Dillon`s health insurance pool plan draws biz backing

Transcription

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6:03 PM
Page 1
®
www.crainsdetroit.com Vol. 25, No. 28
JULY 20 – 26, 2009
$2 a copy; $59 a year
©Entire contents copyright 2009 by Crain Communications Inc. All rights reserved
Page 3
Hospital turns losses to
gains; what’s the secret?
Boosters hope arts deals
will be music to young ears
Inside
Are high-end restaurants
feeling the pinch? Page 4
Small Business Monthly
Acquisitions drive
new auto supplier
Cerion buys bankrupt metal-parts makers Are team finances
BY RYAN BEENE
CRAIN’S DETROIT BUSINESS
Rising from the ashes of three bankrupt
auto parts manufacturers in the stamped- and
cast-metal component sector is Cerion L.L.C., a
new manufacturer coming to life through acquisitions that could be capable of generating nearly
$1 billion in revenue.
Hofmeister:
Plymouth-based Cerion
Name behind
and parent company RevsCerion and
tone Industries L.L.C. of Paris,
Revstone may
Ky., have since December
jog memories,
Page 24
acquired the die-cast metal
component business of Contech L.L.C., almost all the assets and operations
of fine blanking and metal stamping firm Precision Parts International Inc. and, on July 14, the
assets of castings producer Intermet Corp.
THE PRINCIPAL
Spy biz, three others
find their niches, Page 15
Revstone is headed by George Hofmeister, a
Kentucky industrialist with a track record of
executing automotive deals in metro Detroit
and the Midwest.
Contech’s castings business generated revenue of $156.7 million in 2008. PPI posted revenue of $141 million from January to October
last year, and Intermet posted revenue of
about $310 million in the 12 months ending
July 31, 2008, according to records from the
companies’ bankruptcy cases.
Each of the metal stampings and castings
suppliers filed for Chapter 11 bankruptcy between August 2008 and January 2009 and
failed to reorganize and emerge intact.
For about $43 million, Revstone and Cerion
were able to pick up at least 20 manufacturing
operations throughout the U.S. and Mexico
See Cerion, Page 24
This Just In
Land bank authority
getting off the ground
Almost one year after the
Detroit City Council approved
the creation of the Detroit
Land Bank Authority, that body
has held its first meeting.
The board’s seven members are appointed by the
mayor of Detroit and the Detroit City Council, and include the heads of the administration’s Planning and
Development
Department
and the City Planning Commission, an advisory body to
the council. Those positions
are held by Warren Palmer and
Marcell Todd, respectively.
Land banks are designed
to speed up the sale of tax-reverted properties. State law
gives a local land bank the
ability to clear titles and
buy, sell, demolish or rehabilitate derelict properties.
Parcels funneled through
the land bank are automatically eligible for brownfield
tax credits.
NEWSPAPER
See This Just In, Page 2
Tigers’ ticket
sales fall, Ilitch
still spending
Dillon’s health insurance
pool plan draws biz backing
now at full count?
BY BILL SHEA
The division-leading Detroit Tigers have a
large-market payroll with midsize market attendance that’s off 22 percent from last year,
something the team said it was prepared for but
has baseball insiders speculating about the
team’s long-term financial health.
And to the delight of fans, if not economists,
the team’s owner is willing to
spend even more to return to
the World Series — even if it’s
a money-losing endeavor.
Bill at the bat:
Attendance through last Shea faces
week’s All-Star break was av- Dave Rozema
eraging 30,875 per game on the mound,
www.crains
through 40 games at 41,255-seat detroit.com
Comerica Park compared to /extra
last season’s 39,761 through the
same number of home games.
At an average ticket price of $25.15, that
roughly translates into $8.9 million less in ticket revenue so far this season.
The fan drop-off is attributed to both the
team’s last-place finish in 2008 and the subsequent national economic plunge that’s been especially harsh in metro Detroit — vaporizing
fans’ disposable income and making them hesitant to buy tickets for a team three years removed
WEB EXTRA
See Tigers, Page 25
BY JAY GREENE
Several representatives of Southeast
Michigan businesses and other organizations are expressing early
support for a plan offered
last week by Michigan
House Speaker Andy Dillon, D-Redford Township,
to cut health care costs by
creating a large public employee purchasing pool.
Dillon said he will soon
introduce legislation to expand the state’s employee
Dillon
health benefit program to
include local governments, universities and
school districts.
By increasing the number of covered lives
in the state health program, Dillon said the
state can generate greater savings by negotiating deeper discounts with health plans, insurers, physicians, hospitals and other
providers.
STATE INSURANCE POOLS
About 23 states have some type of governmentrun health insurance pool that includes
municipalities, universities and school districts.
States with highest participation: Georgia,
North Carolina, Wisconsin, Delaware, California.
Potential savings with pooled plans: Some
states have reported savings of 2 percent to
5 percent. Massachusetts cities that didn’t join
the state’s pool faced a 13 percent average
increase, compared with 8 percent for those
cities that joined the pool.
Union vs. non-union: Most states with pools
had low levels of union membership. It is
harder to incorporate unions into state pools
because of their contracts, officials said.
Source: National Conference on State Legislatures, Denver
Dillon acknowledged that he expected to
save additional money by continuing a trend
in the public and private sector that shifts
more health care costs to public workers.
However, low-income public workers would
pay lower out-of-pocket costs for health insurance, he said.
“Some (public) plans are run well. If your
costs are lower than the state plan, we are
not going to force people to roll into it,” Dillon said. “We are not talking about a government-run system or replacing private insurance. We will go out to bid and let the private
sector run it.”
Dillon said his plan can save $700 million
See Insurance, Page 24
NATHAN SKID/CRAIN’S DETROIT BUSINESS
Detroit Tigers fans wait to get into Comerica Park
on Opening Day 2009.
AT THE BALLPARK
Here’s a look at attendance at 41,255-seat
Comerica Park since Detroit set the Major
League Baseball American League record for
most losses in 2003:
Average MLB
Record per game rank Total
2003 43-119
17,103
27 1,368,245
2004 72-90
23,962
22 1,917,004
2005 71-91
25,306
21 2,024,485
2006 95-67
32,048
13 2,595,937
2007 88-74
37,619
9 3,047,139
2008 74-88
39,538
8 3,202,645*
2009 48-39
30,875
11 1,235,007**
* Franchise record attendance
** Through All-Star break
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6:10 PM
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Page 2
July 20, 2009
THIS JUST IN
■ From Page 1
The group met July 15, but
board member Deborah Younger,
executive director of Detroit LISC,
said the authority has groundwork to complete before the land
bank can get to work.
Younger said the authority is
in the process of selecting an attorney to write its articles of incorporation and has engaged the
Flint-based Genesee Institute, a
nationally recognized land banking assistance organization, to
develop the authority’s bylaws.
Younger said she hopes the land
bank can begin adding properties
to its inventory by year’s end.
Other board members are
Steve Ogden, vice president, The
Sterling Group; contractor Glenn
Wash; Marsha Bruhn, former planning commission director; and
consultant Savarior Moss.
The authority’s next meeting
is set for Aug. 6 at 2 p.m. at the
Planning and Development Department.
— Nancy Kaffer
Engineering subsidiary link
to Mideast, Indian business
Doha, Qatar-based Pat Engineering Enterprises Co. W.L.L. has established a North American subsidiary, Pat Engineering Enterprises
USA, in Madison Heights and
named Shrawan Tiwari as its first
president.
Tiwari has served as executive
manager at Pat Engineering in
Doha since its inception in 2002
and will continue in that role as
well as serving as North American
president.
The local subsidiary identifies
partners, products and services
for engineering and consulting
projects in India, Kuwait, Qatar
and South Korea, in areas including green construction, telecom,
IT and security.
In the month since it opened,
the local office has signed jointventure agreements with nearly
two dozen local companies to do
business in the Middle East
and/or India, Vice President Carol
Spellman said.
— Sherri Begin Welch
Home improvement firm
to host sales job seekers
Shelby Township-based 1st
Choice Home Improvement Inc., a
manufacturer and installer of custom vinyl-clad windows, doors,
siding and other products is having an in-house job fair next Monday at its offices along 23 Mile
Road east of Dequindre Road. The
company is to add eight-10 sales
positions offering more than
$70,000 per year, said President
Steve Noble. 1st Choice sells to
homeowners.
— Chad Halcom
Hotels’ ex-owner back
in bankruptcy court
Openings remain
for Israel trade mission
A former owner of the Hotel St.
Regis in Detroit and the Plaza Hotel
in Southfield is back in federal
bankruptcy court for tax liens
against another hotel company he
owns.
Remo Polselli, 53, of Bloomfield
Hills is the owner of Oakland
County-based Waterfront Hotel Ventures L.L.C., which bought the St.
Clair Inn in St. Clair County in
1997 and filed Chapter 11 reorganization this week at U.S. Bankruptcy
Court in Detroit.
Polselli was released from a federal prison in 2004 after completing a sentence for three federal tax
violations involving the Plaza Hotel in the 1990s; he claims $5.3 million in liabilities including a $4.8
million lien by the Internal Revenue
Service. Stephen Moore, public information officer for the IRS criminal investigations division in Detroit, said the lien appears to
combine his criminal judgment
with some possible interest, fees
or other IRS judgments.
Attorney Morris Lefkowitz of
Southfield, who represents Waterfront Hotel in the bankruptcy case,
declined to comment.
Other creditors include the city
of St. Clair for $36,000, Hallandale,
Fla.-based TransCapital Bank for
$380,000, and St. Clair-based St.
Clair Inn L.L.C. for $53,165
— Chad Halcom
Up to 10 businesses can participate in an October trade mission
to Israel through Troy-based Automation Alley. Registration for the
Oct. 23-29 mission closes Sept. 4.
Stops on the trade visit include
Haifa, Tel-Aviv and Jerusalem.
Targeted industry segments include aerospace, defense and
homeland security, life sciences,
IT, nanotechnology and renewable
energy.
— Chad Halcom
Transit center halfway to goal
Proponents of a $7 million regional mass transit center near
the Troy-Birmingham border
were closer to reaching the
halfway point in funding after an
allocation of $1.3 million cleared
the U.S. House Transportation
Committee on Friday.
The funding for the transit center is part of a $76 billion transportation appropriations bill that
cleared a subcommittee vote earlier in the week and the full committee vote Friday. The bill proceeds
to the House floor Thursday.
Some $5 million in funding has
been proposed in a Senate version
of the appropriations bill, but that
bill is idle, as the House appropriations bill usually advances first,
said Dan Beattie, director of government relations at the Washington office of Detroit-based Clark
Hill P.L.C. Beattie represents Troy
and Birmingham in their push
for federal funds.
The law firm is acting as project manager for the cities’ transit proposal. The two cities already have pledged up to $1.6
million in municipal funds to
match any federal contribution.
— Chad Halcom
CORRECTIONS
䡲 A story on Page 20 of the July 13 edition incorrectly stated the num-
ber of members in Oakland University’s police officer and dispatcher
union. The correct number is 18.
䡲 A story on Page 22 of the July 13 issue misidentified the employer of
one of the panelists scheduled to speak at a program for job seekers in
the marketing and advertising fields. Gary Erickson is partner at Executive Search Partners L.L.C. in Farmington Hills.
䡲 The headline of a story on Page 3 of the June 29 issue incorrectly referred to a letter of interest from the Wayne and Joan Webber Foundation
as a pledge. The story also reported the Salvation Army Eastern Michigan
Division raised $3 million toward its match requirement of $48 million
by mid-April. It should have said the organization raised $2.6 million.
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20090720-NEWS--0003-NAT-CCI-CD_--
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July 20, 2009
Page 3
Partnership puts hospital on mend
Doctors, McLaren reopen Pontiac facility as a for-profit
BY JAY GREENE
When Doctors’ Hospital of Michigan in Pontiac opened in November, not everyone believed the
state’s only for-profit hospital
would become successful.
It had lost tens of millions of dollars over a dozen years and $2 million a month from August to October last year as North Oakland
Medical Center before it closed on
Oct. 28, the city of Pontiac had
more than 16 percent unemployment, and two other hospitals, St.
Joseph Mercy Oakland and POH Re-
gional Medical Center, were fiercely
competing for patients.
But a group of 42 physicians in
Pontiac and at Flint-based McLaren
Health Care Corp. was willing to invest $7.5 million to reopen the hospital in a unique partnership they
believed would become a new profitable business model.
The turnaround started slowly.
From November through February, Doctors’ Hospital cut monthly
losses from $900,000 to $299,000,
said CEO Clarence Sevillian Jr.
By March, Doctors’ Hospital
posted its first profit — $51,000,
said Sevillian, who started out as a
physical therapist with McLaren
in 1998. He rose through the administrative
ranks to become
vice president of
operations
in
2006
for
McLaren’s
Lapeer Regional
Medical Center.
In April and
May, Sevillian
said the hospital
Sevillian
showed profits
of $359,000 and $330,000, respectively. Gross monthly revenue topped
$10 million, he said. Financials for
June were unavailable.
“It has been a team concept,
working with physicians and employees, to have achieved what we
have done,” said Sevillian, 39, a native of Flint who played wide receiver at Vanderbilt University in
Nashville in the early 1990s.
Unlike the state’s other 146 hospitals, Doctors’ Hospital operates
under a unique ownership model
— the acute-care facility is the
only hospital in the country owned
by a group of doctors and a nonprofit health care system.
Focus: Real Estate
Real estate brokers
find success by
thinking outside the
retail box, Page 9
Not all are happy with new
rules governing appraisers
and brokers, Page 11
Company index
These organizations appear in this week’s Crain’s
Detroit Business:
Andiamo Restaurant Group . . . . . . . . . . . . . . . . . . . 4
See Hospital, Page 21
Assets International . . . . . . . . . . . . . . . . . . . . . . . 15
Baldwin Commons . . . . . . . . . . . . . . . . . . . . . . . . . 9
Bernard Financial Group . . . . . . . . . . . . . . . . . . . . 10
Big Beaver Tavern . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Botsford Hospital . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ageless arts?
Groups look to draw
young professionals
with discount tickets
BY GABE NELSON
SPECIAL TO CRAIN’S DETROIT BUSINESS
When Natalie Bruno looks into
the audience at a Detroit Chamber
Winds and Strings concert, she sees
gray hair.
The group’s core patrons are
aging, said Bruno, director of development for the group and its
partner organizations
Eisenhower
Breathing room:
Dance EnsemBanks lower bond ble and the
payments for
Great
Lakes
Michigan Opera
Chamber
Music
Theatre, Page 23
Festival.
Although
the three organizations had
steady ticket sales over the past
few seasons and saw their combined revenue climb slightly to
$1.4 million in 2008, Bruno said
she’s keeping a close eye on the
age of the groups’ patrons.
“The audience right now, to be
quite frank, is going to die off,”
she said.
That’s one reason Bruno and
colleagues have organized the Detroit Passport to the Arts program, which will offer discount
tickets to presentations at local
arts venues, including the Detroit
Symphony Orchestra, the Michigan
Opera Theatre and the Detroit Institute of Arts.
Bruno, also the Passport program’s lead organizer, described
the program as an effort to reach
out to young professionals now,
rather than expecting them to
transform into avid arts supporters once they grow older.
SAVING OPERA
History buff:
Do the math
on buildings
Butcher & Packer Supply . . . . . . . . . . . . . . . . . . . 16
Formula tests
rehab viability
Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . 21
BY NANCY KAFFER
COURTESY OF JOHN GRIGAITIS
A discount Michigan Opera Theatre ticket program called Access, begun
last fall for students and new patrons, includes networking receptions at
opera events.
“Do we think that they’re going nity for an encore.
to be hooked immediately? No,
The DSO and MOT started pronot necessarily. But this is
grams
last
fall
where our real mission
aimed at students
comes in. We’re trying to
and young profescreate an entire experience
sionals.
for them,” she said.
The DSO’s 37/11
The slow econoclub, named after
my has brought This
the address of the
challenges center story
Max M. Fisher Music
stage for fine arts originally appeared on
Center at 3711 Woodinstitutions. Phil- Detroit Make it Here
ward Ave., offers $11
anthropic support (www.detroitmakeithere
tickets to certain peris dwindling, ticket .com), a Web site for
formances for people
sales are down, and area creatives powered
under 37 years old.
meanwhile, audi- by Crain’s and
The MOT program,
sponsored by Detroit
ences are aging.
called Access, offers
In
response, Renaissance Inc. If you
$20 tickets to students
metro Detroit arts seek creative talent or
and new patrons for
institutions
are services, you can find
one performance of
courting
young more than 1,000
each production. Tickprofessionals with people and 2,000
et prices for new pasuch perks as dis- companies on the site.
trons, however, rise
count tickets, free
with each visit.
food and after-parties.
The Passport to the Arts packIn those young patrons, who age, which goes on sale in midmight become tomorrow’s sea- August, will cost $89 — a fraction
son-ticket subscribers and philanthropists, they see the opportuSee Arts, Page 23
Richard Hosey is a numbers
guy, a senior vice president and senior originator for tax credit investments based in Bank of
America’s Detroit office.
He’s also a
historic preservation
guy,
whose résumé
includes stints
at
prominent
historic preservation and real
estate companies in New Orleans and BaltiHosey
more.
And when Detroit’s historic
buildings are slated for demolition, Hosey thinks it’s a waste.
When the Lafayette Building —
the latest historic building to
make the city’s demo list — was
still in play, the native Detroiter
wanted to prove that it could be rehabilitated, the economic climate
notwithstanding.
Detroit Economic Growth Corp. officials have said rehabilitation of
the Lafayette isn’t financially viable, an assertion to which Hosey
objects.
“The markets are really frozen
up and projects are hard to do, but
in terms of the viability of the
building, I think it’s definitely viable,” he said.
So he ran some numbers.
See History, Page 22
Cerion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Community Foundation for Southeast Michigan . . . 23
Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . 15
Cook, Pray, Rexroth & Associates . . . . . . . . . . . . . 11
CORE Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Crittenton Hospital Medical Center . . . . . . . . . . . . 21
Cultural Alliance of Southeastern Michigan . . . . . . 23
Delphi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Detroit Chamber Woods & Strings . . . . . . . . . . . . . . 3
Detroit Economic Growth . . . . . . . . . . . . . . . . . . . . 3
Detroit Edison . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Detroit Institute of Arts . . . . . . . . . . . . . . . . . . . . . . 3
Detroit Renaissance . . . . . . . . . . . . . . . . . . . . . . . 24
Detroit Symphony Orchestra . . . . . . . . . . . . . . . . . . 3
Detroit Tigers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Doctors Hospital of Michigan. . . . . . . . . . . . . . . . . . 3
Energy Optimization . . . . . . . . . . . . . . . . . . . . . . . 15
EPrize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Grace Christian Church . . . . . . . . . . . . . . . . . . . . . 9
Grubb & Ellis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Harper Associates . . . . . . . . . . . . . . . . . . . . . . . . 16
Henry Ford West Bloomfield Hospital . . . . . . . . . . . 21
Howard Babcock and Associates . . . . . . . . . . . . . . 11
Identity Marketing and Public Relations . . . . . . . . 17
J.C. Beal Construction . . . . . . . . . . . . . . . . . . . . . 22
Kirco Development . . . . . . . . . . . . . . . . . . . . . . . . . 9
LaKritz-Weber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Lormax Stern Development . . . . . . . . . . . . . . . . . . . 9
Marwil and Associates . . . . . . . . . . . . . . . . . . . . . 24
Matt Prentice Restaurant Group . . . . . . . . . . . . . . . 4
McLaren Health Group . . . . . . . . . . . . . . . . . . . . . . 3
Metro-West Appraisal Co. . . . . . . . . . . . . . . . . . . . 11
Michigan Education Association . . . . . . . . . . . . . . 24
Michigan Opera Theatre . . . . . . . . . . . . . . . . . . . . 23
Mpro. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Oakbrook Appraisals . . . . . . . . . . . . . . . . . . . . . . 11
Original Equipment Suppliers Association . . . . . . . 24
P2R Associates . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Plante & Moran . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Quicken Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Ramco-Gershenson Properties Trust . . . . . . . . . . . 10
Seldom Blues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shops at Sterling Ponds . . . . . . . . . . . . . . . . . . . . . 9
Spy King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
St. John Health System . . . . . . . . . . . . . . . . . . . . . 21
St. Joseph Mercy Oakland . . . . . . . . . . . . . . . . . . . . 3
Summit Place Mall . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trinity Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
University of Michigan Hospitals and Health Centers 21
Western Creative . . . . . . . . . . . . . . . . . . . . . . . . . 17
Department index
BANKRUPTCIES . . . . . . . . . . . . . . . . . 25
BUSINESS DIARY . . . . . . . . . . . . . . . . 20
CAREERWORKS . . . . . . . . . . . . . . . . . 18
CLASSIFIED ADS . . . . . . . . . . . . . . . . 20
KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 6
LETTERS . . . . . . . . . . . . . . . . . . . . . . . 7
OPINION . . . . . . . . . . . . . . . . . . . . . . . 6
OTHER VOICES . . . . . . . . . . . . . . . . . . 7
THIS WEEK @
WWW.CRAINSDETROIT.COM
Voter guide
Profiles and videos for more than 100
candidates for Detroit City Council.
www.crainsdetroit.com/election
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time and organize all those stories. To see how to set up an
RSS reader, go to www.crainsdetroit.com/multimedia
PEOPLE . . . . . . . . . . . . . . . . . . . . . . 19
RUMBLINGS . . . . . . . . . . . . . . . . . . . 26
SMALL BIZ SOLUTIONS. . . . . . . . . . . . 17
WEEK ON THE WEB . . . . . . . . . . . . . . 26
20090720-NEWS--0004-NAT-CCI-CD_--
7/17/2009
5:17 PM
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Page 4
July 20, 2009
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closed its Southfield restaurant on
June 26, though remaining open in
Troy, Matt Prentice, president of
When Mark Larco opened Lar- Matt Prentice Restaurant Group, reco’s Italian Chophouse in Troy in acted swiftly to ensure his nearby
1990, life was good.
Shiraz, in Bingham Farms, stayed
Businesses near his Big Beaver healthy.
Road location were booming. Busi“When Morton’s closed, I
ness executives were busy enter- thought ‘Oh my God, the business
taining clients. Fine dining flour- zone is dead,’ ” Prentice said. “The
ished.
viable companies in
Those days are
the area are moving
now a distant memoout and hotels are
ry.
closing.”
On July 3, Larco
Prentice decided
said goodbye to his
to tweak Shiraz’s
once-proud Italian
promotional offereatery. Ten days latings.
er, at the same adPrior to Morton’s
dress, he was celeclosing, Prentice exbrating the grand Mark Larco, Big Beaver Tavern panded his restauopening of his new
rant group’s freBig Beaver Tavern.
quent-diner program to include all
“It just seemed to me that this is customers. Before, it had cost
what the public wants, so the $19.95 to join. That added thoutransformation would be good for sands of e-mail addresses to his
me,” he said.
list, generating hundreds of thouLarco said business started to sands of dollars in sales for the
drop precipitously about two years group.
ago. Offering coupons and disThe program offers customers a
counts increased volume but did- 25 percent discount at any of his
n’t help his profitability.
fine-dining restaurants.
“It was like someone just turned
But after Morton’s closing,
off the faucet. Sales declined 35 Prentice went a step further by
percent in 2009 after a 20 percent adding a buy-one-get-one-free prodecline in 2008,” Larco said. motion for dinner through Labor
“Things were so bad I saw a need Day at Shiraz, Northern Lakes
for a drastic change.”
Seafood in Bloomfield Hills, No.VI
Larco invested $250,000 in the Chophouse in Novi and Coach Inrestaurant conversion. He in- signia in Detroit. The same offer
stalled 20 televisions and changed applies to lunch at Shiraz and
the seating, look and feel of the Northern Lakes.
restaurant to appeal to an entirely
Prentice said sales at Shiraz for
different type of customer.
the first promotional week of 2009
But instead of scrapping the en- were 48 percent higher than those
tire menu, Larco did keep the most from the same period a year earlier.
popular items from the chophouse.
But regardless of its short-term
“Under this new umbrella restau- benefit, Prentice was hesitant to
rant, I can still sell our filet mignon lengthen the promotion.
and other high-end entrees while
“I don’t know if I am doing the
appealing to guests who just want a right thing, but you have to find a
$6.99 burger,” Larco said.
way to put people in seats,” he
Larco is not alone. Many of the said.
area’s high-end restaurants are
Prentice was unwilling to give
making over menus, prices or an exact figure but said there has
marketing programs.
been a dramatic jump in sales at
When Morton’s the Steakhouse Shiraz since the promotions began.
BY NATHAN SKID
were
“soThings
bad I saw a
need for drastic
change.
”
James C. Becker
Market Director
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“We are talking tens of thousands of dollars in sales increase
over the same week for the previous year,” he said. While promotions alone may be enough to
hedge losses over a short period,
other restaurateurs say it’s not
enough.
Joe Vicari, president of The Andiamo Restaurant Group, said maintaining strong marketing is vital
to remaining afloat in a down
economy.
“When economic times are
good, branding is not as important
as it is when it’s bad,” Vicari said.
“You have to maintain a presence
and create brand awareness to
make sure people know what you
are doing.”
The Andiamo Restaurant Group
generated about $45 million in revenue last year and spends roughly
$1.2 million on promotions and another $1 million on advertising.
“Independent
restaurateurs
who don’t think they need to advertise are sadly mistaken, Vicari
said. “I think if you went to ask
them next year, they might not be
around.”
Volume is also down at least 25
percent at Detroit’s Seldom Blues.
Bill Young, general manager at
Seldom Blues, said the jazz restaurant is using a multiple pronged
attack to stem the loss.
It is offering free valet parking,
has formed a promotional partnership with the Detroit Marriott Renaissance Center, and has added
more affordable items to the menu.
“We have to find ways to fill the
void left by the economy, so Seldom Blues and the Detroit Marriott are offering a dinner for two
at Seldom Blues and a stay at the
Marriott for $199, Young said. “We
have sold hundreds of these packages since March. We are averaging 70 to 80 of these a month”
Vicari, Prentice, Larco and
Young all agreed on one point.
None are expecting the economy to
get better anytime soon.
Nate Skid: (313) 446-1654,
[email protected]
Delphi sheds most U.S. plants, will focus on electronics
BY DAVID BARKHOLZ
CRAIN NEWS SERVICE
Nearly four years after entering
Chapter 11, Troy-based Delphi Corp.
is poised to emerge from bankruptcy without most of its U.S. plants
and commodity products and with
a tight focus on electronics.
Former parent General Motors
Co. is facilitating much of Delphi’s
exit from U.S. production. To ensure a supply of parts, GM plans to
take back five UAW-represented
U.S. plants as well as Delphi’s global steering business.
Delphi will be left with just four
of the 41 U.S. plants it had when filing for Chapter 11 in October 2005.
Only 1,500 hourly U.S. employees
will remain, compared with 33,000
when the company sought bankruptcy protection.
Company spokesman Lindsey
Williams says annual sales of the
new Delphi are expected to be less
than $10 billion, down from
$22.59 billion in 2005.
Jockeying for ownership of the
new Delphi has come down to two
groups:
䡲 Parnassus Holdings II, an affiliate
of Platinum Equity of Beverly Hills,
Calif., has made a $3.6 billion offer
for the surviving assets of Delphi.
Under that proposal, Platinum
would put in $500 million in cash
and stock. The deal also would include $2.5 billion from General Motors and $600 million in Delphi cash.
䡲 Delphi’s debtor-in-possession
bankruptcy lenders are exploring a
credit bid that would forgive about
$3.3 billion in loans made to the
supplier in exchange for equity.
An auction to determine ownership was postponed Friday and
moved to Tuesday. A hearing to re-
view Delphi’s exit plan is scheduled for Thursday in U.S. Bankruptcy Court in New York.
The supplier was spun off from
GM in 1999.
Delphi’s core products are
telematics, engine management,
occupant protection, wiring and
connections, power products and
controls, climate control systems
and consumer electronics.
With much of Delphi’s U.S. production returning to GM, sales to
its onetime parent likely will be a
fraction of the $5.56 billion in 2008.
When the supplier emerges from
bankruptcy, fewer than 10,000 of
Delphi’s nearly 120,000 employees
worldwide will be in the U.S. That
compares with more than 50,000
U.S. employees out of 184,000
worldwide when Delphi entered
Chapter 11.
From Automotive News
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July 20, 2009
OPINION: DETROIT PRIMARY ELECTION
D
etroit voters have
a once-in-a-generation opportunity in August to select
new leadership for the city.
At least three City Council
incumbents are not running; at
least three newcomers will be
elected in November. But
the first step is selecting
18 candidates in the Aug. 4
primary.
On the same ballot, voters will
begin to determine who will shape
a new charter for the city.
Without question, the entire region, especially its business community, is affected by Detroit’s
politics and its economic fortunes.
We all have a stake in the August
primary and November general
election.
WTVS-Channel 56 and the University of
Michigan-Dearborn.
We also reviewed the selections
of political action committees and
other media to identify candidates
who showed up on more than one
list. (See “endorsements,” below left.)
The non-incumbent candidates
we selected to profile below are
worthy of voter consideration as
well as business support.
Council
Charter Comm.
Gary Brown: A career police
officer, Brown catapulted into the
spotlight when he filed a whistleblower lawsuit against the city of
Detroit, the Detroit Police Department and former Mayor Kwame
Kilpatrick after his 2003 firing. He
and former colleague Harold
Nelthrope won a settlement of
more than $8 million.
Notably absent from his council campaign documents are references to the subsequent textmessage scandal that rocked
Detroit. Instead, Brown has chosen to point to his service in the
U.S. Marine Corps and his 26-year
history with the Detroit Police
Department.
Brown defended his support
from Detroit’s business community in a recent opinion piece in
the Michigan Chronicle, saying
Detroit’s leaders should be able
to work with the business community and that a candidate who
had attracted business backing
was getting it right.
Kenneth Donaldson: The associate director of the Black United
Fund of Michigan, Donaldson has
worked with nonprofits through-
Leland McRae
John Bennett
David Costa
Andre Spivey
Saunteel Jenkins
Freman Hendrix
Teola Hunter
Ken Coleman
Jonathan Kinloch
CHARTER COMMISSION
Detroit Regional Chamber
Council
Charter Comm.
Jai-Lee Dearing
Gary Brown
Fred Elliott Hall
Saunteel Jenkins
Charles Pugh
Ken Cockrel Jr.
Jenice Mitchell Ford
Sarah Lile
Jonathan Kinloch
Patty Fedewa
Jeffrey Hunt
Kenneth Harris
John Eddings
Cara Blount
Ken Coleman
Lisa Walinske
Andrew Linn
AFL-CIO
Council
Charter Comm.
Saunteel Jenkins
Brenda Jones
Mohammed Okdie
Joann Watson
Charles Pugh
Dalton Roberson
Gary Brown
Ken Cockrel Jr.
Jai-Lee Dearing
Doyle O’Connor
Rosemary Robinson
Marlene Norris
Reggie Fluker
Ken Coleman
Elena Herrada
Arthur Divers
John Eddings
Teola Hunter
Mildred Gaddis, WCHB-AM 1200
Fannie Lou Hamer PAC
Charter Comm.
Gary Brown
Ken Coleman
Saunteel Jenkins Kenneth Harris
Raphael Johnson Elena Herrada
Brenda Jones
Teola Hunter
Charles Pugh
John Johnson
Andre Spivey
Jenice Mitchell Ford
Alberta Tinsley-Talabi
JoAnn Watson
Brian White
The Michigan Chronicle and Detroit
Renaissance Inc. had not announced
endorsements as of press time.
Ken Coleman: Has worked in
the Legislature and for the Detroit
City Council. Says the city charter
sets the path for the council to follow.
Coleman, who also has served
as editor of the Michigan Chronicle, said he’s familiar with the
charter in depth and believes that
the revision commission should
address the question of council
by districts.
John Eddings: Has served as
ombudsman for the city of Detroit
and Macomb County, and has
worked for the city in capacities
including deputy director of human resources under former May-
WEB EXTRA
Interactive ballot,
links to MiVote
Project videos
and more,
www.crains
detroit.com/
election
out the region.
He supports a regional transportation plan and campaigns on
ways to make Detroit safer and to
reduce blight through demolition
of abandoned homes.
He believes the city should experiment in “restorative justice,”
which requires criminals to accept personal responsibility for
harming victims.
Donaldson also favors election
of council members by district.
Fred Elliott Hall: With an MBA
in finance from Wayne State University, Hall founded Novatech
Computer Services Co. in 1989 and
acquired H&P Protective Services,
a security company, in 2005. He
serves on the boards of several
area nonprofits.
He pledges to bring “strategic
thinking and mature, dignified
leadership” to the council, while
providing “effective oversight of
the city’s contracting and pro-
curement processes” that would
eliminate the “pay to play” environment.
Hall also calls for regional cooperation that serves “Detroit’s
best interests and is mutually
beneficial for the region.”
Saunteel Jenkins: Jenkins is a
social worker whose political career began under the tutelage of
late Detroit City Council President Maryann Mahaffey.
Jenkins says her six years in
Mahaffey’s office, ending as the
chief of staff, have given her an
understanding of the city’s budget, ordinances and charter mandates.
She’s also had corporate experience as a business-development
director for Platform Learning, a
New York-based national education company.
Jenkins currently serves as director of a Detroit-based substance-abuse treatment program.
Charles Pugh: Detroiters
probably know Pugh best from
his days as a reporter, anchor
and weekend host at WJBK-TV2.
The longtime reporter left his
post earlier this year to run for
the council.
Pugh says his time as a reporter has given him a street-level view of the challenges Detroit
faces and the ability to read and
digest complicated documents related to city governance — such
as the budget.
The city will have to cut pay for
workers, reorganize departments, divest itself of some assets
and return to core functions,
Pugh says.
Andre Spivey: Spivey is an ordained minister in the African
Methodist Episcopal Church,
currently serving as pastor of St.
Paul A.M.E. Church in Detroit,
which has developed housing on
Detroit’s near east side.
Spivey has served on the Detroit School Board Transition Team
as an appointee of Gov. Jennifer
Granholm, and currently serves on
the Wayne County Economic Development Corp. and the Wayne County
Brownfield
Redevelopment
Authority, appointed by Wayne
County Executive Robert Ficano.
or Coleman Young and assistant
director of the Civic Center Department. Favors council by district, an independent city attorney
to run the city’s Law Department,
and the provision of penalties for
officials who violate the charter.
Kenneth Harris: Founder and
CEO of International Detroit Black
Expo Inc., an economic empowerment agency with more than 7,500
members statewide. Supports exploring council by district, investigating term limits for the city’s
elected officials, reviewing checks
and balances between the mayor
and city council and strengthening the city’s ethical guidelines.
Elena Herrada: Says the city of
Detroit is too big — and that for
the city to shrink, the charter
must change. Advocates reforming the city’s electoral system to
elect members of the Detroit City
Council by district.
A community activist and director of the oral history project
for the organization Fronteras
Norteñas, Herrada said her experience as a labor negotiator and
activist enables her to dissect a
complicated document such as
the charter.
Jonathan Kinloch: Member of
the Detroit Library Commission and
also has served on the Detroit Public Schools board. Supports electing City Council members by district, reducing the size of the
council and instituting term limits. Also supports a more rigorous independent board of ethics.
Andrew Thomas Linn: An urban planner at Zachary and Associates and small business owner,
Linn is a sixth generation Detroiter. Linn wants to streamline the
charter and include city councilby-district elections.
Jenice Mitchell Ford: Serves as
senior counsel, specializing in
commercial litigation, in the Detroit offices of law firm Foley & Lardner L.L.P. Also serves as vice chair
of the Detroit Board of Ethics.
Says she would like to clear up
vague language regarding removal of elected officials. Says an
effective council-by-district system would require a comprehensive plan, and that she would like
to change the way the Detroit City
Council’s president is selected.
CITY COUNCIL
ENDORSEMENTS
Council
With more than 160 candidates
on the ballot, Crain’s did not conduct interviews with all candidates.
Instead, we invited candidates to
submit information to reporter Nancy Kaffer, and we reviewed choices
through a remarkable online tool
created by the nonprofit voter information Web site publius.org and
MiVote Project videos created by Detroit’s public television station,
Brown
Donaldson Hall
Jenkins
Pugh
Spivey
KEITH CRAIN: Getting a message from the deceased
It was very weird. A year ago, I
bought a new vehicle. Last week, I
got a message from my salesman
congratulating me on my first anniversary and offering to help me
with anything I might need.
The weird part is that the dealership is dead. A Chrysler Jeep dealer, it was killed during the blood
bath a few months ago. Today, it’s
barely staying alive selling used
cars until it can get a new franchise from somebody else.
This dealership was in the
neighborhood for decades. The really funny thing is that if the deal-
ership hadn’t been in
business last year, I
never
would
have
bought the car. I saw it
when I was driving
home.
If the dealer hadn’t
been on that corner, it
would have been one
fewer sale for the old
Chrysler Corp. My
guess is there will be
even fewer sales now
that the franchise has
been pulled from that dealer. I
don’t think that car companies
have any idea how important the local dealer
is to the sales mix and
the image in the community.
And if that’s not bad
enough, the “new”
Chrysler sent me a
press release last week
that reported those 900
dealers cost Chrysler
$2.9 billion. Ridiculous.
They even tried to include the cost of product development and lost sales.
Closing those dealerships is going
to lower sales, not raise them.
I have always felt that fewer
dealers means more profitable
dealerships, but it’s up to the dealership to decide if they are making
enough money to stay in business
or should they sell out. It simply
doesn’t cost the factory anything
to have too many dealers; it costs
the dealers.
Sure, when General Motors
stops selling Saab, Saturn, Hummer and Pontiac, Detroit will lose
some good dealers. Obviously,
they need products to continue. (It
looks like Saab, Saturn and Hum-
mer will have new owners and
continue to supply dealers with
products.)
But watch what happens now.
We’re going to see more canceled
dealers in Southeast Michigan fill
their empty dealerships with
brands from Asia and Europe.
Their market share will increase,
and Chrysler’s and GM’s will go
down even further.
There will be fewer Little
League teams and Mite Hockey
teams now that there are fewer automobile dealers. And that’s a
shame.
20090720-NEWS--0007-NAT-CCI-CD_--
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July 20, 2009
Page 7
OTHER VOICES: College is key to reviving state’s economy
the state and federal govIf we are to lead Michiernment. How? Keep tugan toward a revitalized
ition increases low, opereconomy, we must proate
efficiently,
fund
vide the opportunity and
higher education as a primeans for each qualified
ority, and make increased
student to earn a college
financial aid accessible
degree.
and easier to understand.
A recent report by
Second, higher educaMichigan Future found
tion must be focused on
the U.S. has lost 3.7 milSusan Martin
the intersection of core
lion jobs in manufacturstrengths
and Michigan’s needs.
ing-related areas during this recession, jobs that don’t require a Here’s an example: There is a
college degree. The nation gained shortage of registered nurses and
jobs requiring a higher level of ed- nurse educators in the state.
Michigan’s demand for registered
ucation and training.
Here are three essential steps nurses in 2010 is projected to exceed supply by 7,000 nurses.
for success:
First, higher education must be
made affordable and accessible by
schools working in concert with
This year, Eastern Michigan
University expanded capacity in
its bachelor of science in nursing
program by more than 100 students. A recent grant from Michigan’s Department of Community
Health is supporting a new fasttrack nurse educator program that
will put more master’s prepared
nurse educators in the classroom,
increasing capacity for nursing
students. EMU will launch a new
doctoral program in nursing education to increase the supply of
faculty needed to expand nursing
programs.
With finite resources, it is essential that our institutions be strate-
gic, avoiding the trap of trying to
be all things to all people.
Third, we can’t just say we’re
collaborative and entrepreneurial.
We have to prove it. As we’ve seen
throughout this state, universities
have become engaged partners in
economic development. Washtenaw County is home to two public
universities, private colleges, a
strong community college and a
business community that all represent an attractive magnet of resources for economic development. When we work together, we
fuel new business opportunity. Recently, we helped launch the Spark
East incubator in Ypsilanti. The
project was powered by a partnership that includes the state, city,
county, two townships, business
leaders, the academic community,
the Michigan Economic Development Corp. and the Michigan
Small Business and Technology
Development Center. Nine tenants
are already in place and working
at the incubator. Plus, EMU will
invest $179 million in capital projects over the next three years.
We all have a stake in building a
renewed and stronger Michigan.
Let’s work together to put Michigan back to work.
Susan Martin is president of
Eastern Michigan University.
LETTERS
Solution? Follow the law
Editor:
The Michigan Tax Tribunal
would not be swamped with property tax cases if the county or city
assessors who valued properties
valued them at 50 percent of fair
market value, according to state
law. (“Tax tribunal: Raise fees. Appeals cost would more than double,” July 13.)
The main reason the tax tribunal is overloaded is because the
assessors are assessing property
higher than fair market value,
which is against state law. So the
problem is caused by a government agency and burdens another
government agency. The solution
by government is to raise fees or
taxes on the people who are being
cheated by the government.
So, we are raising fees to make it
more difficult for property owners
to be fairly treated by the government. I get it.
David Van Maele
More advanced. More luxurious.
And amazingly, more affordable.
Rochester Hills
Nonprofits aren’t islands
Editor:
One way nonprofits can reinvent themselves, as Mary Kramer
urged in her June 15 column, is
simply to work together.
My wife and I recently attended
an excellent performance at the
Detroit Repertory Theatre of a
play centered on a Polish survivor
of Auschwitz.
A few weeks previously, we
viewed an emotionally stirring exhibit of photos of Jewish ghettos in
Poland in the 1930s at the Detroit
Institute of Arts.
Maybe I missed it, but I’m unaware of any attempt by those two
Detroit cultural institutions to
cross-market their offerings, despite the obvious commonality of
theme and potential audiences.
Oh, and isn’t there supposedly a
Holocaust museum somewhere in
metro Detroit?
Detroit’s diverse array of visual,
performing and musical arts institutions would do well to get out of
their silos and explore working together.
Jim Treece
Detroit
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20090720-NEWS--0009-NAT-CCI-CD_--
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Page 9
REPORTER’S NOTEBOOK
Bill Shea writes about
media, advertising
and marketing,
entertainment, the
business of sports and
transportation. Call
(313) 446-1626
or write bshea@
crain.com
APPRAISAL RULES CHANGE
Guidelines remove mortgage brokers
from hiring appraisers, Page 11
real estate
Bill Shea
Economy trims
moves to Detroit
The crummy economy has taken its
toll on some of the area’s most
anticipated real estate announcements.
Two years ago, Livonia-based
Quicken Loans Inc. said it was bringing
4,000 employees to Detroit and
planned to build a new headquarters
downtown.
At the time, Quicken founder Dan
Gilbert said he was looking at the site
of the old Statler Hotel in Grand Circus
Park and the old Hudson’s site on
Woodward next to Compuware Corp.
Instead, Quicken said two weeks ago
it will postpone the building of a
headquarters and instead move about
1,700 employees early next year into
240,000 square feet of the Compuware
Building at Campus Martius.
The online mortgage giant is
expected to lease four floors in the
18-story, six-year-old building.
The move requires only the approval
of tax incentives by the Michigan
Economic Growth Authority, expected
at this point to be a formality.
Quicken is calling the move an
interim one and says it still plans one
day to build a headquarters building in
downtown Detroit.
The company will move all the
employees at its current headquarters
in Livonia when it takes over the
Compuware space. The Livonia lease
expires at the end of 2010.
About 1,000 employees will not
make the move downtown, including
those in two buildings in Farmington
Hills. Quicken may exercise its option
to renew those leases when they run
out.
Quicken’s decision has a trickledown effect. Other real estate
investment has been pegged to
Quicken’s move.
Pleasant Ridge-based ePrize L.L.C.,
the online promotions and
sweepstakes company in which Gilbert
invested $32 million, has long said it
plans to follow Quicken downtown.
Now, that move has been put off for
two to three years.
CEO Josh Linkner said he still has
that much time left on the lease at his
company’s current 46,000-square-foot
home, a former brewery east of
Woodward near I-696.
Linkner said ePrize hasn’t even
looked at sites and needs to consider
a myriad of details, such as tax
implications, before making a move.
Like Quicken, the company also has
seen job cuts related to the economy.
EPrize has put any move on the
back burner; it was never as much of
a priority for the company as it was for
Gilbert.
The company now has 275
employees and offices in Atlanta,
Chicago, Dallas New York and Los
Angeles.
The company did about $40 million
in revenue last year, and Linkner
called the first quarter of 2009
“fantastic” while the second was
“soft” while expecting to turn a profit.
Thinking outside
the box
To brokers,
creative reuse
is watchword
for ex-stores
LIFE AFTER CLOSING
Area real estate brokers are honing the art of finding tenants for empty retail space. But more challenges are
on the horizon with another recent round of retail bankruptcies of retailers Circuit City, Linens ’N Things and
Steve and Barry’s. Here are five examples of reinvented retail space:
BY DANIEL DUGGAN
When the sports clothing
store Steve and Barry’s closed its
retail outlets around the country last year, it left behind 21
vacant spaces in Michigan.
One 36,000-square-foot space
near Waterford Township’s
Summit Place Mall was put on
the market to be released.
But with the local real estate
market struggling, the leasing
team working on the property
needed to get creative.
Instead of housing a new retail user, the space was leased
in April by the Oakland Intermediate School District to handle
some of its outreach operations.
Eric Banks, principal with
Royal Oak-based Core Partners
L.L.C., said the real-estate firm
realized a creative reuse was
the best route, rather than
looking for mid-box retailers.
“There are a lot of other organizations and businesses
that can make use of the space
and visibility in a location like
this,” he said.
Steve and Barry’s is just one
retail bankruptcy example, and
the bankruptcies aren’t only in
Michigan.
But with the problem growing, local landlords and leasing
brokers in recent years have
found new and inventive ways
to fill the vacant retail spaces
left in the rubble of retailer
bankruptcies and other closings. The leasing challenges affect small-, mid- and big-box
sites.
“You’ll see medical uses, fit-
▲ Medicine: A closed 8,500-square-foot Murray’s
Auto Parts store near Summit Place Mall in
Waterford Township gave California-based DaVita Inc.
the chance to open a kidney dialysis center. The
lease was signed in April.
▲ Education: A closed 36,000-square-foot Steve
and Barry’s near Summit Place Mall was leased in
April by the Oakland Intermediate School District.
▲ Religion: A closed 110,000-square-foot HQ store
in the Shops at Sterling Ponds in Sterling Heights
became home to Grace Christian Church in 2007.
Growing retailers: A vacant Comp USA space at
Baldwin Commons in Orion Township let discount
shoe retailer DSW secure a big-box location close to
Great Lakes Crossing last year. DSW had been
looking in the area, but space near the freeway had
been in short supply.
Food: Ann Arbor-based Borders Group Inc.
announced in January that it is closing its store at
Detroit’s Campus Martius. Eastern Market Corp. is
considering use of half the space as a farm stand.
ISTOCKPHOTO.COM
ness centers, maybe bigger discounters like Goodwill or Salvation Army taking some of those
kinds of spaces,” said Tony
Schmitt, vice president with
Southfield-based LaKritz-Weber
& Co., a real estate firm specializing in retail.
The metro Detroit retail vacancy rate continues to increase slightly, according to
Bethesda, MD.-based CoStar
Group.
The current rate is 11.5 percent, compared with 11 percent
in the first quarter. Between
2006 and 2008, the rate hovered
between 10.3 and 10.6 percent.
If a retailer is in a well-located corridor and closes its doors
as a result of corporate bankruptcy, it can create a chain reaction of other stores moving
up the food chain, Schmitt
said.
Retailers on the grow can
move to well-located spaces
and discount retailers can get a
good deal in the less-desired
spaces.
Still, creativity has
driven a lot of deals in
the area. One leasing
challenge appears to
have taken a cue from
a higher power.
In 2006, an HQ store
closed its doors, leaving a vacant 110,000square-foot space in
the Shops at Sterling
Ponds in Sterling Heights.
At the time, Grace Christian
Church was looking for a new
location and found the space
appealing. By 2007, it moved
the congregation into the former retail space.
At Baldwin Commons shopping center in Orion Township, a vacant Comp USA storefront proved a good place for
Columbus-based DSW to locate
a new store near Great Lakes
see medical
“ You’lluses,
fitness
centers, maybe
bigger discounters
like Goodwill or
Salvation
Army.
”
Tony Schmitt, Lakritz-Weber & Co.
Crossing mall, said Chris
Brochert, a partner with Lormax Stern Development Co. Lormax developed Baldwin Commons in a joint-venture with
Troy-based Kirco Development
Corp.
See Box, Page 10
20090720-NEWS--0010-NAT-CCI-CD_--
7/17/2009
11:46 AM
Page 10
Page 1
July 20, 2009
Focus: Real Estate
Little relief predicted soon
for mature real estate debt
BY GABE NELSON
SPECIAL TO CRAIN’S DETROIT BUSINESS
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The mad scramble to raise cash
and refinance mature commercial
real estate debt will continue to be a
struggle for investors during at
least the next year, experts predict.
It’s going to be especially hard
for commercial real estate investors to get lines of credit in
Michigan because the state’s local
banks “are still on life support,”
said Dennis Bernard, president of
Southfield-based mortgage banking firm Bernard Financial Group.
And national banks are wary of
lending in the state with the nation’s highest delinquency and
foreclosure rates, said Jeffrey
Shell, Grosse Pointe Farms-based
executive vice president with
Grubb & Ellis Co.
According to a July 10 report by
Moody’s Investors Service, the delinquency rate on commercial mortgage-backed securities in Michigan
was 7.8 percent, nearly triple the
national average of 2.67 percent.
“The credit markets for commercial real estate are broken, but
to the extent that credit is available, (national banks are) looking
for opportunities where risk is
minimized. That is not the Michigan market.”
High vacancies have contributed to the plummeting commercial real estate values. According to figures from Grubb & Ellis,
the Detroit area’s office vacancy
rate climbed to 24.3 percent in the
second quarter of 2009, up from
22.6 percent a year earlier.
Shell, who heads the corporate finance practice for the Santa Ana,
Calif.-based commercial real estate
service and investment management firm, said he expects the region’s commercial real estate prices
to drop further over several years.
“We’re going through a structural change in our economy, and
we’re going to be oversupplied in
real estate relative to the future
size of our economy. That’s just
not a situation that attracts capital,” he said.
Nationwide, real estate investors also are working furiously
to raise cash, according to a recent
survey of more than 40 real estate
money managers by Ernst & Young
L.L.P. of New York.
Their two top priorities this year
are refinancing maturing debt and
raising capital, the survey found.
Both goals will be extremely challenging to achieve, said Gary
Koster, the firm’s Americas leader
for real estate fund services.
“We’ll be talking about 2008 and
2009 for decades,” he said.
Of the managers who responded
to the Ernst & Young survey, 92
percent said they generally or
strongly agreed that as with other
debt, lines of credit for a fund
would be very difficult to obtain.
A modest decline in a highly
leveraged property’s value causes
huge drops in the value of the investment, Koster said.
In some cases, remaining debt
exceeds the value of the investment. Companies are struggling to
survive, and this is only the beginning, Koster said.
Bernard said many of his borrowers are struggling to repay their
overleveraged mortgages, as well.
The firm services $3 billion in commercial real estate mortgages.
Many of those borrowers are
trying to refinance their mortgages with lenders to avoid foreclosure, Bernard said.
Some 41 percent of real estate
money managers indicated in the
Ernst & Young survey that capitalization rates for stable income-producing U.S. commercial properties
would increase this year, pushing
down property values further. Cap
rates are the ratio between the net
operating income produced and a
property’s fair market value or cost.
Investment News contributed to
this report.
>\kfeYfXi[Xk ]c\og\ibj%Zfd%
Box: Brokers get creative
■ From Page 9
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;\ckX8ìCè\jfik_\Nfic[G\ibjgifîXd%
Several years ago, DSW likely
would have built a new store, but in
October it took this existing space.
“Because we aren’t building a
lot of new space and there isn’t a
lot of competing space, a lot of this
will be leased,” he said. “If we were
still building, you’d have even
more problems on your hand.”
Farmington Hills-based real estate trust Ramco-Gershenson Properties Trust owns 89 shopping centers
across the country and has been
faced with dozens of retail vacancies resulting from retailer bankruptcy, said Mike Sullivan, senior
vice president of asset management.
The key to filling the spaces is to
find up-and-coming retailers looking to grow.
Filling many of the vacant
spaces are retailers such as Hobby
Lobby, GolfSmith and L.A. Fitness,
brokers said.
Foresight has been the best antidote, though, Sullivan said. Ramco-Gershenson centers are all in
areas with strong demographics
where retailers want to be located.
“And we have an average of two
and a half anchors per center,” he
said. “That way, if we lose one anchor, we’ve still got another in
place to bring others. We’re not
held captive, and that helps us.”
In addition, since Southeast
Michigan’s real estate market
slowed before the rest of the country, the area isn’t overbuilt with retail like other areas, Brochert said.
“The important part is that what
is happening in Michigan right now
is happening all over the country,”
he said. “But we’re in better shape.
We have less retail space per capita
than most metro areas.
“This space will all be filled.”
Daniel Duggan: (313) 446-0414,
[email protected]
20090720-NEWS--0011-NAT-CCI-CD_--
7/17/2009
10:38 AM
Page 1
July 20, 2009
Page 11
Focus: Real Estate
Not all happy with new work rules governing appraisers, brokers
BY DANIEL DUGGAN
For years, the dirty secret in the
residential appraisal industry was
the cozy relationship between appraisers and mortgage brokers.
Often, a mortgage broker intent
on getting a loan approved would
subtly — or not-so-subtly — tell an
appraiser what a home needed to
be valued at. If the appraiser felt
the value was too high for a sale or
refinancing deal to get approved,
the appraiser would risk losing future referral business.
Deals made with a wink and a
nod were overlooked, contributing
to cases of overvalued properties.
“It was blatant fraud, but nobody cared,” said Craig Hufnagel,
an appraiser in
the Troy office
of Cook, Pray,
Rexroth & Associates L.L.C., who
has been hired
in the past to investigate bad appraisals.
To counteract
the problem, a
Hufnagel
set of national
guidelines is starting to take hold —
but it now has appraisers such as
Hufnagel worried about their
stream of business referrals.
On May 1, the Home Valuation
Code of Conduct — for all loans
sold to Fannie Mae or Freddie Mac —
went into effect. Among the provisions is that mortgage brokers can
no longer hire appraisers; rather,
the appraisers must be hired by an
intermediary or by the lender.
While Fannie Mae and Freddie
Mac don’t purchase all of the residential loans originated by mortgage brokers, they are big enough
players that the changes are considered national policy.
“They’re throwing out the cozy
relationships with bad appraisers,” Hufnagel said. “But they’re
also throwing out the good relationships with good appraisers.”
The changes are having the
biggest impact on one- or two-person firms, said Bill Garber, director
of government and external relations for the Chicago-based Appraisal Institute, a trade association.
His group estimates a 50 percent
to 60 percent decrease in revenue
for some firms.
The larger banks have separate
departments that Fannie Mae and
Freddie Mac deem “compliant”
with the new rules. But many of
the lenders need to hire appraisal
management companies, which
then hire the appraisers.
The management companies are
now putting unreasonable time
constraints on appraisers and accepting, in some cases, half the fee
that’s supposed to go to the appraiser, Garber said.
“Asking an appraiser to turn
around a job in 24 hours for $150 is
unreasonable,” he said, noting
that market rate for an appraisal is
$350 to $400 and that a complex appraisal can take up to a week.
Howard Babcock, president of
Howard Babcock and Associates in
Bloomfield Hills, said he has been
offered appraisal work from management companies at 65 percent
under the market rate for the job.
“I turned it down,” he said. “I
won’t do it for that fee.”
The problem, say appraisers, is
that a management company can
shop a low price around until there
is a taker. Babcock and others in
the industry worry that appraisals
will be left to small firms willing to
work for discounted rates or large
firms that can work on volume.
“It’s costing the borrower the
same amount, but the appraisers
are now getting less for doing the
same job,” said Kevin Sulak, owner
of Oakbrook Appraisals in Saline.
But Jeff Schurman, executive director of the Pittsburgh-based Title
Appraisal Vendor Management Asso-
ciation, the trade association for
appraisal management companies,
insists appraisal management
companies can bring efficiency to
the market. A large management
company, covering many states,
can bring an appraiser into its
pool and offer clients they never
would have found on their own,
Schurman said.
In addition, a management company pays the appraiser regardless
of whether the transaction closes.
For an appraisal company considered to be large, such as Troybased Metro-West Appraisal Co.
L.L.C., with 100 appraisers working
out of 21 offices in 10 states, the
changes aren’t debilitating, said
President Donald Rousseau.
“If a management company is accepting a fee of $400 and trying to
pay us $200, we just won’t work for
them because we are as big as we
are,” he said.
But in some cases, a management
company will offer more volume in
exchange for a 5 percent or even a
10 percent discount. The appraiser
doing the work will get the same
rate, but the corporation will take
the loss, while getting more accounts and making up the money.
While many appraisers are not
happy with the solution, many are
happy that fraud in the industry
was finally recognized and action is
being taken.
Garber said his group has advocated that the state and federal government dedicate more funds to investigating fraudulent appraisals.
“Our industry and the others that
relate to us all take a look back …
and there were large parts of the
real estate industry that were unregulated. It was the wild, wild
West,” he said. “But now, we’ve
transferred the problems.”
Daniel Duggan: (313) 446-0414,
[email protected]
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20090720-NEWS--0012-NAT-CCI-CD_--
7/17/2009
11:13 AM
Page 1
Page 12
CRAIN'S LIST: LARGEST HOME BUILDERS
Building permits
by county
By 2008 permits issued in Southeast Michigan
Company
Address
Phone; Website
Rank Top executive
Kensington Realty Advisors
1.
100 North Riverside Plaza, Suite 2300, Chicago 60606
(312) 993-7800; www.kra-net.com
Jim Smith, managing principal
Pulte Homes Inc. B
2.
100 Bloomfield Hills Parkway, Bloomfield Hills 48304
(248) 647-2750; www.pulte.com
Richard Dugas, CEO and president
Centex Homes B
3.
100 Galleria Officentre, Suite 200, Southfield 48034-4780
(248) 233-8300; www.centexhomes.com
Lombardo Cos.
4.
6303 26 Mile Road, Washington Township 48094
(586) 781-7900; www.lombardocompanies.com
Anthony Lombardo, president
Erickson Communities
5.
41000 13 Mile Road, Novi 48377
(800) 573-2285; www.ericksonliving.com
Rick Grindrod, CEO
NRP Contractors
6.
5309 Transportation Blvd., Cleveland, Ohio 44125
(216) 475-8900; www.nrpgroup.com
John Leonard, vice president
Sunrise Senior Living
7.
7902 Westpark Drive, McLean, Va. 22102
(703) 273-7500; www.sunriseseniorliving.com
Mark Ordan, CEO
Pinnacle Homes
8.
28800 Orchard Lake Road, Suite 200, Farmington Hills 48334
(248) 539-9333; www.pinnaclebuilt.com
Steve Friedman, founder; Howard Fingeroot, managing partner; and John
DePorre, president
Burton-Share Management Co. Inc.
9.
30100 Telegraph Road, Suite 366, Bingham Farms 48025
(248) 647-8811; www.burton-katzman.com
Peter Burton, president
Damone Group L.L.C.
10.
850 Stephenson Highway, Troy 48083
(248) 583-6020; www.thedamonegroup.com
Michael J. Damone, president
Toll Bros. Inc.
11.
2733 Meadowbrook Road, Suite 200, Novi 48377
(248) 347-5000; www.tollbrothers.com
Keith Anderson, group president
Palazzolo Bros. E
12.
5995 19 Mile Road, Sterling Heights 48314
(586) 739-9126; www.palazzolobrothers.com
Sebastian Palazzolo, CEO
Hunter Pasteur Homes E
13.
32255 Northwestern Highway, Suite 180, Farmington Hills 48334
(248) 539-5511; www.visithphomes.com
Randy Wertheimer, president
Lions Gate Development Co.
14.
1251 Main Gate Drive, Davison Township 48423
(810) 653-2800; www.lionsgateusa.com
Robertson Bros. Co.
15.
6905 Telegraph, Suite 200, Bloomfield Hills 48301
(248) 644-3460; www.robertson-brothers.com
James Clarke, president and Paul Robertson Jr., CEO and chairman
Granger Construction Co.
16.
6267 Aurelius Road, Lansing 48911
(517) 393-1670; www.grangerconstruction.com
Glenn Granger, president
Michaelangelo Construction Co.
16.
15360 23 Mile Road, Macomb 48044
(586) 532-0716; www.michaelangelohomes.com
Michael Angelo, president and owner
Livonia Builders Inc.
16.
4952 Dewitt Road, Canton 48188
(734) 397-9140
Lidia Veri, president
Sterling Construction Corp.
19.
The Guardian Building 500 Griswold Ave. 10th Floor , Detroit
48226-3213
(313) 963-1212; construction.thesterlinggrp.com
Larry Swank, CEO
Breault Construction
20.
4902 Dewitt Road, Canton Township 48188
(734) 397-5100
Number of
Southeast Michigan
permits issued
2008/2007
Number of
rentals
included in
total 2008
320
NA
320
259
398
0
167
373
0
Permit value
2008
($000,000) Major projects/communities built
$38.0
The Courtyards, UM North campus, Ann Arbor
Permits are down between
12 percent and 63 percent from
2007 to 2008:
Wayne, -26.8%
1,071
784
52.6
Arcadia Ridge, Northville; Creekside Village, Ypsilanti;
Hills at Indianwood, Lake Orion; Pinehurst, Lyon
Township; Liberty Park, Novi
Oakland, -36%
1,018
30.3
NA
652
Washtenaw, -11.9%
128
215 C
24
17.5
The Woods of Forest Ridge, Howell; Partridge Creek
Village, Clinton Township; Thornton Farms, Dexter;
Gloede Park, Macomb Township
725
Fox Run retirement community, Novi
Macomb, -63.2%
100
NA
100
93
45 D
93
78
NA
78
12.0
Sunrise of Bloomfield Hills, Bloomfield Hills
55
27
55
11.5
Heritage Pointe, Chelsea; Greenbriar, Commerce
Township; Kirkway Estates, Northville; Country Club
Village of Rochester Hills, Rochester Hills
9.5
639
1,324
487
6.6
Preston Pointe, Brownstown
Livingston, -58.3%
509
2008
2007
212
Top municipalities
Ranked by number of permits
pulled:
48
NA
44 E
46
NA
46
43
76
41
NA
3.7
Hubbard Communities, Detroit
Municipality
0
NA
2.5
13.4
6.2
Senior housing communities
Northville Hills Golf Club, Northville; Steeplechase of
Northville, Northville; Arbor Hills, Superior Township;
Bluffs at Lakes of Milford, Milford; Island Lake of Novi,
Novi
Rivers Edge at Cherry Hill, Canton Township; Tall Oaks,
Clinton Township; Mill River, Lyon Township
Permits
Ann Arbor
377
Detroit
256
Novi
205
Macomb Twp.
124
Lyon Twp.
96
Shelby Twp.
89
Plymouth Twp., city
89
Washington Twp.
85
Canton Twp.
72
66
39
45
NA
12.7
Knightsbridge Gate in Novi and Lyon Ridge in South Lyon
Northville Twp., city
32
NA
32
0.9
Lion's Gate, Davison Township
Top builders
Ranked by value of permits:
25
NA
24
106
0
24
2.9
2.1
The Hamptons Collection, Canton; Brownstones at the
Park, Grosse Pointe Park; The Ellington Lofts, Detroit;
Saddlebrook of Plymouth, Plymouth
Maple Village, Bloomfield Township; Canterbury-on-thelake, Waterford Township
24
48
0
2.7
Washington Pointe, Washington Township
24
36
0
3.3
Single-family homes, Westland and Canton Township
23
58 F
0
1.7
Woodbridge Estates, Detroit; Heritage Place at Magnolia,
Detroit; Lakeside Towers, Sterling Heights
22
NA
0
2.8
NA
This list of home builders is an approximate compilation of the largest builders and developers with permits issued in Wayne, Oakland, Macomb, Washtenaw, Livingston, Genesee, Lapeer, St. Clair and
Monroe counties. The Southeast Michigan permits issued and permit value were obtained from Housing Consultants Inc. unless otherwise noted.
B Pulte Homes is in the process of acquiring Centex. The deal is expected to close third quarter 2009.
C Total permits include 36 rentals.
D Total permits include 45 rentals.
E Company provided information.
F Total permits include 55 rentals.
LIST RESEARCHED BY ANNE MARKS
July 20, 2009
Builder
Value
Pulte
$52,634,000
T.H. Marsh
$38,000,000
Centex
$30,258,000
Lombardo
$17,539,000
Toll Bros.
$13,444,000
Homebuilder
market share *
Centex
7.0%
Pulte
Lombardo
10.9%
4.3%
Other
73.7%
Pinnacle
2.3%
Toll Bros.
1.8%
*Based on builders with permits issued
in Wayne, Oakland, Macomb, Washtenaw,
Livingston, Genesee, Lapeer, St. Clair
and Monroe counties. Rentals not
included.
Source: Housing Consultants Inc.
DBpageAD.qxd
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3:33 PM
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20090720-NEWS--0015-NAT-CCI-CD_--
7/17/2009
10:37 AM
Page 1
July 20, 2009
Page 15
FIXING INTERNET
Monthly
REPUTATIONS
How to manage, repair
online identities,
Small Biz Solutions, Page 17
REPORTER’S NOTEBOOK
Nancy Kaffer
covers small
business and
Detroit and
Wayne County
government. Call
(313) 446-0412
or write nkaffer
@crain.com
A niche for success
Business owners make a go of surprising specialties
O
ne of the keys to a successful small business is
carving out a niche —
sometimes one that’s unusual.
Imagine jobs that few have heard
of or that many thought no
Nancy Kaffer
Energy rebates
are for biz, too
Small-business owners who want
to go green can be put off by the
sometimes hefty price tags that
accompany energy-efficient or
environmentally friendly upgrades.
A new statewide energy-efficiency
program offers Michigan residents
rebates and other financial
incentives, but small-business
owners may be unaware that
businesses are eligible for the
program’s incentives too, said Jim
Muir of Farmington Hills-based
Energy Optimization Inc.
More education is needed to get
the word out, Muir said.
“If you take an old refrigerator in a
residential section, the expectation is
that you will buy a new one that’s
more efficient. The expectation is
similar in business.”
The Detroit Edison Co., Michigan
Consolidated Gas Co. and Consumers
Energy Co. are offering business
customers “custom” and
“prescriptive” programs.
Prescriptive programs offer preset
rebates for upgrading common-use
items such as lighting, heating and
cooling systems, and motors and
drives.
Custom programs involve larger
overhauls and would require before
and after engineering analyses.
Rebates would be determined by the
energy savings.
“If you go from one lighting program
to another, you don’t need
preapproval,” Muir said.
The rebate system for upgrading to
energy-efficient lighting, he said, is
designed to cover 20 percent to 40
percent of the cost.
“Which is pretty good,” he said.
“That brings it from three- to four-year
payback to two years, and that brings
it a lot closer to (the) realm of
investment.”
For more details, see
www.consumersenergy.com. Click on
“energy efficiency programs for
business.” Or visit DTE’s
www.yourenergysavings.com.
Muir encouraged small-business
owners participating in the programs
to share knowledge.
“Little guys can’t hire consultants,”
he said. “They should look to help one
another. If one goes through the
process, you should look to help a
friend take advantage of it.”
longer existed.
Small-business reporter Nancy Kaffer found four examples of
odd jobs and the business owners
who hold them. It turns out it is
possible to make a living selling
spy gear, finding butlers or helping to make sausage.
Profiles of Fritz Blohm, Roger
Felsner, Ben Schwartz and Michael
Zwick appear on this page and
Page 16.
When heirs aren’t apparent,
attorneys call in search team
We have
“
churches, schools,
business owners,
husbands, wives
(as customers).
T
here was a homeless man
“Some people go missing bein San Jose who’d inheritcause they want to be missing,”
ed $40,000. And there was
he said. “We have some cases
a house painter who didn’t
where we’ll have to find someknow he had a $1.8 million trust
one with a very, very common
fund.
name — though
Finding misswe have had
ing heirs is
some success
what Southwith finding a
field-based As‘Mary Smith.’ ”
sets International
The more indoes.
formation, the
Since 2001,
better — but if
the company
finding the heir
has tripled in
was easy, Assize and revsets Internaenue, with 16
tional probably
employees and
wouldn’t get
$1.4 million in
the job.
sales in 2008,
“It’s a case
said Michael
where any inZwick, compaformation
ny president.
about a person
“We definitecan help us, but
ly find enough
we can work
to keep us all
with a lot less
NATHAN SKID/CDB
busy,” he said.
than the averCases are typage person,” he
President, Assets International
ically referred
said.
Southfield
by attorneys or
Skepticism,
other profesZwick said, is
sionals, Zwick said. Assets Inthe company’s biggest obstacle.
ternational’s fee is a percentage
“We understand that if we
of the missing heir’s bequest, a
were to get a call saying, ‘We
fee that can be authorized by a
have something for you, sign
judge probating the will, an atthis contract,’ we’d be suspicious
torney for the estate or some
too,” he said. “But we have done
other personal representative of
a lot in this area to gain people’s
the deceased.
confidence. We have a licensed
Assets International locates
private investigator that is bondthe missing heir in 94 percent of
ed, we’re a member of the Better
cases, Zwick said.
Business Bureau, we have profes“Every case is different,” he
sional genealogists, we have two
said. “Some cases are a matter
attorneys on staff and we have
of locating someone simply by
an office in Southfield where
using proprietary databases. …
we’re willing to meet with people
In other cases we go out to do re- to show we’re not a boiler room
search, like walking through a
operation.”
cemetery looking for tombIt’s a research-heavy professtones or who might be related
sion, Zwick said.
to whom, or looking at records
“We don’t have the type of busiin courthouses around the coun- ness where we’re staking out
try.”
someone’s home at 2 a.m. or going
The company also works inon some kind of ‘French Connecternationally.
tion’-style chase through the
Sometimes searching for peocity,” he said. “We have a lot of
ple can be a hard slog.
what we call ‘library geeks’ here.”
Michael Zwick
”
Roger Felsner, Spy King
(holding camera pen)
NATHAN SKID/CDB
Supplier for spies builds
on their suspicious minds
eel like someone’s watching
you? Feel like you should
be watching someone?
Then Roger
Felsner’s your
man.
Owner
Roger and
Spy King
his wife,
Lathrup Village
Heather, have
owned Lathrup Village-based Spy
King for 12 years. It specializes in
all manner of gadgets for cloakand-dagger detective work — or
suspicious spouses.
It was a fluke, he said.
“I was in the Army, I was
ready to retire, and I thought I
had a great job lined up when I
came to Michigan,” he said. “But
I got to Michigan and the job was
gone, and I met a guy who was
going to open a spy shop.”
No two customers are alike,
Felsner said.
“(It’s) anyone that has a suspicion that there’s a problem,” he
said. “We have churches,
schools, business owners, husbands, wives ...”
While customers are different, they’re looking for the same
things.
“Surveillance cameras, cameras for homes or businesses is
a lot of what we do,” he said.
“Vehicle tracking — you want
to track cars or trucks — that’s
F
Roger Felsner
getting big. Then we have the
nanny cams, the spy cameras,
that’s been popular since we’ve
been in business. Then we have
bug detection, for people who
think somebody planted some
kind of listening device in their
home or office.”
The company does not provide
surveillance services or do detective work.
Spy King’s sales have suffered
as Michigan’s economy has worsened, Felsner said.
“The first year or so, we didn’t
feel the bad economy,” he said.
“With the auto industry the way
it is, and the Michigan unemployment rate at 15 percent, now it’s
hitting us, too. Some business
owners have theft going on, but
they don’t think it’s worth spending $1,000 to put in a camera system.”
Spy King has a Web site, but
Felsner stopped online sales
about three years ago, turned off
by the potential for online theft.
Felsner, who hopes to match
last year’s sales with between
$500,000 and $750,000 in revenue
by year’s end, also said it’s hard
to keep profits up as the price of
electronics goes down with technological advances.
“The prices come down. So we
try to sell more.”
20090720-NEWS--0016-NAT-CCI-CD_--
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10:35 AM
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Page 16
July 20, 2009
Butcher supply adapts as market segment gets leaner
hen Fritz Blohm’s family
bought Butcher & Packer
Supply Co. in 1951, there
were seven butcher supply companies in Detroit’s Eastern Market
area.
Today,
Butcher &
President and CEO
Packer
is
Butcher & Packer
the last man
Supply Co.
standing.
Detroit
The company has adapted with the times
and has a niche in supplying industrial supplies and unique
spices for meat processing.
“The whole industry has
changed,” Blohm said. “The Eastern Market area used to be a market where the local slaughterhouses and butchers were, there was
Eastern Market and Western Market, and there were a lot of animals
processed locally. They needed
places that would supply ingredients like spices and twines to
process the meat.”
The number of butchers and
W
Fritz Blohm
Third-generation owner Fritz Blohm credits expertise and technology with the
survival of Butcher & Packer Supply Co. as similar businesses disappeared.
packers — and suppliers for same
— shrank as advances in refrigeration made it possible for fewer
companies to distribute meat in a
wider area.
Ask Blohm how Butcher & Packer survived, and he’ll give two answers: expertise and technology.
“I basically kept up with technology and kept on moving forward,”
he said. “Being the third generation
doing this business, I grew up in it,
and I expanded outside Detroit to
other places in the United States.”
Blohm installed computers before such advances were business
de rigueur.
“I started putting in a computer
system and things of that nature
back in the early 1980s,” he said.
“Now, everybody has computers,
but back then there weren’t that
many people that had them. We
had interoffice e-mail in 1981, 1982
… that’s basically what’s given me
ability to keep track of things. And
I don’t have to outsource it.”
Another resource is the company’s human capital.
“It’s a business where you really
have to grow into it,” he said.
“Everyone in it’s been in the meat
industry or food industry for
years.”
Today, about 70 percent of
Butcher & Packer’s more than $5
million in annual revenue comes
from industrial sales. About 30
percent is retail, from walk-in customers, catalog or Internet sales.
In addition to industrial supplies,
the store sells do-it-yourself brining
or sausage kits, and also blends custom spices for industrial or personal use in meat processing.
The butcher supply market has
changed, but so have consumer
tastes, Blohm said.
“You always stay on top of these
trends in foods and flavors, what
people want,” he said.
Modern Americans crave a
more complex palette of flavors —
and also eat less red meat, he said.
“They want something to stimulate their mouths. You have chicken, it’s basically a tasteless piece of
meat. You have more and more
marinated meat products in the
grocery store than we’ve have ever
had. … Right now on my desk I
have a Mediterranean flavor, a
tequila-lime flavor, apricot flavor,
praline pecan flavor … you get into
all these things because people
want them.”
Weak economy or not, butlers, personal chefs in demand
H
Ben Schwartz
arper Associates used to specialize in placing employees in the hospitality trades
— hotels, clubs, resorts.
About 15 years ago, President
Ben Schwartz said, the company
started receiving customer requests for personal chefs.
“We got involved in placing personal chefs, placing house man-
agers, executive assistants for
both the office and residence,” he
said.
If
you’re
not
quite
sure
President
what a “house
Harper Associates
manager” is,
Farmington Hills
think butler
or majordomo. While modern butlers don’t come equipped with for-
mal wear and a silver salver, the occupation is still in demand,
Schwartz said.
“It’s always difficult to find professionally trained individuals,” he
said. “A lot of people who would
like to do this work don’t have the
demeanor, personality or class and
polish. And there are times when
employers are very demanding.
There’s a fine line to walk.”
them and to make sure the cooking
Estate management is about 25 meets or exceeds expectations,” he
percent of Harper’s business, said. “Also, individuals in that levSchwartz said.
el want to make
The company
sure
someone
also places emknows how to
ployees in health
keep
a
clean
care professions,
kitchen.”
sales and in nonClients pay a
residential hospione-time placetality positions.
ment fee: a perThe
vetting
centage of the emprocess is thorployee’s salary.
ough. Like a tradiJobs listed on
tional
employthe Harper Web
ment
agency, Ben Schwartz, Harper Associates
site range from a
Harper serves as
house manager/
an interface between the applicant
private
chef
for
$90,000
to $100,000
and client, checking background
at homes in Michigan and Florida
and references.
“We like to interview everyone to a private chef with some au pair
we represent in our office so we functions for $40,000 to $50,000.
Schwartz said that despite the
can make sure they have the appropriate overall presentation,” he economy, demand for estate management professionals has resaid.
The résumé is passed along to mained high — the folks Harper
the client, and in the case of, say, a serves have remained insulated
personal chef, the company sets up from the vagaries of the economy.
“It’s always been hard to find
a tasting.
“They may do a trial run, cook- good people,” he said. “Right now,
ing one or two days for the family, we have quite a few openings for
to see if there’s chemistry between talented estate professionals.”
It’s always been
“hard
to find good
people. Right now,
we have quite a few
openings.
”
Harper Associates President Ben Schwartz poses with a chef figure in the office
that represents part of his business: supplying clients with personal chefs.
20090720-NEWS--0017-NAT-CCI-CD_--
7/17/2009
10:34 AM
Page 1
July 20, 2009
Page 17
Companies should
check image online
There’s an old sales adage called
“the rule of 200,” says Mark Young,
chairman of Redford Townshipbased advertising and marketing
agency Western Creative Inc.
“The rule of 200 is based on the
idea that the average wedding and
average funeral
had
about 200 atS o l u t i o n s tendees,” he
said. “In the
old world of
marketing, if
you had a bad
relationship
with a customer, you
could damage
yourself with
Nancy Kaffer
200 people,
because that was the sphere of influence of most people.”
In the Internet age, old rules
don’t apply anymore. One disgruntled employee or customer can fire
off a string of negative reviews and
comments, leaving a befuddled
business owner with a bad online
rap viewable by hundreds or thousands of potential customers.
“Search engines have become
the gateway for any company, regardless of whether you’re B-to-B
or B-to-C,” said Brandon Chesnutt,
an account executive at Bingham
Farms-based Identity Marketing and
Public Relations, who works in social
media. “The first place people look
is online, and that means search results are just as important as any
other brand work you do.”
A company should consider its
online identity from an internal
and external perspective, he said.
“A lot of employees are on these
(social) networks and could be inadvertently talking about their
companies,” Chesnutt said. “It’s
smart for an organization to set
up some guidelines for how staff
and executives operate online.”
Such a policy should include
cans as well as can’ts, he said.
But even a well-meaning, supportive employee can dilute the
voice of the company’s brand,
Chesnutt said — so it’s a good idea
to outline who can speak for the
company online.
To monitor reputation outside
the company, the first step is a
simple Internet search.
“The first thing you need to do is
(search) your company name on
the major search engines and find
out what’s there,” Young said.
“Then you need to search your
own name plus ‘complaint’ or
‘scam.’ You might go Google your
own name and say, ‘Oh there’s
nothing out there about me,’ then
Google with ‘complaint’ or ‘scam’
and find 300 items.”
Also search for the review sites
for your industry, he said.
“Review sites matter — consumers really pay attention to review sites,” Young said.”
If you’ve received negative reviews on a site, it’s best to address them.
“Most review sites have a way
for the business management to log
on and address the complaint as the
manager,” Young said. “ ‘Dear Un-
Small Biz
GUARD YOUR GOOD NAME
Online tools to monitor reputation:
www.socialmention.com:
“It’s like Google, but for social
networking,” said Brandon
Chesnutt, Identity Public Relations.
Google Alerts: The free service
allows users to set up automated
alerts based on keyword searches.
Users can search news sources
and blogs.
Blog searches: Google “will go
through any site on a blog
template,” said Chesnutt. “That’s
a service a lot of companies
probably don’t use but should.”
www.namechk.com: Allows
users to check the availability of a
username across more than a
hundred social networking sites.
Companies can ensure that the
brand name hasn’t been hijacked,
Chesnutt said, and can check
name availability to develop a
consistent identity across social
media platforms.
happy in Livonia, I’m so sorry to
you hear had a bad experience with
our business. We take this type of
thing very seriously, would you
please contact me directly so we
can get this resolved.’ ”
Customer service is the new PR,
Chesnutt says.
“If you have a negative reputation in that sphere, it’s going to
come up,” he said. “Smart companies are paying attention. Even if
they’re not actively participating
online, they’re paying attention to
what bloggers and social media
are saying.”
Another concern is what Chesnutt calls “brand-jacking” — when
someone from outside the company
registers a domain name or user
name on a social networking site in
the guise of a company representative.
When an imposter recently
opened a faux account on the microblogging site Twitter.com, posting
as a representative of oil giant Exxon
Mobil, “It makes them look like they
weren’t paying attention to they’re
own brand,” Chesnutt said.
And checking such things once
isn’t enough, Young said.
“There needs to be a regimented, disciplined process within
every company to go back and
retest or re-examine all of those
sources, because everything in the
world of the Web is instant,” he
said. “You may need to look at it
every day, every week or every
month.”
Large companies might have
full-time staffers to monitor blogs
and social media or hire “reputation managers,” Young said.
For small businesses, several
free online resources duplicate
functions of paid subscription services used by big businesses.
“From Google alerts to persistent
searches, to tools that allow you to
monitor various social networks …
the tools are out there ...” he said.
“Just because it’s new technology,
reputation is still the most important thing.”
Nancy Kaffer: (313) 446-0412,
[email protected]
perfection
by design
CALL US TODAY AND EXPLORE YOUR DESIGN OPTIONS
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855
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DavisInteriorDesign.com
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20090720-NEWS--0018-NAT-CCI-CD_--
7/17/2009
11:41 AM
Page 1
Page 18
July 20, 2009
CareerWorks online
Visit www.crainsdetroit.com
/careerworks to search for jobs,
post a résumé or find talent.
CareerTransition
Linda Angell
Former career:
Human factors
specialist at GM
New career:
Founder of startup
research firm
Name: Linda Angell, 56.
Education: Bachelor’s degree in psychology from the University of Kansas, and
master’s and doctoral degrees in experimental psychology from the University of
Colorado.
Past career: She spent 27 years as a human factors specialist at General Motors
Corp. Angell most recently worked at the
company’s Warren Technical Center on
projects to prevent driver distraction and
crashes.
New career: Founder of Touchstone Evaluations Inc., a startup research firm that
tests consumer electronics such as cell
phones and navigation devices to determine whether they distract drivers. The
company hopes to sell its analysis services to companies such as J.D. Power and
Associates and Consumers Union, publisher
of Consumer Reports, as well as to manufacturers of portable electronic devices.
The company also is developing its testing system as a means of diagnosing
Alzheimer’s disease, because the condition makes people more prone to distraction, Angell said.
Why she decided to change careers: With
the future of her career at GM uncertain,
Angell decided to strike out on her own
as an entrepreneur. When she turned 55
in 2008, becoming eligible for GM’s early
retirement package, Angell took the offer. “I saw that I had an opportunity,” she
said. “I could retire early and initiate a
career change for myself to pursue some
longstanding interests — and, in doing
so, perhaps also do something positive toward helping others in the midst of this
change.”
How she made the transition: Angell was
performing research funded by Wayne
State University when an administrator
suggested she try to commercialize her
expertise on driver distraction. Angell secured entrepreneurial training and resources from the SmartStart program at
Wayne State University’s business incubator, TechTown. She also took part-time
jobs with the Wayne State University Medical School and the Virginia Tech Transportation Institute while developing the new
business.
Obstacles overcome: “I knew very little
about starting or running a business. I
needed to learn about it in order to do it,
and TechTown’s SmartStart program is
helping me overcome the knowledge and
skills gap that I have.” Angell initially
struggled to juggle the demands of two
part-time jobs with efforts to grow her
new venture. She also had to become accustomed to a tighter budget and struggled to find time for family life and responsibilities. One big obstacle remains:
finding her first customers. “It is often
necessary to evolve your business concept so that it matches market opportunity, and we are currently in the process of
updating our business concept to improve revenue opportunities.”
Advice for others: “Be ready to ask for
help and be open to accepting it as you
make a change.” When taking advantage
of business incubators such as TechTown, “use the fun and excitement of
change to power you through the challenges you will face.”
If you have made a similar change in
your career, or know someone who has
made an interesting career transition, contact Andy Chapelle, managing editor at
Crain’s
Detroit
Business
at
[email protected].
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have a strong ability to negotiate and make decisions.
Commission based pay structure.
Please e-mail your resume to
[email protected]
WSU event targets
entrepreneurs
A free event to learn about opportunities for creating innovative
companies is being held Saturday at
the McGregor Memorial Conference Center at Wayne State University.
FastTrac to the Future is a program created by the New Economy
Initiative and the Kauffman Foundation to provide a jump-start to entrepreneurship through mentoring, training and resources.
The featured speaker is Chris
Gardner, owner and CEO of Gardner Rich L.L.C. The author of The
New York Times No. 1 bestselling
book The Pursuit of Happyness,
which was turned into a movie
starring Will Smith, will address
the keys to overcoming obstacles
and breaking cycles.
Each participant will be able to
attend four sessions and can choose
from 12 topics. Some session topics
include intellectual property, profiting from social media, introduction to helpful organizations such
as TechTown and Ann Arbor Spark,
and a pitch-and-comment session.
The event runs from 7:30 a.m. to
6 p.m. To register, follow instructions at http://wayne.edu/fasttrac/. Contact: Taniqua Carter,
(313) 483-0392 or taniqua.fasttrac
@techtownwsu.org.
EMPLOYMENT CALENDAR
Learn to write a business plan
The Michigan Small Business and
Technology Development Center is
presenting a workshop on writing
a business plan, from 6-9 p.m.
Thursday at Oakland County’s executive office building (41 West),
2100 Pontiac Lake Road, Waterford
Township.
Workshop participants will
learn what elements are found
commonly in effective plans and
will work on developing plans for
their own businesses.
Assistance in the process and information on resources will be
provided.
Cost is $40 and includes a business plan guidebook. Register online at www.oakgov.com/peds
/calendar and click on the date or
call (248) 858-0783.
Davenport UniversityAutomation Alley open house set
Automation Alley, in partnership
with Davenport University, will host
an open house 4-7 p.m. Tuesday at
Automation Alley’s headquarters,
2675 Bellingham, Troy, to discuss
a 25 percent discount that is offered to all Automation Alley
members to DU’s many degree offerings.
There is no cost to attend, and
registration is not required. For
more information, contact Steven
Hughes, program director of the
executive MBA program, at
[email protected] or
contact Automation Alley’s resource center at (800) 427-5100 or
[email protected].
For information on Davenport
University,
visit
www.davenport.edu.
Other events
䡲 A free job fair is scheduled for
9 a.m. to 1 p.m. Friday at Doubletree Hotel Dearborn, 5801 Southfield. Scheduled companies include
MiTel
wireless,
Aflac
insurance and Regent Financial
Group.
For information, call (641) 7153900 ext. 50832# or go to www.michiganexpoexperts.com or www.oaklandcountynan.com. Sponsored by
the Oakland County chapter of the
National Action Network and
MichiganExpoExperts.com.
䡲 Global Recruiting Solutions is
hosting a Diversity Career Fair
from 9 a.m. to 2 p.m. July 28 at the
Embassy Suites hotel, 28100
Franklin Road in Southfield.
Participating organizations include the FBI, Quicken Loans, Waddell & Reed Financial Advisers, Auto
Owners Insurance and Sears Corp.
For information, call (678) 3194307.
Unprecedented challenges.
Unique needs.
Distinctive solutions.
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Chrysler and GM restructure and prepare
for a viable future.
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Attentive on-site management
Outstanding location close to area amenities and highways
Convenient access to Detroit Metro airport
FOR LEASING INFORMATION, PLEASE CONTACT:
Mark Collins 248.351.2021 Paul Beitz 248.320.6831 Jeffrey B. Bell 248.351.2074
www.cbre.com/detroit
1(:.,1*67752<0,:::%$/867(53$5.&20
20090720-NEWS--0019-NAT-CCI-CD_--
7/17/2009
11:10 AM
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July 20, 2009
Page 19
PEOPLE
ADVERTISING
Stacey Gizinski to vice president and
executive producer, McCann-Erickson
USA Inc., Birmingham, from senior
producer; also Michael Limbert to vice
president and creative director, from
associate creative director; Jennifer
Russell to vice president, remaining
traffic manager; and Susan Stallings
to vice president and creative director, from associate creative director.
ENGINEERING
Steven Willobee
to community development manager, Soil and Ma-
terials Engineers
Inc., Plymouth,
from senior project professional,
NTH Consultants
Ltd., Lansing.
Russell Sykes to
senior vice presiWillobee
dent, SmithGroup
Inc., Detroit, from office director.
FINANCE
Gordon Krater to managing partner,
Plante & Moran P.L.L.C., Southfield,
from managing partner of industry
specializations group.
Michelle Wright to controller senior
vice president, TCF Bank, Livonia,
IN THE SPOTLIGHT
Marygrove College in Detroit has
named Darrin Rankin to the new
position of vice
president for
student affairs
and enrollment
management.
Rankin, 44,
had been vice
president for
enrollment
services and
student affairs
Rankin
at Clark Atlanta
University, Atlanta.
He earned a bachelor of arts
degree in pre-law/sociology from
Loyola University in New Orleans, a
master of science degree in higher
education administration from
Syracuse University, and a Ph.D. in
higher education administration
with an emphasis on urban higher
education from Jackson State
University in Mississippi.
Marygrove is an independent
Catholic liberal arts college.
from corporate controller of internal
reporting, Affinia Group Inc., Ann Arbor.
Angela McBride to internal audit vice
president, Amerisure Mutual Insurance Co., Farmington Hills, from
principal, UHY L.L.P., Troy.
Kendra Pond to
CFO,
Invescor
Ltd., Farmington
Hills, from controller,
AtwellHicks L.L.C., Ann
Arbor.
Joseph Salvia, consultant for Bravo
36 L.L.C., Highland, and Lynn
Torossian, presiPond
dent
of
DMC
Huron Valley-Sinai Hospital, Commerce, appointed to board of directors,
Huron Valley State Bank, Milford.
Jeff Reese to director of internal
audit, Asset Ac-
manager, NSF International Strategic
Registrations Inc., Ann Arbor, from
business development manager, Verify Inc., Connersville, Ind.
SUPPLIERS
Juergen Luft to engineering manager
of North American technical center,
Pierburg Inc., Auburn Hills, from advanced engineering manager.
Smith
elected to firm’s executive committee.
Jonathan Engman, shareholder, Fabrizio & Brook P.C., Troy, appointed
vice chairman of real property committee, Oakland County Bar Association, Bloomfield Hills.
ceptance Capital
Corp., Warren,
from
manager,
Grant Thornton
L.L.P., Chicago.
LAW
Reese
Dennis Schultz to
member, Dawda,
Mann, Mulcahy &
Sadler P.L.C., Bloomfield Hills, from
member, Butzel Long P.C., Detroit;
also Richard Hewlett to member, from
member, Butzel Long P.C., Detroit.
Partridge
Roger Smith, managing partner,
Garan Lucow Miller P.C., Troy, and
Dennis Partridge, partner, Detroit;
NONPROFITS
Richard Nodel, president, Ricmar Inc.,
Southfield, to president, Jewish Community Relations Council, Bloomfield
Hills.
SERVICES
Doug Brown to managing director,
Veritas Global L.L.C., Bloomfield Hills,
from senior vice president, Mara Capital L.L.C., New York.
Jeff Carr to business development
It’s more than an
It represents business checking the way you need it.
Huntington’s Business Premier Checking account is designed to provide your business
with flexibility and convenience. So whether you have a lot of payment transactions
or just a few, whether you prefer to manage your funds hourly or would rather leave it
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PEOPLE GUIDELINES
Announcements are limited to
management positions. Nonprofit
and industry group board
appointments can be found at
www.crainsdetroit.com. Send
submissions to Departments,
Crain’s Detroit Business, 1155
Gratiot Ave., Detroit, MI 482072997, or send e-mail to
[email protected].
Releases must contain the person’s
name, new title, company, city in
which the person will work, former
title, former company (if not
promoted from within) and former
city in which the person worked.
Photos are welcome, but we cannot
guarantee they will be used.
20090720-NEWS--0020-NAT-CCI-CD_--
7/17/2009
10:33 AM
Page 1
Page 20
July 20, 2009
BUSINESS DIARY
CONTRACTS
Akamai Technologies Inc., Cambridge,
Mass., and Fry Inc., Ann Arbor, an ecommerce provider, announced that
Fry will become a reseller of Akamai’s
Dynamic Site Accelerator, which is
designed to increase site performance,
improve page response times and accelerate the delivery of content and
transactions for e-commerce.
Forgotten Harvest, Oak Park, metro
Detroit’s only mobile food rescue organization, has taken delivery of its
first hybrid truck. The Class 7 Freightliner — donated by Daimler Trucks
North America, Portland, Ore., Daimler Financial Services, Farmington
Hills, and Johnson Refrigerated Truck
Bodies, Rice Lake, Wis. — will enable
the organization to rescue 850,000 additional pounds of fresh food annually
at a 30 percent fuel savings.
The Linux Box, Ann Arbor, a professional services organization specializing in open-source technology and the
Linux platform, has appointed Feintuch Communications, New York, as
agency of record.
Continental Corp., Auburn Hills, an
international automotive supplier,
announced that it is contributing a
variety of components and systems to
the new Mercedes E-Class vehicles,
including airbag, brake and chassis
MARKET PLACE
ANNOUNCEMENTS &
SERVICES
Detroit MI. Attention: Ric-Man Detroit, Inc. is
soliciting cost proposals from qualified
DHB/DBB/MBE/WBE Subcontractors/Vendors
certified with the City of Detroit for the DWS 876 &
877 Projects. Bid due date is July 29, 2009. Projects
consist of rehabilitation/lining of existing circular and
non-circular storm sewers, sanitary sewers and water
main lines, 8" thru 120’ diameter. All disciplines of
work specific to rehabilitation/lining including restoration of existing sewer and water main systems are
available for solicitation. Those interested in providing
any of the services required are encouraged to contact us prior to July 20, 2009 at;
Ric-Man Detroit, Inc
1001 Woodward Ave. Suite 400
Detroit, MI. 48226
Phone: 313-833-2242 Fax: 313-964-8356
BUSINESS SERVICES
Attention Businesses
Newly formed private equity group looking for
businesses who need a minimum
investment of $3 million.
Must show growth and job creation.
Advanced Business Capital 800-511-0597
WE SELL BUSINESSES
Confidential & Professional Service.
Specialize in Manufacturing, Distribution &
Business -To-Business Service Industries.
Confidential Business Sale, Inc.
www.ConfidentialBusinessSale.com
Detroit Metro Office 313-221-9378
components, plus an optional Adaptive Highbeam Assist, controlled by a
camera developed by Continental.
St. Louis Rams have selected
AstroTurf, Raleigh, N.C., for a new synthetic practice field at Rams Park. The
joint construction effort between General Sports Venue L.L.C., Rochester,
AstroTurf and Munie Greencare Professionals, Caseyville, Ill., will leave
the field ready in time for the start of
training camp in late July.
ITC Holdings Corp., Novi, Mitsubishi
Electric Corp., Tokyo, and Mitsubishi
Electric Power Products Inc., Warrendale, Pa., are expanding their existing
business alliance to develop and pro-
duce extra high voltage 765 kilovolt
circuit breakers and 765 kilovolt power transformers.
ZF Friedrichshafen, Northville, a manufacturer of vehicle driveline and
chassis technology, and ISE Corp.,
Poway, Calif., a designer and manufacturer of hybrid propulsion systems
and components for heavy-duty vehicles, say they will collaborate on development and supply of a line of parallel-electric hybrid drive systems and
components for the North American
vehicle markets. ZF and ISE have
signed a memorandum of understanding that outlines plans for an intended
strategic partnership.
REAL ESTATE
Auction
AUCTIONS
Trusted Advisors
Revenue Sharing
An established (11 years) and principled Professional Employer Organization (PEO), which provides
Human Resource Management services on an outsourced basis to the small and mid-sized business sector, is seeking to institute an integrated alliance to promote a reciprocal trade relationship
with Insurance Brokers, CPAs, Management Consultants, and various B2B Sales Professionals. This PEO has created a successful and unique footprint that has contributed to high client
retention. The ultimate goal of this arrangement is to complement your existing business service
offerings and leverage areas of mutually beneficial interests.
OPEN HOUSES:
July 26th and August 2nd from 12-3PM
# # Irish Hills - # #
#
#
Evans Lake
Sunday August 9th at 1PM #
#
1205 Lemm Lane
#
Preview & Registration at Noon # # Tipton, Michigan
#
Hey! We're Going to the Lake!
¾
¾
¾
¾
Compensation will be paid monthly on a 100% residual basis;
Confidentiality of current client base and commissions safeguarded;
Opportunity to broaden existing service offering;
Publicize and endorse business partners to foster and develop ancillary revenue sources
Interested parties please contact business principle, David Otto, at [email protected] to schedule a
meeting to further discuss this opportunity.
Swim and Fish in your own backyard. Spectacular newly built home. 3500 +/- sq ft. Once
in a rare while will a truly magnificent home such as this to be available for auction. Built
without compromise. Gourmet Kitchen w/red birch cabinets and granite counters, 2-story
vaulted Great Room with fireplace overlooking Lake. Elegant Master suite and bath, private
living space above garage with 2 beds and bath for guest, 4 car garage, generator, 3/4 acre
lot built in 2005. A home to be experienced in, an investment in yourself.
ROSE AUCTION GROUP, LLC
BETH ROSE, CAI AUCTIONEER
2009 Michigan State Auctioneer's Champion
877.696.7653
www.RoseAuctionGroup.com
APARTMENT BUILDINGS
FOR SALE
Village Square Apartments
APARTMENT BUILDINGS
FOR SALE
Maple Glen Apartments
FRANCHISE OPPORTUNITIES
coffee!!
opportunity!!
interested??
franchise??
Call Kate Blackford (517) 482-8145
or [email protected]
www.biggby.com
BUSINESSES FOR SALE
BUSINESSES FOR SALE
Prototype and Short Run
Stamping Company For Sale
Mobile Truck Repair Business
Turn Key, 100+ Fleet Accounts, Service Vehicles,
Tools & Equipment, $400K Neg.
Reply To [email protected]
30 Years in Business. Clinton Twp. Business
with building and all necessary equipment to
make prototype and small quantity stampings.
Automotive and non-automotive. Owner
would like to retire. Call for all details.
NO BROKERS. CALL 586-463-4000.
EQUIPMENT &
MERCHANDISE
OFFICE FURNITURE
MUST SELL, OFFICE CLOSED
Desks $99, Chairs $39, Files $49, Partitions $50,
Lateral Files $99, Cubicles, Office Phone Systems
Call (248) 548-6404 or (248) 474-3375.
INVESTMENT OPPORTUNITIES
Wanted: Retired/Active Supermarket GM
Either interested in investing and/or
working as a consultant. SE Michigan
email to: [email protected]
CRAIN’S CLASSIFIEDS
WORK!
To Place Your Ad Call
(313) 446-6068
or
Fax (313) 446-1757
17150 Meyers Rd • Detroit, MI
•Lender Sale
•190 Units
•$2,660,000 or $14,000 Per Unit
•67% Occupied
•Property Being Sold “As Is”
•All Available Due Diligence Provided
Prior to Bid Deadline
For More Info Please Contact:
Rich Deptula
248.324.2000
[email protected]
Barry Swatsenbarg
[email protected]
2143 Winslow Drive • Columbus, OH
•Lender Sale - 706 Units
•All Reasonable Offers Considered
•$6,354,000 or $9,000 Per Unit
•Value Add Opportunity
•Property Being Sold “As Is”
•All Available Due Diligence Provided Prior to
Bid Deadline
For More Info Please Contact:
Barry Swatsenbarg
248.324.2000
[email protected]
34975 W Twelve Mile Rd
Farmington Hills, MI 48331
public relations and marketing support to promote the opening of its new
training facility, “Specs Howard on
Location,” at the Grace & Wild Studio
Center motion picture production
complex in Farmington Hills.
AspenTech Consulting Group Inc., Plymouth, a customer relationship management and contact management
company, has joined the Business Improvement Team, Bloomfield Hills, a
consortium of independent consulting
firms.
Paradox Interactive, New York, has
adopted Plymouth-based Stardock’s
Game Object Obfuscation to protect
Paradox PC game titles from piracy,
beginning with the Paradox title
“Majesty 2” and continuing on with
other titles for both retail and electronic software sales.
NEW PRODUCTS
Altair Engineering, Troy, a global
BUSINESS &
INVESTMENTS
BUSINESS OPPORTUNITIES
Tanner Friedman, Royal Oak, has been
hired by the Specs Howard School of
Broadcast Arts, Southfield, to provide
Rich Deptula
[email protected]
34975 W Twelve Mile Rd
Farmington Hills, MI 48331
www.friedmanrealestate.com
www.friedmanrealestate.com
COMMERCIAL PROPERTIES
COMMERCIAL PROPERTIES
Bankruptcy sale of commercial building
in Detroit
14410 Meyers Rd, includes cell tower lease.
Current offer: $140,000. Sale date: July 30, 2009.
More information: Tracy M. Clark, Esq. 248-352-4700
“Special” DOWNTOWN “Fifty Cents”
3300 E. Jefferson, Detroit (behind Chase Bank)
27,000 SF. Commercial/Warehouse
Price: $0.50 PSF, NNN, First Year
Call: Chris Monsour 248-948-0107
provider of technologies and services
for managing computer-intensive
workloads, has released PBS GridWorks 10.1 for workload scheduling.
Web site: www.pbsgridworks.com.
Schreiner ProTech, Southfield, introduced its miniature double-sided adhesive parts especially designed for very
small assembly components. Web site:
www.schreinerprotech.com.
The Michigan Association of Certified
Public Accountants, Troy, in partnership with Hospice of Michigan, Detroit, has created a resource guide,
“Financial Affairs: At the End of
Life.” The guide is designed to help
counsel families of patients under the
care of Hospice of Michigan on how to
attend to the end-of-life financial issues and responsibilities. Web site:
www.michcpa.org.
NEW SERVICES
Harvest Michigan, Madison Heights,
a Michigan-farmed and produced
products provider, now offers home
delivery to the Detroit area through
Suburban Home Delivery Services,
Madison Heights. Web site: www.
harvestmichigan.com.
AAA, Dearborn, has launched a new senior safety and mobility Web site that
provides families of older drivers with
information related to senior mobility
challenges and tools to help extend safe
driving and assist in discussions about
transitioning from driver to passenger.
Web site: www.aaaseniors.com.
Baker College, Auburn Hills, is offering
several new programs this fall, including a legal studies bachelor’s degree; an
LPN-to-RN associate degree; a 911
telecommunications certificate; and a
certificate, associate and bachelor’s degree in criminal justice. Telephone:
(248) 340-0600. Web site: www.baker.edu
STARTUPS
Rush Communique, an event-planning
marketing firm, has opened at 25882
Orchard Lake Road, Suite 211, Farmington Hills. Telephone: (248) 579-3313.
Light Support Services L.L.C., an emergency information database provider,
has opened a Web-based company in
Commerce Township. Telephone:
(888) 666-1952. Web site: www.light
supportservices.com.
DIARY GUIDELINES
Send news releases for Business
Diary to Departments, Crain’s
Detroit Business, 1155 Gratiot
Ave., Detroit, MI 48207-2997 or
send e-mail to cdbdepartments@
crain.com. Use any Business Diary
item as a model for your release,
and look for the appropriate
category. Without complete
information, your item will not run.
Photos are welcome, but we cannot
guarantee they will be used.
20090720-NEWS--0021-NAT-CCI-CD_--
7/17/2009
5:05 PM
Page 1
July 20, 2009
Hospital: Turning around
■ From Page 3
It also is the only for-profit hos- chases) by joining McLaren,”
pital in Michigan.
Sevillian said. This amounts to 65
Purchased out of bankruptcy for percent of purchases, he said.
$7 million, the hospital is 60 perDoctors’ Hospital also has been
cent owned by 42 physicians, 35 able to negotiate more favorable
percent owned by McLaren and 5 contracts with health insurers and
percent not yet allocated, said Dr. vendors as part of the McLaren
Anil Kumar, a urolchain and through
ogist and chairman
shrewd
business
of
the
hospital
tactics.
board.
For example, KuEventually, Kumar said the hospimar said, it is extal advised some of
pected that employits orthopedic imees and vendors will
plant vendors that it
be offered ownerwanted steep disship stakes.
counts.
“The model was
“I am on the staff
Dr. Anil Kumar,
created to provide Doctors’ Hospital of Michigan of Detroit Medical
health care as needCenter. We told our
ed to the community and to be vendors we would not pay more
highly cost effective,” Kumar said. than DMC pays. They came down
“Physicians are more involved in on their price,” Kumar said.
the hospital than ever before. Our
But the biggest cultural change
employees and (Sevillian) have that helped reduce patient care exdone a tremendous job so far.”
penses has been the greater inWhen North Oakland closed on volvement of physicians and emOct. 28 for three days, the hospital ployees in the operation of the
had already defaulted on $38.5 mil- hospital, Kumar said.
lion in bonds issued by the Pontiac
“I’ve been here 17 years and am
Hospital Finance Authority.
on (the medical staffs) of … other
Bondholders received approxi- hospitals,” Kumar said. “To get
mately $3 million as part of the things done, we would have to
bankruptcy agreement, and the fight with administrations. This
city of Pontiac forgave the debt model does away with that.
owed it.
“The key to success in an instiBy Nov. 7, the new ownership tution is to have total involvement
group had finalized the sale at U.S. with doctors.”
Bankruptcy Court in Detroit.
Using a new multi-disciplinary
McLaren paid $5 million and the rounding process, physicians,
doctors contributed $2.5 million, nurses and allied health practiwith $500,000 going toward opera- tioners work as a team to improve
tional costs, Sevillian said.
patient care and reduce length of
Jack Weiner, CEO of St. Joseph stays. Sevillian also makes
Mercy Oakland in
rounds.
Pontiac,
who
As a result, Sevillian said doclast year called
tors and nurses have been able to
for
Doctors’
reduce length of stays to four and a
Hospital to rehalf days from six.
main
closed,
Another way Doctors’ Hospital
said he still behas cut expenses and boosted prilieves Pontiac
mary care services is through the
has too many
use of its 18-physician family prachospitals.
tice residency program, Kumar
“We are at 65
said.
percent
occu- Weiner
Emergency physicians have
pancy (based on licensed beds), and been trained to educate patients on
you have POH and Doctors’ Hospi- appropriate use of the ER and refer
tal at 20 percent (licensed) occupan- non-urgent patients to the family
cy,” Weiner said. “There is a cost medicine clinic, Kumar said.
associated with this and patients,
“We have seen a 16 percent volpayers and businesses pay.”
ume increase to our family mediSevillian said Doctors’ Hospital cine clinic in the last year,” Sevilstaffs its facility based on its “aver- lian said.
age daily census of 65 patients.”
So while the hospital has a
The hospital employs 500 full-time higher mix of Medicaid patients,
equivalent employees, down from up 2 percentage points to 16 per900 last year.
cent of total admissions, uncomWeiner said that since Doctors’ pensated care is 2 percentage
Hospital has reopened and Henry points down to 17 percent this
Ford West Bloomfield Hospital year, Sevillian said.
opened last year, St. Joseph Mercy
“Uncompensated care was one
hasn’t seen any decline in patient of our major problems,” Kumar
admissions.
said. “We are doing a better job in
Kumar said St. Joseph Mercy is helping patients receive more apa “hard competitor” that focuses propriate care.”
on tertiary care services.
While Doctors’ Hospital comOver the next year, the hospital petes with St. Joseph Mercy Oakwants to expand its oncology and land, which is owned by 44-hospital
radiation oncology programs, in- Trinity Health in Novi, the hospital
cluding nuclear medicine, Kumar also has an unusual relationship
said. It also plans to enhance its with POH Regional Medical Center.
urology, cardiology, neurosurgery
McLaren purchased POH Reand orthopedics programs.
gional in 2007 and turned around
One of the keys to Doctors’ Hos- the osteopathic hospital within a
pital turnaround has been the abil- year, Sevillian said.
ity to access McLaren’s cost-cut“We try not to go after the same
ting national supply and service patient population” as POH, Sevilcontracts.
lian said.
“We have saved in excess of half
Jay Greene: (313) 446-0325,
a million dollars (in supply pur- [email protected]
Physicians are
more involved in
the hospital than
ever before.
“
”
Page 21
Area hospitals join statewide
effort to reduce readmissions
BY JAY GREENE
Thirteen hospitals in Southeast Michigan and 14 others
statewide have signed up for a
three-year study to reduce costly
hospital readmissions, according
to the Michigan Health and Hospital
Association and Mpro, a Farmington Hills-based quality-improvement organization.
Funded by a $1 million grant
from the Commonwealth Fund, the
national project — first reported
about in the April 27 Crain’s Detroit Business — has a goal to reduce readmission rates by 30 percent. Hospitals in Washington
and Massachusetts are participating in similar projects.
Nearly 20 percent of Medicare
patients are readmitted to hospitals within 30 days and 33 percent
are readmitted within 90 days,
costing Medicare $17 billion dollars in 2004 alone, according a
study in the April 1 New England
Journal of Medicine.
“The collaboration is unique in
its communitywide approach to
find solutions to improve patient
care and safety across all health
settings,” said Robert Yellan,
CEO of Mpro.
One way hospitals can reduce
readmissions is through more effective discharge planning that
involves clearer communication
with patients. It also involves
closer coordination with other
providers, including primary
care physicians, home health
agencies and nursing homes.
“This project is about removing silos of
care so that different types of
facilities and
practitioners
communicate
effectively and
work together
with patients
Yellan
and their families to ensure treatment, followup visits, and appropriate management of care,” Yellan said.
Two
Southeast
Michigan
health systems participating in
the study are Detroit Medical Center and St. John Health System in
Warren.
DMC’s hospitals are Sinai-Grace
Hospital, Detroit Receiving Hospital,
Harper University Hospital and
Hutzel Women’s Hospital. St. John’s
hospitals are St. John Hospital and
Medical Center, Detroit; St. John
Macomb-Oakland Hospital, Warren;
Providence Hospital Medical Center,
Southfield; Providence Park Hospital, Novi; and St. John River District
Hospital, East China Township.
Other hospitals in the study
are University of Michigan Hospitals
and Health Centers, Ann Arbor;
Henry Ford Hospital, Detroit; Botsford Hospital, Farmington Hills;
and Crittenton Hospital Medical
Center, Rochester Hills.
“Michigan hospitals realize
that the recovery process has
only just begun when patients
leave our facilities and return to
their lives,” Spencer Johnson,
president of the hospital association, said in a statement.
“How patients transition from
hospital care to their home or
long-term care facilities is the key
to the effectiveness of their treatment,” Johnson said. “By identifying and working to reduce
avoidable
rehospitalizations,
Michigan hospitals will benefit
not only our patients and communities, but other states will be able
to learn from this initiative.”
Jay Greene: (313) 446-0325,
[email protected]
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20090720-NEWS--0022-NAT-CCI-CD_--
7/17/2009
5:02 PM
Page 1
Page 22
July 20, 2009
History: Preservationist has formula for rehab plans
■ From Page 3
NATHAN SKID/CDB
The Lafayette Building in Detroit has
been a focal point for preservationists.
“It was something to show the
guys in this city that it does work,”
Hosey said. “So I ran the numbers,
I thought it worked and I thought
it was viable.”
What he devised was a formula
he says can work to convert many
of Detroit’s historic buildings —
pre-1936, significant architecture,
a good story — into residential
rental units, even in a moribund
lending climate that’s required
ever-more-complicated layers of financing to get deals done.
Hosey’s calculations figure
gross size, average size of units
and rents at a rate the current
market would bear.
He compared those costs — an
estimated $60 million to rehab the
Lafayette, $50 million with a deferred developer fee — to the
available arsenal of state and federal tax credits and tools, including a larger state historic tax
credit made available this year
and a U.S. Department of Housing
and Urban Development loan insurance program designed to help
private industry construct or rehabilitate
moderate-income
rental housing.
“The big assumption in the project is that we would be the benefi-
ciary of the new state historic tax
credit, at the enhanced size,” said
Hosey, ticking off elements of the
formula.
“That’s a state historic credit at
$11.5 million which would generate about $8 million in net funding
into the deal … a federal historic
tax credit that I would have on the
low side at $12.5 million, a brownfields state credit that would come
in at $6 million, and a $19.5 million
HUD 221(d)(4) loan.”
The U.S. Federal Housing Administration has become one of the country’s most viable lenders, he said,
but it can be a long process.
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Brian Holdwick, DEGC vice
president of business development
and finance, said Hosey has good
ideas but that the lending market
is still a problem.
“He’s mostly trying to leverage
new market tax credits to bridge
these gaps, and hopefully it does,
but the key problem now isn’t the
ability to get tax credits, it’s first position financing,” Holdwick said.
The DEGC routinely uses such
tools, he said.
“They’re all good tools. (Hosey)
brings new energy to trying to aggressively market those tools and
trying to solve the gaps, but it’s not
something different and new,”
Holdwick said.
“He’s trying to put a whole
bunch of layers of financing together that are needed to do these
projects, and he brings a tremendous amount of energy, but I
haven’t seen any of these projects
get over the finish line, either, in
recent months. But that doesn’t
mean we won’t keep trying.”
Developer Fred Beal’s experience
with the 91-year-old Broderick Tower bears out Hosey’s theorem.
“Traditionally, it was difficult to
put HUD (products) together with
tax credit scenarios like new market tax credits,” said Beal, president
of J.C. Beal Construction Inc., based in
Detroit and Ann Arbor. “But right
now, the developer that’s going to
get something done is very likely to
be doing it with HUD.”
Beal’s Broderick, a 34-story neoclassical/Chicago school/Beaux
Arts skyscraper in Detroit’s Grand
Circus Park, stalled when the credit market dried up.
Beal said he’d started to assemble financing for the project using
the 221(d) program, but then-low
appraisal value put a crimp in the
works.
“Today, knowing all the things
we know about tax credit and new
market tax credits, that same loan
would work,” he said. “But we’d
have to start all over to get it.”
The Broderick has received a
federal tax credit worth 20 percent
of the cost of the $55 million project and a $2 million state tax credit that can double or triple under
the new state guideline — and that
means the project may be on track
to close this summer.
Hosey admits his formula isn’t a
magic bullet. Historic tax credits
aren’t always a sure thing, and
city support or social lending
could be required to leverage the
historic tax equity credit.
But, he said, he’d like to see the
city’s historic buildings recognized
as economic development tools.
“I understand (the DEGC) has
seen a lot of (deals) fall apart,”
Hosey said. “I’ve seen a lot of
things fall apart in this market,
but I want to get a project done and
off the ground. Even with things
falling apart, I want to help them
see that things are possible, and
see what we’ve been able to do in
cities around the country.
“I think Detroit is a prime spot
for things to happen, and even in
these hard economic times, we
have what need to go forward with
this.”
Nancy Kaffer: (313) 446-0412,
[email protected].
20090720-NEWS--0023-NAT-CCI-CD_--
7/17/2009
5:02 PM
Page 1
July 20, 2009
Page 23
Arts: Eyeing new patrons Banks give struggling opera theater a break
■ From Page 3
of the face value of the six tickets.
Although the target audience is
young, sales are not restricted by
age.
Maureen Kickham, director of
marketing services for Detroit
Chamber Winds
and Strings and
its partner organizations, said
organizers intend to sell as
many as 200
packages for the
program’s inaugural season.
During
the
Kickham
first year, each
of the six participating arts institutions will sell the discounted
tickets and contribute money to
the program’s $42,800 budget. That
budget also depends on funding
the program is seeking from philanthropic organizations, Kickham
said.
Ross Binnie, the DSO’s vice
president of audience development, described programs aimed
at young professionals as smart investments for Detroit-area arts institutions.
“I can’t expect younger people,
with all the things going on in
their lives, to subscribe, but this is
a way to increase their participation,” he said.
The organizers of the program
said each Passport package performance will include a special event
geared toward young professionals.
Maud Lyon, executive director
of the Cultural Alliance of Southeastern Michigan, said the new Detroitarea programs react to changes in
audience preferences.
Today’s younger arts patrons
would rather sample a wide variety of experiences than invest in a
single subscription. And events
such as the after-parties satisfy a
desire to mix socializing and networking with entertainment, Lyon
said.
The DSO kicked off its 37/11 program after a November concert
with a party featuring free food, a
cash bar, and a performance by Detroit rock band Silverghost.
Word spread quickly.
The program has grown to include 3,000 members through
word of mouth, social media and
advertising on the DSO’s Web
site. The orchestra sells about 100
discount tickets per week, Binnie
said.
The Passport program has secured advertising through each of
its partner groups, Kickham said.
The MOT has pledged to include
inserts in its programs, the DIA’s
Detroit Film Theatre will screen advertisements before film previews,
and Wayne State University will send
e-mails to students, staff and alumni on behalf of the university’s
Hilberry Theatre.
Organizers hope to reach 100,000
people, Kickham said.
Although discount tickets offered through these programs sell
for a fraction of face value, they
fill seats and provide a small infusion of cash.
Lyon said that’s important because declines in philanthropic
support, particularly from the
auto industry, have pressured arts
institutions to emphasize revenue
BY SHERRI BEGIN WELCH
For one day,
donations
go further
The Community Foundation for
Southeast Michigan last week announced a $1 million online giving challenge to help members
of the Cultural Alliance of Southeastern Michigan leverage another
$2 million.
Every dollar donated to one of
the Cultural Alliance’s 89 members through the Community
Foundation’s Web site at
www.cfsem.org after 10 a.m. on
Aug. 18 will leverage a matching
50 cents to support their operations.
Each participating Cultural
Alliance member can garner a
maximum of $200,000 in matching funds from the Community
Foundation.
The online arts and cultural
giving challenge will end once
the $1 million matching fund is
exhausted, or no later than Sept.
18.
For more information, visit
www.cfsem.org.
— Sherri Begin Welch
from ticket sales.
Last season, the MOT saw corporate donations and sponsorships
plummet by 80 percent, said Rebekah Johnson, communications
coordinator.
Ticket sales have declined because of the slow economy, and patrons are more likely to buy individual tickets at the box office
than buy a full-season subscription.
The MOT’s opera ticket sales
dropped during the 2008-2009 season, though sales of dance tickets
rose.
Opera subscription sales fell 23
percent and single-ticket sales
were down 6 percent from the
2007-2008 season, while dance subscription sales rose 3 percent and
single-ticket sales climbed 38 percent.
The DSO’s overall attendance
dropped to 200,000 during the 20082009 season, down from high-water
marks of 233,000 during the 20052006 season and 258,000 during the
2000-2001 season. Ticket sales for
classical performances, the orchestra’s bread and butter, dipped
from $4.4 million during the 20062007 season to $4.12 million the
next season, and then to $3.85 million during the 2008-2009 season.
Binnie said the DSO hopes today’s discount-ticket buyers will
become tomorrow’s subscribers,
but the orchestra is keeping a close
eye on the age of its patrons these
days to make sure those new patrons materialize.
The last time the orchestra commissioned a demographics study
in 2000, the average audience
member was 54 years old.
The orchestra plans to commission another study by the time the
2009-2010 season starts in September.
After reporting a loss on its tax
forms the past few years tied to
declining corporate support, the
Michigan Opera Theatre has secured
some breathing room on its bond
payments.
MOT recently amended its
agreements with a four-bank consortium to lower its annual bond
payments from $2.5 million to
$1.3 million for the next 18 months.
The consortium members are
J.P. Morgan Chase Bank, Comerica
Inc., Bank of America and National
City Bank, now a part of the PNC Financial Services Group Inc.
“It took us 11 months, but I
think everybody began to realize
losing one of the major culture institutions in the city would be a
real negative for this community,” said David DiChiera, founding general manager of MOT.
Aside from the time it took to
provide detailed financial information to the banks, the negotiations
were “a matter of having banks no
longer represented on our boards
understand the role we play in the
revitalization of our community,
the quality of life ... and making
this a place people would want to
come to,” DiChiera said.
The MOT remains in debt for
$18 million on the opera house
and parking structure.
Its first bond issue for the opera
house was in 1999 for $13 million.
About $3.3 million is owed on that
loan, DiChiera said. In 2004, MOT
took a second bond for $15 million
to build a parking center. About
$13.3 million is owed on that bond,
bringing the total to $16.6 million
and $1.4 million in penalties.
MOT hadn’t missed any bond
payments, DiChiera said, but in
the face of declining corporate support, it was forced to make other
moves that included three layoffs,
schedule reductions to half time
for some staff, salary cuts for the
remaining 45 employees and cancellation of one of its productions.
The loss of corporate support
from General Motors Corp., Chrysler
L.L.C. and others has added up to
about $800,000 this year alone.
MOT ended fiscal 2009 on June 30
with total revenue of about
$13.5 million and a $2 million loss,
DiChiera said.
In 2007, MOT reported total revenue of $13.9 million on its tax
form and a loss of $2.4 million.
That followed losses of $2.2 million in fiscal 2006 and a loss of
$2.1 million in fiscal 2005.
“Let’s hope by the end of this period, this (next) 18 months, the
economy will begin to turn around
so we can be able to come up with a
better solution,” he said.
Sherri Begin Welch: (313) 4461694, [email protected]
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20090720-NEWS--0024-NAT-CCI-CD_--
7/17/2009
6:02 PM
Page 1
Page 24
July 20, 2009
Cerion: New Industrialist Hofmeister has history of building by buying
supplier
BY RYAN BEENE
■ From Page 1
and assume supply contracts with
automakers General Motors Co.,
Ford Motor Co., Chrysler Group L.L.C.,
Toyota, Honda and BMW, as well as
large tier-one suppliers such as
American Axle & Manufacturing Holdings Inc., Delphi Corp., Continental Automotive Systems Inc., Dana Corp.,
TRW Automotive Holdings Inc., BorgWarner Inc. and many others, according to bankruptcy court documents.
Cerion also gained four plants in
Michigan and one in Mexico when
it acquired Inkster-based Hillsdale
Automotive from EaglePicher Corp.
in December, renaming the company Metavation. Hillsdale posted
revenue of about $100 million in
2007, according to a press release
about the deal.
According to a June press release announcing Cerion’s selection of Livonia-based P2R Associates as the company’s public
relations firm, Cerion was officially formed following the Hillsdale
acquisition.
In the release, Cerion was described as a “privately held American manufacturing company focused on acquiring and operating
small and medium-sized precision
component manufacturing operations to serve automotive and other manufacturing industries in the
U.S.”
Cerion CEO Dave Doster declined to comment for this story
through spokesman Gordon Cole,
president of P2R Associates.
While details about the company are sketchy, one thing is clear:
Cerion L.L.C. and parent company Revstone Industries L.L.C. may
be unfamiliar names in Detroit,
but the name of the man behind it
all will likely jog a few memories.
George Hofmeister is the principal of Revstone, and based on
Crain’s reports from 1994 to 2008,
he has a history of doing deals
similar to the assembling of Cerion, almost entirely in metal-components manufacturing.
His most recent venture before
the formation of Cerion is Kentucky-based MW Universal Inc., a
holding company that operates 10
different companies serving a variety of industries.
MW’s Web site says Hofmeister
has “over 35 years experience in
the management of metals manufacturing companies incorporating more than 100 individual companies with corporate revenues
exceeding $3 billion total.”
The Web site also lists Cerion
CEO Dave Doster as MW’s chief
executive.
the market the company is entering is rough-and-tumble.
“The casting sector has experienced a large number of failures
over the last five years,” said Craig
Fitzgerald, a partner and automotive supplier consultant at Southfield-based Plante & Moran P.L.L.C.
“That’s been the rule, rather than
the exception.”
High, often volatile prices for
raw materials such as steel, excess
capacity, low volumes, price pressures and sourcing from low-cost
countries such as India and China
In 1991, Hofmeister founded EWI
Inc. in suburban Cleveland, which
through a series of acquisitions
grew to post $109 million in 1994,
and expected to generate $250 million in 1995.
During that time, the company
acquired then-major prototype
parts manufacturing Hogan Group
in Fraser for $40 million and a
commercial truck cab stamping
operation in Orrville, Ohio, from
GM/Volvo, adding $85 million in
annual sales to EWI’s books.
But the company was in Chapter 11 bankruptcy by 1996.
A separate series of deals overseen by Hofmeister from 1995 to
1997 led to recognition as finalist in
Ernst & Young L.L.P.’s Entrepreneur
of the Year awards in 1997 for his
work as chairman and CEO of
American Commercial Industries Inc.,
which made stamped metal parts
and assemblies for the auto industry and was based in Troy.
The company was a patchwork
of several acquisitions, including
the engineering and prototype
firm Carron & Co. in Inkster, two
stamping businesses from Mas-
coTech Inc. and another from ITT
Automotive.
Hofmeister was also the principal of ACI’s parent company, Kentucky-based American Commercial
Holdings Inc. Another ACH division, American Commercial Steel
Inc., was formed in late 1997 after
acquiring Harper Steel Service Center Inc. in Warren. At the time,
Crain’s sister publication Automotive News reported the overall
holding company was expected to
post revenue of $400 million in
1998.
Then in 2003, Hofmeister joined
Dan Fuhrman, a former vice president of strategic planning at
then-MascoTech, and William
Gruits, who held a position similar to Fuhrman at GE Capital L.L.C.,
to form FGH Capital L.L.C., a private
equity firm in Rochester.
The firm completed a few deals,
buying Soberay Machine & Equipment Inc. in Akron, Ohio, and
Trans Industries of Indiana Inc. in
Marion Ind., both with 2002 revenue of less than $10 million.
But FGH disbanded in 2004 and
Fuhrman started Allegent Capital
have squeezed the sector for much
of the decade, Fitzgerald said.
Buying the firms out of bankruptcy may give the new owners
an edge their predecessors lacked.
“They’re bargains, and that
means continuity of the operations.
There will be some consolidation,
and certainly these guys can afford
to close operations and consolidate
and keep the good parts running
and run them at a higher efficiency,” said Neil De Koker, president
of the Troy-based Original Equipment
Suppliers Association.
Cerion and Revstone were able
to acquire the desirable assets of
Contech, Intermet and PPI without
the burden of excessive liabilities
and debts. The acquisitions also
were a fraction of the likely cost a
few years ago.
For instance, Contech was sold
by its former parent SPX Corp. in
2007 to Marathon Automotive Group
L.L.C. for $147 million. Cerion
picked up Contech’s castings division, roughly half the business, for
$13.5 million.
The potential fate of a company
L.L.C. after Hofmeister’s resignation from the firm in January
2004, just one year after FGH was
formed.
“We decided it was best to end
this relationship, primarily because the three partners simply
had irreconcilable differences in
our philosophy and approach to
performing buyout transactions
and operating our companies,”
Fuhrman said in a press release
announcing the restructuring.
Fuhrman declined to comment
for this story.
The falling out of Hofmeister,
Gruits and Fuhrman resulted in a
series of contentious, bitter lawsuits in the Oakland County Circuit
Court and U.S. District Court in the
Eastern District of Michigan between
Hofmeister on one side, and Gruits
and Fuhrman on the other.
A few months later, Hofmeister
appeared again on the Detroit
buyout scene when he bid for, and
acquired, auto parts maker AEC
Holding Corp. out of bankruptcy
with a $12 million bid.
Ryan Beene: (313) 446-0315,
[email protected]
growing rapidly through acquisition can be seen with such companies as Noble International Ltd. and
Lear Corp.
Both used acquisitions to vault
themselves up in the auto supplier
hierarchies but took on significant
debt in the process. When revenue
plummeted along with car and
truck production volumes, the
companies could not service their
debt, went into default and eventually filed for bankruptcy.
Ryan Beene: (313) 446-0315,
[email protected]
Insurance: Dillon’s health pool plan draws business backing
■ From Page 1
to $900 million annually in reduced health benefit costs by
combining the state’s 50,000 employees and 45,000 retirees with
350,000 public employees in other
governmental subdivisions.
Several groups already have expressed interest or support for Dillon’s plan, including Detroit Renaissance Inc., the Detroit Regional
Chamber, the Michigan Association of
School Administrators, the Small Business Association of Michigan and
Michigan Association of School Boards.
“We are supportive of the concept of pooling of health insurance,” said Doug Rothwell, president of Detroit Renaissance.
“Michigan public employees have
health care benefits that are richer
than the average benefits package
offered in the public sector and far
richer than that enjoyed by private sector workers.”
A 2008 study by Detroit Renaissance concluded that Michigan
employees’ family health coverage
costs are 23 percent higher than
the national average.
Rothwell also said Dillon’s plan
could help reduce the need for further layoffs in state government and
may eventually help to cut taxes.
A spokesman for Gov. Jennifer
Granholm said she is open to looking at various proposals to cut the
budget deficit. The state is facing a
$1.8 billion deficit in fiscal 2010.
“We said we’ve got to look at any
and all proposals that could help
lower the cost of government in
Michigan without sacrificing the
things that matter most to us, including quality health care for
public employees,” said Megan
Brown, the governor’s deputy
press secretary.
Michigan Attorney General
Mike Cox said Dillon’s plan “holds
great promise.” Earlier this year,
Cox recommended the state use a
similar pooling mechanism to contain costs.
Opposing Dillon’s plan is the
Michigan Education Association,
which represents teachers.
“Why on earth would anyone believe the state could run anything
efficiently when it can’t even pass
a balanced budget?” Doug Pratt,
MEA’s director of communications, said in a statement.
Pratt said public school employees are already part of health insurance pools. He said forming a
larger pool would increase administrative costs and wipe out additional savings.
Bruce Marwil, president of
Farmington Hills-based Marwil and
Associates, also said he is skeptical
that enough local governments or
school districts would join the
state-sponsored insurance pool.
“There is only so much you can
do to reduce costs through volume
purchasing,” he said.
Marwil said his employee benefits firm has been working with
more than 35 municipalities the
past several years to lower their
health care costs.
“We have saved them 15 percent
over their old packages through
creative administration, not cutting health benefits,” Marwil said.
“There are lots of things that can
be done in the public sector to lower their bottom line costs without
going through a government-sponsored plan and pool.”
Michigan offers two types of
health plans that union and nonunion state employees can select.
About 70 percent of the state’s
50,000 employees are represented
by unions in collective bargaining
agreements.
Employees can choose either a
preferred provider organization
administered through Blue Cross
Blue Shield of Michigan or several
HMO plans, said Matt Fedorchuk,
compensation director with the
Michigan Civil Service Commission.
Some 65 percent of employees participate in the PPO plan.
Last year, Fedorchuk said the
state increased co-insurance and
co-payments for both plans in an
effort to reduce rising health care
costs.
For example, PPO co-insurance
rates increased to 10 percent from
5 percent, with office visit co-pays
increasing to $15 from $10 and
pharmacy co-pays rising to $20
from $10 for brand name drugs. A
$50 co-pay was added for emergency department use. Employees
who select an HMO now pay 5 percent for co-insurance.
About 23 states have implemented some type of government-run
health insurance pool, said Richard
Kaukchi, health program director
with the National Conference on State
Legislatures in Denver.
“Some states only have a few
thousand people outside of state
government in the pool, and five or
six states have large numbers of
participation,” Kaukchi said.
States with high participation
rates include Georgia, North Carolina, Wisconsin, Delaware and
California, he said.
“Those states have low levels of
union membership,” Kaukchi
said. “It is harder to incorporate
unions into state pools because of
their contracts.”
Kaukchi said some states have
reported savings of 2 percent to 5
percent by using pooling arrangements.
“It is hard to put numbers on
it,” he said. “Massachusetts said
those cities that didn’t join faced a
13 percent average increase compared with 8 percent for those that
joined the pool.”
Mike Boulus, executive director
of the Presidents Council, State Universities of Michigan, said one concern about joining a state-run pool
is losing control over benefit plan
decisions.
“When you have one system like
this (Dillon’s plan), our overall
concern is that you lose control of
your ability to control costs and
your fate,” he said.
Michael Batterbee, Small Business Association of Michigan director of government relations, called
Dillon’s plan a “step in the right direction.”
“We’ve been talking about government reform and government
restructuring for quite a while to
make the budget more stable,” he
said.
Sarah Hubbard, vice president
of government relations with the
Detroit Regional Chamber, said investigating the possibility of forming a state pool is a step in the
right direction.
“It saves significant money at the
state level. We’ve been calling for
out-of-the-box reforms, and Speaker
Dillon is stepping up to the plate,”
Hubbard said. “We really haven’t
seen anything this big since the reform discussions started.”
Jay Greene: (313) 446-0325,
[email protected]. Sherri Welch
and Nancy Kaffer contributed to
this story.
20090720-NEWS--0025-NAT-CCI-CD_--
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5:01 PM
Page 1
July 20, 2009
Page 25
Tigers: Ticket sales fall, owner Ilitch still spending
■ From Page 1
from the Fall Classic.
Season ticket sales dropped to
15,000 this season from 27,000 a
year ago.
“The attendance decline is out of
step with the rest of the league. Attendance is down about 5 percent
leaguewide, so the Tigers’ 20 percent decline is not good,” said J.C.
Bradbury, an economist and associate professor at Kennesaw State
University near Atlanta. He’s the author of The Baseball Economist
and operates the baseball site
Sabernomics.com.
The Tigers said they were braced
for fewer fans this year, and noted
that 2008’s record-setting attendance was a bit of an anomaly fueled by high-profile off-season player signings. They probably rank
where they should out of Major
League Baseball’s 30 teams: 11th
overall, fourth in the American
League and first in their division.
The team is also quick to point
out that it’s on pace for its third or
fourth best season attendance
ever, ahead of the 1968 and 1984
World Series years.
The attendance decline, which
has slowed as the team continues to
win and local weather improves,
means fewer dollars are coming in
for a team with baseball’s fifth
most-expensive player payroll —
something that may not matter if
the owner is willing to dig deeper to
fund trades for premium players.
The trade deadline is July 31.
Losing money?
The Tigers won’t discuss their
finances, so it’s unclear if the team
is making money or if owner Mike
Ilitch’s other business enterprises
— such as his Little Caesars pizza
chain — are subsidizing the $115
million player payroll.
And that doesn’t include the
front office and other personnel,
including manager Jim Leyland’s
$4 million annual contract or the
$2 million that team President,
CEO and General Manager Dave
Dombrowski is paid yearly.
Economic news Web site
Forbes.com, which tracks pro
sports finances, reported that the
Tigers had minus $26.3 million in
operating income last season on
revenue of $186 million. Gate receipts were $75 million.
“With his payroll and attendance
and loss of corporate sponsorships,
I think he’s losing money,” said Andrew Zimbalist, professor of economics at Smith College in Massachusetts and author of several
books on the business of baseball.
The biggest example of corporate cutbacks came when General
Motors Corp. ended its sponsorship
of the Comerica Park center-field
PROMOTING REVENUE
The Detroit Tigers have a number of promotions designed to generate
revenue both for the team and its nonprofit charity, the Detroit Tigers
Foundation.
The team won’t say how much money the promotions make, and none are
financial blockbusters. But the theory is that enough small streams can
trickle into a larger cash flow — especially important for a team spending a
lot in a financially depressed market.
Here are some of the promotions, each of which includes benefits such as
tickets, dinner, photos, clothing, etc.
Deliver the ball to the pitcher’s mound ($1,500)
Deliver the lineup card to the umpire ($1,500)
Press box fantasy ($1,500)
Participate with the grounds crew ($1,250)
Watch batting practice ($1,000)
Parent-child catch in the outfield ($750)
Scoreboard message ($55)
Three-day fantasy camp weekend ($1,350)
Fantasy batting practice under the lights ($249)
8-day fantasy camp in Florida ($3,450)
TIGERS PAYROLL
Here’s how Detroit’s annual player payroll
has changed over several
seasons:
$49.1
million
$46.8
million
$69
million
$82.6
million
$95
million
$137.6
million
$115
million
2003
2004
2005
2006
2007
2008
2009
Source: USA Today salary database
fountain as the company lurched
toward bankruptcy in the spring,
idling a prime advertising spot reportedly worth up to $2 million
over three seasons.
Ilitch kept the GM logo on the
fountain and added Chrysler L.L.C.
and Ford Motor Co. logos, all for
free, as a show of support for the
automakers.
“His standing in the community
is important to him,” Zimbalist
said. “It’s kind of like the Japanese
model to use your sports team to
promote your other business.”
Ilitch — Forbe’s 301st richest
American at a net worth of $1.3 billion and himself a former minorleague ballplayer — bought the
team in 1992 for $82 million from
Michigan’s other pizza baron,
Domino’s founder Tom Monaghan.
Forbes estimates the franchise value today at $371 million.
The Tigers draw their revenue
from several sources: ticket sales,
concessions, merchandise, corporate sponsorships, local broadcast
deals and revenue sharing.
The Tigers also get $2.2 million
annually until 2028 as part of the
naming-rights deal for Comerica
Park.
gle pot, and the money is distributed evenly among all the teams.
That means some teams lose
money on the deal and others take
in tens of millions. Last year,
teams paid $400 million into the
pot, but baseball won’t say which
teams received a net gain or loss
when the money was distributed.
Baseball also contributes a portion of its revenue from its national television contracts, and that
money is allocated to teams based
on revenue.
Some, such as Bill Ferris, who
has run DetroitTigersWeblog.com
since 2001, think Ilitch plans to
maintain aggressive spending for
the foreseeable future.
“The thing I find encouraging,
in their draft in June, they went after guys that will be hard to sign
and require bonuses,” he said. “It
makes me think the (financial) situation isn’t dire.”
The Tigers look extremely stable
compared to the Texas Rangers.
Team owners Tom Hicks’ Hicks
Sports Group recently defaulted on
more than $500 million in loans, and
baseball has made $15 million available to ensure the team maintains
payroll and day-to-day operations.
Baseball socialism
Long haul
Baseball since 1997 has had a
revenue-sharing agreement as
part of its overall labor agreement
that requires all teams to pay 31
percent of local revenue into a sin-
The Tigers say they have been
putting an emphasis on making
tickets and games attractive to costconscious fans — there are deals for
$5 tickets, $5 parking and $5 meals,
which have drawn praise from
baseball Commissioner Bud Selig
— but Ilitch also gambled by raising
prices between $2 and $7 on some
tickets for certain “premium”
games against popular opponents.
Season ticket-holders also saw a
price increase, although the hike
was light years away from the
$2,500 the New York Yankees were
charging for the best seats for a single game.
The team also has developed various promotions to raise money,
such as fantasy camps and packages that allow fans to take the ball
to the mound or watch batting practice, deals ranging from a few hundred dollars to several thousand.
(See box at left.)
The looming question is: If the
team is losing money, what is Ilitch’s threshold for tolerating losses
before he orders a drawdown?
“There are some questions as to
whether things are solid and
whether the Tigers are financially
sound in the long haul,” said Maury
Brown, president of Portland, Ore.based Business of Sports Network,
which includes a Web site devoted
to the economics of baseball. “If he’s
infusing it with his own personal
income, that’s not sustainable.”
But don’t look for a fire sale, Zimbalist said. Instead, the Tigers
would likely pursue a “less aggressive” payroll strategy rather than
dumping talent — unless they keep
winning, in which case Ilitch likely
would keep subsidizing the team
from his own pocket.
Continuing to win should help
the team financially, as could
adding a player through trades,
said Bradbury, The Baseball Economist author.
“Adding a good player to an already-good team could be the
smarter financial move than cutting payroll and incurring losses. If
the Tigers make it to the post-season then they will receive a portion
of post-season gate revenue (40 percent for mandatory games and 100
percent for ‘if necessary’ games)
that could add to the team’s coffers.”
But trades have a problematic
side because of the credit market
these days, and can reveal something about the team’s finances.
“Even if the owner sees a business opportunity that will pay off
down the road (like acquiring an
All-Star veteran) unless he has cash
on hand, he may not be able to make
the deal,” Bradbury said.
“If (Ilitch) is talking about pursuing such a player, then he probably
feels that his cash situation is good
enough to make such a deal.”
Bill
Shea:
(313)
446-1626,
[email protected]
BANKRUPTCIES
The following businesses filed for
Chapter 7 or 11 protection in U.S.
Bankruptcy Court in Detroit July 1016. Under Chapter 11, a company files
for reorganization. Chapter 7 involves
total liquidation.
Aladdin Jewelers Inc., dba Mirage Jewelers, 9701 Joseph Campau, Hamtramck, voluntary Chapter 11. Assets:
$219,300; liabilities: $270,030.
Beginners Inn Day Care Center Inc.,
7505 Canton Center Road, Canton, voluntary Chapter 11. Assets and liabili-
ties not available.
First of America Auto Inc., 7524 Maple
St., Dearborn, voluntary Chapter 7.
Assets and liabilities not available.
Grayon Industrial Inc., 39255 Country
Club Drive, Farmington Hills, voluntary Chapter 7. Assets: $84,221; liabilities: $1,502,371.
M Mullins Inc., 7505 Canton Center
Road, Canton, voluntary Chapter 11.
Optimal Care Dialysis Inc., formerly
dba Optimal Care Inc. and Optimal
Dialysis Care, Optimal Care Dialysis
Center MD, dba Medical Care Optimal,
18600 James Couzens, Detroit, voluntary Chapter 7. Assets and liabilities
not available.
Physical Therapy and Fitness L.L.C.,
30200 Schoenherr Road, Warren, voluntary Chapter 11. Assets and liabilities not available.
Renaissance Physical Therapy L.L.C.,
30020 Schoenherr Road, Warren, voluntary Chapter 11. Assets and liabili-
ties not available.
Victory Outreach – Detroit, P.O. Box
09334, Detroit, voluntary Chapter 11.
Waterfront Hotel Ventures L.L.C.,
40800 Woodward Ave., Bloomfield
Hills, voluntary Chapter 11. Assets:
$250,000; liabilities: $5,269,165.
William and Michelle Mullins L.L.C.,
7515 Canton Center Road, Canton, voluntary Chapter 11. Assets and liabilities not available.
www.crainsdetroit.com
EDITOR-IN-CHIEF Keith E. Crain
PUBLISHER Mary Kramer, (313) 446-0399 or
[email protected]
EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or [email protected]
MANAGING EDITOR Andy Chapelle, (313) 4460402 or [email protected]
ASSISTANT MANAGING EDITOR/FOCUS Jennette
Smith, (313) 446-1622 or [email protected]
BUSINESS LIVES EDITOR Michelle Darwish, (313)
446-1621 or [email protected]
COPY DESK CHIEF Gary Piatek, (313) 446-0357
or [email protected]
ASSISTANT NEWS EDITOR Jeff Johnston, (313)
DATA EDITOR Anne Marks, (313) 446-0418 or
[email protected]
WEB GENERAL MANAGER Alan Baker, (313) 4460416 or [email protected]
WEB EDITOR Christine Lasek, (313) 446-0473,
[email protected]
WEB DESIGNER/PRODUCER Ai-Ting Huang, (313)
446-0403, [email protected]
EDITORIAL SUPPORT Robertta Reiff (313) 4460419, YahNica Crawford, (313) 446-0329
NEWSROOM (313) 446-0329, FAX (313) 4461687 TIP LINE (313) 446-6766
REPORTERS
Ryan Beene: Covers auto suppliers, steel, higher
education. (313) 446-0315 or [email protected]
Daniel Duggan: Covers retail, real estate and
hospitality. (313) 446-0414 or
[email protected]
Jay Greene: Covers health care, insurance and the
environment. (313) 446-0325 or
[email protected].
Chad Halcom: Covers law, non-automotive
manufacturing, defense contracting and Oakland
and Macomb counties. (313) 446-6796 or
[email protected].
Tom Henderson: Covers banking, finance,
technology and biotechnology. (313) 446-0337 or
[email protected].
Nancy Kaffer: Covers small business, the city of
Detroit, Wayne County government. (313) 4460412 or [email protected].
Bill Shea: Covers media, advertising and
marketing, entertainment, the business of sports,
and transportation. (313) 446-1626 or
[email protected].
Nathan Skid: Multimedia reporter. Also covers the
food industry. (313) 446-1654, [email protected].
Sherri Begin Welch: Covers nonprofits and
services. (313) 446-1694 or [email protected]
LANSING BUREAU
Amy Lane: Covers business issues at the Capitol,
telecommunications and utilities. (517) 3715355, FAX (517) 371-2492, [email protected]. or
115 W. Allegan, Suite 220, Lansing 48933.
ADVERTISING
ADVERTISING DIRECTOR Marla Downs, (313)
SALES INQUIRIES: (313) 446-6052; FAX (313)
393-0997
ADVERTISING SALES Jeff Anderson, Matthew J.
Langan, Lori Tournay Liggett, Tamara Rokowski,
Kimberly Ronan, Dale Smolinski
CLASSIFIED SALES (313)-446-0351
MARKETING MANAGER Irma Clark
EVENTS MANAGER Nicole LaPointe
MARKETING ARTIST Sylvia Kolaski
SALES SUPPORT Suzanne Janik, YahNica
Crawford
CIRCULATION Candice Yopp, Manager.
SALES, MARKETING INTERN Kim Winkler
PRODUCTION MANAGER Wendy Kobylarz
PRODUCTION SUPERVISOR Larry Williams,
(313) 446-0301
CUSTOMER SERVICE
MAIN NUMBER: Call (888) 909-9111 or write
[email protected]
SUBSCRIPTIONS $59 one year, $98 two years.
Out of state, $79 one year, $138 for two years.
Outside U.S.A., add $48 per year to out-of-state
rate for surface mail. Call (313) 446-0450 or
(888) 909-9111.
SINGLE COPIES: (888) 909-9111.
REPRINTS: (800) 290-5460, ext. 125; (717) 3991900, ext. 125; or ashley.zander@theygsgroup
.com.
TO FIND A DATE A STORY WAS PUBLISHED:
(313) 446-0367 or e-mail [email protected].
CRAIN’S DETROIT BUSINESS IS PUBLISHED BY
CRAIN COMMUNICATIONS INC.
CHAIRMAN Keith E. Crain
PRESIDENT Rance Crain
SECRETARY Merrilee Crain
TREASURER Mary Kay Crain
Executive Vice President/Operations
William A. Morrow
Group Vice President/Technology,
Manufacturing, Circulation
Robert C. Adams
Vice President/Production & Manufacturing
Dave Kamis
Corporate Director/Circulation
Patrick Sheposh
G.D. Crain Jr. Founder (1885-1973)
Mrs. G.D. Crain Jr. Chairman (1911-1996)
EDITORIAL & BUSINESS OFFICES:
1155 Gratiot Ave., Detroit MI 48207-2732; (313)
446-6000
Cable address: TWX 248-221-5122 AUTNEW DET
CRAIN’S DETROIT BUSINESS ISSN # 0882-1992
is published weekly, except for the first week of
July, the fifth week of August, the fourth week of
November, the third week of December and a
special issue the fourth week of August by Crain
Communications Inc. at 1155 Gratiot Ave., Detroit
MI 48207-2732. Periodicals postage paid at Detroit,
MI and additional mailing offices. POSTMASTER:
Send address changes to CRAIN’S DETROIT
BUSINESS, Circulation Department, P.O. Box
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136760444. Printed in U.S.A.
Entire contents copyright 2009 by Crain
Communications Inc. All rights reserved.
Reproduction or use of editorial content in any
manner without permission is strictly prohibited.
20090720-NEWS--0026-NAT-CCI-CD_--
7/17/2009
6:17 PM
Page 1
Page 26
July 20, 2009
RUMBLINGS
Fundraiser
brings Bing
cha-ching
wo hours of mingling,
$250,000 in campaign
contributions.
That’s the estimated take
from a fundraiser held at Detroit’s The Roostertail for Detroit Mayor Dave Bing, said
Cliff Russell, a representative
of the Bing campaign.
The former Detroit Pistonturned-businessman, elected in a May special election,
will face five opponents in
an Aug. 4 primary.
The event last Monday,
chaired by Jim Thrower, a
former Detroit Lion who’s
now the owner of several
McDonald’s restaurants in
Detroit, drew about 500 attendees, Russell said.
The event’s list of cochairs was dotted with
names of prominent Detroit
businesspeople: John Adamo
Jr., CEO of Adamo Demolition
Co.; DTE Energy Co. CEO Anthony Earley Jr.; Bing Group
CEO Kirk Lewis; Blue Cross
Blue Shield of Michigan CEO
Daniel Loepp; developer Emmet Moten; PVS Chemicals
Inc. President James B.
Nicholson; and a slew of attorneys from firms including Butzel Long P.C., Honigman Miller Schwartz and Cohn
L.L.P., Clark Hill P.L.C. and
Miller, Canfield, Paddock and
Stone P.L.C. — including
Thrower’s daughter, Joni
Thrower, an associate at
Miller Canfield who is serving on Bing’s pro bono turnaround team.
Guests were offered two
ticket options — a strolling
dinner for $250 a head, or
the strolling dinner plus entrée to an earlier photo reception for $1,000.
The evening included re-
T
marks by Bing and newly
appointed Detroit Police Department Chief Warren Evans.
Bing let attendees know
“their support is part of
moving Detroit forward,”
Russell said.
Same sector, new view
When Jim Croce left Detroit-based NextEnergy last
July after nearly five years
as president and CEO, he
said he was eager to get back
to the private sector, as president and COO of Wixombased Lipten Co., an energyservices firm.
NextEnergy is a nonprofit incubator and business
accelerator for alternativeenergy. Before taking the
top job there, Croce had
been vice president of business development of DTE Energy Co.’s energy technology
group.
The lure of the nonprofit
sector apparently proved irresistible, though. This
month, Croce joined the
Nevada Institute for Renewable
Energy Commercialization, another nonprofit energy-technology accelerator, as its
president and CEO.
If Croce is back in the
same sector, at least it’s with
a nice view. His new outfit is
based in Incline Village,
near Lake Tahoe.
Car booted, CEO busted
Linden Nelson, local entrepreneur turned real estate
developer, got himself in
some hot water over the July
4 weekend when he was arrested by police in Aspen,
Colo., for an alleged blow-up
WEEK ON THE WEB
FROM WWW.CRAINSDETROIT.COM, WEEK OF JULY 11-17
related to his car getting a
parking boot in a fire lane at
a grocery store.
Linden, who owns Aspen’s
Crystal Palace dinner theater building, was arrested
July 4.
“Police claim Nelson tried
to flee the scene of the altercation when they arrived,”
the Aspen Daily News reported July 10. “They arrested
him for failing to obey a lawful order and resisting arrest
or interfering with an investigation.” Once Nelson was
brought to the county jail,
his arresting officers decided he should be charged only
with disorderly conduct, the
Daily News said.
“This was a parking issue.
I wish I had had more patience,” Nelson told Crain’s
on Friday. “It was non-confrontational. I think this is a
non-issue.”
Richard Nedlin, deputy district attorney for Colorado’s
Pitkin County, said the case
hasn’t reached him yet, but
the penalty for disorderly
conduct convictions typically carries a short probation
term and public service
rather than jail time.
Nelson, CEO of Celebration
Centers of America, is among
the investors in a $75 million
plan to build a 200,000square-foot movie studio at
General Motors Co.’s Pontiac
Centerpoint complex.
BITS & PIECES
John E. Enkemann Jr., senior vice president at Albert
Kahn Associates Inc., was appointed chairman of the Architectural
Registration Examination
Committee for
the National
Council of Enkemann
Architectural
Registration
Boards. Enkemann will oversee the writing of the ARE
exam, required to become a
licensed architect.
BEST FROM THE BLOGS
READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS
Neither side scores
No time like the present
“
A patent malpractice
case over a scooped
lacrosse head was
tossed out of court.
”
“
Imagine the impact
philanthropists could
have if they funded their
family foundations now
rather than waiting to
leave the full amount in
their estates.
”
Reporter Chad Halcom’s blog on the legal business
can be found at www.crainsdetroit.com/halcom
Reporter Sherri Begin Welch’s blog
about Southeast Michigan nonprofits can be found
at www.crainsdetroit.com/welch
Reports: GM
to open battery
plant near Detroit
eneral Motors Co. will
build battery packs
for the Chevrolet Volt
electric car at a facility in
Brownstown Township
that is expected to employ
at least 100 people to assemble the packs from Koreanmade batteries by a subsidiary of LG Chem of South
Korea.
A source told The Associated Press that GM will invest $43 million in an existing building. The Volt will
be built at GM’s DetroitHamtramck factory.
G
Federal Warrior-Dickinson
case tossed; Artzes settle
U.S. District Court Judge
Gerald Rosen tossed out the
jurisdiction arguments of
Detroit-based Dickinson
Wright P.L.L.C. and Warren
sports equipment maker
Warrior Sports Inc. in a patent
malpractice lawsuit —
along with the case itself.
Warrior had sought damages of $33 million against
Dickinson and member attorneys John A. Artz and John
S. Artz for a “scooped
lacrosse head” patent that
the Artzes allegedly allowed to lapse.
Court records state the
Artzes reached a tentative
settlement separately with
Warrior, on June 15.
Sam Riddle indicted in
public corruption probes
A federal grand jury has
indicted political consultant Sam Riddle in an investigation into public corruption in Detroit and
Southfield.
Riddle was arraigned
Thursday and Magistrate
Judge Mona Majzoub entered not-guilty pleas for
him. Riddle is a former aide
to Monica Conyers, who
pleaded guilty to taking
bribes while serving on the
Detroit City Council.
He also is charged in a
separate corruption case in
Southfield. Former state
Rep. Mary Waters is charged
with conspiracy to commit
bribery in the Southfield
case. A not-guilty plea was
entered for her. Southfield
Councilman William Lattimore also faces charges.
BRIGHT SPOTS
Three Michigan pro-
jects were awarded nearly
$2 million in grants last
week from the U.S. Department of Energy to support
wind energy projects, the
AP reported.
President Barack Obama, speaking at Macomb
Community College on Tuesday, unveiled a $12 billion
plan to help community
colleges.
ON THE MOVE
Edward Cardenas, former communications director for U.S. Rep. Candice
Miller, R-Harrison Township, has been named Detroit Mayor Dave Bing’s
press secretary.
Bruce
Hill has
been appointed
president
and CEO
at HealthPlus of
Hill
Michigan
after six months as interim
president and CEO.
OTHER NEWS
The Michigan Depart-
ment of Transportation said it
awarded an emergency
$84,000 contract to Shelby
Township-based Posen Construction Inc. to remove the
charred remains of the Nine
Mile Road overpass and the
debris from I-75 after a fuel
tanker truck explosion.
Today’s launch of
AnnArbor.com, the online
news and social networking site replacing the closing Ann Arbor News, has
been stalled by technical
problems until July 24.
Southfield-based auto
supplier Lear Corp. filed a
motion in U.S. Bankruptcy
Court Thursday seeking
permission to create a special incentive plan for 29
executives “instrumental
to the success” of Lear’s restructuring efforts. The
company would pay 29 top
employees bonuses totaling $20.6 million or more if
the company meets certain
benchmarks.
A Delaware bankruptcy judge Thursday denied a
request by Van Buren
Township-based auto parts
supplier Visteon Corp. to approve severance and retention plans for its nonunion
employees, the AP reported.
World Alliance Financial
Corp. will close its Michigan headquarters in Troy
effective Sept. 5 and lay off
62 employees, according to
a notice filed with the state
Department of Energy, Labor
and Economic Growth.
Henry Ford Hospital, the
flagship hospital of Detroitbased Henry Ford Health System, unveiled the final results of a $32 million
expansion Wednesday.
Former General Motors
Corp. Chairman and CEO
Rick Wagoner, 56, will retire
Aug. 1 with a pension and
benefits package the automaker valued at more
than $10 million, the AP re-
ported.
Ann Arbor-based Aastrom Biosciences Inc. (Nasdaq: ASTM) announced
Tuesday that it has been
granted another extension
by the Nasdaq Stock Exchange, until at least Oct. 1,
to comply with the requirement that member stocks
trade for at least $1 a share
or face delisting.
Walbridge Aldinger Co.,
a Detroit-based construction services company, has
received Silver LEED certification for its headquarters office at 777 Woodward
Ave.
Oakland County Executive L. Brooks Patterson is
seeking pay cuts totaling 5
percent over two years
from county employees to
help balance the county’s
budget for 2010-2012, The
Detroit News reported.
The Michigan Economic
Development Corp. has approached the Obama administration for as much as
$2 billion in federal aid to
help auto suppliers and other manufacturers that are
struggling in the tight credit market, the Free Press reported.
Farmington Hillsbased Chrysler Financial, the
former financing arm of automaker Chrysler L.L.C., said
Tuesday that it has repaid
in full its $1.5 billion in government loans, the AP reported.
Detroit-based Caraco
Pharmaceutical Laboratories
Ltd. and its parent company, Sun Pharmaceutical Industries Ltd., likely will wait
until at least 2012 to launch
a generic version of depression and anxiety drug
Lexapro — but it could
have several other products on the market much
sooner under an agreement
to resolve litigation over
Lexapro.
An executive order
signed last week by Gov.
Jennifer Granholm eliminates
the Michigan Department of
History, Arts and Libraries —
and about $2 million in associated costs from the 2010
budget.
Farmington Hills-based
Energy Conversion Devices Inc.
(Nasdaq: Ener) announced
Monday an agreement to sell
Orion Township-based
Cobasys L.L.C. to a new South
Korean company, SB
LiMotive Co. Ltd.
OBITUARIES
Alex Allen, a retired
36th District Court judge,
died of complications from
lung cancer July 9. He was
74.
Bill Reedy, who had
owned two Detroit bars
and was an assistant to former Detroit City Councilman Jack Kelley, died of
pancreatic cancer July 12.
He was 72.
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Detroit Diesel Series 60® Tier 3 Engine Package

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