PDF:08172009 - Crain`s Cleveland Business

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CRAIN’S CLEVELAND BUSINESS
AUGUST 17-23, 2009
INSIDE
11
FINANCE
14 BANKS FOSTER
RELATIONSHIPS WITH
NEW, CURRENT CLIENTS.
COMMERCIAL LENDING
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Borrowing
for big real
estate deals
a tough sell
Lenders favor refinancing
of smaller projects, require
more equity than in past
By STAN BULLARD
[email protected]
G
allows humor provides the
only bright spot in the dismal outlook for commercial
real estate lending as the
credit crunch and economic slump
create the biggest hurdles in decades
for securing big-ticket financing.
Alec Pacella, a specialist in
investment property sales at the
NAI Daus realty brokerage in
Beachwood, said he and his
colleagues recently rushed to their
phones after hearing a rumor the
banks were “opening up” to more
real estate lending. Their hopes
were dashed.
“We decided that a lender had
just returned someone’s call,” Mr.
Pacella said.
Although small and regional
banks are providing some refinancing
for small projects, generally under
$5 million, finding big lenders to
refinance larger loans is tough. To
refinance a property, it requires far
more equity than real estate owners
are used to providing — 35% to 40%
down now, compared to 15% to
25% down just two years ago.
As for new loans and loans to
develop new projects: the simple
thing is just to forget about it,
unless you are a favored customer
at a bank and have a fully leased
project, or you are willing to sign
personally, which real estate developers usually shy away from doing.
Lenders began tightening up their
standards for commercial real
estate lending in August 2007, but
that was nothing compared to the
loss of liquidity in capital markets
since epic bank failures roiled the
economy last fall.
David Browning, managing
director of the Cleveland office of
CB Richard Ellis, said even though
finance specialists saw underwriting
criteria tightening the past few
years, he considers last September
to be the bellwether period.
“Suddenly, it changed,” Mr.
Browning said. “You get tripped up
and have problems with things that
were never problems before.”
Usually, those setbacks stem from
a lack of money to do real estate deals
caused by a lack of lending for real
See DEALS Page 14
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12 CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
AUGUST 17-23, 2009
FINANCE
Loans: Firms must present convincing case to lenders
continued from PAGE 11
Mr. Grady said he doesn’t get
involved in individual workouts.
Rather, he typically works with
banks on larger balance-sheet and
regulatory issues. And at the
strategic level, he said, banks want
to avoid owning real estate, capital
equipment or other collateral
whenever possible, especially if
there’s a way they can be paid back
on their loans.
Besides, banks want to keep
customers who are going to stick
around and one day be profitable
and able to borrow more money.
“The reality is, we’re not a transaction-based company,” said
KeyBank senior vice president and
chief of middle-market lending Alan
Zang. “The relationship doesn’t end
just because a borrower becomes
distressed; we have to continue to
work with them.”
There’s always a ‘but’ …
But while maintaining an amicable
relationship is all well and good, in
reality, banks today want to avoid
keeping bad loans on their books.
That means a borrower’s options
may be severely limited, even if
failing to come to terms with a
lender means collateral being
turned over to the bank.
“There’s certainly a chill in the
credit environment right now,” said
Martin Gates, a partner at the Cleveland law firm Calfee, Halter & Griswold, who works with banks and
borrowers, on workout situations.
“It affects both sides of the table,
the borrowers and the lenders.
Lenders are under pressure to limit
their loan losses, and borrowers, at
the same time, are finding a bad
credit market. If they need to go out
and find other financing, it’s very
difficult to do at this point,” he said.
In other words: Work it out with
your current lender, because it’s
probably the only option available.
A bank without skin already in the
game probably won’t risk its hide.
“Borrowers are left with a
couple of options,” Mr. Gates said.
“One is to sort of, if it’s really bad,
to step back and decide if this is a
business that’s viable over the long
haul. If they decide that it is,
they’re going to have to work with
their existing lender, or lending
group, to work things out.”
Step one, he said, will be to convince the lender that the business is
viable. In other words, working out
an existing bad loan will feel a lot like
going to the banker for the first loan
for a brand-new business.
“You’re going to have to show
them some revised projections to
show that you’ve taken the proper
cost-cutting and other measures to
show the company’s viability going
forward,” Mr. Gates said. “If you’re
able to do that and you’re in default,
lenders are usually willing to work
with you.”
It all depends
But the willingness to renegotiate
or renew bad loans varies among
banks — and customers, Messrs.
Gates and Grady said.
KeyBank’s Mr. Zang, for one, said
his bank’s priority is to keep
customers going whenever possible.
“Our approach is to see if those
companies can get healthy enough
to come back online” as profitable
Jingle all the way
The economic downturn has led
to the use of a new term in the commercial lending arena — “jingle mail.”
What’s jingle mail? Nothing a
banker wants to
receive, and something, up until the
recent economic
crisis, few borrowers
thought they’d send.
“You get an envelope with the
keys to the property in it — that’s
the new one I keep hearing about
more and more often,” said Richard
Rennell Jr. of Resource Title Agency
in Independence. “If the borrower
doesn’t have enough faith to put up
other assets and there are no
other solutions, he’s basically
forced to give the property back.”
Hence, handing over — or, in
this case, mailing — the keys.
But that outcome, Mr. Rennell
said, is a worst-case scenario.
customers, he said.
“We’ll continue to provide working
capital to a company that needs
ongoing support, even if they’re in
the asset-recovery program,” Mr.
Zang added, referring to the group
within Key that works with troubled
borrowers.
Individual banks work differently
with different customers, depending
on a variety of factors that range
from the customer’s industry to how
well management reacted to problems. Pittsburgh-based PNC Financial Corp., owner of National City
Usually, if a bank believes a
business is going to survive, and
especially if the bank believes the
business is merely suffering due
to external economic
conditions it believes will
improve, the bank wants
to keep the customer.
Banks have fought hard to
earn what market share they have
and realize that when the economy
improves they often will be competing
to lend money to some of the same
businesses that are in trouble today.
“It always behooves the borrower
to start the dialogue with the lender
as soon as they become aware of
(a potential problem),” said Martin
Gates, a partner at the Cleveland
law firm Calfee, Halter & Griswold.
“You’ll get a pretty quick read on
where you’re going to be able to go
with it.”
— Dan Shingler
Bank here, declined to comment on
its workout policies because it said
each customer situation is unique.
Richard Rennell Jr., a senior vice
president for Resource Title Agency
in Independence, spends about half
his time in the Cleveland market,
much of it dealing with distressed
loans on commercial real estate. He
also says borrowers might find a
variety of available options, but they
may differ from bank to bank.
For example, Mr. Rennell said,
some banks are more willing to let
borrowers do so-called short sales of
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commercial real estate for prices
below what is owed on their loan,
while others might extend the term of
a loan by one or two years to allow a
borrower time to improve its ability
to pay.
“It all depends on the bank and the
asset,” Mr. Rennell said. Real estate
developers, in particular, can benefit
from a short sale, he said, because it
does not impinge on their ability to
borrow for future projects as much as
an actual foreclosure.
As Calfee’s Mr. Gates noted,
“Increasingly, we’re seeing borrowers
do short sales on assets to sort of take
the stigma away, because the last
thing a borrower wants is a deed in
lieu of (foreclosure) or an actual
foreclosure on their history.”
Term limits
But for manufacturers and other
companies that generally don’t have
the same ability to sell off collateral
the way a developer might, finding
new terms might be the only answer
short of a default and possible loss of
assets that the business needs to
remain open. In those cases, coming
to terms is the only hope, but it’s not
one that will be realized on the
cheap, experts say.
“A borrower asking for modification of a lending covenant should
probably expect a heavy modification
fee and definitely a higher interest
rate,” Mr. Gates said.
Typically, rates on commercial
loans and lines of credit are variable,
but are pegged to a standard public
interest rate, such as the U.S. prime
rate or the London-set LIBOR rate.
When money is plentiful and a
borrower’s credit is good, the money
is lent out at a rate that’s just a little
higher than the benchmark rates.
When money is tough to come by
and a company’s balance sheet or
income statements are weak,
borrowing becomes more expensive.
Today, the second situation is the
reality and interest rates are higher
now than they were one, two or three
years ago, when many of today’s
nonperforming commercial loans
first were made, Mr. Gates said.
And, unlike years past, bankers
today want to guarantee themselves
a certain level of income in the form
of interest payments, regardless of
how low the prime rate or other
benchmarks might sink.
“You’re seeing them put floors,
or minimums, on interest rates
now,” Mr. Gates said.
Banks used to say that the rate
would be, for example, 50 basis
points, or one-half percentage point,
over prime, no matter what. If prime
went to 1%, then the borrower’s
interest rate would drop to 1.5%.
Today, lenders are writing commercial loans, including on restructured
credits, that stipulate that the rate of
interest will not drop below a floor,
usually between 4% and 6%, Mr.
Gates said.
“It’s definitely a newer trend,” he
said. “Has it been done in the past?
Yes, but it hasn’t been done in a long
time.”
And, even when fees or higher
interest rates are charged, borrowers
are asked to put up extra collateral
when coming to new terms on a loan.
Experts say they’re seeing banks
ask business owners for personal
guarantees or even that they put up
their home or other unrelated assets
as extra collateral.
■
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AUGUST 17-23, 2009
WWW.CRAINSCLEVELAND.COM
CRAIN’S CLEVELAND BUSINESS 13
FINANCE
Commercial lending environment still delicate
By ARIELLE KASS
[email protected]
L
oans typically fall into one of
two categories, CFBank chairman and CEO Mark Allio said:
strategic or tactical.
And recession or not, Mr. Allio and
others in the commercial lending
arena said they’re still seeing both
types of requests.
Businesses that are in good shape
are looking to take advantage of
some opportunities, while those that
are more concerned about their
futures have their fingers light on the
trigger unless borrowing is a necessity.
Thomas Caldwell, president and
CEO of The Middlefield Banking Co.,
said he has seen a “nice mixture,”
including some loans for business
expansion and new equipment.
Overall, the bank has seen an
increase in lending, he said, as it’s
been able to pick and choose which
customers are worthy.
Mr. Caldwell said it’s too soon to
determine what his bank’s experience getting loans says about happenings in the broader market. “For
them,” he said, “the timing is right.”
A number of other bankers said the
bulk of their new loans are coming at
the expense of rival institutions that
have lost customers — sometimes
voluntarily.
“A lot of people come to us after
getting thrown out of one bank or
another,” said Bill Valerian, CEO of
Beachwood-based Liberty Bank. “It’s
a hard environment out there for
some people.
Mr. Valerian said he mostly has
been getting calls from customers
looking for loans to keep their
companies operating.
While there are some businesses
that are doing well in the recession,
Mr. Valerian said he has had to say
“no” a lot, in response to loan
requests from companies that he
sees as experiencing more-thantemporary struggles.
Bankers generally are remaining
optimistic about the loans they are
getting, even as they note that risktaking is at a minimum.
Bill Elliott, senior vice president of
corporate banking at Dollar Bank,
said he has had some loan requests
from firms looking to buy or expand
buildings, but overall, businesses are
being cautious.
As real estate values have dropped,
people increasingly are talking to
their banks about opportunities
there, Lorain National Bank president and CEO Daniel E. Klimas said.
They’re considering expansion, or
the chance to own real estate.
Paul Fissel, Ohio regional president for Citizens Bank, said he also
has had requests from companies
wanting to buy the buildings they
currently occupy.
Like many bankers, Mr. Fissel said
he’s seen a wide range of requests
from customers as they decide where
they’d like to do their banking.
“It’s a good time to shop around
and find out what else is available,”
he said. “It runs the gamut.”
Representatives from both
Charter One and Fifth Third banks
said in e-mailed messages that the
majority of their recent requests had
involved companies looking to
restructure debt. Fifth Third said
companies are using increased lines
of credit to fund short-term capital
needs while at Charter One, it’s
primarily technology companies
that are looking to fund acquisitions
and equipment.
At Beachwood-based Ohio
Commerce Bank, president and
CEO Dell Duncan said he’s seeing a
lot of refinancing requests, many
related to commercial real estate.
Companies want to stretch out
loans for longer periods, he said,
taking more time to pay off previous
commitments.
Loans made under the U.S. Small
Business Administration also have
been popular, Mr. Duncan said.
Matthew R. Wyner, KeyBank’s
senior vice president for business
banking in Northeast Ohio, said
changes to several SBA loan
programs have driven a lot of
borrowers’ requests, but he did not
quantify how much of KeyBank’s
uptick was due to the program.
Mr. Wyner said the number of
requests to fund capital expenditures has picked up over the last
several weeks, with movement coming from companies that had delayed investing in infrastructure but
couldn’t afford to do so any longer.
He said any equipment expenditures portend good news.
“I am encouraged by recent activity,” he said. “Equipment requests
are a good gauge of confidence.
Based on the fact that we’re seeing
more requests, I believe we’re heading in the right direction.”
Paul Greig, president and CEO of
FirstMerit, said he also has heard
good news from borrowers. Some
have been requesting loans to buy
lines from competitors that may be
in worse shape, and because other
businesses have reduced their inventories so drastically, they’re now
looking for money to grow again.
Mr. Greig also said that increased
equipment spending indicates a
confident business owner and that
those requests have picked up in
recent months, though he didn’t
specify by how much.
At CFBank, Mr. Allio even went so
far as to say the region might be on
the verge of a spending push.
“I’m right on the edge of saying it’s
a great opportunity to buy equipment right now,” he said. “Companies that make stuff are trying to
strengthen their working lines of
credit for expansion.”
Judy Ulrich, senior vice president
and division manager of commercial
banking in Northeast Ohio for U.S.
Bank, said she’s beginning to see
more requests.
“Like a good bread recipe, it calls
for the proper ingredients and the
kneading of the dough to rise,” she
said. “The market as a whole is slowly
headed toward recovery.”
■
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©2009 KeyCorp. KeyBank is Member FDIC.
CS93474
20090817-NEWS--14-NAT-CCI-CL_--
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Page 1
14 CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
AUGUST 17-23, 2009
FINANCE
Banks emphasize relationship-building
By ARIELLE KASS
[email protected]
T
hese days, you would be
hard-pressed to find a bank
that isn’t cultivating its
relationships.
From double-checking with
current customers to ensure they
remain satisfied to knocking on the
doors of potential borrowers who
might not know they have options,
area banks have been doing more to
keep and bring in business during
the recession.
Paul Fissel, Ohio regional
president for Citizens Bank, said his
institution has elevated its calling
activity as it tries to grow its
customer base. More calls have led
to more opportunities, he said.
“Our calling activity has increased
50%,” he said. “We’re seeing
consistent results.”
Mr. Fissel said not all banks have
been as aggressive as Citizens. But
Matthew R. Wyner, KeyBank’s
senior vice president for business
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The Middlefield
Banking Company
banking in Northeast Ohio, said Key
similarly has been pushing to develop
new relationships through calling
programs.
The bank has had “significant
wins,” Mr. Wyner said, and it has
added new relationships that he is
excited about.
Mr. Wyner said customers
appreciate the ability to ask bankers
questions, getting another perspective on the economy and their businesses. While Mr. Wyner said not all
the calls will translate into new
accounts, his goal is to have his card
on people’s desks so he’ll be the one
who’s called if a company has any
banking questions.
Bill Valerian, CEO of Liberty Bank,
has eschewed cold-calling potential
customers in favor of so-called
warm-calling — making a connection after an introduction already
has been made.
That approach has paid off for
Liberty, which added 82 new
relationships in the past 14 months,
Mr. Valerian said.
Main Office 888-801-1666 | West 440-632-1666 | Chardon 440-286-1222
Garrettsville 330-527-2121 | Mantua 330-274-0881 | Orwell 440-437-7200
Newbury 440-564-7000 | Cortland 330-637-3208
estate purposes.
Mr. Browning said the credit
clampdown takes many forms, but
one sign is that financing for acquisitions costing more than $10 million is
difficult to obtain. Moreover, conditions are so tight that building owners
“are no longer automatically able to
fund changes to buildings to accommodate new tenants,” he said.
3&46-54
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Courting customers
More and more, some banks are
emphasizing the relationship aspect
of their offerings and expect that any
loans they make also come with
accounts at the bank, if they aren’t
there already.
Mark Allio, chairman and CEO of
CFBank in Fairlawn, said the lending
process can take years as a bank
woos a borrower and both parties
decide whether they make a good fit.
“Lending is not a sitcom,” Mr.
Allio said. “Lending is done over a
Deals: Credit crunch fairly broad in scope
continued from PAGE 11
www.middlefieldbank.com
“We have increased penetration
based on the fact that we continue
to make new calls when a lot of
banks don’t have money to lend,” he
said. “We’re seeking business.”
Like other banks, FirstMerit
Bank’s chairman, president and
CEO Paul Greig said while his bank
may have stepped up aspects of its
outreach, it has been emphasizing
its calling program for years.
“We’ve been a relationship bank
for a long time,” he said.
long period of time.”
And while many companies
seemed to be content with their banking relationships in the past, the
upheaval in the nation’s financial
institutions has resulted in some
companies being more open to
banks’ advances, said Judy Ulrich,
U.S. Bank’s senior vice president and
division manager of commercial
banking in the region.
Ms. Ulrich doesn’t think U.S. Bank
is doing anything differently as it
seeks new loans, but said the phones
nonetheless are ringing more often
and more people are listening when
she talks about the bank’s offerings.
In the past, Ms. Ulrich said, U.S.
Bank got to the table with one of
every eight pitches. Now, it’s one out
of every five.
“We’re getting in more doors,” she
said. “It’s a great chance to educate
companies on who we are.”
Lorain National Bank president
and CEO Dan Klimas said the more
chances area banks get to talk to
potential clients can only be a good
thing for those institutions.
“When you get more at-bats, you
typically get more hits, as well,” Mr.
Klimas said.
■
“You have borrowers who have
stopped paying mortgages and
banks are not taking (their assets)
back. Lenders are deluged with
nonperforming assets,” he said.
“There are thorny issues that have to
be worked out before the market
gets back to normal.”
Few roses among the thorns
The prickliest issue for commercial real estate owners is in the area
of long-term financing because
they’ll need to renew existing loans
as they mature.
Steve Feldman, managing director
of Bellwether Real Estate Capital
LLC, a mortgage brokerage and
servicing firm in Cleveland, is one of
the few people participating in the
finance market who believes things
have improved. He said that’s
because lenders will consider deals
today, unlike last winter.
“Before, you would have five or
six lenders chasing a deal,” he said.
“Now if you get one, you’re lucky.
It’s really on a case-by-case basis. If
it’s a good sponsor, probably a
repeat borrower with a good project,
you have a good chance.”
To see how difficult financing is,
consider how some local real estate
developers size it up.
“The lending environment now is
much worse than last year,” said
Doug Price, a co-owner of K&D
Group, an owner of apartments,
hotels and offices. “For new development, forget about it. The (bank)
sales guys talk about it. But when (a
loan request) gets to the credit
committee, they shoot it down.”
The lack of financing is a big reason
why K&D dropped its quixotic run at
buying the former Ameritrust headquarters building from Cuyahoga
County for a mixed-use project.
Mr. Price said his company
recently refinanced some properties
with $40 million in loans coming
due, but it had to add cash to win
bank financing. He declined to identify particulars of that deal. Others
say some borrowers have had to line
up multiple lenders for a relatively
small, $20 million loan.
Some developers are adapting by
undertaking smaller transactions.
For example, Mark Munsell
joined developer Kevin Young on a
20,000-square-foot office building
under construction in Pepper Pike
that they got financed after leasing
most of it to a variety of tenants.
“Good deals can get financing,”
Mr. Munsell said. However, the
project is small in scope compared
to other office projects Messrs.
Munsell and Young tackled earlier.
Skin in the game
Typically, real estate developers
eschew signing personally for loans
and instead seek non-recourse
loans, which do not put their
personal assets at risk.
However, Mr. Munsell said he is
beginning to consider signing
personally for loans because
non-recourse loans are so scarce.
Taking that step could be necessary, he said, to seize opportunities.
Besides, because developers and
property buyers must put as much
as 50% cash into a project to get a
loan, he said there is less personal
risk involved in the loan itself.
■
Breakfast discussion
As part of its “Ideas at Dawn”
breakfast series, Crain’s Cleveland
Business will present on Sept. 17 a
panel discussion on the topic of
“What to do when your bank says,
‘No’ — Securing alternate
sources of capital in a tight
lending market.” For information,
go to www.CrainsCleveland.com/
marketing/bizbfast.html.
20090817-NEWS--15-NAT-CCI-CL_--
8/14/2009
2:01 PM
Page 1
AUGUST 17-23, 2009
Charity: Free clinics implement various
strategies to tackle increased care demand
continued from PAGE 3
an optometrist. In Cleveland, Ms.
Downie has more than 100 people
who will wait a minimum of three
months for an eye exam, a process
that in previous years took only
about a month.
“I think it’s going to keep getting
worse because more people are
unemployed” and companies continue to drop so-called “ancillary
insurance” such as vision care, to
save money, Ms. Downie said.
Mr. Baumgartner said he’s seeing
more people who have had to drop
vision or dental insurance themselves
because their incomes have been
reduced and they no longer can
afford the premiums.
The number of patients at the
Lorain County Free Clinic in need of
vision care is up 49% so far this year
compared to 2008 and 83 patients
are on a waiting list to see an
optometrist, which is a much longer
waiting list than in previous years,
Mr. Baumgartner said.
Appealing for volunteers
Demand is on the rise as well at
Open M free clinic in Akron, which
serves all of Summit County. Dottie
Achmoody, Open M’s CEO, said
although all patients at Open M
receive vision care if they need it, the
number of dental patients is increasing
steadily.
Though he doesn’t have hard
figures for how many are requesting
dental care, Danny Williams suspects
the number is much higher this year
at the Free Medical Clinic of Greater
Cleveland, where he is executive
director.
He said the Free Medical Clinic
has been receiving so many calls for
care this summer that the phone
system has been crashing, so many
likely don’t get through to schedule
an appointment.
The Free Medical Clinic has a
dental studio in which local dental
students provide care to the needy,
but Mr. Williams said it has been
hard to get licensed dentists in to
supervise the students. Dentists who
do volunteer are encouraged to
reach out to their peers to do the
same, he said.
Volunteer optometrists are harder
to come by these days, too, because
they need to concentrate on their
own practices, which are suffering
as their reimbursement rates from
Medicare and Medicaid have
decreased, Ms. Downie said. In
addition, more optometrists have
stopped accepting Medicare and
Medicaid patients, which is contributing to the rise in the number of
people seeking care at free clinics,
she said.
Though the Ohio State Medical
Association said its members are
committed to meeting the demand
of those seeking charity care, many
of the free clinics in Northeast Ohio
are trying various tactics to provide
care for more people.
The Walmart option
The Free Medical Clinic earlier
this year started opening one Saturday
a month to provide dental and
behavioral health care and in July
began opening two Saturdays a
month, Mr. Williams said. The clinic
eventually hopes to have enough
volunteers to open every Saturday,
he said.
Open M is expanding its clinic by
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
1,400 square feet and is stepping up
its networking efforts in hopes of
partnering with more organizations, churches and schools that
can provide supplies or volunteers,
Ms. Achmoody said. The clinic this
year even hired its first marketing
expert, she said.
Mr. Baumgartner said the Lorain
County Free Clinic has inked a deal
with the Cleveland Clinic in Lorain,
which will provide optometry
residents to volunteer at the free
clinic.
The partnership enabled the free
clinic to open its doors to vision
patients on additional days and
evenings starting this month, he said.
But even if patients can’t get in to
see an optometrist at a local free
clinic, there are lower-cost options
available. The Eye Clinic at St.
Vincent Health Care Center offers
vision care on a sliding scale
depending on the patient’s income,
said Dr. Manasvee Kapadia, an
ophthalmologist at the Eye Clinic.
Ms. Downie also is referring
people to big box stores such as
Walmart and Sam’s Club, which
offer eye exams for $50 if the patient
has a job. Prevent Blindness Ohio
will pay for a pair of glasses for the
patient, she said.
■
15
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20090817-NEWS--16-NAT-CCI-CL_--
16
8/14/2009
2:00 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
AUGUST 17-23, 2009
New York: Integrated business model boosts firm’s potential
continued from PAGE 1
houseSquare complex in Cleveland.
Westlake Reed certainly has a
compelling story to tell. With 150
employees nationwide and billings
of $24 million last year, its staff is
28% larger and its revenues 63%
greater than in 2002, a watershed
year during the last recession as
the firm decided then to focus on
cultural institutions, health care
and workplace environments.
While the architectural talent
Westlake Reed seeks may be more
available than two years ago, the
competition for commissions is
keener in New York than in the past.
and Phoenix, Mr. Westlake said, but
figures boroughs near Broadway and
the world’s media center may yield
them.
Westlake Reed already is in talks
to recruit two people from New
York firms, but Mr. Westlake would
not identify them, nor would he say
which staffers in other offices would
be dispatched there.
As far as commissions go, Mr.
Westlake said the firm’s experience
doing work for colleges, hospitals and
cultural institutions will give it a shot
at work in New York. In its corner, he
notes, is its experience working on
150 performing arts centers — from
the Bethel Woods Arts Center at the
landmark Woodstock festival site to
the 2,800-seat Buell Theater in the
Denver Arts Center — since cutting its
teeth in that sector 20 years ago at
Blossom Music Center and the Play-
New York, the next India?
Fredric Bell, executive director of
the New York Chapter of the Center
for Architecture, said big-name firms
that previously did big hotel, residential and office projects are now vying
for institutional work. However, he
“We are a science and
technology studio
wedded with an
architecture practice.”
– Paul Westlake Jr., managing
principal, Westlake Reed
Leskosky
added that the clients’ cost-consciousness might aid Westlake Reed in
breaking into the New York market.
As for the firm’s quest for talent,
across-the-board cutbacks at various
firms mean Westlake Reed will be
“inundated” with résumés, Mr. Bell
said.
“Who would think of New York as
the next India?” Mr. Bell asked, noting
that he’s heard of a non-U.S. architectural firm looking to set up shop in
New York because billing rates there
are, incredibly, lower than at home
due to the overabundance of talent on
the market.
One factor that may work in Westlake Reed’s favor is its integrated design
practice that employs 60 engineers
nationwide. Mr. Bell said architecture-
engineering firms common in the
Midwest are rare in the New York
market, where it is innovative for
engineers and architects to form joint
ventures.
Mr. Westlake describes his practice
with panache.
“We used to be a low-tech architecture firm,” he said. “Now we are a
science and technology studio
wedded with an architecture practice.” That combination helps Westlake Reed win projects, he said, that
involve power plants serving big
buildings and telecommunications
jobs not typically thought of as
projects for an architecture firm.
Projects Westlake Reed is designing
range from the Sheik Khalifa Medical
City in Abu Dhabi for the Cleveland
Clinic Foundation and the Saudi
royal family to the new European
headquarters in Geneva, Switzerland,
for Parker Hannifin Corp. Other work
includes a $40 million building for the
U.S. General Services Administration
in Indianapolis and repeat-service
contracts for the State Department,
National Park Service and the Archi-
tect of the Capitol in Washington,
D.C. The firm currently works in 30
states.
Raising the Cleveland flag
The focus Westlake Reed developed in 2002 on work for cultural and
health care institutions is allowing the
firm to grow now while many architecture firms are contracting. That’s
because Westlake Reed during the
construction boom from 2003 to 2006
eschewed jobs for developers of
hotels, shopping centers and office
buildings to focus on its strengths and
on clients with repeat business.
“Now we’re glad we did,” Mr.
Westlake said.
A Cleveland firm going after New
York work will benefit this region,
according to Robert Bostwick, president of Bostwick Design Partnership
and president of the Cleveland Chapter of the American Institute of Architects.
“The best Cleveland firms are competitive with New York firms. They
will go toe-to-toe with them,” Mr.
Bostwick said.
■
Stadium: Facilities can enhance schools’ images
continued from PAGE 3
we sold about $10,000 of season
tickets,” said interim athletic director
Hunter Yurachek. “We’ve heard from
a lot of folks that it’s exceeded expectations once they got in.”
One of those people was InfoCision
chairman Gary Taylor, an Akron native
and University of Akron marketing
graduate who has helped current football coach J.D. Brookhart with a recruiting script for assistant coaches.
B
W
Notre Dame CoLLege’s “great books” seminar
series for those who Love expLoring thoughtprovoking works.
ooks
Rubber Bowl hits the road
That Changed
the
“They really did it first-class; it’s a
beautiful facility,” Mr. Taylor said. “I
got involved because the campus
has changed dramatically since
I was a student, and part of that
recruiting script was that this
on-campus stadium was the last
missing piece, the last step to put
the program over the top.”
The interest is mostly reflected in
sales. Mr. Yurachek said club seats,
of which the 30,000-seat stadium
has 525, are lagging, with about 125
commitments at $1,000 apiece. But
all 16 of the stadium’s 20-person
suites have been sold, at $20,000 a
pop, while 34 of 38 four-person
loges, at $5,000, have been sold.
Mr. Yurachek said the school’s
early goal of 10,000 season tickets
was “aggressive,” and at 5,300
season tickets in hand, the school is
nearly 75% to its more attainable
goal of about 7,200.
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eaders and aspiring leaders: Join our discussions of eight great books
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The reading list spans centuries and cultures: Macbeth, Antigone,
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Changing the World…
One Student at a Time.
The new stadium replaces the
68-year-old, 31,000-seat Rubber
Bowl, which played host to 324
Akron games over the years but
whose shine dimmed long ago. The
new stadium not only will provide
an enhanced gameday experience,
Mr. Yurachek said, but also will serve
as the school’s newest recruiting tool.
“For the athletes for which Akron
competes, the Rubber Bowl was just
too inadequate relative to what
their competitive set of schools
had,” said Mark Rosentraub, a
former Cleveland State professor
and now the endowed chair of the
department of sport management
at the University of Michigan. “As a
result, they surely lost athletes to
those other institutions.”
Akron’s football program already
has landed eight early commitments
for 2010 before the February signing
period, a rarity in the Mid-American
Conference, said Mr. Yurachek, who
noted some of those players’ offers
from Atlantic Coast Conference and
Big Ten schools, Mr. Yurachek said.
The school also will use the press
tower, which includes classroom
space for the school’s sports exercise program, for banquets and other
events. In addition, Mr. Yurachek
said when the Ohio High School
Athletic Association next spring
opens bids for the state football
championship games — which last
year collectively drew 47,458 to
Massillon Paul Brown Tiger Stadium
and Canton Fawcett Stadium, respectively — Akron will bid.
“That’s a way to bring even more
high school students onto campus,”
Mr. Yurachek said. “Our campus
has transformed itself, and this is a
recruiting tool for student-athletes
and the general student body.”
Go west
For a case study of what a new
sports building can do for a school,
head 130 miles west, where Bowling
Green State University in 2007
dedicated its 42,000-square-foot Sebo
Center, a visually striking home for
the school’s student athletes to train,
study and receive medical treatment.
The $7.4 million, privately financed
center enclosed the 43-year-old Doyt
L. Perry Stadium’s north end zone.
Bowling Green athletic director
Greg Christopher said the center
had positive impacts on student
athletes, recruiting and the school’s
alumni base.
“When you go from leaky roofs
and locker rooms to this, faces light
up,” Mr. Christopher said. “It’s
helped all of our coaches in their
recruiting; any new facility on any
campus shows progress, whether
it’s a new residence hall or arena.”
Mr. Rosentraub said the upgrades
are necessary in the ultra-competitive
college football world, and given
the MAC’s television contract with
ESPN — a pact long championed by
former conference commissioner
Rick Chryst — Akron’s new stadium
will play an even bigger role.
“The quality of the facility can
also have an impact on campus
design, people’s views of the program and their willingness to
support the program,” Mr. Rosentraub said. “Once one makes the decision to compete in football, the
necessary pre-requisites include
high-quality training and playing
facilities.”
■
20090817-NEWS--17-NAT-CCI-CL_--
8/14/2009
2:57 PM
Page 1
AUGUST 17-23, 2009
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
17
School: Retailers aim to emphasize ‘must-have’ products
continued from PAGE 3
commissioned in July by Deloitte
showed consumers this year are
placing a priority on basic supplies.
However, it did reveal an improved
— though still lackluster — shopping
scenario, with 64% of consumers
planning to spend less on back-toschool items, down from 71% who
said they would spend less last year.
The reason, Mr. Bentley said, is
that consumers are less pessimistic
about the economy versus last year,
and as such they’re a little more
flexible in their spending habits. And
because this week is a peak backto-school shopping period, retailers
must market their stores as a destination with “must-have” products.
“Retail is a big game,” Mr. Bentley
said. “Retailers have to convince consumers that they need their products.”
Best Buy is one example of a retailer
that has worked to persuade consumers through product marketing
strategies that their electronics products are necessities, Mr. Bentley said.
For example, Best Buy’s Next
Class program was launched about
four weeks ago and promotes four
laptops with Windows 7 software,
costing from $699 to $800. Last year,
those prices would have been more
in the $1,000 range and would not
have included the software, which
costs about $120. The software
program is considered a “must have”
for students, according to Parma Best
Buy manager Elisa Unger.
“These prices are more affordable
now; we’re selling them at the best
deal we can,” she said.
Demand for netbooks also is
driving higher back-to-school sales,
Ms. Unger said, because the smaller
portable laptop is functional and
more affordable, between about
$250 and $400.
And while Ms. Unger said she did
not have back-to-school sales figures
yet at her Parma store, she said she
expects sales will be on par with or
even greater than national projections.
According to the National Retail
Federation, electronics purchases
during this year’s back-to-school
season are expected to increase about
11% over last year.
Back-to-school basics
Northeast Ohio’s retailers are
responding in a variety of ways to the
fragile economic climate, with some
appealing directly to consumers and
others shoring up basic business practices for the back-to-school season.
At Goodwill Industries Inc. of
Akron, which serves Ashland, Medina,
Portage, Richland and Summit
counties, year-to-date sales are up
7% over last year, said marketing
and public relations manager Beth
Galambos.
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“Store managers said they are also seeing new faces, and that’s most likely because
of the economy.”
– Beth Galambos, marketing and public relations manager, Goodwill Industries Inc. of Akron
Ms. Galambos said the stores this
year organized $2 back-to-school
clothing items, such as polos and
khakis, on marked racks. Many
items are brand name, and Ms.
Galambos said she believes the new
marketing strategy has influenced
higher sales.
Indeed, transactions have increased
6.4% this July compared with the
like period last year, she said.
“Store managers said they are
also seeing new faces, and that’s
most likely because of the economy,”
Ms. Galambos said. “We’re appealing
to a new crowd.”
Ms. Lehman of Nicky Nicole’s
said this year she implemented a
new reorder program, which essentially streamlines the inventory
ordering process for her three
stores to make sure a full supply of
best-selling items, such as backpacks and lunch bags, is on hand.
Mr. Rose of Plato’s Closet
prepared for the back-to-school
shopping season earlier this year by
requesting extra storage space from
his landlord to hold more inventory.
The storage space now is almost
empty.
Faber-Castell, meanwhile, recently
rebranded its EcoPencils brand
of art supplies to emphasize their
environmentally friendly aspect.
The pencils are made with wood
from a tree nursery in Brazil, and
each time a tree is cut down, one
is replaced. It’s too early to tell
whether sales will increase as a
result of the marketing change,
which included new packaging for
the 24 pencils that sell for $13, Ms.
Brody said.
The art supply firm also is aiming
for greater brand recognition by
working with educators to get their
products on classroom lists, many
of which recommend Crayola
products. Ms. Brody anticipates the
strategy will bolster back-to-school
sales in the coming years.
From the retailer end, Ms. Brody
said many stores waited until July
to place inventory orders with
Faber-Castell; typically, they place
art supply orders in spring.
“It used to be, retailers ordered
early, but now they’re timing their
orders closer to the selling season,”
she said.
■
20090817-NEWS--18-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
AUGUST 17-23, 2009
Canton financial adviser, having assumed dead baby’s identity, guilty of fraud
By SUE ASCI and BRUCE KELLY
Investment News
a false statement in an application
for a U.S. passport.
He had been indicted in April on
charges of assuming the identity of
Timothy W. Hyde, who was born
Feb. 3, 1976, but died shortly after
birth, according to published reports.
Mr. Bonanno maintained the
guise from 1992 until late last year.
Shortly after Christmas, the
deception began to unravel. After
being summoned to Mr. Bonanno’s
home for a domestic dispute,
police arrested him and took his
fingerprints.
A former financial adviser and
registered representative in Canton
who reportedly hid his criminal
past by using a dead infant’s identity has pleaded guilty to several
fraud charges.
Joseph Bonanno pleaded guilty
Aug. 6 in the U.S. District Court
for the District of Northern Ohio
to wire fraud, aggravated identity
theft, two counts of making a false
statement and one count of making
Contact:
Phone:
Fax:
E-mail:
When those prints were checked
against a national database, police
discovered that Timothy W. Hyde
was actually Joseph Bonanno,
wanted on larceny charges in Massachusetts going back to 1989.
While masquerading as Timothy
Hyde, Mr. Bonanno had a flourishing
career as a financial adviser.
In 2001, he founded a financial
advisory firm, Hyde Financial Inc. in
Belden Village, which is now known
as Helios Investments Inc. The firm
manages $63 million in client assets,
according to Securities and Exchange
Commission filings.
When contacted, no one at
Helios Investments had any comment on the case.
Most recently, Mr. Bonanno was
affiliated with Cadaret Grant & Co.
of Syracuse, N.Y.
Art Grant, the firm’s CEO, said
Mr. Bonanno was a productive
broker who did a good job managing
his clients’ money.
“We did our normal background
checks,” Mr. Grant confirmed.
“He had a family, and was wellestablished” in the Akron-Canton
REAL ESTATE
Genny Donley
(216) 771-5172
(216) 694-4264
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COMMERCIAL SPACE
area, Mr. Grant said. “We don’t see
anything wrong with the brokerage
accounts.”
Mr. Bonanno was affiliated with
Cadaret Grant from January 2007
until the end of last year and has
not been affiliated with a brokerdealer since that time.
Mr. Bonanno is scheduled to be
sentenced Oct. 22.
■
(Ms. Asci is a reporter and Mr. Kelly
is news editor with Investment
News, a sister publication of
Crain’s Cleveland Business.)
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20090817-NEWS--19-NAT-CCI-CL_--
8/14/2009
AUGUST 17-23, 2009
2:33 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK
BEHIND THE NEWS WITH CRAIN’S WRITERS
AUGUST 10 – 16
Try looking down your noses at
Cleveburg now, downstaters
The big story:
■ And the loser is . . . . Columbus?
Yes, the city known for continuous and
unabated job and economic growth over the
last 30 years or so is now losing jobs faster
than any other part of Ohio, which as a
whole is faring worse
than most other states
in the current recession.
Economist George
Zeller said he hasn’t
been too popular in
the state capital lately,
because he has been
almost the lone voice
when it comes to
pointing out the city’s
job losses.
In his report last
Thursday, Aug. 13,
on unemployment in
Ohio, Mr. Zeller
wrote “Stunningly, the report finds that the
very high current level of unemployment
claims is not concentrated primarily in
Cuyahoga County or even in northeastern
Ohio. Ohio’s most elevated levels of new
unemployment claims in comparison to the
last year when the state experienced job
growth in 1999 are currently taking place in
the eight counties of the Columbus metropolitan area in central Ohio. ... No other
Ohio urban area has an elevated job
destruction rate that is currently this high.”
The reason? Mr. Zeller said Columbus is
The highly anticipated Jack
Welch Management Institute MBA program at
Chancellor University has been put on hold
until the famed business leader’s health
improves. The program was announced in late
June, but Mr. Welch entered New York-Presbyterian Hospital July 5 for discitis, a rare but
curable spine infection. Though Mr. Welch is
expected to recover fully, the MBA program set
to begin Aug. 31 will be delayed for a yet-unannounced amount of time. The new start date
will be announced as soon as Mr. Welch has
regained his health.
Changing pilots: After nearly 20 years, a
different CEO will be at the helm of Sifco Industries Inc. The provider of aircraft parts and
services said longtime CEO Jeffrey Gotschall is
stepping down from that post and will be
succeeded by interim CEO Michael Lipscomb,
a former director of Sifco and the former
chairman and CEO of aircraft fuel pump maker
Argo-Tech Corp. The change is effective Aug. 31.
Mr. Gotschall, 61, has been Sifco’s chairman
since 2001 and its CEO since 1990. He will
remain as nonexecutive chairman of the board.
For the health of it: Summa Health System
and the Akron Area YMCA are partnering to
build an $11 million YMCA on the
Akron City Hospital campus.
The organizations plan to
break ground on the 60,000square-foot building later this
year and to open it in 2011.
The University Park YMCA
will house a health and
wellness center with
racquetball and basketball
courts, indoor pools, exercise equipment and an
indoor running track. Summa will provide rehabilitation and physical, speech and occupational
therapy services as well. The YMCA will be
connected to the hospital and a new parking
garage via a covered bridge.
On a roll: Thanks to a shot of federal stimulus
money, Eaton Corp. will be involved in the nation’s
largest deployment to date of commercial hybrid
vehicles. Eaton said it will work with the South
Coast Air Quality Management District, the
recipient of $45.4 million in federal money, and
other affiliates that include the Electrical Power
Research Institute, Ford Motor Co. and Southern
California Edison, in the deployment of 378
plug-in hybrid electric commercial vehicles to
more than 50 utility and municipal fleets nationwide. Eaton also will provide infrastructure for
the electrical charging of these vehicles.
Gearing up: The University of Akron’s planned
Corrosion and Reliability Engineering program
is gaining major support, and it doesn’t launch
until fall 2010. The university received a $1.8
million grant from the U.S. Defense Office of
Corrosion Policy and Oversight, bringing to $2.3
million the total contributions from that office to
Akron’s program. Akron also hired Joe Payer,
who most recently was at Case Western Reserve
University, where he was a professor of materials
science and engineering and director of the
School of Engineering’s Materials Performance
and Reliability Program.
For the record: Kathleen Burke, a partner at
the Jones Day law firm in Cleveland, was named
executive director of the Ohio Lottery Commission. Ms. Burke, 60, lives in Shaker Heights. She
has been a corporate litigator at Jones Day since
1973. … Venture development organization
JumpStart Inc. said its JumpStart Ventures unit
has invested $250,000 in Catacel Corp., a company in the Portage County town of Garrettsville
that makes catalytic heat exchanging materials.
WHAT’S NEW
hit by a double whammy of job losses in the
finance and insurance sector as well as in state
government — two of the city’s major sources
of employment. He said he knew it was bad
when Morton’s Steakhouse announced this
week it was closing its Columbus restaurant,
which Mr. Zeller said is right across the street
from Nationwide Insurance’s headquarters.
The latter has cut staff this year, Mr. Zeller
noted. — Dan Shingler
The stem cell center of the
U.S., at least for this week
■ More than 250 scientists from around the
world will gather in Cleveland this week to
talk stem cells.
The National Center for Stem Cell &
Regenerative Medicine is holding MSC 2009
to talk about regenerative medicine and
adult stem cell therapy. The conference
starts today, Aug. 17, and runs through this
Wednesday, Aug. 19, at the Cleveland Marriott Downtown at Key Center.
Attendees from as far away as Brazil,
Germany and Taiwan will be in town to
learn about and discuss topics such as the
face transplant completed by Dr. Maria
Siemionow of the Cleveland Clinic. University Hospitals’ Dr. Stan Gerson also will talk
about his experience as a member of the
Food and Drug Administration’s Advisory
Panel for Cell Tissue and Gene Therapy.
Discussions about stem cells are timely this
year as President Barack Obama last March
lifted the ban on federal support for embryonic stem cell research and issued a memorandum to keep politics out of science. Former
House Beautiful ad strategy
has Glidden brand covered
Faber-Castell’s new kit is designed to help
crafters and aspiring artists create unique
pieces that capture their style.
The kit includes fully illustrated instruction
cards. The company also encourages users to
augment the kit with found objects to give art
projects an even more personal dimension.
Faber-Castell says the mixed media kit
includes two Art Grip Aquarelle pencils and
one Pitt artist brush pen, plus 20 sheets of
paper in original designs and trendy prints,
lace, stamps and a stamp pad. The materials
enable artists to “use collage techniques to
create artist trading cards and other projects
to preserve special memories and artwork.”
The kit has a suggested retail price of
$29.95.
For information, visit www.fabercastell.com.
We want to hear about your company’s new
products. Send information about them to managing editor Scott Suttell at [email protected].
Plastic? As heavy as lead?
You’re kidding, right?
■ Most often, plastic is thought of as a lightweight, less-expensive alternative to steel or
other metals. But out in Avon Lake, PolyOne
Corp. is doing just fine with a plastic that
weighs as much as lead — because it blocks
radiation as well as lead does.
“For lack of a better word, it’s heavy,” said
Steve Schlegel, industry marketing manager
for engineered materials at PolyOne. In the
company’s parlance, the heavy plastics are
“high-gravity” compounds sold under the
trade names Gravi-Tech and Trilliant HC.
The stuff reduces the need for heavy metals
and can be processed via injection molding
more easily than metals that require machining.
As a result, it generally takes less energy to
make things out of the plastics than it does to
work with metals, Mr. Schlegel said.
PolyOne can manipulate the weight of the
plastics with different formulations. Some customers want plastic to be heavy.
“Some high-end (cosmetic) brands want
to give the idea of heft and weight,” he said.
“With a lot of folks, the perception of quality and value is directly related to the heft of
the product.” — Dan Shingler
BEST OF THE BLOGS
Excerpts from blog entries
on CrainsCleveland.com.
COMPANY: Faber-Castell USA Inc.,
Cleveland
PRODUCT: Getting Started Mixed
Media & Collage kit
President George W. Bush in 2001 signed a
bill that limited the use of federal money for
embryonic stem cell research.
The National Center for Stem Cell & Regenerative Medicine is a partnership among
Case Western Reserve University, the Clinic
and UH. The center last held an international
forum in 2007. — Shannon Mortland
■ The media business is in a lot of turmoil,
and publications are working harder than
ever to make advertisers happy.
One such advertiser that’s benefiting
from a magazine’s openness to trying new
things is paint brand Glidden, part of the
Northeast Ohio-based Akzo Nobel Decorative Paints United States division of Akzo
Nobel.
The New York Timess reported Aug. 10
that the cover of the September issue of
House Beautiful “will include a pouch
containing a chart that readers can pull out
and save. The chart, offering
tips on choosing colors
for home decorating,
carries an advertisement
on the back for Glidden
paints, part of a new
campaign with the
theme ‘Glidden gets
you going.’”
Although back covers
of magazines “have carried ads for decades,
the front covers had long been sacrosanct
as pitch-free zones,” The Times noted. “But
just as newspapers (including this one)
have begun to sell ads on the front pages of
sections, magazines are selling space on or
inside front covers.”
Stephen Drucker, editor in chief at House
Beautiful, said the ad breaks new ground
for his publication, but notes that “none of
the real estate on the cover is anything but
editorial.” Glidden “had no knowledge
about what the content” of the pouch
would be, he adds, other than it would be
part of “a color issue.”
Rob Horton, vice president for marketing
in Cleveland for Akzo Nobel Decorative
Paints United States, told the newspaper,
“For a brand in a period of reinvention, (the
cover pouch) is the perfect way to set up
that we’ll do things that are innovative and
unexpected.”
A pretty picture of a
place with lots of them
■ The Wall Street Journal on Aug. 13 gave a
thumbs up to Phase I of the Cleveland
Museum of Art’s $350 million renovation
and expansion, designed by Rafael Viñoly.
“Unlike the extravagance of Frank Gehry,
whose Weatherhead School of Management
building for Case Western Reserve can be
seen from the glass-box Rodin gallery, Mr.
Viñoly’s master plan is designed to display
great work, not overwhelm it,” The Journal’s
Joel Henning wrote.
He cheered the new East Wing and the
ability it gives the museum to display newly
acquired work, including a massive Andy
Warhol “Marilyn” (1962).
Bad deals for the Indians,
and bad times in Michigan
■ Kansas City Star sports columnist Joe
Posnanski on his blog wrote that the Cleveland Indians have two of the nine worst
contracts in baseball. We’re looking at you,
Travis Hafner and Kerry Wood.
■ How do you know when your state’s
economy is really bad? When you look
across the border at Ohio and think, “Hey,
it’s not so bad there.” As the Detroit Free
Press noted, “Ohio’s 11.1% unemployment
rate in June was more than four percentage
points lower than Michigan’s 15.2% rate.
And although both states badly lag overall
U.S. growth, Ohio’s economy has grown
40% since 1999, compared with just 28% for
Michigan’s.”
20090817-NEWS--20-NAT-CCI-CL_--
20
8/14/2009
2:01 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
AUGUST 17-23, 2009
Wind: Inability to secure financing stymies progress
continued from PAGE 1
install are best made in the country
where they will be used.
Right now, the industry is challenged by a lack of available financing.
“Money was flowing in 2008 and
developers were building new wind
parks,” Mr. Weston said. “In 2009,
there has not been one new
announcement of a new wind park.”
But the United States has been the
world’s leading market for wind
development for the last four years,
and that market is expected to come
back strong when financing becomes
available, Mr. Weston said. He aims
to make sure his members are ready.
The lull even could be a positive for
some members, Mr. Weston said, be-
cause it takes a long time to become
an approved supplier to an original
equipment maker of wind turbines.
Europeans come calling
Current economic conditions
didn’t stop two major European
makers of wind turbines from visiting
Ohio this summer to scout for
suppliers, according to Mr. Weston.
“They wouldn’t come here if they
didn’t think it was a place to expand,”
said Mr. Weston, who declined to
identify the companies.
So far, the wind network includes
member companies from 30 states,
though the bulk of those members
are from Ohio, with larger numbers
also located in Illinois, Indiana,
Michigan and Wisconsin. The companies share leads as well as counsel
each other on how to meet supplier
requirements, Mr. Weston said.
Membership in the network is free,
but Mr. Weston said he’s considering
a fee for membership and likely will
put one in place this fall, though the
amount has yet to be determined. In
the meantime, Mr. Weston must
keep serving members to convince
them the network is worth joining
at a cost. So far, at least, some are
finding business opportunities.
Members are often tight-lipped
about the work they find, Mr. Weston
said. But he said there have been 26
capital investments made by his
Ohio members this year, ranging
from $500,000 purchases of coordinate measurement machines to
larger investments.
Appreciative member
John Halleck Jr., vice president of
operations of JH Industries in Twinsburg, said his company’s membership in the network has proved
invaluable. The company, which
traditionally has made ramps for
material handling and large parts
for injection-molding machines, is
gearing up to make brackets that will
hold generators and other wind
turbine components in place for an
OEM it found through the network.
Mr. Halleck said getting into the
industry hasn’t been easy. European
companies use the metric system,
different industrial standards and even
different grades of steel than are
commonly found in the United States,
he said. Mr. Weston and the Great
Lakes Wind Network staff of nine have
helped both JH and its potential new
customer to communicate and come
to terms on a deal.
Mr. Halleck said he understands
why OEMs are tough to please, as their
machines are expected to generate
power for 20 years without failing. But
he said he hopes his company’s hard
work will pay off by producing a new
long-term source of growth.
“The economy here, I never realized
how dominated it was by automotive,”
Mr. Halleck said. “Wind could be one
of the things that helps Cleveland get
away from the Big 3 (automakers), or
at least not have it be such a big
percentage of our economy.”
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