MiBiz July 20, 2020 print edition

Health leaders back push for implicit bias training

Federal legislation would boost funding for public lands

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JULY 20, 2020 • VOL. 32/NO. 20 • $3.00

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Drinking from a fire hose

Manufacturing executives share lessons after taking new leadership roles during pandemic

BY JAYSON BUSSA | MiBiz jbussa@mibiz.com

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ore than four months into the COVID-19 pandemic, Michigan’s 12 federally recognized tribes have fared better from a health care perspective than many other Native American tribes nationally.

While the virus has wreaked havoc on American Indian communities in the southwestern states — as of this writing, for example, Navajo Nation has reported more than 8,400 confirmed cases and 400 deaths from COVID-19 — Native people made up 0.99 percent of all reported cases in Michigan, according to the state Disease Surveillance System.

Although that’s roughly double the percentage of Native Americans as a portion of the state’s population, tribal leaders from around West Michigan told MiBiz they can point to only a handful of cases involving their tribal citizens being affected by the highly communicable virus.

Instead, they say the most devastating effects of the pandemic for their tribes have been the economic and cultural toll they’ve suffered as a result.

ichael Finn compares taking on a new executive role to drinking from a fire hose. But with the COVID-19 pandemic ravaging virtually every industry, the water out of that hose has a bit more propulsion.

“Any transition always comes with some complexity,” said Finn, who now serves as president of Byron Centerbased PRO-VISION Video Systems, a nationwide video systems manufacturer that serves the transit, law enforcement and commercial transportation industries. “In this case, the company was well estabFinn lished and knew what its focus was, so that made things easier to join it and build on it.”

After the normal process of learning the ins and outs of a new position, the pandemic hit “and it turned everything on its ear and (adjusting to it) completely absorbed us for the better part of a month,” he said.

PRO-Vision became a portfolio company of Boston-based private equity firm JMC Capital Partners following a deal announced last September.

As new leadership moves into executive roles across the manufacturing space, professionals have a fresh batch of headaches to contend with — from keeping their workforces safe to weathering a world of canceled

See PANDEMIC on page 12

See LEADERSHIP on page 4

The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, or Gun Lake Tribe, took swift action early on in the COVID-19 pandemic to shut down its casino and parts of its government operations. “We want to lead with compassion and show that we’re supporting everyone and their safety and their well being,” said Bob Peters, chairman of the Gun Lake Tribe, pictured at the tribe’s government complex in Bradley, south of Grand Rapids. PHOTO: JEFF HAGE, GREEN FROG PHOTO

PANDEMIC DEALS MAJOR FINANCIAL, CULTURAL BLOW TO MICHIGAN TRIBES

By JOE BOOMGAARD | MiBiz jboomgaard@mibiz.com

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HAP bringing group health plans, competition to West Michigan in ’21

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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hen it enters the West Michigan commercial health insurance market in 2021, the state’s third largest health plan will offer both large group and small group policies.

Detroit-based Health Alliance Plan initially planned to launch only with health coverage for small

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employers. However, the Henry Ford Health System-owned company scaled up its plans after it was able to establish a care network “faster than we thought we could,” said Margaret Anderson, senior vice president and chief sales and marketing officer for HAP. HAP first moved into the West Michigan market this year after forming a Medicare Advantage plan with Mercy Health that enrolled 1,700

people in its first year in Kent, Ottawa, Muskegon and Oceana counties.

The health plan is preparing for an Aug. 1 “soft launch” of large group plans in the same four-county area for two types of policies: preferred provider organization (PPO) and exclusive provider organization (EPO), which uses a PPO care network but lacks an out-of-network benefit, Anderson said.

With coverage for small and

large group policies starting Jan. 1, HAP would provide employers another viable option to examine for employee health insurance Anderson in a region that’s long been dominated by Blue Cross Blue Shield of Michigan and Priority Health, according to an annual report

by the American Medical Association.

In the first quarter of 2021, HAP also intends to request approval from state regulators to introduce HMO coverage to large employers in West Michigan, Anderson said.

“When we go to West Michigan, we want to make sure it’s a really positive experience and that we have everything really thoughtfully planned out,” she said, explaining why HAP intends See HAP on page 6

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Nonprofits benefit from PPP loans PAGE 21

INSIDE:

West Michigan Tribal Economy SEE PAGE 12

Building Your Culture August 11, 2020 The Center-West and MiBiz are teaming up to present an industrial-strength quarterly webinar series focused on best practices for small and mid-sized manufacturers. Each webinar in the 2020 series — Back to Manufacturing Basics — will feature experts on the topic at hand as well as Michigan manufacturers sharing their

Life is changing rapidly for manufacturers and their employees as we navigate the COVID-19 pandemic. As priorities shift, many companies are finding that their company culture is shifting, too. How can you, as a leader, embrace those changes and take an intentional approach to building your company’s culture for the future? This 50-minute webinar will feature experts from the Michigan Manufacturing Technology Center-West and executive coaching firm Vistage Michigan. They’ll share best practices for building culture and amplifying your values to assemble a high-functioning team that’s ready to take on the evolving challenges and changes ahead.

To register, visit mibiz.com/backtobasics

stories. The 50-minute webinars will provide actionable, real-world information to help manufacturers improve their efficiency, enhance quality and drive profitability.

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Survey: After slowdown, M&A activity expected to rebound over the next year

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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he M&A market that slowed in the first half of 2020 with the onset of the COVID-19 pandemic should rebound well over the next 12 months as deals that got put on hold go forward, according to a midyear survey by law firm Dykema Gossett PLLC. A little more than half of the 105 corporate executives and M&A professionals surveyed told Dykema in June that they expect the market to strengthen through the rest of the year and through the first six months of 2021. That higher activity could occur after a weak first half of 2020 when the U.S. economy fell into recession.

Just 35 percent of respondents expect the market to weaken and a little more than 14 percent see no significant change through midyear 2021, according to the survey results.

“The M&A market got slowed down by COVID-19 and has started a slow recovery,” said Tom Vaughn, a partner at Dykema’s Detroit office and co-leader of the law firm’s M&A practice group. “Most people have just paused (transactions), they haven’t stopped. That would be consistent with some expectation of an ability to restart activity, particularly later in the year as we, hopefully, get our arms around COVID-19 and we get some stability.”

The Chicago-based Dykema annually surveys corpoVaughn rate executives and M&A professionals in the Midwest and around the U.S. in the fall and uses the results to issue a market outlook for the coming year. Given the market disruptions from COVID-19, Dykema conducted a survey in June that asked for views on the next 12 months and gauged the pandemic’s effects.

Results of the survey — conducted with Association for Corporate Growth chapters in Detroit, Columbus, Ohio, and Austin and San Antonio, Texas — indicate that executives and M&A professionals have higher-thanTeeter expected confidence in the economy and that valuations are coming down, which could keep some prospective sellers out of the market.

Survey respondents told Dykema “most dealmakers have taken a wait and see approach” to transactions. Deal flow was affected by delayed negotiations and due diligence, reduced transaction valuations and termination of purchase agreements, according to survey results.

Increased appetite As a result, the pandemic “has increased the appetite for future acquisitions,” Dykema said in a report on the survey results. More than six out of 10 respondents believe their company or one of their portfolio companies would make an acquisition within the next year, and a little less than one-third told the law firm they believe they would sell a business.

“That is a good sign for M&A activity. M&A has been really quiet for the first six months of the year,” Vaughn said.

M&A EXPECTATIONS Expectations of the 105 respondents to the Dykema Gossett PLLC survey for the M&A market between now and June 2021:

50.7%

The market will strengthen

35%

The market will weaken

14.3%

No significant change

COVID-19’S EFFECTS ON M&A Respondents to a mid-year survey by law firm Dykema Gossett said the COVID-19 pandemic affected M&A activity by: ■ ■ ■ ■ ■ ■

Delaying negotiations – 58% Delaying due diligence – 48% Delaying transaction closing – 35% Reducing transaction valuation – 33% Termination of executed purchase agreements – 12% Terminated deals – 5.71%

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The higher interest in M&A is “very consistent with what we are seeing anecdotally and when I talk to people,” Vaughn said. “In recent weeks, people are seeing a start of M&A activity. People are starting to pick up deals again and are looking at deals again in a way they weren’t a month or two ago.”

Mike Teeter, managing partner at Spring Lake-based M&A firm InVictus LLC, expects that pent-up demand will partly drive the deal flow in the second half of 2020 and first six months of next year.

Activity for InVictus began picking up in June, Teeter said. He’s been seeing higher interest as well from private equity firms looking to make an acquisition and deploy their capital.

“There’s money out there and they want to deploy it. They have to go somewhere with that money, the question is what are they going to deploy it in?” Teeter said.

“I don’t think we’re going to see the deal flow that we normally would if we were not going through this (pandemic), but I think we’re going to see some pent-up demand taking place and that money that’s on the sidelines is going to start to get deployed,” he said.

Private equity deals decline One indicator of the M&A market’s decline comes from a quarterly report Pitchbook issued last week on private equity activity.

Private equity deals declined nearly 20 percent in the first half of 2020 from the same period a year earlier to 2,173 deals, according to Pitchbook.

Transaction values decreased about 20 percent for the first half, and were down by nearly a third in the second quarter alone.

Deal flow through the rest of 2020 will depend on whether restrictions continue to ease, said M&A attorney Jon Siebers of Rhoades McKee PC in Grand Rapids. If an easing of restrictions gets paused and the more severe pandemic measures are back in place, “it’ll slow down deal flow more,” Siebers told MiBiz in late June.

MiBiz recently reported how M&A activity in the small business market has been affected by a reluctance of some sellers to come to market right now, even amid strong demand from prospective buyers.

Economic outlook More than half of respondents to the Dykema survey cited the state of the U.S. economy as the top driver of M&A activity into next year. The economy was cited as the top driver by one-third of respondents in the annual Dykema survey last fall.

The pandemic has “not significantly tempered” expectations for U.S. economic performance from the results last fall, when respondents were about evenly split in their views. In the mid-year Dykema survey, a little more than one-third held a positive outlook for the economy, and 30 percent were negative. The other 36 percent were neutral on the economy.

Longer term, 76 percent of survey respondents said they held a positive outlook on the economy for the next 24 months. Just 5.7 percent had a negative outlook on the economy and the remaining were neutral.

For sellers who are waiting for the economy to recover before coming to market, the 12- and 24-month outlooks indicate they can probably get more for their business a year or more from now, Vaughn said.

“If you as a business can survive through the next year, there is light at the end of the tunnel,” he said. “If you are a seller and you think you can hold off for a year — you’re not distressed, you can sustain the business for a period — you probably are better off sitting on the sidelines because the economy should be better. Valuations are down now and you have a better shot at getting that valuation you were hoping for and looking for.”

Nationally, Comerica Inc.’s latest economic outlook projects U.S. Real GDP growth of 12.3 percent in the present third quarter after an estimated 24.7 percent decline in the second quarter. The U.S. economy will grow another 3.6 percent in the fourth quarter and then start 2021 with a quarterly growth rate of 5.9 percent in Real GDP, according to an updated outlook Comerica issued July 6.

PNC Bank in June projected third quarter Real GDP of 13.9 percent, after an estimated 30 percent decline in the second quarter, and 8.1 percent in the fourth. PNC projects 2021 to begin with 5.8 percent Real GDP growth in the first quarter.

Nearly 23 percent of respondents named valuations as the second-largest driver of deals. That’s more than four times the number of respondents who cited deal valuations back in the fall.

That finding reflects how a large majority — 82 percent — expect deal valuations to decline in the next 12 months, driving an increase in deal flow. In the fall survey, a little more than six out of 10 respondents expected a decline in valuations during 2020.

Sixty-three percent of respondents also felt that seller expectations on valuation “is an impediment to getting deals done,” likely leading to sellers waiting to come to market until the economy improves and more focus on distressed deals over the next year, Vaughn said. The exceptions could come in companies with “the right technology” in the pandemic that a prospective buyer may find attractive.

The mid-year survey also found the higher use of earnouts and delayed payments.

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MANUFACTURING LEADERSHIP Continued from page 1

projects and extreme revenue drops.

The pandemic brought many manufacturing businesses to a halt, leaving the new leadership to put out fires before they can focus on long-term strategy.

When Finn took over at PRO-VISION, coronavirus was still only a murmur as the virus made its way through China. When it arrived in the U.S., he had to make major adjustments to address an unprecedented economic event.

“In some ways the short-term focus can overwhelm the strategy and the long-term things you’re trying to put away,” Finn said.

“However, I don’t think that actually was the case completely here. First thing we had to worry about was safety of our employees and the second thing was establishing ourselves as a needed Spaulding business.”

As well, some of the longterm plans involving engineering software and other aspects of the business “were ironically as productive, if not more productive, by being remote and being able to focus without the day-today disturbances,” he added.

Lindemann Avoiding layoffs, PROVISION muscled through an anemic mid-March and April before seeing improvements in all verticals for both May and June. The business worked through the CARES Act to secure PPP funding, which allowed it to continue serving clients in full capacity.

While Finn came on before the pandemic, new PRO-VISION CFO Kevin Spalding came aboard in the middle of it.

“I had a (virtual) meeting the second week just to make sure I knew who worked for me,” Spalding said. “I didn’t even know who worked for me because they weren’t here — they were working from home. How you do things changes.

You’re coming in a leadership position and you have to build that relationship through a teleconference or videoconference but then also try to lead the team through what’s changing and why we’re doing it. That’s really the difficulty.”

Byron Center-based PRO-Vision Video Systems manufactures a range of products, including rear-view cameras for tow trucks (pictured), body cameras and in-car cameras for law enforcement applications. COURTESY PHOTO Finding opportunity in madness is also important. PRO-VISION leaders took the relative downtime to implement a new CMS and scrutinize internal processes. This, Spalding said, has set up the company for a stronger 2021.

The COVID-19 pandemic also has unlocked new market opportunities for many manufacturers, including PRO-VISION. “The couple of trends that have emerged in the last three months — they were there, but they’re becoming more accelerated — is the monitoring of key processes in a variety of areas,” Finn said. “That can range from food inspection … in the era where you can’t send in people to do it. That’s just an example of where some of our video technology is being used, construction being another one.”

Flexibility is king Scot Lindemann took over as the new CEO of Holland-based Mission Design and Automation during the early portion of January. The company develops automation solutions for the

“As a leader, you have to pay attention to your team and over communicate, and you need to know there are unknowns affecting their personal lives and family lives — all those kinds of things. You have to be more flexible as a leader to pay attention to that stuff and not just be about business right now.”

automotive, office furniture, medical and consumer goods industries.

While the COVID-19 pandemic has greatly shifted the company’s short-term plan, he said long-term goals and strategy are still very much intact.

“With this event, we haven’t changed our threeto five-year planning at all, to be honest,” Lindemann said.

“But we have definitely modified the one-year plan and how you’re planning even month-by-month or even down to week-by-week with some of the changes as they come around.

“I think it’s important to draw that distinction that there’s all different types of planning that companies do and which ones get adapted when.”

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— SCOT LINDEMANN CEO of Mission Design and Automation

Lindemann said his team likely wouldn’t revisit those long-term plans until the market finds stability, which may not be until after this year’s presidential election.

Mission has bucked the trend as a company that has added to its workforce throughout the pandemic, even though Lindemann said he had to shift around some personnel in order to keep everyone on board.

He stressed that fostering a strong, flexible team is a must, especially in a fluid industry where a company doesn’t have the luxury of long-term contracts. Lindemann said when the needs of his clients changed, his team was right alongside them.

“Customers came to us and were pivoting their business to maybe go manufacture masks or ventilator components or hand sanitizer,” Lindemann said. “When a customer comes to us and says, ‘Can you do this?’ We just say, ‘Yes,’ and we jump in next to them and figure it out as we go.

“It wasn’t a normal process of specification and quoting cycle and all that would normally occur. It was very much a partnership with a customer whose business was in demand and they could pivot to help and we were right with them helping build automation and machinery.”

Business aside, Lindemann also said it’s important to recognize the toll the pandemic has taken on employees and their personal lives.

“As a leader, you have to pay attention to your team and over communicate, and you need to know there are unknowns affecting their personal lives and family lives — all those kinds of things,” he said. “You have to be more flexible as a leader to pay attention to that stuff and not just be about business right now.”

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Report predicts slow manufacturing rebound while some remain optimistic

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

W

hile the COVID-19 pandemic was quick to hit, instantly styming manufacturing throughout Michigan and the country, the bounceback will likely not be as swift.

That’s according to a new report by Southfieldbased Harbour Results, a business and operational consulting firm for the manufacturing industry.

The report, which is the second of three installments that will analyze the effects of COVID-19 on the manufacturing industry, not only reported a sizable drop in average revenue from the original 2020 forecast but also highlighted a number of challenges that will make life difficult for shop owners into 2021.

“I think that we bounce back from some of this relatively quickly but then I think we will hit another recessionary period sooner than expected,” said Laurie Harbour, president Harbour and CEO of Harbour Results.

“Someone has to pay for this $3 trillion that was put into stimulus. You’re going to see data points change over the coming months and years and inflation go up and all these types of things and that’s going to drive a change in our economy.”

Of the more than 250 shops surveyed for the report, which were all back up and running in some capacity, Harbour Results reported a 25 percent drop in revenue on average with a lot of worried shop owners at the helm.

The report showed 35 percent of tool shops and 47 percent of production shops are struggling or concerned about the future.

Shops are facing reduced cash flow as well, with 67 percent of tooling and 56 percent of production shops experiencing payments that are being stretched or negotiated.

Federal funds create false hope Harbour said the shops with the best likelihood of emerging from the crisis unscathed — and perhaps even thriving on the other side — are those that made adjustments heading into what promised to be a lackluster 2020, and continued to adapt to this significant health and economic event.

“We’ve been warning suppliers for 18 months that we were heading for at least a minor recession and they were not preparing themselves,” Harbour said. “They were kind of still living on this glory of all this growth that we’ve had in the last 11 years.

They were not as prepared as they should have been going into 2020 and, as a result, when COVID hit and manufacturing basically shut off — not for everyone, but for many — it was a big hit.”

Federal funding like the Paycheck Protection Program and Economic Injury Disaster Loans have been a welcome lifeline for an overwhelming majority of shops. The report showed a whopping 98 percent applied for money in order to retain staff.

However, Harbour said that the money can be a double-edged sword.

“I personally think that federal funding created bad behavior,” she said. “I’m glad we got it, so I’m not saying we shouldn’t have gotten it, but it created bad behavior.

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Now, everyone just either kept their people on board or are bringing them all back at full levels and I’m afraid when we get six to 12 months out, we will not have returned to full levels and we’ll have to lay off again.”

Harbour guessed that a portion of suppliers will eventually fold because of economic hardships, but that they won’t realize it until months down the line.

New opportunities The latest report was not all doom and gloom, though.

Harbour Results highlighted opportunities as many companies look to reshore work in an effort to better manage their supply chain and eliminate risk.

In fact, 50 percent of North American tooling shops are quoting on programs historically produced in China, and 34 percent of production shops are increasing North American sourcing, per the report.

Aside from reshoring, the COVID-19 pandemic has driven the need for new manufactured products.

“There’s definitely some new products that have come out as a result of this pandemic,” Harbour said.

“Whether it’s new types of (personal protective equipment) or ultraviolet scanning machines that people are putting in plants — those all have to be built.”

“The people out selling and looking for those new opportunities” will thrive, she added. “I say that like it might seem obvious but a lot of people sit back and wait for opportunities to come to them, and that’s not going to work.”

Mike Wall, director of automotive analysis at IHS Markit, also makes a living off gazing into a crystal ball that’s been coated by the vaseline of the COVID19 pandemic.

While Wall agreed with the high-level assessment of the tool and die industry grappling with the pandemic, he doesn’t think it will be quite as dire.

“To be sure, sales and production will be down significantly this year — although we have already seen some improvement relative to our early postCOVID forecasts — but OEM plants are coming back online and production is ramping back up,” he said.

“Tool and die-only shops won’t necessarily feel that benefit other than perhaps final tooling kicking off and being paid for, but those shops that also do part manufacturing and assembly are also seeing business pick up there as well.”

Chad Folkema, owner of Die-Matic Tool and Die Inc. in Wyoming, has seen his business weather the storm quite effectively — even after being shut down for about three weeks during the pandemic.

Folkema, who commands the die design and manufacturing company that supports automotive, appliance and consumer products industries, didn’t believe that his company would come near the forecasted 25 percent drop in revenue.

“When you’re not operating for three weeks, you’re also not paying (many) bills for three weeks.

We’ve seen a small drop but sales are up. So, it could be offset by sales.”

Die-Matic has not utilized strategic layoffs — in fact, they’re hiring and have also experienced the reshoring opportunities alluded to in the Harbour Results report.

“There seems to be a lot of work out there,” Folkema said. “I don’t know the scenarios that each of the different shops are dealing with — maybe they don’t have a wide array of customers — but it does seem like there is a lot to quote right now.”

While he acknowledged the potential for hiccups along the way, Folkema was quite bullish on the industry’s ability to rebound quickly.

“A die shop’s crystal ball is usually not more than, say, six months long,” he said. “Will there be work to land in six months? I don’t know — my crystal ball isn’t that good. But right now, today, we’re quoting more than we have in a number of years.”

Harbour’s round of studies will end in August with the final edition, which will analyze manufacturers after presumably months back on the job and a clearer look at the condition of industries like automotive and appliances.

Harbour predicted the study will uncover some pain in the supply base, cash tightening up and profitability worsening. Many companies will have used their PPP money in August, as well.

“I think we’re going to start to see more strain in the industry but also suppliers grabbing on to some neat, cool new projects that came over from low-cost countries,” she said.

Michigan sees steeper used vehicle sales slump during pandemic

By JAYSON BUSSA | MiBiz jbussa@mibiz.com When local auto dealerships braced for a potential cramp in new vehicle inventory, they opted to go heavier on used vehicles.

Now, they’re looking for just about anything.

“When you go to some of these higher volume dealers, in particular just around Grand Rapids, it’s eerie,” said Mike Wall, director of automotive analysis at IHS Markit. “You’re talking about lots that are half full or less on both the new and used side. There is definitely a need for more product.”

The narrowing inventory on new vehicles is easily traced back to the auto factory shutdowns and supply chain woes that were tied to the COVID-19 pandemic and the subsequent industry shutdowns. However, the availability of used vehicles hinges on additional factors, and there is the potential for a new flood of used cars to hit the market based on some projections.

Used car sales slump IHS Markit tracks vehicle registrations, giving them the ability to keep tabs on both private party and dealership sales. Wall said he noticed a drop in used vehicle sales that stayed in lockstep with the drop in new vehicle sales.

“To the extent a dealer could load up on used vehicles, they were trying to,” he said.

“Early on, in that April timeframe, even auctions (weren’t) running the same way they usually were because they couldn’t have people there. Those who could go virtual tried to. But it did kind of choke off, early on, the supply on the used front.

Wall “Right now you can go to most dealerships and I don’t care if it’s new or used, they’re running pretty darn lean.”

Boston-based iSeeCars.com is a nationwide vehicle search engine that also conducts automotive research.

Blackley The site recently released a report based on nationwide used vehicle sales information from May that chronicled the dip through the COVID-19 pandemic and a 12.5 percent decline in used car sales compared to May 2019. The Grand Rapids area specifically saw a steeper decline — 23 percent — compared to the rest of the country.

The year-over-year change in sales in Michigan swelled alongside the COVID-19 pandemic with a 4.8 percent dip in February, 26.6 percent drop in March and 71.7 percent free fall in April, giving reason for optimism in May’s more modest decline.

“When looking at Michigan and Grand Rapids specifically, the area had more significant drops than other parts of the country,” said Julie Blackley, communications manager at iSeeCars.com. “Part of that is because Michigan was one of the strictest states in terms of dealers being open. Dealers were completely closed for a while and then they opened up to online-only sales and it wasn’t until the end of May that dealerships were finally open.”

The report affirmed some of the prominent inventory issues, including the fact that new pickup trucks have dried up and consumers are looking for them anywhere they can find them.

The report showed that pickup trucks were the only segment of used vehicles to see an increase in year-over-year sales in May, as sales rose 9.4 percent.

Sport utility vehicles and crossovers also remained popular used vehicles.

Blackley cited economic uncertainty and the fact that people are traveling far less — including work-related commutes — as reasons that consumers have perhaps delayed their purchase of a new or used vehicle.

Impending market flood?

While used car prices continue to tread water at pre-pandemic levels, Blackley pointed to a few significant factors that might usher in a new wave of used vehicles to the market to drag down prices and make them a more attractive buy.

“A lot of people delayed turning in their leased cars because of the pandemic, and dealerships have been letting them do that,” Blackley said. “I think there will be an influx of off-lease cars coming into the market. And, you look at Hertz (which is going through bankruptcy) and other car rental companies that are in trouble that will be unloading their fleets. They’re set to flood the market as well.”

The potential for rental car fleets to flood the used vehicle market is something that Wall and his team at IHS Markit have followed closely. Thus far, it hasn’t moved the needle whatsoever.

“It’s actually a little lower than last year,” Wall said of the sale of automobiles that were formerly rentals and now first-time used vehicles. “We’re not seeing a spike — it could still happen. At the same time, as of right now, that does not look to be distorting the market.”

He acknowledged The Hertz Corp. is still working through the bankruptcy process and names like Avis Car Rental and Enterprise Rent-A-Car are also grappling with similar situations.

“You’re going to see more turn in the market for sure,” Wall added. “I still think it’s safe to say there will be a pricing headwind when it comes to daily rentals just because of the distress in that market. The good news is, as of right now, we haven’t seen it providing significant distortion to used vehicle pricing.”

George Sharpe Jr., general manager of Sharpe Cars in Grand Rapids, said used vehicle inventory will naturally replenish as the trade cycle progresses and that it’s important for dealerships to seize those opportunities.

“When a customer comes in to buy a vehicle, if there is a trade involved, we’re making sure we are capturing that trade,” said Sharpe Jr., whose business deals with vehicles from BMW, Jaguar, Range Rover and Mini.

“Right now is a great time for a customer to trade their vehicle in because of the demand.

We have all avenues covered as far as acquisitions are concerned. Trades, auctions, offlease — every avenue, we’re pursuing.”

Heading into July, Sharpe Jr. said the company had a “healthy” used car inventory and that it recorded one of the strongest used car months last month.

Overall, the local high-volume dealerships are continuing to move vehicles at a solid clip given the economic circumstances. How long they can continue the pace, especially in light of potential inventory problems, remains to be seen.

“Our sales volume was up 25 percent (in June) from the prior June,” Sharpe Jr. said.

“We’re conservatively optimistic. There was a lot of pent-up demand because many people weren’t buying in the prior months. …

July and August will be a telling picture and a little bit more realistic.”

MiBiz / JULY 20, 2020

5

HEALTH BIZ HAP Continued from page 1 to wait to introduce a large group HMO plan. “But for PPO and EPO, we can stand that up pretty well.”

Health leaders back Whitmer order to formalize implicit bias training

Leveraging connections The PPO and EPO products in West Michigan will use HAP’s existing care network and the network of Grand Rapids-based ASR Health Benefits, a HAP-owned third-party administrator for employers that self-fund their health benefits.

In pursuing commercial business with large and small employers on this side of the state, HAP looks to build on ASR’s market presence for the fully insured products. ASR administers self-funded plans that cover about 120,000 people.

“We have some knowledge certainly in the market, and definitely also relationships,” said Anderson, citing ASR’s ability to control medical costs for employers.

ASR Health Benefits operates as a wholly-owned subsidiary of HAP, which first acquired a 67-percent stake in the company in 2011 and bought out the remaining third last year, according to the health plan’s 2019 financial statement filed with state regulators.

“How do we leverage what they know about the market?”

Anderson said. “We’re looking at kind of unique ways on how we can really think about managing medical costs in a different way for the fully insured market in West Michigan.”

Hub and spoke The move into the Grand Rapids area provides a base for HAP to extend into other markets, Anderson said. In 2022, HAP will look to take large group commercial coverage to seven counties in Southwest Michigan, an area that includes the cities of Kalamazoo, Battle Creek and St. Joseph.

“We have a roadmap for expansion. We right now are in the process of prioritizing where we want to go next,” Anderson said. “We’re definitely looking significantly to think about hub and spoke. If we’re in and around the Grand Rapids region, where do we go next from there? Probably Southwest Michigan would be our next play and thinking around that market.”

HAP covers about 570,000 people in Michigan across six product lines: group, commercial, individual, Medicare, and selffunded policies, as well as network leasing.

The company looks to lead its West Michigan market entry for small employer coverage with its HMO product.

However, the move will come with one void in the HMO’s care network. Spectrum Health and HAP have a contract for PPO coverage, but not for the HMO for both small and large employer groups, Anderson said.

HAP hopes to work out an HMO contract with Spectrum Health, the largest care provider in the market, although that probably won’t occur in time for 2021.

“We’re talking to them,” she said. “We’re in negotiations.”

Even without Spectrum Health as part of the HMO network, “I still think we have an opportunity to introduce some competition and introduce unique product offerings,” Anderson said.

“It’s a good opportunity for us to get out there and start leveraging the HAP brand,” she said.

Injecting options In 2019, HAP’s 181,000-member HMO business recorded total revenue of $1.49 billion with net income of $26.1 million, according to a financial statement filed with state regulators. HAP Empowerment Health Plan, a 17,000-member Medicare and Medicaid plan, had $38.5 million in total revenue with a $6.4 million net loss for 2019.

HAP recently filed 2021 rates that proposed an average 0.1-percent decline for small group policy premiums.

The health plan comes to a market that insurance brokers and agents have said could use another competitor.

The AMA annual report shows that across all health plans — HMO, PPO, point-of-service, and individual policies sold on the public health exchange — Blue Cross Blue Shield led Priority Health 57 percent to 26 percent in the Grand Rapids metropolitan statistical area as of 2018. Blue Cross Blue Shield also led Priority Health 65 percent to 20 percent in the Muskegon MSA. In HMO coverage market share in 2018, Priority Health led Blue Cross Blue Shield in the Grand Rapids MSA (66 percent to 34 percent) and Muskegon MSA (54 percent to 46 percent), according to last year’s AMA report.

Priority Health President and CEO Joan Budden views HAP’s entry into the West Michigan commercial health insurer market with the perspective that “come on in the pool, the water’s fine.”

“Competition makes us all stronger,” Budden said. “We need more competition in Michigan.”

6

JULY 20, 2020 / MiBiz

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

G

ov. Gretchen Whitmer’s recent mandate for Michigan health care workers is already in practice at many hospitals and health systems to eliminate cultural biases that can affect care.

Health systems such as Spectrum Health and Metro Health-University of Michigan in Grand Rapids and Bronson Healthcare in Kalamazoo already do implicit bias training, designed to make health care workers aware of how unintentional, subconscious biases may affect how they view a patient and their care.

Brittany Bogan, senior vice president for safety and quality at the Michigan Health & Hospital Association, estimates that roughly half of the hospitals in the state already conduct implicit bias training.

“Many of our hospital systems across the state have already been doing this for some time,” Bogan said. “The training Bogan itself helps individuals to identify and a c k n ow l e d g e t h e biases that you have i n d i v i d u a l l y, a n d these often exist outside of our conscious awareness. So, there’s benefit to everyone for some sort of conMukkamala versation and training about implicit bias.”

Those biases go beyond race and ethnicity and can include age, religion, gender, weight, socioe c o n o m i c s t a t u s, residency and sexual orientation, said Bogan, who’s also Washington executive director of the MHA’s Keystone Center patient safety organization.

Ha v i n g a b e t ter understanding of their own implicit biases should lead to better engagement between care proHahn viders and patients, Bogan said, noting many examples of “individuals not being listened to when they know something is wrong and missing a diagnosis because there was an assumption made about the individual.”

Two years ago the MHA identified opportunities for birthing units and obstetrics providers to recognize and address implicit bias, Bogan said. She cites data that show Black women are four times more likely to die during childbirth than white women.

Spectrum Health has been doing implicit bias training since 2015 as part of staff cultural competence training, said Spectrum President and CEO Tina Freese Decker. She estimates that half of Spectrum Health’s employees have gone

through cultural competence training in the last three years and said the health system intends to scale up the effort this year.

“We’ve already been deep in this work,” Freese Decker said. “It’s a core part of our teams’ development. It’s not just something we do to check a box. It’s really important that we’re helping our team members know how best to interact with our patients.”

She added that health care is highly personal and requires building trust with patients.

“That means we have to get to know people, we have to understand how they look at things from a different perspective and connect with them to impact their health, impact healthy behaviors and inspire them to take new action,” Freese Decker said.

Pandemic highlights inequities Freese Decker is “very supportive” of Whitmer’s July 9 executive order that directs state regulators to craft rules requiring implicit bias training for Michigan health professionals as they seek licensure, registration and license renewals. The training is a way to ensure equity in health care access, Whitmer said.

The order directs the state Department of Licensing and Regulatory Affairs to undergo a formal rulemaking process, which could take six to 12 months, officials have said.

The order drew support from health care providers and organizations, and comes amid the COVID-19 pandemic that has disproportionately affected minorities and drawn greater attention and scrutiny to inequities in health care.

“The COVID-19 pandemic has been difficult for everyone, but there is no question that this public health crisis has had a disproportionate impact on people of color. COVID-19 is more than four times more prevalent among Black Michiganders than among white Michiganders,” Dr. Bobby Mukkamala, president of the Michigan State Medical Society and a Flint otolaryngologist, said in a statement.

His group is “proactively engaged” in addressing implicit biases in physicians’ “perceptions, words and actions,” Mukkamala added.

“We look forward to this opportunity to discuss with the administration and other stakeholders strategies that will help physicians and other health team members deliver culturally appropriate, patientcentered care in an equitable manner,” he said.

In supporting the governor’s executive order, the MHA ultimately wants to see implicit bias training “as a foundational element of how an organization functions,” Bogan said. “This should always remain a piece that we are all striving together to ensure equitable care.”

Bronson Healthcare as well has an intercultural development program for leaders that includes implicit bias education, said Beth Washington, vice president of community health, equity and inclusion. The health system offers implicit bias training to all employees and every

new employee is “encouraged to explore the Harvard Implicit Association test” that measures subconscious attitude and beliefs, Washington said in a statement to MiBiz. “Bronson Healthcare wants to do whatever we can to eliminate health disparities and we believe implicit bias training is one of the many ways to advance those efforts,” she said. “The importance of this work is especially highlighted by the disparities more clearly revealed nationally during the COVID-19 pandemic. As a health care system, we have been on a journey to address inequities and we look forward to learning more details about the statewide effort.”

Metro Health - U of M has been doing implicit bias training since November, starting with senior leadership and then extending to managers and employees, President and CEO Peter Hahn said.

Requiring the training as part of the formal processes for licensing and relicensing care providers is an “important and good step,” Hahn said.

The training “sort of opens your eyes in really addressing those implicit things that we all believe about each other that we don’t even consciously realize,” he said.

“For physicians, there’s really no formal way to get that training, so making it part of the licensing process is a good way to do it and it just opens their eyes to address those implicit (biases).”

Dr. David Spahlinger, president of the Ann Arbor-based University of Michigan Health System, said his organization has trained 14,000 of 28,000 faculty and staff in implicit bias, while another 4,000 have gone through intervention training.

Seeking flexibility Freese Decker at Spectrum Hea lt h said having the training requirement as part of the relicensing process will assure that lessons are regularly reinforced as a routine part of professional development.

“This isn’t a one-and-done process. We have to continually do it,” she said. “The training and the discussion have to continue to build upon each other to make sure it can be applied and improved upon each time.”

As the Department of Licensing and Regulatory Affairs works with groups to craft rules for mandatory implicit bias training, the MHA hopes “to see a lot of flexibility in how the training can be provided,” Bogan said. The association wants to “avoid where it has to be very prescriptive,” she said.

“That’s critical for success and implementation because not every health care worker is going to benefit from the exact same training,” Bogan said.

Options include using web-based, ondemand training in implicit bias — a format that’s used for health care workers to meet professional continuing education requirements, Bogan said. She suggested that MHA members can share their training models for the state to use in formulating rules for mandatory training.

“I don’t see this as one standardized training that every single individual receives,” Bogan said. “There are a variety of mechanisms in which the training can be provided.”

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REAL ESTATE & DEVELOPMENT

Collaborative cancer treatment network advances despite pandemic slowdown

by the opportunity to help shape the cancer network and to collaborate with peers.

“This is just another way to not just improve cancer care but to improve the health care system in general, and that is a wonderful opportunity with what they’re doing in western Michigan and I wanted to be a part of that,” Sharpe said. “I like the idea about collaboration between institutions, rather than competition.”

Switching gears

Formation of the cancer network that will treat patients at three locations in Grand Rapids and Muskegon remains “still in the pretty early stages” after it was slowed during pandemic this spring and summer, Onesti said.

The partnering health systems hope to

By MARK SANCHEZ | MiBiz begin the collaboration yet this summer, msanchez@mibiz.com referring patients to one another for different

aspects of their treatment and collaborating ince announcing plans late last on patient treatment plans. year to integrate cancer care, Moving slower in the planning process Mercy Health and Metro Healthbecause of the pandemic has “forced us all to University of Michigan Health switch gears” and do more with virtual medihave steadily proceeded on how cine and virtual communication, Onesti said. exactly the Cancer Network of West Michigan “We’re hopeful that we have actually expanded will operate despite a slowdown related to the ways that we can work together,” she said.

COVID-19 pandemic.

The Cancer Network of West Michigan will Still, the goal for the network remains the provide treatment at the Lacks Cancer Center same: Collaborate on cancer care in Grand at Mercy Health Saint Mary’s in Grand Rapids, Rapids and Muskegon, build on the expertise Mercy Health Muskegon’s Johnson Family of each organization, and Cancer Center, and Metro Health Hospital in elevate the level of care Wyoming. they offer.

The three facilities combined treat Organized as a joint more than 13,000 cancer patients annually. venture, the network proClinicians at each health system will provide vides a vehicle for greater care with the support of Michigan Medicine’s collaboration between Rogel Cancer Center in Ann Arbor, which can Mercy Health, Metro also provide highly specialized cancer care for Health and University of patients who need it.

Michigan Health System’s Whichever location patients seek care from Onesti Michigan Medicine in or are referred to, they will get the same level Ann Arbor for treating of standardized, evidence-based care where cancer patients, accessclinicians follow the same protocols. ing advanced treatments “Not only are the options increased, but and trials, and conductvariation will be decreased. The treatment, the ing research. diagnosis, the protocols, they will be state of “We’re not going to the art, evidence-based and standard throughhave individual silos that out all three sites,” said Metro Health President act in competition with and CEO Peter Hahn. each other. We are really The network will initially focus on five Sharpe drawing on each other’s forms of cancer: breast, thoracic or lung, gasstrengths and seeing if trointestinal tract (colon pancreas, gastric), there is a way to conskin, and gynecological solidate best care in one oncology, Hahn said. particular focus, then Executives also have how do we make that be been actively recruitthe best care possible,” ing physicians, such as said Dr. Jill Onesti, medSharpe, to Grand Rapids ical director for the surin specialty areas, Hahn gical oncology departsaid. ment at Mercy Health The cancer network — DR. SUSAN SHARPE will eventually expand Saint Mary’s in Grand Surgical oncologist, Metro Health Rapids. into collaborating on Onesti, who specialtreating other forms of izes in treating cancers cancers such as neuro of the gastrointestinal oncology and others tract, has been working with Dr. Susan Sharpe “that we’re really looking hard at,” Hahn said. on planning care protocols for their particular “We’ve been discussing that this network, areas. Sharpe is a Metro Health surgical oncolover the next year or two, will truly become ogist who specializes in the treatment of skin comprehensive,” Hahn said. “We want to make cancer and soft tissue tumors. sure those five initial areas are truly worldSharpe joined Metro Health in May after class and that we get them going and achievfive years at the MetroHealth Medical Center ing that before we go outside of those initial in Cleveland. She was drawn to Grand Rapids five.”

S

“I like the idea about collaboration between institutions, rather than competition.”

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State, federal loans have been crucial — more help needed, property managers say

By KATE CARLSON | MiBiz kcarlson@mibiz.com

P

roperty managers and real estate companies are seeing an increase in their commercial and retail tenants’ ability to pay rent again after accessing funding through programs including the Paycheck Protection Program.

West Michigan real estate companies generally report more normalcy financially, but they say it will only continue with additional access to financial aid through state and federal programs.

Grand Rapids-based Edmark Development Co. owner Mark Finkelstein said he has been in negotiations with tenants over the past few months identifying their needs. If a tenant needs rent relief one month, they may negotiate extending the lease length, he explained.

Edmark itself was able to access PPP loans to pay employees, keeping them on the payroll as rent income declined, Finkelstein said. The real estate company also received loans through the Small Business Administration, which also helped make up for the short-term decline in rent income.

Finkelstein says he has been “pretty fortunate” since almost all of his properties — which are 90 percent commercial spaces — were leased out and occupied at the beginning of the pandemic. Most of his tenants are maintaining sales, and some are nearly back to where they were a year ago, he said.

The need for additional financial aid for businesses will depend on how quickly everything can reopen, Finkelstein said — which right now is uncertain given a spike in COVID-19 cases, including in Michigan.

“Pe o p l e h a ve b e e n cooped up in their houses but have started going out to retail stores and restaurants,” Finkelstein said. “It’s been helpful getting people into the stores again.”

Jason Wheeler Pure Real Estate Management experienced a similar wave of uncertainty shortly after the stay-home order was issued, said company spokesperson Jason Wheeler.

Rent was collected as normal on April 1, Wheeler said, but then the Grand John Wheeler Rapids-based real estate company revised its budget to reflect an expected dramatic decrease starting May 1. The company was prepared to collect only half of the rent from residential tenants and no rent from commercial tenants.

“We don’t have a backlog of unpaid renters currently, we did create payment plans with some of them,” Wheeler explained. “The last couple of months have been good because federal funding and some different financial support pieces like unemployment and PPP kicked in and helped people pay their rent.”

May was the worst month for cash flow with low rent collections, he said, but then commercial

“From what we’re seeing in downtown Grand Rapids, there’s not a whole lot of office tenants back to work, which means there’s not a lot of retail activity. At some point that converts to them asking for rent relief.”

— JOHN WHEELER CEO, Wheeler Development Group

tenants started to recover and received federal and state financial aid. The company also received more than $150,000 in PPP loans, which went to payroll expenses, Wheeler said.

The need for additional federal aid — including for property management companies — is needed since they are an essential service, he said.

“If property managers would have to close without additional federal or state assistance, you would have unmanaged buildings, which would be unsafe,” Wheeler said.

Conversely, Catalyst Development Co. LLC did not receive a PPP loan, said Patti Owens, vice president and managing director of the Kalamazoo-based property management company. But some of her tenants used part of their own PPP loans to help pay rent when they were shut down, which could put them at a risk of not having their loan forgiven. Catalyst manages about 1.8 million square feet of space, mostly commercial use.

“We have several commercial tenants and retail operations that did apply for the first round of PPP and all were given some relief through the CARES Act funding, but that was a long time ago,” Owens said.

John Wheeler, CEO of Wheeler Development Group in Grand Rapids, said occupied commercial spaces are particularly important in mixeduse buildings.

“Unless you have a healthy first floor, you’re not getting a good cash flow,” Wheeler said.

“From what we’re seeing in downtown Grand Rapids, there’s not a whole lot of office tenants back to work, which means there’s not a lot of retail activity. At some point that converts to them asking for rent relief.”

Wheeler said the company has been working with lenders to help with cash flow, and local banks and lenders have been good partners in the process.

While Owens said she is glad the Michigan Economic Development Corp. is now providing grants of up to $20,000 for small businesses and nonprofits through the Michigan Small Business Restart Program, more needs to be done on a federal level.

“It’s unfathomable to me that we don’t have a national strategic plan we can roll out to everyone with guidelines and financial aid,” Owens said.

BUILDING ON OUR PROMISES Construction. Commitment. Unparalleled.

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7

SMALL BIZ

During stressful times, experts advise small business owners on finding ways to cope Vandepol

By MARK SANCHEZ | MiBiz Vandepol and other mental health experts say msanchez@mibiz.com small business owners can manage the height ened stress and anxiety from the pandemic, both unning a small business is stressfor themselves and their employees, and better ful enough, and then small business cope by taking some commonsense steps. owners recently have had to deal The first is simply recognizing that perhaps with operating during the COVIDthey could use some help with coping.

19 pandemic, which only magnifies After all, if a small business owner isn’t taking that stress. care of herself, she may not take very good care of Entrepreneurs had to shut down their comthe business or her employees during this time, panies for a period of time, adjusted to operating said Amy Ritsema, co-owner of wellness vendor in an entirely new environment, adapted to new OnSite Wellness LLC. rules and regulations, and worried “We’re in crisis mode. We’re not about their employees and even thinking about ourselves. We’re thinktheir companies’ survival. ing about everything else,” Ritsema All that can take a toll on somesaid. “If you’re not taking care of yourone’s emotional state through self and your own personal stress and Sponsored by: SMALL BUSINESS higher stress and anxiety, depresyour personal well-being, your leadASSOCIATION sion and feelings of dread, powerership skills are not going to be top OF MICHIGAN lessness or concern about what the notch. You have to be the best person future holds. yourself and take care of yourself, so “When it’s a small business, it often is as much that you can be the best for your employees.” personal as it is professional, which makes it even To cope, Ritsema and others remind people more stressful because it may be members of your to follow or get back to the basics: Eat well, get family, your extended family, friends, and people some physical activity each day, set boundaries you have gotten to know much better than if you to balance family time from work time, and get were a large business,” said Bob Vandepol, execuenough sleep. tive director of the employee assistance program Ritsema emphasizes the need for physiat Pine Rest Christian Mental Health Services in cal movement or daily exercise to manage and Grand Rapids. “That adds a whole other layer.” reduce stress.

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8

JULY 20, 2020 / MiBiz

Gietzen

Ritsema

“To me, that does not mean you have to go out and run five miles. That might be make sure you’re getting out and taking a walk around the block. Just move, get some fresh air and clear your head once in a while,” Ritsema said.

Staying grounded Professionals say feelings of anxiety and fear are normal responses to crises and living in uncertain times. That requires people to become more deliberate and intentional about finding ways to cope to ease the resulting higher stress and anxiety.

High stress can affect people’s physical state, such as causing the heart to race, in addition to their emotional state and their decision-making abilities, said Kristin Gietzen, president and CEO of Arbor Circle, a nonprofit whose services include substance abuse and mental health counseling at locations in Grand Rapids, Holland, Allegan and Newaygo.

“It can cause your mind to be cluttered with thoughts you can’t get rid of, or it can cause problems with concentration because your mind is just busy in the back of your mind,” Gietzen said.

“That can impact the way you function in the world and your ability to make decisions or think things through, or just feel like, ‘I’m just not feeling quite right.’”

Gietzen and others urge business owners and managers to reach out for help to manage their stress and anxiety before it overwhelms them.

That’s not easy for some people to do, particularly those go-it-alone personality types who just aren’t wired to reach out for help when needed.

Some people need to find how to “get out of your own way” so they can maintain their mental health, said Bryan Nixon, a psychotherapist and owner of Mindful Counseling GR, which has three locations in Grand Rapids and Standale.

“That’s the shadow side of a lot of entrepreneurs. It can become about ego and achievement and continuing to focus on goals and all these things that in one sense really do matter. If you’re going to succeed in business you have to have some of that, but it can quickly get out of balance and start being really costly in other ways,” Nixon said. “It can cost relationships, it can cost mental health. If we implode as individuals, the business is going to implode as well, mostly likely.”

As a small business owner himself, Nixon has looked for ways to “stay grounded.” He’s also sought clarity and to focus on “what really matters in my business and the things that can be cut out, and how to really deepen our roots on what our mission and purpose is.”

“If there is any bit of an opportunity in the midst of this, maybe it’s the silver lining that while COVID-19 is obviously difficult and disorienting in one way, the gift can be the opportunity to have some different clarity on the purpose,” Nixon said.

Back to basics Now that many restrictions have been lifted and businesses are reopening and re-engaging, employees are returning to the workplace.

Taking care of themselves “will be the number one thing” small business owners need to do “so that they, too, are prepared emotionally and physically to face these business decisions,” said Peaches McCahill, the owner and president of The McCahill Group in Grand Rapids.

“I talk to business leaders all of the time and they say, ‘Oh, we want some wellness,’ but they

Nixon

McCahill

don’t want to drink the Kool-Aid,” McCahill said.

“Just because you’re a business leader doesn’t mean you don’t need some support. It’s lonely at the top.”

McCahill, who’s run the wellness company for 30 years, said meditation and prayer help to ease her stress and anxiety. She urges others to have a plan to cope and to reach out to their personal and professional networks for support or to seek professional assistance.

“It goes back to that basic foundation you have to start with, even as a business owner,” McCahill said. “This is hard for people. I see it, especially if you’ve built an organization your whole life and things are crumbling. That means you may need some support.”

Gietzen at Arbor Circle offers the proverbial reminder that we’re all in this together. After months, there are lessons that have been learned about how to cope that people, organizations and businesses may offer one another.

“Do not be afraid to reach out and ask for help because we are all learning in this. We are all dealing with the same issues. There’s a whole new peer group out there with things that we can share,” Gietzen said.

The pandemic caused great disruption to daily routines, from people suddenly having to work from home and quickly adjusting to stayat-home and shutdown orders that closed many small businesses, to the economic downturn and resulting uncertainty.

Individuals and small business owners often can better cope by finding some way to settle back into a daily routine, Gietzen said.

“One of the ways that people can learn to cope with this situation is to try to return to some things that were calming in the past or provided some kind of stress relief and to create routines for those things,” she said. “People need to ask themselves not only how to cope with it or what kind of new skills they might need to learn, but what are the things that do provide some comfort for them that they may have moved away from during this time.”

Follow the leader How small business owners or corporate executives handle themselves personally during the crisis also may dictate how their employees perform.

Experts say small business owners, managers and executive leaders need to remember that employees follow their lead to model their responses.

“Leaders lead through their behaviors,” McCahill said. “It will create your culture.”

In talking about the future, their plans for the business and problems, leaders needs to speak honestly and “fully acknowledge what’s going on” and not “milquetoast it,” either for themselves or their employees, Vandepol said.

“For business owners, there’s a tendency to try to hide from your own fear, to try to hide your own uncertainty in the middle of this ambiguity. Sometimes there’s a tendency to try to minimize and deny the severity of what’s happening, and all of that only jeopardizes trust,” Vandepol said. “Acknowledge the fact that this is really hard. ‘It’s really stressful for all of you. I understand the fear you all have. I understand the financial ramifications. I get it.

I join you in that.’

“Just doing that says, ‘Hey, my leader is tough enough to handle this and my leader cares about me. We’re dealing with real stuff.’”

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SMALL BIZ: COPING WITH COVID-19

Officials explore GR convention space for restaurants

By KATE CARLSON | MiBiz kcarlson@mibiz.com GRAND RAPIDS — After months of an empty DeVos Place Convention Center because of the COVID-19 pandemic, restaurants could soon be operating from the space on a temporary basis.

The center’s operators are exploring the idea of using the Steelcase Ballroom for a pop-up restaurant residency, said Rich MacKeigan, regional general manager of DeVos Place and Van Andel Arena. He brought up the idea during a recent Grand Rapids-Kent County Convention/Arena Authority (CAA) meeting.

Three different restaurant groups have toured the facility to consider the concept, which has been pitched to about 20 different businesses as of July 10, MacKeigan said.

The CAA — a public entity that owns Van Andel Arena, DeVos Place and DeVos Performance Hall — was on track to generate $2.5 million to $3 million before the pandemic caused statewide shutdowns in March, said Kent County Fiscal Services Director Robert White. Estimates predict a net loss of about $900,000 for June with virtually no revenue coming in, White said.

“The idea is there would be five different establishments setting up shop so it would be almost like a food court in the ballroom,” MacKeigan said. “Because of the space we have, we can safely social distance.”

The DeVos Convention Center team is working with the county and health department to secure a temporary license that would be good for two weeks, MacKeigan said. They are looking at having establishments pay a daily $200 fee. The food services could include local restaurants, popup concepts without a brick and mortar location or catering services.

“We’re very pleased with how it’s looking and I think it dovetails nicely with the city’s and Downtown Grand Rapids Inc.’s work on the social zones even though the concept is taking place inside,” MacKeigan said. “This will provide some activity in the building and for some local establishments.”

MacKeigan said the CAA is working on the concept with officials from the Grand Rapids Downtown Market, which houses multiple restaurants and vendors in a shared indoor market space.

Indoor events with more than 10 people are currently not allowed under Gov. Gretchen

STEWART Industries launches medical division to fill demand for PPE

By JAYSON BUSSA | MiBiz jbussa@mibiz.com BATTLE CREEK — As someone who has served on a hospital board for more than a decade, Erick Stewart is keenly aware of the financial challenges associated with these health care organizations.

The issues those companies face have become even more crippling as the country trudges through the COVID-19 pandemic.

“When you’re on a hospital board, you’re in the room and you understand the challenges — especially the financial challenges — of a hospital,” said Stewart, the president of Battle Creek-based STEWART Industries LLC who has served on the Bronson Battle Creek Hospital board for 13 years, as well as its financial investment committee. “That’s a hard business and now you put a pandemic on top of that, where you need more money going out the door than maybe you have.”

Stewart looks to help address those challenges by leveraging the existing capabilities at his company to launch a new division called STEWART Medical.

The medical device division of STEWART Industries specializes in manufacturing and Stewart distributing medical equipment such as disposable heat and moisture exchangers, three-ply surgical masks, natural sanitizers and other forms of personal protection equipment.

Stewart wants this new venture to help curb the price-gouging epidemic that hospitals and medical organizations often face because they are beholden to antiquated purchasing systems that leave them at the mercy of gougers once their normal supply chain has run dry.

During the pandemic, that supply ran dry almost immediately.

“I take it as my personal responsibility as someone who understands how a hospital system works both inside and out, to give the hospitals, health care agencies and other places that needed vetted, proper equipment an opportunity to get just that without being worried about being taken advantage of,” Stewart said.

The new division was less of a pivot and more of a refocusing of the capabilities STEWART Industries already had in its facility.

Established in 2000, STEWART Industries is a minority-owned business that specializes in assembly, inspection and new product innovations for a host of sectors, including the automotive and aerospace industries.

In 2017, STEWART Industries enhanced its quality management system by achieving ISO-13485 certification for the medical device industry, which meant that the company has been working Visit www.mibiz.com

Flower shop, event space owner wants public to take pandemic more seriously The Grand Rapids-Kent County Convention/Arena Authority is considering a plan to allow pop-up restaurants to operate in the Steelcase Ballroom to provide some use for the DeVos Place Convention Center. COURTESY PHOTO Whitmer’s June 1 executive order placing the region in reopening phase 4, but indoor dining is allowed for establishments whose gross sales are at least 70 percent food. Restaurants are also limited to 50 percent capacity.

Restaurants and retail are starting to gradually reopen in downtown Grand Rapids with social zones set up throughout the city to provide bars and restaurants more space for outdoor dining to help with the 50 percent capacity limit. Several Grand Rapids restaurants have at least temporarily closed due to a COVID-19 case among their patrons or staff.

“More opportunities to do things safely downtown is a positive step,” MacKeigan said.

with clients in the medical space long before the COVID-19 pandemic descended on the country.

The new STEWART Medical division also looks to leverage the company’s Foreign Trade Zone certification, which was granted in 2019 and offers tariff reduction and duty elimination for imports.

In fact, when STEWART encountered clients that wanted to use the FTZ to import medical supplies, that’s when Stewart and his staff identified the potential niche.

Stewart said his team was immediately welcomed by many hospitals and health care agencies, standing as a credible, local business to help with supply chain needs as opposed to the many shadowy businesses looking to charge top dollar even though they were unable to ensure the quality or integrity of the supplies.

“We were able to use our supply chain expertise and go out into the market and qualify different sources using the same standards we use for aerospace, automotive and our medical customers,” Stewart said. “We came across guys, who I think are in their basements, saying I have a warehouse of whatever. That’s what (hospitals and health care agencies) were afraid of.”

“I talked to a couple hospitals and they were like ‘Oh, you’re a real company?’ and I was like ‘Yeah,’” Stewart added. “(We can tell them that) we have vetted and certified that a product is real and that it meets quality standards that are suited for you and we can get them in your hands.”

The COVID-19 pandemic has ignited an understandable surge in demand, but even after the pandemic subsides, Stewart still sees his new division filling a great need in the market.

Having conversations with hospitals and other medical establishments highlighted the fact that many of the staple supplies and PPE aren’t made in America.

“We’re not making a whole lot of medical products in the United States is what we’re finding out,” Stewart said. “I’ve had a lot of hospitals say, ‘Man, if you could make something we can buy from you, we’d much rather buy local now.’

“For the past three months, we have been working toward looking at specific products that we can distribute and establish relationships (with clients) and start manufacturing certain types of medical products here at STEWART Industries. My ultimate goal is to have STEWART Medical-marketed items that we can do in our own country to add value to our own hospital systems.”

While the medical division is poised to spur business for STEWART Industries, Stewart emphasized that his company has weathered through many of the same pains as fellow small businesses in the local community.

“STEWART, as a small business, is in the same boat as everyone else trying to survive this COVID thing,” he said.

“We’re back to work,” Stewart added. “Our customers have come back online — they may not be at the same quantity, but at the end of the day, we are working. The struggle is protecting folks at work and making sure they’re following the proper protocols and protecting themselves.”

By KATE CARLSON | MiBiz kcarslon@mibiz.com GRAND RAPIDS — Bing Goei, who owns Eastern Floral and The Goei Center event venue, hopes more people take the COVID19 pandemic seriously so economic conditions don’t worsen for businesses like his.

“I’m hoping and pleading with our residents to take this thing seriously and hope people don’t regret the fact they didn’t take it seriously when someone they love is affected by COVID19,” said Goei, who also chairs the Asian Pacific American Chamber of Commerce.

Goei has been stringent in following state orders along with health and safety guidelines when he was able to reopen Eastern Floral, as well as for the handful of 10-person weddings that have taken place during the pandemic at The Goei Center.

Both businesses cater to in-person events, which have been almost nonexistent since March due to the coronavirus.

Goei knows firsthand how serious the virus is. He personally knows people who have died from COVID-19, and also has daughters who work in health care. Even so, he says there is still a better way to balance reopening the economy safely so small businesses like his are not penalized while larger box stores that sell the same Goei things are fully open.

At Eastern Floral, buying habits of patrons have changed from a significant amount of walk-in sales pre-pandemic to more delivery orders, Goei said. The floral shop was closed for about three months, but was able to reopen for limited retail in May, just in time for Mother’s Day. “We certainly are fortunate because it allowed us to participate in one of our biggest holidays in the floral industry. We lost some big holidays in April when we were shut down,” Goei said.

Up to 10 people are now allowed to come inside the flower shop to make a purchase, Goei said. Employees wear personal protective equipment and take their temperature with a touchless thermometer before starting their shift.

Flower orders they usually receive for banquets, weddings and other large events are basically nonexistent, while orders for funeral flowers have also declined because of limits on gatherings, Goei said. However, “everyday flower sales” have increased.

“The fact that people have been so isolated in their homes and knew people were emotionally hurting because of the pandemic, when we were allowed to deliver flowers we were inundated with orders,” Goei said. “People understood the messaging of flowers and began to feel the benefit of flowers for people in their lives when emotionally they are down and depression is high.”

THE GOEI CENTER Gov. Gretchen Whitmer’s June 1 executive order limiting indoor events to 10 people makes it difficult for event venues like The Goei Center to have any business.

Many couples are postponing their weddings because of COVID-19, though some are pressing forward on a limited scale.

The Goei Center started offering a wedding ceremony package that is limited to 10 people, including those getting married.

“During these times our creativity and innovation has come out big time,” Goei said.

With the 10-person limit for indoor events, The Goei Center is unlikely to maintain much longer with rent and most of the ongoing operating expenses. Without fully reopening, the facility will lose about 100 events for the rest of the year, Goei said.

Goei hopes he will be allowed to safely reopen the event venue soon. Plans to hold events at half-capacity in the large space include spreading out tables so they are at least 6 feet apart. The facility also has enough touchless thermometers to check the temperatures of all guests and employees working an event.

Goei is hoping to convince state officials to adapt the “blanket executive order.”

“We’re still working with our government leaders to explain to them why we can do this safely and why we think we should be able to do some events with CDC guidelines,” Goei said.

MiBiz / JULY 20, 2020

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FOOD BIZ

Recycling company plans to reduce food waste for grocers, restaurants

By KATE CARLSON | MiBiz kcarlson@mibiz.com GRAND RAPIDS — A recycling company hopes to help Kent County achieve its ambitious goal of diverting 90 percent of the county’s trash from landfills by 2030 by working directly with restaurants and grocers to reduce food and beverage waste.

Perfect Circle Recycling LLC’s primary business will be product destruction and recycling food and beverage products that are still in packaging, said Chief Operating Officer Todd Wilson. The company plans to partner with grocers, restaurants, breweries, schools and universities to help them reduce waste that otherwise would go to a landfill.

“Globally, diverting (waste) from landfills is where we need to go,” Wilson said. “Landfills continue to fill and get buried and we want to be on the front Sponsored by: edge of being able to recycle what we DAN VOS can. It benefits the health of the comCONSTRUCTION munity and provides jobs.”

COMPANY According to the U.S. Department of Agriculture, food waste is roughly 30-40 percent of the food supply, which in 2010 equated to about 133 billion pounds and $161 billion worth of food. Food waste occurs at every stage of the supply chain from farms, transportation, retailers, and as a result of over-ordering.

Perfect Circle Recycling signed a lease on its 20,000-squarefoot facility in April, located at 1739 Elizabeth Ave. NW. Machine delivery has been delayed due to COVID-19, but a packaging separator is expected to arrive in October, Wilson said. The company has let Spectrum Health take over its building in the interim until its machine arrives.

Once the company is fully operational, it will provide businesses with 64-gallon carts to collect organic food and beverage waste, which will be collected and processed by Perfect Circle, Wilson said. Any packaging will be consolidated and recycled so it can be put back into circulation.

From there, Wilson said the company intends to take liquid waste from the process to an anaerobic digester in Fremont to

FOOD BIZ

The Mitten Brewing Co. LLC in Grand Rapids has remained open for to-go sales throughout the pandemic and recently opened a new outdoor dining area in a social zone. Even so, the company’s beer sales are down about 60 percent. COURTESY PHOTO create renewable energy. The traditional way of doing things is to take food and beverage waste to a landfill or incinerator, which produces noxious fumes, Wilson explained.

Perfect Circle Recycling will also have the ability to decant and properly dispose of beer that has spoiled, Wilson said, which some breweries faced during the stay-home order.

“There are many progressive restaurants and breweries that want to run their businesses sustainably and what’s perceived as ecofriendly to their community,” Wilson said. “We will help them do that.”

Restaurants, breweries adapt

Spaulding

Andrus

Because of the months-long dine-in shutdown, Brewery Vivant has had numerous kegs go bad, but none had to be dumped, said Kris Spaulding, who owns the Grand Rapids brewery with her husband, Jason Spaulding.

“Some styles are better at aging than others,” Spaulding said. “So yes, we lost some, but we have a way to get rid of it. We can give it to a distillery so they can turn it into a whiskey or hand sanitizer.”

Vivant’s canned beer sales have picked up, Spaulding said, but draft sales are still taking a hit with dine-in capacity capped at 50 percent.

The Mitten Brewing Co. fortunately did not have any beer go bad because of the shutdown, said brewery co-owner Chris Andrus.

“We’re small enough to be agile and nimble enough to make those changes,” Andrus said.

“We’re definitely less profitable right now in many ways but the name of the game is to get to the other side of the pandemic.”

Both Mitten and Vivant scaled back their normal beer production over the past several months. For Mitten, beer volume is down about 60 percent.

Overall, COVID-19 has forced restaurants and bars to scale back and streamline operations where possible. For some, being less wasteful has become an even more essential business practice.

“We have pared down and engineered our menus during the pandemic in a fashion that eliminates virtually all food waste,” said Matt Dowdy, creative and marketing director for The Gilmore Collection in Grand Rapids. “In rare cases where we have product left over, we allow our hourly employees to take it home with them at no cost.”

Andrus and Spaulding said they are still using compostable containers for takeout orders, but with the steep increase in takeout, they understand why some restaurants are turning to cheaper options like styrofoam.

While still using compostable takeout containers, Spaulding said the brewery did switch to a container that costs less when it began serving takeout-only during the dine-in shutdown. And though Vivant maintains a sustainability focus, it and others in the food system have switched to more of a maintenance mode during the pandemic.

“Restaurants are balancing planet and profit, and in all honesty now we have to focus more on the prosperity and profitability side to make sure we’re able to do some of the cool stuff we haven’t been able to this year,” Spaulding said.

“So far we haven’t had to compromise our values at this point, and we’re grateful for that,” she added. “But at this point we’re in a survival mode to make sure we’re around this year.”

Warner Norcross & Judd Grand Rapids, MI

Design Build General Contracting Construction Management www.danvosconstruction.com

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JULY 20, 2020 / MiBiz

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ECONOMIC DEVELOPMENT

Bipartisan federal bill would bolster funding for Michigan’s state, national parks

By MARLA R. MILLER | MiBiz mmiller@mibiz.com

I

n a state with a $26 billion outdoor recreation economy, the proposed federal Great American Outdoors Act is welcomed news among conservation advocates and could bolster the backlog of deferred maintenance projects at Michigan’s national and state parks.

The legislation, which would fully and permanently fund the Land and Water Conservation Fund and provide $9.5 billion for maintenance projects on federal land, has broad bipartisan support and passed the U.S. Senate 73-25 in June. Now supporters await the House of Representatives’ vote, hoping members will act before Congress’ August recess and clear the way for the president’s signature. Although President Donald Trump isn’t celebrated for his environmental protections, he has said he would sign the bill if it lands on his desk.

“Whatever the (political) dynamics, what we like is that there is support for it and there is bipartisan support,” said Bentley Johnson, senior partnerships manager for the Michigan League of Conservation Voters. “The momentum is there, and the time is now to get this done.”

Michigan Republican Congressman Fred Upton recently called the bill a “major victory for our public lands as well as the local economies and natural ecosystems that they sustain.”

“Our national parks are real treasures, and we must always work together to conserve their beauty and protect the great American outdoors that we all cherish,” Upton said in a statement.

Michigan upgrades The act offers substantial support for the nation’s public lands and outdoor recreation in two ways.

The bill guarantees full funding for the Land and Water Conservation Fund (LWCF), meaning the

2018: National Parks deferred maintenance In 2018, national park units in Michigan needed $50.3 million to address deferred maintenance.

NATIONAL PARK

DEFERRED MAINTENANCE*

Isle Royale National Park

$17.9 million

Sleeping Bear Dunes National Lakeshore

$16.3 million

Pictured Rocks National Lakeshore

$10.0 million

Keweenaw National Historical Park

$5.3 million

River Raisin National Battlefield Park

$818,300

TOTAL

$50.3 million

* State share (not park total) SOURCE: THE PEW CHARITABLE TRUSTS

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maximum of $900 million annually would go to support land acquisitions, facility improvements, and large and small recreation projects across the country.

Michigan received $2.7 million from the LWCF last year, and the act’s passage would bump the state’s allocation to $5.7 million, said Ron Olson, chief of the Michigan Department of Natural Resources’ Parks and Recreation Division.

The LWCF’s matching grant program allows state parks and local communities to build boat ramps and fishing piers, campgrounds, bathroom buildings, trail enhancements and generally improve and expand public recreation facilities.

While a boost to the LWCF would help, the state parks system alone — not including trails or waterways — has a $270 million backlog in infrastructure improvements, including $50 million in “high need” projects.

“The need is still very great because infrastructure is a big deal,” Olson said. “The (possible) $5.7 million coming from the feds is going to help, but each city, county and town has its own list. It’s good, but certainly there’s a lot of needs out there. This is a very positive thing to at least get it funded at a full level.”

Ongoing campaign The campaign to secure maximum funding for the Land and Water Conservation Fund has been going on for decades. The League of Conservation Voters and its state affiliates, among others, have helped lobby for the bill and raised awareness of the fund’s help to safeguard natural areas, water resources and cultural heritage.

Among conservationists, the LWCF is largely considered the best federal revenue stream for expansion and protection of public lands.

“It’s really the nation’s premier conservation tool in terms of protecting new places,” Johnson said, noting part of the LWCF program goes to acquiring new national parks, national forests and wildlife refuges. “The COVID pandemic has shown the importance of preserving nature and protecting ecosystems.”

Supporters want to see a guarantee for LWCF funding levels. More than $22 billion has been diverted from the fund to other government programs since it was created by Congress in 1964.

Johnson said it is also a way to support public health outcomes, equal access to recreation and the overall ecotourism economy.

“We are focused on being a part of the national coalition to get it across the finish line,” Johnson said. “We really feel like it is a great model and a proven job creator within the outdoor recreation industry.”

National park needs The act also addresses pressing needs at national parks, allocating $9.5 billion over the next five years for the National Park Service and other federal land management agencies to address maintenance issues. Public lands have racked up $20 billion in deferred maintenance, with nearly $12 billion of that needed for the National Park Service, according to the federal agency.

Beyond enhancing the visitor experience with

The federal Great American Outdoors Act would permanently fund the Land and Water Conservation Fund and set aside $9.5 billion for maintenance projects on federal lands. Advocates hail the proposed legislation, which has already passed the Senate, as crucial to making up for the massive backlog of maintenance projects on public lands, including $16.3 million in deferred maintenance at Sleeping Bear Dunes National Lakeshore. COURTESY PHOTO trails and campgrounds, national parks across the country need wastewater treatment systems, clean safe drinking water for visitors, and improved buildings, roads and bridges, Johnson said.

Michigan has a variety of federally managed lands, including Sleeping Bear Dunes and Pictured Rocks National Lakeshores, Isle Royale National Park, River Raisin National Battlefield Park, Keweenaw National Historical Park and four national forests.

The national lakeshores and Huron-Manistee, Ottawa and Hiawatha National Forests have all benefited from the conservation fund in the past, and officials have identified $50 million in deferred maintenance needs in the state.

Johnson said Sleeping Bear Dunes in northern lower Michigan has more than $16.3 million in deferred maintenance projects, including almost $7 million for historic preservation on historic homes and cultural sites.

“That’s really critical in Michigan,” Johnson said. “From the U.P. all the way down to the very southeast corner of Michigan, there are national parks and national park units that are very popular, and they really tell the stories that define and unite us as a nation. The funds in this bill will really take care of these resources as well.”

Supporting of outdoor recreation The LWCF uses revenue from offshore oil and gas drilling royalties to expand and protect park areas and support various projects on federal, state and locally owned public lands. Every single county in the nation has benefitted from the LWCF program, but the fund generally receives $450 million a year — roughly half of the program’s $900 million cap. The rest is typically diverted to other government programs during the appropriations process, Johnson said.

Michigan’s LWCF allocations have totaled more than $342 million over the past five decades, supporting the Forest Legacy Program (FLP) to help protect working forests and other projects that promote access for hunting, fishing and other outdoor recreation on federal land.

The program also distributes money to state agencies, such as Michigan’s Department of Natural Resources, which then awards the money through a matching grant program. Native American tribes, school districts, and government agencies authorized to provide recreation

can apply, with grants ranging from $30,000 to $300,000. Projects include boat ramps, sports facilities, playgrounds, river walks, bike paths, cultural preservation and acquiring land for public use.

The fund’s state assistance grants have benefitted hundreds of projects across Michigan’s state and local parks, including Brighton State Recreation Area in Livingston County, Presque Isle Park in Marquette County, Proud Lake Recreation Area in Oakland County, the North Country National Scenic Trail, and improvements on Detroit’s Belle Isle Park.

Brad Garmon, director of Michigan Office of Outdoor Recreation Industry, said his office would not directly benefit from the act, but investing in natural recreation areas is another tool to help attract companies and employees to the state.

Michigan is the first state east of the Mississippi to have such an office, and his job is to grow outdoor recreation jobs and businesses that serve the industry.

“To grow the economic side of it, you have to invest in the asset,” Garmon said. “That means the great outdoors, clean water and trails.”

In Michigan, outdoor recreation annually generates more than $26 billion in consumer spending with 232,000 direct jobs and more than $2 billion in state and local tax revenue.

“Our ability to compete with Utah and Colorado depends on me being able to sell our great outdoor resources,” he said. “We need to put that money into the great places we have to canoe and camp and kayak and take your pontoon boat.”

Johnson said he would put the state’s outdoor recreation opportunities up against any state in the nation. Since the COVID-19 pandemic, people have recognized the importance of having access to parks and recreation for mental and physical health. LWCF projects help protect air and water quality, wildlife habitat, and recreational access all across the state and nation — and with it comes tourism and consumer spending.

“We’re at a critical moment with our economy, with our health, with our access and with our way of life where we have an opportunity to permanently fund these critical assets,” Johnson said. “People really love to get outside. People spend their money on it, they spend their free time, and we need to invest in that.”

MiBiz / JULY 20, 2020

11

FOCUS: WEST MICHIGAN TRIBAL ECONOMY PANDEMIC

Continued from page 1 It’s undeniable that Michigan-based tribes’ decisions to close their casinos for six to eight weeks or more starting in March have cost them upwards of $200 million, according to MiBiz estimates. That’s money the 12 sovereign tribal nations pour back into their communities for services ranging from health care and education to public safety and housing — funding they will not be able to make up.

“The financial hit that we took is unrecoverable,” said Matthew Wesaw, tribal council chairman of the Dowagiac-based Pokagon Band of Potawatomi, which operates three Four Winds Casinos in Southwest Michigan and one in South Bend, Ind. “Closing down the casinos for three and a half months, that’s revenue we’ll never get back. … That put a real big hurt on us financially.”

While Michigan-based tribes shared in $8 billion from the CARES Act allocated to tribal governments nationwide, the funding they received is not near enough to fill the revenue gap left by the casino closures — even if they could use the monies for that purpose, which they can’t.

What’s worse is that for now, many tribes have stocked the money away in their bank accounts without a clear plan for how they will be able to spend it, given the various restrictions on the use of the CARES Act funds.

“That money is sitting there until we know how we can spend it the right way,” said Bob Peters, chairman of the Match-E-Be-Nash-SheWish Band of Pottawatomi Indians, or Gun Lake Tribe. “The last thing we’d want is to be audited and have to pay it back.”

Peters declined to disclose how much the Gun Lake Tribe received from the federal government, calling it “a small chunk.”

“It’s nothing compared to what we lost,” Peters said, “but anything is better than nothing.”

Unexpected actions Unlike federal, state and local governments, tribal nations generally lack the ability to create a tax base to fund their operations because reservation lands typically are held in trust by the federal government. That leaves federally recognized tribes throughout Michigan and across the country with limited resources to run their governments, which are usually funded by two main sources: casino gaming revenues and funding from various federal departments.

Nationally, revenues at Wesaw tribal casinos are estimated to hit $24 billion this year, $10 billion less than in 2019, according to executives at the National Indian Gaming Association who spoke during a recent podcast on the effects of the pandemic.

While most Michigan tribes have invested in Cloutier diversifying their revenues away from gaming in recent years, casinos remain the major economic driver in Indian Country. According to the American Gaming Association, the state’s 24 tribally owned casinos generated $1.42 billion in gross revenue in 2016, the most recent year for which data are available.

Even so, the Gun Lake Tribe’s voluntary decision to close its facilities — tribes are sovereign nations that do not fall under state law or the various executive orders — “was the easiest tough decision we ever made,” Peters said in reference to the “proactive” step his tribal council took to close Gun Lake Casino on March 16, one of the first in the country to do so.

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JULY 20, 2020 / MiBiz

When the severity of the COVID-19 pandemic became clear, the Gun Lake Tribe opted to close the Gun Lake Casino, its main source of revenue, out of an abundance of concern for the health and safety of its citizens, workers and the surrounding community. However, the closure wasn’t without its set of challenges: “For one thing, we don’t even have locks on the casino doors,” said tribal chairman Bob Peters. PHOTO: JEFF HAGE, GREEN FROG PHOTO “We knew we had to do it, we knew that we were going to lose millions and millions, but we knew that we had to keep the community safe,” he said. “It’s cost us millions in negative impact over the tribal economy as a whole, but it was the health and safety of our employees that comes before profit. It was our employees and also the patrons and the general community, too.”

Besides the financial hit, the closure also brought about its own set of challenges, all during a time of acute uncertainty and rapidly changing protocols.

“For one thing, we don’t even have locks on the casino doors,” Peters said, adding that the move also required notifying various agencies, including the National Indian Gaming Commission, as well as “a ton of logistics.”

Wesaw at the Pokagon Band of Potawatomi, who also serves as CEO of the Pokagon Gaming Authority that runs the tribally-owned Four Winds Casinos, echoed Peters’ sentiments about the casino closures.

“There’s no planning for something like this,” Wesaw said. “When we opened our doors 13 years ago, we would have never in 100 years expected to close them. That’s just not a plan that we had.”

For the Pokagon Band, the move to close the casino was “a tough economic decision” that the tribal council framed as necessary to protect the health and safety of tribal citizens, many of whom suffer from conditions like diabetes and heart disease that put them at risk if they were to contract the new coronavirus.

“As a Native American community, we’re high risk basically just because we’re Native Americans,” he said.

With the spigot of casino revenue immediately shut off, the tribe prioritized its workforce, keeping on the mission critical employees in health care, law enforcement, social services and housing, and allowing other essential services workers to work from home. Some 2,500 casino and tribal government employees whose work did not directly affect essential service delivery were furloughed, which Wesaw described as “the biggest hurt” caused by the pandemic.

“Right now, I feel very badly because we’ve got people who want to come back to work and we just can’t bring them back because we don’t have the revenue,” he said.

In a May interview with the New York Times, Bay Mills Indian Community Chairman Bryan Newland characterized the Upper Peninsula tribe’s predicament as “life and death” during its casino closure, noting that about two-thirds of tribal employees had been laid off.

Indian Tribe and a former chief and tribal council member, said the budgetary dilemmas are only starting for tribes across the state, but it’s premature to speculate how that will shake out for tribal operations. The Saginaw Chippewa Tribe operates the Soaring Eagle Casino in Mount Pleasant, the state’s largest tribal casino, and the Saganing Eagles Landing Casino in Standish.

“Our budgets are due by the end of the month for each government department, as well as the gaming department. Looking at their new projections, that’s going to really write the story of what the true impact is going to be moving forward,” said Cloutier, who has been active in tribal government and Native American advocacy for 19 years.

“We were fortunate enough to have the reserves to carry us through, but we always rely on the previous year’s income to set our budgets Tough decisions ahead for the upcoming year,” he said. “That direct loss What lasting effects tribal citizens may feel from is absolutely going to be reflected in those budthe still ongoing pandemic remains largely an gets that are due at the end of the month for open question at this point. review. We’re drawing that picture right now.

Like many in the West Michigan business “There’s some very hard decisions coming for community, the local tribes approach their leadership and for these department directors.” operations from a fiscally One source of money conservative perspecthat’s off limits for the tive, according to sources tribes to use in offsetting familiar with governments their casino revenue shortin Indian Country. As falls is the CARES Act fundsuch, the tribes had rainy ing they received from the day funds and reserves U.S. federal government. they could use during Like state governthe crisis to fund operaments, tribes that received tions and other essential Coronavirus Relief Funds services for members, included in the CARES Act including health care. can only spend the money “We’ve all been conto cover unbudgeted servative with our money, expenses incurred because never overspent, and that of the pandemic during the set us up to take care period from March 1 to of something like this,” Dec. 31 of this year. said Chairman Peters at “Revenue replacethe Gun Lake Tribe. “I ment is not a permissible don’t want to say we were use of funds,” said Saba ready for this, but we were Bazzazieh, a Washington, financially able to weather — BOB PETERS D.C.-based partner at this storm without a huge, Rosette LLP, a majority Chairman of the Match-E-Be-Nash-Shehuge impact to our comNative American-owned Wish Band of Pottawatomi munity and all the other law firm with an office in stuff that we provide.”

Grand Rapids.

But given that their In working with tribal economic engines were idled for more than two clients across the country, Bazzazieh has heard months, tribal leaders are bracing for a sheer fallmany concerns about the strings attached to the off in their budgets for the coming fiscal year.

CARES Act funding and how that limits the abilFrank Cloutier, director of public relations ity of tribal governments to put it to use for their for the government of the Saginaw Chippewa most pressing issues.

“We’re just going to write off 2020. There’s no sense in trying to work under the delusion that we’ll be able to claw back to normal life this year,” Newland said in the report.

The Brimley-based Bay Mills Indian Community was among the tribes and tribal entities to receive funding via the U.S. Small Business Administration’s Paycheck Protection Program.

The tribe received a loan valued at $2 million to $5 million, according to public records.

Other tribal recipients included the Sault Ste. Marie Tribe of Chippewa Indians’ Vegas Kewadin Casino ($5 million to $10 million), the Lac Vieux Desert Band of Lake Superior Chippewa Indians in Watersmeet ($1 million to $2 million) and Keweenaw Bay Ojibwa Community College in Baraga ($150,000-$350,000).

“You’re grieving. It’s almost like a loss because you can’t be with these people that you’ve always been able to share with and experience things with, and it’s just the unknown of when is this going to end, when are we going to be able to do this again.”

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“Generally, there have been concerns that the restrictions hinder the flexibility of some governments to utilize their discretion in how the funds could best meet the needs of their respective community,” she said. “Recognizing that the needs in the community are immediate and significant, (tribal leaders) obviously want to conform to the guidance of the federal government and those requirements, but also want to meet the immediate needs of the community.”

Seeking relief Across the board, tribal government sources told MiBiz they’re appreciative of the CARES Act funding, but feel hamstrung by the restrictions imposed around it.

“Based on the restrictions that they have on how that money can be spent, I doubt very seriously that we’re going to be able to utilize it all, which is unfortunate because we’ve got a lot of areas where we could use it but we can’t,” Pokagon Band’s Wesaw said.

The Sault Ste. Marie Tribe of Chippewa Indians in the Upper Peninsula, Michigan’s largest tribe with about 40,000 enrolled members, received $37.9 million from the CARES Act’s Coronavirus Relief Fund, which is believed to be the largest award among the 12 federally recognized tribes in Michigan.

In early July, the Sault Tribe’s board of directors established a $3.5 million COVID-19 Direct Tribal Member Assistance Program to offer emergency financial help for expenses such as medical, housing, food and transportation related to the pandemic. Only one grant award was available per household.

“Our collective goal [is] to provide relief from the pandemic in accordance with our tribal strategic plan,” Tribal Chairperson Aaron Payment said

“The financial hit that we took is unrecoverable.

Closing down the casinos for three and a half months, that’s revenue we’ll never get back. …

That put a real big hurt on us financially.”

— MATTHEW WESAW Tribal Council Chairman of the Pokagon Band of Potawatomi

in a statement, noting the CARES Act also prohibited tribes from using the money for per capita distributions to citizens. “Our priority is to meet the needs of our neediest and most impacted first.”

Although the federal government has updated its guidance around the CARES Act funding several times, attorney Bazzazieh doubts tribes will ever gain the flexibility to use the allocations for revenue replacement, which she said “appears to be off the table.”

Any revenue replacement funding for tribes is likely to come in future rounds of stimulus funding, she added, noting that the House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act “sets aside an additional $20 billion for tribal governments, and it specifically allows lost, delayed or decreased revenues to be an eligible use of funds.”

The $3 trillion legislation passed the U.S. House largely along partisan lines, but has yet to be taken up by the Senate, where it faces an

“unknown and unclear” fate, Bazzaziah said. “(An additional stimulus) is what many tribal governments … are looking for because there is a very significant void right now,” she said. “Given the spike in recent cases, and some tribal casinos being forced to close again after a short reopening, it’s just really not clear when the revenue will be coming in again to the tribal governments.

There’s still going to be significant unmet need.”

Given the restrictions on the CARES Act funding, Cloutier at the Saginaw Chippewa Tribe said that his community is doing what it can with its available resources to ensure the health and safety of members. That includes “multi-million dollar implications” such as providing health coverage to unemployed citizens as well as investing in various technologies to ensure that services continue for members in an era of social distancing.

“As with everything in the federal government, we’re not going to jeopardize the quality of life for our membership and wait for the federal government to do something. We’re going to make those decisions ourselves and move forward as much as we can,” he said.

Cultural disconnect At Gun Lake Tribe, the council continues to go through a planning process to determine how the pandemic could affect operations in the future, including a possible second wave and casino closure.

“We have to monitor wants versus needs and that’s across the board, while still providing adequate programs for our citizens,” Peters said. “We’ve got our strategic plans, so we’re going through those now and seeing what is still feasible, what needs to move further in the future, what can wait a little bit and what do we need now.”

Aside from the direct hit to the tribes’ coffers, leaders told MiBiz the pandemic also has exacted

a heavy toll on tribal culture, which thrives on gatherings to preserve the social fabric of their communities and individual traditions.

For example, the pandemic and need to maintain social distance has led to the statewide cancellation of virtually all powwows, events that celebrate Indigenous culture with dancing, singing and other ancestral traditions.

“You’re grieving. It’s almost like a loss because you can’t be with these people that you’ve always been able to share with and experience things with, and it’s just the unknown of when is this going to end, when are we going to be able to do this again,” Peters said.

Cloutier described the loss of cultural opportunities as “a major concern,” noting that it’s “causing a real, huge disconnect between our membership and our culture, and of course, it’s for their own good.” However, he’s been encouraged to see how members have leveraged technology to stay in touch virtually as much as possible.

For the Pokagon Band, the lack of social gatherings and ceremonies has been “a very difficult issue” and “emotionally devastating” for members, Wesaw said. Even so, he’s been “pleasantly surprised” by how well tribal citizens have adapted to the extreme volatility of the current situation.

“To Monday morning quarterback this, which we haven’t done yet, I don’t know that there’s a lot of things that we would have done differently,” Wesaw said. “We shut down fairly quickly, and quite honestly, I don’t know that we could have shut down any quicker. Obviously, the personal protection equipment would have been nice to have, but who would have factored that? Testing equipment might have been nice to have, but who would have thought that this was going to happen? But now we do have all of that stuff in preparation for a second wave, if it ends up happening. We’ll be better prepared.”

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13

FOCUS: WEST MICHIGAN TRIBAL ECONOMY

Michigan tribes face ‘circular exclusion’ from key minority business certification

By JOE BOOMGAARD | MiBiz jboomgaard@mibiz.com

A

s a citizen of the Match-E-Be-NashShe-Wish Band of Pottawatomi Indians and CEO of its non-gaming enterprise, Kurtis Trevan wants to leverage other corporations’ diversity and inclusion goals to the economic benefit of his fellow tribe members, as well as further the tribe’s own inclusionary spending.

Trevan is a Native American working for a company that’s owned by one of Michigan’s 12 federally recognized American Indian tribes.

Since the profits from Gun Lake Investments’ portfolio benefit the tribe’s enrolled members, the company in many ways is akin to a familyowned business enterprise where the beneficial shareholders are the tribe’s more than 400 enrolled members. Each of them, like Trevan, is a Native American.

So imagine Trevan’s frustration when in late December the Michigan Minority Supplier Development Council, the arbiter of the “Minority Business Enterprise” certification in the state, declined Gun Lake Investments’ application to become a certified minority-owned business.

“For us, it’s not so much that we want to be part of an organization that doesn’t want to accept us,” Trevan said, noting that “large corporations rely on the MMSDC certification to be able to help promote their own diversity and inclusion programs within their companies.”

Before that denial, Gun Lake Investments had joined the MMSDC as a corporate sponsor because, like many businesses around the country, it wants to be intentional in engaging with and supporting other minority-owned companies. The benefit of the corporate membership lies in the access it provides to the MMSDC database of certified Michigan-based minorityowned businesses.

“As soon as we asked to access their database of other Michigan minority-owned companies, they kicked us out from being a corporate member. When I contacted them to just help through what I thought was an obvious misunderstanding, they had explained that it was not a misunderstanding: Minority-owned companies cannot be corporate members,” Trevan said.

As such, Trevan said he is left wrestling with the “circular exclusion” on the part of the MMSDC. “We are not permitted to be a corporate sponsor because in MMSDC’s judgment, we are minority owned, but MMSDC will not certify us as minority owned,” he said, adding “there’s just artificial or arbitrary obstacles that are being created for us to continue to help us promote our own values and access other diverse companies.”

Lack of communication As it turns out, Gun Lake Investments is not alone as a tribally owned entity in struggling to work with the MMSDC. Grand Rapids-based Waséyabek Development Co., the non-gaming investment arm of the Nottawaseppi Huron Band of the Potawatomi, submitted an application in December 2019 for business turnaround and consulting firm DWH LLC, of which it is the majority owner.

“They’ve stopped communicating with us altogether. We’ve sent several inquiries about the status of that application, and we just get no response,” said Deidra Mitchell, president and CEO of Waséyabek. “I understand that one of the rules they have right now doesn’t fit strictly for tribes. That is not the point for diversity and inclusion.”

Andrew Sims, vice president of Central and Western Michigan marketing and communication at MMSDC, told MiBiz he could not discuss or disclose information about individual applications.

“However, the MMSDC has and maintains stringent certification guidelines that adhere to the national standard and reflect our uncompromised commitment to minority businesses, including those owned by Native Americans,” Sims said in an email to MiBiz. The Detroit-based MMSDC is part of a network of 23 regional offices under the National Minority Supplier Development Council. In turn, the MMSDC operates the Detroit Minority Business Development Agency, a program from the U.S. Department of Commerce that was originally established as the Office of Minority Business Enterprise by President Richard Nixon in 1969.

What’s confounding for Trevan and Mitchell is that tribally owned entities like theirs have worked with regional offices in other states to achieve Minority Business Enterprise certification.

That includes D.A. Dodd, a portfolio company of Mno-Bmadsen, the non-gaming economic development arm of the Pokagon Band of Potawatomi in Dowagiac. The Rolling Prairie, Ind.-based mechanical contractor secured its Minority Business Enterprise certification through the Indianapolis-based Mid-States Minority Supplier Development Council, according to a spokesman for Mno-Bmadsen.

Milwaukee-based Greenfire Management Services LLC, a construction management firm wholly owned by the Forest County Potawatomi Community via its Potawatomi Business Development Corp. subsidiary, also received the certification.

Greenfire President Kip Ritchie said the company successfully sought Minority Business Enterprise certification from the Minneapolisbased North Central Minority Supplier

Development Council about seven years ago. He said the designation “opens doors” for the 10-yearold firm, which expects to perform about $140 million in construction management work this year.

For example, the certification gave Greenfire a competitive advantage in winning new business with motorcycle manufacturer Harley-Davidson Inc. and Rockwell Automation Inc., Ritchie said.

“As you look at the growth of our company, it’s certainly been an aspect of it,” he said of the certification. “It’s not the biggest part of it, but we anticipate that as we grow and expand, that we’ll do more and more work in that space. … We realize that like anything, it’s extremely competitive and we need to continue to pursue it. It doesn’t happen overnight.”

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‘Evolving to do what’s right’ Greenfire’s Ritchie, who also serves on the board of directors at Gun Lake Investments, believes the certification could help “our brothers across the lake at Gun Lake Pottawatomi, or any other tribe for that matter” to build capacity, capabilities, infrastructure and business acumen for members.

“Unfortunately, it’s 2020 and not everybody understands how Indian nations are structured,” Ritchie said. “We need to do a better job of edu-

“History has shown time and time again the benefits of not taking a position solely on the language of arbitrary rules, but rather evolving to do what’s right. Without that mentality, women wouldn’t have gained the right to vote in 1920 and Native Americans in 1962.”

The disconnect in Michigan between tribally owned entities and the MMSDC initially surfaced last year as part of a tribal economic development roundtable hosted by MiBiz. In a follow-up story, a representative from the MMSDC said the tribally owned enterprises often fail the three-part test the organization uses to ensure that minorities own, operate and control the companies in question.

“We have very clearly defined rules for that. They’re going to struggle to be certified because they keep the white leadership in place and they don’t fit the three tenets of owned, operated, and controlled,” Sims told MiBiz last year.

According to Trevan, tribal investment arms like Gun Lake Investments retain full control and management of portfolio companies, but often leave the former owners and existing executives in leadership positions to ensure continuity within the organizations. Under that structure, the companies still can achieve minority businesses certifications through other federal programs, including via the U.S. Small Business Administration, which has a “more stringent application process.”

“No question, we rely heavily on leadership teams within those companies, but these aren’t passive investments for the tribe,” Trevan said.

“We’re active within the companies and with the leadership within those companies.”

Trevan and Mitchell say they want to engage with MMSDC to figure out a way forward for their respective organizations, but those efforts have been hampered by the lack of communication from the certifying body.

“The point is that tribes are a different entity.

They are clearly minority-owned, so perhaps the rule needs to be looked at to take into account

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that we are not a single business owner,” Mitchell said. “We are an owner, in our case, on behalf of 1,500 tribal citizens. While we admittedly don’t fit into one set of rules, those rules probably need to be reevaluated to include all minorities.”

— KURTIS TREVAN CEO of Gun Lake Investments

cating and demonstrating where we fit and where we can add value and where we can build communities around us.”

Especially in this moment in time when the country as a whole is taking a critical look at its past actions and inherent biases when it comes to issues of race and equality, Trevan argues it’s a perfect time for the MMSDC to revisit its rules to ensure the organization is being inclusive of all minority businesses, rather than excluding some on the basis of their cultural structures.

“History has shown time and time again the benefits of not taking a position solely on the language of arbitrary rules, but rather evolving to do what’s right. Without that mentality, women wouldn’t have gained the right to vote in 1920 and Native Americans in 1962,” Trevan said.

Given the lack of communication and a way forward with the MMSDC, Gun Lake Investments is launching its own database and is asking minority- and women-owned businesses interested in seeking business with the tribe to sign up on its website. The list of companies will be available to any businesses that request it, Trevan said, noting that he’s “disheartened” by tribes’ ongoing struggle for recognition as minority business owners.

“If the MMSDC truly has a mandate to help promote diversity and inclusion, we fail to understand why they would deny applications such as Gun Lake Investments’ and not reply back to other tribal applications,” he said. “More so, I just hope that other large corporations start to understand that maybe MMSDC should not be the sole arbiter of who is or who is not a minority-owned company, and I encourage them to look for other paths or perhaps do their own diligence in understanding who else may be a minority-owned company that’s not able to access the certification by the MMSDC. “I just don’t think (corporations) are aware that the system may only be working for some.

But not only is it not working for others, it’s actually being prohibitive. … By them solely utilizing the MMSDC certification, we are arbitrarily being blocked out of this process to be able to access contracts, not only for Michigan companies, but around the country as well. It’s just been a very extremely frustrating process for us.”

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15

FOCUS: WEST MICHIGAN TRIBAL ECONOMY

Casino closures make case for Michigan tribes’ further economic diversification

By JOE BOOMGAARD | MiBiz jboomgaard@mibiz.com

I

n mid March of this year, all 24 of Michigan’s tribally operated casinos fell silent, their more than 22,280 slot machines spitting out their final paydays for lucky patrons or taking one last injection of cash for the house.

For the first time in three decades, the 12 federally recognized American Indian tribes based in Michigan — each of them an individual sovereign nation — faced an entirely unclear economic reality thanks to the COVID-19 pandemic.

In voluntarily shutting down their casinos, the tribes willingly stalled the economic engines that drive Indian Country, a self-inflicted economic wound explicitly justified to preserve the health and safety of their tribal citizens, their employees and their surrounding communities.

While casinos remain the primary revenue sources that tribal governments use to provide services to their citizens, all Michigan tribes have invested in economic diversification to some degree in the last decade. Even though the dollars from tribal economic development are a trickle compared to the geyser of cash generated by casinos, experts say the pandemic has clearly demonstrated why tribes’ diversification efforts are more important than ever.

“I hope this is eye opening for some tribes that maybe need to move in that direction,” said Gibbs, a descendant of the Little Traverse Bay Bands of Odawa Indians. “This situation really brings to light the need for tribes to diversify their economies and not be so dependent on gaming revenue. There are just lots of other businesses and ways to make money for the tribal government to continue to support services outside of gaming. It’s hard, though, because with a casino, you open it and it just makes money. It’s hard to replace that type of revenue.”

However, as the pandemic has proved, even a sure economic bet like a casino is “not the end all be all” for tribal governments, she said.

Growth despite ‘mixed results’

Gun Lake Investments to date has focused on a three-pronged investment strategy in real estate, operating companies and direct credit. Most recently, the company in January partnered with Waséyabek Development Co., the investment arm of the Nottawaseppi Huron Band of the Potawatomi, to acquire the iconic McKay Tower in downtown Grand Rapids for $17.5 million.

Gun Lake Investments has also previously invested in the retail portion of Rockford Construction Co. Inc.’s mixed-use Stockbridge redevelopment in Grand Rapids’ upand-coming west side neighborhood.

Gun Lake Investments’ holdings also i nc lude C om mer c ia l S a n it at ion Management LLC (CSM), a Hudsonvillebased commercial custodial services provider, as well as the Noonday Market convenience store across from the tribe’s Gun Lake Casino complex in Bradley.

“On the direct credit side, we continue to find opportunity to loan money to firms and create relationships we think are strategic to Gun Lake Investments,” Trevan said. “It continues to be our opportunity to be able to partner with organizations where there’s not an obvious equity need, but using this to build those relationships — TANYA GIBBS where there still may be a financial need where we can assist.”

Managing Partner in Grand Rapids of Rosette LLP Trevan said Gun Lake Investments has been able to grow its portfolio even during the pandemic, although some of “Gaming has done an amazing amount of good the individual results have been mixed and the for tribes now for decades, but gaming’s history organization’s prospect pipeline has “hit a wall has shown that it is a volatile industry,” said Kurtis for various reasons.”

Trevan, CEO of Gun Lake Investments, the Grand “Our main opportunities that we had been Rapids-based non-gaming economic investment working on for nearly a year prior to COVID, they arm of the Match-E-Be-Nash-She-Wish Band of all just stopped,” he said. “That part has been Pottawatomi Indians, or Gun Lake Tribe. “You challenging because we built the organization to need to have other investments to be able to support future growth, but that growth obviously ensure that you have liquidity for when situations has been paused. I don’t know whether that’s like this strike, because they will strike again.” good or bad, or just maybe it has created some Tanya Gibbs, managing partner of the Grand of the new opportunities that we’re working on Rapids office of Rosette LLP, a majority Native today that are really exciting. But definitely, our American-owned law firm, works with tribes growth has been pushed out probably six months across the country specializing in non-gaming because of COVID.” economic development. In her experience, the diversified tribes seem to be weathering the panSeeking opportunities demic better than the tribes that rely entirely on Deid ra Mitchel l, president a nd CEO at gaming, which have been “completely devasWaséyabek Development Co., also credited tated because the casino is the only business her organization’s diversified portfolio for that they have.”

“This situation really brings to light the need for tribes to diversify their economies and not be so dependent on gaming revenue. There are just lots of other businesses and ways to make money for the tribal government to continue to support services outside of gaming.”

16

JULY 20, 2020 / MiBiz

MIBIZ FILE PHOTO: KATY BATDORFF

Tanya Gibbs, managing partner in Grand Rapids of Rosette LLP. COURTESY PHOTO

weathering the pandemic thus far with minimal adverse effects.

“For us, we are continuing to look for companies that we want to purchase and acquire and own; we have not halted that,” she said. “I think COVID will precipitate the sale of some companies as businesses consider where they’re at, where they’re going and what their capacity is, so there will be some opportunities there.”

Last mont h, Mitchell told MiBiz t hat Waséyabek had expanded its investment strategy into the middle market and had started prospecting for operating company acquisitions in the $10 million to $30 million revenue range.

Like other tribal non-gaming investment arms across the country, Waséyabek also has leaned into the government contracting business in recent years to take advantage of federal set-asides for minority owned companies.

On April 1, its Waséyabek Federal Services LLC division started work on its largest award to date, a five-year, $161 million contract with the Department of Energy to provide site operations and support services at three National Energy Technology Laboratory locations.

Waséyabek’s goal for the federal contracting group is to generate $20 million in annual revenue by the end of 2022, according to Mitchell.

If any thing, the pandemic has forced Waséyabek to reevaluate its past business practices and adjust to the new operating realites.

For example, the company now looks at business travel through a different lens to consider whether it’s essential because of the various travel restrictions and safety protocols.

“By stopping to make that decision rather than just doing what you’ve always done, we can make better choices not only for our business and our costs, but also for the environment and our work-life balance,” Mitchell said.

and utilities, to retail, finance and insurance, administrative support, waste management, arts and entertainment, and hospitality.

“These are tribally owned businesses and they’re part of the Michigan economy as well.

A job on the reservation is a job for the region,” said Eric Trevan, Ph.D., a faculty member of The Evergreen State College in Olympia, Wash. and a member of the Gun Lake Tribe.

He said the study represents an “at least” figure for the economic contributions of tribal non-gaming businesses in the state because three Michigan-based tribes did not participate in the study. Likewise, the study did not incorporate Michigan-based businesses owned

by Alaska Native Corporations.

While tribally owned entities generally do not pay state and federal taxes, the economic activity generated by them doing business with suppliers and vendors and the workforce at those firms created $7.6 million in state taxes and $16.6 million in federal taxes, according to the study.

Tribes participating in the study were: Hannahville Indian Community, Lac Vieux Desert Band of Lake Superior Chippewa Indians, Little River Band of Ottawa Indians, Little Traverse Bay Bands of Odawa Indians, the Gun Lake Tribe, Nottawaseppi Huron Band of the Potawatomi Indians, Pokagon Band of Potawatomi, Saginaw Chippewa Indian Tribe and the Sault Ste. Marie Tribe of Chippewa Indians.

“It’s wonderful to see that tribes are continuing to diversify beyond gaming and looking at other revenue sources,” said Jon Panamaroff, a co-author of the study and chief compliance officer and senior vice president of business integration at Alaska Native-owned Koniag Government Services. “Diversification is a cornerstone of all business. As we think about seven generations out, business diversification is key when we’re thinking about the sustainability of these tribes and their communities.

Diversify for sustainability

Community reinvestment

Mitchell also coordinated a new study released this month that examined the effects on the state’s economy by non-gaming businesses owned by Michigan tribes.

Using data from nine of the 12 federally recognized tribes, the study’s authors determined that the 38 business entities created nearly $288.8 million in economic spin off in the state in 2019. The companies also resulted in the creation of 1,847 jobs at other businesses across the state, including at suppliers and vendors to the tribal entities.

The tribally owned businesses had a combined asset value of more than $343.5 million and generated in excess of $228.4 million in revenues last year. The firms also span 11 different industry sectors, ranging from manufacturing, real estate, construction, professional services

For Kurtis Trevan at Gun Lake Investments, the study shows “how tribes are such an important piece of the Michigan economy that goes way beyond just gaming.”

“The cash flows that tribes are receiving from gaming are, in a large part, just being reinvested back into the community,” he said.

“It helps everyone prosper.”

Across the board, tribal leaders contacted by MiBiz say the pandemic and resulting casino closures have caused them to rethink how their tribes approach economic development with an even greater focus on diversification.

Matthew Wesaw, tribal council chairman of the Dowagiac-based Pokagon Band of Potawatomi, said the tribe has been “headed down the right track” toward diversifying its economy with Mno-Bmadsen, its non-gaming

Kurt Trevan, CEO of Gun Lake Investments.

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Treaty rights at center of tribal opposition to Line 5 pipeline, tunnel

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

A Deidra Mitchell, President and CEO of Waséyabek Development Co. COURTESY PHOTO economic development corporation with a buy-and-hold investment strategy.

“When you look at how COVID virtually shut down everything, I don’t know what industry we could have been in that would not have been impacted by the virus,” Wesaw said when asked if the pandemic further pushes the tribe to diversify. “The point is well taken, and I think this will cause us to even look in additional areas, but I don’t know what industry we could have been in that would have been safe from everything that has happened.”

Frank Cloutier, public relations director for the government of the Saginaw Chippewa Indian Tribe, said the tribe’s non-gaming company, Migizi, currently is trying to identify opportunities arising from the pandemic, particularly around health care capacity.

“Sure, there’s a pandemic, but is there a startup or something we could build that would raise capacity within our region? Or is there an opportunity for us to support an effort like that and build a partnership? There are some real — and I mean real — opportunities and possibilities out there,” Cloutier said. “Our economic development department, they certainly don’t sit on their laurels and wait around.”

Catch-22 With all the opportunities out there, Trevan said Gun Lake Investments has benefited from the flexibility of having a balance sheet and governance structure that is separate from the Gun Lake Tribe’s government. The structure is modeled after best practices identified by the Harvard Project on American Indian Economic Development.

“There are challenges that exist with how tribes are structured, with election cycles every two to four years. We’ve seen in Michigan with a number of tribes, including the Gun Lake Tribe through Gun Lake Investments, the importance of creating separate governance to help manage your business and investments because these efforts take a long time to mature,” he said. “You can’t just start it today and hope that you’re going to be protected tomorrow. It really is a years-long effort to be able to get to a point where you can really create sustainability in your cash flows.”

As well, the irony of tribes facing economic uncertainty and budgetary shortfalls from the casino closures now beginning to think about spending money on non-gaming investments is not lost on Trevan. “Without a doubt” some tribes will be reckoning with large holes in their budgets for essential services at the very time they should be prioritizing sustainable investment strategies for future generations.

“There’s a catch-22 right now,” Trevan said.

“At a time that tribes understand more than ever the importance of diversification, they also lack the funds to do so today.”

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n oil spill in the Straits of Mackinac would not only be an environmental disaster, but also it would threaten the economic livelihoods of tribes who fish the area while devastating a vital cultural site.

The five tribes composing the Chippewa Ottawa Resource Authority (CORA) say the the threat of a pipeline spill from Line 5 endangers their rights to hunt and fish in the area included under the 1836 Treaty of Washington, which effectively gives them property rights across a wide swath of the Lower Peninsula and the eastern half of the Upper Peninsula — all of which Line 5 runs through.

While tribes say a plan finalized under the administration of former Gov. Rick Snyder to build a tunnel under the Great Lakes bottomlands also jeopardizes their treaty rights, CORA’s goal is to decommission the pipeline as it exists today.

“The pipeline itself and any future tunnel project still present risk to the natural resources in the Straits,” said Whitney Gravelle, tribal attorney for the Brimley-based Bay Mills Indian Community. “ Though the focus has been on the Straits of Mackinac … we feel Enbridge is specifically painting this picture of just a couple miles of Gravelle pipeline. But if there was a rupture anywhere along the pipeline, it would threaten and diminish those treaty rights of the five tribes.”

The CORA member tribes are the Bay Mills Indian Community, Grand Traverse Band of Ottawa and Chippewa Indians, Little River Band of Ottawa Indians, Little Traverse Bay Bands of Odawa Indians and the Sault Ste. Marie Tribe of Chippewa Indians.

Until now, the tribes haven’t been formally involved in Attorney General Dana Nessel’s two lawsuits challenging Enbridge Energy and the tunnel plan. However, they are seeking to formally intervene in proceedings before the Michigan Public Service Commission involving tunnel construction. The CORA tribes — along with environmental groups — also submitted written comments to the Army Corps of Engineers this month requesting a public hearing on the tunnel proposal.

“As sovereign nations and in conjunction with treaty rights, we recognize we have a different role to play in all of these legal proceedings,” Gravelle said. “We’re just waiting for the right opportunity for us to step in and assert those treaty rights in ways that are most effective.”

David Gover, senior staff attorney with the Native American

Rights Fund who also is providing legal support to Bay Mills, said tribes’ treaty rights will likely play a key role in their intervention before the MPSC.

Tribal engagement, ‘nuclear option’ Although separate lawsuits filed by Attorney General Nessel go after the existing pipeline as well as the tunnel deal, the legal arguments aren’t formally based on tribes’ treaty rights. “(Nessel’s) lawsuit has noted the devastating impact that a Line 5 oil release would have on fishery resources, including those where the tribes exercise rights protected by treaty,” Nessel spokesperson Ryan Jarvi said in an email. “But the tribes are sovereign entities who are not represented by the AG, so the AG’s lawsuit does not purport to assert treaty-based claims on behalf of the tribes. The tribes certainly could file their own lawsuit(s), and may well decide to do so.”

In recent years, tribes have largely felt left out of the formal discussions and information-sharing between the state and Enbridge.

Gravelle said communication with the state “improved somewhat” after Gov. Gretchen Whitmer and Nessel took office, but hadn’t necessarily reached the level of formal consultation.

“Really, until the last couple of months, most of our requests for consultation and for information have gone unanswered,” Gravelle said. “To us, consultation means you’re listening to concerns and interests of the tribes and determining how that plays a role in the decision-making you have to do in different permit applications.”

Jarvi said Nessel and staff have had “extensive communications” with tribes related to Line 5 and have “shared information about the pending litigation.”

Enbridge spokesperson Ryan Duffy said the company has “made sure to keep the tribes updated every step of the way. And we are open to meeting with them at any time to discuss the project.”

“We are committed to forthright and sincere engagement with Indigenous people about Enbridge projects and operations that potentially affect them,” Duffy said. “We aim to develop mutual understanding through open, timely, two-way communication.”

Matthew Fletcher, director of Michigan State University’s Indigenous Law and Policy Center, said Enbridge benefits from the fact that Line 5 was installed in the 1950s when the state and federal government weren’t “paying particularly close attention to treaty rights.”

“The legal hook is really that the tribes have a right to a homeland, which includes access to clean Great Lakes waters, both for a sustainable fishery and access to water in general,” Fletcher said. “The treaty rights are really a relatively new player in all of this, though it should never have been that way.”

However, Fletcher added that tribes generally have been reluctant to take treaty rights to federal court as a “legal and political strategy.” Turning the implications of those rights over to a federal court is a “tricky thing.”

“I’ve always referred to treaty arguments as the nuclear option.

You could win big or lose everything,” Fletcher said.

Cultural significance, other pipelines The straits between the Upper and Lower Peninsulas that separate Lakes Michigan and Huron carry cultural significance to the Anishinaabe and Ojibwe that tribal leaders have compared to aspects of the Book of Genesis.

“The Straits of Mackinac is the place where the Earth was remade after it was cleansed, and that’s where they’re running this pipeline right through the heart of it,” Bay Mills Chairman Bryan Newland said on a podcast with the Michigan Climate Action Network.

Gravelle added the cultural significance of the Straits to the tribes is “kind of ignored by the general public.”

“A lot of Anishinaabe language is tied to the Straits of Mackinac,” Gravelle said. “Not only are we protecting our treaty rights and economy, we’re also fundamentally trying to protect the core of our culture and who we are as a people.”

Meanwhile, the Line 5 dispute is playing out amid other high profile pipeline cases across the U.S., several of which also involve Enbridge. A federal judge recently ordered the nearly 1,200-mile Dakota Access pipeline, which traverses the Midwest, to shut down while an environmental impact assessment is completed.

The U.S. Supreme Court also recently rejected a request by the Trump administration to allow construction of the Keystone XL pipeline.

Gover at the Native American Rights Fund said while treaty rights are “usually papered over,” recent cases show they are “gaining traction.” That includes a U.S. Supreme Court decision this month involving treaty rights for the Five Civilized Tribes in eastern Oklahoma.

“The ripple effect you’ll see in Indian Country is — taking those principles from that case — treaty rights still exist,” he said. “The lesson here is that federal agencies have an obligation as the trustee to tribes to ensure the tribes’ treaty rights aren’t impacted and if they are, how and at what consequence.”

The Straits of Mackinac is a key Anishinaabe and Ojibwe cultural site and the location of a contentious dispute over the operation of the Enbridge Line 5 pipeline. COURTESY PHOTO MiBiz / JULY 20, 2020

17

FOCUS: WEST MICHIGAN TRIBAL ECONOMY

CDFI helps bridge financing gap for Native entrepreneurs

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

DOWAGIAC — After they prepared for the opening of the Four Winds Casino in New Buffalo, the leaders of the Pokagon Band of Potawatomi years ago sought ways to use the revenues to assist tribal citizens to achieve self-sufficiency.

The Tribal Council was planning to create an economic development entity “but wanted to provide a capacity-building platform for individual entrepreneurs to develop new and existing businesses,” according to Sean Winters.

Their hope was “to provide the opportunity of synergy between the two organizations when possible,” Winters said.

Tribal leaders settled on forming Mno-Bmadsen, the non-gaming investment arm of the Pokagon Band, and Chi Ishobak Inc., a federWinters ally designated community development financial institution, or CDFI, that provides affordable loans and capital for citizens starting or expanding their own business.

“Any community, but in our community, Native Americans have a lot of barriers or challenges, so we kicked around a lot of different ways that we could responsibly assist folks,” said Winters, executive director for Chi Ishobak, which the tribe formally incorporated in 2009.

“Ultimately, we realize that’s the way we’re going to strengthen our nation as a whole by

individual citizens doing fantastic things, either personally or professionally,” Winters said.

Finding a niche After taking a few years to organize, build an operating infrastructure, earn designation and secure funding from the U.S. Department of Treasury’s CDFI Fund, Chi Ishobak awarded its first business loan in March 2012 for $15,000 to a small company that makes spaghetti sauce sold at local, state and regional outlets.

A year later, Chi Ishobak extended into consumer loans for tribal members who need reliable transportation, and then to emergency home repairs and loans to consolidate personal expenses.

Today, Chi Ishobak has an active business loan portfolio of 20 business loans totaling $468,000. Consumer lending to tribal citizens has grown to far exceed commercial lending, totaling $2.8 million through 376 loans as of June 30, 2020.

Borrowers run across economic sectors and include a high-end tattoo studio, the spaghetti sauce maker, a resale store, a commercial flooring company, a yoga studio, lawn care, a trucker who owns his own tractor-trailer, food trucks, a commercial accountant, a hotel operator, and a virtual reality studio.

In seven years, Chi Ishobak overall has deployed $1.7 million through 47 commercial loans to tribal entrepreneurs and $5.2 million through 640 consumer loans.

Chi Ishobak is one of three Native American CDFIs in Michigan — along with Northern

an online publication delivering important daily news that affects Native Americans nationwide has acquired a new website nativenewsonline.net The undersigned served as exclusive web development adviser to Native News Online.

Shores Community Development in Harbor Springs and Lake Superior Community Development Corp. in L’Anse. Nationally, 61 Native CDFIs operate in 20 states.

The Native CDFIs help to fill in the gap for tribal citizens lacking access to a bank or credit, particularly on reservations where there’s often not a traditional lender, said Michou Kokodoko, project director for community development with the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis.

“On some reservations, they’re probably the only source of capital,” Kokodoko said.

all” of the small borrowers with an outstanding business loan, he said.

“It was something to really show our clients we’re behind them 100 percent. We’re going to be with them through thick and thin and we’re going to work with them,” Winters said. “We understand that this is uncharted territory we’re in right now and we’re going to get through it together. That seems to be a common theme everywhere and more so for our community. Our financials have taken a little bit of a hit, but we know those will rebound because of the relationships we’ve created with our folks.”

Developing relationships

Making strides

The pandemic has affected most Native CDFIs. Many of the Native CDFIs are small. A 2017 The Washington, D.C.-based advocacy group Indian Country Development report Kokodoko Native CDFI Network reported in March that authored said more than two-thirds of the Native more than 86 percent of tribal CDFIs that make CDFIs at the time had loan or investment portfoloans to businesses were affected by the COVIDlios of less than $5 million.

19 shutdown. Among those About four in 10 had less that restructured loans, than $1 million in assets. nearly 90 percent expected Chi Ishobak, with $4.4 it to affect lending capital. million in assets, offers Chi Ishobak recently two forms of micro loans received an infusion of — up to $10,000, and from capital with $900,000 in $10,000 to $35,000 — as funding from the U.S. well as small business loans Department of Treasury’s of more than $35,000. As CDFI Fund that will go to with any CDFI, its loans loans, operations, techniare designed for small busical assistance to borrowers nesses and entrepreneurs and loan-loss reserves. who lack the track record Chi Ishobak also or collateral to qualify for recently partnered and a traditional commercial has formed a “very close loan from a bank or credit relationship” with Citizen union, or who have a poor — SEAN WINTERS Potawatomi Community credit history.

Executive Director of Chi Ishobak Inc. Development Corp., a For commercial borlarger and “very successrowers, Chi Ishobak pairs ful” Native CDFI based in loans with assistance such Shawnee, Okla., Winters as business coaching or classes intended to hone said. The two partnered for a consumer loan for borrowers’ business skills and heighten their a citizen of the Oklahoma tribe who lives in South chances of success, or to sharpen their business Bend, Ind. plan or conduct additional market research.

The two CDFIs are now looking to partner on “We don’t ever want to give a loan just to give a pair of commercial loans, including for a coma loan. We want to make sure that we’re truly mercial flooring company that moved into a new helping somebody and not putting someone in facility two years ago that it leases and now wants harm’s way or placing financial adversity upon to buy. The business loan could reach $375,000 them,” Winters said. to $400,000.

The Native CDFI had been “making very nice By partnering with Citizen Potawatomi Comstrides” in achieving self-sustainability through munity Development, Chi Ishobak can share the earnings until COVID-19 hit, Winters said. risk for larger credits, Winters said.

As with banks and credit unions, Chi Ishobak “They’ve opened the door to say, ‘Hey, we’d worked with borrowers. When the tribe’s casino love to learn more about these projects. We did shut down, temporarily ending disbursements to the one.’ So the door is open to that and it looks members, directors decided to provide borrowlike one or both of these will be participation ers 90-day deferrals on loan payments “where projects with Citizen Potawatomi,” Winters said. we basically pressed pause on everybody’s debt,” “We’re getting ready to start using that and hopeWinters said. The pandemic affected “virtually fully continue that impact and goodwill.”

“Ultimately, we realize that’s the way we’re going to strengthen our nation as a whole by individual citizens doing fantastic things, either personally or professionally.”

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JULY 20, 2020 / MiBiz

SEPTEMBER 3, 2013 VOL. 25 • NO. 23

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

Faith-based philanthropy drives local affiliate of National Christian Foundation

By JANE C. SIMONS | MiBiz jsimons@mibiz.com

P

‘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

M

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 Solutions “We went on to introduce one of the first in 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

40,937

11,898 17,330 20,000 6,127

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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19

FOCUS: WEST MICHIGAN TRIBAL ECONOMY

Settlement funds aim to bolster tribal agriculture economy

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

A

settlement fund created from a landmark 2010 class action lawsuit is providing tens of millions of dollars to help tribes bolster agricultural companies, including access to critical lending needed to jumpstart operations.

Most recently, the Native American Agriculture Fund awarded grants to Upper Peninsula-based tribes to expand fish processing and provide a revolving loan fund. The $250,000 awarded to Lake Superior Community Development Corp. in L’Anse will deploy loan capital to Native farms and ranches across the state and includes business training and tax preparation for Native producers.

Those eligible for the revolving loan program include farmers, ranchers, harvesters and commercial fisheries that are part of any federally recognized tribe in Michigan, said Eddy Edwards.

“In the end, the big goal is to try to let tribes and tribal people be more self sustaining in regional food produc— EDDY EDWARDS tion, which increases food security and sovereignty,” Executive Director of Lake Edwards said.

Superior Community The COVID-19 pandemic Development Corp. has highlighted the need for self sufficiency through food security, such as not being reliant on commercial food processing operations, Edwards added.

“Regional food systems are key to providing good food and more organics rather than corporate food processing we see a lot of,” Edwards said.

“It’s a great opportunity for economic development because food is something people buy everyday.”

20

JULY 20, 2020 / MiBiz

Edwards is a member of the Keweenaw Bay Indian Community, which was awarded $75,000 from NAAF last month to create an “integrated community food sovereignty system” through a certified fish processing facility and using fish byproducts to expand organic vegetable production. The funding will support traditional foods and expand the tribe’s capacity to process fish.

“Each and every family in the community is connected to fishing in some way. The KBIC supports its fishermen as well as other harvesters in keeping these traditions,” KBIC President Warren “Chris” Swartz said in a statement. “As stewards of the resources, our goal is to facilitate sustainable harvest of fisheries resources to provide into the future for the seventh generation.”

Landmark opportunity The Native American Agriculture Fund is a charitable trust created under a landmark class action lawsuit settlement in 2010.

In Keepseagle v. Vilsack, tribes alleged the U.S. Department of Agriculture discriminated against Native farmers and ranchers in loan programs since 1981. Edwards said the NAAF is vital, as tribal members still report a burdensome loan process through the USDA. The NAAF has roughly $266 million available in funding for business assistance, agricultural education, technical support and advocacy. The first funding round issued $10 million to 80 organizations across the U.S. The second round starting this year includes $15 million in grants. The pandemic also led NAAF to distribute $2 million in rapid response funding to 74 grantees.

According to the 2017 U.S. Census of Agriculture, American Indian/ Alaska Native farms represent 3 percent of all U.S. farms. In Michigan, the number of farms on reservation land increased by more than 10 percent from 2012 to 2017, comprising 2 percent of all Michigan farms.

Although the numbers have grown in recent years, Edwards said a majority of Native farmers are “small time.”

Bay Mills Community College, the tribally controlled educational institution of the Bay Mills Indian Community, received nearly $300,000 in 2018 under a fast track program before the NAAF

Bay Mills Community College, an educational institution run by the Bay Mills Indian Community located in Brimley in the eastern Upper Peninsula, operates the 40-acre Waishkey Bay Farm as a teaching and incubator facility. COURTESY PHOTO was created. The college operates the 40-acre Waishkey Bay Farm, which serves as an incubator and research center for sustainable agriculture. The funding allowed the farm to expand staff and student programming as well as buy new equipment.

Edwards said the biggest need among Native agricultural startups is “equipment to do the job” at a commercial scale.

“It’s a great opportunity for economic development because food is something people buy everyday,” he said. “There’s a big swing to people becoming more aware of where their food is coming from, what it’s made of and what the (growing) conditions are.”

As a Native Community Development Financial Institution (CDFI), the Lake Superior Community Development Corp. also assists members with the business side of establishing agriculture companies with accounting and tax preparation.

“We don’t want to just give them money, we want to make sure they’re successful,” Edwards said. “A lot of people might know how to farm and ranch but they don’t know how to deal with the IRS.” The revolving fund will provide loans up to $50,000. Edwards’ organization also received NAAF rapid response funding for smaller grants of $2,500. He said the funding is about taking advantage of a program specifically designed to build agricultural capacity among tribes.

“This is an opportunity through NAAF to provide funding to Native farmers and ranchers for the next 20 years,” Edwards said, adding it will help “build capacity so they can be more self reliant.”

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NONPROFIT ORGANIZATIONS

Hundreds of Michigan nonprofits land ‘critical’ PPP loans

By JANE SIMONS | MiBiz jsimons@mibiz.com

S

mall businesses were clear benefactors when the federal Paycheck Protection Program was announced in March to help companies recover from the COVID-19 pandemic.

However, nonprofits are also eligible and represent a major economic driver at the local, state and national levels.

“It’s very easy for those at the state and federal level to think about small businesses, but nonprofits are a part of that,” said Donna Murray-Brown, president and CEO of the Michigan Nonprofit Association. “The MNA will continue to advocate for additional funds at the federal and state level.”

Close to $16 bi l lion in loa ns were approved for more than 121,000 businesses and organizations in Michigan by the end of June, according to the U.S. Small Business Administration.

Earlier this month, the SBA released information on some 20,000 Michigan entities that Murray-Brown received at least $150,000 through the PPP, including more than 1,100 nonprofits.

The information doesn’t identify companies receiving less than $150,000 each, and lists only broad ranges of amounts companies received instead of specific totals.

Murray-Brown said the total amount disbursed was not necessarily more than she expected but was a considerable amount nonetheless.

Gowdy Those nonprofits receiving PPP loans represent a broad spectrum, including organizations focused on addressing housing and food insecurity, health care for the underserved, residential treatment centers, and churches.

‘It was critical’ Area organizations that received PPP loans include Kalamazoo-based MRC Industries Inc. and Wedgwood Christian Services in Gustafson Grand Rapids.

Bonnie Sexton, MRC’s director of human resources and community relations, said the organization applied as soon as the application process opened and received $482,472 on April 15.

MRC serves individuals in Kalamazoo County with developmental or intellectual disabilities, traumatic brain injuries, emotional impairments and mental illness.

The organization provides a range of programs and services that include in-house production programs that offer job training opportunities, job placement, training in the arts and case management.

“Our revenue from services we provide was greatly reduced,” Sexton said. “We did temporary layoffs for two weeks, which impacted close to 50 percent of our staff, and had a handful of

Still opportunity

The PPP is a cornerstone of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed by President Trump in late March. The first round of funding for the PPP authorized $349 billion in SBA loans for small businesses and other eligible applicants. These funds were depleted within two weeks of the PPP’s announcement. The second round of funding, announced on April 24, authorized an additional $310 billion for the PPP. people who were working reduced hours so they were still eligible The goal of the loan program is to encourage businesses to keep for unemployment.” workers employed and cover certain operating expenses during After receiving the PPP loan, MRC was able to bring back all the pandemic. of its 61 employees. Sexton said the funds were used primarily Funding is still available in the PPP, which Murray-Brown says gives to cover salaries and benefits with a small amount going toward organizations that have not yet applied the opportunity to do so. rent and utilities.

“That’s helpful for organizations who recognize that they do “It was critical,” she said of the PPP funds. “We wanted to make need the funds and it’s closing the gap for people who had no idea sure we retained our staff. Our employees are our most important that these monies were available,” she said. resource — it was critical to being able to bring them back on the The PPP loans were a lifeline for organizations that were able payroll and to continue their benefits.” to access them, enabling them to keep staff members and provide Dan Gowdy, who took over on May 19 as Wedgwood’s presifinancial support for operations if they were unable to fully operdent and CEO, said the organization’s $2.8 million PPP loan was ate, Murray-Brown said. Particularly this includes arts and culture “extremely important to us and allowed us to continue our misorganizations because they depend on people coming through sion during these unprecedented times.” their doors.

Wedgwood, which has about 390 employees, provides a wide Besides covering salaries, the loans also covered the cost of range of social services to individuals struggling with any number establishing remote working environments. of issues including abuse and neglect, substance abuse and learn“There were considerable funds available for those who undering difficulties. These services range from intense to less intenstood their financial situation at that time,” Murray-Brown said. sive treatment, making Wedgwood’s continuum of care one of the In addition to the critical services they provide to Michigan largest among all social service agencies in the state of Michigan. residents, nonprofits have a major economic effect on the state’s “Working in residential and direct care, that was really critical to economy, which was reinforced in a 2018 report prepared for the keeping our talent and making sure they were treated well. People Council of Michigan Foundations and the MNA. had a lot of anxiety as you can imagine,” Gowdy said.

That report, prepared by Public Sector Consultants, said more than 50,000 nonprofit entities employ close to 470,000 — or about Data lacking, bad timing one in 10 — Michigan workers. The sector employs more than the Though the SBA data include names of businesses that received at state’s leisure and hospitality industry. least $150,000 in loans, it didn’t fully account for the race, ethnicity In 2018, Michigan’s nonprofits held more than $268 billion in and gender of recipients. assets, an increase of approximately 13 percent from $234 billion “That is a bit disturbing for me that we don’t in 2013, according to the report. have that information,” Murray-Brown said. “We “This growth is equivalent to adding an orgahave stories and anecdotes of people who don’t nization the size of a major automotive company have access to the PPP and people of color who are to Michigan’s nonprofit sector,” according to the Sponsored by: not necessarily having access. We have been doing report.

GRAND RAPIDS outreach to their communities for that reason.”

Because of COVID-19, Murray-Brown said there COMMUNITY That outreach included partnering with New is some speculation “about how many organizations FOUNDATION Michigan Media to make minority-operated nonwe could lose, which could be between 15-25 perprofits aware of these opportunities and capital, cent. It’s hard to put a number on it.” said Joan Gustafson, MNA’s external affairs officer.

As nonprofit boards and staff convene in the fall in advance of “Many of them are small and don’t know these programs are fiscal years that start Oct. 1, Murray-Brown anticipates more conout there or how to apply for them,” Gustafson said. “We tried to versations around potential alliances, collaborations and mergers educate them and make them aware.” going forward.

At the time the PPP was announced, Murray-Brown said some The MNA will continue its member advocacy to ensure they Michigan nonprofits hadn’t recognized whether they needed the have the needed information and access to all available funding. loans because they still had grant funds available. That certainty “Not having the answers we need” is what keeps Murray-Brown from grants would dissipate in the following months. up at night, she said.

“These were choices that nonprofit leaders were making with“I don’t have a crystal ball to provide them what they need when out understanding what was ahead of them,” she said. “They had they need it,” she said. “I want to make sure we’re helping nonprofsome in reserves, in some cases six months of reserves, and they its at the practical level.” also had grant funds that were taking care of operations for the That includes a series on re-entry into the workforce and manentire year. … They had the funding they needed for operations aging risks, as well as making members aware of state and federal and programming.” funding opportunities.

Given this scenario, some of these nonprofit leaders felt they “When we think about monies available at the federal governwere in a manageable position to continue services to their client ment level, the foundation impact pales,” she said. “We want to base and wanted to leave that PPP money for those nonprofits that make sure we’re not missing something and making sure we know really needed the additional funding. about everything available.”

NONPROFIT SECTOR NEWS

Our future is bright.

Hats off to all graduates who followed their dreams and are ready to become tomorrow's leaders.

Melanie Orozco-Zavala Union High School Class of 2020, Challenge Scholar Visit www.mibiz.com

Congratulations to the Class of 2020!

grfoundation.org MiBiz / JULY 20, 2020

21

Q&A Tina Freese Decker President and CEO Spectrum Health A coalition of Michigan business and health care leaders recently warned that the state is at a “dangerous tipping point” in the COVID-19 pandemic and “at risk of losing ground it has sacrificed for months to gain” as the number of new cases again rose each day. As of July 16, Michigan had 71,842 confirmed cases of COVID-19, a daily increase of 645 cases. On the previous day, the confirmed cases jumped by 891, the highest single-day spike in two months. The death toll from the virus stood at 6,101 people, according to the state. The recent uptick in cases also led Gov. Gretchen Whitmer to strengthen an executive order requiring masks to be worn in public indoor spaces and large gatherings, which took effect on July 13.

The coalition includes Grand Rapids-based Spectrum Health, whose leader — Tina Freese Decker — is also part of Whitmer’s Michigan Economic Recovery Council that’s been advising the governor throughout the pandemic.

Freese Decker spoke with MiBiz about the coalition’s concerns with the state’s position four months into the pandemic.

What does this coalition want people to keep in mind about where we are in this crisis?

What we need to know is what we’ve been practicing and should be practicing on an ongoing basis, which is that the safety and prevention measures work and we need to keep practicing those. Hand sanitizing, wearing a mask, being six feet apart. Although some of those are difficult to do, it has proven to help protect yourself and others. It’s taking responsibility to do those three prevention practices that will help us continue going forward.

COVID-19 is with us and it’s going to be with us, and we hope to have therapeutics or a vaccine, but we need to figure out how to manage this as we go forward and rely on those preventions and safety measures.

As you look at the data of the recent weeks, what concerns you the most?

I believe we have the opportunity to all come together and take the collective actions to practice safety measures and these prevention measures. If we do that, I’m not as concerned.

We’ve done so much with helping those vulnerable populations. We could do more, but we need to make sure we continue to focus on this because if we relax on some of these measures, we could get back to where we were before. I know West Michigan. I know we can do better, and I know we can stand together, protect each other and think about each other and practice these measures.

For people who have been resistant about wearing a mask in public, how do you convince them otherwise?

In health care we’ve always been focused on healthy behaviors, and it’s hard to change to healthy behaviors. My focus has been you’re doing this to protect yourself, but you’re also doing it to protect others, and how do we think and care about each other and each other’s safety.

Are you hopeful that the rise in new daily cases that Michigan has seen of late can get turned around and get going in the right direction?

I believe that in West Michigan we want to keep people safe and we want to do the right thing. We’re starting to see an upturn in the numbers and now is the time to make sure it doesn’t go up. In other states we’ve seen it go up quickly, so we just need to make sure we’re watching this and keep doing the things we know how to do and that we know work to make sure we keep this at a lower level.

What has been the focus of the Michigan Economic Recovery Council?

We came together to help us think about how we turn back to ‘open,’ because we wanted to make sure that we were preparing for this, that we were looking ahead, thinking about the future going forward. I think it’s been helpful in providing some forward-thinking ideas about where we are and getting us prepared so that we continue to live as we want to with these prevention measures. I do see it will continue for a while. I believe it should only continue for as long as it’s being beneficial, but it has been good to get together with the other members to share observations, to share data and to put together our recommendations on what would make sense for us.

Is there a proper balance to strike between protecting public health and protecting the economy now that much has reopened?

There is a way and that’s focusing on these prevention measures. I think that we can be accountable and responsible and still live our lives, but we need to do these prevention measures to protect ourselves and to protect others for this time period.

Interview conducted and condensed by Mark Sanchez. COURTESY PHOTO

22

JULY 20, 2020 / MiBiz

IN THE NEWS M&A

n An affiliate of Grand Rapids-based wood products company UFP Industries Inc. (Nasdaq: UFPI) has acquired Rancho Cucamonga, Calif.-based T&R Lumber Co. With the asset deal, UFP Industries, formerly known as Universal Forest Products Inc., also acquired T&R Lumber’s affiliates, Sullivan & Mann and Kelmar Creations, according to a statement.

A manufacturer and distributor of products for the nursery industry, including growing containers, pots, trays, wooden stakes, trellises, tree boxes and other supplies, T&R Lumber generated $31 million in sales for 2019. The company will be incorporated into the UFP Industrial business unit and will continue to be managed by President Phil Guardia, according to a statement. Terms of the deal were not disclosed. n A long-standing partnership has turned into the sale of a significant business unit for Blue Medora Inc., a venture capital-backed Grand Rapids-based software developer. After partnering with software virtualization giant VMWare Inc. (NYSE: VMW) for several years, the Palo Alto, Calif.-based software company recently acquired Blue Medora’s True Visibility Suite team and products. The deal was finalized on July 7 for an undisclosed sum. Blue Medora’s True Visibility Suite contains solutions that easily integrate into, and enhance the performance of, VMWare’s vRealize platform, which is an AI-driven product that gives I.T. teams the power to implement self-driving capabilities to facilitate hands-off, hassle-free operations. Terms of the deal were not disclosed. n Grand Rapids-based FormulaFolios Investments LLC plans to merge with Brookstone Capital Management in Chicago in a deal that will create an investment adviser firm with more than $6.5 billion in assets. The merged firm will keep the Brookstone name and retain the Grand Rapids-based FormulaFolios brand for continued oversight of its asset management division. Brookstone intends to maintain both headquarters in Chicago and Grand Rapids. Formed in 2011, FormulaFolios serves hundreds of financial advisers and thousands of clients nationwide. At the end of 2019, the firm managed $3.64 billion in assets.

FormulaFolios also maintains an office in Costa Mesa, Calif. A year ago, Clearwater, Fla.-based AmeriLife Group acquired a majority stake in Brookstone.

AmeriLife is backed by Boston, Mass.-based private equity firm Thomas H. Lee Partners L.P. n Lansing-based food safety company Neogen Corp. (Nasdaq: NEOG) plans to acquire the U.S. rights to StandGuard Pour-on, which combats horn fly and lice within domestic beef cattle, according to a statement. StandGuard Pour-on belongs to global animal products supplier Elanco Animal Health Inc., which has proposed a $7.6 billion acquisition of Bayer Animal Health GmbH. The Federal Trade Commission stepped in to order Elanco and Bayer to divest from three animal product lines as they prove to be anti-competitive in their respective markets.

The rights to the product will fall to Neogen, which entered the agricultural insecticide market in 2014 when it acquired Chem-Tech. Terms of the deal were not disclosed.

EXPANSION

n Kalamazoo-based mechanical contractor R.W. LaPine Inc. is expanding its Custom Metal Fabrication Division with a new $2.5 million, 26,000-square-foot building at its main campus near the intersection of Sprinkle Road and ML Avenue.

Company President Kirk LaPine said the addition resulted from the division expanding and outgrowing its existing facility in recent years. The company also plans to invest $1.2 million in advanced fabrication equipment for the new facility, which is being built by Vicksburg-based Frederick Construction Inc. As well, R.W. LaPine is planning for another expansion involving a 20,000-square-foot building to house its HVAC sheet metal duct fabrication. The company is working with Kalleward Group Inc., a Kalamazoobased contractor, for that facility, with an expected ground breaking in spring 2021. n Grand Rapids-based Vos Glass LLC has

expanded with a second location in Lansing, according to a statement. Glazing industry veteran Kenneth Emrich will lead the new office. The Lansing location will focus on all sizes of commercial projects. n Walker-based supercenter retailer Meijer Inc. opened five new stores spanning a four-state territory in July. The new 159,000-square-foot facilities are located in Bad Axe, Mich., Manitowoc, Wis., Sycamore, Ill. and Brimfield and Lorain, Ohio, according to a statement. The company now operates 253 supercenters and grocery stores in Michigan, Ohio, Indiana, Illinois, Kentucky and Wisconsin. n Ann Arbor-based C3 Industries LLC opened its High Profile branded dispensary on July 15 in Buchanan, just north of the Indiana border in Berrien County. In Buchanan, company officials expect to draw customers from surrounding counties and northern Indiana while offering in-store and curbside sales. C3 is a vertically integrated cannabis company with retail stores in Grant in Newaygo County, Ann Arbor and a location in Detroit that is temporarily closed. It also has operations in Oregon and plans to launch soon in Massachusetts and Missouri.

BANKING

n Sparta-based ChoiceOne Bank named Ryan Wolthuis as senior vice president and Grand Rapids market executive. Wolthuis joined ChoiceOne with nearly 20 years of commercial banking and executive management experience. He previously worked for 11 years at Grand River Bank in Grandville, most recently as senior vice president leading all loan departments.

GAMING

n Sports betting is now live at the three Four Winds Casinos in Southwest Michigan. The Pokagon Band of Potawatomi earlier this month formally launched its sportsbooks, which will be available at Four Winds locations in New Buffalo, Hartford and Dowagiac.

The tribe partnered with Kambi Group plc, an independent sportsbook partner with clients around the globe. The new interface allows patrons to scan a QR code with the camera of their smartphone to access the Four Winds betting website. Once they make their bets, they will be provided with an additional QR code to be scanned at the sportsbook or guest services counters of all three Michigan locations, where bets will be placed. The New Buffalo location will feature 18 self-service kiosks and Hartford and Dowagiac will both feature six kiosks each.

HEALTH CARE

n Priority Health President and CEO Joan Budden plans to retire at the end of 2020 after 12 years with the health plan, the last five as its chief executive.

Budden’s retirement takes effect Jan. 1, 2021. She’ll remain active as CEO until then to ensure a smooth transition to new leadership. Spectrum Health, which owns a 93.9-percent stake in Priority, has retained Furst Group, a Rockford, Ill.-based executive search firm, for an internal and external national search for the next president of Priority Health, the second-largest health plan based in Michigan with nearly 1 million members, double that of a decade ago. n Spectrum Health partnered with Commerce Bank to offer Health Services Financing, which allows patients to pay the out-of-pocket balances of their medical bills over time with no interest. Spectrum Health can offer extended payment arrangements up to 60 months interest free. n Metro Health-University of Michigan Health began offering a laser treatment for kidney stones, providing faster, easier relief for patients. Metro Health teamed with Olympus America to offer the Soltive SuperPulsed Laser System that pulverizes kidney stones in half the time it takes other laser systems and provides precise soft-tissue cutting and an improved ability to stop bleeding. n Hulst Jepsen Physical Therapy opened its 16th location with the Pelvic Rehabilitation Center in Hudsonville. Lisa Vis, co-owner of Hulst Jepsen Physical Therapy, leads the center as its manager.

The center specializes in treating a variety of men’s and women’s health issues, including pelvic floor dysfunction, complex pelvic pain issues, bowel and bladder issues, incontinence, urinary frequency, and pregnancy-related pain and postpartum care.

Visit www.mibiz.com

UPCOMING ISSUES

8.3.2020

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

8.17.2020

Automotive Supply Chain Contract Deadline: 8.5.2020

8.31.2020 Insurance How should marketing change in the wake of COVID-19?

Aerospace suppliers brace for continued turbulence

PAGE 9

PAGE 5

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: 8.18.2020 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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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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Business of Senior Care

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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

Contract Deadline: 10.14.2020

11.9.2020

Food Economy

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Foodservice disruptions cause crisis for farmers

Family Business

Spectrum Health prioritizes buying local

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TRIAL

BY FIRE:

9.14.2020

INSIDE:

Drinking economy

Contract Deadline: 10.28.2020

SEE PAGE 14

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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