiencing a rise more by not coming in,’” Presta told one reports company is acquiring ational marijuana zoning reglong-term structural fixes are needed cern among employers who pay less means workers would be paid their in many of the stressors that are MiBiz. “That’s out there.” another that sources raw ulations and won’t start acceptto state and federal programs. than the amount of benefits worktypical wages. known to increase risk for suiSturgis Molded Products’ operamaterials or components ing applications until April 20.

The $2.2 trillion CARES Act passed ers are receiving. In at least one case Kelly Presta, vice president at Sturgis cide,” Eastburg said. tors and first-line positions make

By JESSICA YOUNG | MiBiz Ea rlier t his mont h at t he West Michiga n from China. Buyers are Hours after voting to delay in late March included provisions to in Washington state, a company Molded Products Co., shared these less than the maximum amount See MENTAL HEALTH on page 6 Symposium jyoung@mibiz.com Automotive Suppliers in Grand Rapids, asking for more informarecreational and pause mediadd $600 in weekly unemployment that received a Paycheck Protection concerns during an April 22 conference See UNEMPLOYMENT on page 5 Mike Wall, director of automotive analysis in Grand tion about supply chains, cal applications, the City he automotive industry is scrambling to strike Rapids at IHS Markit, forecasted light vehicle sales backup plans and the Commission reversed course SBA races to provide relief a balance between near-term execution and of 16.8 million units in the U.S. this year, in the segcapabilities of replacement after the six commissionto small businesses, but P E R I O D I C A L S unsteady industry disruption from the novel ment that includes cars, utility vehicles and pickup suppliers. ers could not agree on how to some hiccups remain Brown coronavirus outbreak. trucks.

“It’s still very new. move forward. A last-minute That’s according to industry experts who say the Already, that outlook is changing as COVID-19 conEveryone’s trying to figure it out on the fly, dispute among commissioners

By MARK SANCHEZ | MiBiz effect of the virus, which has been spreading around tinues to develop across the country, he told MiBiz. but if clients were selling source parts from also involved equity and local msanchez@mibiz.com the globe since late December and shut down producAs of this report, IHS Markit was still finalizing a China, you’re going to have to make sure ownership. tion in specific regions, has shifted forecasts for global revised sales projection, but Wall expects the new forethey have a backup supply-chain plan in Commissioners were conhe sheer volume of small automotive production and U.S. sales downward. cast to drop to 16.5 million units. case there is a major disruption,” said Mike sidering zoning amendments businesses that have Indeed, Gov. Gretchen Whitmer announced “Everything is happening so quickly and there is Brown, who leads the M&A practice at investrecommended by the Planning MARKcases SANCHEZ | MiBiz sought federal relief the state’s first two presumptiveBy positive so much volatility that given the circumstances, 16.5 ment bank Charter Capital Partners LLC in Commission that would have msanchez@mibiz.com loans illustrates the PAGE 11 in Oakland and Wayne counties on March 10, fol(million) will still be a very good year,” Wall said.

Grand Rapids. eliminated a waiver process depth and scope of the economic See SHIFTING DYNAMICS on page 4 lowed by a state of emergency declaration. for sensitive land uses like reliSee DUE DILIGENCE on page 9 n normal times, Trinity Health’s seven pain brought on by the COVID-19 gious institutions and opened hospitals across Michigan generate compandemic. more properties for cannabis bined operating income of $9 million to The U.S. Small Business development. $10 million a month.

Administration quickly blew Marijuana advocates have But the current operating environment through $349 billion in just 14 sought to relax distance requireis far from normal, and the COVID-19 pandays and approved loans for 1.6 ments in order to expand the Downtown Grand Haven. MIBIZ PHOTO: MARLA MILLER demic has pushed the Catholic health sysmillion small businesses nationnumber of properties qualified tem’s financial performance deep into the wide before halting new applifor marijuana business use, red. seeking a constitutional amendment cations April 16 for the Paycheck

By ANDY BALASKOVITZ | MiBiz graduated, or progressive, income tax. schools and road and water infrastrucwhich they say could also help The operations for percent Trinity Protection Program. That’s as abalaskovitz@gmail.com to Michigan change Michigan’s flat 4.25 The Democratic-backed proposals have ture starting in 2022. The plan would address concerns over a lack of Health, the Livonia-based parent corporation many loans as the SBA processed income tax to a graduated structure failed to gain traction in the Republicanreduce the state income tax rate for local ownership. of Mercy Health in West Michigan Saint in the previous 14 years combined. s progressive political advobased on income.

The Boardand of State held state House and Senate. individuals with income of $175,000 or Joe Neller, co-founder and Health Congress last week allocated cates seek lower state income Canvassers is Joseph expectedMercy to decide in the In t he late 1960s a nd 1970s, less and joint filers with income at or chief government affairs offiSoutheast another $320 billion for the PPP, tax rates for most Michigan coming weeksSystem whether in organizers can Michigan voters by wide margins below $350,000. According to organizcer at Dimondale-based Green Michigan, recorded a $50 $30 billion of which will go to federresidents while higher earncollect signatures in hopes of putting rejected ballot proposals for a graduers, 95 percent of Michigan residents Peak Innovations LLC, said the

By MARLA MILLER | MiBiz the region’s busiest tourist towns, as Main Streets million operating loss for ally designated community develers pay more for infrastructure needs, the question to voters in November. ated income tax. Such a change would would pay a lower state income tax rate Planning Commission rejected mmiller@mibiz.com across the state are bearing the brunt of COVIDMarch, “and remember opment financial institutions, plus the state’s leading business group is “If this qualifies for the ballot, require a constitutional amendment. than they do now. a provisioning center proposed 19 closures. in March half the month banks and credit unions with less bracing for a highly contentious politfrankly, it would be war,” said Rich However, supporters say growing Of the 41 states with income taxes, by his company because of the s the owner of longtime site’s downtown some restaurants and breweries have pivwas a normal than $10 billion in assets. Banks ical campaign.

Studley, president and CEOmonth,” of the income disparities and declining pub33 have a progressive structure. Federal proximity toWhile a church, Grand Haven retailer Down To though Earth, theoted to takeout retailers deemed nonsaid President and CEO and credit unions with assets Organizers behind the Fair Tax Michigan Chamber of Commerce. lic services have shifted public opinion. income tax also follows a graduated even company had and delivery, Sholeh Veiseh has turned toahosting essential fall into more of a gray area. Some have shut Rob Casalou.has opposed between $10 billion and $50 billion Michigan campaign, which was For years, the Chamber The Fair Tax Michigan plan would raise model. waiver virfrom the church. tual fashion shows and offering sales onQUO down entirely, while others are transitioning online to TheLegislature operating for loss will get another $30 billion. announced in late February, are Casalou efforts in the state a See INCOME TAX on page 3 $1.5 billion in additional revenue for See STATUS on page 8 social media to bring in some revenue during the remain at least partially open for e-commerce. stems from the lost revThe legislation also directed coronavirus closure.

Under a new executive order issued April 24, enue from canceling non-essential surger$60 billion in funding to the SBA’s Gov. Gretchen Whitmer’s initial executive those stores now have more clarity: Retailers sellies and procedures, combined with ramped Economic Injury Disaster Loan P E R I O D I C A L S order closing non-essential businesses through ing non-essential items can open for curbside up spending to test and care for COVID-19 program Congress set up earlier April 30 shuttered most storefronts on Washington pick-up and for delivery. patients. in the pandemic.

See FINANCIAL CRISIS on page 6 Avenue, an established shopping district in one of Before running out of money See LAKESHORE RETAILERS on page 10 for the first round of the PPP, the SBA approved relief loans totaling $10.38 billion for nearly 43,500 PAGE 21 small businesses in Michigan.

Executives at banks and credit unions say applications for the PPP came from across the economy, including Main Street-type businesses, companies up to the SEE PAGE 16 500-employee threshold, the hosBy JOE BOOMGAARD | MiBiz in-person dining and drinking in crews for to-go orders, curbside pickup In a survey compiled by Boulder, pitality sector, restaurants, manujboomgaard@mibiz.com their establishments in an effort to or home delivery of beverages and Colo.-based Brewers Association in facturers and retailers that have curb the spread of COVID-19. For food. Meanwhile, distilleries have early April, 14.1 percent of responbeen hurt by the pandemic and ichigan’s craft beverage the first time in many of their his- repurposed their stills to produce eth- dents indicated their business could resulting stay-at-home orders. industry is facing a chal- tories, the owners of breweries, dis- anol in an effort to answer the call to sustain for four weeks or less if the “If you connect enough dots, lenge with the economic tilleries, wineries and cideries have boost critical supplies of hand sanitizer. current conditions persisted. An addiand some you have to confallout from the corona- been forced to lay off staff members These scrappy and resilient com- tional 45.8 percent of respondents said nect more dots than others, virus pandemic that is unlike any — their companies’ direct connec- panies are finding revenue wher- their businesses could only sustain for you can almost see where every other in its history. tions with consumers in their tap- ever they can, but few could have one to three months if the social dissingle human being and every Many companies have been com- rooms and bars. prepared for such an abrupt sea tancing measures and restrictions on See SBA LOANS on page 8 pletely closed for weeks as a result The craft beverage companies that change that’s been brought on by sit-down service remain in place. of state-mandated orders to end all remain open are leveraging skeleton the pandemic.

See CRAFT BEVERAGE on page 14

COPING WITH COVID-19

Former Muskegon coal plant to get new owners

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— C ORON AV I RUS I N M IC H IG A N —

Virus concerns drive additional due diligence in M&A transactions

West Michigan will work differently post COVID-19

How employers can help with mental health

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

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Automotive analysts see shifting dynamics amid coronavirus spread

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Health systems face financial crisis brought on by pandemic

Construction industry adapts to new safety protocols

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Michigan Chamber prepares for ‘war’ over graduated income tax proposal LAKESHORE RETAILERS ADAPT, MOVE ONLINE AS SOME SCRAMBLE TO STAY AFLOAT

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Leaders push for action to raise wages

After unbridled growth, Michigan craft beverage companies gird for devastating lows

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Contract Deadline: 8.18.2020

9.14.2020

Family Business

Contract Deadline: 9.2.2020

9.28.2020

Diversity/Equity/Inclusion Contract Deadline: 9.16.2020

10.12.2020 Industry 4.0

Contract Deadline: 9.30.2020

10.28.2020

Mergers & Acquisitions

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Foodservice disruptions cause crisis for farmers

Insurance

Spectrum Health prioritizes buying local

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TRIAL

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INSIDE:

Drinking economy

Contract Deadline: 10.14.2020

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11.9.2020

Food Economy

Contract Deadline: 10.28.2020

11.23.2020

Education & Talent Development Contract Deadline: 11.11.2020

12.7.2020

Construction Wrap-up

Contract Deadline: 11.25,2020

12.21.2020

Crystal Ball Special Year-End Edition Contract Deadline: 12.9.2020

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