Crain`s Detroit Business, July 9, 2012, Pages 1-32

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Crain`s Detroit Business, July 9, 2012, Pages 1-32
20120709-NEWS--0001-NAT-CCI-CD_--
7/6/2012
4:28 PM
Page 1
®
www.crainsdetroit.com Vol. 28, No. 28
JULY 9 – 15, 2012
$2 a copy; $59 a year
©Entire contents copyright 2012 by Crain Communications Inc. All rights reserved
Airport sets
rebids for
retail space
Page 3
New Novi office park sends
positive vibes
Company sews new revenue
lines with apparel
Health Care Extra
Insure or don’t
insure? Biz
weighs
options,
Page 19
No preference made
for current vendors
BY NANCY KAFFER
AND DUSTIN WALSH
JOHN RUSSELL
Inside
Greg Krueger of Jefferson Beach Yacht Sales expects sales to get a push if the Legislature passes
bills to assess sales tax on the difference in value between a new boat or vehicle and any trade-in.
World Watch:
Spotlight on
Michigan biz in
France, Page 16
Boat, auto dealers hope bills
reassessing sales tax travel well
Crain’s Lists
Outstate top-compensated
CEOs, Page 18
This Just In
MEDC trip to explore export
opportunities in China
NEWSPAPER
The Michigan Economic Development Corp. is organizing
a China trip to Shanghai,
Nanjing, Hangzhou, Chengdu and Wuhan from Sept. 17
to 28 to explore export opportunities.
Businesses that apply before July 16 can receive half
off the $5,900 price. The cost
includes events, translators,
hotels, meals and transportation in China but not airfare.
Eligibility requirements
include 500 or fewer employees, an employer identification number linked to a state
address, good standing with
the Michigan Department of
Treasury and other agencies
and the commitment and
ability to export.
For more information, contact Weiwei Lu, International
Trade Manager, Statewide
China, at [email protected]
or (517) 335-1646.
— Ryan Kelly
BY AMY LANE
SPECIAL TO CRAIN’S DETROIT BUSINESS
Greg Krueger has heard it from his clients
many times: They’d like to purchase their
new boat from his Jefferson Beach Yacht
Sales, but they’re instead going across the
Michigan border.
That’s because many other states, including Michigan’s Great Lakes neighbors, assess sales tax only on the difference in value
between a new boat or vehicle and the tradein. It can be a significant purchase consideration. And for years, it has been a competitive disadvantage that Michigan boat and
auto dealers, lawmakers and other interests
have sought to change.
CRAIN’S DETROIT BUSINESS
Now, with bills recently moving to soften
the impact on state revenue , advocates are
optimistic.
“We have support in the Senate, and we
think we have support in the House,” said
Krueger, president and owner of the St.
Clair Shores boat dealership. “It’s going to
increase all the dealers’ business.”
In May, the Senate by a near-unanimous
vote passed a bill that would assess sales tax
only on the difference in value. A similarly
purposed House bill in June moved out of
committee and is on the floor.
It’s an issue that for years in the state
Capitol has had wide support among Democ-
For the first time since the Detroit Metropolitan
Airport’s McNamara Terminal opened in 2002, the
contracts for airport retailers are being rebid.
Airport officials say the bids provide an opportunity for local businesses, but local operators say
that’s difficult to do without a contract with a national operator.
The initial vendor contracts will start to expire
next year, said Michael Conway, director of communications for the airport. When initially let, the
contracts were for seven years with one three-year
extension.
Only McNamara’s nonfood retail contracts will
be rebid, Conway said. Contracts for the North
Terminal will remain intact because most of the
contracts there won’t expire until 2016.
Conway said 37 nonfood retail locations in the
airport will be rebid, and existing tenants will
have to win the bid to keep their space. The current contracts generated more than $160 million in
revenue for the retailers and $29 million in revenue for the airport in 2011.
Typically, Conway said, vendors pay the airport
for their space in one of two ways: a minimum con-
See Sales tax, Page 26
See Airport, Page 29
Stressed out on the Web? A plug-in could change the mood
BY LAURA BLODGETT
SPECIAL TO CRAIN’S DETROIT BUSINESS
A 2-year-old technology company that created a Web browser
plug-in that allows people to better
manage time spent online is gaining traction thanks to tutelage
from TechTown.
The software, branded The Mentalspace Manager, disables a
user’s favorite news feeds, blogs
and social media sites such as
Facebook or YouTube if the user
has determined that they reduce
productivity or worsen his or her
mood.
Users can block individual sites
or create a “power hour” — which
blocks the entire Internet for an
hour.
If the user tries to access the site
while it’s blocked, the software instead will show an uplifting quote,
video or image. As an additional
barrier, the user can select a person
who — if the user tries to unblock
the site — will get an automated
message to allow or deny access.
“It’s meant to be playful; we’re
not a clinical solution,” said Mark
Ostach, founder and CEO of Detroit-based MyMentalSpace LLC,
who was one of Crain’s 20 in their
20s in 2011. “It’s meant for you to
be more self-aware of how a site
impacts your mood.”
Smartphone addicts
Ostach, who holds degrees in
psychology and information systems, came up with the idea in 2009
after he began to see how technoloSee Web stress, Page 27
Mark Ostach runs MyMentalSpace LLC.
CD_20120709page1CMB.qxp
7/6/2012
4:47 PM
Page 1
CRAIN’S MICHIGAN BUSINESS
CRAIN’S DETROIT BUSINESS
A special edition of
®
www.crainsdetroit.com Vol. 28, No. 28
JULY 2012
$2 a copy; $59 a year
©Entire contents copyright 2012 by Crain Communications Inc. All rights reserved
Airport sets
rebids for
retail space
Inside Michigan
Full of
tourists,
Sleeping
Bear
basks in
national spotlight,
Page 15
World
Watch:
Spotlight on
Michigan biz
in France, Page 16
No preference made
for current vendors
BY NANCY KAFFER
AND DUSTIN WALSH
JOHN RUSSELL
Health Care Extra
Greg Krueger of Jefferson Beach Yacht Sales expects sales to get a push if the Legislature passes
bills to assess sales tax on the difference in value between a new boat or vehicle and any trade-in.
Insure or don’t
insure? Biz
weighs options
Page 1
Boat, auto dealers hope bills
reassessing sales tax travel well
Crain’s Lists
Outstate top-compensated
CEOs, Page 18
This Just In
MEDC trip to explore export
opportunities in China
0
71486 02858
NEWSPAPER
1
The Michigan Economic Development Corp. is organizing
a China trip to Shanghai,
Nanjing, Hangzhou, Chengdu and Wuhan from Sept. 17
to 28 to explore export opportunities.
Businesses that apply before July 16 can receive half
off the $5,900 price. The cost
includes events, translators,
hotels, meals and transportation in China but not airfare.
Eligibility requirements
include 500 or fewer employees, an employer identification number linked to a state
address, good standing with
the Michigan Department of
Treasury and other agencies
and the commitment and
ability to export.
For more information, contact Weiwei Lu, International
Trade Manager, Statewide
China, at [email protected]
or (517) 335-1646.
— Ryan Kelly
BY AMY LANE
SPECIAL TO CRAIN’S DETROIT BUSINESS
Greg Krueger has heard it from his clients
many times: They’d like to purchase their
new boat from his Jefferson Beach Yacht
Sales, but they’re instead going across the
Michigan border.
That’s because many other states, including Michigan’s Great Lakes neighbors, assess sales tax only on the difference in value
between a new boat or vehicle and the tradein. It can be a significant purchase consideration. And for years, it has been a competitive disadvantage that Michigan boat and
auto dealers, lawmakers and other interests
have sought to change.
CRAIN’S DETROIT BUSINESS
Now, with bills recently moving to soften
the impact on state revenue , advocates are
optimistic.
“We have support in the Senate, and we
think we have support in the House,” said
Krueger, president and owner of the St.
Clair Shores boat dealership. “It’s going to
increase all the dealers’ business.”
In May, the Senate by a near-unanimous
vote passed a bill that would assess sales tax
only on the difference in value. A similarly
purposed House bill in June moved out of
committee and is on the floor.
It’s an issue that for years in the state
Capitol has had wide support among Democ-
For the first time since the Detroit Metropolitan
Airport’s McNamara Terminal opened in 2002, the
contracts for airport retailers are being rebid.
Airport officials say the bids provide an opportunity for local businesses, but local operators say
that’s difficult to do without a contract with a national operator.
The initial vendor contracts will start to expire
next year, said Michael Conway, director of communications for the airport. When initially let, the
contracts were for seven years with one three-year
extension.
Only McNamara’s nonfood retail contracts will
be rebid, Conway said. Contracts for the North
Terminal will remain intact because most of the
contracts there won’t expire until 2016.
Conway said 37 nonfood retail locations in the
airport will be rebid, and existing tenants will
have to win the bid to keep their space. The current contracts generated more than $160 million in
revenue for the retailers and $29 million in revenue for the airport in 2011.
Typically, Conway said, vendors pay the airport
for their space in one of two ways: a minimum con-
See Sales tax, Page 26
See Airport, Page 29
Stressed out on the Web? A plug-in could change the mood
BY LAURA BLODGETT
SPECIAL TO CRAIN’S DETROIT BUSINESS
A 2-year-old technology company that created a Web browser
plug-in that allows people to better
manage time spent online is gaining traction thanks to tutelage
from TechTown.
The software, branded The Mentalspace Manager, disables a
user’s favorite news feeds, blogs
and social media sites such as
Facebook or YouTube if the user
has determined that they reduce
productivity or worsen his or her
mood.
Users can block individual sites
or create a “power hour” — which
blocks the entire Internet for an
hour.
If the user tries to access the site
while it’s blocked, the software instead will show an uplifting quote,
video or image. As an additional
barrier, the user can select a person
who — if the user tries to unblock
the site — will get an automated
message to allow or deny access.
“It’s meant to be playful; we’re
not a clinical solution,” said Mark
Ostach, founder and CEO of Detroit-based MyMentalSpace LLC,
who was one of Crain’s 20 in their
20s in 2011. “It’s meant for you to
be more self-aware of how a site
impacts your mood.”
Smartphone addicts
Ostach, who holds degrees in
psychology and information systems, came up with the idea in 2009
after he began to see how technoloSee Web stress, Page 27
Mark Ostach runs MyMentalSpace LLC.
20120709-NEWS--0002-NAT-CCI-CD_--
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3:34 PM
Page 1
Page 2
July 9, 2012
CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS
PSC report doesn’t quiet ‘smart meter’ concerns
Feds offer loans to fruit farmers
slammed by hot-cold spring
The federal government last
week declared Michigan a disaster
area because of damage to fruit
crops from spring weather that
was, at turns, too warm and tool
cool. With the designation, growers can seek low-interest loans.
The U.S. Department of Agriculture
granted disaster status to 72 counties. Because the designation also
applies to contiguous counties,
virtually the entire state is covered, The Associated Press reported.
A rare heat wave in March
caused cherry, apple and other
fruit trees to sprout blooms that
were killed during later frosts and
freezes. State officials and industry leaders have reported losses of
90 percent or more in some areas.
An analysis by Michigan State University economist Bill Knudson estimated the cost to farmers at $223
million.
West Mich. colleges see growth
in enrollment for online classes
Colleges in West Michigan say
more students are chosing to matriculate online. The number of
Grand Rapids Community College students taking online courses grew
13 percent for the summer semes-
In May, Crain’s reported that the Michigan Public Service Commission had begun an investigation into the
statewide deployment of “smart meters,” which allow
utilities to wirelessly collect power use data from customers. The PSC told utilities to provide more details
about the costs, potential savings, benefits and environmental and health hazards to consumers from radio frequencies emitting from the meters.
The findings of that report, released at the end of
June: The meters posed an “insignificant” health
risk and “are more accurate, enhance outage response and offer opportunities for customer energy
management.”
But David Sheldon, president of the Michigan Stop
Smart Meters group, isn’t persuaded. “I don’t think
they’ve addressed any of the public concerns,” Sheldon said. “They really didn’t do any investigation.”
In February, Crain’s Michigan Business reported
ter, The Holland Sentinel reported.
In response, the school has opened
40 new courses for next year.
Hope College and Grand Valley
State University also have seen enrollment growth in online courses,
The Sentinel said. The number of
Grand Valley students enrolling in
online courses and those combining classroom and online instruction has more than doubled in the
past five years. Hope has seen a
slow increase since 2006, when it
started offering online summer
classes.
GRCC Provost Gilda Gely told
The Sentinel that online classes
that Consumers Energy Co. would launch a program
that moves more than 2 million business and residential customers — the first 50,000 to 60,000 by the
end of this year in Muskegon and Ottawa counties
— onto a system where the utility can read and control its meters remotely.
Critics say the utility hasn’t proved that the $750
million program will provide tangible benefits to
customers — who will be charged on average about
$312 for each smart meter installation, along with
ongoing costs covering two-way radio links between
the meters and cellular phone towers.
Sheldon thinks the meters can reveal things
about customers’ lives, such as when they are home,
when they sleep and the devices they use. He also
said many people are sensitive to electromagnetic
radiation and suffer symptoms such as headaches,
nausea and inability to sleep.
typically offer students more flexibility. She and other school administrators say online classes are as
rigorous as their classroom versions and sometimes surprise students in that they require self-discipline, time-management skills
and accountability — just like oldschool schooling.
MICH-CELLANEOUS
䡲 A proposed renovation of the
Thomas Edison Inn in Port Huron received a $7.5 million loan guarantee from the federal government.
The hotel would become a Hilton
Garden Inn as part of a $30 million
project. The hotel is to be connected to the new Blue Water Area Convention Center.
䡲 The Lansing Economic Area
Partnership and the city of Lansing’s
economic
development
agency have signed a pact that
shifts the city’s development efforts to the regional agency. The
change will save the city about
$250,000 a year, said Randy Hannan, chief of staff for Mayor Virg
Bernero. Hannan said budget concerns were not the only reason for
the change. “Economic development needs to take on a more regional focus,” he said.
䡲 The remnants of Michigan
Brewing Co., best known for producing Kid Rock’s Badass Beer,
were purchased at auction last
week by MillerCoors. A MillerCoors
spokesman said the purchase did
not include the brewing operation
in Webberville near Lansing.
Find business news from
around the state at crainsdetroit
.com/crainsmichiganbusiness.
Sign up for Crain's Michigan
Business e-newsletter at crains
detroit.com/emailsignup.
CORRECTIONS
䡲
An article on Page 3 of the June 25 issue about the reopening of
Morels incorrectly reported that Matt Prentice made a direct sale of assets to attorney Stanley Dickson Jr. The October 2009 sale was a controlled foreclosure arranged by Prentice that resulted in the transfer to
Dickson of the first position on notes with Amresco Commercial Finance.
Also, Crain’s was told in interviewing for the story that Matt Prentice
has a minority stake in Michigan Bistros LLC. Prentice said he does not
have an equity stake at this time.
Keeping automotive suppliers
ahead of the curve
There’s a lot at stake
in the auto supply industry.
So much, in fact, that our
automotive attorneys represent
ONLY suppliers. We represent more
cWP]!Pdc^\^cXeTbd__[XTab
safely steering them through some
serious hairpin turns. Contact
Warner Norcross & Judd
and be ready for the
curves ahead.
A BETTER PARTNERSHIP ®
F=9R^\~'%%$""" '
Southfield
Sterling Heights
Lansing
Grand Rapids
Holland
Muskegon
20120709-NEWS--0003-NAT-CCI-CD_--
7/6/2012
4:24 PM
Page 1
CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 3
Novi project builds on confidence
Northern Equities office park
echoes market’s positive signs
BY DANIEL DUGGAN
CRAIN’S DETROIT BUSINESS
In a sign that the Novi office
market is improving, the owner of
a 200-acre office park is ready to
start building again.
As the development firm Northern Equities Group prepares to start
construction on a 55,000-squarefoot building in its Haggerty Corridor Corporate Park, it marks the
only speculative office project in
the metro area.
“There’s a lot of deals out there
right now,” President Matt Sosin
said. “So, I’m confident this will be
leased by the end of the year.”
That confidence is something
developers have lacked for years.
In the past, when many companies were expanding and moving to
metro Detroit, it was common for
developers to build office space
without a tenant signed. Once the
building was completed, a tenant
would be found.
Since the recession, however, al-
An artist rendering
shows the planned
55,000-square-foot
building planned for
Haggerty Corridor
Corporate Park.
most no speculative deals have
occurred, as landlords struggled
to fill the existing buildings. The
few buildings that have been built
were situations in which a tenant
already had agreed to move in.
Brokers point to just one other
speculative project: the 74,000square-foot building at 37000
Woodward Ave. in Bloomfield
Hills that recently was completed
and is 63 percent leased.
And the options for companies
looking for 40,000 square feet or
more are getting smaller, especially in submarkets that have
seen a lot of activity, said Jeff
Schostak, director of corporate
real estate services for Livoniabased investor and developer
Schostak Bros. & Co.
“There has been quite a bit of
absorption, especially the tierone suppliers who’ve been pickSee Office park, Page 29
New Marine
vehicle could
be designed
by a civilian
Crowdsourcing
basis for contest
BY MEGHANA KESHAVAN
SPECIAL TO CRAIN’S DETROIT BUSINESS
Crowdsourcing may emerge as a
new strategy in the ongoing quest
to shave cost and time from the development a military vehicle.
A local contractor is leading a
crowdsource-style competition for
a new amphibious military vehicle
— and experts expect more to follow.
On June 19, the federal Defense
Advanced Research Projects Agency
awarded Belleville-based Ricardo
Inc. a $9.8 million, yearlong contract to hold competitions to design
a vehicle for the U.S. Marine Corps.
The contest, open to the public,
will encompass three design challenges of increasing complexity to
conceptualize the new Fast, Adaptable, Next-Generation ground vehicle. Cash prizes will total $4 million.
Ricardo’s position in metro Detroit is of strategic advantage for
the national competition, said
Paul Luskin, program director for
vehicle engineering at Ricardo.
“This is the Motor City — probably the largest concentration of automotive and technical engineers
in the country,” Luskin said.
“When you’re communicating
with the engineering community,
there’s not much of a better match
See Contest, Page 28
KENNY CORBIN
Mark D’Andreta, president of TD Industrial Coverings Inc., says the company’s subsidiary, MCDC, “put us on the map”
by attracting requests to design and manufacture denim uniforms and other custom sewing projects.
Assembly line to apparel lines
MCDC gets
fit with jeans,
custom wear
BY REBECCA JONES
SPECIAL TO CRAIN’S DETROIT BUSINESS
Detroit-branded blue jeans and
custom apparel are helping a
once-struggling Sterling Heights
company recover after its main
line of work, which relied heavily
on the auto industry, hit a snag.
MCDC clothing is designed, cut
and stitched in a plant shared
with its parent company, TD Industrial Coverings Inc. TDIC makes
covers for machinery, curtains
for factories and protective work
wear.
CRAIN’S
MICHIGAN BUSINESS
MCDC adds logos to catalog-ordered
clothing, including jackets with this
striped, Detroit-specific design.
Although the fashion and industrial lines use different sewing
machines and techniques, the two
sides of the business share many
resources, including designers.
“It’s been fun. It’s allowed us all
to get more creative,” said Mark
D’Andreta, president of TDIC and
its denim-company subsidiary,
which began two years ago with a
line of blue jeans. Soon after, he
started getting requests to create,
design, prototype and manufacture uniforms and other custom
sewing projects.
Apparel manufacturing also
helped the company survive. During the economic downturn, orders for industrial coverings
dwindled and the apparel work
has helped the company diversify.
The investment in MCDC “put
us on the map,” D’Andreta said.
“It really energized my staff and
brought in contracts.”
It also opened a new market for
Grand Rapids firms build
presence in Detroit, Page 11
Company index
These companies have significant mention in this
week’s Crain’s Detroit Business:
Aetna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Anna’s Uniforms . . . . . . . . . . . . . . . . . . . . . . . . . 28
Atomic Object . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Beaumont Health System . . . . . . . . . . . . . . . . . . . 23
Belfor Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Blue Cross Blue Shield of Michigan . . . . . . . . . . . . . 6
BorgWarner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Children’s Hospital . . . . . . . . . . . . . . . . . . . . . . . . 23
Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Community Central Bank . . . . . . . . . . . . . . . . . . . . 7
Compuware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cooper-Standard Automotive . . . . . . . . . . . . . . . . 12
CRT Medical Systems . . . . . . . . . . . . . . . . . . . . . . 19
Delphi Automotive . . . . . . . . . . . . . . . . . . . . . . . . 12
Detroit Denim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 11
Detroit Metropolitan Airport . . . . . . . . . . . . . . . . . . 1
Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fatoula Lambros Design . . . . . . . . . . . . . . . . . . . . 28
Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . 12, 25
Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Gayle’s Chocolates . . . . . . . . . . . . . . . . . . . . . . . . 29
Honigman Miller Schwartz and Cohn . . . . . . . . . . . 10
Inteva Products . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Jefferson Beach Yacht Sales . . . . . . . . . . . . . . . . . . 1
Jones Lang LaSalle . . . . . . . . . . . . . . . . . . . . . . . . 29
Kelly Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lambert, Edwards & Associates . . . . . . . . . . . . . . 11
Leonard and Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MCDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
McGraw Wentworth . . . . . . . . . . . . . . . . . . . . . . . 20
McLaren Macomb Hospital . . . . . . . . . . . . . . . . . . 23
Metaldyne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Michigan Economic Development . . . . . . . . . . . . . . 1
Miller, Canfield, Paddock and Stone . . . . . . . . . . . 10
Mindscape at Hanon McKendry . . . . . . . . . . . . . . . 11
MSX International . . . . . . . . . . . . . . . . . . . . . . . . 12
MyMentalSpace . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Northern Equities Group . . . . . . . . . . . . . . . . . . . . . 3
NSF International . . . . . . . . . . . . . . . . . . . . . . . . . 12
Oakwood Healthcare System . . . . . . . . . . . . . . . . . 23
Open Systems Technologies . . . . . . . . . . . . . . . . . 11
Original Equipment Supplies Association . . . . . . . 20
Pangborn Design . . . . . . . . . . . . . . . . . . . . . . . . . 29
Plante Moran Group Benefit Advisors . . . . . . . . . . 20
Plunkett Cooney . . . . . . . . . . . . . . . . . . . . . . . 10, 19
RelayFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Ricardo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
R.L. Polk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
St. John Providence Health System . . . . . . . . . . . . 23
Schostak Brothers . . . . . . . . . . . . . . . . . . . . . . . . . 3
Stokas Bieri Real Estate . . . . . . . . . . . . . . . . . . . . 29
TD Industrial Coverings . . . . . . . . . . . . . . . . . . . . . . 3
TNG Worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Trinity Health-Michigan . . . . . . . . . . . . . . . . . . . . . 23
TRW Automotive Holdings . . . . . . . . . . . . . . . . . . . 12
University of Michigan . . . . . . . . . . . . . . . . . . . . . 23
Visteon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Weather Underground . . . . . . . . . . . . . . . . . . 26
Department index
BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6
BUSINESS DIARY . . . . . . . . . . . . . . . . 17
CALENDAR . . . . . . . . . . . . . . . . . . . . 25
CLASSIFIED ADS . . . . . . . . . . . . . . . . 25
JOB FRONT . . . . . . . . . . . . . . . . . . . . 24
KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8
LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8
See Apparel, Page 28
MARY KRAMER . . . . . . . . . . . . . . . . . 11
OPINION . . . . . . . . . . . . . . . . . . . . . . . 8
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20120709-NEWS--0004-NAT-CCI-CD_--
7/6/2012
3:35 PM
Page 1
Page 4
July 9, 2012
CRAIN’S DETROIT BUSINESS
C AT E R I N G
Signature strategy builds foundation
for beauty product supplier’s rebound
BY SHERRI WELCH
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CRAIN’S DETROIT BUSINESS
Beauty supply distributor TNG
Worldwide Inc. is slowly recapturing the $25 million in revenue it
lost over the past six years as major brands pulled their contracts
and began calling directly on
beauty salons.
The Farmington Hills-based
company has launched its own
signature spa and hair care products and become the master U.S.
distributor for an Italian hair
care line. TNG has taken those
products into salons, spas and a
new market — the hotel industry
— over the last couple of years.
TNG founder, president and
CEO Larry Gaynor projects the
company’s revenue will be flat
this year at around $61 million
but will rise to about $65 million
next year, driven by demand for
its signature brands and from the
hospitality industry.
Originally, TNG served purely
as a distributor, dealing in Matrix,
Loreal and Tigi products, he said.
But the company had to change its
model as the name brands began
selling their own products — a
trend that hit TNG’s bottom line
TNG continues to distribute
health and beauty products including nail care, tanning, lotion
and hair care products, spa equipment, and furniture to salons,
spas and resorts. It’s moved into
distribution of customized items
such as shower caps, laundry
bags, pens, notepads and other
items to resorts and high-end hotels, and it has developed signature hair care products.
“We evolved by manufacturing
and being more responsible for
our own brands,” Gaynor said.
TNG formerly operated as The
Nailco Group. Gaynor said focusing
on the brands the company manufactures and control over the
products has increased sales overall the last two years.
Minnetonka, Minn.-based Beauty Craft Supply Co is not producing
its own proprietary products, but
TNG, which is well known in the
industry, could successfully introduce proprietary brands because
the company has a distribution
network with its Industry Source
stores, said Beauty Craft President and CEO Maximillion
Wexler.
Name brands bringing their
distribution back in house and
consolidating the distributor market through acquisitions are
trends that have taken place over
the past 15 years, he said.
“Loreal spent close to $1 billion
buying up distributors … (and)
Sally’s (Inc.) was also doing the
same thing,” Wexler said.
But the industry consolidation
is pretty much complete, said
Wexler, also chairman of the
Scottsdale, Ariz.-based Professional Beauty Association. And there’s
now opportunity for small and
medium sized distributors.
Those distributors “can move
on trends much more quickly because they don’t have all the overhead and layers of management,”
TNG founder,
president and CEO
Larry Gaynor
launched his
company’s own spa
and hair care
products and
became the master
U.S. distributor for
an Italian hair care
line to bounce back
from years of lost
revenue.
GLENN TRIEST
he said. Plus, “salon owners don’t
know the conglomerates; they
know us, Wexler said. “That
makes a difference to them.”
New corporate HQ
After selling its Farmington
Hills building to Mahle Industries
Inc., a subsidiary of Germanybased Mahle Group, for an undisclosed amount, TNG in June
moved its corporate headquarters
to its 175,000-square-foot Lyon
Township warehouse. The move
followed $1.1 million in renovations to build out its corporate offices designed by Bingham Farmsbased Scarcello Associates Inc.
TNG has 210 employees, 165 of
them in Michigan. It has about 10
others at its California distribution center and salespeople across
the country, Gaynor said.
The company’s Farmington
Hills flagship store, which supplies only licensed cosmetologists, and its main education center for hairdressers, nail techs
and estheticians, will move in early August to a nearby 5,200square-foot space in a strip center
owned by Certified Realty Inc.
The company has signed a 10year lease there, Gaynor said. It’s
investing $350,000 on renovations,
working with Davis & Davis Interior
Design Co. LLC., Farmington Hills.
After the recession
TNG’s sales are rebounding after several years of decline.
The company hit an all-time
high of $78 million in 2006. But it
lost its contracts with Loreal and
Matrix in December that year.
To help counter that loss, TNG
became the U.S. master distributor for Italian hair care line Kemon early in 2007 and began picking up distribution for smaller
brands like Montreal-based Moroccan Oil. Those efforts helped
recover about $5 million, Gaynor
said.
Sales dropped to about $58 million in 2009, as the recession took
hold. But the company has rebounded to about $61 million.
In 2010, TNG began producing
shampoo, conditioner and lotion
for locker rooms at hotels, resorts,
spas and fitness centers under the
Ginger Lily Farms spa line.
TNG developed the formulas
and fragrances and contracted
production to a Michigan company Gaynor declined to identify.
Customers include Motor City
Casino Hotel; MGM Grand Detroit;
Greektown
Casino-Hotel;
The
Townsend Hotel; Boyne USA Resorts;
MGM properties in Las Vegas and
Connecticut; and Canyon Ranch in
Tucson, Miami Beach and Lenox,
Mass.
TNG only sells its signature
products to salons, Gaynor said,
which helps it compete against
the Ulta chain, which carries
most major brands and charges
less than salons for products.
“For salons to compete, they
need to sell products that Ulta
doesn’t sell,” he said.
Gaynor projects the hospitality
business will bring TNG $3 million in revenue this year and $5
million in 2013.
Moving into Texas
TNG purchased Salon Source, a
Texas-based professional beauty
supply distribution distributor for
$6 million in 2010, opening a distribution center in Coppell, Texas,
and acquiring stores in Austin,
Dallas, Fort Worth and Houston.
But it wasn’t the revenue boost
Gaynor initially projected.
TNG since has rebuilt the teams
and brands at Salon Source. Last
year, those operations brought in
just over $1.5 million. Gaynor projects sales in Texas will reach $5
million within three years.
In addition, TNG added another
signature hair care line, Black
15in1, last year. The brand is in
more than 3,000 U.S. salons,
through distributors in other markets and some direct sales through
TNG, Gaynor said.
Sherri Welch: (313) 446-1694,
[email protected] Twitter: @sherriwelch
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20120709-NEWS--0006-NAT-CCI-CD_--
7/6/2012
3:35 PM
Page 1
Page 6
July 9, 2012
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Aetna wants Blue Cross to tell how
it sets pay for Loepp, other execs
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
Aetna Inc. wants a federal judge
in Detroit to compel Blue Cross Blue
Shield of Michigan to disclose the
way it sets compensation for CEO
Dan Loepp and more than a dozen
other top executives, in a civil lawsuit over favorable charging agreements between
the
state’s
largest insurer
and various hospitals.
Aetna, which
in mid-June defeated a Blues
motion to dismiss its lawsuit
alleging
anti- Loepp
competitive conduct, now wants Judge Denise
Page Hood at U.S. District Court in
Detroit to compel Blue Cross to
disclose documents that show target goals or formulas to compensate Loepp and other top executives between 2005 and 2011.
Aetna, which filed suit against
the Blues in December, also wants
details on nonqualified defined
benefit pension plans that the
Blues maintain for top-compensated executives.
The Blues responded June 29
with a brief opposing Aetna’s request. Hood is expected to decide
the issue without arguments sometime after July 20, when each company is supposed to update the
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“Because Blue Cross has made
clear that it will defend this (lawsuit) based on its purported motivation to advance the public good,
Aetna is entitled to take discovery
to test Blue Cross’s arguments,”
Aetna states in its motion.
“These requests (on compensation and benefits) are designed to
assess whether Blue Cross’s executives are given incentives to carry
out a ‘social mission’ to ‘benefit
the people of Michigan’ or, rather,
whether Blue Cross’s executives
are given incentives to maximize
Blue Cross’s operating profits and
retained capital, market share and
competitive positioning.”
Besides Loepp, other Blue Cross
executives for whom Aetna wants
documents on accomplishments
and recommendations on pay and
bonuses include:
CFO Mark Bartlett
Tricia Keith, vice president of
corporate services
Kevin Seitz, executive vice
president of health care value
Carolynn Walton, vice president
and treasurer
Robert Milewski, senior vice
president
Darrell Middleton, executive
vice president of operations and
business performance
Jeff Connolly, vice president
and president of the Blues’ west
Michigan operation
Joseph Hohner, executive vice
president of health care value and
information technology
Ken Dallafior, senior vice president of group business and corporate marketing
Sue Barkell, senior vice president of health care value
Lynda Rossi, vice president for
social mission and public affairs
Kim Sorget, vice president of
provider contracting and network
administration
Jeanne Carlson, former CEO of
the Blues’ HMO, Blue Care Network
Lisa DeMoss, former general
counsel and now director of the
graduate insurance program at the
Thomas M. Cooley Law School
Thomas Simmer, senior vice
president
Leslie Viegas, former executive
vice president of operations
Loepp earned $3.27 million in
2011, a 19 percent increase over 2010
on total revenue growth of 6.2 percent from $19.2 billion to $20.4 billion, according to information the
company previously provided to
Crain’s.
Helen Stojic, director of corporate affairs for the Blues, said in a
statement July 2 that none of the
requested information is relevant.
“Aetna is a for-profit company
crying financial hardship even
though it paid its (former) CEO $72
million in 2010,” the statement
said. “Our CEO salary is publicly
reported on an annual basis. Aetna pulled out of the small group
market in Michigan instead of investing in the state like Blue Cross
does through its social mission.”
Connecticut-based Aetna reported about $21 million in total 2010
compensation to former CEO
Ronald Williams, who retired in
November, plus another $50.3 million he collected from exercising options on 2.4 million shares of stock
that were due to expire in early
2011, according to a disclosure filed
with the U.S. Securities and Exchange
Commission. Current Aetna Chairman and CEO Mark Bertolini
earned just over $10 million in 2011,
including stock awards and bonuses that vest over time.
At issue in the Aetna lawsuit
against Blue Cross are so-called
“most favored nation” and nationplus agreements, two sets of billing
arrangements Blue Cross allegedly
began making with Michigan hospitals in 2007. Those are the basis of a
2010 joint civil action against the
Blues by the U.S. Department of Justice and the Michigan attorney general’s office. Several other civil lawsuits followed, including Aetna’s
own lawsuit last year.
The more conventional most-favored nation agreements allegedly
required only that Blue Cross get a
billing rate at least equal to any
other insurer. The plus agreements allegedly caused hospitals
to charge the competitors more.
The Blues argue in part that the
discovery requests are irrelevant
and “unduly intrusive” — and that
some of Aetna’s requests are covered in a Department of Justice inquiry that the Blues already intend to answer. Discovery is due to
be completed in the Justice lawsuit by Nov. 30.
“Here, Aetna has exceeded the
ultimate and necessary boundaries
of legitimate discovery,” the Blues’
response in court states. “Aetna’s
premature rush to present to the
court an unripe dispute about documents that are about to be produced needlessly complicates the
already difficult process of conducting efficient discovery in the context of three related (lawsuits, over
most-favored nation agreements).”
Chad Halcom: (313) 446-6796,
[email protected]
Twitter:
@chadhalcom
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BANKRUPTCIES
The following businesses filed
for Chapter 7 or 11 protection in
U.S. Bankruptcy Court in Detroit
from June 29 to July 6. Under
Chapter 11, a company files for reorganization. Chapter 7 involves
total liquidation.
Tindall & Co. PC, P.O. Box 46564,
Mt. Clemens, voluntary Chapter
11. Assets and liabilities not available.
Floodcooling Technologies LLC,
1107 Naughton Road, Troy, voluntary Chapter 11. Assets and liabilities not available.
— Compiled by Ryan Kelly
20120709-NEWS--0007-NAT-CCI-CD_--
7/6/2012
July 9, 2012
4:22 PM
Page 1
CRAIN’S DETROIT BUSINESS
Page 7
Leonard and Co. also targeted in
2nd suit against Comm. Central
BY TOM HENDERSON
CRAIN’S DETROIT BUSINESS
A second lawsuit was filed Friday in U.S.
District Court in Detroit against the former
directors of the defunct Community Central
Bank Corp. and the estate of deceased President and CEO David Widlak over the private
placement of $2.4 million of stock in 2009.
Unlike the first suit, which was filed Feb.
9, this one also sues the brokerage firm involved in the sale, Troy-based Leonard and
Co.; some of its officers, including Leonard’s
president and CEO, Dainforth French Jr.; director Wendy Leonard; CFO David Weber;
chief compliance officer James Mason; and
general counsel Jeffrey Plopa; and its holding company, Troy-based Leonard-French
Holdings Inc.
Both lawsuits have been assigned to
Judge Bernard Friedman.
Leonard and Co. was paid a fee of 6 percent to broker the sale, according to the
terms of the offering.
Former bank board members being sued
are John Stroh III, Dean Petitpren, Gabe Anton, Salvatore Cottone, Celestina Giles,
Joseph Jeannette, James Mestadagh, David
Weber, Joseph Catenacci and Bobby Hill.
The Friday suit was filed by Bloomfield
Hills attorney Norman Yatooma on behalf of
his father-in-law, a dentist named Timothy
Mayer, who was the largest purchaser of
stock in the placement, $700,000 worth.
The stock was supposed to pay quarterly
dividends of 5 percent, but no payments
were ever made. And the stock itself became
worthless when the bank was shut down by
state and federal regulators in April 2011
and its assets assumed by Talmer Bancorp Inc.
The Grosse Pointe Park law firm of Boyle
Burdett PC filed the first suit, having been recruited by Leonard and Co. on behalf of its
individual and institutional customers who
bought stock. Boyle Burdett eventually
signed every client but Mayer.
Yatooma said in his filing that he was approached before Boyle Burdett took the case
by two representatives of Leonard and Co.,
Plopa and the broker who handled Mayer’s
account, Max Pett, to see if he would accept
payment from the brokerage to represent its
clients, provided he promise not to sue
Leonard and Co.
The lawsuit said that when Yatooma told
Leonard and Co. that he wouldn’t make that
promise, Leonard and Co. then made a similar deal with Boyle Burdett.
Partner Eugene Boyle Jr. told Crain’s he
decided not to sue Leonard and Co., but not
because of a quid pro quo with the brokerage. He said the brokerage has done well by
its clients and doesn’t deserve it. “Leonard
has gone the extra mile. They pushed this
lawsuit because they want to do something
for their clients.”
Boyle said neither he nor his clients were
required to promise not to sue Leonard and
Co. In fact, he signed what is called a tolling
agreement with Leonard and Co., which allows clients to extend statue-of-limitation
rules to file a suit against the brokerage in
case they are not made whole by a settlement or judgment.
Boyle said they would be free, too, to file
arbitration proceedings against Leonard
and Co. with the Financial Industry Regulatory
Authority Inc.
Yatooma’s suit included an affidavit from
Pett, who said that he and Plopa reached an
agreement in principal for Yatooma to represent its clients, but that French rescinded
the agreement when Yatooma wouldn’t
agree not to sue the brokerage.
French said, “I haven’t seen the suit yet,
and I can’t comment on something I haven’t
seen.”
But in May, discussing the Boyle Burdett
suit, he denied wrongdoing by Leonard and
Co. He said he and his brokers were deceived by exaggerated claims by bank officials about the bank’s health.
“The true facts were not made known at
the time of the offering, and if the facts had
been known, participation in the offering
would not have occurred,” he said. “There
were facts that were not shared with us.”
Yatooma told Crain’s that as a public company, Community Central had filed enough
documents with the U.S Securities and Exchange
Commission that it should have been clear to financial advisers at Leonard and Co. that buying stock in the bank was not prudent.
On Jan. 7, 2010, the day the bank announced the placement, the stock opened at
$1.47 a share, down from a pre-recession
high of $13.45. And it was in the midst of a
string of quarterly losses that began with a
loss of $2.58 million in the fourth quarter of
2008, and escalated to a loss of $15 million in
the fourth quarter of 2009 and $8.8 million in
the first quarter of 2010, massive losses for a
small community bank.
Steven Ribiat, a partner in Birminghambased Brooks Wilkins Sharkey & Turco PLLC,
which represented all the defendants in the
Boyle Burdett suit except Catenacci, hasn’t
had time to file a response to the Yatooma suit.
Tom Henderson: (313) 446-0337, [email protected] Twitter: @tomhenderson2
Visteon cancels unit sale, aims for joint venture
BY DUSTIN WALSH
CRAIN’S DETROIT BUSINESS
In a July 4 announcement of two deals, Visteon Corp. disclosed the termination of a previously announced sale of its interiors business as well as a plan to offer $805 million to
acquire the remaining stake in Korean joint
venture Halla Climate Control Corp.
The Van Buren Township supplier holds a
70 percent stake in Halla, a climate controls
supplier. Visteon is offering approximately
$25.12 per share for the remaining 30 percent
stake of 32 million shares — a 14 percent premium to Halla’s closing price July 4.
The offer is conditional on shareholders
allowing Visteon to acquire at least 26.7 million of the shares, or 95 percent.
However, South Korea’s National Pension
Service, which owns 9.8 percent of Halla,
may oppose the deal, Reuters reported.
Visteon’s offer is supported by an $815
million line of credit from South Korea’s
largest bank, Kookmin Bank.
Halla’s largest customer is Korean automaker Hyundai Motor Group, which made up
more than 60 percent of Halla’s revenue of $2
billion in 2011, according to Reuters.
Goldman Sachs and Rothschild Group are advising on the deal, the company said.
Visteon is the second-largest provider of
climate-control systems, behind Japanbased Denso Corp. The supplier intends to increase its 12 percent market share of the $32
billion market to 14 percent by 2014.
Visteon also announced it terminated its
memorandum of understanding to sell the
remainder of its interiors business to its
China joint venture Yanfeng Visteon Automotive Trim Systems Co. The company originally
announced the deal last November.
Visteon also announced Wednesday a $50
million investment to build a wind tunnel
site in South Korea.
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20120709-NEWS--0008-NAT-CCI-CD_--
7/6/2012
3:36 PM
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July 9, 2012
CRAIN’S DETROIT BUSINESS
OPINION
Blues case must
be decided quickly
s Blue Cross Blue Shield of Michigan guilty of anticompetitive practices? Or, as the market-share
leader for health insurance in Michigan, is it exercising its clout to obtain the best possible pricing from hospitals to keep rates low for its customers?
Aetna Inc., one of the nation’s largest for-profit health insurers, thinks it’s the former. Blue Cross maintains it is the
latter.
It’s hard to argue that Blue Cross shouldn’t use its sheer
size and member volume to get the best deals — “most favored
nation” agreements — from hospitals. That practice is used in
many industries, such as automotive. The question is whether
the Blues can also require some hospitals, as Aetna alleges, to
charge their competitors significantly more.
As Michigan begins to create the framework for a federally
mandated health insurance exchange, regulators should decide what’s kosher.
Why? Because if Aetna is right, its rates may be higher
than they should be in the exchange, which would give Blue
Cross an unfair advantage and customers fewer choices.
Aetna’s suit — and parallel civil action by federal and state
regulators — should be resolved before the terms of the exchange are made final.
Blue Cross defends its agreements as being in the best interests of its customers — employers and their employees. Besides, Michigan regulators sign off on Blue Cross rates.
As Chad Halcom reports on Page 6, Aetna is asking U.S.
District Judge Denise Page Hood to force the Blues to pony up
details on executive compensation. Aetna says it needs to see
what kind of performance goals are tied to executive pay to see
if the company is really operating as a nonprofit with a social
mission.
Such data might also show that Blue Cross can offer top
pay and benefits because it has no competitive reason to be internally efficient — it already commands the best rates from
hospitals.
What makes the case intriguing to industry insiders is its
strong Michigan connection. Mark Bertolini, chairman and
CEO of Aetna, served a tour of duty in Michigan, where he
competed against Blue Cross’ Blue Care Network as CEO of SelectCare, an HMO formed by three hospital systems before it
was ultimately sold.
Gov. Snyder has promised a health insurance exchange
that’s as easy to use and shop as it is to buy an airline ticket.
The debate over whether Blue Cross figuratively has its finger
on the scale is important to resolve before a state insurance exchange is started.
I
LETTERS
TALK ON THE
WEB
‘Fast track’ not best
Editor:
I understand the apparent need
for a quick fix, but “fast-track”
training is a Band-Aid that covers
an anti-education residual of our
union town. (Mary Kramer: “Our
health issue: Job training,” July 2).
Having lived here my whole life,
I can’t count the number of times
I’ve heard the statements, “The
company made me take this $^#*%
training — couldn’t get up to the
cottage last week!” Or, “It’s not
what you know, it’s who you
know.” Or, “Just get the piece of
paper.” Apparently, Plymouth is
no different than education-adverse Macomb County, where the
whole career plan for decades was,
“My old man will get me in at the
plant.”
When people are willing to learn
because knowledge is power, when
they actually have a genuine curiosity about the work they want
to get paid for, then they will
Crain’s Detroit Business
welcomes letters to the editor.
All letters will be considered for
publication, provided they are
signed and do not defame
individuals or organizations.
Letters may be edited for length
and clarity.
Write: Editor, Crain’s Detroit
Business, 1155 Gratiot Ave.,
Detroit, MI 48207-2997.
Email: [email protected]
amass enough skills beforehand
that employers won’t have to settle
for “70 percent and a quick study.”
What employers value are insights that come from bringing in
outside knowledge and applying it to
the company’s unique situation.
Sooner or later, techniques regurgitated from a few months of “fasttrack” training will be automated.
From www.crainsdetroit.com
Re: State House will create
health insurance exchange
I would think that a marketplace
exchange like this would be a darling
of free-marketeers. It encourages the
almighty “competition” by allowing consumers to more easily compare policies. Why the opposition?
Besides obstructionism ...
Alex Hardesty
Re: Court decision on health care
The Affordable Care Act will not
control long-term rising health
care costs. While some provisions
in the bill are positive and will provide benefits, the bill comes far
short of actually solving the health
care problem. The key is affordable
health care, not affordable insurance.
BrandonP
Mark Maisonneuve
See Talk, Page 9
Eastpointe
KEITH CRAIN: Time to be responsible and vote for DIA
It takes a lot to create a great
city. In addition to strong, engaged
businesses, a good educational system and, yes, winning sports
teams, we must have world-class
cultural events. And we have to
continue to support getting rid of
corruption in our governments.
Detroit is blessed with a lot of
great institutions, but right up
there at the top of our list is the Detroit Institute of Arts.
Certainly everyone in Detroit
knows what a jewel we have. And
along with other great institutions, the DIA is a great deal of
what makes this city so
viable with a great history to build on for the
future.
But as a civic institution, the DIA is a victim,
like so many businesses
in Southeast Michigan,
of a terrible economy
that has forced it to
scramble for economic
support.
Now, we have a
chance to establish a steady
stream of revenue for the DIA for
the foreseeable future.
The citizens of Southeastern Michigan have
a chance to vote for a
modest increase in our
taxes that will give the
DIA the stability it so
desperately deserves.
On Aug. 7, we all
have a chance to support the DIA by voting
yes on the ballot.
Sometimes it seems
that it’s not possible for
an individual to do something to
help change a city. Voting to support the DIA in August is some-
thing we can do that will indeed
make a difference. It is an election
that will probably not attract a lot
of people, so every vote will make a
huge difference.
If we want to once again be a
world-class city, we have to support the cultural institutions that
create the environment to attract
people and corporations from all
over the world to live and work in
our community. We need a powerful combination of education, with
our world-class universities, our
winning professional and collegiate sports teams and, just as im-
portant, a wide variety of culture.
The DIA has a long and magnificent history in Detroit.
If you don’t care about our city
and our community, then don’t
vote. But if you feel that Detroit’s
best days lie ahead, then do your
part and be a part of our community wherever you live in Southeast
Michigan.
Each vote is going to be very important for our future. It’s time for
all of us to take a part in making
Detroit and the DIA an important
part of that future.
20120709-NEWS--0009-NAT-CCI-CD_--
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9:44 AM
Page 1
CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 9
OTHER VOICES: Foundation network helps access to college
General Motors FounIt is that time of year
dation and Buick, annuwhen high school seniors
ally awards 100 renewhave graduated and are now
able scholarships of up
preparing for fall in a colto $25,000 per year and
lege or university.
1,000 one-time scholarAs part of those graduaships of $2,000. In June,
tion ceremonies, millions of
the program was exdollars in scholarships
pected to award more
have been awarded — many
than 50 scholarships to
from donor-advised funds
Michigan students increated at community founRobert Collier
terested in science,
dations or private, family,
independent and corporate foun- technology, engineering, math
dations across all 83 Michigan and related fields who demonstrate excellence in the classroom
counties.
and community but lack funds for
Here are just three examples:
䡲 The Buick Achievers Schol- college.
arship program, launched by the
䡲 This year, the Community
Foundation for Muskegon County
and its affiliates in Oceana, Mason and Manistee counties are expected to award more than 550
scholarships totaling close to
$600,000.
䡲 The Jean M.R. Smith Foundation in Bad Axe grants $20,000,
four-year, renewable scholarships.
Receiving these scholarships is
a time for graduates and their parents to rejoice. But the bottom line
is that the price of higher education is far outstripping the amount
available in scholarships and is
making it difficult for many qualified students to pursue their
dreams without taking on significant loans.
It is shocking that the average
Michigan student completing an
undergraduate degree will enter
the workforce with more than
$22,000 in debts.
How do we make sure all students have the opportunity for
higher education? Foundations
cannot replace the dollars being
trimmed by the state and federal
governments, but foundations are
important partners with government. Here is just one example:
With a challenge grant from the
Kresge Foundation, Michigan
community foundations are sup-
TALK CONTINUED
■ From Page 8
Re: Easing transfer of liquor licenses
Huh. A perfectly sensible regulation change. I’ll be. … After just
spending two weeks on the phone,
in the car, on email, twisting bureaucratic arms and paying fees to
at least four government offices to
get a one-day fundraiser liquor license to sell local microbrewed
beer, I can’t appreciate this enough.
Gary Anglebrandt
Re: LaHood says no grant for M1 Rail
A wish and a prayer for operating funding is not a business plan.
Kudos to the Obama administration
for pushing back and helping Detroit avoid another People Mover.
Mr Sin
Re: Creating a Midtown ‘living room’
Good idea, but be very careful
that you don’t take business away
from nearby restaurants or bars
because you might have an advantage being nonprofit and very
trendy. Maybe partner with local
bars and restaurants.
bill t cat
What could make it an even
more dynamic idea is to incorporate
the public space on Woodward surrounding the main Detroit Public
Library, which … becomes sadder
and sadder looking each year.
JANMODZE
Re: Detroit River bridge developments
King Snyder has spoken. Voters’
feelings or votes do not matter.
WJW
The creation of so many jobs is
wonderful news, but for whom? With
Canada providing the funding and
leading the charge for the new project, shouldn’t we assume that they
will share in their investment?
Pragmatic
A.
B.
CAN YOUR BANK
SPOT THE DIFFERENCE?
Picture A represents a home improvement
retailer, picture B a garden center.
Each has its own challenges and
banking needs. Just like your business.
So why treat them the same?
At Fifth Third Bank, we look – and think – harder.
Because we’re curious to find the right ideas to
help you run your business better.
Ideas that enable you to collect payments
on-site or online. Or solutions that may
turn cash into working capital, fast.
It’s an approach that’s as different as,
say, an adjustable wrench and a
Lycoris squamigera.
And you’ll find it at Fifth Third Bank.
Learn more at 53.com/BusinessIdeas
The curious bank.
How about using one of the steel
mills here in the Detroit area? It
would give everyone a much-needed economic boost.
The Groundhog
Re: DMC to stop hiring smokers
I’m not a smoker, but this kind
of policy feels really invasive and
inappropriate. I hope a court somewhere strikes it down.
Grand Circus Park
Deposit and credit products provided through Fifth Third Bank. Member FDIC. Equal Housing Lender.
© Fifth Third Bank 2012.
porting a growing network — 48 at
the last count — of local college access networks all connected by the
Michigan College Access Network
(http://micollegeaccess.org/direct
ory/lcan).
We appreciate Gov. Snyder and
the Legislature including $2 million in the budget for support of
the network. Because the funding
for MCAN is matched by contributions from Michigan foundations, few items in the state budget create as much bang for the
buck.
Robert Collier is president and
CEO, Council of Michigan Foundations.
20120709-NEWS--0010-NAT-CCI-CD_--
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9:37 AM
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Page 10
July 9, 2012
CRAIN’S DETROIT BUSINESS
Law firms hiring non-lawyers to help streamline operations
BY DUSTIN WALSH
CRAIN’S DETROIT BUSINESS
Honigman Miller Schwartz and
Cohn LLP is on the hire — but not
for lawyers.
The Detroit-based law firm is
seeking to fill several new positions revolving around the business practices of the firm.
David Foltyn, CEO of the firm,
said he expects an increase in nonlawyers as part of a trend in the
law business, where clients want
more value for services.
“Lawyers are generally horrible
businesspeople,” he said. “What
clients are looking for is real value
in the world delivered by lawyers.
That comes in many forms, but a
lot of it is understanding business
and hiring non-lawyers in areas
where we don’t need lawyers doing
the work.”
The firm is hiring COOs for its
business and litigation divisions, a
client services manager, chief value officer and deputy chief officer.
The firm is also hiring a yet-to-bedetermined number of project
managers, price estimators and
client team leaders.
The hirings are part of a trend to
streamline operations using fewer
lawyers, Foltyn said.
“The fact is, we want to generate
as much revenue with as few
lawyers as possible,” he said.
“Lawyers are terrible at doing
more for less. So we need to go into
our operations to figure out who is
doing what and how to be more efficient.”
Foltyn said the company is looking toward the construction and
automotive industries for some of
the positions, including project
managers.
Honigman has hired nonlawyers in the past in customer
service, project management and
professional development, but is
going further, he said.
Other firms say they are not currently hiring non-lawyers but
have shifted toward more nonlawyer positions over the past 15
years.
Michael Hartmann, CEO of Detroit-based Miller, Canfield, Paddock
and Stone PLC, said his firm has not
created new positions for nonlawyers because the local law market is not growing.
͞nLJ K ǁho ǁants a
healthieƌ ǁoƌŬfoƌce shoulĚ
consiĚeƌ HealthPlus.͟
“As firms grow larger, certain
functions outgrow the competence
of your average lawyer, but there’s
not a lot of growth in Detroit,”
Hartmann said. “We have nonlawyers running our billing, IT
and human resources areas, but I
haven’t seen a big change (in hiring non-lawyers) over the past couple of years around town.”
Henry Cooney, president and
CEO of Bloomfield Hills-based
Plunkett Cooney PC, said his firm isn’t hiring more non-lawyers, but
said firms are facing more pressure to deliver value than in previous years and non-lawyers can
help.
“We have to deliver efficiency at
a predictable cost and have to
manage costs much more than we
did 15 years ago or even five years
ago, for that matter,” he said.
“Having non-lawyers handle certain processes so our lawyers can
stay focused works, and it’s done
well for us over the years.”
Dustin Walsh: (313) 446-6042,
[email protected]
Twitter:
@dustinpwalsh
ENTER CRAIN’S BEST-MANAGED
NONPROFIT CONTEST
tĞǁĂŶƚĞĚĂŵŽƌĞŝŶƚĞƌĂĐƟǀĞŚĞĂůƚŚĐĂƌĞ
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In aĚĚiƟon to oīeƌing coŵƉeƟƟǀe Ɖƌicing anĚ a stƌong
netǁoƌŬ of ƉƌoǀiĚeƌs, HealthPlus ďecaŵe ouƌ ǁellness
chaŵƉion. dhe HealthPlus teaŵ ǁoƌŬs closelLJ ǁith us
to ĚeǀeloƉ tools anĚ ƌesouƌces that helƉ Ɖƌoŵote a
healthLJ lifestLJle foƌ ouƌ eŵƉloLJees anĚ theiƌ faŵilies.
then ƌeǀieǁing LJouƌ oƉƟons, consiĚeƌ HealthPlus.
zŽƵ ĐŽƵůĚ ĂĚĚ Ă ďŝŐ ƉůƵƐ ĨŽƌ LJŽƵƌ ĞŵƉůŽLJĞĞƐ͘
Isn͛t it Ɵŵe LJou got the Plus͍
1-800-530-9071
ǁǁǁ.healthƉlus.oƌg
©2012 HealthPlus of Michigan, Inc.
Cathy Nash
WƌĞsŝĚĞŶt aŶĚ CK͕ CŝƟnjĞŶs ZĞƉƵďůŝĐ aŶĐŽƌƉ
This year’s Crain’s Best-Managed
Nonprofit Contest is focused on
technology.
Applicants are
asked to
submit an
example of
successfully
deploying
2012
technology to
forward their
organization’s mission, such as,
but not limited to: improvements to
in-house technology that improve
efficiency or other goals;
successful social media strategy;
or use of technology to improve
databases of volunteers and/or
donors. Entries will be judged on
the degree to which the success of
the technology deployment is
documented.
Applications are due Aug. 20.
Finalists will be interviewed in
person by judges the morning of
Nov. 6.
Applicants for the award must be a
501(c)(3) with headquarters in
Wayne, Washtenaw, Oakland,
Macomb or Livingston counties.
Applications must include an entry
form, a copy of the nonprofit’s
most recent audited financial
statements and a copy of the
most-recent IRS 990 form.
Previous first-place winners are not
eligible; neither are hospitals,
HMOs, medical clinics, business
and professional organizations,
schools, churches or foundations.
The winners will be profiled in the
Nov. 26 issue, receive a special
“best-managed” logo from Crain’s
for use in promotional material and
will be recognized at the Crain’s
Newsmaker of the Year lunch early
next year.
For a copy of the application form,
please email YahNica Crawford at
[email protected] or visit www.
crainsdetroit.com/nonprofitcontest.
For information, email Executive
Editor Cindy Goodaker at
[email protected] or call (313)
446-0460.
20120709-NEWS--0011-NAT-CCI-CD_--
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10:27 AM
Page 1
CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 11
PUBLISHER’S NOTEBOOK
Contact Mary
Kramer at
mkramer
@crain.com.
CRAIN’S MICHIGAN BUSINESS
Mary Kramer
Grand Rapids-area businesses build presence in Detroit
BY MATTHEW GRYCZAN
CRAIN’S MICHIGAN BUSINESS
eter Brand was tired of driving
back to Grand Rapids after seeing a
Tigers or Lions game and saying to
himself the Web marketing firm he cofounded — Mindscape at Hanon McKendry
— ought to be doing more business in
Detroit. So in May, after three years of
procrastination and study, he finally
opened a downtown office.
The opening of his 1,100-square-foot
office in Paradise Valley — formerly
the Harmonie Park area of downtown
— was a small pebble making barely a
ripple in the metro area’s large pond of
real estate.
But Brand and others from West
Michigan say that a bucket of those pebbles can, one by one, create a wave for
downtown Detroit that’s as large as a
small boulder.
Perhaps the bucket is on its way.
Over the past few months, the Grand
Rapids-based
companies
Mindscape,
Lambert
Atomic Object
Edwards
Inc. and LamMindscape
bert, Edwards
Atomic Object
& Associates
Bro
all have
ad
wa
y
opened offices
in downtown
Detroit no
Lib
rar
more than a
y
stone’s throw
CDB from each
other — creating what Atomic Object’s Carl Erickson
calls a “little West Michigan.”
Open Systems Technologies Inc. in
Grand Rapids plans to join them somewhere in downtown Detroit in the near
future. Open Systems President Dan
Behm said his company is looking for
space downtown, right on the heels of
opening an office in Ann Arbor.
While Open Systems originally
planned to move its Ann Arbor office to
downtown Detroit after a year, the company now anticipates offices in both
cities because of the initial success of
the Ann Arbor location, Behm said.
Ironically, the four companies could
compete with one another, depending on
the client and project. But they all have
talked among themselves about their
shared belief that downtown Detroit is
on the rebound — and they want to be
some of the first on the bandwagon.
The bandwagon appears as if it will
become a bit more crowded in coming
months. Mark Denson, manager of business attraction for the Detroit Economic
Growth Corp., said he expects announcements soon from another trio of West
Michigan companies that will be locating downtown, but he wasn’t at liberty
to provide details.
P
Ran
dol
ph
Detroit
Gra
tio
t
E.
Gra
nd
Riv
er
ph
dol
Ran
er
rm
Fa
Detroit is getting back some of its
cool. Or maybe regaining its cachet.
For many, Detroit always has been
cool. For others, it’s tough to
reconcile “cool” with a city that has so
many well-documented problems.
But as Matt Gryczan reports on this
page, a handful of Grand Rapids-area
tech companies are opening shop in
Motown — often within walking
distance of one another in downtown
Detroit.
And they’re finding a vibe — and
new clients — that just might
encourage other companies to take
this plunge.
In late May, Crain’s Dan Duggan
reported that Tom Kartsotis, founder
of Fossil watches, had picked
Midtown Detroit for his latest venture
— a line of watches that will be sold
under the Shinola brand name.
Why Detroit?
A company employee told Dan that
Kartsotis did some consumer
research, posing pens made in China,
the U.S. and Detroit at price points of
$5, $10 and $15, respectively.
Given the choice of the Chinese
and U.S. pens, consumers picked the
cheaper pen made in China. But when
the choices included a $15 Made-inDetroit pen, they opted for the Motor
City brand. And this was before
Chrysler launched its “Imported from
Detroit” campaign in its Super Bowl
spots in 2011.
But for every step forward, we see a
step back.
Detroit should welcome anybody
with a good idea who wants to legally
pursue a business in the city.
That’s why it’s critically important
for Detroit City Council and Mayor
Dave Bing to be on the same page
and help entrepreneur John Hantz get
his urban farm project off the ground.
Hantz hired a farming expert from
Michigan State University to help him
pull together a farming project that
works. Activists who believe that a
nonprofit Detroit Food Policy Council
should call the shots on all things
farming have criticized Hantz,
describing his plan to buy vacant land
to plant hardwood trees as a “land
grab.”
Really?
Detroit has 70,000 lots that are
vacant or with blighted structures. But
there are people who act as if there
are only seven.
In their playbook, there’s only one
way to do urban farming — through a
nonprofit that they — “the people” —
control.
Detroit has plenty of land and lots
of possibilities. It’s up to the mayor
and council to start unleashing both.
If they do, before long we will find
more than trees and vegetables
sprouting up in Detroit. We’ll find new
investment — and jobs.
‘Little West Michigan’
Joh
nR
Detroit needs
to welcome biz
from all areas
GLENN TRIEST
Every time Peter Brand came to Detroit for a ballgame, he would tell himself, “Gosh, I wish I did more
business here.” In May, he opened a downtown Detroit office for his Grand Rapids-based Web
marketing company, Mindscape at Hanon McKendry.
People ask us why
“
didn’t we go to Chicago
or Indianapolis. It’s
because we’re
Michiganders.
”
Peter Brand, Mindscape at Hanon McKendry
The executives at Mindscape, Atomic
Object and Lambert Edwards said their
announcements flushed out business
opportunities they hadn’t anticipated,
which Denson said has happened with
other companies in Paradise Valley.
These businesses and others from
metro Grand Rapids are grasping the
inexpensive cost of space, the depth of
the available talent pool and the “richness of opportunity” in Detroit, he said.
A stake in the ground
The metro Grand Rapids companies
in Paradise Valley said they wanted to
make a statement with their locations.
For Erickson, president of Atomic
Object, it’s the cachet of a strongly urban setting for his 20- and 30-something
employees.
See West, Page 12
20120709-NEWS--0012-NAT-CCI-CD_--
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July 9, 2012
CRAIN’S DETROIT BUSINESS
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West:Grand Rapids firms
say Motown is go-to town
■ From Page 11
For Jeff Lambert, president and
CEO of the firm that bears his last
name, it’s about having a strong
Detroit presence that includes
community projects, such as its
initiative to teach inner-city children how to swim.
For Brand, Michigan is just one
big neighborhood. “We’ve had people ask us why didn’t we go to
Chicago or Indianapolis. It’s because were Michiganders.”
The launches of the satellite offices in downtown Detroit have
raised questions and eyebrows in
West Michigan
and Detroit.
“I’ve had a lot
of questions, and
it’s sparked a lot
of conversations
— from (Grand
Rapids) real estate people who
haven’t done a
lot of business
Lambert
over there to contractors who were thinking of dipping a toe in those waters and wanted to hear our perspective,” said
Lambert, whose public and investor
relations firm currently works out
of temporary space in downtown
Detroit while its 8,700-square-foot
office is being built.
Lambert was inspired to take
the leap to relocate his firm’s Troy
office downtown after Dan Loepp,
president and CEO of Blue Cross
Blue Shield of Michigan, announced
that 3,400 of his employees would
be relocated to the Renaissance
Center from Southfield, a move
completed last month.
“I think there’s a real naiveté
among real estate folks about the
suburbs,” he said. “Real estate people in the suburbs can’t believe that
anyone would actually move downtown — they run it down, they talk
about how bad it is and do everything they can to dissuade you.
“Frankly, I think it’s hurtful to
the overall metro area with this
‘us versus them’ mentality in real
estate.”
Erickson, who grew up in Bloomfield Hills, said
he has “more
raised
eyebrows” in West
Michigan when
he talks about
his firm opening
2,700 square feet
of office space at
1407 Randolph
St., the same adErickson
dress as Lambert Edwards’ temporary office.
“They ask me: ‘Why Detroit?’
Why are you doing this?’ ” Erickson said. “I think there’s a lot of education that needs to happen with
people, not only in West Michigan
but all around the country, realizing what’s happening in Detroit.”
So why Detroit?
To learn more about Michigan placemaking, go to MIplace.org.
The question “Why Detroit?” is
particularly pointed for Atomic
Object, which earned more than
half of its $5 million in revenue
last year by serving customers out-
side Michigan.
Like Mindscape, Atomic Object
doesn’t gain advantage from proximity to raw materials or transportation hubs by being in Detroit.
About half of the company’s revenue comes from Web development,
about a quarter from mobile apps
and another quarter from embedded software, which runs on computer chips installed in cars, toys,
appliances and other machines.
“Detroit is still a national market,” Erickson said. ... “We feel we
have an insider’s view of Detroit
that will give us a competitive advantage — a bit of a contrarian
strategy and a bit of insider trading knowledge.”
Still, clients can be served in
metro Detroit as easily from the
suburbs as from downtown. Some
employees’ commutes might be
shorter in the suburbs, and parking often is free — and then there
are Detroit’s income tax and ongoing budget troubles.
Personal selling tipped the balance in Detroit’s favor, the executives said, along with favorable
leasing terms they were able to negotiate with the DEGC. While they
wouldn’t discuss particulars, they
said the favorable terms included
rent and costs of build-outs.
In addition, they will seek incentives under the DEGC’s Creative
Corridor Incentive Fund, which
helps defray the cost of items such
as parking and office construction.
Denson said he expects $2.5 million will be disbursed by September under the program, funded
through the New Economy Initiative.
Lambert considered a downtown Detroit office as an afterthought, a final triple-check before
signing a deal to stay in the suburbs. He inherited the Troy office
when his firm acquired John Bailey
& Associates Inc. in 2009, and he
knew he would have to decide
whether to stay or move the Troy
staff by spring of this year.
Lambert started his search early
last year and was “pretty focused
on finding something in the suburbs, based on the feeling that
downtown Detroit wasn’t quite
ready yet.” But he warmed to the
idea after talks with Sue Mosey,
president of Midtown Detroit Inc.,
and Josh Linkner, managing partner of the venture capital firm Detroit Venture Partners.
The deal was sealed when Lambert heard Loepp announce his
commitment to bring thousands of
employees of Blue Cross — a Lambert Edwards client — to downtown Detroit.
Lambert hopes to have the 15 fulltime employees at the new location
at 1429 Broadway in the fall. Lambert Edwards employs about 40 fulltimers statewide and posted revenue of about $6 million last year.
‘I love the vibe’
For Brand, the journey started
with a note that sat on his desk for
three years that states, “There’s no
shortage of good ideas, only a
See Next Page
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 13
CRAIN’S MICHIGAN BUSINESS
West: Why come to Detroit? Grand Rapids firms see opportunity
■ From Previous Page
shortage of follow-through.”
Then came helpful encouragement from Eric Hohauser, director
of client services at Harvey Hohauser
& Associates in Troy; Don Lee, chief
marketing officer at Clark Hill PLC in
Detroit; and Denson at the DEGC.
“For my entire business career,
any time I would go over there for
a game I would have this little internal conversation in my head as
I was driving out of town: ‘Gosh, I
wish I did more business here.’ I
love the sports, I love the entertainment, I love the people, I love
the vibe that I’ve always gotten
around Detroit,” Brand said.
Mindscape’s vice president of operations, Mike Simon, said the firm
thinks things have bottomed out in
Detroit and that, economically, it
made more sense to locate an office
downtown than in Chicago. Detroit
compared favorably with Chicago
on overall costs, and Mindscape
was able to negotiate favorable
terms on a five-year lease at 1435
Randolph with the DEGC, which
owns the building through the Detroit Downtown Development Authority.
“Entering any new market is a
lot of work,” Simon said. “We already had customers here, so we
had business to help support the
new office.”
Hohauser and Lee were instrumental in providing insight into
the downtown environment, competitive landscape and challenges
of opening a satellite office.
Mindscape determined that a lot
of little firms and some large ones
were in Web marketing, but there
was a need for a midsize firm. With
about 25 full-time employees, Mindscape posted revenue of about $3
million last year. The company
hopes to hire its first full-time person in Detroit early next year.
Atomic Object and Open Systems share the same Goldilocks
mentality with Mindscape: the
feeling that they are just-rightsized for the market.
“It was primarily the business
opportunity that got us excited,”
Erickson said. When it investigated the competition and potential
market in Detroit in 2010, Atomic
Object discovered a significant gap
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between the unmet demand for innovation services and existing capacity in the area.
Open Systems President Dan
Behm said: “Even though we are
in the same state, people want to
deal with people who are local.
They want to be able to talk with
someone whose daughter’s on the
same T-ball team as their own.”
Open Systems — which helps
companies in the health care, manufacturing, finance and insurance
industries better manage data —
established a physical presence in
metro Detroit by signing a oneyear lease for office space in Ann
Arbor. But the company will be actively seeking space in downtown
Detroit when the lease is up, Behm
said. Six of its nearly 100 full-time
employees live in the Detroit area.
Behm said he thought his company would be doing an equal
amount of business in Detroit and
Grand Rapids when he founded
the company 15 years ago because
both cities are in the same state.
“But here we are 15 years later,
and there is a disproportionate
amount of our business on the
west side, and we wouldn’t have
predicted that — it’s because of a
local presence,” he said. Open Systems posted revenue of about $68
million last year, up about 24 percent over 2010.
All of the West Michigan executives highlighted another dynamic
that has eased their trepidation
about locating in downtown Detroit: the alignment of interests on
the east and west sides of the state.
Said Erickson: “What happens
in Detroit matters a great deal to
the state of Michigan, and as people who live in the state of Michigan, that means it matters to the
people of Grand Rapids.
“And what matters to Grand
Rapids matters to Atomic and all
the people that work at Atomic.
There’s a very clear chain of selfinterest there.”
Lambert said he has seen a new
spirit of cooperation between the
metro areas.
“At
the
(Detroit
Regional
Chamber’s) Mackinac Policy Conference, you’ve got folks like Rick De-
Vos and Mike Jandernoa (former
CEO of Allegan-based Perrigo Co.)
now serving on the panels — that
would’ve never happened three
years ago,” he said.
Representatives of the Detroit
Regional Chamber visited Grand
Rapids in September to discuss
with the Grand Rapids Area Chamber
of Commerce ways in which the two
sides of the state can collaborate.
The Grand Rapids chamber reciprocated by visiting the Detroit
chamber in April. Business leaders have been meeting at other
events, such as the “East Meets
West” get-together in late 2010.
Lambert said the change in attitude has been striking.
“I was involved on the PR side of
an east-meets-west event about 15
years ago, and the Detroit people
and the West Michigan people
came away with the feeling that
we had nothing in common. We
are in a much different spirit of
collaboration in Michigan now.”
Matthew Gryczan: (616) 916-8158;
[email protected];
Twitter:
@mattgryczan
20120709-NEWS--0014-NAT-CCI-CD_--
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July 9, 2012
CRAIN’S DETROIT BUSINESS
CRAIN’S MICHIGAN BUSINESS
New owner from east side
boosts dealership on west
by focusing on community
BY NICK BUNKLEY
CRAIN NEWS SERVICE
We’re in your neighborhood
At ITC we strive to be good neighbors and community partners.
We’re working hard to keep efficient, reliable energy flowing to homes
and businesses across Michigan and throughout the Midwest.
www.itctransco.com
Kickball, child seats and Christmas trees have helped a Southeast
Michigan auto retailer turn
around a failing Ford dealership
in Battle Creek.
When Vince Pavone bought the
store in 2010, it was headed toward
insolvency after going through a
string of owners and name
changes. Pavone changed its name
once more, slashed overhead, cut
deals with creditors and created a
new management structure.
The result: Lakeview Ford-Lincoln
turned a profit in its first month,
Pavone said.
But to succeed long term,
Pavone believed the key was building a stronger relationship with
the community. He uprooted his
family from the opposite side of
Michigan, convinced that the previous owners failed largely because they ran the
dealership from afar.
“We realized that
was the missing component,” said
Pavone, 53.
“None of the
management
of the dealership
had
lived in Battle Creek for
the last 15 or
20
years.
They
had
been absentee owners who were trying
to do it long distance.
It needed to have
community relationships and contribute
to the community.”
To that end, Pavone not only has
sponsored but also
has become deeply involved personally with numerous charitable
events in town, including an annual kickball tournament with several Detroit Lions players that raised
almost $30,000 in May and periodic
clinics that provide child restraints
to dozens of needy families.
Pavone said he learned the importance of community engagement from his father-in-law, Bill
Fox, who owns Bill Fox Chevrolet in
Rochester Hills. After a 17-year career in sales with a metal-processing company, Pavone worked for
Fox for four years before deciding
to buy his own store.
The activities have positively affected his business as well as the
Battle Creek area. Lakeview sells
about 40 new and 40 used vehicles
per month, roughly double from
before Pavone took over. Total
sales through May are up 30 percent this year, to 407 cars and
trucks, and new-vehicle sales are
up 38 percent, compared with a 7
percent increase for Ford Motor Co.
nationwide.
“It’s definitely been very fulfilling, and it’s helped make a name
for us in the community,” Pavone
said. “I feel like it’s been a successful formula for us, though it wasn’t
necessarily a formula for sales but
for inclusivity in the community.”
For the child-seat clinics,
Pavone clears out his service bays
and pays to bring in technicians
who ensure the restraints are installed correctly. He also has
bought billboards and full-page
newspaper ads to promote them.
“Vince is always looking for a
way to serve his community,” said
Mary Barkley, a project coordinator with Calhoun County’s Early
Childhood Connections program.
During the first clinic last year,
Barkley found her husband looking
at pickups on the lot. He went back
a few days later and bought an F150.
“Most of the people who come to
these events have never stepped
foot on our
property,”
Pavone said.
“It’s
really
about raising
awareness about our store
and having the
community
trust
that
we’re giving
back
and
we’re a good
citizen. Then
they can trust
that you’re going to give
them a good
deal on a car
because you’re
not going anywhere.”
The kickball
tournament,
which benefits an organization that
helps youngsters with disabilities
participate in recreational activities, began last year in conjunction
with former Detroit Lions quarterback Drew Stanton, who had done
some promotional work for Lakeview. This year the event doubled
in size after Pavone and Stanton recruited
Lions
quarterback
Matthew Stafford and receivers
Calvin Johnson and Nate Burleson.
Pavone also has put together
fundraisers for local high schools
through Ford’s “Drive One 4 UR
School” program and an annual
Christmas tree sale, for which he
donates space on his 8-acre property and all of the trees that are sold.
Pavone “definitely sticks out as
the car dealer who is really offering
his time in the community,” says
Ed Burnham, the board chairman
of Battle Creek’s Binder Park Zoo, for
which Pavone is organizing a
fundraising gala this fall. “It really
surprised me to see how fast he really dug into the community and
became a part of the community.”
From Automotive News
Vince Pavone
uprooted his
family from
the opposite
side of the
state,
convinced that
the previous owners
failed largely because
they ran the
dealership from afar.
RAYMOND JAMES IS CELEBRATING
THEIR 50TH ANNIVERSARY
Ann Arbor Branch
T 800.338.7846
Farmington Hills Branch
T 800.548.8008
Novi Branch
T 888.298.9587
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T 800.544.8754
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T 800.598.0027
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T 800.758.0037
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T 800.962.9531
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T 866.214.4104
Wyandotte Branch
T 800.962.9531
©2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
20120709-NEWS--0015-NAT-CCI-CD_--
July 9, 2012
7/6/2012
10:24 AM
Page 1
CRAIN’S DETROIT BUSINESS
Page 15
Commercial Finance Experience
In Your Corner.
CRAIN’S MICHIGAN BUSINESS
Full of tourists, Sleeping Bear
basks in the national spotlight
Social media,
TV exposure
boosts coast
BY HOWARD LOVY
SPECIAL TO CRAIN’S MICHIGAN BUSINESS
EMPIRE — A sunny, hot Sunday
on Michigan’s Leelanau Peninsula
brought large crowds to the beach
near Empire the last weekend of
June.
The village, along with other
communities and tourist attractions surrounding Sleeping Bear
Dunes National Lakeshore, continues
to bask in the national attention
from last summer, when viewers
of ABC’s “Good Morning America”
— propelled by the region’s social
media efforts — voted the rolling
sands, scenic woods and photogenic Michigan coastline the
“Most Beautiful Place in America”
(Crain’s, Aug. 29, 2011).
Tom Ulrich, deputy director of
Sleeping Bear Dunes, said visits
are up about 70 percent from last
year with 143,000 visitors through
May, compared with 83,000 in 2011.
The numbers for June are expected to be compiled early this month.
“If we continue to get the great
weather we have, coming on the
heels of that ‘Good Morning America’ (broadcast), we’re going to
have a very, very big year.” Possibly, Ulrich added, “our biggest
June ever.”
Tourism spending in Michigan
jumped 8 percent in 2011 and
should increase 6 percent this year
as the economy continues to recover, Michigan State University researchers said this spring in their
annual report about the state’s $17
billion-a-year tourism industry.
Although Ulrich cannot say for
certain that the “GMA” spot last
August is directly responsible for
the increase in visitors, he noted
that Sleeping Bear had an “immensely busy fall” right after the
segment aired.
Actual visitors may be hard to
quantify, but virtual visits soared.
Before last year, the Sleeping Bear
website got 1,500 to 2,000 page
views a day in a typical August.
On Aug. 17, when the “Most Beautiful Place” selection was made,
that number rose to nearly 15,000.
This year, nearby Old Mission
Peninsula, just north of Traverse
City, is seeing benefits from the attention that Sleeping Bear received.
Marie-Chantal Dalese of the Chateau
Chantal winery said the entire region is getting more recognition as
a direct result of the “GMA” piece.
That has translated into more visits
from foodies and wine lovers, she
said last month during the Traverse
City Wine & Art Festival.
Just a few days before, Chateau
Chantal hosted an event put on by
the other major factor in the region’s new-found national fame:
HOWARD LOVY
Nearly a year after “Good
Morning America”
named it the “Most
Beautiful Place in
America,” Sleeping Bear
Dunes National
Lakeshore (above) is still
generating crowds and
economic impact. One of
the region’s biggest
promoters has been
celebrity chef Mario
Batali, who is helping
the state promote
Michigan products.
restaurateur and Food Network chef
Mario Batali, a summertime resident of Leelanau County. He has begun a new partnership with the
state’s Pure Michigan travel marketing plan, sharing recipes and
holding an online chat with fans to
talk about Michigan food and wine.
Batali, who also makes frequent
appearances on “Good Morning
America,” helped boost the region
with his many social media followers during the “Most Beautiful
Place” vote last year.
Batali is a fan of local food and
wants to tell everyone. This can
translate into economic benefits,
he said.
“I think delicious food attracts
customers, always,” Batali wrote in
an email to Crain’s. “More customers, more jobs, more business.”
The state will evaluate the results of this initial collaboration
with Batali before deciding about
any formal long-term partnership,
said George Zimmerman, vice president of Travel Michigan, the Michigan Economic Development Corp.’s
marketing arm for state tourism.
As for Batali, he’s happy to promote the area in any way, whether
formal or informal — especially
using social media.
“I tweet every day, and it’s a big
part of my life,” he wrote. “I don’t
do it as a paid advocate or lobbyist,
which is why people believe me.”
Ulrich said that while the social
media exposure is playing a role in
Sleeping Bear Dunes’ rising popularity, it is not necessarily the entire story.
“I would not at all attribute the
‘Good Morning America’ announcement just to the social media here,” he said. “I attribute it to
the fact that there was a really nice
piece they did on Sleeping Bear
and that this place is beautiful.”
In general, Ulrich said, the National Park Service is waking up to
social media and is doing a better
job of embracing technology.
There is already an iPhone app
that details the trails at Sleeping
Bear, and in the works is another
one that allows hikers to log their
miles by using their smartphones to
scan QR (quick response) codes at
different parts of the hiking trails.
Lisa Griebel, a park ranger at
Sleeping Bear who is also in
charge of the park’s social media
efforts, said that more in-depth
content — along with warnings
and special events — is being
made available.
The increased electronic presence would have gone ahead even
had Sleeping Bear not received
this publicity, but the “GMA” spot
last year brought home the power
of the national spotlight, and many
businesses in the region are capitalizing on it.
“It is something that visitors ask
us about all the time,” Griebel
said. “They still remember it, they
still talk about it. That’s why they
planned their vacation here.”
Meanwhile, the region continues to enjoy increased recognition
as more national media outlets
learn about it. National Geographic recently named the region one of
the best summer trips of 2012.
American Profile magazine named
Sleeping Bear Dunes National
Lakeshore the “best inland
beach.” And a study conducted by
the University of Wisconsin and the
Robert Wood Johnson Foundation
named Leelanau County the
healthiest in Michigan and third
healthiest in the U.S.
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20120709-NEWS--0016-NAT-CCI-CD_--
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9:36 AM
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Monthly
July 9, 2012
CRAIN’S DETROIT BUSINESS
France
WHERE MICHIGAN DOES BUSINESS
Belfor Holdings Inc.
Based: Birmingham
France operations: Branch offices in Lyon,
Marseille, Lille, Toulouse, Dijon and Paris
Employees: 136
Products: Remediation, cleaning and
restoration services for industrial, commercial and residential properties
Top executive: Léonore Boulte, managing
director
More information: Belfor performs work in
mainland France and outlying French territories in various parts of the world, including St. Martin, Guadeloupe and other exotic
tropical islands.
Chrysler Group LLC
rance is the 10th-largest trading
partner to the U.S. Its GDP is $2.7
trillion, making it the world’s
fifth-largest economy. Major exports include machinery and electrical equipment, automobiles, textiles, leather,
chemicals and steel.
France has a population of about 65
million, borders six European countries
and has undergone tax changes. Former
President Nicolas Sarkozy is credited
with eliminating an annual flat business tax and increasing the tax credit
for investments in small- and mediumsized enterprises.
F
Crain’s monthly World Watch report
showcases companies leading the way in international business as well as those expanding their global operations.
Each World Watch Monthly features a different country. If you know of a Michigan
company that exports, manufactures abroad
or has facilities abroad, email Jennette Smith,
managing editor, at [email protected]
COMING UP
䡲 August: Mexico
䡲 September: Italy
ery, Illkirch-Graffenstaden, La Rochelle,
Saint-Aubin-du-Cormier and Villepinte.
Employees: 3,100
Products: Fuel injection systems, thermal
systems, ultrasonic modules and immobilizers, key fobs, body controllers, infotainment
and driver interfaces, battery management
systems
Top executive: IsBelgium
abelle Vagne, presiLuxembourg dent of Delphi in
Lille
Bouzonville
Germany France
Based: Auburn Hills
France operations: Fiat France in Trappes
sells Jeeps in France and handles after-sales
for Jeep, Chrysler and Dodge. Fiat France
also distributes the other brands of Fiat
Group Automobiles: Fiat, Fiat Professional,
Alfa Romeo, Lancia
and Abarth. There are
England
352 sales locations
and 385 service locaEsson
tions for all brands
Paris
combined.
Creutzwald
Trappes
Employees: 282
Blois
Products:
Jeep
Dijon
Based: Ann Arbor
Wrangler, Wrangler
Switzerland France operations:
Unlimited, Compass
200 stores nationwide
and Grand Cherokee.
Employees: 500
Lyon
Some Chrysler prodProducts: Pizza, inItaly
ucts adapted and sold
Bordeaux
cluding French speunder the Lancia
Sophia Antipolis cialties, sandwiches,
Toulouse
brand: Thema, Voysalads,
chicken,
Marseille
ager
and
(soon)
cheesy
bread,
potaSpain
Flavia.
toes and desserts, inTop
executive:
cluding Ben & Jerry’s
Christophe Bertonciice cream
ni, general manager
Top
executive:
Melanie Gigon, president
More information: Domino’s Pizza in
France is owned by Domino’s Pizza EnterprisBased: Detroit
es, the largest Domino’s franchise in the
France operations: Paris and Sophia An- world, with more than 800 stores in Austipolis
tralia, New Zealand, the Netherlands, BelEmployees: 100
gium and France.
Products: Marketing and customer support for proprietary software products —
specifically, Compuware’s Application Performance Management, Changepoint, Mainframe and Uniface products.
Top executive: Philippe Llorens, senior
vice president
Domino’s Pizza Inc.
FRANCE
Compuware Corp.
Cooper-Standard Automotive Inc.
Based: Novi
France operations: Creutzwald, Lillebonne,
Rennes and Vitre
Employees: 1,655
Products: Fluid systems, sealing systems,
anti-vibration systems
Top executives: Rolf Herzog, vice president
and managing director of metal operations
in Creutzwald; Sylvain Broux, vice president and managing director
More information: All operations in France
are part of Cooper-Standard France, a 51-49
percent joint venture between Cooper-Standard and the French government’s Fonds de
Modernisation des Equipementiers Automobiles.
Delphi Automotive PLC
Based: Troy
France operations: Four manufacturing
plants, three technical centers and two customer service centers, in Blois, Cergy, Donch-
Federal-Mogul offices in Crépy-en-Valois
Federal-Mogul Corp.
Based: Southfield
France operations: Corporate office in Paris,
manufacturing locations in Chasseneuil-duPoitou, Crépy-en-Valois, Garennes-sur-Eure,
Le Pont-de-Claix, Noyon, Oloron-SainteMarie, Saint-Jean-de-la-Ruelle, Saint-Priest
and Veurey-Voroize
Employees: 1,900
Products: Pistons, piston rings and liners,
filters and transmission parts, friction products, self-lubricating bearings, engine bearings, sealing systems, transmission parts
Top executive: Jean Brunol, senior vice
president of business and operations strategy
Ford Motor Co.
Based: Dearborn
France operations: Two plants in Bordeaux
that produce automatic and manual transmissions, a parts center in Estrées-Saint-Denis and a national sales company in SaintGermain-en-Laye.
Employees: 2,303
Products: Five-speed manual transmission,
six-speed automatic transmission that starts
in 2013, as well as other components for cars
Top executive: Jean-Luc Gérard, managing
director
Inteva Products LLC
Based: Troy
France operations: Four facilities, in Esson,
Saint-Dié and Sully-sur-Loire
Employees: About 1,120
Products: Closure systems, motors and
electronics
Top executives: Jean-Marc Belmond, senior
director of roof systems, motors and electronics and closure systems for Europe and
Asia; Pierre Blanchard, senior director of
motors and electronics
More information: Inteva has two operations in Sully-sur-Loire, a technical center
and an operations facility.
Kelly Services Inc.
Based: Troy
Operations: 82 branch offices
Employees: More than 30,000 full-time and
temporary
employees
Products:
Traditional
finance, IT,
health care,
science, and
engineering
office
and
work services
Kelly’s office in Clichy
Top executive: Franck
Teboul, country general manager
More info: Kelly France celebrates its 40th
anniversary this year.
Metaldyne Corp.
Based: Plymouth
France operations: Lyon
Employees: About 160
Products: Crankshaft dampers and isolation pulleys, which help guide the serpentine belt in an engine.
Top executive: Thomas Amato, president
More information: Metaldyne Lyon services
many major OEMs in Europe, including PSA
Peugeot Citroen, Renault SA, Ford, Jaguar Land
Rover, BMW AG, VM Motori SpA and Opel AG.
MSX International Inc.
Based: Warren
France operations: Two offices, including a
call and training center, are in the La Defense area of Paris.
Employees: Nearly 450
Products: Call centers and all retail network solution services, which include customer relationship management, warranty
and technical assistance platforms, dealer
training and coaching programs, and service and technical training.
Top executives: Eric Menoret, vice president, retail network solutions, responsible
for France, Benelux (customs union composed of Belgium, Netherlands and Luxembourg), Italy, Central Europe, Russia; Olivier Campanello, managing director, France
More information: France is MSX’s largest
retail network solutions business unit, with
growth from all automotive manufacturers
since the early 2000s. Its biggest customers
include Ford, Fiat Group SpA, Renault-Nissan Alliance, PSA Peugeot Citroen and the Volkswagen Group.
NSF International Inc.
Based: Ann Arbor
France operations: Bordeaux and Lyon
Employees: About 300
Products: Food safety audits and certification services, tests and certifications of water
filtration systems, training and consulting
services, audits and ISO registrations
Top executive: Kevan Lawlor, president
and CEO
R.L. Polk and Co.
Based: Southfield
France operations: Regional sales and services office in Paris
Employees: 33
Products: Marketing services, automotive
forecasts, vehicle volume and market share
reports, business consulting
Top executive: François Carlier, vice president and managing director, Southern Europe
More information: Customers in the region
include OEMs, suppliers, and various levels
of the automotive aftermarket.
TRW Automotive Holdings Corp.
Based: Livonia
France operations: Manufacturing sites in
Bouzonville, Brest,
Ramonchamp, Orléans, Plouzané,
Schirmeck, Ingwiller, Bonnevalsur-Arc and Dijon,
and two sales and
customer service
locations in Paris
Employees: 2,082
Products: Disc
brakes,
suspensions, radars, engine valves, fasteners,
shock
TRW manufactures radar
absorbers, power systems in Brest.
steering
valves
and sensors
Top executives: François Augnet, global vice
president for TRW’s aftermarket business;
Alexandre Perrin, global sales director for
Renault-Nissan Alliance; Thierry Métais, global
sales director for PSA Peugeot Citroen
— Ryan Kelly, Meghana Keshavan
20120709-NEWS--0017-NAT-CCI-CD_--
July 9, 2012
7/6/2012
9:35 AM
Page 1
CRAIN’S DETROIT BUSINESS
Page 17
Our friends in Congress
won’t take time
to remind you, so we are...
BUSINESS DIARY
ACQUISITIONS
Oxford Cos., Ann Arbor, a commercial
real estate investment firm, acquired
Arch Realty Co., Ann Arbor, a residential firm.
CALL FOR ENTRIES
Humantech Inc., Ann Arbor, is accepting entries for its Find It – Fix It Challenge. Deadline is Sept. 16. Email:
[email protected] Website:
www.humantech.com.
Business Leaders for Michigan, Detroit; the Michigan Economic Development Corp., Lansing; the New Economy Initiative, Detroit; and Ann Arbor
Spark are accepting applications for
the Accelerate Michigan Innovation
Competition. The application deadline for companies is Aug. 15 and for
students, Sept. 27. Website: www.ac
celeratemichigan.org.
Michigan Business and Professional
Association, Warren; Michigan Food
and Beverage Association, Warren;
Wellco Corp., Royal Oak; and Corp!
magazine, Warren, are accepting
nominations for The Best and Brightest Wellness Champions competition.
Deadline is July 27. Telephone: (888)
277-6464. Website: www.101bestand
brightest.com.
CONTRACTS
City Recycling Inc., Detroit, a metal recycler and processor, has chosen MagneGas Corp., Tampa, Fla., to provide
MagneGas, a natural gas alternative
and metal working fuel, to be used
throughout its metal-cutting operations.
Agree Realty Corp., Farmington Hills,
has been named a Florida development
partner for Wawa Inc., Wawa, Pa., a
convenience and fuel store chain.
A Sattler Consulting, Royal Oak, has
been hired by Audi, Ingolstadt, Germany, to assist with branding and marketing for Audi Sport customer racing.
Xpert Technologies, Sterling Heights,
a technology services company, has
been selected by Hensel & Associates
LLC, Sterling Heights, architectural
and structural modeling, and LJPR
LLC, Troy, registered investment advisers, to provide hosted VoIP phone
services.
The U.S. Army Contracting Command
has awarded General Dynamics Land
Systems, Sterling Heights, a $26 million contract to build two joint assault
bridge prototypes.
A contract between Meridian Health
Plan, Detroit, and the New Hampshire
Department of Health and Human Services, Concord, N.H., was approved.
Meridian will provide managed health
services to Medicaid beneficiaries and
will operate as Granite Care-Meridian
Health Plan in New Hampshire.
Altair Engineering Inc., Troy, developer of the HyperWorks computer-aided
engineering software suite, announced the addition of Finnish-based
Componeering Inc. to the HyperWorks
Partner Alliance. Componeering
Inc.’s software ESAComp is a composite modeling tool that aids engineers
in the design and structural analysis
of composites.
Creative Services Co., Madison
Heights, a video production company,
was contracted by Agrinos, Oslo, Norway, a green technology company, to
produce videos targeting commercial
growers. Also, Security Seed & Chemical LLC, Clarksville, Tenn., a regional
wholesale and retail commercial agricultural company, has expanded its
contractual services with CSC to include branding and marketing functions for SekureLink, a new privatelabel product line.
Care Solutions Group, Royal Oak, a
health care management services organization, selected M&K Mobile Podiatry, Novi, to provide mobile podiatry
and wound-care services for patients
residing in skilled nursing, assisted
living, independent living and private
home settings.
Your $5,000,000 transfer tax gift card
is set to expire on December 31, 2012.
EXPANSIONS
Michigan Gov. Rick Snyder joined
Share Our Strength, United Way for
Southeastern Michigan, Detroit Public
Schools and a diverse group of leaders
in education, government, community and business at Gompers Elementary School in Detroit to launch Michigan No Kid Hungry. Website:
mi.nokidhungry.org.
Roasting Plant, New York, will open a
coffee shop this fall in the First National Building, 660 Woodward Ave.,
Detroit.
NEW PRODUCTS
Lakeside Software Inc. released FastTrack 2.0, the second release of its SysTrack FastTrack virtual desktop assessment tool for Citrix XenDesktop
customers. Website: www.lakesidesoft
ware.com.
TRW Automotive Holdings Corp., Livonia, has introduced an infotainment
touch pad that can be molded onto the
surface of a vehicle’s armrest, steering wheel or instrument panel so motorists can use their fingers to instruct the navigation system, radio
and other infotainment functions.
Website: www.trw.com.
Congress’ gift
to your heirs
$5,000,000
CARD
G I F T be
r 31, 2012
Expires Decem
Download our white paper about this unprecedented
tax legislation that allows for a cumulative , maximum
lifetime gift of $5,000,000 per person - estate and gift
tax free and how Schechter can maximize this gift to
your heirs. Visit: www.schechterwealth.com/giftcard
STARTUPS
Law Offices of Gerkin & Decker PC, at
7305 W. Grand River, Suite 400,
Brighton. Telephone: (810) 222-6424.
Email: [email protected]
Website: www.gdlawoffice.net.
248.731.9500
Your customers are
GLOBAL.
Need to gear up?
20120709-NEWS--0018-NAT-CCI-CD_--
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July 9, 2012
C RAIN’ S DETROIT BUSINESS
CRAIN'S LIST: OUTSTATE TOP-COMPENSATED CEOS Ranked by fiscal 2011 compensation
Rank
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Total compensation
2011/2010
Salary
2011/2010
Bonus
2011/2010
Stock awards
2011/2010
Nonequity incentive/
retirement
2011/2010
Other compensation
2011/2010
Option awards
2011/2010
Company's net income
2011/2010
Andrew Liveris
$19,274,625
$21,376,727
$1,741,667
$1,691,667
$0
$0
$7,659,470
$5,683,729
$5,209,399
$8,644,180
$263,994
$297,145
$4,400,095
$5,060,006
$2,784,000,000
$2,321,000,000
Jeff Fettig
12,329,493
14,440,697
1,368,333
1,325,000
0
0
4,124,928
7,676,247
3,193,509
5,226,914
230,458
212,536
3,412,265
0
390,000,000
619,000,000
Stephen MacMillan
9,542,856
4,706,532
1,250,000
1,200,000
0
0
3,598,000
0
1,166,631
1,375,734
418,379
225,198
3,109,846
1,905,600
1,345,000,000
1,273,400,000
Blake Krueger
6,966,843
6,323,366
812,558
767,308
0
172,644
1,675,335
1,437,675
3,935,019
3,477,263
34,032
16,212
509,899
452,264
123,287,000
104,470,000
John Russell
6,716,892
4,893,478
950,000
758,333
0
0
2,610,452
2,106,374
3,112,405
2,010,795
44,035
17,976
0
0
415,000,000
324,000,000
0
NA
1,482,848
NA
1,728,500
NA
67,159
NA
2,316,594
NA
1,231,000,000
1,247,000,000
Name
Company
Dow Chemical Co.
Whirlpool Corp.
Stryker Corp.
■ Resigned Feb. 8, 2012.
Wolverine World Wide Inc.
CMS Energy Corp.
■ Became president and CEO May 2010.
John Bryant
6,595,113
NA
Joseph Papa
5,649,706
5,264,683
962,500
918,750
0
0
1,770,011
1,589,994
1,899,000
1,837,500
299,349
203,968
718,846
714,471
339,197,000
223,799,000
James Hackett
3,534,321
2,188,617
900,000
792,000
0
0
2,056,500
1,069,250
572,847
327,293
4,974
74
0
0
56,700,000
20,400,000
Dennis Eidson
2,868,862
1,692,506
691,385
615,923
0
0
689,443
832,200
1,466,805
31,834
21,229
16,199
0
196,350
31,758,000
32,307,000
Brian Walker
2,714,666
1,452,363
693,969
583,200
0
0
0
0
763,406
12,300
42,292
100,835
1,214,999
756,028
70,800,000
28,300,000
Kurt Darrow
1,825,043
2,510,849
766,652
725,000
0
0
748,728
100,947
124,198
959,175
38,944
8,556
146,521
717,171
24,047,000
32,701,000
Cathleen Nash
1,744,042
1,314,952
1,100,000
813,846
100,000
100,000
550,000
400,000
(5,958)
398
0
708
0
0
(16,318,000)
(314,610,000)
Fred Bauer
1,576,243
1,259,975
449,397
434,179
83,757
80,543
0
0
0
0
24,926
25,485
1,018,163
719,768
164,668,228
137,734,000
David Ramaker
1,564,364
1,282,498
482,219
419,450
0
15,413
259,490
289,345
757,604
500,245
5,803
5,803
59,248
52,242
43,050,000
23,090,000
James Herbert
964,000
960,547
322,000
322,000
165,000
155,000
0
0
0
0
8,400
8,627
468,600
474,920
22,839,000
17,521,000
Matthew Missad
736,779
NA
387,655
NA
792
NA
123,210
NA
200,623
NA
24,499
NA
0
NA
4,549,000
17,411,000
Richard Barz
620,530
533,526
375,225
357,600
26,535
24,706
0
0
181,143
116,364
37,627
34,856
0
0
10,210,000
9,045,000
602,560
1,270,709
393,269
351,576
0
0
0
0
193,430
390,815
15,861
6,761
0
521,557
49,361,000
3,641,000
John Sztykiel
596,380
597,397
342,004
318,977
45,000
0
137,633
215,000
48,992
40,275
22,751
23,145
0
0
773,000
4,100,000
Michael Magee
585,103
385,618
582,000
382,000
0
0
0
0
0
0
3,103
3,618
0
0
(20,200,000)
(16,709,000)
Robert Crockett
564,218
222,023
200,000
200,000
0
0
0
0
0
0
11,298
22,023
352,920
0
(1,218,651)
(1,901,060)
Michael Price
501,880
496,848
474,000
474,000
0
0
0
0
0
0
27,880
22,848
0
0
36,142,000
(14,611,000)
Robert Schermer Jr.
490,800
487,800
197,300
197,300
162,000
147,000
0
0
81,000
73,000
10,500
10,500
40,000
60,000
2,787,000
2,419,000
H. Douglas Chaffin
407,087
343,982
302,718
297,682
0
0
18,500
31,000
58,233
0
16,386
15,300
11,250
0
(3,762,000)
(11,899,000)
David Dunn
355,238
221,889
197,693
186,122
110,000
0
0
0
0
0
47,545
35,767
0
0
1,108,000
(3,612,000)
Kellogg Co.
1,000,012
NA
■ Became president and CEO Jan. 1, 2011.
Perrigo Co.
Steelcase Inc.
Spartan Stores Inc.
Herman Miller Inc.
La-Z-Boy Inc.
Citizens Republic Bancorp Inc., Flint
Gentex Corp.
Chemical Financial Corp.
Neogen Corp.
Universal Forest Products Inc.
■ Became CEO July 2011.
Isabella Bank Corp.
Thomas Vacchiano Jr.
X-Rite Inc. B
Spartan Motors Inc.
Independent Bank Corp., Ionia
Ecology Coatings Inc.
Mercantile Bank Corp.
Meritage Hospitality Group Inc.
MBT Financial Corp. (Monroe Bank & Trust)
Wolverine Bancorp Inc.
Top compensation for CEOs at publicly held companies outside of metro Detroit. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available.
B Acquired by Danaher Corp. in May 2012.
LIST RESEARCHED BY CRAIN'S STAFF
20120709-NEWS--0019-NAT-CCI-CD_--
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 19
Extra
People
䡲 The Michigan Health and Hospital
Association, Lansing, has elected
officers and board members.
New board members are Edward
Bruff, executive vice president and
COO, Covenant HealthCare, Saginaw;
Michael Falatko, president and CEO,
Hills & Dales General Hospital, Cass
City; Sharon Flewelling, president,
Michigan Association of Healthcare
Advocates, Mercy Hospital Cadillac;
Loren Hamel, president and CEO,
Lakeland HealthCare, St. Joseph;
Rodney Nelson, CEO, Mackinac Straits
Health System, St. Ignace; Annette
Phillips, president and CEO, Mercy
Memorial Hospital System, Monroe;
and Mark Vipperman, president and
CEO, Memorial Medical Center of West
Michigan, Ludington.
Officers are Chairman William
Jackson, president, Charlevoix Area
Hospital; Chairman-elect Dennis
Swan, president and CEO, Sparrow
Health System, Lansing, and
Treasurer Thomas DeFauw, president
and CEO, Port Huron Hospital.
䡲 The Wayne
County Medical
Society of
Southeast
Michigan elected
new officers,
including
dermatologist Ali
Moiin, M.D., as
president. Other
officers elected:
Mohammed
Moiin
Arsiwala, M.D.,
president-elect; Patricia WilkersonUddyback, M.D., secretary; and
Edmund Barbour, M.D., chair of the
board of trustees.
䡲 Mary Barra, senior vice
president of global product
development at General Motors Co.,
has been elected to the board of
directors for the Barbara Ann
Karmanos Cancer Institute. Attorney
Tom Kalas, owner of Kalas Kadian,
has been elected to the board of
directors for the Barbara Ann
Karmanos Cancer Center, the clinical
care function of the institute.
䡲 Alan Afsari,
M.D., has been
named director of
orthopedic trauma
at St. John
Hospital and
Medical Center.
䡲 The Huron
Valley Ambulance
Board of Trustees
appointed
Deloisteen Brown,
Afsari
M.D. to its board.
Brown is a former director of the St.
Joseph Mercy neighborhood health
clinic, Ann Arbor.
The board also elected officers:
Jacalyn Liebowitz, vice president for
patient care continuum, Allegiance
Health, Jackson, as chair; Richard
Lundy, community leader, Dexter,
vice chair; and Joseph Dulin, retired
principal, Roberto Clemente Center,
Ypsilanti, secretary-treasurer.
Robert Casalou, president and CEO
of St. Joseph Mercy Health System,
Ann Arbor, and John Thorhauer,
president and CEO of United
Methodist Retirement Communities,
Chelsea, were appointed new
trustees.
Healthy decision
Businesses weigh their options with insurance exchanges
PHOTO COURTESY OF CRT MEDICAL SYSTEMS
David Doyle, CEO of Novi-based CRT Medical Systems, said he plans to continue to offer health insurance to employees because it serves as an
excellent tool for recruitment and retention.
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
ver the next year, employers
will have tough choices to make
under provisions of the Patient
Protection and Affordable Care
Act of 2010, primarily because of the tax
penalty for not offering health insurance
that kicks in Jan. 1, 2014.
If they currently offer
health insurance, should
they drop it, pay the
䡲 The costs,
$2,000 per-employee
benefits of
penalty and allow workdropping coverage,
ers to enter the state’s
Page 21
still-to-be-developed
䡲 Snyder looks at health exchange?
all options,
Or should they continPage 22
ue to offer employerbased health insurance, consulting closely with agents, brokers or insurers on
methods to hold down costs below the
current 7 percent average annual increase in Southeast Michigan?
Many employers are likely to wait until after 2014 to make those decisions, said
Michael Philbrick, a health attorney with
Troy-based Hall, Render, Killian, Heath & Lyman.
Mark Kopson, chair of the health care
practice with Bloomfield Hills-based Plunkett Cooney PC, said the uncertainty about
Michigan’s health insurance exchange is
putting employers in a bind.
To make decisions, employers need to
O
DECISION TIME
We are likely to see a
“
cottage industry pop up
... that will develop
technologies to help
employers make these
decisions.
”
Mike Embry, National Association of Health
Underwriters
know what the exchange will look like
and be able to compare benefits they currently offer with coverage options in the
exchange, he said.
Health insurance exchanges, in which
individuals and small employer groups can
choose from a set of health coverage plans,
begin operating next year. Open enrollment through the exchange will start Oct.
13, 2013, with coverage to begin Jan. 1, 2014.
Michigan hasn’t created an exchange,
although Gov. Rick Snyder is working
with the Legislature to do so.
“Business doesn’t like uncertainty. It
causes businesses to hunker down and
not make financial commitments and
large capital investments,” Kopson said.
Mike Embry, Region 3 vice president
for the National Association of Health Un-
derwriters in Detroit, said the biggest issue for some employers in deciding
whether to drop benefits will be if their
employees will be eligible for subsidies
to purchase insurance in the exchange.
“It could be a benefit for an employer
to keep a group plan. It might help them
reduce overall costs for their medical
plan,” Embry said. “We are likely to see a
cottage industry pop up of companies
that will develop technologies to help employers make these decisions.”
David Doyle, CEO of Novi-based CRT
Medical Systems, a medical billing company, said health care costs for his 70
employees have increased 35 percent
over the past five years. That average is
about 7 percent per year, the norm for
Southeast Michigan.
Still, Doyle said he plans to continue to
offer health insurance to employees because it is an excellent tool for recruitment
and retention of experienced employees.
In June, CRT acquired Dearborn-based
Continuum Management Services Inc.,
adding 40 employees to the company’s
health insurance program.
“There is a lot of anxiety and stress
when employees have to worry about
health care coverage. We want to maintain it because it is a distraction and a
negative” for employees to think they
may lose it, Doyle said.
Because of increased competition from
See Decision, Page 20
20120709-NEWS--0020-NAT-CCI-CD_--
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10:23 AM
Page 1
Page 20
July 9, 2012
CRAIN’S DETROIT BUSINESS
Health Care Extra
Michigan State
Medical Society
Leading the Way
Toward the
Future of Medicine
• Ensuring the Viability of Primary Care
• Focusing on Health Care Quality & Safety
• Securing the Safety Net for Patients with Medicaid
• Committing to Health Care Resources Stewardship
• Addressing Child Obesity
www.msms.org
Decision: Employers weigh options
■ From Page 19
the exchanges and other cost controls built into the act that are designed to grow in effectiveness
over time, Doyle said: “I believe
(reform) will slow down the cost
increases. It will bring a new level
of competition and force insurers
to be more competitive.”
Talent recruitment also is the
reason few auto suppliers will
drop coverage, said Dave Andrea,
senior vice president of industry
analysis and economics for the
Troy-based Original Equipment Suppliers Association.
“Our members indicate that
health care benefits are a critical
element of a competitive compensation package,” said Andrea, who
also is manager of the association’s human resources council.
“We can say the vast majority of
our members are going to keep employer-based health care.”
Andrea said supply companies
continue to look to reduce rising
health premium costs. One popular strategy lately has been to offer
employees high-deductible health
savings account plans, he said.
Elaine Coffman, a principal and
practice leader with Troy-based
McGraw Wentworth, said a survey
her firm conducted shows that 85
percent of employers intend to
continue offering coverage to employees in 2014.
The Congressional Budget Office
also has predicted the Affordable
Care Act will lead to only a small
reduction — 3 to 5 million people
by 2019 — in employer-based
health insurance. The CBO says
Health Law Is Complex
Understanding It Can Be Simple
Gain insight and understanding
at hallrender.com.
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the worst-case scenario estimates
20 million will drop coverage and
send their workers to exchanges.
Even so, the number of employers who offer health care is less
than it once was.
Some 170 million people now are
covered through work, but that
number has dropped by 12 million
since 2000, primarily because of insurance price increases and the
economic downturn that began in
2008, said the U.S. Census Bureau.
In the past 13 years, the percentage of companies offering health
insurance has dropped to 55 percent in 2010 from 64 percent in
2000, the Census Bureau said.
As employers and individuals
make health insurance decisions,
the Congressional Budget Office
has estimated that up to 30 million
people could be covered by private
health insurance in the exchanges.
Attorney Philbrick said employers with 50 or more workers that
will be subject to the $2,000 penalty
for not offering insurance have little incentive to create benefit packages for their employees.
“What I have heard is that the
penalty is not going to influence an
employers’ decision to offer something they weren’t offering before,” said Philbrick, noting that
the cost of adding health insurance
will most likely be far greater than
paying the penalty.
Coffman said most midsize employers are now just beginning to
consider their options of keeping
their health coverage or paying
the penalties to drop it.
Because open enrollment starts
each fall, employers usually start
making plan change evaluations
in February and make final decisions in August or September, said
Ed Murphy, president of Auburn
Hills-based Plante Moran Group Benefit Advisors II LLC.
“Given that there are many regulations yet to be released, and insurance exchanges that have yet to
be built, we believe large employers in particular will be hesitant to
drop coverage with so many unknowns,” said Coffman, adding:
“It may be 2015 or 2016 until the
employer market settles into a
new normal.”
Marianne Udow-Phillips, executive director with the Ann Arborbased Center for Healthcare Research & Transformation, said
because the health exchange, as
currently proposed in Michigan,
would initially only allow companies with fewer than 50 employees
to purchase insurance through it,
few midsize and large employers
will drop coverage in the next
year. In 2017, employers of all sizes
will be eligible to shift employees
into the exchange.
“The small employers are dropping now because of the economics
of health insurance. Will reform
accelerate it? I don’t think so,”
said Udow-Phillips. “The reason
employers offer health insurance
is primarily to attract employees.
This still makes a good argument”
for retention.
Udow-Phillips said some job
seekers will chose between companies based on the value of the company’s health insurance coverage.
“Small employers may shift to
ROAD TO EXCHANGES
Timeline to implement health
insurance exchanges:
䡲 Sept. 30: Deadline for states to
promulgate “essential benefits,”
the benefits that must be offered
by all health plans that will be
offered on the exchange. The
benefits are to be based on
existing health benefit plans in
Michigan that meet federal
guidelines.
䡲 Nov. 16: Deadline for states to
submit applications for state
exchanges or state-federal
partnership exchanges. The
application must include the entire
plan, including information
technology contractors selected
and how the exchange would
operationally function.
䡲 Jan. 1, 2013: HHS approves
state applications for exchanges or
determines a federally facilitated
exchange will be used in a state.
䡲 Early 2013 (date uncertain):
States or the federal government
will issue applications for
insurance companies to offer
qualified health plans.
䡲 Summer 2013 (date uncertain):
States or federal government will
certify and give final approval on
rates for health plans.
䡲 Oct. 1, 2013: Open enrollment
for state or federal exchanges will
begin.
䡲 Jan. 1, 2014: Insurance coverage
purchased on exchanges will
begin.
Source: Center for Healthcare Research
and Transformation, Ann Arbor
the exchange to purchase health
insurance,” and many employees
may receive improved coverage,
said Udow-Phillips, adding that
she believes coverage in the exchange will be good.
But the big question right now
on employers’ minds is the health
insurance exchange. The act allows each state to set up its own exchange and develop its own rules,
following some general guidelines.
The Michigan Senate has approved Senate Bill 693 to set up the
state’s own nonprofit exchange.
The House has yet to take action,
but Speaker Jase Bolger, R-Marshall, has promised to take action
sometime this year.
By 2014, health insurance exchanges will be operating in every
state, offering community-rated insurance to individuals and small
employer groups of up to 100 workers. Federal subsidies will be available to workers earning up to 400
percent of the federal poverty level,
or $89,400 for a family of four.
Murphy said the state has until
Sept. 30 to select the set of essential
benefits that it wants health insurers to include in the insurance
products offered in the exchange.
Each policy offered will include
different coverage levels — labeled
bronze (covers 60 percent of essential benefit costs), silver (70 percent), gold (80 percent) and platinum (90 percent) plans.
“Employers need to know these
tiers so they can evaluate the level
of benefits and see how they fit from
an attraction and retention (of employees) standpoint,” Murphy said.
Jay Greene: (313) 446-0325,
[email protected] Twitter: @jaybgreene
20120709-NEWS--0021-NAT-CCI-CD_--
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10:22 AM
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 21
Health Care Extra
Costs, benefits of keeping or dropping health insurance coverage
Option 1: Costs or savings
if an employer offers coverage
䡲 Cost of passing the affordability and benefits test
Employers with 50 or more full-time
equivalents must offer a qualified medical
plan that costs an employee less than 9.5 percent of that employee’s W-2 wages for single
coverage and covers at least 60 percent of
the cost of benefits.
If an employer offers less and a worker
leaves the plan to purchase coverage in a
health insurance exchange and receives a
federal subsidy, the employer is hit with a
$3,000 per-employee penalty.
䡲 Cost of direct and indirect new taxes and
fees
Employers will be required to pay about
five direct and indirect fees. For example, a
direct fee is the comparative effectiveness
research fee, which is $1 per employee per
year in 2014, rising to $2 per employee per
year in 2015. The act creates a $1 billion fund
to issue grants to research the relative value
and effectiveness of medical procedures,
medical devices, drugs and other health
care systems. Indirect fees — passed on to
employers from taxes on medical device
makers and health insurers — are expected
to increase premiums 2.5 percent in 2014 and
up to 3.5 percent in 2015.
䡲 Costs to add newly qualified part-time employees and seasonal workers
Expected federal rules will require employers to offer health insurance to part-time employees working 30 or more hours per week
and seasonal workers who work 120 days or
more. Penalties for not covering those workers are expected to be $2,000 per employee.
The impact to employers depends on their dependence on these types of workers.
䡲 Savings by low-wage employees opting out
of group’s plan for Medicaid
There is no penalty to employers for not
covering workers who earn less than about
$9.80 per hour, or 133 percent of the federal
poverty level, and take Medicaid instead of
their employer’s plan. Statistics show that
only about 25 percent of those workers eligible for Medicaid will leave private health insurance, mostly because of the stigma associated with Medicaid.
䡲 Costs if larger numbers of employees opt to
accept employer-based insurance in 2014 than
under current plan
Some employers have many employees
who opt out of their employer’s plan because
they choose to be uncovered or they receive
insurance through a spouse’s plan. However, those companies could see employees
who have chosen not to be insured now
want coverage because of the mandate and
plan changes, increasing employers’ costs.
䡲 Cost of complying with new-hire waiting period restrictions of a maximum of 90 days
Some employers — many auto dealers, for
example — have insurance waiting periods
of up to two years. Those employers cannot
require more than 90 days for employees to
join their plans.
䡲 Impact of non-discrimination rules on fully
insured plans
Fully insured plans may not discriminate
between employees by providing price
breaks on insurance for highly compensated
executives. The rule has been in effect many
years for self-funded plans.
䡲 Impact of new federal rules insurers must
follow in setting premiums for individuals and
group plans
New federal community rating rules, the
factors that determine how insurance is
priced, will replace current state rules, both
on the exchange and off the exchange (either
for groups under 50 or 100 employees, depending on the exchange threshold).
Federal rules will allow carriers to adjust
pricing based on family size, where people
live, tobacco use and age. They cannot
charge older people more than three times
what they charge the youngest person. They
also cannot charge smokers more than 50
percent more than non-smokers.
Health insurers also will be limited in
how they price these fully insured plans
(group insurance plans in which an employer pays the bulk of the health insurance premiums).
One effect could be that some employers
might decide to self-insure their employee
coverage. If they do, fewer workers will enter the exchange, and that could lessen price
competition.
Option 2: Costs or savings if an
employer eliminates coverage
䡲 Cost of the mandate penalty
Employers with more than 50 employees
must offer coverage or pay a penalty of
$2,000 per employee, excluding the first 30
workers.
䡲 Cost of making employees whole or partially whole by evaluating the estimated cost of coverage in the individual market through the exchange
Some companies that eliminate coverage
could save thousands of dollars per employee, even if they pay the $2,000 penalty. However, employees would be left to purchase
health insurance in the exchange. Some
companies might share some of those savings with employees, allowing them to use
funds to purchase a policy through the exchange.
Lower-wage employees most likely would
need less financial help than higher-income
employees, especially those in their 50s, who
would be charged higher premiums for insurance.
䡲 Impact on corporate taxes
Employers are unable to write off mandate penalties from their income taxes. Additionally, employers would have additional
revenue from not purchasing health insurance that would be subject to federal taxes.
Source: Elaine Coffman, McGraw Wentworth, Troy
H EALT H CAR E
T R A N SFOR M AT ION
SERIES 12
An Educational Series on Optimizing Health Care Value
Get the qualities of an Olympian on your side.
Have a St. John Providence doctor working with you.
As we head into two weeks of Olympics coverage,
we’ll see the near-fanatical media coverage and
audience size that these games attract. We’ll hear
dramatic stories about the grueling training that
athletes undergo over many years to achieve
their dream.
I’ve noticed a strong similarity between champions
who become Olympic athletes, and champions who
become physicians. Below is a summary of the road
ahead for anyone choosing to become a doctor.
Difficulty: Hard
Time Required: 15 years after high school graduation
Qualities required:
s Strong work ethic
s Passion and drive for medicine and helping others
s A lot of money, loans or scholarships
s Ability to memorize medical terminology, symptoms
and medications
s Math and science skills
s Tenacity and drive
s A lot of time to study, memorize and practice
Dr. Maryland would be happy to hear your
thoughts and questions about health care reform.
Write her at [email protected]
Steps required:
s Bachelor’s degree
s Medical College Admissions Test
s Medical school graduation
s Medical residency program
s US Medical Licensing Exam
s Fellowship training
s State medical license
s Board certification
At this point, the doctor is typically 33 years old
and finally ready to practice medicine. He or she
seeks affiliation with a health system with a strong
reputation, top clinical excellence, leading technology
and a passion for healing body, mind and spirit. And
that is why 3,200 Olympic-caliber physicians choose
to partner with St. John Providence to practice their
healing skills.
If you want the qualities of an Olympic champion
working for you, contact us at 866-501-DOCS.
PATRICIA A. MARYLAND, Dr.PH
President and CEO of St. John Providence Health System
and Ministry Market Leader, Ascension Health Michigan
20120709-NEWS--0022-NAT-CCI-CD_--
7/6/2012
10:21 AM
Page 1
Page 22
July 9, 2012
CRAIN’S DETROIT BUSINESS
Health Care Extra
The Supreme Court
has spoken:
What does the
Affordable Care Act
decision mean for
your business?
WEBCAST EVENT
Thursday,
July 12, 2012
Noon to 1:00 p.m. EDT
RSVP: Call 1.800.847.6424 or
visit mcdonaldhopkins.com
McDonald Hopkins PLC
39533 Woodward Ave., Suite 318, Bloomfield Hills, MI 48304 • 248.646.5070
Carl J. Grassi
Stephen M. Gross
President
Detroit Managing Member
Leading with Results
Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach
Snyder presses lawmakers on state-run
exchange, examines available options
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
Gov. Rick Snyder has been meeting with Michigan legislators the
past week to encourage them to
move quickly on approving a statebased health insurance exchange
— MiHealth Marketplace — when
they return from recess July 18.
Snyder Press Secretary Sara
Wurfel said the governor’s office is
exploring options that include a
possible executive order in case
the Legislature doesn’t act, but
“the overarching preference, focus
and energy is to work on a legislative solution for a state-run health
exchange.”
On June 28, the Supreme Court
upheld major provisions of the Patient Protection and Affordable
Care Act of 2010, paving the way
for states to create their own
health insurance exchanges and
allowing consumers to purchase
subsidized private health insurance through an online portal.
A state-based exchange would
allow individuals and small employers to comparison shop among
private insurance plans through
the portal. The federal law allows
exchanges to be initially open to
employers with 100 or fewer employees, but the proposed Michigan law limits employer size to 50
or fewer workers. Last November,
the Michigan Senate approved
Senate Bill 693 to set up Michigan’s
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Since 1986, over $200 million in no-fault charges have been
exchange. House Republicans held
hearings but decided not to consider the measure until after the
Supreme Court’s decision.
After the decision was announced, Michigan
House
Speaker
Jase
Bolger, R-Marshall, said the
House reluctantly would move
forward
with
plans to create a
health
insurance
exchange
Bolger
for the state. He
said he wants to protect the people
of Michigan from a federal exchange, but he gave no specific
date for hearings.
However, Bolger is experiencing
intense pressure from some Republicans to withhold a vote until
after the Nov. 6 presidential election. For example, Attorney General Bill Schuette is lobbying legislators to wait until after the
election to act.
Republicans hope voters select
Mitt Romney, who has pledged to
work to repeal and replace the entire health bill if elected.
In a July 3 Facebook blog, Snyder made his case for Michigan to
develop its own health insurance
exchange, despite his misgivings
about the Affordable Care Act.
Snyder said Michigan stands to
lose a $9.8 million grant from the
federal government that would
help it complete implementation of
the health insurance exchange. It
already has spent $1 million in federal funds on initial planning.
Sources told Crain’s that if the
Legislature fails to act in the next
two months, Snyder’s only option
might be to approve the creation of
a state-federal partnership.
Such a hybrid exchange could
include
Michigan
managing
health plans on exchange and performing consumer assistance services but with the federal government performing other services,
including Medicaid eligibility determinations.
If Snyder issues an executive order, he would join governors in
New York and Rhode Island who
have already signed executive or-
ders to create state-based health
insurance exchanges. Kentucky’s
governor has said he is considering using executive powers to create the exchange.
The governors of Arkansas and
Montana are working with the federal government on creating a hybrid exchange. In Indiana and
Minnesota, governors have issued
executive orders to study options
for exchanges.
But the governors of Florida,
Louisiana, Maine, South Carolina
and Wisconsin have notified the
U.S. Department of Health and Human
Services that their states do not intend to establish an exchange.
Federal officials have warned
Michigan and other states that
they must take substantial steps to
create an exchange by early fall or
risk having the federal government form an exchange for them.
The Department of Health and
Human Services has set a Nov. 16
deadline for states to submit an application for a state exchange or a
state-federal
partnership
exchange.
“If the federal government finds
that we’re not prepared, they will
step in and establish a federally
run exchange in Michigan,” said
Snyder in his Facebook blog. “We
have no idea what that would cost,
and they would be calling the
shots. That’s why we have to act.”
Rep. Gail Haines, R-Lake Angelus, told Crain’s that House Republicans are still reviewing the
court’s decision and have made no
decisions on going forward with
the health exchange.
Haines, chairman of the House
Health Policy Committee, held several hearings in the spring to discuss the exchange. She said she has
some concerns about a negative impact from the exchange on Michigan’s private insurance market.
“We prefer to work on marketdriven approaches” to address coverage for Michigan’s 1.1 million
uninsured people, Haines said. “We
want to continue to take a deliberate approach to health reform. We
will sit down and see how this ruling impacts taxpayers.”
Jay Greene: (313) 446-0325,
[email protected] Twitter: @jaybgreene
approved for our hospital clients. Our insurance team has over
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To learn more, please visit
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335 East Big Beaver
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Troy, MI 48083
NOMINATIONS SOUGHT FOR STATE’S HEALTHIEST EMPLOYERS
Michigan companies will have an
opportunity to be recognized for
their healthy workplace practices in
a new awards program.
Priority Health, with Crain’s Detroit
Business and MiBiz as media
sponsors, is seeking nominations
for Michigan’s Healthiest Employers
awards.
The awards recognize best
practices used by employers to
create healthy workplaces across
Michigan as determined by
Indianapolis-based Healthiest
Employers LLC, which has used its
healthiest employers methodology
in 40 cities across 25 states.
Companies can enter by filling out
a survey found at
crainsdetroit.com/nominate. There
is no entry fee.
Southeast Michigan winners will be
announced Oct. 16 at a breakfast
preceding fourth annual Health
Care Leadership Summit. A similar
event will be held in West Michigan
by MiBiz to recognize winning West
Michigan companies.
All winners will be profiled in a
special supplement to run in
Crain’s Detroit Business and MiBiz
on Oct. 29.
The deadline to enter is Aug. 13.
Questions about the awards
program can be directed to Crain’s
Deputy Managing Editor Daniel
Duggan at [email protected] or
(313) 446-0414.
20120709-NEWS--0023-NAT-CCI-CD_--
July 9, 2012
7/6/2012
11:35 AM
Page 1
CRAIN’S DETROIT BUSINESS
Page 23
Health Care Extra
Five hospitals face payouts; lawsuit
alleges conspiracy over nurse salaries
of wage compensation data for registered nurses among the eight
hospitals going back to at least December 2002.
Some exchanges were directly
between individual hospital executives, or via third-party market
surveys that used code numbers to
identify individual hospitals, or in
a few cases during union contract
negotiations between the nurses
and Mt. Clemens General, the only
unionized hospital in the group.
The nurses allege that the hospitals used competitor data to help
set and contain RN wages, despite
a shortage of RNs in the health
care industry that should have put
pressure on wages.
“This case arises out of basic
economics,” said Mark Griffin,
partner at Seattle-based Keller
Rohrback LLP and lead attorney for
the nurses. “When you have a
shortage of something, like there’s
purportedly a shortage of nursing
causing competition for labor, the
wages for nursing should be increasing. In fact, they weren’t increasing at a rate that suggested a
shortage, and that’s been documented.”
In his March ruling, Rosen said
no evidence directly contradicts
the hospitals’ claims that competitors’ wage data was just one of several factors used to compute RN
wages, but said a reasonable person could find the hospitals had a
policy of frequent, “on-demand”
exchange of wage information that
could depress salaries.
Chad Halcom: (313) 446-6796,
[email protected]
Twitter:
@chadhalcom
million.
䡲 Bloomfield Orchard Villa, West
Bloomfield Township: Move all 50
licensed beds and another 96 beds to
a new, 72,000-square-foot facility.
䡲 Oakland Health Campus, Novi:
Trilogy Healthcare of Oakland II LLC
proposed to build and operate a
new single-story, 34,459-squarefoot, 60-bed nursing home health
facility; $4.79 million.
䡲 Riverview Health and Rehab Center, Detroit: Add 20 ventilator pool
beds; $3.3 million.
䡲 Romeo Continuing Care Inc.,
Romeo: Move the 33-bed facility to
the newly constructed, 25,000square-foot facility and become
Romeo Nursing Center; $2.5 million.
Filings approved:
䡲 Belle Fountain Nursing and Rehabilitation Center, Wayne: Construct
a 20,000- square-foot addition and
move 39 nursing beds; $3 million.
— Meghana Keshavan
ONE HUND
R
100
ARS
CON Roundup
The University of Michigan in Ann
Arbor is expecting to speed up the
time it takes to develop new drugs.
The university has been awarded
a five-year, $53 million federal grant
that will allow it to develop new
medical therapies to treat a wide
range of diseases such as diabetes,
heart disease, lupus and cancer.
The funds from the National Institutes of Health will support research at the Michigan Institute for
Clinical & Health Research.
“The award will enable (the institute) to continue to accelerate discoveries toward better health by educating, funding, connecting and
supporting clinical and translational research teams across the university,” said Tom Shanley, M.D., the
institute’s director and associate
dean for clinical and translational
research at university’s medical
school in a press release.
Shanley said volunteers are
needed to participate in the more
than 420 ongoing studies.
Register: umclinicalstudies.org.
— Jay Greene
NG
YE
Children’s Hospital in Detroit
filed a letter of intent on June 12
proposing a $17.1 million renovation of three floors of offices in the
William and Marie Carls Ambulatory Care building, which is attached to the hospital.
About 68,000 square feet will be
renovated, including the cardiology, thoracic surgery, hematology/oncology and otolaryngology
offices and the Communications
Disorder Center.
The renovation will take six
phases and is expected to be completed between the fourth quarters of this year and next.
The following are selected filings and decisions from June
1-30:
Applications received:
䡲 Macomb Wellness Center, Warren: Lease and operate a 99-bed
skilled nursing facility in Warren;
$15 million.
䡲 William Beaumont Hospital,
Troy: Move 44 beds into a new
44,000-square-foot addition; $14.5
TI
ED
Children’s Hospital plans UM wins $53M
$17M office renovation federal grant
RA
Five Southeast Michigan hospitals could pay $34.5 million combined to settle their portions of an
antitrust lawsuit alleging they
conspired via market compensation data to keep registered nurse
salaries depressed.
The former Mt. Clemens General
Hospital Inc., now McLaren Macomb
Hospital, has agreed to pay just
over $2 million to a proposed class
of registered nurses who provided
direct patient care in Detroit-area
acute care hospitals between December 2002 and late 2006, according to a proposed settlement agreement submitted late last month to
Chief U.S. District Judge Gerald
Rosen in Detroit.
Royal Oak-based Beaumont
Health System will pay an additional $11.34 million for its role in alleged collaboration with Mt.
Clemens General and six other local hospitals on RN wages between
2002 and 2007, according to a separate proposed settlement.
Both proposals await preliminary approval from Rosen to notify the affected nurses, and both
hospitals reserve the right to rescind their settlements if a minimum number of nurses (5 percent
of the settlement class for Beaumont or 10 percent for Mt.
Clemens) opt out of it.
Three other local hospitals — St.
John Providence Health System in
Warren, Oakwood Healthcare System in Dearborn and Bon Secours
Health System, now Beaumont Hospital in Grosse Pointe — agreed to a
collective payout of nearly $21.1
million under a set of settlements
Rosen approved in 2010.
But St. John is a unique case in
that most of its $13.6 million settlement was partly contingent on the
nurses winning a class-action certification against the remaining
hospital defendants in court,
which is still a pending motion before Rosen. If that request fails, the
hospital gets back more than $10
million.
That leaves three hospitals —
Henry Ford Health System in Detroit,
the Detroit Medical Center and Novibased Trinity Health-Michigan —
still in the fray awaiting the outcome of several pretrial motions.
In March, Rosen granted part of
a request by the then-five remaining hospitals to dismiss the lawsuit, but he agreed to let another
part go forward involving a “rule
of reason” claim. That means the
nurses now have to prove not only
that the hospitals collaborated
with each other, but that the conspiracy caused a restraint of trade
in the Detroit labor market for
nurses.
“Our position is that there wasn’t a conspiracy in the first place,
and therefore nothing that the hospitals have done could have impacted the (Detroit) market.” said
David Marx, partner at McDermott
Will & Emery LLP in Chicago and
lead counsel for Henry Ford
Health.
Marx said he was aware of no
current settlement talks for the
three remaining hospitals, and he
expects all three will continue to
defend the cases in court. Rosen
has not set a trial date.
At issue is a series of exchanges
CELEB
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
SAVE $100 00
OFF
20120709-NEWS--0024-NAT-CCI-CD_--
7/6/2012
Page 24
Crain’s Job Front
Visit www.crainsdetroit.com/jobfront
to search for jobs, post a résumé
or find talent.
9:43 AM
Page 1
July 9, 2012
CRAIN’S DETROIT BUSINESS
JobFront
PEOPLE
ADVERTISING
Janet Galecki to account supervisor,
account services, Mullen, Detroit,
from outbound marketing leader,
Owens Corning Corp., Toledo. Also,
Tim Szczesniak to account supervisor,
account services, from digital account
supervisor, MRM Worldwide, Detroit;
Meg Arens to part-time account supervisor, PR and social influence, from
senior account executive, Hass MS&L,
Troy; and Kaileen Connelly to account
supervisor, PR and social influence,
from senior account executive.
ENGINEERING
Kevin Rettich to
director of engineering,
SHW
Group
LLC,
Berkley, from associate principal.
ENTERTAINMENT
Andy Loughnane
Rettich
to vice president,
corporate
partnerships, Palace
Sports & Entertainment LLC, Auburn Hills, from
FINANCE
IN THE SPOTLIGHT
Wendy Zimmer Linehan to trust rela-
Kyyba Inc., Farmington Hills, has
named Connie Eding its first
controller of
finance.
Eding, 53, had
been an
accountant at
McKesson
Pharmacy
Systems,
Livonia.
Eding earned
an associate
degree in
Eding
accounting
from Lansing Community College
and a bachelor’s degree in
dietetics from Michigan State
University. She is a CPA and is
pursuing an MBA in finance at
Walsh College, Troy.
Kyyba focuses on engineering and IT
staffing and software development.
franchise lead, Corporate Executive
Board, Washington, D.C.
tionship officer, personal trust division, Greenleaf Trust, Birmingham,
from vice president, director of private bank sales, Fifth Third Bank,
Southfield. Also, Steven Christensen
to wealth management adviser,
wealth management division, from
vice president, investment adviser,
private wealth management, J.P. Morgan, Bloomfield Hills.
HEALTH CARE
Cindy Tomlinson to
@HOMe support
program director,
Hospice of Michigan Inc., Detroit,
from regional director of service
operations, central
region, Saginaw.
REAL ESTATE
Alexandra Jackiw
to managing director,
residential
client services, McKinley Inc., Ann Arbor, from president, Buckingham
Management and Special Asset Management, Indianapolis.
Tomlinson
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20120709-NEWS--0025-NAT-CCI-CD_--
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CRAIN’S DETROIT BUSINESS
July 9, 2012
REAL ESTATE
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CALENDAR
TUESDAY
JULY 10
Pre-Business Research Workshop/
FastTrac Orientation. 9-11 a.m. Learn
best practices for increasing your
chances of entrepreneurial success.
Michigan Small Business & Technology Development Center, TechTown Detroit. Free. Contact: Brian King, (313)
967-9295; email: [email protected];
website: www.misbtdc.net.
The Art of Online Networking. 11:30
a.m.-1 p.m. Automation Alley. With
Keith Zendler, founder, PeopleMovers.
Automation Alley headquarters, Troy.
Members preregistration $20, at the
door $30; nonmembers preregistration
$40, at the door $50. Email: [email protected]; website: www.
automationalley.com.
WEDNESDAY
JULY 11
Increase Your Pipeline with Networking
Finesse. 8:30-11 a.m. Detroit Regional
Chamber’s Michigan auto project,
Warner Norcross & Judd and Pure
Michigan. With Dennis Atkinson, director of corporate engagement,
Michigan corporate relations network, Wayne State University; Athena
Trentin, program director, Global Talent Retention Initiative of Southeast
Michigan; and Rebecca Wenglinski,
program manager, talent enhancement, Michigan Economic Development Corp. Detroit branch of Federal
Reserve Bank of Chicago. Contact:
Rob Luce, (313) 596-0383; email:
[email protected]; website:
www.detroitchamber.com.
Selling Smart Workshop – Increase
Your Pipeline with Networking
Fed-Mogul to buy
spark plug biz
from BorgWarner
Federal-Mogul Corp. last week announced a purchase agreement to
acquire the Beru spark plug business from BorgWarner Inc.
Terms were not released. The acquisition is expected to boost Federal-Mogul’s spark plug capacity to
more than 350 million units annually and boost sales by $80 million,
the company said in a release.
The deal has Southfield-based
Federal-Mogul taking over Beru
plants in Lyon, France, and
Neuhaus, Germany. The two plants
employ 500. It’s unclear whether
Federal-Mogul will consolidate either of the operations with its current spark plug business.
“Spark ignition engines are forecasted to remain the dominant ignition technology for the foreseeable
future, and we intend to be a leader
in this market,” Rainer Jueckstock,
Federal-Mogul original equipment
division CEO, said in a release.
BorgWarner will incur a pretax
loss of $50 million to $60 million because of the sale, the company said.
For Auburn Hills-based BorgWarner, this represents the second
deal in the past eight months divesting Beru business units since
acquiring a majority stake in Beru
for $490 million in 2005. The supplier sold its Beru tire pressure monitoring business in November 2011
to Huf Electronics GmbH of Germany.
— Dustin Walsh
CRAIN’S HONORS POWERFUL
WOMEN AT AUG. 8 EVENT
Crain’s Detroit Business and title
sponsor KPMG present Crain’s
Women: Profiles in Power, 5:30-9
p.m. Aug. 8 at The Henry Ford,
Dearborn.
The 11 women being honored have
shown how to break into impactful
careers. The keynote speaker is
Sara Laschever, co-author of
Women Don’t Ask: Negotiation and
the Gender Divide.
Tickets are $50 for current CDB
subscribers; $45 for Small Business
Association of Michigan members
and groups of 10 or more; $75 for
nonsubscribers; and $74.50 with a
special CDB subscription offer.
Guests will receiv e 50 percent off
their tickets by bringing someone
they’re mentoring.
For more information, call (313)
446-0300 or go to
www.crainsdetroit.com/events.
Finesse. 9-11 a.m. Ann Arbor Spark.
With Dave Bilbrey, sales trainer, Sales
Force Services; Greg Peters, founder,
The Reluctant Networker LLC; and
Joe Marr, president and CEO, Sandler
Training Ann Arbor. Spark Central,
Ann Arbor. Free; registration required. Contact: (734) 761-9317; website: www.annarborusa.org.
THURSDAY
JULY 12
Workplace Diversity Conference. 8 a.m.4 p.m. Oakland County Employment Diversity Council, Michigan Works Oakland. With L. Brooks Patterson,
Oakland County executive; Judge Phyl-
lis McMillen, Oakland County Circuit
Court; and others. The Auburn Hills
Marriott Pontiac at Centerpoint, Pontiac. $75; lunch only, $50; table of 10, $700.
Contact: Frank Russell, (248) 858-5204;
email: [email protected]; website:
www.ocedc.net.
Energy Forum: Universities as a
Source for New Businesses and Technology. 5-7 p.m. Ann Arbor Spark.
With Ian Stines, engineer and recent
graduate; Paul Jaques, founding member, The Center for New Enterprise
Opportunity; Doug Neal, managing director, Center for Entrepreneurship,
University of Michigan, College of Engineering; and Neil Sheridan, adjunct
professor of management, director,
TechWorks Innovation Center, Kettering University. Spark Central, Ann
Arbor. Free. Contact: (734) 761-9317;
website: www.annarborusa.org.
SATURDAY
JULY 14
Skyline Club Wine Club Crawl. 6:309:30 p.m. Engineering Society of Detroit, Friends of the Vine. Skyline
Club, Southfield. $50 FOV members,
$55 ESD members and guests. Contact:
(248)
350-9898;
website:
www.esd.org.
COMING EVENTS
ESD LHP Software Job Fair. Noon-9
p.m. July 20-21. Engineering Society
of Detroit. ESD headquarters, Southfield. Free. Website: www.esd.org.
ESD Networking Mixer. 5:30-7:30 p.m.
July 25. Engineering Society of Detroit. Skyline Club, Southfield. Free
for ESD members. Contact: (248) 3530735; website: www.esd.org.
20120709-NEWS--0026-NAT-CCI-CD_--
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Sales tax: Boat, auto dealers hopeful
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■ From Page 1
rats and Republicans, and one version of the legislation made it into
law for a short time in 1984 before
it was repealed.
Over the years, revenue impact
has been a chief concern.
“I don’t think anyone ever argues the policy. It’s always the
money,” said Terry Burns, executive vice president of the Michigan
Auto Dealers Association in East
Lansing. “And that’s what makes
these particular bills interesting,
because they phase it in.”
Senate Bills 126 and 127, sponsored by Sen. Dave Robertson, RGrand Blanc, would begin this
year by exempting from tax the
first $2,500 in the difference between a new car purchase and the
trade-in. The amount would rise
by $2,500 each year through 2017,
and then in 2018 all the difference
in value would be exempt from
sales tax.
House Bill 5696, sponsored by
Rep. Andrea LaFontaine, R-Richmond, would in 2012 exempt the
first $7,500 of difference in value
from tax and then would exempt
an additional $2,500 each year for
the next two years, with the
change completely adopted in 2015.
Under both bills, the change for
boat purchases would be full and
immediate.
But while the Michigan Department of Treasury sees phasing in the
sales tax change as an improvement over past versions of the legislation, the Snyder administration is opposed to the bills in their
current form.
According to a Senate Fiscal
Agency analysis, the changes as
proposed in SB 126 and 127 would
reduce state sales and use tax revenue by $12.8 million in the remaining current fiscal year, with
revenue impact rising to $90.9 million in fiscal 2013 and reaching
$221 million in fiscal 2018 when the
sales-tax change is fully phased in.
Treasury estimates the impact
of HB 5696 to be $151 million in fiscal 2013 and $179 million in fiscal
2014. No estimates were available
for 2015.
“The fiscal impact is a concern,
and we are currently focused on
reforming the personal property
tax system in the administration’s
continuing effort to improve the
state’s business environment,”
said Terry Stanton, Treasury public information officer, in an email
to Crain’s.
Bill sponsors say they are sensitive to state budgetary concerns
but want to provide tax relief to
consumers as well as address a
competitiveness issue for businesses.
“I think that this is long overdue,” said Robertson, who sponsored and co-sponsored similar
bills in the past.
“I don’t believe that the impact
will be as severe as the bill’s opponents would argue. But I do believe
that the tax relief would be significant for the purchaser, and from a
fairness standpoint, a removal of
double taxation.”
He said the change would stimulate car and watercraft sales and
bring in new tax revenue, and
there would be less overall state
revenue impact than the Senate
Fiscal analysis suggests.
LaFontaine said she is “open to
any negotiations and really what
will move this bill forward. Because I look at this as a benefit for
the taxpayer.
“The state can look at it as a loss
of revenue, but if you’re putting
money back in the consumer’s
pocket, that’s where that money
should be going.”
Asked about the possibility for
aspects of the legislation to be revised to make it more acceptable to
Treasury, Stanton said “the administration is always interested
in improving legislation.”
How soon the bills move remains to be seen. House Speaker
Jase Bolger, R-Marshall, is interested in the bills “as another form
of tax relief for individuals in
Michigan and a potential catalyst
to boost car and boat sales.” However, there is “the matter of how to
address the reduction in revenue
that would be caused,” said his
press secretary, Ari Adler, in an
email.
“The state is doing better now
from a budget standpoint than we
have in many years. We want to
continue to stimulate growth in the
economy, which an additional tax
cut could provide,” the email said.
“Having said that, we also have
a responsibility to consider how
such tax cuts will impact future
budgets. Because of the necessary
review that is still needed, we do
not yet have a timeline on when
we will address either of these two
tax bills in the full House.”
Burns, of the auto dealers association, said the change would encourage more people to trade in vehicles that would be sold by
licensed new and used car dealers,
with the state then making the full
sales tax revenue on those usedcar sales.
And, he said, the savings realized could give all car buyers more
money for a down payment or reduce the amount they need to finance, ultimately making it easier
to purchase a vehicle.
Among 45 states that have a general statewide sales tax, Michigan
is one of six to not give credit for
trade-ins on the sales tax, bill supporters said. The other states are
Oklahoma, Virginia, Nevada, California and Maryland, Burns said.
Jefferson Beach Yacht Sales’
Krueger estimated the tax change
would boost his business’ sales by
20 percent to 30 percent. He said
Jefferson Beach sales were about
$20 million in 2011 and are expected to approach $25 million this
year.
John Ropp, president of the
Livonia-based Michigan Boating Industries Association, said the legislation would make Michigan “substantially more competitive” for
boat dealers. “And being the boating state we are, to be the only one
in the Great Lakes region (to assess sales tax on total price), just
doesn’t make any sense.”
Weather Channel to acquire Ann Arbor weather site
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
The Ann Arbor-based weather
database and website The Weather
Underground Inc. is expected to be
acquired by The Weather Channel.
Alan Steremberg, president of
Weather Underground, confirmed
that the two companies signed the
acquisition agreement late last
month.
The site, which started as a research project within the University
of Michigan department of Atmospheric, Oceanic and Space Sciences,
will retain its URL and brand name,
and has no immediate plans to
change services, he said.
“We’re going to keep the differentiation going and not merge the
services. But we will be able to
make use of greater resources that
The Weather Channel can offer
and collaborate because they can
offer great resources,” Steremberg
said. “Our culture as a site has al-
ways led to a lot of creativity, and
it’s my goal to continue to maintain that.”
Terms of the deal were undisclosed, and a closing is expected
later this month.
The Weather Channel is coowned by Bain Capital, The Blackstone Group LP and NBC Universal,
which in turn is majority-owned
by Comcast Corp.
Weather Underground traces its
origins to a database tool that Perry Samson, the Arthur F. Thurnau
Professor of Atmospheric Science
at UM, began developing with Jeff
Masters in the early 1990s with assistance from a grant from the National Science Foundation.
It became a private company in
1995, shifting its focus to the Internet. Steremberg, one of the original software developers hired by
Samson, succeeded him as president about two years later.
The company employs almost 60
people at offices in Ann Arbor, San
Francisco and New York.
Weather Underground collects
localized weather and climate data
from more than 22,000 reporting
stations at homes and businesses,
and offers data services to various
CBS-owned-and-operated TV stations and media publications of
Sacramento, Calif.-based McClatchy Co.
Weather Underground’s website,
Wunderground.com,
is
ranked 76th out of 100 international websites, at just under 11.9 million unique users per month, according to Quantcast, a Cisco
Systems Inc. company.
Steremberg said the acquisition
will allow him to head up engineering and product development
at Weather Underground, with
less of a focus on sales and marketing functions under the new management.
Chad Halcom: (313) 446-6796,
[email protected]
Twitter:
@chadhalcom
20120709-NEWS--0027-NAT-CCI-CD_--
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3:39 PM
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 27
Web stress: Software helps users manage time on Internet
■ From Page 1
gy modifies behavior.
and 1999) and 64 percent of Genera“The Internet promotes the ob- tion X’ers (those born between
sessive behavior to be influenced 1965 and 1979) check texts every 15
by what you see, hear and feel, minutes or less.
whether reading about a murder
“What we’re carrying is an
that impacts the conversation you amazing device in our pocket 24/7,
have at lunch or harassment that so it’s no surprise (people are obcan be caused by things people sessed with it), and a lot of it is bepost on social media blogs and wall low the level of truly conscious
posts,” Ostach said.
thought,” Rosen said. “Because
Internet addiction expert Larry these are such amazing distracRosen, author of iDisorder
tions, we need to learn
and a professor at Califorhow to put it aside.”
nia
State
University,
Ostach works full
Dominguez Hills, agrees Intime at Digerati Inc. in
ternet obsession and anxiDetroit, a small techety is a real probnology company that
This
lem.
installs custom soft“What we’re see- story
ware to help organizaing is that these originally appeared on
tions run more efficienttechnologies, par- Detroit Make it Here
ly.
He
launched
ticularly the smart- (www.detroitmakeithere
MyMentalSpace on the
phone, has become .com), a website for
side.
an object of obses- area creatives.
Through
word-ofsion — exactly the
mouth, Ostach recruited
kind of obsession people suffer from a team of software engineer conwhen they have obsessive-compul- sultants and graphic designers
sive disorder,” Rosen said. “A brain who also maintain other full-time
scan of someone being obsessed by jobs, working on this project
technology looks a whole lot like evenings and weekends.
anxiety.”
Ostach has self-funded the effort,
Although Rosen thinks technolo- investing slightly under $100,000 to
gy can provide users around-the- date. He draws revenue from speakclock empathy, kindness and social ing to local companies and educasupport, the problem is that many tional institutions in Michigan
people experience anxiety when about managing Internet use.
they can’t check their texts, blog
The company has projected 2012
posts or other communication.
revenue of $30,000 and projected
Rosen said 62 percent of all iGen- 2013 revenue of $150,000 based on a
eration (those born between 1990 predicted uptick in sales of educa-
tional programs and DVDs.
Though Ostach has made the
app free to build awareness and
generate users, he soon plans to
begin selling a premium model
with additional features that will
cost $1-$3 a month.
Ostach said the company will
sell its application to schools, employers and parents. Pricing is
based on total users, and bulk discounts are available.
The application, in development
for two years, was launched last
September. The website has just
over 1,000 users, mainly college
students, with plans to grow the
base through a new marketing effort in the fall called the Facebook
Challenge.
This challenge will encourage
users to block Facebook — the
most requested site to be blocked
through MyMentalSpace — anywhere from one hour to one
month. It also will monitor how
the user feels when off Facebook
and what the user does differently
with his or her time.
MyMentalSpace collects data
from its users voluntarily to aggregate information on how a particular website makes the user feel —
happy, sad, deprived, disgusted.
There may be market value in the
data for researchers, advertisers
and search engine optimization
analysts that would provide another revenue source.
TechTown boost
In 2010, Ostach enrolled in what
was then called TechTown’s Smart
Start, a one-year program that
walked entrepreneurs through all
parts of starting a business and
provided one-on-one coaching.
TechTown helped align Ostach
with pro bono service from an intellectual-property firm, nominated his company for local media
awards and provided opportunities to pitch investors.
Ostach said his experience was
fruitful, but that an entrepreneur’s
experience with the organization
will depend on how well he or she
can make the most of the resources.
“TechTown has a lot of energy
and intelligent people working
there that you just need to be able
to navigate through,” Ostach said.
“Are you outgoing enough to make
a pitch in an elevator? How deep
can you dig?”
Ostach leases shared community space at TechTown monthly for
his staff and interns and still
meets bimonthly with his coach
there, Michael O’Rourke, who has
been working with Ostach primarily on his revenue model.
“What we look for are entrepreneurs who have a passion for their
business,” said O’Rourke, who is
TechTown managing director of
operations. “We like them to have
some business knowledge in order
to hit the ground running, a viable
business idea and potentially be
able to create jobs within the city
and Southeast Michigan. Mark fits
all of those.”
Once a tech company has begun
to sell its product, it becomes easier for the company to go after investment money for software development to enhance features,
hire salespeople or develop a marketing plan, he said.
Key to success, though, is finding a niche that hits the market at
the right time.
Ostach “has to convince people
that they have a need for this product,” O’Rourke said. “If that can
catch on, this gives him a huge
market. One thing investors look
at is a large market as well as a
strong team.”
Cranbrook Schools in Bloomfield
Hills is using the product and it
brought Ostach in this past year to
speak to its high school students
about the proper use of the Internet.
“Teenagers are very social beings, and they don’t want to miss
out on anything or feel left out,”
Brown said. “They appreciate that
(the tool) is not ‘Big Brother’ coming in but that they are monitoring
their own behavior to be responsible. It’s easy for us to come in and
say, ‘You can’t do this,’ but that’s
not a stance we want to take.
“Once we’re gone, they go and
use (technology) anyway, so we
want to responsibly teach them
how to use it.”
Enter a new awards program and be recognized for your
best practices that promote healthy employees and healthy
workplaces. To enter, simply complete an online survey
administered by Indianapolis-based Healthiest Employers LLC,
which has used its healthiest employers methodology in 40
cities across 25 states.
There is no charge to enter. Deadline for entries is Aug. 13.
Winners will be announced on Oct. 30 at a special breakfast
prior to Crain’s fourth annual Health Care Leadership Summit.
To enter, please visit
www.healthiestemployers.com/events/michigan
Winners will be profiled in a special supplement to run in Crain’s Detroit Business and MiBiz on Oct. 29.
To advertise in this section, contact Marla Wise at [email protected] or 313-446-6032.
20120709-NEWS--0028-NAT-CCI-CD_--
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4:23 PM
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Page 28
July 9, 2012
CRAIN’S DETROIT BUSINESS
Apparel: Business gets fit manufacturing jeans, custom wear
■ From Page 3
the 30-year-old business.
In addition to making sleeves
for robotic arms and jeans for fashion-conscious Detroiters, the companies make outfits for cocktail
waitresses and casino dealers and
uniforms for hotel personnel.
That they do it alongside of industrial work on U.S. soil is key,
D’Andreta said.
“We’re on a mission here,” he
said. “We’re trying to bring back
American manufacturing.”
A stitch in time
The venture into blue jeans began in 2010. As TDIC’s apparel
manufacturing was getting under
way, Joe Faris, former “Project
Runway” contestant and cofounder of Fashion in Detroit, approached D’Andreta with the idea
of creating a denim brand.
Motor City Denim Co. was founded
in September 2010, and the line debuted the next month at a Fashion
in Detroit show under the name
Motor City Denim Co. by Joe
Faris. But in November 2011, Motor City Denim and Faris split
ways; D’Andreta cited business
and creative differences.
Faris debuted his new fashion
line called Motor City Blues at the
Fashion in Detroit show in March.
Meanwhile, TDIC’s Motor City
Denim now goes as MCDC. The
company also learned some things
through the changes. D’Andreta
said the company has learned to be
more creative and nimble as a result of the expanded product lines
and mixture of functional and
fashionable projects.
TDIC has 83 employees, up
about 20 from when Motor City
Denim began. Depending on workload, a dozen employees can be
shifted from the industrial side of
the business to the apparel side.
That includes four in-house designers who have backgrounds in
fashion and are enjoying the opportunities to channel their creativity
in new ways, D’Andreta said.
“Their creative juices are flowing,” he said, and both sides of the
business are benefiting. “When
you become more creative … the
more solutions you can bring to a
problem.”
Apparel accounted for about
$70,000 of TDIC’s revenue last year,
and D’Andreta said he wants to double that in the next year. TDIC, he
said, is on pace to beat $8 million in
revenue. But he doesn’t see much
future in industrial coverings.
“I’m not envisioning automobile
increasing beyond what it is today,”
he said. “There aren’t going to be
more new assembly lines built.”
Designs for clients
TDIC is working with Arrow Uniform of Taylor to design its
wardrobe line for casino and hospitality workers and has done sewing
for Kid Rock’s Made in Detroit company. Arrow Uniform also works
for TDIC as its denim-wash vendor.
Event planners and consultants
Gail & Rice of Farmington Hills contract with TDIC to design specialty
wardrobes for auto shows, such as
the leather jumpsuits that Fiat
Abarth product representatives
wore at the North American International Auto Show and the custom
racing suits that helped Dodge introduce its Dart Rallye in New
York this spring. Account executive Terri Maloy said she anticipates similar projects for the upcoming auto show season.
But uniform work can be fickle,
according to Anna’s Uniforms of Ferndale, which sells medical scrubs,
restaurant and other uniforms.
The company adds logos to catalog-ordered clothing and has four
seamstresses who design, cut and
sew custom uniforms primarily
for churches, choirs, pastors and
hospital volunteers, said owner
John Stingu, whose mother founded the company in 1972. Anna’s
Uniforms designed the robes worn
by choir members who appeared
in the debut “Imported From Detroit” ad from Chrysler.
Despite these kind of one-off
contracts, uniform business has
been on a steady decline for a
decade, Stingu said.
“Way back when, we used to
make restaurant uniforms, but
now they wear polo shirts and
skirts,” he said.
An increasingly diverse base of
customers and investments in
modern machinery have helped
TDIC, said D’Andreta. TDIC invested in new sewing machines
and equipment for apparel production but was able to leverage its existing resources, such as computer-aided design software.
Fatoula Lambros of Fatoula Lambros Design in Detroit hired TDIC
to produce its knit and woven
clothing that will be available this
winter. Lambros said she had a
bad experience with another production facility and wanted to use
one that was close, where she
could work on site with the staff.
“We were looking for someone
who was closer to Detroit,” she said.
“If I hadn’t found Mark, I would
have considered moving,” probably
to California where those services
are more readily available. “He believes in making a Detroit brand.”
Detroit’s jeans scene
MCDC plans to re-launch its own
denim this fall, D’Andreta said. The
company makes men’s and women’s
jeans and T-shirts and plans to introduce jean jackets for its winter
collection.
In its debut, Motor City Denim
sold between 300 and 400 pairs of
jeans, running about $180 a pair.
The new line of jeans — three
styles each for men and women —
will cost about $125 a pair. They
will be sold online at www.motorcitydenimco.com and at independent boutiques.
MCDC is not in competition
with national brands, and customers buy them because the
“made in Detroit” message resonates, D’Andreta said.
“Our customers love that we embody the resilience of Detroit,” he
said.
The new logo features the letters
MCDC and the wings of a Phoenix.
MCDC isn’t the only jeans maker in town, though. Detroit Denim
Co. also sells pants with a Detroit
label. Like MCDC, it uses denim
from U.S. mills, but Detroit Denim’s high-end, handmade men’s
jeans use selvage denim and premium leather and cost about $250 a
pair.
Before he set up his own manufacturing operation this spring at
Pony Ride in Corktown, which provides low-rent factory space to entrepreneurs, owner Eric Yelsma
had a few pair of his own jeans
made at Motor City Denim.
Although the company is based
in the city that bears its name,
Yelsma said it is more important
to him that all the components are
made in the U.S. than that they
come from Detroit.
“Jeans are about as American as
you can get,” he said.
Meanwhile, D’Andreta said he’s
excited for TDIC’s future.
“We’re hitting the sweet spot,” he
said. “We’re doing it slow and we’re
doing it steady, and it’s actually happening. I’m making money at it.”
Contest: A civilian could become designer of new Marine vehicle
■ From Page 3
than this area.”
The design competition’s aim is
to find alternative ways to make
defense design and spending more
efficient, said Army Lt. Col.
Nathan Wiedenman, program
manager of the Adaptive Vehicle
Make portfolio of programs at
DARPA in Arlington, Va.
“The direction we’ve been going
in military acquisitions lately is not
a sustainable path,” Wiedenman
said. He said that in 15 years the
Army alone spent $22 billion on programs that were later canceled.
Participants in the FANG contest
will be able to use the contest website, vehicleforge.org, to register
and collaborate on vehicle design.
The prototype design resulting
from the competition will replace
the expeditionary fighting vehicle, a $15.9 billion design effort
awarded to General Dynamics Land
Systems in Sterling Heights that
was scrapped last year. The General Dynamics vehicle was to replace the Marines’ aging assault
amphibious vehicle, in use since
1972.
The EFV was designed to carry
Marine rifle squads on land and
sea, and took $3 billion and nearly
two decades of work from various
contractors before U.S. Defense
Secretary Robert Gates deemed
the project too costly. Each 35-ton
vehicle, which would carry about
25 Marines and crew, would cost
about $22.3 million.
Representatives from GDLS declined to comment on the DARPA
crowdsourcing project, but are
looking into it further.
“A big part of the problem is
that even though the systems
we’re building are much more
complex than they have been in
the past, the way we engineer defense systems hasn’t fundamentally changed in a long time,”
Wiedenman said.
In the new competition, DARPA
is opening the channels of military
vehicle design to the public — and
Ricardo will provide the equipment and framework.
DARPA awarded Ricardo a $6.2
million contract in January to develop computer modeling software
for contenders to use. This includes specifics on the engineering
development software and vehicle
parts needed in the design.
Ricardo collaborated with Warren’s Tank-Automotive Research, Development and Engineering Center in
2008 to build vehicle modeling and
simulation software to design a
new military truck prototype.
The software created a base vehicle and had sliding adjustment
bars to change various aspects,
such as engine size and armor
thickness. Changes would be reflected in a spreadsheet that
tracked vehicle speed, fuel efficiency, cost and weight.
“It’s likely that Ricardo is doing
the exact same thing with
DARPA,” said Carl Johnson, project manager for fuel efficient
demonstrator trucks at TARDEC.
Ricardo will serve as competition moderator and will evaluate
submissions. With 200 employees
in Michigan, it would likely expand its staff to accommodate the
new project, Luskin said.
Ricardo and DARPA are still formulating the competition guidelines and won’t actively begin publicizing details until at least this
August, he said.
The contest to design the FANG
will kick off in early 2013. It could
run until June 2015, with DARPA’s
total investment in Ricardo’s operations expanding to $27.6 million if
the project is renewed for two
more years.
The winning design will be manufactured, and the final vehicle
will ultimately be evaluated
against prototypes from larger defense contractors in a side-by-side
operational test.
Crowdsourcing ideas is not a
new trend, said Panos Papalambros, a mechanical engineering
professor at the University of Michigan. Similar approaches have
worked in open source software
and integrated circuit development projects, but this is a new
strategy for the military.
Papalambros is working on a
crowdsourcing research project
between UM’s Automotive Research
Center and TARDEC.
“The decisions for large procurements are usually political,
and crowdsourcing won’t change
that,” Papalambros said. “But it’s
a very interesting exercise that
will likely surface good ideas, and
galvanize government contractors
into paying more attention to their
products.”
Crowdfunding site targets Jan. launch
RelayFund Inc., a new Michigan-based crowdfunding site, is
revving up to help connect
small investors with startups.
Crowdfunding combines social media with raising private
equity for small businesses —
similar to microloans and project startup funds raised on sites
like
Kiva.org
or
Kickstarter.com. It was created
after President Barack Obama
signed the Jumpstart Our Business Startups Act in April.
“Before the legislation, there
was no good way for small businesses to raise capital beyond
asking family and friends,” said
Jeff Lambert, one of RelayFund’s principals and president
of Troy-based investor relations
firm Lambert, Edwards and Associates. “A lot of rules were put
into place to help protect investors from fraud, but it’s
stunted the job market by making it hard for startups to take
off.”
RelayFund is backed by Lambert’s firm, as well as Grand
Rapids-based investment banking firm Hartwick Capital and a
handful of investors across the
state. The site can be found at
www.relayfund.com, but it’s not
yet active.
Lambert and his partners are
preparing for a January launch,
when the Securities and Exchange
Commission will likely release
regulations.
“Everyone is trying to predict
how the SEC will structure
this,” Lambert said. “But with
enough freedom, I think it’ll be
a real job creator and fill the gap
that exists in private equity
now.”
The maximum businesses can
raise is $1 million a year. People
with incomes below $100,000 can
invest up to $2,000, or 5 percent
of their annual income. Those
with incomes higher than
$100,000 can invest 10 percent of
their annual income, with a
maximum total investment of
$100,000 per year.
Ken Kousky, a partner in RelayFund and founder of Midland-based BlueWater Angels Investment Network, said that
crowdsourcing democratizes
the investment process, allowing small-time investors to have
greater control with their money.
“Traditionally, what the Internet does is take away the bureaucratic middle management
and transactional services,” he
said. “Crowdfunding looks like
it’s a radical change, and it is —
it’s all about taking Wall Street
finances back to Main Street.”
— Meghana Keshavan
20120709-news--0029-NAT-CCI-CD_--.qxp
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CRAIN’S DETROIT BUSINESS
July 9, 2012
Page 29
Office park: Northern Equities echoes confidence
■ From Page 3
ing up new contracts,” he said. “I
can see the scenario where you
run out of good options for space
by the end of the year.”
For Northern Equities to start
working on a speculative building
now puts it in a good position for
later in the year when companies
on a short timeline are looking for
space, Schostak said.
“But at the same time, it’s still
an aggressive move,” he said.
“There aren’t many investors doing this right now, because you
don’t know how long it will take to
fill it up.
“Will it take six months or will it
take two years?”
Sosin said the move is part of a
strategy to be in a good position
for the companies looking for
space by the end of the year. And,
the roughly 1.5 million square feet
in the office park is almost all taken.
“The occupancy in our park is
96 percent right now,” Sosin said.
“We needed to have something
to have something
“thatWeweneeded
could use to go after the
bigger deals.
”
Matt Sosin, Northern Equities Group
that we could use to go after the
bigger deals.”
The new building, MacKenzie
North Tech, represents an investment of $8 million to $10 million,
he said, and is expected to be completed by the end of the year.
Office and research and development space in Novi has been
strong in 2012, according to data
from the Washington, D.C.-based
CoStar Group Inc.
This year, there’s been 187,000
square feet of leasing activity. Just
six out of the 11 metro Detroit submarkets tracked by CoStar showed
positive leasing activity.
The vacancy rate has come
down as well. It’s currently at 20
percent, compared to 22.8 percent
at the end of the second quarter in
2011. At 20 percent, the vacancy
rate is slightly above the average
for metro Detroit of 18.8 percent.
A speculative building in the
Haggerty Park is indicative of several factors, particularly how well
the park has been doing, said A.J.
Weiner, an executive vice president in the Detroit office of Jones
Lang LaSalle.
“If you’re a landlord sitting on
tons of vacant space, with minimal
rent, you won’t be out doing a new
building,” he said.
Weiner also pointed out that certain areas such as Novi and
Auburn Hills are seeing construction of new buildings, while places
like Troy and Southfield still have
existing space to fill.
Looking toward the end of the
year, Weiner expects there will be
demand from companies that want
new, updated office space — and
fewer companies focused on lessexpensive space like they were
during the recession.
“Demand for buildings, like the
one Northern Equities is doing, is
going to be driven by the company
that doesn’t want to be in a 30-yearold building anymore,” Weiner
said.
“A year ago, they might be looking for the value play, but now,
quality is becoming a more important factor.”
Daniel Duggan: (313) 446-0414,
[email protected]
Twitter:
@d_duggan
Airport: Metro launches plan to rebid retail space
■ From Page 1
cession fee or a percentage of sales,
whichever is higher.
One local businessman says he’s
concerned that rebidding may drive the few local retailers represented at the terminal away from
the airport.
“Whether you’re an existing tenant or not, the process they’re doing is having everybody literally
starting from ground zero,” said
Dominic Pangborn, founder, president and CEO of Pangborn Design
Ltd., which operates Pangborn Design Collection in the McNamara
Terminal.
“I’ve been there since 9/11, I’ve
invested, I’ve put hard work into
it, and we’re going to start over
like we had never existed? … Any
other place, you’d be negotiating to
renew on a lease.”
Of particular concern to Pangborn is that the bid parameters require new funds be dedicated to
the physical space vendors occupy.
Conway says it’s necessary to
“freshen” the retail spaces, but
Pangborn says it’s a needless expense for established operators —
and a cost that makes it difficult
for a local retailer to compete with
national chains.
Conway said the airport authority provides no specific advantage
to local businesses over national
providers, but it does encourage
local investment.
Proposals will be evaluated on
customer service, design, concept
and experience — one category in
which current operators could
have an advantage, he said.
Two of the contracts up for bid
are “prime” contracts, in which
one operator wins the right to operate 11 locations. Direct contracts
with independent operators may
still have multiple locations.
The prime contract operators in
McNamara are Buffalo, N.Y.-based
Delaware North Cos. and Atlanta-
based The Paradies Shops Inc.
erators.”
The national contract operators
Rebidding contracts is standard
lease retail brands and sell in air- practice in airport operations, said
ports
around
the
country. Michael Boyd, president of EverParadies operates several stores in green, Colo.-based The Boyd Group
McNamara, including Hometown Inc., an aviation consulting firm.
Favorites, Motown Harley-Davidson
“It’s done in one form or another
and the PGA Tour Shop.
at every big airport across the
Royal Oak-based Gayle’s Choco- world,” Boyd said. “Several things
lates Ltd. leased its company name come into play here, not just rental
and products to Delaware North rates, but also the revenues that go
when McNamara opened in 2002. through it. … It’s good manageOwner Gayle Harte said she could- ment to maximize the revenues
n’t run a store without a national you can get. Maximize square
partner.
footage, but
“The security issue
also
maxialone is a challenge
mize the dolfor an independent
lars that go
operator,”
through these
she
said.
spaces.”
“Delaware
Rebidding
North
hancontracts also
dles the conallows
the
tracts
and
airport to acstaff, and I get
commodate
to say what’s
shifting retail
in the store.
trends, ConIt’s best to
way said.
have a part“It’s good
ner that can handle
both from a
the ins and outs of opservice standerating at the airport
point and fiand handle the highnancial
volume atmosphere.”
standpoint to
Harte said she inkeep things
tends to keep the store
fresh,”
he
Dominic Pangborn, Pangborn Design said.
in the airport.
Harte operates in
Retailers
the North Terminal as
are keenly inwell, but in a joint contract with terested in airport space, regardDelaware North.
less of the economic conditions of
Lansing-based Michigania Inc., the surrounding area, Boyd said.
which sells Michigan-made prodStill, he said, it’s often a conucts, also leased its name to tentious process.
Delaware North for use at its air“When an airport does this, it’s
port store.
a no-win situation, (and) anything
The airport’s retail lineup won’t they do is going to get criticized no
be replaced in one fell swoop, Con- matter what they do,” he said. “It
way said.
is incumbent on an airport to re“We’re not going to take the bid these things. It’s messy, it’s
whole program down at once,” he nasty, and you’re going to get acsaid. “We’re going to phase in the cused of every crime in the book
new operators, if there are new op- for doing it.
The process
they’re doing
is having
everybody
literally
starting from
ground zero.
... Any other place,
you’d be negotiating
to renew a lease.
“
”
“When you make the awards,
call the lawyer because someone’s
going to say you cheated me, but
they have to do it.”
James Bieri, president and CEO
of Detroit-based retail real estate
consulting firm Stokas Bieri Real Estate, said independent retailers
face a major challenge in operating at the airport.
“Most don’t have the sophistication to deal with nature of the business,” he said. “The bidding
process is cumbersome, and most
local companies can’t handle the
high-volume retail spaces like at
an airport.”
The rebid process doesn’t apply
to food and beverage contracts,
which will be up for rebid next
year, Conway said.
“Our role is to keep the cost of
the airlines as reasonable as possible to keep some competition
here,” Conway said. “People don’t
usually come to the airport to
shop, they come to the airport to
fly. So going out to the marketplace occasionally and asking,
‘What do you have? What can you
offer?’ is the responsible way to
market the airport.”
Conway said the airport urges
local independent retailers to bid,
and the partnering with national
vendors.
The airport authority has held
four outreach meetings to educate
local retailers on the prospects of
opening a shop in the airport.
A selection committee composed
of airport authority employees
will select proposals, which will be
approved by the airport authority
in the coming months.
Nancy Kaffer: (313) 446-0412,
[email protected] Twitter: @nancykaffer
Dustin Walsh: (313) 446-6042,
[email protected]
Twitter:
@dustinpwalsh
www.crainsdetroit.com
EDITOR-IN-CHIEF Keith E. Crain
PUBLISHER Mary Kramer, (313) 446-0399 or
[email protected]
ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or [email protected]
EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or [email protected]
MANAGING EDITOR Jennette Smith, (313) 4461622 or [email protected]
DEPUTY MANAGING EDITOR Daniel Duggan, (313)
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or [email protected]
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contracting and Oakland and Macomb counties.
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and transportation. (313) 446-1626 or
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CRAIN’S DETROIT BUSINESS ISSN # 0882-1992
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20120709-NEWS--0030-NAT-CCI-CD_--
7/6/2012
4:39 PM
Page 1
Page 30
July 9, 2012
CRAIN’S DETROIT BUSINESS
RUMBLINGS
Prepare to pay
more for UM
basketball
ooking to keep those
front-row seats at a
University of Michigan
basketball game? It might
cost you.
The university’s basketball program will start a
seat donation program this
year for the first time. For
season ticket holders, this
means a payment to increase their eligibility for
preferred seats.
Donations will range
from $50 to $7,500 per seat
for the 2012-13 season. Sections 122 through 124, for
example, have a $250 preferred seat donation attached.
“We felt with all the
changes to Crisler Arena …
it was time to do it,” said
David Ablauf, associate athletic director for public and
media relations.
The 12,700-seat Crisler —
now formally called Crisler
Center — is getting $72 million in upgrades that, by
November, will include a
new seating bowl, a new
high-definition scoreboard
and interactive displays
that provide team histories,
as well as escalators and a
grand entrance to the arena
that includes large, glowing
block “M” in a waterfall.
L
A firm for Chrysler House
After the breakup of law
firm Beals Hubbard PLC in
March, John Hubbard and
two other partners, Eric
Parzianello and Mark Snitchler, have created a new firm
and will move from Farmington Hills to Detroit.
Hubbard Snitchler &
Parzianello PLC leased 5,700
square feet on the sixth floor
of Chrysler House, formerly
the Dime Building, 719 Griswold St., from Bedrock Real
Estate Services — the real estate arm of Dan Gilbert’s Rock
Ventures group of companies.
The firm, to house six
lawyers and nine total staff,
will move in Aug. 1.
The broker was Jones
Lang LaSalle Inc. in Detroit.
The firm will handle legal
issues for small- and midsize businesses, including
litigation, planning and
transactions.
Beals Hubbard dissolved
amicably over “different visions of the future” with its
other partners, Hubbard
said.
Tuesday Market returns
Eastern Market Corp. is reviving its Tuesday Market,
a smaller version of the Saturday Market that draws
tens of thousands of shoppers each weekend looking
for produce and other food.
This year’s edition will
extend well into the harvest
season, running from July
10 to Oct. 30. The market
will be open each Tuesday
from 11 a.m. to 6 p.m.
More than 50 food vendors are expected to pack
Shed 2 each week focusing
on locally sourced and produced items.
No vehicle decision yet
Defense contractors in
Southeast Michigan and
elsewhere had been expecting a decision by now on
WEEK ON THE WEB
FROM WWW.CRAINSDETROIT.COM, WEEK OF JUNE 30-JULY 6
the much-awaited contracts
for development of the $5
billion-plus Joint Light Tactical Vehicle program from
the Warren-based U.S. Army
Tacom Life Cycle Management
Command.
But the Army quietly
gave contractor teams the
message to keep waiting. A
source close to the deal said
it will be at least late July
before a decision comes in.
Col. David Bassett of the
JLTV program office said
the later deadline is aimed
at getting the broadest response possible.
At least six proposals are
in play on JLTV, which will
replace nearly 18,500 aging
military Humvees after production begins in 2015. Sterling Heights-based General
Dynamics Land Systems is in
a joint venture for one proposal and various local suppliers and divisions are involved with the others.
Patent office to open
Guided tours and a panel
discussion will be part of
the inauguration of Detroit’s Elijah J. McCoy U.S.
Patent and Trademark Office
at Stroh River Place.
Open for business July
16, the office will start with
40 employees and will grow
to 125 by mid-2013.
An inaugural event
Wednesday will include a
guided tour followed by a
panel discussion.
Panel members will be
USPTO Deputy Chief of
Staff Azam Khan; PresidentCEO William Coughlin of Ford
Global Technologies LLC; CEO
Michael Walsh of LexisNexis
Legal & Professional; Assistant General Counsel of IP
Sharon Brady of Dow Corning
Corp.; Monte Falcoff of Harness Dickey & Pierce plc; and
David LaPrairie of Howard &
Howard Attorneys PLLC.
The office will host Acting U.S. Commerce Secretary Rebecca Blank at a ceremony Friday to swear in 11
newly hired administrative
patent judges.
BEST FROM THE BLOGS
READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS
Change afoot at Freep
Fresh start for Morels
“
A visit to the
Detroit Free Press ... by
a handful of Gannett
corporate executives
prompted the latest
round of existential
newspaper angst within
the walls at 615 W.
Lafayette Blvd.
”
Reporter Bill Shea’s “For Immediate Release” blog on
the media, transportation and marketing can be found
at www.crainsdetroit.com/shea
“
If the closing of
original Morels marked
the end of the feel-good
era, perhaps the opening
of its reincarnation is the
beginning of a new
one.
”
Reporter Nathan Skid’s Detroit-area restaurant blog
can be found at www.crainsdetroit.com/skid
Alidade buys
condo high
rise in Fla.
lidade Capital LLC, a
Bloomfield Hillsbased private equity
firm that targets undervalued real estate, has bought
Star Tower, a prominent
condominium high rise in
Orlando, Fla.
Managing partner Geoff
Langdon said Alidade
bought the
19-story,
100-unit development
in the city’s
upscale
Lake Eola
district for
$11.8 million.
Langdon
It was Alidade’s first deal in Florida.
The firm has invested in
Michigan and Texas and
spent more than $30 million
over the past year.
A
ON THE MOVE
䡲 The Detroit Pistons promoted George David to assistant general manager, making him the right-hand man
to Joe Dumars, the team’s
president of basketball operations. David, 38, has been
with the Pistons for 15 seasons and replaces Scott Perry,
who left as vice president of
basketball operations to become assistant general manager with the Orlando Magic.
COMPANY NEWS
䡲 Livonia-based direct
mail and coupon marketer
Valassis Communications Inc.
cut 44 jobs in Michigan, or
about 4 percent of its 1,100person Southeast Michigan
workforce. The cuts, which
included an undisclosed
number outside the state,
came as Valassis acquired
San Mateo, Calif., digital advertising firm Brand.net for
about $18 million.
䡲 Howell-based Highland
Engineering Inc. has been
awarded a $15 million contract to build rapidly deployable showers, laundries, kitchens and latrine
systems for the U.S. Army.
䡲 General Dynamics Land
Systems won a $22.7 million
contract from the U.S. Army
Contracting Command at
the Tacom Life Cycle Management command in Warren that modifies an existing contract and will fund
technical support work for
the Abrams battle tank.
The company also is awaiting word on whether the International Union of Operating
Engineers Local 286 will represent 128 employees in
Washington state who are
part of the Sterling Heightsbased Stryker program.
HEALTH CARE
䡲 Gov. Rick Snyder signed
legislation encouraging insurers to make more use of
telemedicine, which uses
technologies such as telephone and Internet to connect physicians and patients, providing a less
expensive alternative to
physician visits. Snyder
also issued an order to create a council that will oversee development of a state
plan to monitor newly approved insurance coverage
for autism disorders.
䡲 Altarum Institute, an
Ann Arbor-based health researching firm, received an
$8.4 million grant from the
federal government to help
physicians cut down on unnecessary medical imaging
in Southeast Michigan.
䡲 The Detroit Medical Center has begun screening job
applicants for nicotine. The
policy does not cover current employees, but the
health system will offer cessation programs to workers
who smoke.
LANSING NEWS
䡲 Michigan Attorney
General Bill Schuette says
the state is in line to get
$23.8 million as part of a
$3 billion settlement of an
improper drug marketing
case against GlaxoSmithKline
LLC. The U.S. Justice Department said the combined
criminal-civil fine will be
the largest penalty ever paid
by a drug company.
䡲 The Michigan Campaign
Finance Network is questioning the practice of state lawmakers continuing to raise
campaign money despite being barred from seeking reelection by term limits.
Twenty-two lame-duck lawmakers raised $568,000 and
held 42 fundraising events
in 2011, the Detroit Free
Press reported.
OTHER NEWS
䡲 The head of the Detroit
Law Department is continuing her effort to block the
consent agreement designed
to fix the city’s finances. The
Detroit Free Press and Detroit News reported that Krystal Crittendon indicated
Thursday that she planned
to move forward with the legal battle. Mayor Dave Bing
has said he wants the Detroit City Council to fire
Crittendon after she sued
the state of Michigan to stop
the critical financial deal. A
judge dismissed the case,
but Crittendon wants the
judge to reconsider.
䡲 The leader of a mortgage fraud ring that bilked
banks in Southeast Michigan of more than $100 mil-
lion over four years pleaded
guilty to conspiracy in U.S.
District Court in Detroit. As
part of his plea agreements,
Ronnie Edward Duke, 45, of
Fenton, is scheduled to be
sentenced to 10-15 years in
prison Nov. 15 by District
Judge Julian Abele Cook.
䡲 A survey of 600 smallbusiness owners by the
Small Business Association of
Michigan found that over the
past six months, 22 percent
of entrepreneurs increased
their employee base, 38 percent reported higher sales,
and 27 percent said they increased employee wages.
䡲 The National Football
League now is allowing
teams to sell 85 percent of a
game’s tickets to avoid a TV
blackout within 75 miles of
the stadium. Games previously had to sell out 72
hours prior to kickoff. Under the new policy, the Detroit Lions can avoid a blackout by selling about 46,750
seats rather than 55,000.
䡲 The University of Michigan expects one in five of its
employees to reach retirement age in the next 5½
years. Associate Vice President Laurita Thomas forecasts
18 percent of staff and 20 percent of faculty will retire.
䡲 The state has filed suit
in Wayne County Circuit Court
disputing claims that it
owes nearly $5 million to Detroit for a water bill. The suit
says the city overcharged
the state for water at the
Michigan State Fairgrounds
and failed to provide documentation for the charge.
䡲 The city of Detroit and
the Michigan Department of
Treasury obtained an extension, to Aug. 15, to the deadline for a city bond transaction necessary to keep the
city solvent. Detroit borrowed $80 million in shortterm notes in April after
city officials signed a consent agreement with the
state. The city was supposed to sell $137 million in
long-term bonds by the end
of June to repay the debt.
䡲 The Michigan State Police will begin removing socalled synthetic marijuana
from store shelves if businesses haven’t done so.
Anyone caught manufacturing, distributing or selling the substances, which
are illegal by state law, can
be charged with a felony
that carries a maximum
punishment of seven years
in prison, while possession
can bring two years.
䡲 Roy Roberts, the stateappointed emergency manager running the Detroit
Public Schools, imposed a
contract on district teachers. The district declined to
reveal details until teachers have been informed.
OBITUARIES
䡲 John Porter, Eastern
Michigan University’s president from 1979 to 1989, died
June 27. He was 80.
DBpageAD.qxp
6/28/2012
12:33 PM
Page 1
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• E and U Waste
• Food Waste/Organics Case Study
• ABCs of Recycling and Commodity Management
• Implementing Your Sustainability Program: It Can Be Done!
• Safety: How to Engage Your Employees
Connect with peers during the evening Networking Reception
Celebrate with the 2012 Green Corporate Citizen Award winners
& EXHIBITORS
SPONSORS
P L AT I N U M
GOLD
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S I LV E R
Industrial Recycling & Plastics Processing
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6/26/2012
12:42 PM
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HEALTHCARE
CAN’T
WAIT
FOR A NETWORK TO KEEP PACE WITH HIT INITIATIVES.
Comcast Business Class Ethernet can help improve the quality of care of your organization. With speeds from 1Mbps to
10Gbps, telehealth from multiple locations can be a reality. And it’s flexible and scalable so it can grow right along with you
while keeping costs in line.
Go to business.comcast.com/healthcare or Call 866.429.3082
Restrictions apply. Not available in all areas. Actual speeds vary and are not guaranteed. Call for details. Comcast © 2012. All rights reserved.