Lakeshore Ch. 7 filing left employees in lurch

Transcription

20140512-NEWS--0001-NAT-CCI-CD_--
5/9/2014
6:02 PM
Page 1
®
www.crainsdetroit.com Vol. 30, No. 19
MAY 12 – 18, 2014
$2 a copy; $59 a year
©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved
Page 3
Trinity-Ascension venture:
Elixir for high premiums?
Shinola opens leather
factory, trains workers
CRAIN’S
MICHIGAN BUSINESS
Grand Rapids
bets that bus
line will drive
development,
Page 17
Second Stage
Show talent the money and
maybe a little TLC, Page 11
Inside
State bill would prohibit DIA
millage renewal, Page 4
This Just In
Senate minimum-wage bill
would negate ballot push
Supporters of the proposed
ballot measure to raise the
state’s minimum wage to
$10.10 are still gathering signatures to put it before voters in November, but their
work may be for nothing.
On Thursday, Senate Majority Leader Randy Richardville,
R-Monroe, introduced Senate
Bill 934, which would raise the
minimum wage from $7.40 an
hour to $8.15.
More important, the bill
would also repeal the state’s
current minimum-wage law,
which the ballot proposal is
seeking to amend.
If the bill is approved and
signed into law by Gov. Rick
Snyder, voters would be trying
to amend a law that no longer
exists.
Danielle Atkinson, a member
of the Raise Michigan Coalition,
which is behind the ballot
measure, said a move such as
Richardville’s is a reason why
people feel disenfranchised by
the political process.
— Chris Gautz
Lakeshore Ch. 7 filing
left employees in lurch
Overseas staff, fired by email, tap petty cash to fly home
with that news, Lakeshore sent separation
letters to various project managers, engineers and other overseas employees.
Until two weeks ago, David HoopengarBut Lakeshore has sent no word about
ner and Gordon Surgeon were at Bagram
transportation
home for terminated emLakeshore Global
Airfield in Afghanistan to help Lakeshore can’t keep
ployees — so they have been coordinating
TolTest Corp. build fighter plane hangars and contracts with
transportation for colleagues on their own.
flight control towers and manage other con- Detroit water
“Ever since we got the separation letter,
department,
struction projects.
the only correspondence we’ve received
Since then, the managers have been Page 33
from the company was an email from
building an exit strategy — not for their ex(Lakeshore TolTest CEO) Grant McCullagh
employer, but for themselves.
instructing us to make sure that some company
Lakeshore TolTest, based in Detroit until earlier
this year, landed in bankruptcy court May 2. And
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
LAKESHORE
DWSD LOSS
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Web-based
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allows you
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See TolTest, Page 33
A gem
off the
old block
Marc Gardner
takes on Twitter
founder’s Square
in big bucks battle
BY TOM HENDERSON
Persistence, luck help
new developers build
Midtown and a legacy
BY KIRK PINHO
G
eorge Stewart recalls a
thriving cultural scene in
Detroit when he moved
here from Baton Rouge, La., more
than a half-century ago to pursue
a Ph.D. in mathematics at Wayne
State University.
But over the years, Stewart noticed a gradual decline in the
city’s entertainment offerings.
He set out with development partner Michael Byrd to change that,
focusing their attention on the
site of the former Sassy Cat adult
theater in Midtown.
Now after 15 years and upward
of $3 million out of their own pockets, the formerly blighted oneblock area of Woodward Avenue
GLENN TRIEST
George Stewart shows photographs from when his now-rejuvenated block was
a blighted area of Woodward Avenue between Selden and Alexandrine streets.
between Selden and Alexandrine
streets has become the Woodward
Garden Block Development.
A combination of luck and a
healthy dose of nontraditional financing finally got the $44 million mixed-use project across the
finish line, said Stewart, principal of the project’s developer,
Woodward SA-PK LLC.
“We were lucky as hell,” he said.
“We had to use a lot of upfront cash.
We were inexperienced developers
and don’t have deep pockets.”
With the final piece of the development — the 61-unit Woodward Garden Apartments — having
opened earlier this month, Stewart can breathe easier after years
of having to wrangle for funds —
the result of him being a new developer working in an area that
had long been dilapidated and a
favorite spot for squatters.
SMALL BUSINESS STRATEGIES
NEWSPAPER
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Square Inc. has gotten all the publicity and headlines when it comes
to mobile payment processing. Understandably so.
The San Francisco-based company reportedly has raised $440 million in four
rounds of venture
capital
since it was
founded in 2009
by
another
headline
producer,
Jack
Dorsey, who cofounded Twitter
in 2006.
Investors in- Gardner
clude Birmingham-based Rizvi Traverse Management LLC, a previously
under-the-radar investment firm
that was the biggest shareholder in
Twitter when it had its big IPO last
November.
In the four years since Square
created an app and a small device
See Midtown, Page 31
See Pay, Page 29
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Page 1
Page 2
May 12, 2014
MICHIGAN BRIEFS
Kent County proposes millage
to fund services for veterans
A subcommittee of the Kent County Commission recommended that
November’s ballot include a dedicated millage to improve services
for veterans, MLive.com reported.
The eight-year, 0.05-mill property
tax request — which works out to
$5 for an owner of a $100,000 home
— would raise an estimated $1 million in the first year.
The United Veterans Council of Kent
County is behind the proposal. Proponents say evidence shows that
this year’s county allocation of
$338,000 for veterans isn’t enough
to meet a growing need for services
by soldiers returning from
Afghanistan and Iraq in addition to
those who served in Vietnam.
Traverse City Film Festival adds
some marquee names to board
The Traverse City Film Festival,
now in its 10th season, has added
five board members, including actor and playwright Jeff Daniels
and former Rage Against the Machine guitarist Tom Morello, the
Traverse City Record-Eagle reported.
“Those big names can make calls
to filmmakers and say, ‘Hey, bring
your film to Traverse City,’ ” said
board President Michael Moore, the
festival’s co-founder and himself a
GR tax to fix roads takes smooth ride to voters’ OK
While lawmakers in Lansing figure out how to
pay for better roads, voters in Grand Rapids last
week decided enough tires had been sacrificed and
enough shock absorbers shocked. Nearly two-thirds
of those who cast ballots said that instead of taking a
scheduled income tax cut in July 2015, rates will remain the same through 2030, with the money going
to road repairs.
City Manager Greg Sundstrom told MLive.com
that he will ask the Grand Rapids City Commission to
appoint a committee to oversee use of the tax money, which won’t start coming in until July 2015.
Work initially will concentrate on streets that can
documentary filmmaker. This
year’s festival is July 29-Aug. 3.
MICH-CELLANEOUS
䡲 Grand Rapids-based Mercantile Bank Corp. and Firstbank Corp. of
Alma will complete their plans to
merge by June 1 after federal regulators signed off on the plan,
MLive.com reported. The merger,
announced last August, was delayed after a citizens group challenged the merger, claiming Mercantile had a poor record of
lending to minorities.
䡲 Encana Corp., Canada’s biggest
natural gas producer, will pay
Michigan $5 million and not contest a charge that it tried to collude
with Oklahoma City-based Chesa-
be improved at relatively little cost.
“If we apply some crack sealing, we can hold the
condition of the street and extend the life another 10
years,” Sundstrom said. “We really won’t do any reconstruction work until next season.”
Grand Rapids voters also amended the city charter to end a requirement that sidewalks had to be inspected and brought up to code by a property owner
before the property could change hands. Which
when sidewalks are covered by snow was, well, let’s
say Grand Rapids might have had the highest number of cursing real estate agents per capita in the
first quarter.
peake Energy Corp. to rig a 2010 oil
and gas lease auction, Bloomberg
News reported. Michigan Attorney
General Bill Schuette accused the
companies of divvying up the
counties in which each would seek
exploration rights before a 2010
auction, driving bid prices down
from $1,510 an acre for that auction
to $40 in October.
䡲 Grand Rapids-based Steelcase
Inc. plans to close a plant in High
Point, N.C., within two years and
consolidate the work elsewhere —
including, perhaps, Grand Rapids,
MiBiz reported. The closing will affect about 230 jobs, the company
said.
䡲 Ohio-based Bob Evans Farms
will spend up to $4.1 million to expand a packaging facility in Hills-
dale, creating 17 jobs, MLive.com
reported. The Michigan Economic Development Corp. is offering a tax
break estimated at $119,000.
䡲 After more than 60 years,
Omega Farms is moving its Angus
cattle operation east of Lansing to
Georgia, the Lansing State Journal
reported. Owner Clifford Simmons
II said the company wants to be
closer to its primary market.
䡲 More than a dozen freighters
hauling coal and iron ore have been
parked in lower Lake Huron at
times because ice in Lake Superior
and the St. Marys River is limiting
travel, the Port Huron Times Herald
reported. The U.S. Coast Guard said
last week that 40 percent of Lake Superior remains covered by ice.
䡲 Michigan Attorney General
Bill Schuette said Joel Wilson of
Saginaw will be extradited from
Germany this week to face charges
that he scammed investors by selling unregistered securities, The Associated Press reported. Schuette
said $8.5 million in investor funds is
missing.
䡲 Trevor Corlett, co-founder of
Madcap Coffee in Grand Rapids,
took third place at the U.S. Barista
Competition during the U.S. Coffee
Championships this month in Seattle, the Grand Rapids Business
Journal reported.
Find business news from
around the state at crainsdetroit
.com/crainsmichiganbusiness.
Sign up for the Crain’s Michigan Morning e-newsletter at
crainsdetroit.com/emailsignup.
CORRECTION
■A story on Page 7 of the April 28 issue should have said the Dowagiacbased Institute for International Cooperation & Development Michigan was
one of several groups affected by Ypsilanti Township’s enforcement of
regulations related to donation bins, rather than the Massachusettsbased Institute for International Cooperation and Development Inc.
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20140512-NEWS--0003-NAT-CCI-CD_--
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May 12, 2014
Page 3
Do low costs = low premiums?
Ascension-Trinity venture aims to find out
BY JAY GREENE
Health care reform spurred by
the Patient Protection and Affordable Care Act appears to be the driving force uniting physicians and
hospitals to create new types of delivery models to contract with private health insurers, employers
and government payers.
But will these new health organizations deliver lower health care
costs to employers, and ultimately
patients, in the form of lower insurance premiums?
While officials for the newly
formed Together Health Network LLC
in Southeast Michigan say lower
costs is one of their goals, experts
contacted by Crain’s say the jury is
still out on whether lower costs
will translate into lower insurance
premiums for customers.
Last week, Warren-based Ascension Health Michigan and Livonia-
based CHE Trinity Health Michigan
announced the formation of a separate company — Together Health
— that they say will create one of
the nation’s most closely aligned
organizations of its kind, a clinically integrated network of 27 hospitals, medical centers and more
than 5,000 physicians.
The main purpose of Together
Health will be to manage the health
of distinct groups of patients in a
narrow network of hospitals, physi-
cians and other
medical
providers, said
officials for the
nation’s
two
largest Catholic
systems.
“This is one of
the more transformational initiatives (AscenMaryland
sion Health) has
ever done,” said Patricia Maryland, COO of St. Louis-based AscenSee Together, Page 30
Shinola opens
leather factory
These companies have significant mention in this
week’s Crain’s Detroit Business:
BY AMY HAIMERL
P
Lisa Chandler adds a loop to a watch
band. The work is meticulous, which
suits the self-proclaimed perfectionist.
straps for Shinola’s line of men’s
and women’s timepieces, but it
will by fall turn out a host of small
leather goods, from purses to technology accessories, as the company expands its leather-goods division.
“Our current leather goods is a
very limited line,” said Jen Guarino, vice president of leather for
Shinola. “It was launched as an accoutrement to the watches. Our
ethos is going to be a relaxed style,
a neotraditional style like our
watches are, with high-quality
American leathers. Our brand is a
very casual brand, a comfortable
See Shinola, Page 32
PHOTOS BY ANTHONY BARCHOCK
Paloma Vega-Perez (left) is production manager, leather; Jen Guarino is vice
president, leather, for Shinola’s new venture.
Hotel developer starts one of 3 projects; 225 jobs expected
BY SHERRI WELCH
A local hotel owner and developer plans to break ground this week
on an $18 million project that will
bring a four-story Holiday Inn Express & Suites and Staybridge Suites
to Dearborn’s Michigan Avenue.
The development is one of three
projects totaling $49 million in investment that owner Akram
Namou has in the works to pair limited-service and extended-stay offer-
ings next door to
each other.
Similar projects are planned
for a former office building site
on the west side
of Stephenson
Highway, north
of 14 Mile Road
in Troy, and the
Namou
current site of
Rodeway Inn & Suites Hotel on Van
Dyke Avenue north of 13 Mile in
Metro Times alt-deletes for
control of market, Page 6
Company index
New Center location
expands product line,
trains local workers
aloma Vega-Perez spent
more than a decade in the
trenches for Louis Vuitton,
helping the luxury bag maker with
production in Barcelona and Los
Angeles.
Now she’s in Detroit, launching
Shinola/Detroit LLC’s line of leather
goods.
“I wanted to be a part of the beginning,” she said.
The company is opening a
12,000-square-foot leather factory
adjacent to its existing watchmaking facility inside the College for
Creative Studies in Detroit’s New
Center area. It has hired 50 employees since April and intends to
add another 10 by year’s end. In total, Shinola employs 260 people,
with 136 of them in bike, watch
and leather manufacturing. The
leather staff is learning to produce
Inside
Warren — which is set to be demolished within six months to make
way for the development.
Collectively, the three projects
are expected to create 225-235 new
hospitality jobs. None of the three
include local or state incentives.
Namou and his co-investors are refinancing some of their other properties to bring seed money to the
new projects, and banks are financing 75 percent of the projects’ costs.
Flagstar Bank is financing the
Dearborn project, and Wells Fargo
& Co. is financing the Troy deal,
Namou said. He is still working on
financing for the Warren location.
“The economy is improving.
The banks have opened up, and financing is available,” said Namou,
a retired CPA who is president and
CEO of Southfield-based A&M Hospitality Services Inc. A&M provides
cleaning and maintenance services to the hotels he co-owns with
local operators.
See Hotel, Page 32
360 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Active Solutions Group . . . . . . . . . . . . . . . . . . . . . 12
Altair Engineering . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ascension Health Michigan . . . . . . . . . . . . . . . . . . . 3
Autoliv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Baymont Inn & Suites . . . . . . . . . . . . . . . . . . . . . . 32
Belle Isle Conservancy . . . . . . . . . . . . . . . . . . . . . . 7
Blue Cross Blue Shield of Michigan . . . . . . . . . . . . 30
Center for Michigan . . . . . . . . . . . . . . . . . . . . . . . 24
Chevrolet Detroit Belle Isle Grand Prix . . . . . . . . . . . 7
Community Initiative for Southeast Michigan . . . . . 11
CBRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
CHE Trinity Health Michigan . . . . . . . . . . . . . . . . . . 3
Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 31
Detroit Garment Group Guild . . . . . . . . . . . . . . . . . 32
Detroit Institute of Arts . . . . . . . . . . . . . . . . . . . . . . 4
Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Fairfield Inn & Suites . . . . . . . . . . . . . . . . . . . . . . 32
Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Fisher Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Generations Home Care Group . . . . . . . . . . . . . . . 14
Global Talent Retention Initiative of Michigan . . . . 13
Gordon, Laughbaum & Prescott . . . . . . . . . . . . . . 33
Grit Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hampton Inn & Suites . . . . . . . . . . . . . . . . . . . . . 32
Holiday Inn Express & Suites . . . . . . . . . . . . . . . . . . 3
Homewood Suites . . . . . . . . . . . . . . . . . . . . . . . . . 32
Hotel Investment Services . . . . . . . . . . . . . . . . . . . 32
Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
International Automotive Components Group . . . . . 21
Inteva Products . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Jaffe, Raitt, Heuer & Weiss . . . . . . . . . . . . . . . . . . 33
Kelly Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Lakeshore Global . . . . . . . . . . . . . . . . . . . . . . . . . 33
Lakeshore TolTest . . . . . . . . . . . . . . . . . . . . . . . 1, 33
Livio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Mantese Honigman Rossman and Williamson . . . . 33
McLaren Health Care . . . . . . . . . . . . . . . . . . . . . . 30
Metaldyne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Metro Coalition of Congregations . . . . . . . . . . . . . 25
Metro Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Michigan Community Colleges Association . . . . . . 13
Michigan Economic Development . . . . . . . . . . . . . 11
Middlebelt Medical Center . . . . . . . . . . . . . . . . . . 16
Midtown Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . 31
MSX International . . . . . . . . . . . . . . . . . . . . . . . . 21
New Economy Initiative . . . . . . . . . . . . . . . . . . 11, 13
PayAnywhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Real Detroit Weekly . . . . . . . . . . . . . . . . . . . . . . . . 6
RGIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Shinola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Staybridge Suites . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Together Health Network . . . . . . . . . . . . . . . . . . . . 3
Tome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
TownePlace Suites by Marriott . . . . . . . . . . . . . . . 32
United Physicians . . . . . . . . . . . . . . . . . . . . . . . . . 30
Urban Science Applications . . . . . . . . . . . . . . . . . 15
Woodward SA-PK . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Department index
BANKRUPTCIES . . . . . . . . . . . . . . . . . 25
BUSINESS DIARY . . . . . . . . . . . . . . . . 28
CALENDAR . . . . . . . . . . . . . . . . . . . . 27
CAPITOL BRIEFINGS. . . . . . . . . . . . . . 10
CLASSIFIED ADS . . . . . . . . . . . . . . . . 29
KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8
LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8
MARY KRAMER . . . . . . . . . . . . . . . . . 17
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OPINION . . . . . . . . . . . . . . . . . . . . . . . 8
PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28
RUMBLINGS . . . . . . . . . . . . . . . . . . . 34
WEEK ON THE WEB . . . . . . . . . . . . . . 34
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May 12, 2014
Bankruptcy bills package includes
prohibition of DIA millage renewal
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Of the 11 bills in the Detroit
bankruptcy legislation package unveiled Thursday, one stood out. Unlike the rest, it didn’t deal with
sending state money to the city, reforming city pensions or enacting
fiscal oversight. Instead, House Bill
5571 would prohibit the Detroit Institute of Arts from renewing its existing three-county millage — or approving a new one.
The bill, sponsored by Rep. Ken
Goike, R-Ray Township, doesn’t
have a connection to the city’s bankruptcy but is seen as necessary to secure votes for the rest of the bills
from Macomb County legislators.
That’s according to Rep. John
Walsh, R-Livonia, who has been
working for months to craft the bills.
“It’s a big issue for them,” Walsh
said.
That’s because voters in Macomb
in 2012 barely passed the DIA millage with 50.5 percent of the vote.
Before it ever came to the vote,
there was a question about whether
the Macomb County Board of Commissioners would allow the millage to
appear on the ballot.
But Macomb also made levying
of the millage dependent on
whether the millage passed not just
in Macomb, but in Oakland and
Wayne counties as well. The other
two counties did not include such a
stipulation. The millage was approved by 64 percent of votes in
Oakland and 68 percent in Wayne.
Rep. Hugh Crawford, R-Novi,
said he favors the package but said
the DIA bill struck an odd note.
“I kind of questioned why they
were not able to renew that,” he said,
adding that he didn’t think it should
be part of the bankruptcy bills.
He said he was told by House Republican leadership that the DIA
was OK with the provision, but he
has not been able to confirm that.
Although he voted for the DIA
millage in 2012, he said he would
vote for the Goike bill.
“I wouldn’t go against the total
package for the one issue,” he said.
“The solution it provides is too important to the city, the region and
the entire state.”
Goike did not return a call seeking comment.
Rep. Pete Lund, R-Shelby Township, said Friday he had not decided how he planned to vote on the
package and wouldn’t say if the
DIA bill made it more likely he
would support the legislation.
Walsh said another reason for
the bill is that the ownership structure of the DIA will change into an
independent body, though still a
nonprofit. Some lawmakers were
uncomfortable with a private entity receiving tax dollars, he said.
The 10-year, 0.2-mill levy brings
in $23 million annually to the DIA
to help fund its operations. The
bankruptcy plan allows the millage
to continue for the full 10 years, but
made no mention about its future.
Ari Adler, press secretary for
House Speaker Jase Bolger, RMarshall, said the DIA has been involved in some of these discussions. He said the DIA is welcome
The DIA bill
doesn’t have a
connection to the
city’s bankruptcy but
is seen as necessary to
secure votes from
Macomb County
legislators.
to develop an alternative way to
come up with money, if it wishes,
once the millage expires.
“We are doing a lot to make sure
the collection at the DIA stays at the
DIA through this settlement,” Adler
said. “State taxpayers are putting in
money to protect the artwork. Sometimes protection comes at a cost.”
Pamela Marcil, public relations
director for the DIA, declined to
comment on the advice of counsel.
When the DIA sought approval
CAPITOL BRIEFINGS
Livonia lawmaker not looking for
partisan points on Detroit bills, Page 10
of the millage in 2012, it did so by
saying it planned to use the funding for operations, along with raising another $12 million to supplement that funding. That would free
up its fundraisers to focus on raising money for an endowment so
the museum would have a sustainable operating model.
When the DIA volunteered to be
part of the bankruptcy settlement,
in order to keep from losing any of
its artwork during bankruptcy, it
pledged $100 million over 20 years,
meaning the museum will have to
raise another $5 million annually.
Adler said the 11 bills are not tiebarred, so if one of the bills does not
pass, the others can still pass. However, if this bill, or one of the others, is not approved, “it puts the
whole package at risk,” he said.
Chris Gautz: (517) 403-4403,
[email protected].
Twitter:
@chrisgautz
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20140512-NEWS--0006-NAT-CCI-CD_--
5/9/2014
4:26 PM
Page 6
Page 1
May 12, 2014
Metro Times deletes competition in deal with rival alt-weekly
BY BILL SHEA
Like its mainstream brethren,
the Detroit Metro Times is trying to
find the elixir that guarantees financial success — or at least survival — for a print newspaper in
the mercurial age of digital media.
While investing money and
staffing in the 21st century holy trinity of digital, mobile and social media, the owners of the Ferndalebased alternative weekly last week
also took a page out of capitalism’s
dog-eared playbook and bolstered
the bottom line by eliminating the
competition.
They did it in what they termed a
merger with longtime Royal Oakbased rival Real Detroit Weekly, a
transaction that created Metro
Times LLC as a company separate
from Cleveland-based Euclid Media
LLC, which bought Metro Times and
three other papers in December.
Surprisingly, the rival weeklies
shared only 30 percent of their advertisers despite being media outlets in the same market targeting
similar segments — nightlife and
entertainment.
That leaves the remaining 70
percent of Real Detroit Weekly’s ad
base for the Metro Times to try to
capture for new revenue.
“The advertising was being cannibalized. Having one alt-weekly
in town would eliminate that problem,” said Andrew Zelman, Euclid
Media’s majority owner.
Zelman said advertisers have
Real Detroit Weekly’s final edibeen receptive to
having the sin- tion was last week, and the joint
staffs of the papers will produce a
gle newspaper.
“In general, beefed-up Metro Times beginning
we’ve heard posi- this week.
Financial terms of the deal were
tive
feedback
from
every- not disclosed. It’s unclear whether
Euclid Media paid RDW founder
body,” he said.
Zelman has and owner John Badanjek for his
declined to dis- newspaper or assumed any debt —
cuss financial which would make the deal an acZelman
specifics but did quisition rather than a merger.
Zelman said his company will be
say both Metro Times and Real Dethe majority shareholder in Metro
troit Weekly are profitable.
Ownership is quick to point out Times LLC, and Badanjek will be a
that the blending of the newspa- minority owner.
Two editors, four advertising
pers was done for content reasons
sales representatives and other
as much as financial.
“This merger is more to us RDW staffers will work from the
Metro Times’ Ferndale office unabout the content than ad dollars,”
til the newspaper finds a new
Chris Keating, a minority owner
space in Detroit. Zelman
in Euclid Media and pubexpects to announce
lisher of Cleveland
a new home
Scene, wrote in
an email.
“At the
core, Metro
Times
is
hard-hitting
journalism, indepth profiles,
arts and culture.
RDW is more of an
entertainment, culture and music publiThe Detroit
cation. We’d like to
Metro Times and
think that this will be a
Real Detroit Weekly are
multimedia company that
coming together to create a
will appeal to a broader au“superweekly” that would cover the region’s
dience than publishing indi- entertainment and culture scene. It will be
published under the Metro Times name.
vidually.”
within a month.
Badanjek, who
launched RDW
in 1999, joins
Metro
Times
LLC as president
of a new events
unit within the
company.
Events are a key
revenue generaShackelford
tor for alt-weeklies, and Metro Times’ current signature events include the annual
“Blow Out” concerts and its “Pig &
Whiskey” food event in downtown
Ferndale.
Tiffany Shackelford, executive director of the Washington, D.C.based Association of Alternative Newsmedia, said the combined
Detroit newspapers will boost
local arts and entertainment
coverage in the market.
“They’re going to really own that space more
than they already had,”
she said.
The
alt-weekly
media segment has
suffered the same
financial and advertising losses
and undergone the
same job cuts as traditional print media, said Shackelford, whose organization is a
trade group of 130 U.S. and Canadian alt-weeklies, of which Metro
Times is a member but RDW was
not.
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There have been several altweekly casualties in large cities
the past few years.
The Other Paper in Columbus,
Ohio, was closed in January 2013,
and The Nashville City Paper in Tennessee halted publication in August.
In 2012, Boston-based Phoenix
Media/Communications Group said it
would merge its alt-weekly, The
Boston Phoenix, with a style publication it also owns, Stuff Magazine, to create a weekly glossy
magazine called The Phoenix. It
closed in March 2013.
However, the alt-weekly segment
in recent years has seen some improvement, Shackelford said.
“We’re seeing a nice, steady increase back to profitability and
reach,” she said. Papers in several
markets — such as Syracuse, N.Y.,
and Colorado Springs, Colo., are
boosting print circulation.
Zelman said the new Metro
Times’ weekly circulation will be
increased from the current 50,000
to beyond 65,000 but didn’t yet
know to what number.
Real Detroit Weekly published
65,000 issues every Wednesday. It
is primarily a nightlife entertainment guide — stories, listings and
ads about concerts, bars, bands,
restaurants, art, fashion — rather
than the traditional, largely leftleaning alternative news outlet
that Metro Times is, although
Metro Times also covers entertainment and culture.
Alternative newspapers are using the same template as Metro
Times to boost revenue, Shackelford said, and that includes investing in digital and mobile along
with staging events.
She noted that the massively popular South by Southwest festival was
created by the co-founders of The
Austin Chronicle alt-weekly in 1987.
The new forms of revenue are
critical because alt-weeklies traditionally have had a difficult time
prying payment out of advertisers.
The late Ben Burns, who had
been director of the journalism
program at Wayne State University
and an editor at The Detroit News,
told Crain’s in 2012 for a story
about Metro Times that alt-weekly
advertising is frustrating.
“The collection rate on those entertainment ads historically in the
news business is dreadful,” he said.
“You can get the ads, but collecting
the bill is something else. They
don’t pay for them. It’s the worst
category I can think of in terms of
advertising nonpayment.”
Advertising in alt-weeklies is
usually from concert venues, bars,
restaurants, casinos and industries such as medical marijuana
and adult entertainment.
Discussions between the alternative newspapers began in December, Zelman said. They were
completed in recent weeks, and the
deal was announced Tuesday.
Blending back-shop functions
such as printing, advertising and
distribution have been worked
out, Zelman said.
The deal also includes Real Detroit Weekly’s digital properties,
such as its website and social media outlets.
Bill Shea: (313) 446-1626,
[email protected].
Twitter:
@bill_shea19
20140512-NEWS--0007-NAT-CCI-CD_--
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4:25 PM
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May 12, 2014
Page 7
DUSTIN WALSH
Whether it’s making sure the lights are right or that attendees of a charity gala get a memorable view of Scott Fountain,
Roger Penske is determined that the upcoming Chevrolet Detroit Belle Isle Grand Prix on a revived Belle Isle gets top marks.
With Detroit’s reputation at stake,
Penske sweats details on Grand Prix
BY DUSTIN WALSH
Walking around Belle Isle Park
last week, billionaire Roger
Penske showed that he knows
what he likes and what he doesn’t.
Preparation for the Chevrolet Detroit Belle Isle Grand Prix, in its third
year since returning from hiatus, is
in full gear. And the organizer and
chairman and CEO of Bloomfield
Hills-based Penske Corp. is there to
ensure no detail gets overlooked.
“Are those the lights we’re using?” Penske asked the race’s head
of construction. “They look like
something from my warehouse.”
Penske inspects every detail because he knows what’s at stake.
State oversight of the island, in
place since February, is controversial in a bankrupt city. The Grand
Prix, and its $50 million in economic impact, will be judged, locally and nationally.
“I want to get an ‘A,’ ” Penske
said. “We’re all working together
and take this very seriously, because you can’t practice this, so
we’re doing it in a way that our organization can deliver, and people
trust that.”
Penske knows how to succeed:
His company operates more than
320 auto dealerships, he helped secure Super Bowl XL at Ford Field,
and he owns one of the most successful IndyCar race teams in the
sport’s history.
And he promises this year’s
Grand Prix, May 30-June 1, will be
one of its most successful in history.
A May 29 gala event, the PWC
Grand Prixmiere, already has sold
out and is expected to raise $400,000
for the Belle Isle Conservancy.
Guests paid $500 to attend the
fundraiser. They will get a peak at
what the Grand Prix offers, includ-
ing a drive around the racetrack
before arriving at the gala tent
near Scott Fountain, one of this
year’s focal points, Penske said.
The nearly 90-year-old fountain,
a historic relic, will be operating
during the gala and the weekend’s
races, thanks to the Michigan Department of Natural Resources and
the Belle Isle Conservancy.
Last month, the conservancy
was seeking $35,000 to $50,000 to repair and operate the fountain on
weekends this summer. The DNR
committed the funds.
Penske is particularly proud of
the fountain. He spent time last
week ensuring that the walls of the
gala tent would be clear so guests
could view the fountain during the
event.
“This is going to look great, isn’t
it?” Penske said. “This view of the
fountain is going to set off the
event.”
The DNR’s presence is evident
all over the island near the Grand
Prix site. Trash no longer blows
through the grounds, and 200 trees
were removed, clearing views of
the Detroit skyline.
“The DNR has a consistent playbook, which they use (for) all the
state parks,” Penske said. “You
don’t see litter like before.”
Penske and the state aren’t the
only ones pitching in. Corporate
sponsorships for the event are sold
out, Penske said.
Sponsors include Cars.com,
Chevrolet, Comerica Bank, MotorCity
Casino Hotel, Meijer Inc., Deloitte LLP,
Coca-Cola Co. and Quicken Loans Inc.
Sales of corporate chalets and
seats remain a large push for
Penske and his team. This year,
the group installed 17 double-decker corporate chalets along the final
straightaway. The chalets were
the same used in the London
Olympics in 2012.
They hold 3,000 and are sold out,
Penske said.
The cornerstone of the Grand
Prix’s success, he said, is access.
Construction crews laid new pavement walkways around the grandstands, which will hold up to 14,000
fans, and completed a new walking
bridge over the track to connect
the chalets to the main paddock.
“For us to create a successful
event, we have to create access,”
Penske said. “The stick-and-ball
sports can’t offer access like we can,
so we are taking advantage of it.”
Fans are able to interact with
drivers on pit row and the mechanics wrenching on engines in the
paddock.
The improvements are paying
off. Besides selling out corporate
spots, ticket sales are up nearly 8
percent over last year despite a $10
increase on tickets from 2013. The
Grand Prix is expected to draw
more than 100,000 fans to Belle Isle.
All tickets cover access to the
IndyCar Series, featuring the
Chevrolet Indy Dual in Detroit,
TUDOR United Sports Championship, Pirelli World Challenge
Series and Meijer Fan Zone. Admission to the event will be free on
the first day, May 30, following a
Detroit Grand Prix tradition.
Penske thinks this year’s Grand
Prix will offer just a taste of what’s
to come as Belle Isle improvements continue.
By the 2015 Grand Prix, the DNR
will have completed new pavement on the track and replaced the
island’s outdated sewer system.
“We’ve always said we’ll make a
difference,” Penske said. “I think
we’ve shown that we did.”
Dustin Walsh: (313) 446-6042,
[email protected].
Twitter:
@dustinpwalsh
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20140512-NEWS--0008-NAT-CCI-CD_--
5/9/2014
5:31 PM
Page 1
Page 8
May 12, 2014
OPINION
Time to build case
for backing transit
or years, Southeast Michigan civic and business leaders have sought the holy grail: a quality, regional public transit system that competes for “riders of choice”
as well as “riders of necessity.” Such a system would reduce
peak freeway congestion as well as be attractive to young talent who prefer public transit to personal vehicles.
State law has created a Regional Transit Authority. Now
we have to fund it. A local alliance of ministers and community leaders hopes to pull together a coalition to help propel that
effort. (See story, Page 25.)
In that respect, Grand Rapids is ahead of the game. As
Matthew Gryczan reports on Page 17, that city’s regional transit system will launch a rapid-bus transit line in August along
that region’s equivalent of Woodward Avenue. Business leaders — and voters — backed the expansion. Businesses are expanding and renovating to accommodate additional traffic anticipated on the corridor.
Transit-linked investment is also anticipated in Detroit
along the 3.3-mile streetcar loop known as M-1 Rail. Business
and philanthropy led the charge on M-1 Rail, which should
start running by 2016. That’s also the year region voters
could be asked to approve a millage for expanded transit, including routes similar to the rapid-bus Silver Line in Grand
Rapids.
Building the case for public support will take a lot of effort,
from grass roots through top civic and business leadership.
Now is the time for business owners, employers and leaders to start planning. The June 4 summit can be a good start.
For more information, go to mccmichigan.org.
F
Bankruptcy end no partisan goal
A poll released last week by Business Leaders for Michigan
shows strong support for using state dollars to help bring Detroit’s bankruptcy to a close. (See “Most Michigan residents
support $350M state help for bankrupt Detroit,”
crainsdetroit.com.)
Voter support exceeds 50 percent in all regions of the state
and is across party lines, BLM CEO Doug Rothwell said.
That should boost efforts by state Rep. John Walsh to pass
11 bills related to the bankruptcy, including the critical contribution of nearly $200 million toward city pension shortfalls.
(See Capitol Briefings, Page 10.) “It not only affects Detroit, but
my district and the entire state,” Walsh, a Republican from
Livonia, told Crain’s. “If we do this right, following the bankruptcy, the city has a chance to return some of its population
level and its economic success.”
We hope this action becomes bipartisan.
LETTERS
Word choice not age-friendly
Editor:
Words are important. Words
matter. I was very surprised to
read the poor choice of words expressed in the headline in the
health care section of the April 21
edition: “The ‘silver tsunami,’ ” in
reference to the demographic
change underway.
People of great age do not create
a tsunami. A tsunami is a terrible
force wreaking havoc and destruction. As we age, we are not an evil
force wreaking chaos and destruction. Yet the choice of words
evokes this very negative picture.
I am surprised that Crain’s is not
more thoughtful and considerate
in word choice.
As our society moves to accept
the inherent responsibilities to improve life as we age, we cannot afford to set ourselves back by the
use of pejorative language. The
negative reference is baffling
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]
when considering that caring for
those of advancing ages is vital.
While my message is strong, I
recognize the potential inadvertence of the use of words. Through
my legal work and my work with
GracefulAging.com, my ear is sensitive to language. I can tell you
that “tsunami” when referencing
seniors is quick to draw a strong
reaction from those in the aging
field. Personally, I rally against
words like “old,” too. Even “senior” is off-putting. My growing
preference is to consider people as
they age as persons of great age.
I am glad we have organizations
like Trinity and other fine parties
committed to improving life as we
age.
Gregory Bator
Founder and host of Graceful Aging
Attorney, Bator Legal
Birmingham
All of us have some
kind of disability
Editor:
Regarding the April 21 Other
Voices column, “Employers must
accept diverse abilities,” I’d venture to say (in my distinctively disfluent way) that George Lenyo was
See Letters, Page 9
KEITH CRAIN: Water everywhere, but not a drop to drink
There are few things that are as
volatile as trying to figure out the
water and sewage system for
Southeast Michigan.
For a lot longer than any of us
would like to remember, it was under the jurisdiction of a federal
judge. That ended in early 2013.
And in spite of that supervision for
more than 35 years, we have
learned corruption was rife at
least some of that time.
Meanwhile, for decades, Detroit has been selling water to
municipalities at a wholesale
rate, and those same municipali-
ties have been marking
up that same water to
their residents. A nice
little profit center for
the suburbs.
Detroit’s bankruptcy
gives the entire region
the opportunity to become more than a customer. The deal being
proposed is either for a
new authority to lease
the system from the city
or have the city lease the system to
a private company.
Ownership is tricky. No one,
particularly Oakland
County, likes the idea of
having to take on debt
the system has incurred. They don’t
mind the asset side but
are very nervous about
the debt.
The city’s emergency
manager and the federal bankruptcy judge
have to figure out how
to handle this asset.
City proposals so far don’t include
regional ownership. There already
is a seven-member regional board,
but the city appointees outnumber
the suburban, and decisions are
majority-rule.
It seems like an impossible task
to solve this dilemma. A solution
won’t please everyone.
Yet I have been pleasantly surprised at the positive outcome of
Cobo Center’s transition to a regional authority that both owns
and operates the facility. Unanimous votes are required on its
board, something a lot of people
thought would never work — but it
has. Cobo has become a real jewel
for the region, not just Detroit.
We need a solution. Everyone
needs water, and it’s too expensive
to try to replicate the huge water
system already in place.
To make its ownership and management shared by everyone
makes great sense. The solution is
fairly obvious. The journey is going to be difficult, to say the least.
We all want our community to
have abundant, clear, clean water.
The system is in place.
The challenge will be to create
an ownership and management
system that will make everyone
unhappy equally.
20140512-NEWS--0008,0009-NAT-CCI-CD_--
5/9/2014
10:26 AM
Page 2
May 12, 2014
LETTERS CONTINUED
■ From Page 8
shooting low when he estimated
that more than 70 percent of disabilities are not apparent. Given
that everybody has some disability
— we just don’t count many of the
characteristics that create hurdles
for even the most successful people
— it’s more likely 99 percent of disabilities are invisible.
More employers should doublecheck to make sure they aren’t
hampered by their own attitudes
when it comes to hiring, promoting and, frankly, just listening to
people with disabilities. This can
be very difficult for many employers, but they likely have more ability in this area than they think.
Sharon Emery
of physicians by state and federal
agencies even if a violation is only
technical or inadvertent.
The Crain’s articles have shined a
light on what is now the gorilla in
the room for health professionals.
Physicians must prepare themselves to be in absolute compliance
with voluminous state and federal
requirements or potentially face a
virtual onslaught of administrative
actions that can be career-ending
and financially devastating.
Christine Dedarian
Sylvan Lake
Auto exec haircuts
matched talent level
Editor:
The April 14 Publisher’s Note-
book column by Mary Kramer on
the compensation divide, “Compensation creep worth keeping eye
on,” was very good.
I firmly support excellent compensation for excellent performance. The only point in the column that could use data to support
it is the haircuts that GM and
Chrysler execs took while the taxpayers held the stock, and the subsequent inability-to-recruit comment. Similar comments were
made by the former GM chairman
to persuade the administration to
put the taxpayers’ interests to a fire
sale. However, I’m not aware of any
talent that was recruited away from
GM or Chrysler. Top talent certainly would have been lured away. Unless some top guns left, I would conclude the haircut levels were in line
Page 9
with the talent level.
Alan Levijoki
Clio
Support local
companies
Editor:
I am deeply disappointed to
read that the airport authority
board selected a foreign-owned
vendor over Planterra for the horticultural services contract (“Biz
tied to Libya wins airport deal,”
April 28, Page 1).
Planterra is a vibrant and proactive force in our community and
that Greater West Bloomfield
Chamber of Commerce. It employs
Michigan residents and hosts a variety of events that echo our motto
of “bringing business and commu-
nity together.”
Shane Pliska, president of
Planterra, will be honored as
Young Entrepreneur of the Yearat
our eighth annual awards dinner.
His dedication to the chamber and
community earned him this recognition.
When a public entity spends
money, there is more than one bottom line to consider. The level of
commitment and dedication to our
region from foreign entities isn’t
the same as the investment local
businesses make in our community. We need to support great community partners like Planterra
that contribute to and positively
impact our local economy and
stature.
Suzanne Levine
Executive director
Greater West Bloomfield Chamber of Commerce
Vice president
Truscott Rossman
Lansing
Compliance big issue
in medical community
Editor:
The articles in the April 21
Crain’s by Jay Greene (“New state
rules seek to tighten doctor discipline,” Page 1) and Chad Halcom
(“Michigan medical discipline rises
to a new high,” Page 21) did a great
service to the medical community.
While physicians still worry about
medical malpractice, the facts do
not support their concern.
Medical malpractice reform in
Michigan has dramatically reduced
the filing of court actions against
physicians. Now, however, the
most problematic challenge facing
doctors, which has the potential of
having permanent career impact, is
a fast-growing trend of the targeting
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7KHURDGWRWKHFRUQHURIÀFH
STARTS HERE.
A business degree from
Wayne State University
does more than
provide an academic
foundation for success
— it helps open doors.
Our graduates join a
strong network of more
than 31,000 successful
alumni across Metro
Detroit and worldwide.
Whether you’re landing
that first job or making
your way to the
executive suite, there’s
likely a Wayne State
alum nearby, ready
to help.
Livonia lawmaker not looking for
partisan points on Detroit bills
The state’s involvepath for the city to return
ment in helping Detroit
to a wonderful future.”
exit from bankruptcy
He said he remembers
has been led for months
going downtown nearly
behind the scenes by an
every weekend as a child
unlikely figure — state
to attend international
Rep. John Walsh.
festivals, play and shop,
So why is a Republican
but that doesn’t happen
from Livonia so deeply
as much anymore.
involved in this process?
“If we do this right, folHe did not grab the short
lowing the bankruptcy,
straw, he guarantees.
the city has a chance to
“I raised my hand,”
return some of its popuChris Gautz
Walsh said. “I’ve had a
lation level and its ecolong affinity for the city.
nomic success,” he said
It was a natural for me to step up
And Walsh has been involved, aland try to work most from the beginning, meeting
on this package. with Kevyn Orr after his appointIt not only af- ment as Detroit’s emergency manfects
Detroit, ager. And as the settlement negotiabut my district tions continued and it was getting
and the entire closer to the final plan of adjuststate.”
ment, Walsh and others began
Walsh, 51, was drafting the legislation that would
born in Detroit become the 11-bill package that was
and earned his unveiled on Thursday.
law degree from
Those bills, House Bills 5566Walsh
Wayne State Uni- 5575 and an 11th bill that has yet to
versity and worked in private prac- be officially introduced, will be the
tice in the city for 15 years.
subject of a hearing Tuesday in
Before becoming a state law- Lansing before a new House commaker, Walsh was the executive mittee, Detroit’s Recovery and
director for Schoolcraft College’s Michigan’s Future.
foundation, and oversaw operaWalsh, not only guided the bills in
tions of the college’s business cen- the drafting process and sponsored
ter and culinary program.
one of the 11, but he will also serve
Walsh said his involvement in as chairman of the new committee.
the issue is not just motivated by
At Tuesday’s hearing, Walsh will
the economics, “but we can set a give an overview of the legislation
Capitol
B r i e fi ng s
Terry Campbell, MBA ’90
Chief Operating Officer
Detroit Eastern Market
School of Business Administration
business.wayne.edu
AIM HIGHER
May 12, 2014
WE WERE CURIOUS, COULD A BANK LOOK BEYOND COOKIE CUTTER SOLUTIONS TO HELP YOUR BUSINESS SUCCEED?
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and then Orr will testify on the
package. A second hearing tentatively set for later in the week will
hear from groups connected to the
bankruptcy, Walsh said, and could
include union and pension officials,
business leaders and possibly a representative from the City Council
or Mayor Mike Duggan’s office.
The following week, there will
be at least one more hearing, if not
two, to take testimony from the
general public, he said.
While some GOP colleagues have
a reputation for seeming to enjoy
the annoyance they give Democrats, Walsh has earned a reputation
as honest and even-handed.
But as speaker pro tempore of
the House, it’s Walsh’s job to control the gavel on the House floor,
and that has led to some bitter disagreements with Democrats who
felt he was not allowing them to
challenge rulings that were made,
or to speak on certain bills.
Walsh said he has a good relationship with House Democrats,
though, and is looking forward to
the process that begins this week.
“There are going to be rough
spots, but I always strive to treat
everyone with dignity and respect,” Walsh said. “I’m a good,
proud Republican, but I was sent
to Lansing to get work done.”
Chris Gautz: (517) 403-4403,
[email protected].
Twitter:
@chrisgautz
The curious bank.®
Fifth Third Bank. Member FDIC.
31675_Fifth Third_Register_10x6.625_QFBR0119.indd 1
4/24/14 5:55 PM
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Page 11
WORTH THE WEIGHT?
A medical practice cross-trains
staff so it can expand
services, Page 16
growing small businesses
EDITOR’S NOTEBOOK
Amy Haimerl is
entrepreneurship
editor and covers
the city of Detroit.
She can be
reached at (313)
446-0416 or at
[email protected]
Amy Haimerl
At last, help
for survivors
Rachel Lutz has a word for them:
Been-ups.
These companies are the ones
already here silently toiling,
unremembered and uncelebrated,
watching as the resources, support and
capital focus on startups.
As the owner of the Peacock Room
and Emerald boutiques in Midtown,
Lutz is a been-up. She started her
company on credit cards and has
grown it into a place that dresses some
of Detroit’s most fashionable ladies.
Been-up Christa Sarafa, whose
family owns Public Lumber Co. on the
city’s east side, has been railing about
the attention flowing to downtown and
the new businesses opening — with
little remembrance of those, like her
family’s, that never left.
Well, the New Economy Initiative has
been listening to all this street talk. The
group recently announced it will give
$500,000 to existing businesses in
Detroit, Highland Park and Hamtramck.
“While we recognize all the energy
around Detroit’s startup scene, we
feel it’s important to celebrate the
small, existing businesses that have
been the cornerstone of their
communities for years,” said David
Egner, executive director of the NEI, a
project of the Community Foundation
for Southeast Michigan.
The NEIdeas program, as it is being
called, is doling out grants in two groups:
䡲 $10,000 to 30 small businesses
with revenue of less than $1 million.
䡲 $100,000 to two entrepreneurs
with revenue between $1 million and
$5 million.
The NEI has been hosting listening
sessions around the city, advising
small-business owners on the
application process. And for such
significant grants, it’s not that
challenging. You have to submit a
200-word essay that shows how the
grant would affect you or your
business and expresses your passion.
Having just judged our annual 20 in
their 20s applications, I can’t stress
how important it is to clearly spell out
the measurable results you expect.
Details are gold. Be specific.
Second place also doesn’t look too
shabby. The Detroit Economic Growth
Corp. will connect them with the
entrepreneurial resources available
locally.
Here’s to the been-ups.
To apply, visit neideasdetroit.org;
applications are due by June 26.
Andrea Livingston, co-founder of the Detroit digital marketing firm Grit Design Inc., knows
“the respect factor” is a key to keeping employees happy through flexible scheduling.
Show
them
the
money,
but ...
JOHN SOBCZAK
Yeah, cash is nice, but trolling for talent isn’t always that simple – or always
that expensive. Here are 12 tips to help find and reward talented employees
BY GARY ANGLEBRANDT
SPECIAL TO CRAIN’S DETROIT BUSINESS
F
or companies across a range of
industries in Southeast Michigan, gaps in the workforce are
top of mind.
IT workers, skilled tradespeople,
health care workers and anyone
schooled in the STEM disciplines of science, technology, engineering and
mathematics are in high demand. And
some slots are expected to come under
more pressure as baby boomers retire.
Stepping up recruiting is one-half of
the solution, but what about the benefits
and compensation side? As second-stage
businesses grow, owners increasingly
find themselves competing for talent
with bigger competitors but lacking resources to offer big benefits and pay.
The good news is they don’t necessarily have to. Business experts, human
resource professionals and business
owners say companies should look beyond traditional benefits and compensation to softer — and less expensive —
factors such as fringe benefits, career
development and flexible schedules.
“You have to understand what the
candidate’s carrot is,” said Cynthia
TAPPING TALENT: HOW 2 COMPANIES DO IT
Generations Home
Care Group:
Aptitude, not
diploma, is the
prime credential,
Page 14
Urban Science
Applications Inc.:
Concentrating on
culture attracts,
keeps tech talent, Trivia Tuesday at Urban
Page 15
Science Applications.
Richardson, manager of
talent programs and talent enhancement at the
Michigan Economic Development Corp. “It’s
not always money. It’s
time to work on a pet
project; it’s flex time;
it’s ‘I will work at 3 in
Richardson
the morning for you,
but I want to be home in the morning to
get the kids to school.’ ”
And if that doesn’t work? “Then we
attack salaries, but that’s secondary,”
said Chris Beltz, human resources director at Human Capital LLC in
Rochester Hills, where he manages HR
for 150 client companies.
Smaller companies
should look for opportunities to help employees
with their work-life balance, said Rose Stanley,
total rewards practice
leader for WorldatWork,
a Scottsdale, Ariz.-based
human resources assoStanley
ciation. “Companies
need to think out of that big box of traditional compensation and benefits,” she
said. “Employees are looking for something. Try to find out what that is.”
How does a company put in place the
compensation packages that attract and
retain talent? For starters, talk with existing staff, do the homework on prevailing salaries for specific jobs — and
be creative. Here are 12 tips to guide talent searches and compensation talks:
1. Above all, flexibility
The mantra among the experts is
flexibility. It is “your No. 1 thing,” Beltz
said. A company in a talent bind needs
to make some concessions, and flexibility is an easy one to make.
See Rewards, Page 12
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May 12, 2014
Second Stage
Rewards: It’s not just about money
■ From Page 11
Grit Design Inc., a digital marketing firm in Detroit, hasn’t had a
hard time finding people for its ITheavy staff of 13. Co-founder Andrea Livingston said this is because of the company’s flexibility
in hours and its culture in general.
There isn’t a set number of personal days for each employee. People can take time as needed as long
as deadlines are met and no one
else’s deadlines won’t be hampered.
“It’s the respect factor,” Livingston said. “People have life needs.
That really is the cadence of the office. If people need to call in or work
from home, there’s not a lot of questions. That’s a huge relief for people.”
Tech workers like to stay on top
of the latest platforms and systems.
Giving them opportunities to work
on more than one is valuable to
them, so Grit rotates people in ways
that advances their portfolios.
“Although you should pay people, especially really good people,
what they’re valued at, it’s about
letting them have control over what
they work on,” Livingston said.
Office politics can poison efforts at
flexibility as workers “feel they have
to be at their seat at 8 a.m. before
everyone else gets there,” she said.
The antidote: frequent, open communication.
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Flexibility in culture as well as
time is in demand among younger
workers. Millennials look for opportunities to be involved in community functions and social responsibility events and want the
time to do them, Stanley said.
And they don’t make it a secret.
“They will come and ask for it,”
Stanley said. “Me, as a baby
boomer, I’m more reluctant to ask.”
Active Solutions Group in Dearborn
doesn’t have trouble maintaining its
staff of young
tech workers because the culture
is loose, President
Frank
Kadaf said. “The
relaxed atmosphere is very attractive
to
them,” he said.
The dress code
Kadaf
is loose, there are
after-work gatherings, and Active
Solutions is generous with chances
to work from home or take a day to
work on side projects, he said.
“We’re not reckless, but they
have the ability to do what they
want,” Kadaf said.
In some cases, those projects
turn into side businesses in which
Kadaf becomes a partner.
One quality to look for when hiring fresh faces out of college is the
ability to figure things out for
themselves, Livingston said.
“Folks coming out of college are
not always best in understanding a
flexible environment,” she said.
3. But don’t forget
older people
It’s hard to put a value on experience, and people out there with it
are ready to work if a compa ny can
offer the right kind of arrangement.
Getting in touch with organizations such as AARP can churn up
people ready to work who know
what they’re doing, Stanley said.
Offering part-time work and job
sharing might be all that’s needed
to make it happen.
“They have all this knowledge,
and they have a work ethic that’s
already established,” Stanley said.
4. Don’t forget the
long-term unemployed
Companies do themselves a disservice by writing off people with
a recent big gap on their résumé.
San Francisco-based Evolv Inc.
published a study in April that
found the long-term unemployed
were no more or less productive
than people with more consistent résumés. The report was based on the
company’s study of almost 20,000
sales and service workers in two
groups: those who hadn’t worked in
five years and those who had.
It’s not as if a few years off causes people to revert to being high
schoolers again. “They might have
to come back up to speed, but the
world didn’t change that much in
five years,” Stanley said, noting
that large companies make a point
of staying in touch with former
workers of all stripes because it
cost a lot to train them and a lot to
replace them.
Employers can gain a trade-off
here, too, in the form of a salary
discount, she said.
The MEDC runs a program
called Shifting Gears to help experienced workers move into new careers at small businesses. See
mitalent.org/misg-stakeholders.
5. Offer more vacation
“One thing I think employers
are ridiculously skimpy on is vacation time,” Richardson said.
Adding extra vacation time to a
benefits package can make a company stand out from the crowd.
This appeals to workers frustrated
at having to restart the clock every
time they take a new job — a common occurrence in an era when
lifelong jobs are a thing of the past.
“Employers really trip over a
nickel to save a penny when they
don’t offer a competitive package,
especially to experienced workers,”
Richardson said. “You’re recruiting
experienced talent but punishing
them because they’re just coming to
your company.”
Extra time off does have its costs
and should be handed out judiciously, said Stanley, who advises companies to use it in one-on-one negoSee Next Page
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May 12, 2014
Page 13
Second Stage
From Previous Page
tiations. Companies should gather
feedback from candidates who
turned down a job to see whether
time off was a factor. They also
should look into variations that are
becoming popular, such as workweeks of four 10-hour days or schedules of 80 hours in nine days.
“Survey data shows most Americans don’t take long vacations,”
Stanley said. “They take long weekends.”
6. Don’t forget
about training
Career development is always a
top priority for workers, and it
doesn’t have to cost a lot. Lateral
moves, for example, satisfy the need
to develop new skills but don’t necessarily mean a pay increase.
Training fell by the wayside during the downturn, Richardson said.
And it can get overlooked when a
company takes on a new client and
automatically starts looking outside for talent — a great way to inspire mutinous worker sentiments.
Before the company starts looking for outside help, employees at
Active Solutions are offered company-paid training if a new job comes
up that doesn’t fit anyone’s skills,
Kadaf said. Companies shouldn’t
forget that management training
can take place after hiring and that
government grants exist for worker
training, said Michael Hansen, president of the Michigan Community Colleges Association.
“If there’s a training need, call
the president of the local community college,” Hansen said. “You
don’t have to go through layers of
bureaucracy.”
and takes a few
weeks of paperwork to sponsor
a visa, she said.
Much of that can
be avoided because students
already are authorized to work
in their field of
study for up to 29
Trentin
months. If the
employer and employee want to
continue the relationship, they can
go through the visa process later.
Employers don’t have to pay
into Social Security while the
worker is on a student visa, and no
relocation costs would come with
hiring someone straight out of another country.
Companies also can offer flexibility to deal with immigration issues, such as time to leave the
country and renew a visa, and it
doesn’t have to be paid leave. Help
with adjusting to the community,
finding bilingual schools and assistance for spouses are other extras a company can offer to help
workers feel at home.
“These sorts of things get the
word out that a company’s doors
are open to international workers,” Trentin said. “They know
they can apply to a Microsoft or an
Oracle, but who in Michigan?”
9. Make sure job-seekers
feel welcome
Showcasing diversity can turn a
business into a magnet for talented
people who don’t want to wait until day one on the job to find out
whether the company’s culture is
going to work for them.
Marketing materials signal a
company’s inclusiveness, as can
visiting support groups and associations to offer hiring support,
Stanley said. To back that up, companies can tailor make people new
to the workplace feel at home
through social meetings and workplace support groups.
A flexible work environment
tends to go a long way, Stanley
said. For example, workers with
disabilities benefit from the ability
to telecommute as needed.
10. Don’t let pay lag
back, it’s infinitely more complex
than ‘we don’t have enough machinists and welders,’ ” Hansen
said. “The higher-paying ones never have trouble filling jobs.”
Beltz of Human Capital said
that when he makes clients aware
of their lagging pay, they always
make adjustments.
He advises companies to “look
in the mirror,” especially now
that the economy has picked up
and workers can pack up and
leave again.
11. Do the research.
Rinse. Repeat
Compensation data age quickly,
and paying downturn-era wages
deep into an upturn is not a recipe
for success, Richardson said.
Richardson’s office at the MEDC
can run compensation numbers for
a few key positions as long as the
jobs are posted at mitalent.org. Online tools available through human
See Rewards, Page 14
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It’s hard to have sympathy for a
company that complains of not being able to find workers but hasn’t
stepped up its starting pay in 10
years.
“Employers can get very complacent with their pay,” Richardson said. “They need to really understand what the market is
paying — the market changes
every day, every month.”
Hansen at the community college association talks with college
staff who place students in skilled
jobs such as machining and welding.
What he hears is that the companies that complain the loudest
about not finding talent are the
ones that pay the lowest.
“If you peel the onion layer
CORPORATEEAGLE.COM
7. Offer one or two
benefits for contractors
Companies in a bind between hiring permanent workers and highquality contractors can offer a few
benefits as an in-between option.
Some health insurance companies in Michigan will cover contractors as part
of an employer’s
group,
Beltz
said.
Employers
also can include
contractors on
voluntary benefit
programs
such as retailer
discounts and
Beltz
pet insurance.
“That’s a big one,” Beltz said.
8. Look for foreign talent
If a company is suffering a talent
crunch, it should look beyond its
usual talent pools. One such pool:
international students.
Employers assume that hiring
foreign workers is complicated and
expensive, said Athena Trentin, executive director of the Global Talent
Retention Initiative of Michigan, funded by the MEDC and New Economy
Initiative to keep international students in the state.
“International students want to
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20140512-NEWS--0011,0012,0013,0014,0015,0016-NAT-CCI-CD_--
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May 12, 2014
Second Stage
Home care company’s job posting: Aptitude wanted
Vincent Salvia has worn many
business hats over five decades.
He has worked for General Motors
Corp. and Kimberly Clark-Corp. in accounting roles, was executive vice
president of operations for a pharmaceutical company and sought out
talent as a headhunter for 10 years.
Now he owns Generations Home
Care Group, a health care company of
100 employees based in Rochester
Hills that provides at-home care.
One day, Salvia had had enough.
No more paying thousands of dollars to run a little job posting in a
newspaper or poring over the college degrees listed on a candidate’s
résumé. Salvia didn’t want anoth-
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er CPA who, though talented and
valuable in certain situations, cost
$80,000 a year to be, on most days,
“a very expensive billing clerk.”
“I found people have all kinds of
degrees, but aptitude confirms their
ability to learn and do a task,”
Salvia said. “So many people graduating with degrees don’t have the
aptitude. They feel that degree will
carry them.”
So Salvia began seeking aptitude — which, tactically speaking,
boils down to little more than using his gut instinct.
Salvia looks for people he thinks
have the will to succeed, like the
waitress he hired who now heads
operations. Or her sister, who
worked midnights at a bar stocking shelves and now is a business
manager. The traditional CFO duties were pieced out to people who
appreciated the chance to learn.
Many of Salvia’s employees
have no college
degrees.
“We’re
not
stuck in the corporate
world
where you have
to have this degree to do this
job,” which is a
poor indicator of
how a person
Salvia
will be on the job,
Salvia said. “It doesn’t mean much
until you get out on the front lines.”
This approach manifests itself on
the benefits and compensation side
as higher pay. In return, workers
learn multiple, marketable skills, as
they are required to learn each other’s jobs through cross training.
“I’m paying people much more
than what they would make someplace else,” Salvia said.
The arrangement has worked
out well, he said. Productivity is
Rewards: Money isn’t the only value
■ From Page 13
resource organizations such as the
Society for Human Resource Management can show salary data for specific jobs right down to the ZIP
code.
Kadaf of Active Solutions Group
said he checks pay scales every
three or four months and tries to
make adjustments over time. He
doesn’t have a preset schedule for
giving raises but gives them based
on how things are coming along —
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248-841-2200
up and costs are down, and employees are happy to be getting the
chance to advance, Salvia said.
The flexibility has helped, too.
The Michigan Talent Bank —
now called Pure Michigan Talent
Connect — is a good source for
nurses and aides, but Salvia has a
harder time finding occupational
and physical therapists. That problem was diminished when he began offering flexible hours.
The therapists are expected to
do 20 visits a week. They can use
the full week including weekends
to fill those hours however they
want, working around family demands and spouses’ work hours.
As a general pattern for smallbusiness workforce success, Salvia
follows this formula learned from
experience: “Small team, talented,
properly compensated and slightly
overworked.”
— Gary Anglebrandt
millerlawpc.com
before employees ask for them. He
also gives surprise bonuses for doing a good job in a given week.
12. Be careful about
playing favorites
When sweetening the pot to attract a certain type of skilled worker, unintended consequences can
arise. The employee who has
slogged it out over many economically dragging years without a raise
isn’t going to feel good about newcomers receiving higher salaries.
“Now that you’re hiring in a
war-of-talent time, you don’t want
to lose that person who stuck with
you the last three years,” Richardson said. Some of these employees
may prefer more time off to salary
increases, she said.
This is another reason to stay on
top of compensation data for all job
types within a company, experts
say.
Employees in a department
where a talent crunch hasn’t
arisen could be getting low
salaries simply because no one has
bothered to look. Then, when some
in-demand workers start filling
the ranks, these existing workers
feel jilted. HR managers should
conduct salary reviews regularly.
“Pay compression” is the HR
term for having to hire people in a
tight spot, to the disadvantage of
staff in the same department hired
earlier at lower pay ranges.
“Sometimes that range has to
change based on what’s happening,” said WorldatWork’s Stanley.
For people in other departments, managers need to have
honest talks about market conditions and pay philosophy. Sometimes an understanding of the bigger economic picture at an
organization really helps with understanding.
Said Stanley: “Some jobs within
an organization just may not be at
a premium.”
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Page 15
Second Stage
Mike Wozniak, a
senior manager at
Urban Science
Applications,
hosts “Trivia
Tuesday,” an
event at which
workers gather at
lunchtime (below)
to vie for a
coveted trophy: a
pinata.
LARRY PEPLIN
Urban Science concentrates
on culture to win, keep talent
Detroit-based Urban Science Applications Inc. is based in a hot zone
of competition for tech talent.
The company, which analyzes
sales and marketing data for automotive companies and car dealerships, is roommates with General
Motors Co. in the Renaissance Center. And it’s just down the street
from Quicken Loans Inc. Both have
sponged up tech workers lately.
“A number of companies are
coming after us,” trying to score
tech talent, said Rebecca Gualdoni, chief human resources officer for Urban Science.
The company offers all the expected things: competitive benefits
and compensation, health insurance, a 401(k), dental, life insur-
ance and so on. But it’s the softer
cultural features that have helped
it gain more traction among candidates. These are things such as
foosball
tournaments,
video
games, popcorn machines and pancake breakfasts.
“It’s not always the raises that
are attracting them,” Gualdoni
said. “It’s the environment and the
culture.”
Urban Science employs 850,
with 300 of them in Detroit alone.
Two years ago, in direct response to the talent pressure, Urban Science also organized a committee
of
15-20
employees,
depending on the topic, to find out
what employees wanted.
The first thing was a relaxed
dress code, which the company
soon provided. Next was more
time off, which the company is
working on.
“They want more time to tinker
and learn,” Gualdoni said.
The company allows some workat-home flexibility and now is
looking into more flexible work
schedules.
Another move that caused an immediate spike in interest from
young talent was Urban Science’s
offering incentives for workers to
live in downtown Detroit. Its tuition reimbursement program —
which never stopped during the recession, as it did at many companies— also has kept job candidates
lined up.
— Gary Anglebrandt
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20140512-NEWS--0011,0012,0013,0014,0015,0016-NAT-CCI-CD_--
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May 12, 2014
Second Stage
To expand medical practice, doctor cross-trained existing staff
BY GARY ANGLEBRANDT
Samer Kafelghazal doesn’t mind
tinkering with his medical practice. He started Middlebelt Medical
Center in 1998 as a primary care
provider. He liked the independence that running a solo practice
afforded.
The drawback was he depended
on hospitals for referrals, and
there was little to differentiate his
business.
So in 2005, Kafelghazal added cosmetic procedures, such as acne
treatments, Botox injections, laser
MIDDLEBELT MEDICAL CENTER PLC
Location: Livonia
Description: Health care practice
specializing in cosmetic
procedures and weight loss
President and CEO: Samer
Kafelghazal, M.D.
Employees: Six
Revenue: $1.1 million in 2013
treatments — “everything that doesn’t require surgery,” he said.
That, too, had drawbacks.
The cosmetics business requires
expensive equipment that siphons
profits for years
before making
returns on the
investment. The
tips used on
laser machines
alone cost $350
and have to be
changed after
every patient,
said KafelghazKafelghazal
al.
So although Middlebelt Medical’s revenue increased 50 percent
in the first year with cosmetic procedures, the profit margins barely
squeaked by.
Competition was fierce here,
too. “Anybody on a corner can do
Botox and laser hair removal,”
Kafelghazal said.
So in 2009, he tacked on another
practice area: weight management.
“Obesity is a growing problem,
and you don’t need fancy equipment to deal with obesity management,” Kafelghazal said.
Problem: Steering a business in a
new direction is a costly, sustained
distraction. Besides monetary
costs, it diverts focus from the existing business. Fortunately, com-
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pared to the move into cosmetic
procedures, the cost to offer weight
management was low.
But it would take time, something that already was in short
supply. As the only doctor on staff,
Kafelghazal could build his business only so much.
Hiring more doctors was an option he’d written off, determining
that the time and money wasn’t
worth the risk. He had particular
methods he preferred, and that required training.
Kafelghazal tried hiring a nurse
practitioner, but the person wasn’t
trained in weight management
and was uncomfortable talking
with people about their weight
problems. So he had to find a way
to increase patient volume using
the staff time he had.
Solution: Kafelghazal crosstrained
the
staff so each
could perform
all functions of
the business
except
the
A look at
ones only a
problem-solving
doctor can do,
by growing
such as precompanies
scribe medication.
His employees, all certified medical assistants, handle electronic
records, answer the phone, draw
blood, answer patient questions,
talk about the side effects of drugs
and administer electrocardiograms.
Kafelghazal spends $1,000 a
month on training on topics like
the psychology of weight management. Kafelghazal’s patient count
jumped from 15-20 a day before
launching the weight management
service to 50 a day now. Revenue increased from $700,000 in 2009 to $1
million in 2011. It has been steady
at $1.1 million the past few years.
Kafelghazal expects a further
boost in revenue from a new plan,
launched this year, to accept online
weight management appointments.
Risks and considerations: If the
move didn’t pan out, Middlebelt
Medical would have had two years
of work to make up for in growing
the other parts of the business.
“If I see 100 patients and only 10
lose weight, I’m going to have 90
people telling their friends that this
doctor can’t help you lose weight,”
Kafelghazal said.
He also worried that demand for
weight loss programs could rise
and fall throughout the year,
whereas demand for primary care
is steady.
Expert opinion:
Richard Beadle,
founder and coowner of St.
Clair
Shoresbased
Vistage
Michigan, a peerto-peer business
coaching organization
for
heads of busiBeadle
nesses, said it’s
important to keep an eye down the
road and prepare to make changes.
“That’s why we have two eyes,”
Beadle said. “We have to keep an
eye on the main business, keep
moving in the right direction,
while always recognizing that it
may change and augmenting it by
experimenting a bit.”
STAGE 2
STRATEGIES
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May 12, 2014
Page 17
PUBLISHER’S NOTEBOOK
Contact Mary
Kramer at
mkramer
@crain.com.
CRAIN’S MICHIGAN BUSINESS
Mary Kramer
Grand Rapids bets its new bus system will
successfully compete with cars and spur
development. Other cities are watching
Ex-lawmaker
gets firsthand
biz perspective
Is there such a thing as a bornagain capitalist?
That might be the new religion for
former U.S. Rep. David Bonior — who,
before leaving
Congress in 2002,
represented a
chunk of
Southeast
Michigan that
included territory
inhabited by those
once deemed
“Reagan
Democrats” by
Bonior
pollsters.
By Washington Post columnist
Thomas Heath’s estimation, Bonior
has invested about $1 million in two
family-owned restaurants in
Washington, D.C.
As a politician, Bonior is
remembered as extremely smart, an
advocate for organized labor and an
opponent of the North American Free
Trade Agreement. Less remembered,
perhaps, is that he lost the
Democratic primary in 2002 to
Jennifer Granholm, who went on to
eight years as Michigan’s governor. In
that campaign, Bonior called for a halt
in cuts to the state’s then muchmaligned single business tax.
Owning a business has led to a
couple of epiphanies.
First, increasing the minimum wage
would have a big impact on a small
business. In his two nonunionized
restaurants, Bonior pays the “tip
wage” of $2.36 an hour with good
benefits — paid vacations of at least
two weeks a year. He offered health
care, but most employees have moved
into coverage through the health care
exchange, The Post reported.
Good thing he’s in D.C. and not
Michigan, where a ballot movement is
afoot to eliminate the exemption for “tip
wages” and instead make all
restaurants pay a higher minimum wage
of $10.10 an hour, up from $7.40.
A second epiphany: Small
businesses can get hamstrung by
government regulations. “It took us a
ridiculous amount of time to get our
permits,” Bonior told Heath. “I
understand regulations and … the
necessity for it. But we lost six months
of business because of that.”
Thousands of new rules have been
pouring out of Washington during the
Obama era: health care mandates,
financial rules and environmental
regulations. The Detroit News
reported last week that regulation has
jumped from being the fourth-biggest
issue for small businesses nationally
to No. 1 — after revenue/sales, taxes
and insurance costs/availability.
Most are drafted by or voted on by
people who have never really run a
business. Maybe Bonior could do his
former colleagues a favor by inviting
them to dinner to discuss his current
views on regulatory policy.
PHOTOS BY JON BROUWER
Conrad Venema, planning manager for The Rapid transit authority in Grand Rapids, praises the city’s upcoming Silver Line bus service as “finally ... a
transportation mode that is competing with the car.”
On the line
BY MATTHEW GRYCZAN
T
he transit system serving metro
Grand Rapids is staking nearly
$40 million and its reputation on a
bus system mimicking light rail that it
says will compete successfully with the
automobile in getting people from the
southern suburbs to downtown.
For many observers, the Silver Line
will serve as a communitywide experiment that larger cities in Michigan are
likely to watch closely.
Come August, thousands of riders will
board buses daily on the Silver Line without having to show the drivers their tickets or fumble for cash. Because payment
is on the honor system, buses won’t even
have fare boxes to take cash or tickets.
Without having to queue up for pay-
The round-trip fare on
the Silver Line is $3,
compared with the cost of
driving perhaps 20 miles
and parking downtown at
rates ranging from $26 to
$149 a month.
ment, riders then will be whisked north
and south along Division Avenue via
two of the artery’s five lanes during
peak traffic periods.
Motorists who use these two specially marked lanes during 7-9 a.m. and 4-6
p.m. weekdays will be ticketed.
Besides having a straight shot to
downtown, the buses will communicate
their positions via global positioning
system to traffic lights, which can decide whether to stay green a few seconds
longer to allow vehicles that are behind
schedule to make up time.
With all those advantages, Silver
Line buses are expected to make the 9.6mile trek from 60th Street in Wyoming
to offices, hospitals and college classrooms in downtown Grand Rapids in 27
minutes, said Conrad Venema, planning
manager for The Rapid, the transit authority that will operate the Silver Line.
“Finally, it’s a transportation mode
that is competing with the car,” said
Venema, who has been involved with
planning the Silver Line for a decade.
See Transit, Page 18
20140512-NEWS--0017,0018,0019,0020-NAT-CCI-CD_--
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Page 2
May 12, 2014
Transit: Bus system bucks car culture
■ From Page 17
“Twenty-seven minutes is competitive with taking the (U.S.) 131
expressway north to downtown,
finding a parking spot and getting
to a place of employment — it’s as
quick, if not quicker.”
There’s little question that as a
pocketbook issue, the Silver Line
can compete with commuting by
car. The round-trip fare is $3, compared with the cost of driving a car
perhaps 20 miles and parking downtown for rates that can range at public lots anywhere from $26 to $149 a
month.
But the Silver Line raises a busload of questions as a fascinating
experiment in human behavior.
Will there be too many freeloaders
who evade fares? Will motorists
who use Division Avenue as a
thoroughfare lean on their horns
when the street constricts by half
during rush hour? Will the Silver
Line revitalize business segments
of Division Avenue that have fallen on hard times?
Venema acknowledges the unknown territory that the Silver
Line is entering.
“This is the first time in Michigan that we are doing this,” he
said. “When we talk to other systems that have done these things,
they say at first people are understandably nervous. But after people get more comfortable as it
runs, then they finally decide:
‘This works, and it’s not as painful
as I thought it would be.’ ”
Any compromises that have to
be made as a community, Venema
and others said, are more than
made up for by the advantages of
Reliable, modernized grid
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JON BROUWER
The new Silver Line hybrid bus will stop for riders at sites such as this new
station along South Division Avenue at 36th Street in Grand Rapids.
effective mass transit — and the
possibility of economic development along the corridor.
Flipping the turn signal
The southernmost segment of
the Silver Line is a mecca of usedcar lots, RV dealerships and auto
parts stores — some of the very industries that the bus service hopes
to make obsolete.
It wasn’t always that way, said
Tim Cochran, city planner for
Wyoming and a member of the Interurban Transit Partnership board,
which operates The Rapid. And it
doesn’t have to stay that way, he
said.
“Before the construction of U.S.
131, Division Avenue was a main
commercial corridor,” Cochran
said. “But when 131 came in and
28th Street was developed, it pulled
a lot of the vitality out of Division.”
The exodus of retailers along Division created a niche opportunity
for the car dealerships, which
could lease or own large lots at
bargain prices.
“We think that now the tables
are going to turn with the (Silver
Line) coming through,” Cochran
said. “It’s going to re-energize the
corridor. The car dealerships are
certainly welcome to stay there as
long as they would like to, but we
think opportunities will make
themselves available where they
will sell their properties and allow
them to be redeveloped for more
intense uses.”
Sam D’Angelo, owner of Autoxsell Sales and Marketing LLC, already is repurposing his former
used-car lot on Division Avenue
into a retail center called Fisher
Station, which is set for an early
summer opening.
“If you asked me that five years
ago whether we needed more retail
in this area, I would’ve answered
‘no,’ ” D’Angelo said of his project,
which he expects to cost more than
$1 million.
“The Silver Line does factor in a
little bit, but probably a bigger factor is that a Wal-Mart is going in
just around the corner from us.”
D’Angelo already has signed a
Biggby Coffee franchisor and another company as tenants, and he is
negotiating with two other potential occupants of the 6,000-squarefoot retail center — an expansion
of about 3,200 square feet over the
original Autoxsell building.
“Would somebody be taking a
bus down to buy a car?” D’Angelo
said. “Probably not.”
The Silver Line, he said, “lends
itself to a retail center more than a
car lot — a coffee shop, a cellphone
company, some other type service
business or retail business.”
Cochran said another major catalyst should boost redevelopment
from roughly 56th Street to 60th
Street: the extension of a sanitary
sewer system, which will allow
more intensive residential development along that stretch of Division
Avenue.
With a shared boundary of
roughly two miles down the middle
of Division, the cities of Wyoming
and Kentwood hope to break
ground next year on the sewer project, whose cost easily could exceed
$1 million. The engineering is still
being done and plans aren’t completed. Federal funds that will pay
for the bulk of construction already
are earmarked.
“That area has a number of large,
underutilized properties, mainly
because everything out there had to
use septic fields,” Cochran said.
“That is really going to open up that
section for development.”
Terry Schweitzer, community
development director for Kentwood
and another member of The
Rapid’s board, said he expects residential density to increase after the
improvements are finished. But he
cautioned that the change “is something that will evolve over time.”
To goose along that evolution,
Wyoming and Kentwood are collaborating on the use of form-based
zoning codes that will encourage
redevelopment
by
allowing
changes such as reduced setbacks
for construction of buildings closer
to the corridor. Form-based codes
address characteristics such as the
types and mixes of building in an
area and the number of floors,
while conventional zoning codes
address characteristics such as the
density use, parking and setbacks.
Kentwood is benefiting from the
experience of Wyoming, which
created such codes for the development along 28th Street, Schweitzer
said. Wyoming may have something for its City Commission in
about six months.
“We are meeting with property
owners there now because we are
discussing the reconstruction of
See Next Page
20140512-NEWS--0017,0018,0019,0020-NAT-CCI-CD_--
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Page 3
Page 19
May 12, 2014
© Vito Palmisano
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From Previous Page
Division from 54th to 60th Street,
so we are also asking for input on
code changes,” Schweitzer said.
Among those discussions is reducing the requirement for a 35-foot
building setback.
There’s another reason
that The Rapid is optimistic
about filling Silver Line buses with riders right out of
the gate in August: The authority has purchased a lot
for 200 cars on the southern
end of the route, providing
free parking on a first-come,
first-served basis.
“We are trying to capture the
‘choice rider,’ the commuter —
and who exactly that is remains to
be seen,” Venema said. “Is it someone driving in from Kalamazoo, or
is it someone more local?”
One likely rider is a student trying to get downtown to attend
classes at Grand Rapids Community
College. Free parking and a 27minute commute time could act as
powerful incentives for students
accustomed to the “massive pileup” that sometimes results in
hourlong waits at the main GRCC
ramp during peak times of 8 a.m.
to 1 p.m., Venema said.
The Silver Line loop downtown
stops at GRCC as well as Mercy
Health St. Mary’s Campus; the “Medical Mile” — made up of Spectrum
Health facilities, the Van Andel Institute and the Michigan State University College of Human Medicine — and
two stops downtown before ending
at The Rapid’s Central Station.
With all the factors in play, The
Rapid hopes by the end of next
year to entice an average of at least
5,000 riders per weekday to take
the Silver Line — making it the
second-busiest route in a system
that covers nearly 500 miles.
“Whenever you launch a new service, it takes time for people to acclimate or try it,” Venema said. “We’ll
know a lot more in fall this year.”
Road to reconstruction?
Several of the transit system’s 34
bus stations south of downtown
Grand Rapids are islands of new
construction in tired commercial
districts. Stretches of the thoroughfare are populated by secondhand thrift stores, fast food restaurants, gritty industrial areas and
niche small businesses.
Some — such as Al & Bob’s Sports,
which has catered to outdoor enthusiasts since 1959 — are welcome
anchors in the commercial district.
Others — such as the Esquire Health
Spa, featuring rubdowns by “American girls” — contribute to a somewhat seedy quality of the corridor.
Jeff Steinport isn’t convinced
the Silver Line will do much to
move the needle in changing the
dynamics of Division Avenue — or
even act as an effective mode of
mass transit.
Steinport, a founding member of
the Kent County Taxpayers Alliance
who maintains a website critiquing The Rapid, isn’t buying the
authority’s assertions that the Silver Line will be faster, promote
economic development and increase ridership. The Grand
Rapids-based alliance is a nonprofit created to promote openness and
accountability in local government, he said.
Simply adding a service like the
Jeff Steinport of
the Kent County
Taxpayers
Alliance says
adding the
Silver Line,
which follows
an existing
route, isn’t a
prudent use of tax
dollars, particularly
when it appears
growth on the routes
has plateaued.
Silver Line — which follows much
of the same course along Division
Avenue as the existing and highly
used Route 1 — isn’t a prudent use
of federal or local tax dollars, particularly when it appears growth
on The Rapid’s routes has
plateaued, Steinport said.
The construction cost of the stations, acquisition of land, installation of a fiber-optic network and
purchase of new buses are the major
capital costs of the federally funded,
$40 million project. Local funds generated through property taxes will
be used to operate the line.
Steinport said he wondered why
The Rapid would launch a new service along an existing route when
statistics show that fixed-route ridership has “started to reach saturation,” except for services that
cater to students of Grand Valley
State University, the Grand Rapids
Public Schools and GRCC.
As proof of the point, Steinport
cited statistics from The Rapid
that show ridership grew about
12.1 percent in 2012 compared with
the prior year but rose only 2.4 percent in 2013. He said ridership figures in the first two months of this
year declined compared with the
same two months last year.
As to whether the Silver Line
will be significantly faster than
other routes, Steinport conducted
an analysis of the average speeds
of 28 routes using information
from The Rapid on the distance of
each route and its allotted time.
The Silver Line is “not all that
much faster than the northbound
speed of Route 1, and it’s actually
slower than the southbound speed
of Route 1,” Steinport said. Compared with other routes, the Silver
Line is predicted to be faster than
some but slower than others, his
analysis found.
Steinport said he was skeptical
that the Silver Line will be a catalyst for economic development. He
said observers may attribute new
projects coincidentally built along
the route to the service — particularly projects near the core city
that are funded using federal Low
Income Housing Tax Credits.
He also questioned from where
the Silver Line will draw additional
riders to break even or make a profit. Venema said a rule of thumb in
See Transit, Page 20
Detroit Welcomes
Nation’s Top
Revitalization Experts
“Resiliency” will be the buzzword May 18–20 in
downtown Detroit, when professionals who
specialize in historic preservation and downtown
revitalization converge on the city for the 2014
National Main Streets Conference.
The event, sponsored by the National Main
Street Center and co-hosted by the Michigan
State Housing Development Authority and
the Michigan Main Street Center, will attract
leaders in preservation-based economic
development and community revitalization
from throughout
the country.
Among those
slated to attend
are Main Street
program directors, architects, planners, economic
development professionals, public officials,
volunteers and consultants.
Celebrating Strong
Neighborhoods
The National Main Streets Conference will
ensure that a nationwide audience gets an upclose look at exciting grassroots revitalization
efforts that are finding success in the face of
economic challenges. Although the conference
will be based at the GM Renaissance Center,
mobile workshops will allow attendees to
explore, for example, the thriving Grandmont
Rosedale community in northwest Detroit and
the largely Latino sights, sounds and tastes in
the southwestern area of the city.
Besides enjoying the positive PR and
economic boost that come with hosting the
nation’s premier historic preservation and
downtown revitalization event, Detroit will
also benefit from the conference’s educational
opportunities. On May 18, free introductory
courses on revitalization techniques will be
Spotlight on Detroit
offered on the Main Street Four-Point Approach®
Organizers promise that the event will provide
to economic development: organization, promotion,
attendees with an opportunity to see resiliency and design and economic restructuring.
innovation at work. The conference will spotlight
ongoing revitalization efforts that build on the
“Hard work, new thinking”
Detroit region’s cultural and historic assets.
“The Four-Point approach is designed to leverage
Media nationwide have proclaimed for years
assets such as cultural or architectural heritage
that downtowns and urban commercial districts
and community pride, which we all know are in
are dead, but members of the Main Street
ample supply in Greater
movement know otherwise, as do those working
Detroit,” said Scott
to revitalize Detroit’s central business district
Woosley, Michigan State
and neighborhoods.
Housing Development
Authority executive
Consider a few facts that illustrate downtown
director. “The National
Detroit’s resilience:
Main Streets Conference
• 97 percent of all rental units in downtown
is an opportunity to
Detroit were occupied in 2013.
demonstrate to the
Scott Woosley
• More than $6 billion has been invested
rest of the country
in real estate development projects in the
the hard work and
Greater Downtown Detroit area since 2006
new thinking that is going into rebuilding
(according to the Hudson Webber Foundation). the community.”
• The Greater Downtown Detroit area accounts
for more than 40 percent of the total
employment in the city.
For more information about Michigan Main Street
successes, visit MichiganMainStreetCenter.com.
20140512-NEWS--0017,0018,0019,0020-NAT-CCI-CD_--
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May 12, 2014
Transit: Grand Rapids hopes to spur growth with bus system
■ From Page 19
transportation planning is that an
average person will walk onefourth of a mile to reach a bus stop,
maybe a little farther for frequently
running service. But at least eight
of the Silver Line stations in the
southern segment are surrounded
by commercial or industrial businesses, not higher-density residen-
tial areas such as apartment complexes and subdivisions.
Let the experiment begin
Venema countered Steinport’s
criticisms of the cost of operating
the Silver Line by pointing out
that The Rapid is a tax-funded au-
thority that provides transportation as public infrastructure.
“And as a public infrastructure,
it inherently does not pay for itself,
so you know that it’s going to be
subsidized,” he said. “There’s not a
public transportation system in
North America that pays for itself.”
Venema conceded that some of
B UILT
the Silver Line stations are in commercial and industrial areas that
don’t have high densities of residences nearby. But he said demand
must exist there, because Route 1
now picks up riders at those stops.
With regard to the Silver Line’s
average speed, Venema said Steinport’s statistics may be accurate,
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but “to say that the Silver Line is
not as fast as No. 1 is totally false. “
“If you compare apples to apples
— the same section of roadway of
the two routes — the (Silver Line) is
doing about 22 mph, while the No. 1
is doing about 18 miles an hour,”
Venema said. Once the Silver Line
reaches the core downtown, it meanders at a rate of about 10 mph as it
hits employment centers, while
Route 1 takes a faster route to The
Rapid’s central station.
With regard to its hope of serving
5,000 riders daily during the work
week, Venema said the estimate is
based on adding “choice riders” —
those who own cars but choose to
take the bus — and serving current
riders who use buses as their primary means of transportation. During peak hours, the Silver Line will
run every 10 minutes.
“Keep in mind that Route 1 runs
every 15 minutes between downtown and 36th Street, and it’s a half
an hour for every stop south of
that, and Route 1 is going to be
brought down to a 30-minute pattern,” Venema said. “Does that
mean Route 1’s ridership is going
to drop? Probably.”
After the Silver Line has established a baseline of ridership, it’s
likely The Rapid will ask for public input and assess whether the
times offered under Route 1 should
be scaled back, Venema said.
Even before the Silver Line prepares for its inaugural run Aug. 25,
some thorny issues remain regarding enforcement of the semidesignated lanes for buses along with
fare evasion. The Rapid is in discussions with cities along the
route to determine how to enforce
those civil infractions and what
the cost of fines should be.
A ticket for fare evasion “would
be painful enough” for riders to
think twice about being caught,
with some transit systems assessing $100 fines, Venema said. One
comprehensive study of such systems concluded that typically, nine
out of 10 people pay their fares.
The Rapid will operate the Silver Line initially with the viewpoint that “generally speaking,
people are honest and will pay.”
Each station along the route has a
kiosk to take cash and issue tickets
and a kiosk that acts as the fare box
on a bus to validate tickets just purchased or already held by riders.
If an altercation ensues, personnel may radio for police for backup, as they do now when a situation escalates.
As is the case with fare evasion,
The Rapid is in discussions with
the cities on how to handle motorists who use the semidedicated
lanes during rush hour, other than
to make right-hand turns or access
business entrances.
“Is there going to be an adjustment on how you’d drive on Division? Absolutely,” Venema said.
“And as a community, we are going to have to work through that.
“We want this experiment to
work — we need this experiment
to work. If it doesn’t work, it’s going to make future projects much
more difficult.”
Matthew Gryczan: (616) 916-8158,
[email protected].
Twitter:
@mattgryczan
20140512-NEWS--0021-NAT-CCI-CD_--
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4:03 PM
Page 1
May 12, 2014
Monthly
Page 21
Spain/Portugal
WHERE MICHIGAN DOES BUSINESS
Altair Engineering Inc.
Autoliv Inc.
Based: Auburn Hills
Spain operations: Locations in Barcelona
and Valencia
Employees: 615
Products: Seat belt assembly, static and
dynamic testing, and airbag manufacturing
Top executives: Jesus Arribas, plant manager in Barcelona; Amparo Vercher, general manager in Valencia
Clients: Mercedes Benz AG, Ford Motor Co.,
Volkswagen Group, Jaguar Land Rover Ltd.,
Seat, General Motors Co., Renault SA, Nissan
Motor Co. and PSA Peugeot Citroën
Domino’s Pizza Inc.
Based: Ann Arbor
Spain operations: 129 stores
Employees: 1,300
Products: Pizza and side items
Top executive: Miguel Ibarrola, CEO of
Zena Group, a Spanish casual dining and
fast-food restaurant group
Clients: Retail customers
More information: The master franchisee
originally operated 90 Pizza Hut units in Spain,
but after its contract expired in 2009, it converted all the restaurants to Domino’s.
T
he same global economic decline and real estate bubble that took a toll on other economies hit Spain and
Portugal, albeit in different ways, in recent years.
In the case of Spain, (which reported a nominal GDP of $1.35
trillion in 2013) resilient exports have helped the country offset some of the declines in domestic consumption and high unemployment — tracked at more than 26 percent in 2013, according to the CIA’s World Factbook. The government also
worked to shore up struggling banks by completing a European
Union-funded restructuring and recapitalization last year.
In Portugal (nominal GDP of $219.3 billion), the government reduced the budget deficit from 10 percent of GDP to
5.1 percent, according to the World Factbook, and it is forecast to reach 4 percent of GDP this year, according to a report from Reuters.
Portugal products range from agricultural and wood products — such as paper and cork — to food products, telecommunications, oil and wine.
Exported products are also a strong part of the Spanish
economy, and include machinery, motor vehicles, food,
wine and pharmaceuticals. Both countries trade heavily
with each other, as well as with France and Germany.
Dow Chemical Co.
Based: Midland
Dow operates in Spain and Portugal
through subsidiary Dow Chemical Ibérica SL
Spain operations: Commercial sales office and
headquarters in Madrid; two research and design centers in Tarragona; polyurethane systems tech center in Ribaforada
Portugal operations: Tech center in Estarreja
Employees: Approximately 800
Products: Ethylene, propylene, fuels
(methane and hydrogen), polyethylenes,
polyols and polyglycols, among others
Top executive: Anton Valero, president,
Dow Chemical Ibérica
More information: Dow Chemical Ibérica
began in Bilbao in 1960 and opened its first
plant in Tarragona in 1967.
Federal-Mogul Corp.
Based: Southfield
Spain operations: Manufacturing plant in
COMING UP
June: Israel
July: United Kingdom
Badalona and distribution center in Madrid
Products: Brake products
Top executive: David Zapata, managing director, aftermarket – Spain and Portugal
General Motors Co.
Based: Detroit
Spain operations: Chevrolet Spain central
offices in Alcobendas
Portugal operations: Chevrolet Portugal
central offices in Oeiras, and GM Portugal
(Opel brand) offices in Paço de Arcos and
Lisbon. These run sales, aftermarket, marketing and distribution operations.
Employees: 21 in Spain, 50 in Portugal
Products: All the passenger vehicle lineup
from Chevrolet Europe (importing and distribution to a dealer network); Opel passenger and commercial vehicles
Top executives: Juan Manuel Lumbreras,
managing director of Chevrolet Iberian
Cluster; João Falcão Neves, managing director of General Motors Portugal
International Automotive Components Group
Dow Chemical employs about 800 in Spain and
Portugal.
Crain’s World Watch
Monthly report showcases companies that
are already leaders in
growing global markets
— and those that are expanding operations.
Each World Watch
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].
Based: Southfield
Spain operations: Manufacturing plants in
Logroño and Vitoria
Products: Bumpers, side wall coverings,
instrument panels, exterior trim, trunk
panels, spoilers, and floor carpets.
Top executive: Jim Kamsickas, president
and CEO
Clients: Audi AG, BMW AG, Daimler AG, Renault SA, Adam Opel AG
Inteva Products LLC
Based: Troy
Spain operations: Manufacturing facility in
Santa Maria de Palautordera
Employees: 70
Products: Window regulators
Top executive: Josep Marzo, plant manager
Clients: Seat, General Motors Co., Renault
SA, Nissan Motor Co. and PSA Peugeot-Citroën
Inteva Products employs 70 at a plant in Santa
Maria de Palautordera, Spain.
Employees: 136 permanent and 5,837 temporary
Products: Recruiting of employees for contact center, hospitality and tourism, retail,
engineering, IT and health care; business
process outsourcing; human resources consulting; payroll services; temporary
staffing; and onsite temporary staffing
Top executives: Natalia Shuman, senior
vice president and general manager Europe, Middle East, Africa and Asia Pacific
regions; Afonso Carvalho, country manager
More information: Kelly Services has had a
presence in Portugal since 2008, and is a top
three player in the staffing industry in Portugal.
Metaldyne LLC
Based: Plymouth
Spain operations: Manufacturing locations
in Barcelona and Valencia
Employees: 170
Products: Powder metal connecting rods,
rubber dampers and isolation pulleys
Top executive: Francisco Ribera, director
of operations for sintered international connecting rod plants, and general manager,
Metaldyne Valencia
Clients: Ford Motor Co., Linamar Inc., Renault
SA, Daimler AG, Thai Summit Engineering Co.
Ltd., John Deere and Porsche
Kelly Services Inc.
Based: Troy
Portugal operations: Locations in Alverca,
Amadora, Aveiro, Leiria, Lisbon, Maia, Porto, Setúbal, Vila Nova de Famalicão and
Vila Nova de Gaia
Metaldyne employs about 170 in Barcelona and
Valencia, Spain.
Vitoria
Porrino
Porto
PORTUGAL
Based: Troy
Spain operations: Altair Software and Services SL office in Madrid
Employees: 10
Products: Altair proprietary software and
services, which include engineering simulation software, software for on-demand computing, software for industrial design, and
engineering services
Top executive: Stefano Deiana, managing
director
Clients: Airbus Group, Aernnova Aerospace SA,
Atos SE, CEiiA, Gestamp Automoción, Grupo Antolin, Acciona SA, Gamesa Corporación Tecnológica and Construcciones y Auxiliar de Ferrocarriles
Lisbon
Pamplona
Palencia
Barcelona
Tarragona
Madrid
Valencia
SPAIN
MSX International Inc.
Based: Detroit
Spain operations: MSXI Spain is located in
Madrid.
Products: Provides a full range of retail
network products and services to the Spanish and Portuguese automotive industry, including customer relationship management, mystery shopper programs, warranty
and technical assistance platforms, dealer
training and coaching programs
Top executive: Markus Klaus, managing director, MSX International, Spain
Clients: Ford Motor Co., BMW AG, PSA Peugeot Citroën, Nissan Motor Co., Fiat SpA, Jaguar
Land Rover Ltd., among others
More information: MSXI has more than 20
years experience in Spain, and performs
work in Spain and Portugal.
RGIS LLC
Based: Auburn Hills
Spain operations: Offices in Madrid and
Barcelona, with satellite offices in Valencia
and Málaga, and remote teams in Zaragoza,
Alicante, Murcia, Bilbao and La Coruña
Portugal operations: Offices in Lisbon, and
remote teams in Porto and Algarve
Employees: Five full-time, 200 part-time
Products: Physical inventory for retailers,
fixed-asset inventories, audits
Top executives: Ignacio Giribet, business
development manager Spain; Paulo de Freitas, operations manager Iberia and country
manager Portugal
Clients: Adidas AG, Nike Inc., Hollister Co.,
Levi Strauss & Co., Groupe Adeo’s AKI and Leroy
Merlin, Burberry Group plc, Celio, Pro-Duo, Event
Europe Ltd.
TI Automotive Inc.
Based: Auburn Hills
Spain operations: Fluid-carrying systems
and powertrain facilities in Montornés del
Valles; fluid-carrying systems center in Palencia; tank systems facility in Pamplona;
tank systems center in Martorell; fluid-carrying system and HVAC facilities in Tauste;
and FCS facility in O Porrino
Employees: 637
Products: Automotive fluid systems,
which include brake and fuel lines, fuel
tank systems, modules, tank top lines and
HVAC
Top executive: Oscar Bercedo, general
manager
Clients: Ford Motor Co., Renault SA, Nissan
Motor Co., Mitsubishi Motors Corp., Mercedes
Benz AG, Audi AG, Volkswagen Group, General
Motors Co. and PSA Peugeot Citroën.
— Compiled by Bridget Vis
20140512-NEWS--0022-NAT-CCI-CD_--
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5:15 PM
Page 1
Page 22
May 12, 2014
Livio founder forms new tech company, lands big customer
BY TOM HENDERSON
Jake Sigal, the founder of Livio,
is back in the tech saddle again, a
month after ending a transition period with Ford Motor Co. that began
last September when the automaker bought the 5-year-old developer
of in-vehicle connectivity software.
Sigal and his partner at Livio,
Massimo Baldini, have formed a
new tech company based in Royal
Oak called Tome Inc., raised a seed
round of $250,000 and landed a big
customer willing to help fund de-
Sigal
Baldini
velopment of their first product.
Livio was sold to Ford Motor Co. last
September.
Sigal, a past Crain’s 20 under 20
honoree, is CEO, and Baldini is
Electrifying companies.
Dynamic leaders.
Powerful innovators.
Join us as we celebrate this year’s EY
Entrepreneur Of The Year™ Michigan and
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out innovators, job creators and risk takers,
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June 5, 2014 | MGM Grand Detroit
1777 Third Street, Detroit, MI
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Nationally sponsored by
Regionally sponsored by
president. They recently hired a
chief technology officer, Tom
Hoag, and hope to hire seven software engineers by the end of the
year.
Sigal said he hopes to develop
his first, as yet undisclosed, product in the niche known as the Internet of Things — a term for the
connectivity of sensors and devices — in time to show it at the
big Consumer Electronics Show in
Las Vegas next January.
Examples would be wearable
technologies that monitor such
things as blood pressure and pulse
rates and transmit data to doctors;
toothbrushes with sensors that
can diagnose early-stage diseases
or other health problems; and
smart home appliances.
Sigal said he can’t be specific
about the first piece of hardware
Tome will develop, but that the
work is for a major company that
“had a big hardware gap in a very
specific area and asked us to
help.”
He said that after Tome develops
the product for his client and
ramps up commercial development, he will be able to market it
to other potential customers.
“The first customer could mean
Michael Marcantonio | Alliance Franchise Brands LLC
Steven Greenawalt | Alta Equipment Company
John Lowery | Applied Imaging
Jeffrey Styers | Arrow Strategies
Jeffrey Farber | Auburn Pharmaceutical
Michael McFall, Bob Fish | BIGGBY COFFEE
James Verrier | BorgWarner Inc.
Cheong Choon Ng | Choon’s Design
Robert Verdun | Computerized Facility Integration LLC
Josh Linkner, Dan Gilbert, Brian Hermelin |
Detroit Venture Partners
Stacey and Mike Marsh | Flatout, Inc.
Bridget Lemberg | Forensic Fluids Laboratories
Chris McCuiston |
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Lorna Utley | Goodwill Industries of Greater Detroit
Arthur Bott | Grand Rapids Plastics, Inc.
Rich Beckman | Great Expressions Dental Centers
Surendra Khambete | Indratech
Luther Elliott | Information Systems Resources
Ernest Nicolay | Kar’s Nuts, Inc
Tel Ganesan | Kyyba Inc.
Patrick Fehring | Level One Bank
Donald Hicks | LLamasoft, Inc.
Stuart Carlin | MachineTools.com
Jason Teshuba | Mango Languages
John Roggow | MPF Acquisitions Inc.
Linda Torakis | MVC Holdings, LLC
Michael Kulka, Peter Bosanic |
P.M. Environmental, Inc.
© 2014 Ernst & Young LLP. All Rights Reserved.
Nanua Singh | Rapid Global Business Solutions Inc.
Thomas Salisbury | Reliable Aftermarket Parts, Inc.
Todd Sachse | Sachse Construction
Ramzi Hermiz | Shiloh Industries
Richard Penington | Summit Health, Inc.
Kevin Choksi | WorkForce Software
Eric Ersher | Zoup! Fresh Soup Company
tens of millions in revenue, and
there’s hundreds of millions in
revenue beyond that customer,”
he said.
A project for Ferndale
While Sigal and Baldini are
pushing development of that product, they will also be going forward
on a 150,000-square-foot development plan for the heart of Ferndale, a plan Crain’s first reported
in April that is picking up steam.
Although it is still in the preliminary stages, the plan is for a
mixed-use project in two locations:
a 2.6-acre site that is now a cityowned parking lot behind the former Old Navy on the northwest corner of Nine Mile Road and
Woodward Avenue, and a one-acre
city-owned parking lot one block
south of Nine Mile and one block
west of Woodward.
The plan is for a parking deck at
both sites, to relieve the current
congested parking in the city at
night and on weekends, and at
least 100 apartment units and office space for second-stage companies, biotechs and auto suppliers
on the larger site.
Southfield-based CBRE Inc. is on
board as a consultant and will be
the leasing agent, said Sigal, who estimates the cost of the project at between $50 million and $100 million.
Dennis Griffin, a CBRE vice president who specializes in getting projects financed, helped Sigal with the
presentation in March to the City
Council, which approved a 12month exclusive negotiating rights
agreement for the project.
It was through CBRE that Sigal
met his other partners on the project, Royal Oak-based CG Emerson
Real Estate Group and Southfieldbased Versa Development.
Emerson, Versa, Sigal and Baldini are partners in the company
formed for the project, 360 LLC.
Derek Delacourt, Ferndale’s director of community and economic
development, said Sigal will next
meet with the planning commission, likely in June. Negotiations
have yet to begin on a sale price for
the lots, and site plans have not
been submitted.
“They made assurances to the
City Council that they would be
back in 90 days to give input on
their progress,” he said.
Delacourt said he hopes construction can begin as the summer
of 2015.
“We are extremely supportive of
this. Jake and Livio have been
great partners for this community
from the time he had the company
in his basement,” he said. “Council is very excited about this. …
“We’ve had a lot of talks with
others about those lots over the
years. It’s prime development
space. This is a bigger undertaking
than originally envisioned by the
city, and it’s well worth taking a
year to try to do it.
“It would have been easy to with
a quicker, cookie-cutter project.
And we still may end up with a
cookie-cutter project if this doesn’t
work out, but a project like this
was worth taking a year to try to
get it done.”
Tom Henderson: (313) 446-0337,
[email protected]. Twitter:
@tomhenderson2
20140512-NEWS--0023-NAT-CCI-CD_--
5/9/2014
11:16 AM
Page 1
May 12, 2014
Page 23
CRAIN'S LIST: LARGEST MICHIGAN INFORMATION TECHNOLOGY COMPANIES Ranked by 2013
revenue
Revenue
($000,000)
2013
Revenue
($000,000)
2012
Percentage revenue from IT industry segment
Compuware Corp.
Robert Paul
president and CEO
$944.5
$1,009.8
Software and professional services
Syntel Inc.
Bharat Desai, chairman
Prashant Ranade, vice chairman
Nitin Rakesh, CEO and president
824.8
723.9
IT outsourcing, knowledge process outsourcing, application development
and management, e-business services, architecture consulting and
support, IT infrastructure management, cloud computing, data
warehousing and business intelligence, application testing, migration
solutions
Tata Technologies Ltd.
Warren Harris
president and COO
376.0 B
376.0
Engineering and design, product life cycle management and product
development IT services, proprietary software and knowledge
management software systems
Netech Corp.
James Engen, president
Mark Wierenga, vice president
Bill Murray, general manager, Detroit
Bryan Teipel, general manager, Grand
Rapids
254.3
186.9
Designs and installs IP-based networks
6355 E. Paris Ave., Caledonia 49316
(616) 281-8100; www.netechcorp.com
5.
Altair Engineering Inc.
James Scapa
chairman and CEO
251.0
238.0
Global software and technology, engineering simulation, advanced
computing, enterprise analytics and product development
6.
Strategic Staffing Solutions Inc.
Cynthia Pasky
president and CEO
238.0
208.7
Consulting and staff augmentation services, vendor management
programs, executive search services, call center technology and a
domestic IT development center
The Bartech Group Inc.
David Barfield, chairman, president, CEO
Brian Salkowski, senior VP, managed
solutions
Aaron Barfield, VP business development
Jim Hanrahan, executive VP, CFO
216.5
223.0
Develops and delivers workforce management solutions.
27777 Franklin Road, Suite 600, Southfield 48034
(248) 208-4300; www.bartechgroup.com
Acro Service Corp.
Ron Shahani
president and CEO
216.0
159.6
Staff augmentation (IT, engineering, office support), outsourcing and IT
and engineering consulting, application development and enablement,
relational database design and development, Web design and
development
9.
Stefanini Inc.
Antonio Moreira
CEO, North America and Asia-Pacific
197.6
150.0
Offshore, onshore and nearshore managed IT services, systems
integration, consulting and strategic staffing
10.
Vision Information Technologies Inc. (VisionIT)
David Segura, CEO
Christine Rice, president
190.0
226.5
Mobile application solutions, managed IT services and talent
management
11.
CareTech Solutions Inc.
Jim Giordano
president and CEO
162.6
161.2
Information technology and Web products and services for U.S. hospitals
and health care systems
12.
Urban Science Applications Inc.
James Anderson
president, founder and CEO
161.2
146.6
Global retail marketing consulting with a scientific approach
13.
HTC Global Services Inc.
Madhava Reddy
president and CEO
153.0
135.0
Application development and maintenance, business process
management, document and content management and project
management office services
Netlink Software Group America Inc.
Dilip Dubey, chairman and CEO
Anurag Shrivastava, co-founder, CEO
EMEA
Greg Hacias, president
134.5
84.5
Managed IT and cloud-enabled business solutions
999 Tech Row, Madison Heights 48071
(248) 204-8800; www.netlink.com
15.
Iconma LLC
Claudine George
managing member
118.3
109.7
Professional staffing and project-based services that include proprietary
mobile apps and a content management system
16.
Tweddle Group Inc.
Andrew Tweddle
president and CEO
113.0
102.0
Information and communications solutions company focused on helping
our customers enhance the ownership experience of their consumers
17.
Diversified Computer Supplies Inc.
Joseph Hollenshead
chairman, president and CEO
111.8
106.5
Distributes imaging/printer supplies, develops IT strategies for clients and
supports back-end connectivity with XML feeds, EDI integration and an
e-commerce platform
18.
Open Systems Technologies Inc.
Tad McConkey, account executive
Dan Behm, CEO
107.0
80.0
Information technology and technology consulting and systems integrator
19.
Rapid Global Business Solutions Inc.
Nanua Singh
president and CEO
74.9
64.5
Software development, IT and services for staffing, engineering, vendor
management, and recruitment process outsourcing
Synova Inc.
Tim Manney
president
70.0
69.8
Custom software development, maintenance and support, SAP
technologies, SAP enterprise applications, SAP performance
management, mobile applications development for financial and telecom
verticals, cloud enabling of organizational resources
21.
HCL Global Systems Inc.
Durga Prasad Gadde
president and CEO
70.0
58.0
Consulting, business solutions and systems integration
22.
BlueWater Technologies Group Inc.
Suzanne Schoeneberger
president
69.0
59.1
Design, engineering and implementation of custom technology solutions
for live events, video conferencing, experiential marketing, interactive
displays, lead generation capabilities
23.
Epitec Inc.
Jerome Sheppard, CEO
Josie Sheppard, president
65.0
65.0
Computer services for staffing and managed services
24.
FutureNet Group Inc.
Perry Mehta
president and CEO
65.0
53.9 C
25.
Secure-24 LLC
Mike Jennings
CEO
62.9
54.0
Rank
1.
2.
3.
4.
7.
8.
14.
20.
Company
Address
Phone; website
1 Campus Martius, Detroit 48226
(313) 227-7300; www.compuware.com
525 E. Big Beaver Road, Suite 300, Troy 48083
(248) 619-2800; www.syntelinc.com
41050 W. 11 Mile Road, Novi 48375-1302
(248) 426-1482; www.tatatechnologies.com
1820 E. Big Beaver Road, Troy 48083
(248) 614-2400; www.altair.com
645 Griswold St., Suite 2900, Detroit 48226
(313) 596-6900; www.strategicstaff.com
39209 W. Six Mile Road, Suite 250, Livonia 48152
(734) 591-1100; www.acrocorp.com
27335 W. 11 Mile Road, Southfield 48033
(800) 522-4400; www.stefanini.com
3031 W. Grand Blvd., Suite 600, Detroit 48202
(877) 768-7222; www.visionit.com
901 Wilshire Drive, Suite 100, Troy 48084
(248) 823-0800; www.caretech.com
400 Renaissance Center, Suite 2900, Detroit 48243
(313) 259-9900; www.urbanscience.com
3270 W. Big Beaver Road, Troy 48084
(248) 786-2500; www.htcinc.com
850 Stephenson Highway, Suite 612, Troy 48083
(888) 451-2519; www.iconma.com
24700 Maplehurst, Clinton Twp. 48036
(586) 307-3700; www.tweddle.com
4435 Concourse Drive, Ann Arbor 48108
(800) 766-5400; www.dcsbiz.com
605 Seward NW, Suite 101, Grand Rapids 49504
(616) 574-3500; www.ostusa.com
31791 Sherman Drive, Madison Heights 48071
(248) 589-1135; www.rgbsi.com
1000 Town Center, Suite 700, Southfield 48075
(800) 799-9625; www.synovainc.com
24543 Indoplex Circle, Suite 220, Farmington Hills 48335
(248) 473-0720; www.hclglobal.com
24050 Northwestern Highway, Southfield 48075
(248) 356-4399; www.BlueWaterTech.com
24800 Denso Drive, Suite 150, Southfield 48033
(248) 353-6800; www.epitecinc.com
12801 Auburn St., Detroit 48223
(313) 544-7117; www.futurenetgroup.com
26955 Northwestern Hwy., Southfield 48033
(800) 332-0076; secure-24.com
Top executive(s)
Customized solutions for environmental and infrastructure improvement
Managed hosting, enterprise cloud computing and IT outsourcing for
large organizations and mid-market companies.
This list of leading computer companies is an approximate compilation of the largest such companies in Michigan that research, design, manufacture or invent equipment or software, plus companies that provide sophisticated computer services such as systems
design, programming and information retrieval. It is not a complete listing but the most comprehensive available. Companies based elsewhere are listed with the address and top executive of their main Michigan office. Unless noted, the companies provided the
information. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Actual revenue figures may vary. NA = not available.
B Company estimate.
C Acquired Smith & Wesson Security Solutions Inc. July 2012.
LIST RESEARCHED BY GARY PIATEK
20140512-NEWS--0024-NAT-CCI-CD_--
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5/9/2014
11:27 AM
Page 1
May 12, 2014
State poll: Don’t raise taxes, unless it’s to repair roads
BY CHRIS GAUTZ
CAPITOL CORRESPONDENT
Filling potholes
and other road
repairs would be
welcome sights
for state
taxpayers these
days, according to
a report issued by
the Center for
Michigan.
NATHAN SKID
In poll after poll on transportation funding, the outcome is almost always the same.
People want to see Michigan’s
crumbling roads fixed, but they
don’t want to pay more to fix
them.
But a report released last week
by the Center for Michigan found
something different.
When asked whether people
would be willing to pay more in
taxes for roads, 58 percent said
they would, while 39 percent
would not.
But overall, respondents were
opposed to tax increases, with 43
percent saying their advice to political leaders would be to cut taxes, while 21 percent would want
them to raise taxes.
“We thought
it was very
telling that the
public was willing
to
pay
more,”
said
John
Bebow,
president and
CEO of the Center for Michigan. “That goes Bebow
against general
sentiment on tax issues. We think
that’s pretty striking in this climate. There’s a disconnect in favor
of roads. This stands out as a tallest
dandelion in the field.”
Overall, 56 percent of respondents said investing in roads,
bridges and infrastructure was an
urgent priority.
This study, the center’s fourth
major public engagement campaign, is titled “Michigan Speaks.”
The data came from polls and conversations that took place from
late September 2013 through early
April.
More than 5,500 residents took
part in more than 160 statewide
community conversations, two
polls and an online version of the
conversation.
Other findings from the data
were interesting as well.
On the question of whether people are willing to pay more taxes
for the roads, every income group
supported it.
The percentage increase of support went up incrementally with
the income of the household.
Among low-income individuals, 50
percent supported more taxes for
roads, and 59 percent of middle-income respondents and 69 percent
of those in the highest income
bracket were willing to pay more
in taxes.
For the poll, low income was defined as households earning less
than $30,000 per year. Middle income was defined as households
earning between $30,000 and
$80,000 per year and high-income
households were defined as earning more than $80,000 per year.
Maybe not as surprising is that
when respondents were asked if
taxes were to be raised, and then
asked about which type of tax
should be raised, business taxes
were the highest candidate with
28 percent.
Just 25 percent of high-income
households wanted to raise business taxes, while 33 percent of lowand middle-income households
thought it a good idea.
Conversely, when asked which
tax to cut, high-income households
thought most highly of cutting
business taxes at 27 percent. Lowand middle-income households
put higher priorities on cutting
property taxes, with 31 percent
and 32 percent, respectively.
The full report can be found at
thecenterformichigan.net.
Chris Gautz: (517) 403-4403,
[email protected].
Twitter:
@chrisgautz
20140512-NEWS--0025-NAT-CCI-CD_--
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11:28 AM
Page 1
Page 25
Summit to
tackle issues
related to
transit
BY DUSTIN WALSH
Local religious leaders continue
to lead an effort to bridge the political and social gaps in the development of a regional transit system.
On June 4, the Metro Coalition of
Congregations of the Harriet Tubman
Center will join WDET 101.9 FM host
Craig Fahle, business leaders and
members from the Regional Transit
Authority for a transit summit at
the Detroit Zoo.
The summit, “Better Transit,
Better Business,” is designed to
spur meaningful conversation
about regional transit as it relates
to job access, economic development, talent attraction and investment, the group said in a news release.
“Improving transit in Southeast
Michigan is essential to the region’s economy. So now is
the time to get
involved,” the
To learn more
about the June 4 Rev.
Louise
transit summit or Ott, pastor of
to register, visit
the Congregamccmichigan.org tional Church
of Birmingham,
chairwoman of MCC’s Regional
Transit Committee and member of
the RTA’s Citizen’s Advisory Committee, said in a release.
“We know we need to build partnerships with the business community and local officials to ensure the transit system connects
the four-county region, meets the
needs of a diverse constituency,
and is a system voters are willing
to invest in,” Ott said.
Marie Donigan, partner at Royal
Oak-based Donigan McLogan Consultants LLC, said the summit will give
business leaders and local governments the opportunity to tell the
transit authority how a transit system could benefit communities.
The MCC held a regional transit
system rally in March at the First
United Methodist Church of Birmingham.
Eight churches in Oakland and
Macomb counties make up the organization.
Dustin Walsh: (313) 446-6042,
[email protected].
Twitter:
@dustinpwalsh
MORE INFO
{High Ŗ lighted.}
Sign up for a Plante Moran Webinar
Our spring webinar series is designed to provide
insights to keep you ahead of trends. These
CPE-approved* sessions cover critical business
topics from cyber security to international tax.
Double-booked? Don’t worry. Visit our archives
and enjoy the presentation at your convenience.
Sign up for a Plante Moran webinar this spring
and find out why Plante Moran’s webinars offer
a higher return on experience.
Register at webinars.plantemoran.com
* Plante Moran is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor
of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have
final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors
may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org
Business Law Experience
In Your Corner.
®
■ Business, contracts, transactions, employment and
private equity, with a focus on technology, internet
and software companies.
■ Named to the inaugural Techweek Detroit 2014
Techweek 100; Detroit area leaders significantly
impacting business and technology.
■ In Your Corner.
BANKRUPTCIES
The following businesses filed for
protection in U.S. Bankruptcy Court
in Detroit May 2-9. Under Chapter 11,
a company files for reorganization.
Chapter 7 involves total liquidation.
Energy First Financial LLC and Etsler
Energy Enterprises LLC, 1708 Ridge
Road, Chelsea, voluntary Chapter 11.
Assets and liabilities not available.
Talf LLC, 30760 Vernon Drive, Franklin,
voluntary Chapter 11. Assets and liabilities not available.
— Bridget Vis
First Tier Ranking
in Corporate Law and
Commercial Litigation
Contact Matt Bower at [email protected]
■
Metro Detroit
■
Grand Rapids
■
Kalamazoo
■
Grand Haven
■
Lansing
DBpageAD_DBpageAD.qxd 5/8/2014 5:08 PM Page 1
CELEBRATE
THE 2014 CLASS OF
20 IN THEIR 20s
FEATURING
How Detroit Works:
Three Takes on the City
from Past and Present 20s
Moderator: Craig Fahle, host,
The Craig Fahle Show on WDET 101.9 FM
Speakers:
Reshaping Local Politics
Bryan Barnhill, Chief Talent OfÀcer
City of Detroit, Class of 2014
What Happens After the Media
Declares Your Restaurant
Will Save Detroit
Phil Cooley, Co-Owner
Slows Bar BQ, Class of 2007
How Social Entrepreneurship
Helps Detroit
Veronika Scott, Founder and CEO
The Empowerment Plan, Class of 2013
JUNE 12
!
THE GARDEN THEATER
DETROIT • 5–9 P.M.
Register at crainsdetroit.com/events
or (313) 446-0300.
TITLE SPONSOR
2014 Class of 20 in their 20s. Find stories, video, photos and interviews at crainsdetroit.com/20s
Bryan Barnhill, 27
Chief Talent OfÀcer
City of Detroit
Erika Eraqi, 28
Senior Account Director
Jack Morton Worldwide
Ryan Hooper, 25
Creative Director
Pure Detroit
Timothy Bassett, 29
Managing Director, Asset Management
and Investment Services
Talmer Bank and Trust
Michael Evans, 27
Senior Developer
Loveland Technologies LLC
Founder
PishPosh TV LLC
Sean Jackson, 25
Executive Associate
Rock Ventures LLC
Adam Finkel, 27
Partner
OrÀn Ventures LLC
Jessica Daniel, 29
Executive Director
FoodLab Detroit
Tatiana Grant, 29
President/Co-Owner
Infused PR & Events/Flash Delivery
Daniel Ellis, 26
CEO
SkySpecs LLC
PRESENTED BY
Daniela Tomatti, 29
Director of Internal Audit
and Compliance
Plastipak Holdings Inc.
Jesse Vollmar, 25
Co-Founder and CEO
AgriSight Inc.
Alisyn Malek, 28
Investment Manager
GM Ventures LLC
Evonne Xu, 25
Attorney and Counselor
Howard & Howard Attorneys PLLC
Brent Ott, 29
CFO
The Henry Ford
Gregory Holman, 29
Data and Assets Manager
Detroit Land Bank Authority
TITLE SPONSOR
Michelle Srbinovich, 28
Co-General Manager
WDET 101.9 FM
David James, 23
CEO
The Right Choice
Insurance Agency
LOCATION SPONSOR
MAJOR SPONSORS
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20140512-NEWS--0027-NAT-CCI-CD_--
5/9/2014
10:22 AM
Page 1
May 12, 2014
Page 27
CALENDAR
TUESDAY
MAY 13
Crain’s 2014 General and In-House
Counsel Summit. 2-7:30 p.m. Crain’s
Detroit Business, Association of Corporate Counsel, Michigan Chapter;
State Bar of Michigan-Business Law
Section In-House Counsel Committee;
Oakland County Bar Association. The
annual summit offers learning opportunities with practical applications
and the chance for general and inhouse counsels to meet and discuss
common issues and strategies. With
keynote speaker Mary Ann Hynes, senior counsel, Dentons. Westin Book
Cadillac, Detroit. $120 at door if space
is available. Contact: Kacey Anderson,
(313)
446-0300;
email:
[email protected];
website:
crainsdetroit.com/events.
members, $35 full-time students. Contact: (866) 385-1784; email: info@wom
comdetroit.org; website: womcomde
troit.org.
email: [email protected]. Website:
mshpm.org.
FRIDAY
ling Heights Regional Chamber of
Commerce & Industry. With keynote
speaker Gov. Rick Snyder. MacRay
Banquet Center, Harrison Township.
$35 chamber members, $50 nonmembers. Contact: Lori Cline, (586) 731-5400,
ext. 11; email: [email protected]; website: suscc.com.
MAY 16
Spring Health Care Conference. 8:30
a.m.-3 p.m. Michigan Society for
Healthcare Planning and Marketing.
Targeting health care marketers and
strategists who work with physician
groups, hospitals and health plans. Focus on maximizing growth through
public and private exchanges, and creating distinction in the area of patient
experience. Sheraton Detroit Novi Hotel, Novi. $75 members, $120 nonmembers. Contact: Liz Conlin, (734) 327-6606;
Reinventing Michigan: Getting It Right.
Getting It Done. 11 a.m.-1:30 p.m. Ster-
UPCOMING EVENTS
Urban CPR: Community, preservation,
resurgence. 11:30 a.m.-1:30 p.m. May
19. Detroit Economic Club. With
Stephanie Meeks, president, National
MICHIGAN HISPANIC CHAMBER’S 2014 ECONOMIC FORUM
Join the Michigan Hispanic
Chamber of Commerce 8-10 a.m.
May 16 at the Detroit Athletic Club,
Detroit, for the 2014 Economic
Forum, with the theme “Hispanic
Business Trends: Local and Global
Market Reach.”
Appearing at the breakfast event
will be Sandy Baruah, president
and CEO of the Detroit Regional
Chamber, and Ellen Hughes-
Cromwick, chief global economist,
Ford Motor Co.
Registration begins at 7:30 a.m.
Tickets are $75 for members,
$100 for nonmembers.
Sponsorship levels are $1,500$5,000.
For information, call Barbara Lange
at (248) 792-2763, ext. 101,
email her at [email protected], or
visit mhcc.org.
Trust for Historic Preservation, on urban preservation strategies and the
future of cities. Masonic Temple, Detroit. $45 DEC members, $55 members’
guests, $75 nonmembers. 11:30 a.m.
speaker reception open only to board,
life and gold members. Contact: Detroit Economic Club, (313) 963-8547;
email: [email protected]; website:
econclub.org.
THURSDAY
MAY 15
t r u e s t o ry
2014 Positive Business Conference.
10 a.m.-9 p.m. Thursday; 8 a.m.-10 p.m.
Friday; 8 a.m.-6 p.m. Saturday. University of Michigan Stephen M. Ross
School of Business. Nearly 500 business professionals, academics, students and industry luminaries will
collaborate on positive business
thinking, best practices and practical
implementation tools. With Sheryl
Connelly, chief futurist, Ford Motor
Co.; Bob Fregolle, chief customer officer, Procter & Gamble; Walter Robb,
co-CEO, Whole Foods Market IP LP;
Ari Weinzweig, co-founder and CEO,
Zingerman’s Deli; Bill Lovejoy, faculty
co-director, Master of Entrepreneurship Program, University of Michigan;
others. University of Michigan, Ann
Arbor. $750. Contact: Kerry Velez,
(617)
426-2222;
email:
kvelez
@v2comms.com; website: positive
businessconference.com.
Ambassadors’ Dialogue 2014: Update
on U.S.-Republic of Korea Economic Relations. 11:30 a.m.-1:30 p.m. Detroit Economic Club. With Ahn Ho-Young, Republic of Korea ambassador to the
United States, and Sung Kim, U.S. ambassador to the Republic of Korea, addressing economic ties between the two
countries and Korea’s growing role in
the international community. Cobo
Center, Detroit. $45 DEC members, $55
members’ guests, $75 nonmembers.
11:30 a.m. speaker reception open only
to board, life and gold members. Contact: Detroit Economic Club, (313) 9638547; email: [email protected]; website: econclub.org.
Business Law: Learning From the Past,
Navigating the Future. 1-5 p.m. Thursday, 8 a.m.-noon Friday. Michigan Defense Trial Counsel. Sessions on the
Michigan Arbitration Act, issues involving the Telephone Consumer Protection Act, the impact of Detroit’s
bankruptcy, employment and business
law updates, business succession planning and data security breaches. With
MDTC president Raymond Morganti,
senior shareholder, Siemion Huckabay
PC; Jason Bank, leader of bankruptcy
and restructuring practice, Kerr Russell and Weber PLC; Kurt Heise, state
representative, R-Plymouth; others.
Atheneum Suite Hotel, Detroit. Registration fees $75-$395; other fees apply to
optional activities held in conjunction
with the conference. Contact: (800) 7722323; website: mdtc.org.
Matrix Awards Celebration. 5:30-9 p.m.
The Association for Women in Communications, Detroit chapter. Platinum-level sponsor: Crain’s Detroit
Business. AWC Detroit will honor
three women or organizations that
make significant differences in people’s lives through a communications
medium. With keynote speaker Anne
Doyle, consultant, Anne Doyle Strategies for Leaders, and author of Powering Up: How America’s Women Achievers Become Leaders. The Dearborn
Inn, Dearborn. $50 members, $60 non-
The CFO’s heart was in the right place,
which told her the company’s 401(k) plan was not.
In her capacity as CFO for one of the region’s leading manufacturers, the executive bore a weighty responsibility:
to continue providing decent jobs, and to ensure that her company’s 401(k) plan was properly managed. It was the
latter point that worried her. For years, the plan provider had been a large, regional bank that was biased toward its
own proprietary funds. None were top performers in their sector, and the overall fund selection was equal parts
old/laggard and new/unproven. Believing her employees deserved better, and mindful of her own legal fiduciary
responsibility, the CFO asked a local banker for a recommendation. “We use Greenleaf Trust,” came the reply.
At the introductory meeting, the retirement plan services team from Greenleaf Trust made a favorable impression.
There was clarity and due diligence on how funds are researched, chosen and continuously measured against a stringent
performance requirement. There was transparency on fees. There was a simple, step-by-step plan to expedite a seamless
and timely transition from the company’s current provider. And there was a proactive, hands-on approach to meeting
with employees individually and collectively in order to help them make smarter decisions about their eventual
retirement. It was pretty much everything the current provider was failing to provide, and Greenleaf Trust was awarded
the business. Employee participation is now higher, contributions have increased, asset values are healthier, and the CFO
thanks the day she met us.
Not every plan conversion is such an eye-opener. But with Greenleaf Trust’s fiduciary excellence, open architecture,
best-in-class investment platform, and nearly perfect client satisfaction scores, your employees will clearly see things in a
better light—starting with you. Let’s talk: Call Matt Siel at 800.416.4555.
3 4 9 7 7 w o o d wa r d av e n u e b i r m i n g h a m , m i 4 8 0 0 9
g r e e n l e a f t r u s t. c o m
800.416.4555
20140512-NEWS--0028-NAT-CCI-CD_--
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May 12, 2014
PEOPLE
CONSTRUCTION
Jim Zylka to construction superintendent, Hunting-
ton Construction
Co., Southfield, a
division
Farbman
Zylka
of
the
Group,
from construction
supervisor
for
Garden
Court/
Woodward Lofts,
Huntington Construction Co., Detroit.
ENTERTAINMENT
Ted Major to vice
president of corporate partnerships,
Palace
Sports & Entertainment, Auburn
Hills, from national
partnership
development, Tampa Bay
Buccaneers, Tampa, Fla.
Doug Kuiper to
Major
vice
president,
corporate communications, Ilitch
Holdings Inc., from chief marketing officer, Covisint Corp., Detroit.
FINANCE
IN THE SPOTLIGHT
Urban Science, Detroit, an
automotive retail consulting firm,
has appointed Laura Kowalchik its
CFO. She
replaces Dick
Widgren, who
had been CFO
for the past 13
years and will
retire at the
end of 2014.
Kowalchik, 45,
most recently
was vice
president,
Kowalchik
corporate
controller and chief accounting
officer at Kaydon Corp., Ann Arbor.
She previously had been vice
president and corporate controller
at Dura Automotive Systems LLC,
Auburn Hills, and senior vice
president and CFO at Microheat
Inc., Farmington Hills. She also
held various finance positions at
Metaldyne LLC, Plymouth.
Kowalchik earned a Bachelor of
Science degree in accounting from
the University of Richmond’s Robins
School of Business, Richmond, Va.,
and an MBA in finance from Indiana
University South Bend. She is a CPA
in Virginia.
pital, Grosse Pointe, from director of
nursing.
INSURANCE
Dawn Geisert to chief compliance officer, Health Alliance Plan, Detroit,
from principal counsel, government
practice group legal team, Blue Cross
Blue Shield of Michigan, Detroit.
LAW
Henry Gornbein to
Lippitt
O’Keefe Gornbein
PLLC, formerly
partner,
Lippitt O’Keefe
PLLC, Birmingham, from attorney, Henry S.
Gornbein PLLC,
Bloomfield Hills.
Gornbein
managing director, global aftermarket
for pump and module systems, TI Automotive Ltd., Auburn Hills, from CEO,
Barbeau Consulting LLC, Houston.
MARKETING
Rick Covault to
business development
manager,
J.R.
Thompson
Co., Farmington
electronics division, Delphi Corp.,
Troy.
HEALTH CARE
MANUFACTURING
David Barbeau to
Covault
Hills, from owner
and
president,
Ballyhoo Communications
LLC,
Canton
Township.
PEOPLE GUIDELINES
Sugg
Dietz
Dan Sugg to president, Gold Star Mortgage Financial Group Corp., Ann Ar-
There’s no faster construction
than precast construction.
Proof: 26 Cherry - Grand Rapids, MI
41,000sf of hollowcore with metal studs
fully installed in 37 days.
bor, from executive vice president, national sales director.
Eric Dietz to regional manager, private client group in east Michigan,
Huntington National Bank, Birmingham, from treasury management
sales manager, Huntington National
Bank, Troy.
Gitanjali Kundich to director, Alderney
Advisors LLC, Southfield, from financial analyst, aftermarket consumer
Combs
Stewart
Beth Combs to vice president of clinical operations, Health Management
Systems of America, Detroit, from
clinical manager.
Anne Stewart to vice president and
chief nursing officer, Beaumont Hos-
Announcements are limited to
management positions. Email them
to [email protected]
or mail notices to Departments,
Crain’s Detroit Business, 1155
Gratiot Ave., Detroit, MI 482072997. Releases must contain the
person’s name, new title, company,
city in which the person will work,
former title, former company (if not
promoted from within) and former
city in which the person worked.
Photos of at least 250 dpi are
welcome, but we cannot guarantee
they will be used.
BUSINESS DIARY
ACQUISITIONS
Proquest LLC, Ann Arbor, acquired
Pi2 Solutions Ltd., London, England, a
provider of product literature databases, workflow tools and related outsourcing services for global pharmaceutical companies. The company
plans to align Pi2 with its ProQuest
Dialog corporate information service
to expand ProQuest’s presence in the
pharmaceutical industry. Websites:
proquest.com, pi2solutions.com.
CONTRACTS
PublicCity PR LLC, Southfield, added
clients Barton Malow Co., Southfield;
Life Time Athletic, Bloomfield Township; and Medical Weight Loss Clinic,
Southfield. Website: publiccitypr.net.
Jekyll & Hyde Advertising and Marketing, Redford Township, signed with
Cremo Co. LLC, Laguna Beach, Calif.,
KERKSTRA PRECAST
Contact us to learn more about using hollowcore & metal studs.
www.kerkstra.com
to build national brand recognition
for Cremo Shave Cream. Website:
jekyllhydeagency.com.
P2R Associates, Livonia, was named
the agency of record for Alderney Advisors LLC, Southfield. Website: p2rasso
ciates.com.
Alchemy Group, Troy, added Bar’s
Products, Holly, to its clients, to market Bar’s Leaks and Rislone automotive fluids. Website: alchemygp.com.
Miller, Canfield, Paddock and Stone
PLC, with offices in Detroit, Ann Arbor and Troy, served as adviser to
WorkForce Software LLC, Livonia, on
the majority investment by Insight
Venture Partners, New York City.
Website: millercanfield.com.
Altair Engineering Inc., Troy, a provider
of computer-aided engineering and
high-performance computing software
and services, announced that Deutscher Wetterdienst, Germany’s national
meteorological service, Offenbach, Germany, selected Altair’s PBS Professional for workload management on its two
Cray XC30 supercomputing systems to
produce higher resolution and more accurate global and regional weather predictions. Website: altair.com.
Arotech Corp., Ann Arbor, a provider
of defense and security products for
the military, law enforcement and
homeland security markets, announced that its battery and power
systems division received new orders
from military customers totaling $5.2
million. Website: arotech.com.
EXPANSIONS
Dickey’s Barbecue Restaurants Inc.,
Dallas, is opening a Dickey’s Barbecue
Pit restaurant at 1418 N. Rochester
Road, Rochester Hills. Telephone:
(248) 266-6226. Website: dickeys.com.
Lane Bryant Inc., Columbus, Ohio, is
opening a store at Woodhaven Commons, 19195 West Road, Woodhaven.
Telephone: (734) 676-1002. Website:
lanebryant.com.
ImageSoft Inc., Southfield, is expanding its staff and relocating its satellite
office from 1130 Situs Court 1, to a
larger space at 1121 Situs Court 2,
Suite 140, Raleigh, N.C. Website:
imagesoftinc.com.
Yoga Shelter LLC, West Bloomfield
Township, opened a studio at 1910 S.
Rochester Road, Rochester Hills. Telephone: (248) 545-9642. Website:
yogashelter.com.
DIARY GUIDELINES
Email news releases for Business
Diary to cdbdepartments@
crain.com or mail to Departments,
Crain’s Detroit Business, 1155
Gratiot Ave., Detroit, MI 482072997. Use any Business Diary item
as a model for your release, and
look for the appropriate category.
Without complete information, your
item will not run. Photos of at least
250 dpi are welcome, but we
cannot guarantee they will be used.
20140512-NEWS--0029-NAT-CCI-CD_--
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May 12, 2014
Page 29
Pay: Marc Gardner battles against Twitter founder’s Square
■ From Page 1
that attaches to smartphones that allows merchants to do mobile payment processing, it
went from zero in sales to processing more
than $15 billion annually.
It became a favorite of small-business folks
— operators of food trucks, artists traveling
the art-fair circuit, flea-market exhibitors
and the like — and a favorite of some large
companies as well. Square is now the exclusive mobile processor for the bazillion Starbucks stores and the mobile processor for
Whole Foods Market stores.
All’s well that ends well, right? Not exactly.
Alas, the most recent headlines haven’t
been so rosy. The Wall Street Journal and
other news organizations reported on April
21 that Square is under intense pressure
from its investors to find a buyer, its losses
having grown wider as it burns through that
nearly half a billion in equity capital.
Reports are that Square had a loss of $100
million in 2013 and has been in talks with
Google Inc., Apple and eBay Inc.’s PayPal about
being acquired.
Marc Gardner is probably happy these
days he hasn’t had nearly so many headlines
and very little attention. If Square is Goliath,
Gardner’s PayAnywhere LLC is David. A small
unassuming David who isn’t worrying about
killing the giant, just carving out enough
space in a huge market to give him another
profit center.
In 1992, Gardner founded Troy-based North
American Bancard LLC, a processor of credit
card payments that has revenue of about
$500 million and 600 employees processing
$16 billion of transactions annually for more
Storefront wasn’t cheap to bring to market. Gardner hired two designers from Apple and had it designed from scratch, investing more than $30 million in development
costs over three years.
When he launched PayAnywhere as a separate LLC, Gardner told Crain’s he was going to fund it internally and avoid diluting
equity by turning to the venture-capital or
private-equity markets. He was also avoiding the external pressures that arise from
investors growing tired of the inevitable
bumps in the road, delays in bringing cool
new technology to market and financial
losses.
Smart move. No one is clamoring for him to
sell, except maybe for the chocolate Labrador
he brings to work who might want a little more
attention than Gardner can spare, focused as
he is these days on landing merchants and
building volume for PayAnywhere.
Sudip Datta, a professor of finance at Wayne
State University and interim chairman of the
department of finance in the School of Business Administration, said holding off on outside equity was a smart decision.
“Having and keeping control of a fledgling
new business venture is important. In the
case of Square, that control has been compromised as the VCs are eager to see their
liquidity event or exit. They typically don’t
have much patience, three to five years at
most,” Datta said.
“So, if one has the luxury to avoid VC
funding — not too many entrepreneurs have
this luxury — you have a longer time horizon and more degrees of freedom to expand
the business,” he said.
COURTESY OF PAYANYWHERE LLC
PayAnywhere’s processing device attaches to a
smartphone.
than 250,000 merchants nationwide. Gardner
said nearly 200,000 merchants have signed
up for PayAnywhere.
Gardner launched PayAnywhere in 2011
with an app and its own small device to allow
mobile phones to process payments for merchants. Since then, it has taken up a big
chunk of his time and energy. “I’m pretty passionate about it,” he said.
Early in April, at the big Electronic Transaction Association show at Mandalay Bay in Las Vegas, Gardner launched what he calls Storefront, a transaction processor that is a
combination of tablet computer and stand. It
affixes to surfaces with a suction cup and conducts cloud-based processing, sales data and
inventory control.
Storefront competes directly with Square’s
tablet system, which is called Register.
Gardner has always been open about revenue for North American Bancard. He declines, though, to disclose any number for
PayAnywhere — the number of employees,
revenue, transaction dollar volume, number
of merchants signed up and so forth.
He acknowledges being much smaller than
Square, but doesn’t care to let the competition
know how much smaller. But he is pleased, he
says, with all the metrics. The company is still
losing money, but if its business volume is just
a fraction of Square’s, so are the losses.
Asked if he is considering cashing out by
doing an initial public offering for PayAnywhere now that the IPO market has gotten
hot again, Gardner said, “No.”
When asked if would consider selling
PayAnywhere if Google or PayPal or any of
those possible buyers of Square came calling, Gardner smiled and said: “I always answer my phone.”
Datta had a bit of advice for Gardner.
“I expect that ultimately Gardner’s company will be bought out by the likes of
Google, Apple, etc. However, given the pace
of technological innovation in this space, if I
were Gardner I wouldn’t wait too long to
cash out,” he said.
Gardner, though, sees a different outcome that is more likely. He thinks that as
mobile payment becomes more ubiquitous,
it will probably make sense to merge North
American and PayAnywhere into a single
entity.
“They’re on a perfect path for collision,”
he said.
Tom Henderson: (313) 446-0337, [email protected]. Twitter: @tomhenderson2
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20140512-NEWS--0030-NAT-CCI-CD_--
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4:54 PM
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May 12, 2014
Maker Faire Detroit deadline nears; 500 participants expected
BY BRIDGET VIS
Last year's Maker
Faire Detroit
featured a 70-foot
fire-breathing
dragon.
SPECIAL TO CRAIN’S DETROIT BUSINESS
Makers of anything from robots
to bicycles have until June 6 to
submit their entry forms for the
fifth annual Maker Faire Detroit at
the Henry Ford Museum in July.
About 500 makers are expected
to participate in the two-day festival to showcase their crafts, inventions and solutions at the Dearborn museum, said Shauna
Wilson, senior manager of national events for The Henry Ford.
Wilson said there are not many
restrictions on what can be showcased at the event, but it must be
able to fit either inside The Henry
Ford or its parking lot and be safe
for guests to be around.
“We’ve often said, since year
one, that if it can be made, it can be
displayed,” she said.
Nearly 22,000 people attended
the event last year, even though it
rained, and more are expected this
year if the weather holds out, said
Wilson.
The museum is one of five nationally to host a Featured Maker
Faire this year, she said.
GARY MALERBA
Wilson describes Maker Faire
as a mash-up of a science fair, arts
fair, country fair and Burning
Man (a new age art event in Nevada’s Black Rock Desert where
artists burn a wooden man).
“Every year is a little different
because of what the makers bring
to display at the event,” she said.
Last year, one maker brought a
70-foot fire-breathing dragon, Wilson said. Annual favorites include
a group of crafters workshops, she
said.
While many makers are hobby-
ists, Wilson said startups use Maker Faire to test prototypes in front
of the festival’s audience. Teams
from incubators such as TechTown
Detroit have participated as well,
she said.
There is no cost for makers to
display at the event, but there is a
fee if they plan to sell their products in the small, juried craft
bazaar, said Wilson.
Wilson said hosting the event in
metro Detroit reflects the area’s
maker culture.
“People here like to tinker and
make things. Think Henry Ford,”
she said.
New to the festival this year out
of the estimated 100 makers who
have already submitted entry
forms will be a “Nerdy Derby,”
where people of all ages will be able
to build and then test vehicles
made of recycled materials, and a
power tool drag race sponsored by
a group from Cincinnati, Wilson
said.
For more details on Maker Faire
Detroit, which takes place July 2627, or to fill-out an entry form,
go to: makerfairedetroit.com/callfor-makers.
Together: Clinical network offers patient management model
■ From Page 3
sion Health, the parent company of
Ascension Health Michigan.
While the deal is not an asset
merger, Rick O’Connell, president
of Trinity Health
Division and executive vice president of CHE
Trinity,
said
having two large
health systems
means 75 percent
of the population
in Michigan will
be 20 minutes
O’Connell
from either a network hospital or physician office.
“We can work with the payers in
a more flexible way than our competitors can,” O’Connell said.
O’Connell said Together Health
will be able to manage patient populations more effectively by sharing best medical practices and
clinical information.
“We will be able to mitigate increases in medical expenses and in
many instances actually reduce total medical costs, which should result in lower premiums,” O’Connell
said.
Maryland said lowering costs
and improving patient outcomes is
“most important for the major businesses we want to attract to the
state.”
Sue Barkell, senior vice president of health care value with Detroit-based Blue
Cross Blue Shield
of Michigan, said
the
state’s
largest insurer
supports combinations like Together Health.
“These
are
two
leading
Michigan health
Barkell
systems
that
have embraced Blue Cross’ approach to improving health care
value through a more intensive focus on effective population health
management and quality patient
outcomes,” Barkell said in a statement to Crain’s.
CHE Trinity and Ascension
Health are two of several health systems that have signed performancebased contracts with Blue Cross.
The reimbursement contracts give
hospitals financial incentives for
working closely with physicians to
improve quality and safety while reducing unnecessary tests, hospitalizations and diagnostic procedures.
Barkell said health care reform
is incentivizing competing health
systems and affiliated physicians
to collaborate on more effective
ways to provide quality care at affordable costs.
While clinically integrated networks like Together Health are not
new — more than 500 exist in the
U.S., according to The Advisory Board
Co. — the formation of one between
two competing health systems is a
newer trend, said Dennis Weaver,
M.D., executive vice president of
consulting and management services at The Advisory Board (Nasdaq: ABCO) in Nashville, Tenn.
“Some competing health systems have come together in markets to form integrated networks
for the public good,” said Weaver,
who has advised organizations on
their development. “As we move
from fee for service to fee for value, you need to be successful in
population health management.”
Maryland said the types of managed care contracts will include
shared savings, pay-for-performance and bundled payment
arrangements with global budgets
based around specific procedures.
“We want to be the lowest-cost
and highest-quality provider in
Michigan,” O’Connell said.
Weaver said some well-managed
clinically integrated networks have
“made some fairly dramatic improvements in health care quality
and cost efficiencies.” He said patients with such chronic diseases as
diabetes, heart failure and pulmonary disease have improved. In
addition, infection and hospitalization rates have declined, he said.
“It makes the whole health care
system more efficient, and that
lowers costs for everyone,”
Weaver said.
Jeffrey Hoffman, senior partner
with Kurt Salmon’s health care practice in San Francisco, said patients
in the future will have the option to
select a health delivery system
rather than just a health plan.
“The value is going to be created
by managing care and delivering
better care rather than just trying
to grow market share” as a traditional asset merger, said Hoffman,
who has consulted with Trinity
Health on clinical integration.
For Michiganders, Hoffman
said, Together Health could eventually result in lower costs, or at
least costs that rise more slowly.
“If they are successful, we should
at least see a slowdown in the increase in the premium cost of care,
if not an outright decrease,” Hoffman said. “It could also end up
making insurance plans (and
prices) more competitive.”
Blue Cross declined to comment
on the impact on customer premiums. Executives for Health Alliance
Plan and Priority Health also declined to comment for this story.
Hoffman said hospitals that are
not included in Together Health
will have to consider revising
their own managed care network
and integration strategies.
Officials for Beaumont Health System and Henry Ford Health System
were unavailable for comment last
week.
But Mark O’Halla, executive vice
president and COO of 12-hospital,
Flint-based McLaren Health Care Inc.,
said integrating clinical care and
managing patient populations is
what McLaren has been doing for
16 years.
“We have been doing this
through our (McLaren Health Plan),”
O’Halla said. “We already are managing risk and have 250,000 covered
lives … with 111 hospitals and
25,000 physicians” under contract
in Michigan.
O’Halla said Ascension and Trinity decided to form a clinically integrated network because they don’t
have a health plan of their own.
“When you have two separate
entities to clinically integrate
(care), there is always a challenge
how they manage that,” O’Halla
said. “That is going to be their
challenge.”
But O’Halla agreed the Together
Health Network could change the
competitive landscape, depending
on the types of health plans it offers.
“This will bring another group
of products into the marketplace
and could change the competitive
landscape, if their objective is to
create a narrow network,” he said.
Since last October, when health
insurers in Michigan began offering new health plans on the federal
health insurance exchange, or
marketplace, a growing number of
narrow provider networks, notably HMOs, began to appear.
HMOs were a popular, albeit controversial, contracting vehicle during the 1990s. In what were mostly
used to offer lower premiums,
providers agreed to cut prices dramatically for payers in exchange for
the potential of higher volume, as
the network limited the number of
hospitals and physicians.
“We are looking at a narrow network product,” said O’Halla of the
McLaren Health Plan. “We are going to play in both areas. A narrow
network for people interested in
that, to lower costs, and a broader
network for people interested in
having
(greater)
access
to
providers.”
Mike Williams, M.D., CEO of
Bingham Farms-based United Physicians, said the formation of Together Health in Southeast Michigan is
likely to increase the development
of other similar physician-hospital
collaborations because of competitive pressures.
“The complexity of this network
might be increased by the number
of stakeholders involved, but it is
clearly a step in the right direction,” Williams said.
“The leadership and governance
of an innovative partnership like
this must be built on trust and
transparency,” he added. “This
will require a very different mindset in how many hospitals and
physicians have often worked together in the past.”
Ascension Health Michigan operates 14 hospitals with 5,000 affiliated or employed physicians, and
employs 30,000 people with $3.4 billion in fiscal 2013 revenue. The system includes Borgess Health in
Kalamazoo, Genesys Health System
in Grand Blanc, St. John Providence
Health System in Detroit, St. Joseph
Health System in Tawas City and
St. Mary’s of Michigan in Saginaw.
CHE Trinity Health Michigan
has 13 hospitals, nine nursing
homes, 27 senior living communities, 10 home health agencies and
six hospices with $3.4 billion in operating revenue in 2013. The
Michigan hospitals include Saint
Joseph Mercy Health System in Ann
Arbor, Chelsea, Livonia, Port
Huron, and Livingston and Oakland counties, as well as Mercy
Health operating in Grand Rapids,
Muskegon, Cadillac and Grayling.
Jay Greene: (313) 446-0325,
[email protected].
Twitter:
@jaybgreene
20140512-NEWS--0031-NAT-CCI-CD_--
5/9/2014
5:32 PM
Page 1
May 12, 2014
Page 31
Midtown: Persistence, luck help developers build a future
■ From Page 1
The new development includes
the apartments, 52 of them leased so
far; the Garden Theater on the site of
the former Sassy Cat; a 300-space
parking deck on West Alexandrine;
and 75,000 square feet of office and
commercial space with Great Lakes
Coffee Roasting Co., Midtown Detroit
Inc., The Kresge Foundation, Wayne
State and the 88-seat Grille Midtown
restaurant as tenants.
That’s just the beginning. Letters
of intent are signed for other leases
that would fill up the 7,700 square
feet that’s unoccupied, although
Lawrence Williamson, real estate
manager for Midtown Detroit, which
is handling commercial leasing on
the project, declined to say with
whom.
“Now we have to make it work,”
Stewart said.
Big vision
Stewart and Byrd were visionaries with large-scale plans for Detroit development years before
Dan Gilbert began building his
real estate empire and redeveloping it downtown, said David Di
Rita, principal of the Detroit-based
Roxbury Group, the developer of the
David Whitney Building and the
former Globe Trading Co. building
along the Detroit River.
“They are the kind of developers
we need more of in Detroit,” Di
Rita said. “They had a vision, and
they stuck to that vision, to really
transform that block.”
For Stewart, the Garden Block
development is the end result of two
unique factors: getting frustrated
with his prime hobby during retirement and estate planning.
Upon retiring from EDS Corp. as a
regional manager in 1996, he got his
sea legs after buying a boat and
spending his days fishing on the
Great Lakes. But Stewart, also a former director of information systems
and communications for General Motors Co., grew tired of recreational
fishing after a couple years.
“I thought, ‘If I never have to untie a damn boat and get up at 4:30
a.m. again, I’ll be happy,’ ” he said.
That’s when Stewart started
renovating homes and selling
them, totaling about 20 or 30 from
1998 to 1999, primarily in Detroit,
his first real estate experience before tackling the Garden Block development. Ultimately, Stewart,
77, wants the momentum in building a real estate enterprise to pay
off for his three grandchildren,
who are in their early to mid-20s.
“The vision has never been for
Michael and me,” he said. “Hopefully we can pass the baton onto
them and give them the foundation
of something that they can run.”
George Jackson, the outgoing
president and CEO of the Detroit
Economic Growth Corp., said the project’s legacy is important.
“It’s important because it’s growing wealth in the African-American
community by having future generations involved,” Jackson said.
The project is significant to the
African-American business community for a number of reasons,
he said. Among them: There aren’t
many large-scale African-American developers who could have
tackled the project, and the partners showed great business acumen, like remaining flexible and
GLENN TRIEST
George Stewart takes a walk through the renovated Garden Theater, which spurred redevelopment of the entire block in Detroit’s Midtown.
striving for high quality.
Corporate gigs and concerts
The plan for the Garden Block
was much smaller in the beginning, starting with the former
Sassy Cat. Stewart said the original plan was simply to restore the
theater, but he and Byrd realized
the redevelopment of the entire
blighted block was necessary.
Upcoming events at the theater
include performances by comedian Paul Mooney on May 17 and
R&B singer Tamar Braxton, the
younger sister of Grammy winner
Toni Braxton, on June 3.
Stewart plans to host a variety
of national and local acts 30-40
weeks out of the year, two or three
nights a week. In addition, the theater will host weddings, corporate,
nonprofit and religious events and
conferences.
There are also three small conference rooms on the second and
third floors for rent, Stewart said.
“The place has been quite popular,” he said.
Creative financing
Funding for the project came
from a wide range of sources, but
$19 million from the U.S. Department of Housing and Urban Development Section 108 Loan Guarantee
Program in 2006 was the most important part of the financing, Stewart said.
The program allows communities and states to convert small portions of Community Development
Block Grant dollars into federallyguaranteed loans to fund economic
development “for the benefit of lowto moderate-income persons, or to
aid in the prevention of slums.”
“That was the exact vehicle we
needed,” Stewart said. “That was
what sort of made the deal.”
Another $8 million came from
HUD’s 221(d)(4) program, which
helps finance construction or reha-
bilitation of multifamily rental housing for moderate-income families, the
elderly and people with disabilities.
About $10 million in U.S. Department of Treasury New Market tax
credits, which are for the development of blighted or contaminated
areas, provided about $4 million in
equity. There was about $6 million
in brownfield tax credits; $2.5 million in historic tax credits; $121,000
from the DEGC’s Creative Corridor Incentive Fund and a $100,000
DEGC SmartBuildings grant; and
$3.5 million in private equity.
All told, the rehab of the former
Sassy Cat theater, which can accommodate 1,100 people, cost $10.5
million, Stewart said. The parking
deck cost $10 million. The apartments, which also feature 11,200
square feet of ground floor commercial space, were $13.5 million.
The rest of the development,
which was the renovation of the
former Blue Moon Building and
construction of 24,000 square feet
of retail and commercial space,
was $10 million, Stewart said.
Those figures don’t include the
$3 million he and Byrd spent outof-pocket on things like architectural work, site plans, and legal
and consulting fees.
“They put up their 401(k)s, life
savings — the whole ball of wax,”
Jackson said.
Stewart said the development
group gained control of the properties for the project from various
private owners on land contracts
over the years.
It bought 3919-3921 Woodward
Ave., the site of the restaurant, for
$750,000 in 2010, according to Washington, D.C.-based real estate information service CoStar Group Inc. It
bought the theater building at 3929
Woodward for $940,000 in 2012 and
the apartment site at 3901-3915
Woodward from Michael Zakoor,
the former owner of Zakoor Novelty
Co., for $1.48 million in 2009.
The restaurant part of the development, Grille Midtown, features
American-style cuisine during
lunch and dinner hours. With exposed brick walls and a car-themed
décor, it offers mid-priced hamburgers, sandwiches and entrees
such as Grille jambalaya ($16) and
tenderloin medallions ($16). For
dinner, entrees range from the $19
blackened Mahi Mahi to filet
mignon ($27) and ribeye ($29).
Demand for housing
Woodward Garden Apartments
adds to the supply of units in the
booming Midtown apartment market, where occupancy rates are 97
percent, according to a November
2013 report by Midtown Detroit.
There are 7,530 units in 155
buildings in the market, according
to the report.
The 53 one-bedroom units at the
Woodward Gardens range from
$850 to $1,250 per month and are
550 to 860 square feet. The eight
two-bedroom units range from
$1,500 to $1,800 per month and are
1,050 to 1,225 square feet, according
to Stephanie Byrd, marketing
manager for the apartments and
Michael Byrd’s daughter.
Twenty-two of the units are currently occupied; another 31 units
have been leased, Byrd said. Woodward Gardens started accepting
lease applications in late March.
“Demand was high from the getgo and it has only increased,” she
said.
She said the target demographic
is young professionals, Detroit Medical Center employees and other
workers downtown.
Detroit-based First City Real Estate Management LLC manages the
apartments, Byrd said.
An ‘act of sheer will’
Jackson said Stewart and Byrd
“did everything right” as new developers by seeking out help and
taking advice from staff at the
DEGC and Midtown Detroit.
“They didn’t know everything
they needed to, but they listened,”
Jackson said. “We worked with
them being sort of advisers and
consultants. I liked their integrity
and the willingness to do things
the right way.”
Developers say sometimes a big
vision, and sheer relentless persistence, are the things that see a project through. That and building relationships with people who can
help support it and help with the
creative financing elements.
In hindsight, Stewart and Byrd
— who is also the owner of Flood’s
Bar & Grille downtown and the former Mr. Mike’s restaurant, which
burned down last summer, at
Woodward and Piquette Street —
picked the right development location for the Garden Block project.
But it wasn’t viewed as the right
location when the project began,
Di Rita said.
“It was an act of sheer will back
then, and it could have turned out
very differently. You’ve got to respect not just the effort there, but
the scale of the effort, and the transformative nature of that project.”
Di Rita has faced similar challenging projects. Both the David
Whitney and Globe building projects — which Di Rita said are nearing completion — are using significant amounts of nontraditional
financing.
Stewart, who one day hopes to
move back to Louisiana, said he’s
not ready to take on another development.
“Now I need to take a vacation,”
he said. “I don’t know what I’m going to do right now. All I know is
that I’m tired.”
He looks back at the last 15
years, shakes his head — and
smiles.
“We were naïve enough to go for
it,” he said. “We went for it, and
nobody thought we could do it.”
Kirk Pinho: (313) 446-0412, [email protected]. Twitter: @kirkpinhoCDB
20140512-NEWS--0032-NAT-CCI-CD_--
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5:33 PM
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Page 32
May 12, 2014
Shinola: Firm starts factory to expand leather products line
■ From Page 3
brand, a simple brand.”
The hot sellers from Shinola’s
current leather offerings are the
tech accessories, particularly the
women’s iPhone wristlet wallet,
which retails for $185.
Shinola would not provide revenue estimates for its leather division because it is in its infancy,
but Crain’s estimates that its
watch division will post revenue of
at least $75 million this year.
There is no ETA for when the additional leather goods will be produced in Detroit, but by the end of
May, leather production manager
Vega-Perez expects that Detroitmade straps will start adorning the
Runwells, Birdys, Breakmans and
Chronos that Shinola assembles
down the hall. Currently, bands are
produced by Hadley-Roma in Florida.
“The more things we can manufacture, and the more things we can
manufacture in Detroit, the better,”
said Steve Bock, CEO of Shinola, a
brand of Dallas-based Bedrock Manufacturing. “We have very wonderful
and strong relationships, but really
having that type of manufacturing
capability in our factory is a very
important step for us.”
That is a significant departure
from the industry. Even the everpresent Coach bag is no longer produced in the United States.
“Low-cost suppliers in China
and Vietnam can deliver accessories at lower prices than local
firms, making domestic items less
attractive to downstream retailers
and consumers,” said IBIS World Industry analyst Zeeshan Haider in
the company’s most recent report
on the leather goods and luggage
manufacturing industry. “As a result, companies remaining in the
industry have shifted their focus
to designing and marketing activities while contracting third parties to manufacture goods or opening up their own facilities abroad.”
The global handbag-making business is a $12.8 billion industry, and
U.S. manufacturing accounts for
less than $500 million of that figure.
But Guarino and Bock think
Shinola can buck the trend. For
one, they said, leather is easier to
source in the U.S. than other types
of materials.
“American hides are actually really beautiful,” Guarino said. “You can
also get to market faster with American hides. Your largest expenditure,
which is leather, is right here.”
That shorter supply chain allows Shinola to manage costs by
being more nimble with what —
and how much — it produces.
“Instead of ordering tens of
thousands of units, with a lot of
cash flow tied up over months and
months, you can order to market
demand,” Guarino said. “That
helps to manage cost.”
The capital outlay to get set up is
no small feat, however. Those dollar signs sway many small design
firms toward contract manufacturing. But Shinola decided to invest,
though it would not disclose how
much. At the very least, it spent an
estimated $400,000 to purchase the
necessary machinery to produce
watch straps. When it expands its
current line of leather goods, it
will have to buy even more.
“Shinola is a business that has
to be profitable to continue, and so
investing in people and equipment
and facilities and processes is really important from a long-term
standpoint,” said Bock. “The more
investment, the more successful
we’ll become and can manage
costs. We can design and manage
the whole process of Shinola.”
Of course, the critical element to
that plan is hiring talent in a region
that has seen its industrial sewing
prowess fade. Finding talented
stitchers is one of the most significant barriers to establishing softgoods manufacturing in the U.S.
“When cut-and-sew manufacturing went overseas, the pool of workers here dried up, with many of the
women who commonly worked in
the factories retiring and their children no longer interested or able to
follow in their footsteps,” said
Karen Buscemi, founder and president of the Detroit Garment Group
Guild. “Now that there is a push for
reshoring, and many wanting products made in the USA, there is work
for the cut-and-sew manufacturers,
but no sewers to do the actual
work.”
To combat that locally, her nonprofit is launching an Industrial
Sewing Certification Program at Henry Ford Community College’s Michigan
Technical Education Center this fall.
The program, which has Lear Corp. as
its sponsor, hopes to fill the existing
need for 300 employees and attract
more manufacturers to the state.
“We will be one of only two
states in the entire country that
will have a pool of workers ready
to work,” Buscemi said.
Shinola, too, sees its leather factory as a way to redevelop the industrial sewing talent in Southeast
Michigan. Because so few people
have that skill, let alone understand the art of leather, the company is considering opening its own
sewing school, Vega-Perez said.
When she went looking for talent
this spring, she knew she couldn’t
find leather expertise. Instead, she
sought “people who want to learn,
people who want to participate and
be engaged in the challenges. It is
really a challenge, and it takes
teamwork.” She can teach the skills
if they bring the passion.
One of the first
three hires was
Damond Love.
His title is quality artisan, but
he’s advanced
quickly and now
helps Vega-Perez
run the production floor. Before
coming to ShinoLove
la, Love worked
part-time jobs as he sought out a
permanent position. He was laid off
from Bing Metals Group LLC after 14
years, when former Detroit Mayor
Dave Bing sold the company.
Love only had passing knowledge
of Shinola when he saw an employment ad online and applied. “I love
it all,” said the native Detroiter.
“You think of a watch, but when I
think of a watch I see how it’s made,
from cutting the leather.”
Now, he laughed, his mother is
not-so-subtly hinting that she wants
a Shinola handbag for Christmas.
Before the factory can start turning out handbags, it has to master
the watch band. And that is no
small feat. There are almost 20 steps
involved in each band, from cutting
the leather to quality control, and
each one can take two to three days
to make it across the factory floor.
“Leather watch straps demand
more precision and care to make
than handbags, wallets or even
boots,” said Carlos Galli, whose Italian company, Galli S.P.A., developed
a line of custom-built machines for
Shinola’s factory.
Lisa Chandler has worked on
most of the machines, but she
prefers adding the loop to the
watch band. It’s
a
meticulous
step, which is
good for her, she
said,
because
“I’m kind of a
perfectionist.”
That’s exactly
what
VegaPerez needed.
“It’s very hard
Chandler
to find a machine that can do that,” she said of
Chandler’s work on the loop machine. “One millimeter here is a
complete … well, small things are a
big deal.”
No piece of leather is the same,
so the material has to be finessed
through the highly technical machines all along the assembly line.
At the paint machine, for example,
a person must gently guide each
individual strap through, ensuring that it moves at just the right
pressure and speed. Otherwise, the
finish will bubble. The machine
can’t do that on its own; it requires
a human’s tactile ability.
“I like the human element,” said
Chandler, who was unemployed
when she got hired at Shinola.
“There are no gloves because Paloma wants us to get a feel for the
leather.”
She pauses.
“I love working for this company.”
Amy Haimerl: (313) 446-0416,
[email protected].
Twitter:
@haimerlad
Hotel: Developer plans projects in Dearborn, Troy, Warren
■ From Page 3
Namou, 64, co-owns 10 full-service hotels and 70 limited-service
hotels and extended-stay properties, most in Southeast Michigan.
But he also has ownership in a
handful of hotels in Grand Rapids
and Toledo and plans to open a 79room Holiday Inn Express &
Suites in Frankenmuth July 1.
Occupancy rates are on the rise in
Michigan, driven by the rebounding
economy and the state’s Pure Michigan campaign, Namou said.
As Crain’s reported in March,
metro Detroit hotel occupancy
reached its highest rate in at least
a dozen years last year — 63 percent — capping four years of
progress on hotel check-ins.
Industry experts and the region’s hotel operators say average
occupancy rates are still on the
way up, propelled by a resurgence
in business travel and corporate
meetings and an increasing number of large conventions and conferences coming to Detroit.
Occupancy rates for hotels and
motels in Wayne, Oakland and Macomb counties reached 63.1 percent last year, up from 61.9 percent
the year before, according to the
Detroit Metro Convention & Visitors
Bureau. That compares with 47.5
percent in 2009 and 55.3 percent in
2008, before the recession.
Detroit hotels are running at
born movie theater on the site,
Namou and Abdulnoor plan to
break ground this week on a 105room Holiday Inn Express and 99suite Staybridge Suites.
The Dearborn hotels should be
completed within a year, Namou
said.
Birmingham-based Saroki Architecture is architect and Bloomfield
Hills-based Jonna Construction Co.
LLC is contractor for both the Dearborn and Troy projects.
and our Marriott flags satisfy that
corporate need,” Namou said.
Construction should begin by
August and be completed within a
year, he said. When completed, the
91-room Fairfield Inn & Suites and
TownePlace Suites by Marriott extended stay with 89 suites are expected to create a total of 55 jobs.
The Troy City Council approved the
preliminary site plan for the project
in November but has yet to approve
the final site plan, said Brent Savidant, the city’s planning director.
Namou plans to transfer the
Fairfield Inn flag for the new site
from a nearby hotel at Stephenson
and I-75 south of 14 Mile in Madison Heights to the new limited-service hotel in Troy.
He plans to convert the Madison
Heights hotel, meanwhile, to the
economy brand Baymont Inn & Suites.
Marriott did not review its license.
Troy
Warren
Demolition of an empty office
building on Stephenson just north
of 14 Mile in Troy began in early
May to clear space for a similar development, Namou said. He said
there are several other investors
on the project, separate from the
operator/investors on the Dearborn and Warren projects.
“Troy is a highly corporate area,
In Warren, Namou said he and
the local operators/co-owners of
the Rodeway Inn, brothers Saher
and Maher Abdulnoor (siblings to
Malik, the Dearborn investor) are
preparing to demolish the aging hotel within six months. The Abdulnoors previously operated supermarket and liquor stores in Detroit.
A 100-room Hampton Inn & Suites
COURTESY OF SAROKI ARCHITECTURE
Developers Akram Namou and Malik Abdulnoor plan a 105-room Holiday Inn
Express & Suites at Michigan Avenue and Telegraph Road in Dearborn.
about the same occupancy rate as
Chicago and are leading Midwestern Rust Belt cities, including Indianapolis and Cleveland, Ann Arbor-based hospitality consultant
Charles Skelton said in March.
Dearborn
The new Dearborn hotels, not
far from Ford Motor Co.’s world
headquarters, will help meet corporate and leisure traveler demand from visitors to The Henry
Ford museum and Greenfield Village,
Namou said. It’s also a good central location to the city of Detroit
and Detroit Metropolitan Airport.
Namou and fellow investor Malik Abdulnoor, who will operate
the Dearborn hotels, purchased
the site at the southwest corner of
Michigan Avenue and Telegraph
Road last year for $2 million from
West Dearborn Lodging LLC. After
razing the former Showcase Dear-
and Homewood Suites extended stay
with 100 suites will take its place
within two years, Namou said. Construction on the $16 million project
is scheduled to begin in 2015. The
architect and contractor for the
project have yet to be named.
When completed, the two hotels, a
half mile from the General Motors
Tech Center, are expected to create 60
jobs.
Developing
and
operating
paired hotels that complement one
another leverages efficiencies in
both construction and operations,
since it allows the two hotels to
share a director of sales, general
manager, maintenance manager
and other key staff, said Ron Wilson, CEO of Troy-based Hotel Investment Services Inc., in an email.
The hotel market in Southeast
Michigan is good and getting better,
he said. Local, regional and national
banks are lending again and starting to get competitive with loan
terms. But, he said, “only well-capitalized deals are getting done so
that should provide some backstop
to when the economy dips again.”
Banks are lending to people who
have staying power, “so that when
there’s a hiccup, they’re not going
to run out of cash,” he said.
Sherri Welch: (313) 446-1694,
[email protected].
Twitter:
@sherriwelch
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May 12, 2014
Page 33
TolTest: Bankruptcy has overseas workers in lurch
■ From Page 3
equipment like mobile phones, laptops and tablets and other (IT
equipment) all get packaged up —
and to please make arrangements
for their return” to the company,
said Surgeon, a security manager
for LTC since last December.
The DIY repatriation process,
which managers were figuring out
on their own by sharing ideas with
other former employees — and
some accessible petty cash funds —
was nearly complete late last week.
Of personnel in Afghanistan, only
about 14 employees were left; Surgeon and Hoopengarner, a construction manager for Lakeshore
in Bagram, were expecting to fly
home late Friday along with Karl
McMichael, a manager at a
Lakeshore worksite near Herat.
An airline shuttle departs twice
daily from the Kabul airfield to
Dubai.
Lakeshore TolTest had about 79
employees and about 135 more subcontractors or independent contractors on the ground in Afghanistan
as of two weeks ago, according to
Surgeon and Hoopengarner, who
spoke with Crain’s via Skype late
last week.
Lakeshore executives have communicated only in written form,
they said.
“I believe the LTC executives, or
ex-executives, have been advised
not to speak to anybody for (legal
reasons), and that’s why we aren’t
hearing from them,” Surgeon said.
Lakeshore has been wrangling
with lost military contracts, expensive litigation with the Detroit Water
and Sewerage Department and employer and subcontractor lawsuits.
It filed for Chapter 7 bankruptcy after it said it couldn’t obtain financing to continue operations.
Quick decisions
Lakeshore Vice President of Human Resources Wayne Stockbridge sent an April 29 separation
letter to company employees, including the Afghanistan personnel, which many there received in
the middle of the night, they said.
“We have been attempting, as recently as today, to obtain financing
that would have allowed the company to continue its operations. Regrettably, and despite our best efforts, that process has proved
unsuccessful,” the Stockbridge letter states.
“The decision to terminate your
employment is a permanent one
and — because your entire facility
will be closing — there will be no
other positions available for employees to move into. You will be …
contacted shortly by LTC to
arrange for the return of your personal belongings.”
The letter goes on to direct employee follow-up questions to
Stockbridge’s office phone, but
calls to that line yielded a busy or
disconnected signal late last week.
LTC Corp. Government Services
Inc., doing business as Lakeshore
TolTest, along with LTC Holdings
and several other Lakeshore entities sharing a headquarters in
Chicago since at least January, all
filed petitions for Chapter 7 at U.S.
Bankruptcy Court in Delaware.
Since then, the employees in
Kabul said, they have been using
money out of a fund that’s sup-
Lakeshore Global can’t
keep DWSD contracts
For all the distance it has
placed between itself and bankrupt progenitor Lakeshore TolTest
Corp., Detroit-based Lakeshore
Global Corp. won’t get to keep $60
million worth of Detroit Water and
Sewerage Department contracts.
Lakeshore Global, a defunct legal entity revived by Avinash
Rachmale in 2013 after he was replaced as Lakeshore TolTest CEO
by Grant McCullagh, was to assume those contracts as part of a
plan to part ways with LTC management.
The Board of Water Commissioners approved two sewer lining and repair deals each worth
$30 million each with Lakeshore
TolTest April 23, and a follow-up
reassignment of those two
awards to Lakeshore Global.
Competitors Inland Waters Pollution Control Inc. and Blaze Contracting Inc. of Detroit protested,
saying Lakeshore Global didn’t
deserve consideration, but the
board in a special meeting Friday denied both protests.
posed to handle transportation
and other day-to-day operations
costs for employees, to help cover
employee flights out of the country
to Dubai and elsewhere, they said.
Surgeon, a citizen of the United
Kingdom, said he and others on the
ground in Kabul haven’t been paid
by Lakeshore since March, although he believes some U.S. employees received a partial wage
payment in April. Despite reaching
out to managers about arrangements for transportation home,
there’s been no response, they said.
“There have been no plans to
repatriate, no one’s contacted us
about it, even though that’s specifically included in the contracts we
have over here,” said McMichael, a
former security manager.
Calls to the company’s office in
Detroit went unanswered or yielded
a busy signal last week, and the
company’s website, ltccorp.com, appeared to have come down. Calls to
new company offices in Chicago
also were not returned.
Owners remain mum
Private equity firms Gridiron Capital LLC of Connecticut and Elston
Capital Partners LLC of Indiana,
which each reported owning a
stake in Lakeshore TolTest among
their respective portfolio companies earlier this month, have removed references to the company
from their respective websites.
Audrey Young, a strategic communications advisor to Gridiron
at Holland & Knight LLP, declined to
comment on transportation plans
for employees. Lakeshore TolTest
also maintains offices in Dubai
and Iraq.
Michael Menkowitz, partner at
Fox Rothschild LLP in Philadelphia
and attorney for court-appointed
bankruptcy trustee Alfred Guiliano
of accounting firm Guiliano Miller &
Co., said he has received “about a
The
denial
won’t
help
Lakeshore Global, since William
Wolfson, DWSD chief administration and compliance officer and
general counsel, already found
the previous awards were invalid
because a financially insolvent
Lakeshore Toltest was not eligible to receive the award in the
first place and so cannot assign it
elsewhere.
The protesters had hoped to
restart the bid process for both
contracts, or have DWSD review
them again. But if DWSD follows
usual procedures, it will likely
approve its next-best bid — by
Roseville-based Lanzo Cos. Inc. —
at a future meeting.
Rachmale could not be
reached
for
comment
at
Lakeshore Global. Gerard Mantese, partner at Troy-based Mantese Honigman Rossman and
Williamson PC and Rachmale’s attorney, said the bankruptcy
should have affected Lakeshore
Global’s contract status.
— Chad Halcom
thousand” calls on Lakeshore and
its Middle East employees the past
few days, mainly from Afghanistan.
As of Friday afternoon, he said,
he’s been advised that all LTC employees were now off the Bagram
base — but it remains to be seen if
the court can allocate company assets to help them with any connecting flights getting back to
their home countries.
Starboard Capital Partners LLC, another Connecticut private equity
firm, still listed Lakeshore TolTest
in its portfolio on its website. But
managing member Marc Bergschneider declined to comment.
Military contracts unravel
Lakeshore TolTest has seen at
least three military contracts terminated for default since last year
with the U.S. Army Corps of Engineers
and the U.S. Air Force Materiel Command, valued at more than $125 million and covering various infrastructure projects in Afghanistan.
Lakeshore brought six claims to
the federal Armed Services Board of
Contract Appeals in Falls Church,
Va., between last September and
early April, all appealing government decisions to terminate
Lakeshore work projects in Afghanistan. The first of these appeals was
scheduled to go to trial Oct. 20; the
others are still in discovery or
awaiting service of a complaint.
Usually, defense contract appeals are also stayed whenever a
military contractor is in bankruptcy, but an official at the federal
agency told Crain’s the board has
not yet been notified of one.
Edward DeLisle, partner at Cohen Seglias Pallas Greenhall & Furman
PC in Philadelphia and attorney for
Switzerland-based Theodor Wille Intertrade AG in two Detroit lawsuits
against Lakeshore, said he expects
his litigation to be among the casu-
alties of bankruptcy.
Theodor
Wille
is
suing
Lakeshore and bonding company
Insurance Co. of the State of Pennsylvania alleging unpaid invoices as a
subcontractor to LTC in Delaram,
Afghanistan, and for nearly
$600,000 in a separate contract for
a Lakeshore worksite in Garraf,
Iraq. Lakeshore, in return, seeks a
credit of nearly $1.2 million for
work it alleges Wille didn’t perform as requested at the Iraq site.
DeLisle said the bankruptcy will
likely stay both cases against
Lakeshore, although he hopes to
continue the portion of his
Afghanistan case against the bonding company. It’s also possible, he
said, that if Lakeshore or its
trustee wins on any of the military
contract appeals, it can mean a
partial payout to lawsuit creditors.
Litigation casualties?
David Hayes, an attorney at
Clark Hill PLC in Detroit representing Lakeshore in several federal
lawsuits, said the bankruptcy will
impose a stay on litigation in
which Lakeshore is a defendant.
The trustee will have to evaluate
the cases where it is a plaintiff to
see if they have value and can be
potential assets to pay creditors.
Also expecting to get stayed in
bankruptcy is Deborah Gordon of
Bloomfield Hills-based Gordon,
Laughbaum & Prescott PLC, attorney
for Eric Renninger, former
Lakeshore director of operations
in Afghanistan.
Renninger resigned last summer and sued Lakeshore TolTest
in February for breach of contract,
claiming a reorganization plan by
one of its vice presidents largely
stripped him of his Afghanistan
duties in an “attempt to constructively discharge him.”
He also claims Lakeshore deliberately kept Renninger’s name on
a business license the company
maintains with the government of
Afghanistan in order to shift liability away from itself.
But those claims are likely on
hold with the bankruptcy.
“Sometimes you can wait it out,
and possibly get a new or reinstated claim to go forward against the
new company,” Gordon said. “But
very often you just get whatever
they’re offering to a certain creditor class, which can be pennies on
the dollar.”
Gerard Mantese, a partner at
Troy-based Mantese Honigman Rossman and Williamson PC and attorney
for former Lakeshore TolTest CEO
and part owner Avinash Rachmale, said the Afghanistan contracts all belong to LTC and Rachmale’s current company, Lakeshore
Global Corp. in Detroit, is not involved. He said the LTC management has not kept him informed or
allowed him any share of control,
so there is little Rachmale can do.
Rachmale stepped down from
LTC’s board of directors April 2.
“Mr. Rachmale believes that the
abandonment of these employees
is unconscionable, but consistent
with the atrocious way these defendants have run the company
since they took control,” he said.
Chad Halcom: (313) 446-6796,
[email protected].
Twitter:
@chadhalcom
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20140512-NEWS--0034-NAT-CCI-CD_--
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5:34 PM
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Page 34
May 12, 2014
RUMBLINGS
WSU’s Auner
back in good
grace, new lab
ayne State University
engineering professor Greg Auner is
back in the good graces of
his employer.
Crain’s reported last
June about a series of disputes between Auner and
the university administration under President Allan
Gilmour that led to a latenight layoff of Auner’s research team and seizure of a
“clean room” Auner used.
(“A chemical reaction over
lab,” June 3, 2013.) After a
review, new President M.
Roy Wilson has given Auner
better and bigger space and
has persuaded an engineering school alumnus to resume paying an endowment
to support Auner’s work.
“I have looked into the
details of this very complex
situation, and I also understand there are varying interpretations by the different parties involved. Rather
than dwelling on the past,
my focus instead is on rebuilding a collaborative situation going forward,” Wilson told Crain’s in an email.
“Professor Auner has
demonstrated in the past
that he is a talented researcher, and he will be given every chance to demonstrate this going forward.”
The endowment comes
from Paul and Anita Strauss,
who agreed in 2010 to make
annual $250,000 payments
for 10 years to support
Auner’s work. Paul Strauss
graduated from WSU in
1948 with a degree in electrical engineering and later
embarked on a long career
as a psychiatrist.
After learning of Auner’s
W
struggles with administration, the Strausses had terminated their endowment
after three payments. They
told Crain’s last week that
they are about to resume.
“We admire the work Dr.
Wilson did in uncovering
the facts. He told us he was
going to make Greg whole,”
said Paul Strauss, who
added that Wilson had met
with the couple in person.
“I’m very pleased with
what’s happened and with
his letter to Greg. We’re just
waiting for the dust to settle
before starting the endowment back up.”
Fans buy up Tigers charity
bow ties; more coming
Fans bought the entire lot
of 276 numbered Detroit
Tigers Foundation bow ties
within 24 hours of them going on sale
last week,
the team
said.
To meet
the sartorial
demand, a
new batch of
charitable
bow ties will Justin
be available Verlander
for sale with- sports a Tigers
in two weeks. Foundation
They’re $57. bow tie.
The ties come from the
BowTie Cause Foundation,
which creates the neckwear
for various charitable causes, and the Tigers are the
first Major League Baseball
team to offer such a bow tie.
Proceeds benefit the Detroit Tigers Foundation’s
youth baseball initiatives
and the Torii Hunter Project,
WEEK ON THE WEB
FROM WWW.CRAINSDETROIT.COM, WEEK OF MAY 3-9
which supports the outfielder’s charitable endeavors,
the team said.
The neckwear’s blue and
orange colors are patterned
to represent the stitches on
a baseball and a tire tread (a
nod to the Motor City).
The initial batch was
numbered 1-276 to represent
the Tigers’ 276 victories
from 2011-13. The next batch
will not be numbered.
The Tigers’ foundation is
an affiliate of Ilitch Charities.
Details are at
tigers.com/bowtie.
Detroit loft owner employs
divine marketing
You could get into heaven
through good deeds and
kindness. Or you could just
take the stairs.
An email campaign advertising a for-sale unit in
the Lofts at Rivertown
promises the future owner
that the space has a “spiral
staircase to heaven,” as
well as an “omnipotent
view of downtown.”
The loft, at 6533 E. Jefferson Ave., is a 1,268-squarefoot bi-level listed for
$182,000, according to
Jerome Huez, president of
Detroit-based downtown
residential brokerage The
Loft Warehouse Inc.
The two-bedroom, twobath loft comes with a twocar carport, an in-unit
washer and dryer, a balcony
and fitness center on-site.
How divine.
The loft is just one of the
179 in the building. It has
been on the market for two
or three weeks, and Huez
said there have been six or
eight tours so far.
Huez’s wife, Sabra Sanzotta, owner-broker of The Loft
Warehouse, wrote the copy
for the marketing materials, Huez said.
“What we are trying to
convey is that it is a sublime
property that is so inspirational,” Sanzotta said. “We
are not religious freaks. In
fact, we are atheists.”
Amen to the honesty.
Lear to request
$8.75M lawsuit
settlement
outhfield-based Lear
Corp. will ask a
bankruptcy court
judge in New York City this
month to sign off on an
$8.75 million settlement to a
Detroit lawsuit involving
automotive supplier pricefixing over the previous
decade. The manufacturer
of interior systems including seats and electronics
will pay that sum to resolve
accusations it was a part of
a conspiracy to bolster the
prices of wire harness components between 2000 and
2010, in a multi-district lawsuit before U.S. District
Judge Marianne Battani in
Detroit.
S
ON THE MOVE
䡲 Amerisure Mutual Insur-
ance Co. in Farmington
Hills named Gregory Crabb
as president and CEO.
Crabb, chairman of
Amerisure’s operational
governance committee, replaces Richard Russell, who
will remain as president
and CEO of Amerisure Holding Cos. until he retires at
the end of the year.
䡲 Detroit-based Ilitch
Holdings Inc. named Doug
Kuiper vice president of corporate communications.
The former chief marketing officer for Detroit-based
Covisint Corp. replaces John
Hahn, who is moving to
Washington, D.C., for family reasons.
䡲 Teach for America
named Tiffany Williams executive director of its Detroit
office. Williams had been
interim executive director
since January, when Annis
Stubbs left to become senior
vice president of strategy,
innovation and operations
at the nonprofit’s national
office.
COMPANY NEWS
BEST FROM THE BLOGS
READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS
Top Beaumont exec leaving
“
Beaumont Health
System, Royal Oak, is
losing one of its rising
administrative stars, and
health system executives
say it is not related to the
pending business deal
with Oakwood Healthcare
Inc. and Botsford
Hospital.
”
Jay Greene’s blog about health care, energy and the
environment is at www.crainsdetroit.com/greene
Scratch Golf in talks
“
Golf club
manufacturing could be
coming back to the U.S.
with metro Detroit
manufacturing knowhow.
”
Sherri Welch’s “What’s in Store?” blog about retail
can be found at www.crainsdetroit.com/welch
䡲 Microsoft Ventures,
which employs about 200 in
Southfield and Grand
Rapids, signed a lease with
Bedrock Real Estate Services
LLC for office space in the
Dan Gilbert-owned Madison
Building in Detroit.
䡲 New York City-based
601W Cos. closed on the
$177.5 million purchase of
the Southfield Town Center
and plans to spend $40 million to $50 million on renovations and contracts at
metro Detroit’s secondlargest office complex.
䡲 KPMG LLP, the New
York City-based tax, audit
and advisory firm, announced its acquisition of a
majority of the assets of
Southfield-based advisory
firm BBK Ltd. Financial
terms were not disclosed.
䡲 New York City-based
private equity firm American Securities LLC announced it bought Novibased early childhood care
and education services
company Learning Care
Group Inc. in partnership
with the company’s management. Financial terms
were not disclosed.
䡲 Local restaurant owner Zack Sklar is planning
his next eatery, Beau’s in
Bloomfield Township, on
the site of the former Beau
Jack’s, which he bought in
March and will reopen by
July or August. Sklar owns
Social Kitchen and Bar in
Birmingham, Mex in
Bloomfield Township and
Birmingham-based Peas
and Carrots Hospitality
Group.
䡲 Warren-based supplier
SRG Global Inc. announced
it will expand its Ibi, Spain,
plating facility and add 20
jobs, Plastics News reported. Expansion of the plant
is expected to be completed
in early 2015.
䡲 Mumbai, India-based
The Mahindra Group inaugurated its North American
Technical Center in Troy,
which will develop fully engineered vehicles for Mahindra Global Automotive and
employ more than 100 engineers, AP reported.
䡲 The University of Michigan announced that General
Motors Co., Ford Motor Co.
and Toyota Motor Corp. will
join the school in establishing a testing site for driverless cars in Ann Arbor, AP
reported.
䡲 The Detroit Lions drafted Eric Ebron, a tight end
from the University of North
Carolina, 10th overall in the
first round of the 2014 National Football League draft.
Taylor Lewan, a University of
Michigan offensive tackle,
went 11th overall to the Tennessee Titans.
䡲 The fifth Shinola/Detroit LLC city clock was unveiled in front of Gate A at
Ford Field hours before the
Detroit Lions participated in
the National Football League
draft. It follows the installation of four clocks at various spots throughout the
city in March.
OTHER NEWS
䡲 The Michigan House introduced an 11-bill package
in which about $195 million
from the state would be
used to help shore up Detroit’s pension funds and
prevent the sale of cityowned art, as long as the
state has oversight over
city finances for decades to
come. The lump sum is
meant to join contributions
from private foundations
and the Detroit Institute of
Arts as part of the city’s
strategy for exiting bankruptcy.
䡲 Staffing company
Sodexo North America, which
provides building maintenance and custodial services for the Detroit Public
Schools, said it will stop
working for the district because it’s owed more than
$18 million, the Detroit Free
Press reported.
䡲 The Rust Belt Market in
Ferndale will play host
when Detroit for the first
time joins 23 other cities
worldwide participating in
Portfolio Night, a May 21
event that connects young
advertising copy writers,
art directors and designers
with creative directors for
ad agencies.
䡲 Reflecting a trend
among two-year schools,
Dearborn’s Henry Ford Community College said it was
dropping the word “community” from its name.
䡲 The Detroit Symphony
Orchestra will perform at
Detroit pawn shop American
Jewelry & Loan on May 31,
ending a fundraising
month of more than 40
small-ensemble performances at various venues.
䡲 A former executive
secretary of Detroit’s General Retirement System and Police and Fire Retirement System pleaded not guilty to 20
felony charges involving
downloading child pornography on the Internet. Walter Stampor, 70, of Sterling
Heights, faces four- and
seven-year felonies.
䡲 The Detroit River Canadian Cleanup and the Detroit
River Public Advisory Council
announced the taste of fish
from an area of the waterway classified as the Detroit River Area of Concern
was found “not impaired,”
AP reported.
䡲 A survey by the Business Leaders for Michigan
shows more than 87 percent
of state voters believe a
strengthened Detroit is important to Michigan’s overall economy, while more
than 9 percent said it is not.
More than 66 percent of respondents supported sending $350 million to the city
over a 20-year period to
help extract it from bankruptcy.
䡲 The Michigan House
voted to dedicate $450 million a year more for road
upkeep, which proponents
called a long-overdue step
while critics argued the
money isn’t nearly enough
to fix the state’s deteriorating transportation infrastructure, AP reported.
䡲 The Michigan Senate
and House passed similar
school budget bills that
would increase per-pupil
spending on K-12 education
for next fiscal year.
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Lakeshore Ch. 7 filing left employees in lurch

Transcription

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