Crain's Cleveland Business by Crain's Cleveland Business

20120625-NEWS--1-NAT-CCI-CL_--

6/22/2012

3:11 PM

Page 1

$2.00/JUNE 25 - JULY 8, 2012

United execs laud efforts to back local hub Early results of campaign to encourage businesses to fly merged airline on track By JAY MILLER jmiller@crain.com RENDERINGS PROVIDED

BROWNS, CLEVELAND’S TOP CHEFS TEAM UP Symon, Whalen, Sawyer will be featured in stadium’s club, suite levels; parties, corporate functions also now have access

By JOEL HAMMOND jmhammond@crain.com

The challenge from Jeff Smisek, the CEO of United Airlines, was simple. And, at least so far, it appears that challenge to the Cleveland business community is being met. “Every hub needs to earn its value every day,” he told an audience of Northeast Ohio civic and business leaders at a November 2010 luncheon in downtown Cleveland. “The key for Cleveland is to have a level of

business travel so that we can have either consistent profitability or have that hub’s profitability in a clear line of sight (ahead).” The Greater Cleveland Partnership-led marketing campaign that arose from Mr. Smisek’s comments — dubbed “United for Cleveland’s Hub” — began in earnest in January. Early returns look good. “Cleveland is to be commended” for encouraging customers to choose United Airlines, said Greg Hart, See UNITED Page 24

NOTICE TO READERS

he Cleveland Browns are making changes to their catering offerings in the premium seating areas of Cleveland Browns Stadium, and the new provider will bring with it the cachet of a few local heavy hitters. Already with presences at Quicken Loans Arena, Michael Symon and Rocco Whalen will be featured in Aramark’s new offerings in the suites and club level at Browns Stadium. They’ll be joined by fellow well-known restaurateur Jonathon Sawyer. The Browns have formed a new company, Cleveland Browns See CHEFS Page 8

INSIDE: Jonathon Sawyer is preparing Italian concept for a University Circle opening next year. Page 8

Crain’s print edition to return July 9 Crain’s will not publish a newspaper on Monday, July 2. For the latest Northeast Ohio business news during our hiatus, visit www.CrainsCleveland.com.

Region’s manufacturers buoyed by buying binge Cash surplus has led to bevy of acquisitions By GINGER CHRIST gchrist@crain.com

Some of Northeast Ohio’s largest manufacturers are on a buying spree that shows no signs of abating. Flush with cash from three years of post-recession sav- Sullivan ings, they’re putting their reserves to use in the purchase of companies. Since June 2011, the 10 largest publicly traded manufacturing companies in Northeast Ohio acquired 29 businesses, more than half of which were based outside the United States. In the previous

year, the numbers were nearly similar. Among the buyers is RPM International Inc. The Medina-based maker of coatings and sealants completed five transactions in its fiscal 2012, which ended May 31, and has plans for more, according to chairman and CEO Frank C. Sullivan. The company is considering purchasing specialty coatings and building materials companies in both North America and overseas, Mr. Sullivan said. See BUYING Page 6

NEWSPAPER

74470 83781

SPECIAL SECTION

MAKING IT Analyzing compensation trends across various sectors in Northeast Ohio ■ Page 15 PLUS: EARNINGS POTENTIAL ■ COST OF LIVING ■ & MORE

20120625-NEWS--2-NAT-CCI-CL_--

6/22/2012

1:45 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

CRAIN’S ON THE WEB Crain’s expanded photo slideshows ■ Crain’s has expanded its offering of photo slideshows, from an inside look at Calfee’s striking new space in downtown Cleveland to this week’s gallery of The Country Club in Pepper Pike, which is preparing to host the U.S. Women’s Amateur. To view our shooters’ latest work, click on the multimedia section at www.CrainsCleveland.com.

REGULAR FEATURES Big Issue ......................11 Best of the Blogs ..........26 Classified .....................25 Editorial .......................10 Going Places ................12

List: Highest-paid CEOs ..................22-23 Personal View...............10 Tax Liens......................14 Reporters’ Notebook.....26

WWW.CRAINSCLEVELAND.COM

JUNE 25 - JULY 8, 2012

THE STATE OF INTELLECTUAL PROPERTY Ohio has nearly 2.7 intellectual property-supported jobs, the fifth-highest total in the country, according to a new report from the U.S. Chamber of Commerce’s Global Intellectual Property Center. The report measured research and development spending, the number of scientists and engineers, and the amount of patents, trademarks and copyrights produced to determine the number of jobs supported by the IP industry. Here are data for the top five IP states:

State

IP-supported jobs

IP-supported job wages

California

7.39 million

$65,171

Texas

4.62 million

$55,148

Illinois

2.83 million

$56,525

New York

2.78 million

$69,581

Ohio

2.69 million

$48,646

SOURCE: U.S. CHAMBER OF COMMERCE; WWW.THEGLOBALIPCENTER.COM

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Joel Hammond (jmhammond@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Michelle Park (mpark@crain.com) Finance Ginger Christ (gchrist@crain.com) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing director: Lori Grim (lgrim@crain.com) Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales manager: Nicole Mastrangelo (nmastrangelo@crain.com) Senior account executive: Adam Mandell (amandell@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsey Nordloh (lnordloh@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Digital strategy and development manager: Stephen Herron (sherron@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com)

We look up to our customers because mutual respect is a must in any banking relationship. You’re the engine of our country’s economy and we believe in treating you that way. Starting with the relationship. That’s why we offer you a team of specialists right here in your community who advocate for your ﬁnancial future and support your business any way we can. You’re a big deal. It’s about time you had a bank that sees you that way. Visit key.com/bigdeal to learn how we’ll make you a priority.

Audience development manager: Erin Miller (emiller@crain.com)

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation

Banking products and services are offered by KeyBank N.A. Member FDIC and Equal Housing Lender.

20120625-NEWS--3-NAT-CCI-CL_--

6/22/2012

2:41 PM

Page 1

JUNE 25 - JULY 8, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

First Fed of Lakewood seeing loan demand rise

INSIGHT

Companies’ mobile dos, don’ts lists growing With more devices in the workplace, firms’ policies more detailed

Bank’s originations double, and its competitors are taking notice

By CHUCK SODER csoder@crain.com

By MICHELLE PARK mpark@crain.com

Three years ago, if a company had a policy regarding how its employees should use their mobile devices, it consisted of maybe a few pages, max. Now some companies that work with mobile device management firm Vox Mobile Inc. of Independence have policies that are 10 or 12 pages long. The influx of so many different high-powered mobile devices has made life more complex for the people charged with managing them, according to several information technology experts in Northeast Ohio. Over the past two years, many local businesses that previously issued nothing but companyowned BlackBerrys have started letting employees use iPhones, iPads and Android phones, too. Thus, they’ve got more devices to secure and support. And their employees have toys with all sorts of capabilities that can be abused and misused. Making matters even more difficult, many businesses are starting to let employees use their own smart phones and tablet computers, as opposed to company-owned devices, to tap into corporate networks that often contain sensitive data. More than 70% of Vox Mobile’s clients do so already or are moving in that direction, said Jeff Fuggit, vice president of marketing for the company. “This is a tidal wave,” he said of the “bring your own device” trend.

There’s not much at First Federal of Lakewood that isn’t growing, but here’s what some say is most surprising. At a time when most bankers report unimpressive loan demand, First Federal in the first five months of this year doubled its loan originations, or new loans, over the year-ago period to $350 million. It’s posting record numbers, both in number of loans and dollars, according to Thomas J. Fraser, executive vice president and chief operating officer. First Federal has increased its lending — predominantly residential mortgages but also multifamily and commercial loans — both in the communities it entered through its December 2010 acquisition of Century Bank and in its pre-existing footprint. None of the increase includes purchased loans; rather, all of the loans were originated by First Federal’s Fraser employees, Mr. Fraser said. “We’ve seen a strong purchase activity this year, which could be signaling better housing conditions in Northeast Ohio than we’ve seen,” Mr. Fraser said, noting that 60% of the institution’s loan growth has been in home purchases. Much of the mortgage business today is in refinancing, though industry insiders say they’re hearing anecdotally that a shift from refinances to purchases is occurring. First Federal’s competitors have noticed its “very aggressive approach to growing,” said Robert L. Palmer, president and CEO of the Community Bankers Association of Ohio, citing conversations he’s had with bankers in this region. “Loan demand is anemic at best and to see them

Erecting a ‘virtual barrier’ Companies aren’t about to stop using the latest consumer gadgets, given how popular and powerful they are. Instead, they’ve had to figure out how to See MOBILE Page 23

MARC GOLUB

Radio executive Tom Wilson expects to launch a new rock station, WLFM-LP 87.7, in late July.

MAKING AIRWAVES Radio industry veteran says new station will use lots of local content to compete with satellite, Internet options By MICHELLE PARK mpark@crain.com

om Wilson has taken to the Cleveland airwaves successfully before — to the tune of a multimillion-dollar payday in 1999 — and he’s fixing to do it again. Mr. Wilson, who with his partners sold two of the city’s top-rated stations, WDOK-FM, 102.1, and WRMRAM, 850, in a four-station package deal 13 years ago for more than $200 million, is launching a new radio station here. He’s confident the local content and local personalities he plans to deliver will prove profitable, even in this era of satellite and Inter-

net radio. Mr. Wilson, who has spent three decades in the broadcasting business, expects to launch the new station, WLFM-LP, 87.7, in late July. Two weeks ago, the station began running a four-song loop to test its signal, playing the fight songs of the Cleveland Browns, Indians and Cavaliers, and “My Town” by The Michael Stanley Band. That spawned speculation that it will be a sports format, though the Ohio Media Watch blog noted: “For all we know, the sports-themed songs are an attempt to ‘sound Cleveland’ — as few songs exist that mention the city by Lake Erie.” That’s exactly it: Mr. Wilson says See RADIO Page 9

See LAKEWOOD Page 25

LOANS UP AT FIRST FED LAKEWOOD First Federal of Lakewood has steadily increased its loan origination as it’s grown overall. Here, tracking that rise in new loans, with the 2012 figure through May 31 — which projects to $850 million for the year:

Year

Loan originations

2012 (first 5 months)

$350 million

2011

$477 million

2010

$412 million

2009

$362 million

SOURCE: FIRST FEDERAL OF LAKEWOOD

THE WEEK IN QUOTES “We ... give companies the ability to have the best in Cleveland dining, and that’s very important for the corporate function side of things.”

“Acquisitions are ... quicker and in many ways safer than the process of establishing a presence in a developed world from scratch.”

— Jim Ross, vice president of business development for the Cleveland Browns. Page One

— Frank C. Sullivan, CEO of RPM International Inc. Page One

“It’s been a long process, but we have a USGA-quality course and we’re ready for it.” — Nancy Heinen, member of The County Club in Pepper Pike and co-chair of the U.S. Women’s Amateur tournament being held there Aug. 6-12. Page 5

“We are finding we are compensating IT folks and engineers at a higher rate of growth than other types of positions.” — Beth Stec, MCPc vice president of corporate communications and human resources. Page 15

“What you can do with those dollars (earned in Cleveland) is demonstrably higher than what you can do in Atlanta or Chicago.” — Mike Milby, president and CEO of executive recruiting firm Ratliff & Taylor. Page 20

20120625-NEWS--4-NAT-CCI-CL_--

6/22/2012

4:23 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 25 - JULY 8, 2012

‘Highway’ built, OneCommunity now searching for willing test drivers Software developers able to capitalize on nonprofit’s high-speed network By CHUCK SODER csoder@crain.com

The Sky Quest Travel Experience: Relaxing travel with no waiting in lines, no carrier delays A flight that departs on YOUR schedule ◆ A private aircraft with a crew you know and trust ◆ Substantial savings over jet card programs ◆ One-way flights available with NO repositioning fee ◆

AIR CHARTER SERVICE AIRCRAFT MANAGEMENT

◆

SAFETY

◆

SERVICE

◆

CONVENIENCE

Northern Ohio’s Premier Air Charter Company 216-362-9904

www.FlySkyQuest.com

Charter@FlySkyQuest.com

Creating Value.

OneCommunity’s 1,735mile fiber-optic network is almost entirely built. Now the Cleveland nonprofit can focus more of its energy on what Scot Rourke Rourke describes as the bigger goal: getting people to create software that harnesses the network’s power. “The highway’s done,” said Mr. Rourke, OneCommunity’s president and CEO. “What kinds of cars are we going to put on this? And we want lots of cars on it.” The organization — which offers high-speed Internet access and information technology services to governments and nonprofits in Northeast Ohio — is increasing its efforts to reach out to companies, universities and entrepreneurs who could come up with new ways to take advantage of the network’s bandwidth. The nonprofit isn’t alone in its quest: The National Science Foundation two weeks ago announced that it selected Northeast Ohio as one of 25 regions that will participate in the U.S. Ignite partnership, a national effort designed to spark the creation of new software programs that can make the most of ultra-fast Internet speeds. OneCommunity, which is leading U.S. Ignite’s work in Northeast Ohio, could receive funding for the effort through the National Science Foundation, and it aims to raise money and in-kind support from other organizations, too. The nonprofit hasn’t yet laid out a list of action steps, but it already is talking to several “major players” who could come up with ideas for software and develop the tools, Mr. Rourke said. OneCommunity — which earlier this year formed a “Smart Region” team that will advise the group on the effort — might even create a prize competition to get area computer science students interested.

Testing, testing What kind of software might they create? Many programs likely would be based around the idea of helping people communicate via high-definition video, Mr. Rourke said: Picture doctors talking face-to-face with distant patients, teachers interacting

What do You Value? Maybe it’s advice from accounting and tax professionals to help your business grow and thrive.

We Value that too. 216.241.3272 or www.meadenmoore.com

with classes full of students from around the world or judges arraigning suspects without meeting them in person. Developers also could create better software dispatch systems for police departments and better mapping tools for local governments. They might even come up with tools to help manage the flow of electricity through your appliances or the flow of cars on a busy street. Though some software programs can do these types of things, many don’t take advantage of the speeds that can be achieved through fiberoptic networks, Mr. Rourke said. However, Mr. Rourke said he expects the United States eventually will have a more robust broadband network. Entrepreneurs and companies that want to prepare for that day can test their ideas on OneCommunity’s infrastructure. The network is a great test bed, he said, given the number of hospitals, schools, libraries, government agencies and nonprofits connected to it. OneCommunity also has a relationship with the Case Connection Zone, a group of more than 100 homes in the University Circle area that for research purposes were provided similar Internet connections. Most OneCommunity customers and all Case Connection Zone participants have 1-gigabit-per-second Internet connections, which is more than 100 times faster than typical cable and DSL Internet speeds. Some hospitals on the OneCommunity network subscribe at even faster speeds, Mr. Rourke said. Developers would be hard-pressed to find another region where so many institutions have gigabit-speed connections, he said. “There are not that many other networks, especially ones you can develop on,” he said.

We’re top three! Joe Kochan agrees. The cofounder of U.S. Ignite said that, because of OneCommunity, Northeast Ohio is “ahead of the game” when compared to other U.S. Ignite regions. The organization has powerful infrastructure, deep relationships to the institutions that use it and connections to researchers who can help maximize its capabilities.

“They are very much ahead of the pack. Certainly in our top five; probably in our top three,” Mr. Kochan said. Through U.S. Ignite, the National Science Foundation aims to spur the creation of about 60 high-tech software programs focused on education and work force development, advanced manufacturing, health care, transportation, public safety and clean energy. The project is intended to show how the country might benefit if it upgrades its broadband infrastructure, Mr. Kochan said. “What if you had unlimited bandwidth with more capabilities?” he said. The country’s Internet infrastructure needs an upgrade, Mr. Rourke argues. By streaming online videos and music, people already are becoming “super users” of data, often without realizing it, he said. With better infrastructure and software designed to exploit it, the United States among other things will be able to cut the cost of government services, health care and education while also improving the delivery of those services, he said. For instance, Mr. Rourke said he expects online education to become a lot more popular — and a lot better — in the future. “The experience is going to be more enriching. You can get Chinese from China,” he said. On the government front, he described how, after South Korea started providing a large number of government services via the Internet, service satisfaction rates went up and the size of government agencies went down. OneCommunity already has helped Jeff Mowry, Cuyahoga County’s first chief information officer, apply for three grants to fund IT collaboration projects that the county didn’t end up winning. The nonprofit’s broadband network, which is used by roughly 30 county facilities, also plays a crucial role in helping the former Chrysler executive execute his part of the county’s Western Reserve Plan, which is the county’s effort to cut the cost of government in Northeast Ohio by selling services to cities in the area that may not be able to provide them as efficiently. “Having the technology infrastructure that OneCommunity brings to the table helps us get to that Western Reserve vision,” Mr. Mowry said. ■

Former Case professor will lead Weatherhead Case Western Reserve University has tapped one of its former professors, Robert E. Widing II, as the new dean of its Weatherhead School of Management. Mr. Widing, who currently serves as the dean of the Macquarie School of Management in Sydney, Australia, served as assistant professor at

Weatherhead from 1988 to 1993. He will replace Mohan Reddy, who announced last summer he would return to teaching full time after serving as dean for five years. “Rob Widing possesses the depth of experience and breadth of perspective required to lead in an era of increasing complexity and interna-

Volume 33, Number 25 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

ON THE WEB

Story from www.CrainsCleveland.com.

tional engagement,” Case Western Reserve University president Barbara Snyder said in a news release. “He also appreciates the vital importance of strategic thinking, philanthropy and continuous improvement of academic offerings.” Mr. Reddy ascended to the deanship in December 2006 after serving about five months in an interim capacity. During his tenure, he helped redesign many of Weatherhead’s programs and brought a sense of stability back to the business school. ■

20120625-NEWS--5-NAT-CCI-CL_--

6/22/2012

4:50 PM

Page 1

JUNE 25 - JULY 8, 2012

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

Patio Enclosures leads growing home improvement contractor By GINGER CHRIST gchrist@crain.com

Great Day Improvement LLC, a local private equity group, is building a name for itself east of the Mississippi, and it’s starting the process in its own backyard. The Cleveland-based group has been on the acquisition trail since its formation in 2010, buying three brands in Ohio in less than two years. Through those acquisitions, Great Day is constructing for itself an identity as a full-scale home improvement contractor. Its portfolio now includes Central Aluminum Co. of

Columbus, a custom producer of aluminum extrusions; SoftWall Finishing Systems LLC in Sharon, Ohio, a producer of fabric-covered wall panels; and Patio Enclosures Inc., a manufacturer, retailer and distributor of sunrooms, solariums, patio and porch enclosures, among other products. Great Day is using Patio Enclosures, with its well-known jingle and developed customer base, as the face of its expansion. Great Day has 250 employees, about 100 of whom work out of the Patio Enclosures headquarters in Macedonia. Since acquiring Patio Enclosures

in December 2010, Great Day has opened seven new retail branches, bringing the total to 17 companyowned sites and 11 franchise sites. It also expanded the dealer network to 20 dealers, up from about 15 at the end of 2010, giving the company 48 retail locations in 28 states. And Great Day isn’t pulling the shades on growth just yet. The company has a strategic plan that involves opening more Patio Enclosures retail sites, developing a greater distribution network, establishing an online presence and acquiring more brands. “We’re poised for tremendous

growth,” said John Fitzpatrick, general manager of the Cleveland market for Patio Enclosures. Great Day’s sales were up 30% in 2011 and are on track to show similar increases in 2012. Bill Goddard, vice president of sales for Patio Enclosures, said he sees opportunity in the home improvement market. With the residential housing market still on the path to recovery, there is room for growth both as it rebounds and in the interim as homeowners choose to upgrade and repair their existing homes, he said. Plus, the company plans to continue to diversify, entering more areas

Country Club preps for U.S. Women’s Am By JOEL HAMMOND jmhammond@crain.com

If the members at The Country Club in Pepper Pike are leery of their club being overtaken for a week in early August by 156 women’s amateur golfers and some of their families, they sure have a funny way of showing it. Members at the club, after all — along with many big-name Northeast Ohio corporations — are footing the bill for the 112th U.S. Women’s Amateur, one of the United States Golf Association’s most prestigious tournaments. The tournament, which features two days of stroke play fol-

ON THE WEB: For more photos of The Country Club, visit www.CrainsCleveland.com/CountryClub. lowed by five of match play to whittle a field of 156 to one, will be held at The Country Club on Aug. 6-12. All told, individual and corporate donors, with the help of the Greater Cleveland Sports Commission, raised more than $500,000 to stage the tournament. That total covers all transportation, meals for the players — officials expect more than 2,500 meals will be served — for the entire week, security and other components. The entire event is free to the public, and spec-

tators will have inside-the-ropes access all week. The USGA visited the club almost four years ago and approved it for its first USGA event since 1935, when it played host to the U.S. Men’s Amateur. Tournament cochair Nancy Heinen said the USGA was impressed by the challenging, rolling course — from which the women most often will play from the men’s tees, with the course measuring 6,512 yards — and liked the Cleveland-area venue. “It’s been a long process, but we have a USGA-quality course and we’re ready for it,” said Ms. Heinen, a member of the club who is a retired

of the home improvement market. “If we just do one thing, you can’t have any hiccups. It really diversifies our company,” Mr. Goddard said. “We ... continue to be on the hunt for great brands.” He said the company is interested in complementary companies, such as window or awning companies. “Just because we sell somebody else’s right now, doesn’t mean we can’t own it in the future,” he said. The company also plans to expand its geography west through distribution at big box retailers and through commercial distribution at hotel chains. ■

The difficult par-3 ninth hole at The Country Club in Pepper Pike will be a key test in August’s U.S. Women’s Amateur tournament. RUGGERO FATICA

BP executive. Her co-chair, Scott Wilson, is a recently retired partner at Cleveland law firm Calfee, Halter & Griswold. Now in the home stretch, the USGA has paid recent visits to map out pin locations and areas to make the course more challenging. Country Club officials, meanwhile, still

are trying to line up volunteers and make other final preparations. The Country Club course was designed in 1930 by William Flynn, who also designed famed courses Shinnecock Hills on Long Island and Cherry Hills in Colorado. In 2005, the course was restored by by Brit Stenson of IMG Design. ■

20120625-NEWS--6-NAT-CCI-CL_--

6/22/2012

2:38 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 25 - JULY 8, 2012

Buying: Pace picks back up as industry rebounds continued from PAGE 1

“Acquisitions are a way of quickly establishing a base of business that you can then expand from,” Mr. Sullivan said. “It’s quicker and in many ways safer than the process of establishing a presence in a developed world from scratch.” Just last week, RPM announced the acquisition in Brazil of Viapol Ltda., a maker of building materials, in a deal that Mr. Sullivan said “establishes a substantial footprint for RPM and our many industrial and consumer businesses in the exciting Brazilian market.” Mr. Sullivan said acquisitions are

an attractive option for companies looking to invest in an environment in which traditional investment options, such as U.S. Treasury bonds, aren’t giving companies profitable returns. “Leaving your money in cash is a bad idea,” said Mr. Sullivan, whose company had $735 million in cash and available lines of credit as of Feb. 29. That’s double what the company carried in the way of cash and credit lines seven years ago. The extra reserves are giving companies that hold them a leg up on acquisitions because they can take quick action when opportunities

Fairview Park, Ohio

Two Three-story Office Buildings on 9.8 acres • 200,000 sf Gross Rentable Area • 88 Parking Spaces • Fluorescent Lighting • Roof Mounted Zoned HVAC • Sprinkler System • Masonry Brick/Split Rock walls

• Loading Dock • Ideally located next to the Cleveland-Hopkins International Airport, Brookpark Road, and I-480 • Zoned OB3

U.S. General Services Administration 312-353-0302 / www.realestatesales.gov

arise. And opportunities are becoming more plentiful as owners that delayed selling during the downturn look to cash in on the upswing in business values, local executives say.

Where to invest For Lincoln Electric Holdings Inc., finding a place to spend the money generated by the Euclid-based maker of welding equipment had been a problem until recently. The $300 million in cash Lincoln Electric had on its balance sheet as of March 31 wasn’t there because the company was trying to be conservative following the recession. Rather, Lincoln Electric hadn’t had enough opportunities to invest it. The acquisition environment, particularly in 2009 and 2010, was depressed because of the decline in business valuations, said Vince Petrella, Lincoln Electric’s chief financial officer. “It was not so much that we weren’t interested,” Mr. Petrella said. “It’s more that the sellers were unwilling to separate themselves from their properties because valuations had declined so rapidly.” However, since the manufacturing sector rebounded, Lincoln Electric has had its foot on the acquisition accelerator. In the past 12 months, it has bought four companies — Wayne Trail Technologies Inc., an Ohio-based maker of automated systems and tooling; Weartech International Inc., a California-based producer of cobaltbased hard facing and wear-resistant welding consumables; Applied Robotics Inc., a Nevada-based manufacturer of CNC cutting tables and accessories; and the welding operation of Maryland-based Techalloy Co., a producer of nickel alloy and stainless

steel welding consumables.

Building reserves When Joseph Gingo joined Akronbased A. Schulman Inc. in 2008 as CEO, he immediately set to work increasing cash levels at the supplier of plastic resins, in order to stabilize the company. As of last Feb. 29, the end of A. Schulman’s fiscal second quarter, the company had $95.8 million in cash and $201.5 million in untapped credit lines. “If you want to grow and increase profits, one of the areas you have to look at is acquisitions,” Mr. Gingo said. “When you have a lot of cash, you can buy things.” In the past year, A. Schulman has agreed to acquire Elian SAS, a French producer of specialized color master batch products, for $63 million, and bought a majority interest in an Argentina-based maker of rotational molding materials. Because Europe and the United States have been slower-growth markets, A. Schulman has focused on expanding in emerging markets where there is more growth potential, Mr. Gingo said. That’s the thinking behind the company’s 50-50 joint venture agreement with National Petrochemical Industrial Co. of Saudi Arabia to produce polypropylene compounds at a plant in that Middle Eastern nation. A. Schulman’s initial investment in the relationship is about $14 million, with project costs for the Saudi plant estimated at $70 million. “Several aspects of this deal will accelerate A. Schulman’s expansion and visibility in its priority growth markets of Africa, India and the Middle East while better serving our existing global customers with high-quality polypropylene compounds,” Bernard Rzepka, general manager and chief operating officer of A. Schulman, Europe, Middle East, Africa, said in announcing the joint venture June 11.

Parker picks up the pace

Opportunity. A challenge often is disguised as a chance for progress, so a company should be aware of every option. SS&G Parkland has the tools and experience to help with your next step.

Combining The Parkland Group Inc.’s turnaround and management consulting experience with SS&G’s business valuation, litigation, and forensic consulting expertise, SS&G Parkland’s expert services include: › bankruptcy and receiverships › business valuation › fraud detection and deterrence › investment banking and corporate finance › litigation consulting › management consulting and strategy › turnarounds, workouts, and restructuring SS&G Parkland: innovative expertise under one roof. Learn more at www.SSandG.com/Parkland.

Parker Hannifin Corp. decided to preserve cash and be more cautious about acquiring companies during the recession, according to Aidan Gormley, the company’s director of corporate communications. That’s not the case anymore. “Today, we are back to our more normal pace and have a strong pipeline of opportunities we are evaluating,” Mr. Gormley said. “Our considerably strong cash flow, low debt and excellent credit rating give us significant capacity to invest in growth initiatives such as regional expansion, innovative new products and systems, and acquisitions that enhance our business.” Parker has acquired four companies in the past year and plans to look for more opportunities in the motion and control markets, Mr. Gormley said. Each acquisition is one that will

DEALING WITH IT Acquisitions in the last year by Northeast Ohio’s top 10 publicly traded manufacturing companies, according to Crain’s research: EATON CORP. Nine acquisitions, including a May 21 announcement of plans to acquire Cooper Industries plc, an electrical equipment supplier based in Dublin, Ireland, for $11.8 billion. J.M. SMUCKER CO. Acquired in January a majority of the North American food service coffee and hot beverage business of Sara Lee Corp. in an all-cash transaction. LUBRIZOL CORP. Four deals, including last week’s agreement to buy Lipotec SA, a Spanish company that makes ingredients for personal care products. NORDSON CORP. Four deals, including June’s for New Castle, Pa.-based Xaloy Superior Holdings Inc., a maker of melt delivery components for plastic injection and extrusion machinery. PARKER HANNIFIN CORP. Four deals, including acquiring Snap-tite Inc., an Erie, Pa.-based manufacturer of high-pressure fluid power components for the oil and gas, industrial and research markets. TIMKEN CO. Two deals for companies specializing in drive chains, roller chains and gear-drive systems. TRANSDIGM GROUP Three, including February’s deal for Phoenix, Ariz.-based AmSafe Global Holdings Inc. for $750 million in cash. expand the company’s product lines or technology offerings, allow it to enter a new market or to expand geographically or drive aftermarket sales. The company’s goal is to grow revenues at a 10% compounded rate annually, with half that growth generated from acquisitions, Mr. Gormley said. Still, acquisition-minded companies aren’t throwing all caution to the wind. A number of public companies are carrying far more cash today than they did before the recession, RPM’s Mr. Sullivan said. Nonfinancial corporate cash balances at the end of the first quarter of 2012 were $1.74 trillion, up 0.7% from the previous quarter and up 25% from the first quarter of 2008, according to the June 7 Federal Reserve Flow of Funds report. “I think going forward companies are going to operate with a larger cushion of cash and excess liquidity on an ongoing basis than, let’s say, they did five to seven years ago,” Mr. Sullivan said. ■

20120625-NEWS--7-NAT-CCI-CL_--

6/22/2012

4:53 PM

Page 1

JUNE 25 - JULY 8, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Once-booming Medina County homebuilder now reeling Owner entangled in Chapter 11 bankruptcy filing, targeted in court by multiple lenders By STAN BULLARD sbullard@crain.com

When home building boomed last decade, Unmistakably Premier Homes of Wadsworth ranked repeatedly as the most prolific builder in Medina County. The local outfit led by Wadsworth native Stephen Kovack slugged it out with national builders such as Ryan Homes and others as they harvested its fields for home sites. Now Mr. Kovack is struggling to hang onto the Wadsworth office building that houses Unmistakably Premier’s headquarters and is weathering a blizzard of legal woes. In a bid to retain the building, the 7972 Ridge Road LLC that Mr. Kovack controls has filed for voluntary Chapter 11 reorganization in the U.S. Bankruptcy Court Northern District of Ohio. The builder also is the target of more than $1.6 million in judgments in Medina and Cuyahoga county common pleas courts. The largest is a $1 million judgment to satisfy a note filed by Fifth Third Bank. Moreover, an unfinished home at 5588 Bilney Court in Lafayette Township, owned by Unmistakably Premier Homes, sits skeleton-like in a neighborhood populated with dozens of homes the builder sold in better times. Lafayette Township Trustee Lynda Bowers, a realty agent herself, said she fields calls from Bilney Court neighbors when plastic sheets on the walls rustle too loud in a big wind or pieces of wood blow off in a storm. The sight that galls neighbors most, she said, is that they see workers in trucks with Unmistakably Premier logos driving through the massive subdivision. New homes are rising again as the worst realty debacle since the Great Depression wanes across the nation. Ms. Bowers hopes that Medina County and her township can nab some money that Ohio Attorney General Michael DeWine will make available to help local governments cope with foreclosures. She hopes to use it to demolish the battered Bilney house. “Most people think of old, dilapidated housing in urban areas needing demolition,” she said in an interview, “but that’s not the case here,”

said. “Buyers are back. As a volume builder, this is what you face. In the 1990s there was a toilet shortage. I had 40 homes waiting for toilets.” Despite the plethora of legal and financial wrangles, the June 1 bankruptcy filing refers solely to the 1392 High St. office building owned by 7972 Ridge Road LLC. The Prudential Kovack Realtors brokerage operated by his sister, Michele Boyd, and several tenants also are in it. Mr. Kovack said PNC did not want to extend his loan on the office building, but he wants to keep it. He

built it. The bankruptcy filing notes Unmistakably Premier was not paying its rent and would move. “Why pay the rent when they are not renewing the loan?” Mr. Kovack said. The court filing says 7972 Ridge filed for reorganization to protect the asset because PNC Bank had secured a foreclosure order in Medina County Court of Common Pleas. The firm’s filing maintains it is eligible for bankruptcy reorganization because the more than $1 million loan by PNC Bank and another for $635,000 for Woosterbased Wayne Savings Community Bank exceed the $1.3 million appraisal for it set by the Medina

Make no mistake The homebuilder also is the subject of a website dubbed “Mistakably Premier Homes” where dozens vent complaints about building quality or alleged nonperformance on home-sale contracts. The site has 45 names on a petition calling on the builder to honor warranties and contracts. Of the website, Mr. Kovack said it’s hard for people to understand how some houses keep going up but not others as different loans fund them. Banks and buyers are not the

only ones miffed with Premier. Pritts Concrete Inc. of Rootstown, Ohio, last April received a judgment in Medina County Court of Common Please for $414,541 in unpaid bills. A call to the firm was returned by an attorney, Chris Wetherbee, but his call was missed Friday morning and he did not return a follow-up message by deadline last week. Of the lien, Mr. Kovack said, “They are just protecting themselves from the bank.” Now he sees Ryan Homes building on lots in Dover Highlands and Tiberon Trace in Wadsworth Unmistakably Premier might have sold. “All that money,” he said, “is leaving here.” ■

Could your global banking needs use some local advice?

Experience worldwide capabilities with hometown sensibilities. From advisory, trade, and payment services to working capital and foreign exchange, FirstMerit combines all the international banking products and services you’d expect from a larger institution, with the personalized service of a trusted neighborhood bank.

‘Beat up like everyone else’ In a phone interview, Mr. Kovack, Unmistakably Premier founder and owner, blamed the Bilney house on Huntington Bank pulling his line of credit as it stopped funding home builders in 2010. “We’ve been beat up like everyone else,” Mr. Kovack said. “We built 120 homes in 2010. We had (more than) 36 homes to start, with earnest money down, when the big banks pulled our financing. I would say we were one of the last ones to experience what other (smaller) builders had earlier.” Mr. Kovack said he is trying to get funds to complete 40 homes he has under contract. He hopes to clear the decks to rebuild his business. He said he hopes to land money from hedge funds to start building with new resources by August. “You get through it,” Mr. Kovack

sheriff’s office. The sale only netted one $990,000 bid, according to the bankruptcy filing.

TO L E A R N MOR E, C O N T A C T :

Chris Pilkington at 800-237-6384. Follow the latest market trends @ﬁrstmerit_mkt

PERSONA L

BUSINESS

COMMERCI A L

W E A LT H

Member FDIC 294 _FM12

20120625-NEWS--8-NAT-CCI-CL_--

6/22/2012

2:34 PM

Page 1

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 25 - JULY 8, 2012

Sawyer preparing Italian concept for University Circle By KATHY AMES CARR clbfreelancer@crain.com

Before Jonathon Sawyer opened the French-inspired Greenhouse Tavern, he and some of the restaurantâ&#x20AC;&#x2122;s co-pilots traveled to France for some research and Sawyer development. He went to Tokyo to more fully integrate himself with the Japanese metropolis and cuisine before unveiling Noodlecat. Now the chef has recently returned from a 40-day jaunt in Italy, the bulk of the time spent in Trentino, where

Mr. Sawyer engrossed himself in the culture in preparation for a planned spring 2013 opening of an Italian concept targeted for Uptown in University Circle. â&#x20AC;&#x153;The concepts are representations of our experiences,â&#x20AC;? Mr. Sawyer said. The chef is constructing a menu inspired by the cuisine of the northern Italian Trentino region, which highlights single-grain pastas, potatoes, cabbages, apples, rich cheeses, pork and freshwater fish. â&#x20AC;&#x153;I think the restaurant will be well-received because it gravitates

OFFICE LEASING OPPORTUNITIES IN CLEVELAND 5(6(59( 648$5( _ ($67 Completely Renovated Indoor Parking Dry Cleaner Market, Florist Restaurants Car Rental

675((7

Great Highway Access Manned Security Desk at Entrances On-Site Property Management and Maintenance Embassy Suites Hotel

&(17(5 675((7

continued from PAGE 1

Close to Major Highways and Attractions in the West Bank of the Flats. Easily Accessible From Downtown Cleveland. )RU PRUH LQIRUPDWLRQ RQ WKHVH H[FLWLQJ RSSRUWXQLWLHV SOHDVH FRQWDFW

* ) &R\OH ,,, 6,25 JHRII FR\OH#RPFOH FRP

0LFKDHO - 2FFKLRQHUR

ZZZ RVWHQGRUI PRUULV FRP

PLFKDHO RFFKLRQHUR#RPFOH FRP

Greenhouse pastry chef receives honor Greenhouse Tavern and Noodlecat pastry chef Matt Danko is scheduled to be in Los Angeles today, June 25, for one sweet honor. Mr. Danko, 29, has been named one of 20 â&#x20AC;&#x153;Young Gunsâ&#x20AC;? by Eater, a national restaurant, bar and nightlife blog. The site defines Young Guns as its â&#x20AC;&#x153;annual roll call of the next guard â&#x20AC;&#x201D; the most promising newbies in food, wine and hospitality.â&#x20AC;? â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s really exciting,â&#x20AC;? Mr. Danko

Mr. Sawyer said he sells each month between 500 and 1,500 bottles of the boutique vinegar. The production and bottling process shuttles between the basement of the chefâ&#x20AC;&#x2122;s Shaker Heights home and The Greenhouse Tavern. To address the production limita-

ZZZ WKHNGJURXS FRP

The Ohio Energy Challenge We have the team for that. Energy development in Ohio is on the fast track. Our legal team includes diverse specialists who have been at the forefront of the growing energy industry in our state. The stakes are high. We have a high-energy group that is focused on providing insight for your energy challenges and foresight for the issues on the horizon.

Hospitality Group, that will feature another of Mr. Symonâ&#x20AC;&#x2122;s B Spot restaurants, a duplicate of Mr. Whalenâ&#x20AC;&#x2122;s Rosie and Roccoâ&#x20AC;&#x2122;s restaurant at the Horseshoe Casino Cleveland, and Sawyerâ&#x20AC;&#x2122;s Street Frites, which will feature the signature item from Mr. Sawyerâ&#x20AC;&#x2122;s Greenhouse Tavern on East Fourth Street in downtown Cleveland. â&#x20AC;&#x153;Bringing in three of the preeminent chefs in the region, we think, is a way to re-energize, revitalize and add a nice component to our premium offerings,â&#x20AC;? said Jim Ross, the Brownsâ&#x20AC;&#x2122; vice president of business development. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s local equity there; theyâ&#x20AC;&#x2122;re all visible members of the community.â&#x20AC;? With Levy Restaurantsâ&#x20AC;&#x2122; contract to provide services in the stadiumâ&#x20AC;&#x2122;s premium areas expiring, the Browns received proposals from many concessionaires, including Levy and Delaware North Sportservice, the latter being the Brownsâ&#x20AC;&#x2122; general concessions provider. But Aramark Sports and Enter-

tainment, a Philadelphia-based arm of Denver-based Aramark, stood out when the Browns visited other venues at which Aramark provides similar premium services. In Cleveland, the company will operate in the stadiumâ&#x20AC;&#x2122;s two club areas, its suites and at the 200-plus corporate events, weddings and parties to which the stadium plays host each year. The latter business is an area the Browns want to grow, according to Mr. Ross, so Aramarkâ&#x20AC;&#x2122;s ability to bring Messrs. Symon, Whalen and Sawyer on board helped. â&#x20AC;&#x153;The chef component gives us a unique hook to host more corporate functions,â&#x20AC;? Mr. Ross said. â&#x20AC;&#x153;We open up those stands and give companies the ability to have the best in Cleveland dining, and thatâ&#x20AC;&#x2122;s very important for the corporate function side of things. â&#x20AC;&#x153;Aramark presented a plan that really hit on their ability and track record at other buildings; theyâ&#x20AC;&#x2122;ve driven that (non-gameday) business at other buildings.â&#x20AC;? Kevin Kearney, Aramarkâ&#x20AC;&#x2122;s district

On average, Northeast Ohio employers save $13,513 by hiring an intern for entry-level projects, versus assigning a higher-skilled, fulltime employee.

McDonald Hopkins LLC 600 Superior Avenue East, Suite 2100, Cleveland, OH 44114 â&#x20AC;˘ 216.348.5400

Carl J. Grassi

Shawn M. Riley

President

Cleveland Managing Member

Chicago â&#x20AC;˘ Cleveland â&#x20AC;˘ Columbus â&#x20AC;˘ Detroit â&#x20AC;˘ Miami â&#x20AC;˘ West Palm Beach mcdonaldhopkins.com

said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s cool for the restaurant, but itâ&#x20AC;&#x2122;s one more reason why this city is great.â&#x20AC;? The pastry artist is the only Young Gun from Ohio, of 2,000 applications. Mr. Danko began working three years ago at the Greenhouse Tavern as an intern before accepting a full-time position as a cook. Mr. Sawyer two years later gave him the reins to contrive the dessert menu at the gastropub. â&#x20AC;&#x201D; Kathy Ames Carr

tions, the chef is prototyping a new flagship vinegar with a partner in Columbus. Mr. Sawyer, who in April opened a Noodlecat stand at the West Side Market, said he expects this year to generate between $4.5 million and $6 million in sales. â&#x2013;

Chefs: Browns eye non-gameday events

6721(%5,'*( 2)),&( %8,/',1*6 Completely Renovated Expansive Parking Area Fitness Center Full Service Restaurant Outdoor Patio Area

toward our Austrian, Hungarian, Slovakian and Germanic heritage,â&#x20AC;? he said. He plans in September to send to Italy Greenhouse Tavern chef Brian Goodman, who will head up the yetto-be-named eatery. Like his other two establishments, Mr. Sawyer anticipates the Italian concept will become a certified green restaurant. Once the project comes online, Mr. Sawyer expects to boost his operationâ&#x20AC;&#x2122;s current employment of about 100 to between 160 and 170. Meanwhile, the chef and his staff have been busy churning out artisan vinegar, which plays a role in many of the restaurantsâ&#x20AC;&#x2122; dishes. In February, it hit the shelves of local shops such as neighboring retail outfit Dredgerâ&#x20AC;&#x2122;s Union, as well as Publican Quality Meats restaurant in Chicago and Houston grocer Revival Market. Heâ&#x20AC;&#x2122;s also working with Cleveland Heights author Michael Ruhlman to offer the vinegar online through OpenSky, which sells products endorsed by celebrities and experts.

Learn more by reading NOCHEâ&#x20AC;&#x2122;s 2012 Regional Internship & Co-op Pay Rates, Practices, and Economic Impact executive summary at www.noche.org/intern.

manager in the Cleveland area, said the companyâ&#x20AC;&#x2122;s success in that arena has been fueled by the proliferation of football-only stadiums across the NFL. With only 10 games and at best a handful of concerts on the calendar, these stadiums go unused for major portions of the calendar. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s been an opportunity there for greater facility utilization at these stadiums,â&#x20AC;? Mr. Kearney said. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;re looking at a lot of open dates, and weâ&#x20AC;&#x2122;ve had tremendous success using the premium spaces for special events. We think having these chefs will make the facility more attractive for (special event) usage.â&#x20AC;?

Howdy, neighbor The Browns didnâ&#x20AC;&#x2122;t have to look far for at least one Aramark reference: The company opened B Spot, a burger restaurant by Mr. Symon, on The Qâ&#x20AC;&#x2122;s main concourse, and Bar Symon, on the arenaâ&#x20AC;&#x2122;s club level, in 2009. Before last season, Aramark opened Mr. Whalenâ&#x20AC;&#x2122;s Roccoâ&#x20AC;&#x2122;s Nachos and Tacos at The Q. Mr. Sawyer, in addition to the Greenhouse Tavern, also owns Noodlecat, on Euclid Avenue near East Fourth, in downtown Cleveland. At The Q, the Cavaliers were trying to reinvest in the facility and update and refresh concepts, according to Mr. Kearney, who spearheaded the initial partnership with Mr. Symon. Mr. Kearney said Mr. Symon and his business partner, Doug Petkovic, got Aramark thinking about an expanded partnership with Messrs. Whalen and Sawyer, which presented itself when the Browns sought a new provider in their premium areas. â&#x20AC;&#x153;These guys are Cleveland champions and Cleveland sports fans,â&#x20AC;? Mr. Kearney said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been discussing different opportunities with them for a number of years.â&#x20AC;? Aramark, which operates at over 150 venues in the United States and Canada, including Blossom Music Center in Cuyahoga Falls, is in the beginning stages of construction of the new stands at Cleveland Browns Stadium. Mr. Kearney said the companyâ&#x20AC;&#x2122;s goal is to have the new spaces finished by July 29, when country music stars Kenny Chesney and Tim McGraw play at the stadium. â&#x2013;

20120625-NEWS--9-NAT-CCI-CL_--

6/21/2012

4:06 PM

Page 1

JUNE 25 - JULY 8, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Radio: Stations develop Crain’s receives 10 Press Club honors unique niche in market continued from PAGE 3

the station will work to sound Cleveland. He has planned a rock and entertainment talk format driven by a team of about a dozen people who will take to the streets of Cleveland and put Clevelanders on the air. (What kind of rock is still up in the air, and yes, he’s open to involving local artists.) “We just see a need in the market,” Mr. Wilson said. “Radio has become so homogenized and corporate throughout the country that the localism has vanished. What we’re doing is bringing that back.” The goal is to hire local personalities and immerse them at rib cook-offs, county fairs and the like, Mr. Wilson said. He’s in talks with the Rock and Roll Hall of Fame about promotions, too. “We just can’t play music because anybody can go anywhere to pick up music,” he said. “Our whole thrust will be music and entertaining talk. Pandora (Internet radio) and Sirius (satellite radio) don’t blend those two together, and they’re certainly not local. “We want to be a station that everybody talks about at Starbucks in the morning because of our programming — because it’s different, it’s entertaining and it’s fun,” he added.

Powering up After selling his Cleveland stations in 1999, Mr. Wilson continued his broadcast work in other markets, including Las Vegas, where he and his partners operate a television station, and in Chicago, where they recently leased their radio station to Merlin Media. Now, his company, Murray Hill Broadcasting, holds the license to the Channel 6 low-power television station and its accompanying 87.7 FM radio. (The license has been in Mr. Wilson’s hands for several years, just through a different company.) They plan to broadcast what they’re doing on air on television, too, eventually, Mr. Wilson said. “There’s nothing like launching a new station in your own market,” Mr. Wilson said. “It’s fun to be back in Cleveland to launch a local Cleveland radio station. All your ties are here.” According to the National Association of Broadcasters in Washington, D.C., there are 13,585 radio stations on air, a number that’s been trending up for several decades. Despite some consolidation in terms of radio ownership, local owneroperators are not all that unusual, according to Dennis Wharton, executive vice president of communications for the association, which represents roughly 8,000 member radio and television stations. There are some 3,000 owners of radio stations in the United States, he estimated. While he wouldn’t be more specific, Mr. Wilson said he’s spending “significant money” on the equipment and salaries needed to get WLFM-LP up and running. He’s in the process of hiring talent and production staff, as well as account executives who will sell advertising and develop partnerships. He’s looking at two locations for the physical station. While he’s well aware of the lower overhead costs of Internet radio — “we could launch

“The (stations) that are going to be the most profitable are those that invest the time and research in developing talent (and) programming that is targeted to the local community.” – Tom Wilson, radio executive 25 Internet radio stations next week if we wanted” — he said he wants “a real radio station.” The station will stream online, though, so listeners can pick up the audio from anywhere. Though he doesn’t know Mr. Wilson or the Cleveland market, Mr. Wharton thinks Mr. Wilson has a solid shot at success. “Good local radio is no different today than it was 15, 20 years ago,” he said. “The ones that are going to be the most profitable are those that invest the time and research in developing talent (and) programming that is targeted to the local community. You just can’t be a jukebox in the sky and succeed as a local radio station long term. There are so many options for the listener that were not there 15 (or) 20 years ago. “The unique niche about radio is that we can have a connection to the local community that none of these satellite (stations) or Pandoras have,” Mr. Wharton added. “So it can sometimes cost more money to hire news crews and talent that is local as opposed to running an announcer outside the market, but if they do it right, it can be hugely successful.”

Crain’s Cleveland Business was honored with 10 awards, including second place in the category of Best Business Publication in Ohio, in the statewide Excellence in Journalism awards competition presented by The Press Club of Cleveland. In the Open Print competition among all print publications in Ohio, editor Mark Dodosh won first place in the category of single editorial for “What a waste,” which chastised elected officials in Columbus for failing to eliminate tax breaks that are of dubious economic benefit to the state. Also, government reporter Jay Miller won second place in the category of analysis for “Road to turnpike deal may be rough,” which looked at the challenge Gov. John Kasich may face in trying to work a deal to lease the Ohio Turnpike. Crain’s received three awards for its visual content. Cartoonist Rich Williams won first place in the category of single cartoon for an editorial cartoon that commented on the challenges faced by local governments in merging services. Also, Kathy Ames Carr and graphic artist Lauren Rafferty received a second-place award for best single-page tabloid design and another second-place award for best business publication cover for “Don’t stick a fork in the

Warehouse District just yet,” an illustration for a story that looked at the competition among restaurants in and around downtown Cleveland. In the competition among nondaily newspapers, assistant editor Joel Hammond won first place in the sports writing category for “The lack of luxury,” which examined the over-abundance of luxury seating at Progressive Field. In the competition among business publications, manufacturing reporter Dan Shingler won second place in the general news category for “Eaton suit over trade secret theft may be dead due to improprieties,” which reported on the effects on Eaton Corp. of legal missteps in a Mississippi court. Also, sections editor Amy Ann Stoessel, managing editor Scott Suttell, and Messrs. Miller and Shingler received second place in the category of feature package for “Up in the air,” stories that looked at the future of local air service and what it might mean for the region. And in new media, finance reporter Michelle Park received second place in the online general news category for “Kelley & Ferraro LLP files for Chapter 11 bankruptcy protection,” whch told the back story of a feud between the widow of co-founder Michael Kelley and the firm’s other

Miller

Williams

Rafferty

Hammond

Shingler

Stoessel

Suttell

Park

namesake partner, James Ferraro. The Business Courier of Cincinnati won first place in the Best Business Publications category in which Crain’s received second place. ■

DON’T BE LEFT BEHIND Never Miss An Issue...

An ‘immediate world’ What’s “doing it right,” though? For one, hiring people who know the region, who can name landmarks during their traffic reports and build a trust with listeners, Mr. Wharton said. Mr. Wilson said he’s on it. Some say the days when local personalities shine in locally owned and operated radio are gone, and Mr. Wilson agrees. “I do — I think radio’s changed completely,” he said. Still, Mr. Wilson’s love of the business clearly remains strong, and he plans to serve listeners everything but syndicated material. If something happens at 9 a.m., WLFM-LP will have the capability to implement something related to it at 9:15. “That’s the beauty of media: It’s an immediate world,” he said. “If something happens in the market, we can be on the air immediately.” Craig Karmazin, president and CEO of Good Karma Broadcasting, the Wisconsin-based parent of ESPN Cleveland, anticipates the new station will be “intense” competition. But Mr. Karmazin isn’t sorry to see a new station enter the market. For one, he expects it to “make the overall pot bigger” in terms of potential advertisers. And he added, “The real excitement of it for someone in the industry is (we’re getting) a creative, successful, energetic person … who is saying, ‘I want to be in radio in Cleveland, Ohio.’ For someone who’s made that same choice, it’s really exciting. It shows the opportunity that exists in this market.” ■

Dodosh

Exclusive offer for CLE flyers SUBSCRIBE TODAY FOR ONLY $49

CrainsCleveland.com/travel

20120625-NEWS--10-NAT-CCI-CL_--

6/21/2012

4:01 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 25 - JULY 8, 2012

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Square deal

rom the early days of this publication, we’ve expressed a desire for a dramatic makeover of Public Square in downtown Cleveland. It’s heartening to know that Mayor Frank Jackson is of a similar mind, because the benefits the city could gain in creating a grand public space in the heart of town could be greater now than at any time in Cleveland’s history. Cleveland never will be able to develop a public space to rival New York’s Central Park. However, a reconfiguration of Public Square into one big public park or two large rectangular parks rich in green space could give a boost to the ongoing transformation of downtown Cleveland into a place where people no longer just work, but, more importantly, now live. Even city dwellers want a break from concrete and busy streets. A remade Public Square where they could enjoy walks with their dogs or the occasional public concert would provide one more inducement for downtown living, and could encourage the further redevelopment of empty office buildings into apartment and condo properties. A park-like Public Square also would be a welcome lunchtime space for office workers, and could serve as an inviting front door to the city for those visitors emerging from the Horseshoe Casino or using the Regional Transit Authority’s Red Line rapid transit train to come downtown from Hopkins airport. The recent Marine Week activities the U.S. Marine Corps staged in part at Public Square show the energy a large, open public space can produce throughout downtown. For Marine Week, Public Square was closed at Ontario Street and Superior Avenue, which bisect the square and divide it into four quadrants. Families and friends gathered together to climb on a tank, hold a bazooka or talk to the Marines assembled at the square. They had fun, with many wandering downtown’s streets in search of places for lunch or dinner. Yes, closing the square screwed up traffic that week. But we’re confident traffic planners could figure out ways to keep cars and trucks moving if a permanent change was made in Public Square’s configuration. A transportation planning firm hired by Mayor Jackson’s Group Plan Commission has recommended that Public Square be split into two big rectangles by closing Ontario, which runs north-south, but leaving Superior open to east-west vehicular traffic. A study by the planning firm, Nelson Nygaard of San Francisco, should serve as an excellent starting point for talks among civic leaders of how to proceed with a change at the square. We’d be disappointed if the status quo winds up winning out after this review process. Public Square as it is today isn’t the welcoming, enjoyable place it could — and should — be. It is too sterile, and it’s too chopped up to use in an effective manner for bringing people together. The heart of Cleveland’s downtown is in need of major surgery, and we hope it happens under a mayor who sees the need for it as much as we do.

FROM THE PUBLISHER

MidTown’s new look hard to believe

the demand for downtown housing and magine Euclid and Chester avenues businesses — especially biomedical — of 40 years ago, staggered by the would be leading the redevelopment of aftermath of the urban riots of the Euclid Avenue. Oh, yes, and there would 1960s and wave after wave of outbe several blocks of new housing along migration to the suburbs. Neither roadChester Avenue near the campuses of way was one that drivers were comfortthe Cleveland Clinic and University Hosable on as they commuted to downtown. pitals. And downtown’s Public Square There may not be a more dramatic, and University Circle would be nearly visceral transformation served by a sleek new bus service anywhere in our city than along BRIAN that looked and felt like a train, those roadways between down- TUCKER complete with pleasant, shiny town and University Circle, and passenger stations. much of the credit can go to a Right. Back then, you would neighborhood economic develhave looked at me like I was opment corporation that argucrazy. And if you were like most ably is Cleveland’s best: MidClevelanders, you had probably Town Cleveland Inc. given up on that stretch of real Recently, I had the privilege estate. Not the folks behind of taking part in MidTown’s MidTown Cleveland, who had a annual meeting — its largest to vision and faith that there was value in date — something I’ve done for the past that land in the future. They were right. four years. The change has been remarkLearn about this great success story. able, and if you doubt that, just drive those You’ll find new pride in what Cleveland two streets. If it has been a long time has achieved. And it’s just beginning. since you made that trip, you will be **** shocked by the transformation. THE UTICA SHALE NOW is part of our Imagine it’s 1970, and I uttered this regular conversation, and certainly is a forecast 40 years into the future: Develbig part of what we’re planning for this opers would not be able to keep up with

publication. And it goes way beyond how much the big oil players have shelled out for the mineral rights along our state’s eastern border counties. The fact that Ohio’s shale oil is rich with resources not found in the shale plays in neighboring states means, for example, that the plastics businesses that once fled to Louisiana may be returning to the state of their origin. Also, as we reported recently, watch for the construction of natural gas refilling stations, because it’s likely that big fleet operators are already planning their shift away from gasoline. That’s not some futurist-speak. Recently, Dan Shingler, our reporter on the shale beat, wrote about a deal between Shell Oil and TravelCenters of America to build at least 100 natural gas refilling spots at its highway operations. The world is changing at an incredibly fast pace. That’s why we are launching our new Shale magazine, which will be delivered to our readers as well as geo-targeted financial executives in all the shale states. This is a game-changer, folks, and we want to be there to tell you the story. ■

PERSONAL VIEW

Third Frontier threatened by partisanship By RONN RICHARD, TED KALO, DANIEL R. CLAYPOOL, ROBERT AUFULDISH and ED FITZGERALD

ince 2002, policymakers across the nation have looked to Ohio’s Third Frontier as a model program to modernize and grow state and regional economies. They have admired Third Frontier for successfully leveraging $1 billion of state spending into more than $6 billion of combined federal and private investment. They have admired Third Frontier’s foresight in financing emerging technology companies — especially renewable energy — at the early stages of their growth, when funding is most needed and the returns highest. But most of all, policymakers have admired Third Fron-

Mr. Richard is the president and CEO of the Cleveland Foundation. Mr. Kalo is a Lorain County commissioner. Mr. Claypool is an Ashtabula County commissioner. Mr. Aufuldish is a Lake County commissioner. Mr. FItzGerald is Cuyahoga County’s executive. tier for keeping its decisions untainted by politics, despite multiple regime changes in Columbus and across the nation. This reputation led Ohio voters to support the funding of Third Frontier twice, most recently with a $700 million bond measure in 2010. It was a reputation well deserved, gained through well-chosen and active investment activities. In 2011 alone, Third Frontier awarded millions to emerging firms, including, locally, Kent

Displays, a manufacturer of flexible LCD products; CardioInsight, a medicalimaging company with origins at Case Western; Akron-based EchoGen for a heat energy recovery system; and Parma’s GrafTech and their graphite-based fuel cell components. In recent months, the very fundamentals that made the Third Frontier a model for the nation are in jeopardy. Gov. Bob Taft promised Third Frontier as a nonpartisan initiative, a mission Gov. Ted Strickland supported and maintained. This history of non-partisanship must continue. Despite the budding investment opportunities offered statewide by our rapidly developing high-technology sector, there’s concern that — as of this writing — Third Frontier has not released funds See VIEW Page 11

20120625-NEWS--11-NAT-CCI-CL_--

6/21/2012

3:06 PM

Page 1

JUNE 25 - JULY 8, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Streetsboro window maker moving Pa. production here

THE BIG ISSUE How do you feel about the statewide ban on texting while driving?

Acquisition opens new markets for Soft-Lite LLC By GINGER CHRIST gchrist@crain.com

KATHLEEN STEPHENS

CHRISTINA FERRONE

WILL TARTER JR.

LAURIE WALKER

Westlake

Brecksville

Aurora

I believe it’s the right thing to do from a safety perspective. … It’s so tempting when you get a text or a message, and I think it’s a prompt that’s absolutely driving people to make poor driving decisions and lack of awareness on the roads.

I think it’s critical that we keep others in mind and eyes on the road.

I definitely think it’s an important issue, and I think it’s one of those things that people can not realize the impact that texting while driving can have. … It’s a level of consciousness that needs to be raised among the general public.

As the mother of two 20somethings, I think there needs to be something done in terms of safety. … I don’t know if the ban is the answer to it, but I think something needs to be done.

➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.

A maker of vinyl replacement windows and doors based in Streetsboro is moving production of Gorell brand windows to its local plant. Soft-Lite LLC in March acquired Gorell Windows & Doors, a manufacturer based in Indiana, Pa., through a court-ordered receivership sale in Allegheny Common Pleas Court in Pittsburgh. The 294person company, which now goes by the name Soft-Lite Gorell, is hiring 40 to 50 people to handle the additional manufacturing output at its 200,000-square-foot Streetsboro plant. The company also retained Gorell’s sales and customer service employees and is maintaining Gorell’s retail shop in the town of Indiana.

Roy Anderson, president of SoftLite Gorell, said the acquisition of Gorell, which was a major competitor of Soft-Lite, gives the company a greater geographic footprint and variety of product offerings. He anticipates sales growth of 50% from the acquisition. The company generates $50 million to $100 million a year in revenue. While Soft-Lite currently serves the Midwest, Northwest and Atlantic seaboard, Gorell expands that presence to Florida, Texas and other southern states. In addition, Gorell manufactures an impact product — windows and doors designed to withstand high-impact situations such as hurricanes — not in Soft-Lite’s portfolio. Mr. Anderson said SoftLite also is considering other acquisitions that could help grow the company, including at least one on the West Coast. ■

View: Wind project would position region as a national leader Lake, Lorain, Ashtabula and Cuyahoga counties, to demonstrate the commercial potential of wind power and thereby attract private funding for further expansion and research. Breaking with the Third Frontier’s record for investing foresight, the program denied funding to LEEDCo, despite approval recommendations from outside reviewers for the Ohio Department of Development and two business representatives on the board. The decision also ignored reports from both private observers praising the significant short- and long-term benefits this pilot program would bring the state. This pilot project alone would yield more than 500 jobs in construction, research and associated fields, with attendant increases in retail spending, tax revenue and housing demand. In the long term, lowered energy costs and a renewable, low-carbon source of energy provided by Lake Erie wind would significantly improve energy prices and business costs. Looking beyond the price of elec-

continued from PAGE 10

for a project in six months. The fiscal year ends in June, and while state funds will roll over, the opportunity to receive supplemental federal funds could be missed. Also, the projects being considered stray from the program’s stated mission of fostering early stage entrepreneurship. These worrying trends call Third Frontier’s hardearned national reputation into question, and threaten to betray the mission approved and funded by the voters of Ohio. Recently, the Lake Erie Energy Development Corp. (LEEDCo) applied for a $5 million grant from Third Frontier to help fund construction of an initial set of turbines, seven miles off the coast of Cleveland. LEEDCo is the nonprofit organization tasked with building an offshore wind industry in Lake Erie — the first such industry anywhere in the United States. This project was initiated by the Cleveland Foundation, NorTech, the city of Cleveland, and

RECENT TRANSACTIONS FROM OUR CLEVELAND HEADQUARTERS:

integrate

tricity, we must recognize that LEEDCo’s wind power advances have given Northeast Ohio the lead in growing an industry. While the natural advantages of Lake Erie’s constant, high-energy winds eventually will draw investment, the chance to be the national leaders in offshore wind is unique and temporary. Receiving financing and support from the Third Frontier Commission could help LEEDCo win up to $50 million in federal grants it has applied for to help finance construc-

tion of the offshore wind farm. However, the impact of this seemingly small project reaches beyond the tens of millions in additional funding it could bring to Northeast Ohio; we have within our grasp the opportunity to once again be the capital of an American industry. Instead, ignoring the advice of outside reviewers and business representatives, Third Frontier turned its back on the progress our region has made and places in jeopardy the immense sums of external funding

that could be awarded to Ohio for related research, job creation and opportunities for Ohio’s businesses. The commission’s decision represents a worrying departure from an insightful and highly successful strategy, and it may signal the reversal of Ohio’s recent strides towards national technological leadership. For that reason, we are asking Ohio Third Frontier to reconsider their tradition-breaking denial and reconsider funding the LEEDCo application. ■

The executive summary for our business traveler appreciation day:

You’re the best.

FHA 223(F)

84 Unit Garden Style

The new Bellwether Enterprise has brought together our local market expertise, national lending relationships and ﬁnancing structure experience to offer our clients the most extensive multifamily, commercial real estate solutions. With a portfolio of over $5 billion, we provide a variety of loan products for investment real estate placed through a range of institutional investors including life insurance companies, pension funds, commercial banks, CMBS lenders and government agencies such as FHA, Fannie Mae, Freddie Mac. Call when you need an expert in multifamily and commercial ﬁnancing. ™

WADSWORTH, OHIO

$4,635,000 FREDDIE MAC

195 Unit Apartment Complex MEDINA, OHIO

$7,500,000

2012 LIFE INSURANCE COMPANY

Retail Shopping Center BROOKLYN, OHIO

$10,500,000

BUSINESS TRAVELER AP PR ECIAT ION DAY

FOR MORE INFORMATION CONTACT: J. Ross Halloran, Jr. Senior Vice President 216-820-4528 rhalloran@BellwetherEnterprise.com

www.BellwetherEnterprise.com

VISION

KNOWLEDGE

PEOPLE

Jim Doyle Senior Vice President 216-820-4502 jdoyle@BellwetherEnterprise.com

At CLE, we’re dedicated to our loyal business customers. Which is why we’ve made Monday, June 25th Business Traveler Appreciation Day. From 6 a.m. – 10 a.m., enjoy special perks, including free copies of Crain’s Cleveland Business magazine. Because at CLE, we make it our business to appreciate your business.

clevelandairport.com

20120625-NEWS--12-NAT-CCI-CL_--

6/21/2012

1:50 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Virtual Hold rolling out new products Callback software moves into mobile devices, TVs By CHUCK SODER csoder@crain.com

The next time you need to talk to someone at a call center, you may not need to dial a phone number. At least not if Virtual Hold Technology LLC’s latest products take off, as the fast-growing Fairlawn company is in the process of launching software that would give contact centers a way to call you before you call them. A few banks that already use the company’s core technology — which allows contact centers to call you back instead of putting you on hold — are rolling out mobile applications that use the company’s new Conversation Bridge software, and a cable company is plugging similar software into apps for both mobile devices and Internet-connected TVs. It’s up to Virtual Hold’s clients to develop the front end of both the mobile and TV apps, which allow their customers to troubleshoot problems on their own first. Virtual Hold’s technology comes into play if they need more help; in both the mobile and TV apps, end users can

press buttons that tell the contact center to give them a call as soon as possible. They also can schedule the call, choosing from a list of times generated by Virtual Hold’s core software, which can estimate how long it will be before a contact Hayden center employee becomes available. That employee won’t start from square one. He or she already will know that the end user has been through the troubleshooting steps in the app, said Eric Camulli, vice president of marketing for Virtual Hold, which has 110 employees, up from 85 at the start of 2011. That feature is key, said Paul Stockford, research director for the National Association of Call Centers of Hattiesburg, Miss. His members have been clamoring for a good way to connect with customers via mobile devices, in particular. “That’s a pretty good first step,” he said. The new products will be a big part of Virtual Hold’s growth plans, said Wes Hayden, who two weeks ago was announced as the company’s new CEO. Mr. Hayden, who replaced Kevin

Sjodin, started consulting with Virtual Hold to develop its product strategy about a year ago. At the time, the company already was working to create Conversation Bridge-style tools, and it already offered a call-back button customers could add to their websites. Mr. Hayden, however, suggested the company put a bigger focus on those products. The mobile app offering is particularly timely; many Virtual Hold clients are developing mobile apps or plan to do so over the next 18 months, said Mr. Hayden, who has led multiple companies related to contact centers. Not only has Virtual Hold added about 25 employees over the past 18 months, but the company has more than doubled the size of its staff over the past five years, according to Crain’s Cleveland Business’ annual list of Northeast Ohio software developers. Virtual Hold’s revenues have grown by an average of 25% each year for the past three years, Mr. Camulli said. The company expects sales this year in the range of $25 million to $30 million. ■

JUNE 25 - JULY 8, 2012

GOING PLACES JOB CHANGES CONSTRUCTION GILBANE BUILDING CO.: Jon Fischer to senior project engineer; Tom Ruminski and Praem KanagaRaj to project engineers; John Coughlin and Christopher Kowalczyk to assistant project engineers.

Melda

Ibrahim

Swartz

Williams

Sweeney

LaRochelle

GREAT LAKES CONSTRUCTION CO.: Chris Stutz to operations manager.

CONSULTING HURON CONSULTING GROUP: Geoffrey Frankel to managing director, financial consulting.

EDUCATION NOTRE DAME COLLEGE: J. Scott Swain to director of athletics.

director of communications, industrial sector.

SOUTH UNIVERSITY: Bruce Campbell to dean of academic affairs and operations, Cleveland campus.

NONPROFIT

UNIVERSITY OF PHOENIX CLEVELAND CAMPUS: Stephen C. Quick to campus college chair, School of Business. WHITE HAT MANAGEMENT: Maggie Ford to chief academic officer; Joe Weber to chief financial officer; Pete Zacharias to DELA (Distance & Electronic Learning Academies) controller; Carrie McLain to DELA business manager; Stephanie Coney to call center coordinator/ board relations liaison; Rodd Coker to vice president, business development; Roy Berlocker to senior director, procurement and facilities.

FINANCE OHIO COMMERCE BANK: Ronald Schultz to vice president, commercial lender.

FINANCIAL SERVICE CEDAR BROOK FINANCIAL PARTNERS LLC: Joshua S. Melda to partner.

AKRON CHILDREN’S HOSPITAL FOUNDATION: Cheryl Williams to director, corporate partnerships.

REAL ESTATE TRANSACTION REALTY: Michael Smith to sales associate. WEBER WOOD MEDINGER/ CORFAC INTERNATIONAL: Kevin Riley to vice president.

SERVICE SAFEGUARD PROPERTIES: Kellie Chambers to assistant vice president, property preservation; Russ Klein to assistant vice president, quality assurance and training; Steve Meyer to assistant vice president, high risk and hazard claims; Travis Anderson to director, vendor management; Tim Rath to director, property preservation, regionals. TODAY’S BUSINESS PRODUCTS: Dennis Vargo, Paul Kruger and Eileen O’Connor to sales associates; Leann Teagno to customer service representative.

TECHNOLOGY HEALTH CARE SUMMACARE: Mumtaz Ibrahim, M.D., to chief medical officer.

SOFTWARE ANSWERS: Robert Sweeney to client services manager, ProgressBook.

LEGAL

BOARDS

BAKER HOSTETLER: Martin T. Booher to partner.

CUYAHOGA COUNTY NEXT GENERATION COUNCIL: Ludgy A. LaRochelle (Licata & Toerek) to chairman.

BENESCH: Scott E. Swartz to of counsel. OGLETREE DEAKINS: Natalie M. Stevens to associate. ULMER & BERNE LLP: Michael T. Tangry to associate. WICKENS, HERZER, PANZA, COOK & BATISTA CO.: Kimrey D. Elzeer, Timothy Pillari, James L. Miller and Christine C. Covey to associates.

MANUFACTURING EATON CORP.: Kelly Jasko to

JUNIOR LEAGUE OF CLEVELAND INC.: Hermione Malone (University Hospitals) to president.

AWARD JOHN CARROLL UNIVERSITY ALUMNI ASSOCIATION: Robin L. Baum (Zinner & Co. LLP) received the Alumni Medal.

Send information for Going Places to dhillyer@crain.com.

SALT • SALT • SALT • Water Softener • Industrial • Ice Melt • Food Call For Pricing!! Minimum Delivery: 1Pallet

1-800-547-1538 Salt Distributors Since 1966

20120625-NEWS--13-NAT-CCI-CL_--

6/21/2012

3:06 PM

Page 1

Why search across 50 states when youâ&#x20AC;&#x2122;re trying to hire in one? Ohio and Monster have teamed up to help big and small businesses match up with the best talent across the state. Ohio Means Jobs uses advanced tools and filters to narrow down your employee search to a manageable number of resumes, saving you time and effort. If youâ&#x20AC;&#x2122;re looking to hire in Ohio, look no further.

Faster Filters. Better Results.

20120625-NEWS--14-NAT-CCI-CL_--

6/22/2012

5:14 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Six suburban hotels change ownership Purchase prices could be key indicator for other properties going forward By STAN BULLARD sbullard@crain.com

A portfolio of six suburban Cleveland hotels, operating under flags such as Courtyard and TownePlace by Marriott, has gained a new owner in a $44.8 million transaction by Boston-based asset manager CrossHarbor Capital Partners. The seller was Ozre Lodging LLC, a New York City-based realty affiliate of the Och-Ziff Capital Management Group LLC, an asset manager for institutional investors. Ozre in 2005 bought the hotels for $44.6 million from their original developer, The Richard E. Jacobs Group of Westlake. David Sangree, president of the Hotel Leisure Advisors consultancy in Lakewood, said the virtually unchanged sale price likely indicates the properties are performing today at about the same level as they did in 2005. As there have been few arms-length hotel sales recently in the region — most recent transfers have been distressed sales — the CrossHarbor purchase prices will be important, Mr. Sangree said. They will establish some basic hotel values in the region after the recession, he said.

THE ROSTER The six hotels in suburban Cleveland that have changed ownership: ■ Courtyard Cleveland Independence, Independence ■ Courtyard Cleveland Hopkins Airport Hotel, Middleburg Heights ■ TownePlace Suites, Middleburg Heights ■ Courtyard Cleveland North, North Olmsted ■ Courtyard, Westlake ■ TownePlace Suites, Westlake However, Mr. Sangree said the prices only will be one factor, as hotel valuations are based on performance and locations of various properties. According to Cuyahoga County land records, the CrossHarbor affiliate, CIP II Buckeye Hotel Landlord LLC, paid $10.3 million for the Courtyard Cleveland Independence, 5051 W. Creek Road in Independence; $9.5 million for the Courtyard Cleveland Hopkins Airport Hotel, 7345 Engle Road in Middleburg Heights; and $5 million for the TownePlace Suites, 7325 Engle Road, also in Middleburg

Heights. The sale also included the Courtyard Cleveland North, 24901 Country Club Blvd. in North Olmsted, for $6.4 million. Two Westlake hotels, the Courtyard and TownePlace at 25050 and 25052 Sperry Drive, respectively, sold for $13.4 million, according to a single deed transfer for both properties. A Marriott International spokeswoman said Marriott itself will continue to manage the Courtyard in Independence. However, the Middleburg Heights and Westlake hotels will be managed by Sage Hospitality, a Denver-based hotel management and development concern, according to a June 18 news release from the company. “Marriott has been an incredible partner for Sage Hospitality and we look forward to adding these important properties to our portfolio,” said Walter Isenberg, Sage president and CEO, in the news release. A Sage spokeswoman declined to discuss the sale of the property or change in management. A CrossHarbor spokeswoman declined comment. Ozre officials did not return two calls by deadline last week. ■

JUNE 25 - JULY 8, 2012

TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

Date released: April 3, 2012 Type: Employer’s withholding Amount: $389,841

LIENS FILED

CMC Pension Services Inc. 3690 Orange Place, Beachwood ID: 34-1448997 Date filed: Sept. 2, 2009 Date released: April 10, 2012 Type: Employer’s withholding Amount: $28,484

PGT Construction Inc. 9900 York Theta Drive, North Royalton ID: 20-1054167 Date filed: May 22, 2012 Type: Employer’s withholding Amount: $210,481 Diversified Digital Group Inc. 6775 Industrial Parkway, North Olmsted ID: 34-1942032 Date filed: May 8, 2012 Type: Employer’s withholding, unemployment, corporate income Amount: $192,058 Southwest Cleveland Sleep Center Inc. 17900 Jefferson Park Road, Suite 102, Cleveland ID: 34-1938990 Date filed: May 18, 2012 Type: Employer’s withholding, failure to file complete return Amount: $172,736 Hal-Mark Associates Inc. ETS Travel 9697 Brookpark Road, Parma ID: 34-1770173 Date filed: May 3, 2012 Type: Employer’s withholding Amount: $139,950 Beckett & Chambers Inc. 1786 E. 47th St., Cleveland ID: 34-1015905 Date filed: May 18, 2012 Type: Employer’s withholding, unemployment Amount: $138,122

LIENS RELEASED Affordable Supply Center Inc. 720 E. 152nd St., Cleveland ID: 20-3513654 Date filed: Feb. 13, 2012 Date released: April 17, 2012 Type: Employer’s withholding Amount: $137,303 Al Ihsan School Inc. 4600 Rocky River Drive, Cleveland ID: 34-1961620 Date filed: Jan. 20, 2012 Date released: April 10, 2012 Type: Employer’s withholding, unemployment Amount: $11,751 Anegada LLC 48 Northfield Road, Bedford ID: 20-1703791 Date filed: April 30, 2008 Date released: April 10, 2012 Type: Employer’s withholding Amount: $59,195 Anegada LLC 48 Northfield Road, Bedford ID: 20-1703791 Date filed: Dec. 1, 2008 Date released: April 10, 2012 Type: Employer’s withholding Amount: $21,405 Cleveland Business Consultants LLC 526 Superior Ave., E. Suite 1111, Cleveland ID: 11-3678151 Date filed: Oct. 20, 2011

Cleveland Business Consultants LLC 526 Superior Ave., E. Suite 1111, Cleveland ID: 11-3678151 Date filed: Dec. 16, 2011 Date released: April 3, 2012 Type: Failure to file complete return Amount: $80,437

Gellner Engineering Inc. 2827 Brookpark Road, Parma ID: 34-1383557 Date filed: Nov. 10, 2011 Date released: April 17, 2012 Type: Employer’s withholding Amount: $12,163 Head Builders Inc. 15293 Sandalhaven Drive, Cleveland ID: 34-1437352 Date filed: May 12, 2011 Date released: April 26, 2012 Type: Employer’s withholding Amount: $23,077 J R Hudak Inc. 6465 Pebblecreek Drive, Independence ID: 34-1675388 Date filed: Jan. 24, 2012 Date released: April 10, 2012 Type: Unemployment Amount: $13,510 Le Clairs Custom Cabinetry Inc. 21706 Lunn Road, Strongsville ID: 34-1712180 Date filed: Nov. 30, 2011 Date released: April 17, 2012 Type: Employer’s withholding Amount: $28,967 Pioneer Environmental Systems Inc. 20536 Krick Road, Walton Hills ID: 06-1682390 Date filed: Nov. 29, 2011 Date released: April 3, 2012 Type: Employer’s withholding Amount: $10,375 Reeder Properties Inc. 1192 Holmden Ave., Cleveland ID: 34-1834472 Date filed: Nov. 22, 2011 Date released: April 10, 2012 Type: Employer’s withholding, corporate income Amount: $10,998 R J Evans & Assoc Inc. 31035 Cannon Road, Solon ID: 34-1163720 Date filed: Feb. 19, 2009 Date released: April 17, 2012 Type: Employer’s withholding Amount: $39,733 Varrsity Constructors LLC 23209 Miles Road, Suite A, Cleveland ID: 20-5305272 Date filed: Jan. 10, 2012 Date released: April 3, 2012 Type: Employer’s withholding, failure to file complete return Amount: $12,776 Victory Solutions LLC 6505 Rockside Road, Suite 175, Independence ID: 20-4833667 Date filed: Oct. 7, 2011 Date released: April 3, 2012 Type: Employer’s withholding Amount: $23,803

20120625-NEWS--15-NAT-CCI-CL_--

6/21/2012

4:02 PM

Page 1

he fields of Northeast Ohio’s employment landscape are blooming with opportunity in engineering, health care and technology. Higher pay in these sectors along with current and future job availability align with national trends, according to local and national salary and wage data. The region is fertile ground for growth in these occupations, with a commanding presence of globally oriented health care and technology companies. But, finding qualified people to fill these positions remains a challenge for employers. “It appears that demand for positions in engineering, IT and health care is being influenced, in part, by a supply shortage for talent within these fields,” said Marty Mordarski, director of membership and research for ERC in Mayfield Village.

The human resources organization in May released its 2012 wage and salary survey data, which provide a snapshot of the current jobs environment in Northeast Ohio, including some of the highest- and lowest-paying nonexecutive occupations. The 2012 wage and survey information are based on positions for which ERC surveys; the surveys don’t cover salaries for occupations

MANAGEMENT

such as surgeons or lawyers. The Bureau of Labor Statistics also provides comprehensive occupational information for the Cleveland-Elyria-Mentor MSA, based on 2011 annual mean wages, and covers the aforementioned positions as well as executive pay. This section takes a closer look at the region’s high- and low-paying occupations, based on these and other sources. — Kathy Ames Carr

Mean annual wage: $104,330

MAKING IT

Analyzing how well — or poorly — Northeast Ohioans are paid

See TOP Page 18

120,0000

100,0000

CONSTRUCTION Mean annual wage: $48,340 SOURCE: RESEARCH BY BALDWIN-WALLACE ECONOMICS PROFESSOR VERONICA Z. KALICH

$80,000

INSIDE THIS SECTION

Social services: $45,360

■ We chatted with area career and college counselors to gauge their views on what careers have the greatest earning potential in Northeast Ohio and outside the region. PAGE 17 Construction: $48,340

Education/librarians: $51,760

Life/physical scientists: $59,900

Business/finance: $63,790

Health practitioners: $70,280

Architecture/engineering: $71,720

Computer/math: $73,406

■ A look at the impact of the recession on wages, including the effect of lost jobs and changes in the employment market. PAGE 16 Legal: $85,460

Management: $104,330

$60,000

ccording to the Bureau of Labor Statistics, the highestpaid positions in Northeast Ohio belong to obstetricians and gynecologists, who earn an annual mean wage of $207,700, followed by physicians and surgeons at a little more than $200,000. Chief executives earn an average of $198,660, while psychiatrists bring home $177,000. Other six-figure professions include: ■ Dentists, $163,430 ■ Architectural and engineering managers, $119,850 ■ Computer and information systems managers, $115,240 ■ Aerospace engineers, $107,020 According to ERC’s membership survey, specialized engineers in Northeast Ohio generate an average median base salary of $74,152. Programmers and software engineers come in second, at $70,349, followed by safety managers, at $69,656. The average median base salary of a nurse, another high-demand occupation, is $68,578. Registered nurses are in some of the greatest demand within local health care systems. The Cleveland Clinic has a need for specialty nurses in cardiac,

According to research by Veronica Z. Kalich, a professor of economics at Baldwin-Wallace College, these are the top 10 occupations in Northeast Ohio, ranked by mean annual wage. All values are derived from data collected by the Bureau of Labor Statistics from employers in all industry sectors in the ClevelandElyria-Mentor metropolitan statistical area, and are as of May 2011, the most recent available. The figures take into consideration both high-paying and low-paying positions in each category.

$40,000

By KATHY AMES CARR clbfreelancer@crain.com

Mean annual wage: $70,280

HIGHEST-PAID OCCUPATIONS

$20,000

AT THE TOP

HEALTH CARE PRACTITIONER

■ A look at other factors, including benefits, unions and education, that go into pay. PAGE 19 ■ How does Northeast Ohio stack up with other parts of the country in terms of salaries and cost of living? PAGE 20 ■ Miscellaneous data, including Northeast Ohio’s highest-paid athletes, and more. PAGE 21

20120625-NEWS--16-NAT-CCI-CL_--

6/21/2012

4:21 PM

Page 1

MAKING IT

CRAIN’S CLEVELAND BUSINESS

JUNE 25 - JULY 8, 2012

Add up recession’s local toll, get $3.6B in lost earnings Salary ‘compression’ in existing work force could keep some pay down By AMY ANN STOESSEL astoessel@crain.com

rom 2001 to 2011, Cuyahoga County lost $3.6 billion in annual earnings. “That’s an astonishing figure,” said local economist George Zeller, who provided the statistics compiled from unemployment tax records. “We were over $4 billion before the recent gains. … This recession was very damaging.” The downturn’s effect on the region’s earnings was multi-faceted, from loss in jobs and changes to the employment market to adjustments in individual wages. While more recent figures show a reverse in the downward trend in overall earnings — the county actually gained nearly $672 million

from 2010 to 2011 — Mr. Zeller said Ohio never really recovered from 2000-02 before heading into the most recent recession. “The good news is average earnings are actually increasing,” he said. “Those are actual real gains.” Certainly, there are aspects in earnings that may not be reflected in the numbers, meaning in some cases more people working in a position may be earning less or vice versa. The seven-county region’s employment numbers also increased from 2010 to 2011, adding 13,145 jobs, a 1.1% uptick. In all, 158,189 jobs were lost in the same region from 2000-11, an 11.2% drop. “We want to get the jobs back, and we want to get their wages up, too,” Mr. Zeller said.

Mr. Zeller said the recovery is being driven by growth in high-wage manufacturing jobs. However, public sector cuts are slowing down the recovery. “The problem is the recovery is way too slow,” Mr. Zeller said, noting that at the current rate of recovery it will take 12 years to recover previously lost jobs in the region. In Cuyahoga County, that same figure is 21 years, and statewide, it’s nine years.

Recession results Of course, jobs and their corresponding wages were not the only losses from the recession. For those who remained employed during the downturn, existing earnings often took a hit. “What we did see was more

across-the-board pay cuts,” said Marty Mordarski, director of research and membership at ERC. Additionally, wage freezes and lower salary adjustments became more common. For example, actual salary increases in 2001 were 4.4%, according to ERC’s 2011-2012 Wage & Salary Adjustment Survey. In comparison, that number was 2.7% in 2010 and 2.8% in 2011. “It was very reactive. … I think it started happening before it got really bad,” Mr. Mordarski said. Mr. Mordarski said industries in which there was the most stagnation in terms of wage freezes and cuts were manufacturing, particularly for lower-skilled production, maintenance and service positions. In addition, at the height of the recession it was common to see health care institutions and nonprofits implement wage freezes, cuts and hiring freezes. Of note, however, is that the dip in salary adjustments is not unique to the most recent economic downturn. It also dropped to 2.6% in 2002, hovering at a little over 3% until 2010. “We saw a big dropoff after 2001,” Mr. Mordarski said. “That has not changed much really since then.” Katie Talarico, ERC’s survey manager, said employers last year started moving away from pay freezes. That doesn’t mean, however, that earnings will catch up to where they would have been had the recession not occurred. “It’s very unlikely their employer’s going to come back and make up for that,” Mr. Mordarski said. To that end, what’s known as “pay compression” is a resulting phenomenon of the recession. While the market calls for increased pay for new talent, especially for positions in high demand, salaries within the existing work force still are being negatively affected by the impacts of past cuts and freezes. “It puts organizations in a really challenging position,” he said. “That happens if you really stagnate. … The best practice is to adjust their rates.”

Structural issues Another result of the recent recession is a lot of “structural unemployment,” said Bruce McCain, chief investment strategist at Key Private Bank. A lot of jobs that disappeared simply are not coming back, which in itself is having an effect on some earnings levels. “This was a harder recession than

Did you know bees give directions to other bees through dance?

UP AND DOWN On average, Northeast Ohio employers provided actual pay increases of 2.8% in 2011, according to data from Mayfield Village human resources firm ERC. A look at past actual and projected pay increases:

Year

Actual

Projected

2011

2.8

2010

2.7

2009

3.1

3.3

2008

3.4

3.3

2007

3.5

3.3

2006

3.4

3.3

2005

3.4

3.3

2004

3.6

3.2

2003

3.3

3.0

2002

2.6

3.7

2001

4.4

4.1

most,” Dr. McCain said. “Household incomes have taken a pretty heavy beating.” Whole industries permanently reduced the number of people they need, so the state of being underemployed may have become permanent for some. “It was a recession on steroids,” he said. Baby boomers felt the brunt of structural unemployment, although Dr. McCain said each generation’s earnings may be affected in some way by the recession. Members of Generation X are facing a “bottleneck,” not having the opportunity to rise in pay or position since many Baby Boomers remain in the work force. Millennials, meanwhile, are facing high levels of debt and may not have the same opportunities in term of compensation as their predecessors. As for household incomes, they’re simply not rising as fast as they once did, especially as gas, food, college and health care costs increase, Dr. McCain said. And while it’s a trend that’s been long in the making, “it’s becoming much more excruciating painful for people.” Still, economist Mr. Zeller stressed that there are positive trends — and reasons to be hopeful. “Earnings are still holding up by and large,” he said. “That’s good, that’s part of the recovery. … That means this recovery is genuine. ■

Another little-known fact: As a COSE member, you’ll receive step-by-step guidance through complex employee beneﬁt options from our dedicated team members and the experts at Medical Mutual. And that’s just one of the advantages of an annual membership that works out to about $25 a month. Find out how COSE can help your business take the sting out of beneﬁt selection with a free health insurance quote today. CALL 216.923.0767 OR VISIT COSE.ORG/HEALTHQUOTE2 Health plans insured by Medical Mutual

20120625-NEWS--17-NAT-CCI-CL_--

6/21/2012

3:05 PM

Page 1

MAKING IT

JUNE 25 - JULY 8, 2012

CRAIN’S CLEVELAND BUSINESS

Job prospects trending up in IT, emerging industries By JUDY STRINGER clbfreelancer@crain.com

he notion that there aren’t any decent jobs out there simply isn’t true, according to the area’s college and career counselors, who say employment — and in many cases earnings — prospects for today’s students are good. And that’s not only the case for the fast-growing fields of health care, information technology and financial services, they say, but also for older sectors, such as manufacturing, and emerging ones, like alternative energy. “With regards to technology, computer science and information sciences, we can’t fill all the positions with the number of students we have available,” said Carmen CastroRivera, director of career services at Baldwin-Wallace College. The U.S. Bureau of Labor Statistics forecasts that employment of computer software engineers alone is expected to increase by 32% nationally between 2008 and 2018, which is much faster than the average for all occupations. The demand for computer information managers and computer systems analysts in Ohio will increase 13% and 14%, respectively, in the same time period. And salaries in information technology are strong. Jody Patterson, career counselor with Kent State’s Career Services Center, said she has seen starting salaries in IT-related jobs increase 3% in the last year. “We are talking about starting salaries well over $50,000, sometimes in the $60,000s,” Ms. Patterson said. Computer information research scientists and actuaries in Greater Cleveland clear more than $100,000, according to Baldwin-Wallace professor of economics Veronica Kalich. Such statistics debunk the perception that high-paying IT jobs are outsourced overseas. IT positions requiring lots of client and customer interaction or decision-making or that have security implications have remained in the U.S. and are on a growth curve, Ms. Castro-Rivera said.

nurse), and continue on from there to complete an associate degree or bachelor’s degree in nursing or allied health.” Accounting, auditing and related financial service positions are another bright spot. Ohio is expected to add 16% more accounting jobs between 2008 and 2018 with a similar increase in the number of auditing jobs. The BLS reports that the median annual wage of accountants and auditors was $61,690 in May 2010. “In times when things are more uncertain in terms of the financial picture, we all want people with expertise to help manage our insurance, retirement planning accounts and investment accounts,” Ms.

Castro-Rivera said. “For corporations, when there is not a lot of money for day-to-day operations, they need people who can handle it well.”

Making jobs A local manufacturing resurgence and the alternative energy industry are expected to provide increased opportunities for students who get the necessary expertise. Liz Walton, adult education director at CVCC, said the grubby manufacturing jobs of the past have given way to clean advanced manufacturing jobs — many of which are going unfilled as too few get the training necessary to replace retiring, experienced workers. Here in the Cleveland area, CNC

operators, charged with operating computer-control machines or robots in automated manufacturing processes, averaged slightly more than $36,000 a year as of May 2010, according to the BLS. According to Ms. Coyne, not a day goes by that a manufacturer doesn’t call CVCC looking for a machinist, CNC operator, maintenance technician or welder. Schools like hers provide a range of certification programs, but don’t have enough students to meet the escalating demand. “I think many students have old-fashioned views of manufacturing jobs as dirty, boring or declining. In fact, careers in advanced manufacturing offer exciting opportunities for people inter-

ested in designing and improving products, operating high-tech tools and machinery, analyzing problems and coming up with creative solutions,” she said.

Going into the unknown Of course, there are other fields expected to be fruitful here in Northeast Ohio. Dr. Kalich pointed out that legal jobs, along with business and financial professionals and health care practitioners, rank high both in terms of salary potential and concentration in the area. It is also impossible to know what new fields or jobs might materialize as a result of new technologies or products. “In 2012, we are seeing a lot of positions related to social media that did not even exist four years ago,” said Hilary Flanagan, director of John Carroll’s Center for Career Services. ■

MY BENESCH “We’re moving at the speed of light and Benesch is just as fast.” ELLIS YAN CEO TCP, Inc.

Healthy future Northeast Ohio’s global leadership in medical care coupled with the aging population’s growing demand for health care service translates into ample employment opportunities in the health care field. The BLS projects the health care and social assistance industry will create about 28% of all new jobs, or 5.7 million new jobs, in the U.S. through 2018. In Ohio, the demand for both acute care nurses and clinical nurse specialists will increase 18%, Ms. Patterson said. Other areas of health care job growth include care support services, such as social workers, which will rise 20% and mental health practitioners, which will see a 25% jump. “The wonderful thing about careers in health care is the pathways that exist for people who want to enter the field,” said Patricia Coyne, placement specialist with Cuyahoga Valley Career Center in Brecksville. “Students can earn certification with short-term training in direct patient care fields such as STNA (a state-tested nursing assistant or aid), medical assistant or phlebotomist ... find employment and continue their career path to become a paramedic or LPN (license practical

MY TEAM

Cleveland Columbus

Shanghai

TCP is a world leader in energy-efficient lighting. New technology and legislation changes their business and their legal needs on a daily basis. Benesch keeps pace with a team approach ensuring that TCP has everyday access to the entire breadth of our expertise. As their general counsel, Benesch assists TCP with everything from contracts and real estate to public affairs and intellectual property protection.

White Plains

To learn more about our relationship with TCP, visit beneschlaw.com/myteam

Indianapolis Philadelphia

Wilmington www.beneschlaw.com

Featured attorneys (left-right): IRA KAPLAN, STEVE AUVIL, MARTHA SWETERLITSCH, JAMES FRIEDMAN, DOUGLAS HAAS, BRYAN JAKETIC, YANPING WANG, MARK AVSEC and ALLAN GOLDNER. © 2011 Benesch Friedlander Coplan & Aronoff LLP

20120625-NEWS--18-NAT-CCI-CL_--

6/21/2012

3:28 PM

Page 1

MAKING IT

CRAIN’S CLEVELAND BUSINESS

JUNE 25 - JULY 8, 2012

Top: Pay at startups lower initially, but jobs offer return continued from PAGE 15

oncology, research, surgery, critical care, and labor and delivery, said Christine Durigg, director of staffing and recruitment. Engineer employment is healthy at firms such as Cleveland-based MCPc, a technology solutions provider that last year hired 27 engineers to bring to 78 its current engineer headcount and to 367 its overall employment. The majority of these occupations are virtualization-focused, as cloud computing becomes more ubiquitous. “When it comes to this type of talent, companies are challenged with compensating appropriately,” said Beth Stec, MCPc’s vice president of corporate communications and human resources. “We are finding we are compensating IT folks and engineers at a higher rate of growth than other types of positions, so if the market is trending toward a two-, three- or four-percent pay increase, the engineering team gets over double that.” The engineering talent pool is a highly selective group. According to a March 2012 U.S. News and World Report story, the unemployment rate is about 2% for engineers. Observers see demand for positions that include biomedical, aerospace and automotive — sectors that have or are developing substantial roots in Northeast Ohio. Wickliffe-based Lubrizol is thinking even bigger because the specialty chemicals company now is owned by Warren Buffett’s Berkshire Hathaway Inc. Its recent acquisition strategy outlines a plan to reach $10 billion in sales, and it places an emphasis on acquisitions for Lubrizol’s advanced-materials unit.

Tom Tomasula, director of global talent acquisition at Lubrizol, said he expects the company will need to hire more chemists and chemical and mechanical engineers. Of course, there’s also recruiting for specialized jobs that, at the getgo, don’t offer much compensation. When Robert Hatta, vice president for entrepreneurial talent at JumpStart Inc., seeks candidates to fill positions at early stage companies and startups, he seeks a highly targeted, exclusive group. “It’s not for everyone, but you offer something special: a chance to play a critical, high-impact role in delivering an innovative new product to market and (potentially) creating significant wealth in the process,” Mr. Hatta said. “The tradeoff between shorter-term lower compensation is the longerterm potential in stock options.” The right individuals not only need specific technical skills, but must have the right personality. “It’s hard to find people who do, and have demonstrated the desire to take risks in job security and compensation,” Mr. Hatta said. The venture development organization recruits nationally, although Mr. Hatta and others work closely with talent attraction group Global Cleveland, the Northeast Ohio Software Association and local colleges and universities to source regional talent. A shortage in qualified employees is a concern among technology industry professionals, and Northeast Ohio is not unique. “It’s worse in Seattle, San Jose … the tech meccas,” Mr. Hatta said. “The shortage here could easily be addressed with an open-minded, aggressive approach toward

HIGH- AND LOW-PAYING NON-EXECUTIVE OCCUPATIONS IN NE OHIO The average median base salary figure for each occupation was calculated using data excerpts from the following surveys conducted by ERC: 2012 ERC Salary Survey; 2012 ERC Wage Survey; and 2011 ERC Non-Profit Compensation Survey. The salary figure reported for each occupation is an average of median salaries across applicable job titles from entry level through management level. Executive and director position types were excluded to prevent skewed averages. ERC’s annual salary and wage surveys report data on hundreds of positions for thousands of employees. Go to www.ercnet.org for more information.

Higher-paying occupations

Median salary, 2011-12

Specialized engineering

$74,152

Programmers/software engineers

70,349

Safety (i.e. risk manager)

69,656

Nursing

68,578

IT analysts

67,044

Lower-paying occupations

Median salary, 2011-12

Warehouse/distribution laborers

$30,577

Misc. production (i.e. painting, coating)

32,483

Administrative support

33,515

Patient/client services

33,910

Assemblers/fabricators

35,712

recruiting, where companies train employees or graduates.”

At the bottom Food preparation and related service positions are on the other end of the spectrum, with annual mean wages not much higher than a full-time minimum wage income. According to the Bureau of Labor Statistics’ May 2011 look at the Cleveland-Elyria-Mentor area, dishwashers and lifeguards earn just

under $18,000 a year. Fast-food cooks, restaurant hosts and hostesses and cooks are paid in the $18,000 to $19,000 range. Home health and personal care aides earn annual salaries in the low $20,000s. Other lower-paying occupations include: ■ Child care workers, $22,660 ■ Funeral attendants, $23,280 ■ Veterinary assistants, $23,410 ■ Preschool teachers, except special education, $23,650

Exposure

According to ERC’s membership survey, jobs that fall into the lowestpaying categories are found in warehouse, production, administration and client/patient services. Many of these jobs have low education and skill requirements with highly repetitive duties, according to ERC, although exceptions are in the social and human services areas. Education and social work pay about $10,000 more than manual laborers and production workers, whose average median base salaries are in the low $30,000s. Of course, even lower income levels strain an estimated 39,000 families, or 12.2% of Cuyahoga County’s population, who have annual income levels below $15,000, according to the U.S. Census Bureau’s 2010 American Community Survey. Many of these workers no doubt rely on minimum-wage jobs in sectors such as food service or retail. These positions typically rely on weekly schedules, so workers often aren’t guaranteed 40-hour work weeks. A working adult supporting a family and earning $7.70 an hour means he or she likely needs to choose between basic needs such as food, child care, health care, quality housing or reliable transportation, said Emily Campbell, Williamson Family Fellow for Applied Research at the Cleveland-based Center for Community Solutions, a research and advocacy group on health, social and economic conditions. “However, a parent earning minimum wage makes so little that their family would probably qualify for public assistance like food stamps, Medicaid or housing assistance,” she aid. “But it’s very difficult to live on minimum wage, earning $16,000 a year.” ■

Expertise

Results

Marcus & Millichap Cleveland is closing more investment sales transactions than any other ﬁrm in the Midwest. Below is a Sampling of Our Recent Listings.

Commercial & Industrial Christopher Felice Shareholder

e understand the unique accounting, tax and business issues that you face.

Cleveland, OH Multifamily 64 Units $1,450,000 Agent: Ben Baker

Canton, OH Wendy’s (2) $1,417,000 / $1,403,000 Agents: Erin Patton, Scott Wiles, Craig Fuller

University Heights, OH Jackson, Montor & Wrenford 76 Units $3,125,000 Agents: Michael Barron, Daniel Burkons

Canton, OH Shopping Center 174,353 SF $2,615,000 Agents: Scott Wiles, Erin Patton, Craig Fuller

Our ability to offer strategies that create value let you remain competitive in today’s complex commercial and industrial arena. Let our knowledge, experience and expertise be an asset to your company’s operations, management and shareholders.

To Access the Investment Market, Contact the Market Leader.

■ Cleveland 216.363.0100 ■ Canton 330.966.9400 ■ Elyria 440.323.3200 + Business Advisors and Certified Public Accountants

maloneynovotny.com

Offices Nationwide

Michael L. Glass Vice President/Regional Manager Cleveland Office (216) 264-2050 mglass@marcusmillichap.com

www.MarcusMillichap.com

20120625-NEWS--19-NAT-CCI-CL_--

6/21/2012

1:47 PM

Page 1

MAKING IT

JUNE 25 - JULY 8, 2012

Many factors play into compensation Benefits, unions, degrees all are part of formula By KATHY AMES CARR clbfreelancer@crain.com

he compensation formula can be tricky, as considerations beyond skill and experience factor into the wages and salaries of Northeast Ohioans:

■ Employers with benefits: Bonuses, stock options, health insurance and sick days are just some of the benefits employers offer beyond salary. Perhaps tuition reimbursement, retirement contributions or profit sharing also are part of the package. No matter the mix, organizations offer benefits as a way to recruit, retain and reward employees, although they come at a cost. About 25% of an organization’s total budget is allocated toward compensation, while an additional 8% is directed toward benefits, according to Mayfield Village-based ERC’s 2012 Turnover and HR Department Practices Survey. Non-manufacturers in general spend more of their total budgets on compensation and benefits, though in some sectors such as nonprofit and government work, more emphasis may be placed on benefits because of certain restrictions such as union contracts that control salary levels. ■ Does it pay to be in a union?: Whether nonunion workers are paid less than unionized workers depends on a lot of factors, said Marty Mordarski, director of membership and research at ERC. A union worker may be paid a higher gross rate, but depending on the size of the union dues, he or she may take home less pay than a nonunion employee. However, union workers’ total compensation in some cases may be higher. According to 2011 national data from the Bureau of Labor Statistics, the union membership rate of the U.S. work force was 11.8%, essentially unchanged from 11.9% in 2010. More than half of the 14.8 million union members in the United States lived in seven states, including Ohio, where membership was about 600,000. In 2011, union members had median weekly earnings of $938, while those who were not union members had median weekly earnings of $729. ■ A degree’s worth: With the cost of education skyrocketing in recent years, the value of a college or advanced degree has been called into question. But as 2011 BLS data show, the more educated you are, the likelier you are to generate a heftier income. The average median weekly earnings in 2011 were $797. Individuals with a high school diploma earned $638. Employees with a bachelor’s degree made about $1,053 each week, while workers with master’s degrees were paid $1,263. Those with doctorates earned $1,551 per week. Unemployment among individuals without a high school diploma was 14.1%, and 9.4% for those with a high school diploma. The jobless rate among those with bachelor’s degrees was 4.9%; 3.6% for people with master’s degrees; and 2.5% for individuals with doctorates.

■ Gender: It’s difficult to track gender and salary equality in the workplace because so many factors, including education and experience, are tied to compensation and benefits. But ERC’s Top Performer survey offers a glimpse into one way that gender may factor into the work force. The survey was completed by top-performing employees at Northeast Ohio organizations applying for the NorthCoast 99 Award from 2009 to 2011. In general, more women are working in lower-paying positions than men. For example, management and supervisory roles and technical and engineering roles typically pay more than office,

administrative, and health and human services jobs. “From an HR perspective, there are so many factors to consider when establishing pay, it doesn’t even make sense to consider nonperformance-related considerations like your shoe size, hair color or race and gender. Why limit your ability to employ the best people?” said Mr. Mordarski, noting that it’s unlikely employers purposefully are factoring gender into their hiring practices. “If an employer isn’t providing pay that matches the needs of the talent that they need to be successful, that organization is going to struggle to attract and retain top talent, period,” he said. ■

CRAIN’S CLEVELAND BUSINESS

Action Management Services Earning the trust of Northeast Ohio professionals for over 30 years.

Professional -- Honest To The Point • Executive Search • Professional Placement • Consulting

ACTION

Management Services 6055 Rockside Woods Blvd. Cleveland, OH 44131

216-642-8777 www.actionmgmt.com

TAKE ACTION TODAY!

ERC is Northeast Ohio’s leading provider of compensation and beneﬁts data. Salary, wage and beneﬁts data for thousands of positions locally, regionally and nationally.

#6 7 Join today and receive free access to all current ERC survey data. www.ercnet.org/comp | 440/684-9700

20120625-NEWS--20-NAT-CCI-CL_--

6/21/2012

3:07 PM

Page 1

MAKING IT

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

JUNE 25 - JULY 8, 2012

When pitching Cleveland, recruiters tout cost of living Salaries often donâ&#x20AC;&#x2122;t stack up to other cities By JENNIFER KEIRN clbfreelancer@crain.com

n the fight for fresh talent, consider Margy Judd to be Northeast Ohioâ&#x20AC;&#x2122;s closer. As CEO of Executive Arrangements, itâ&#x20AC;&#x2122;s Ms. Juddâ&#x20AC;&#x2122;s job to help her clients â&#x20AC;&#x201D; heavy-hitting local employers like the Cleveland Clinic, American Greetings and Eaton Corp. â&#x20AC;&#x201D; sweeten the deal for out-of-town job candidates with an enticing glimpse of life in Northeast Ohio. By digging into the interests of the candidate and his or her family, Ms. Judd and her team of guides create customized tours of the city, visiting schools, sampling restaurants, touring cultural institutions and browsing desirable communities. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re usually asking them to leave the biggest cool cities in the country,â&#x20AC;? said Ms. Judd, who claims an 80% success rate. â&#x20AC;&#x153;If we can tap into the things that make them tick as a family, we can figure out if Northeast Ohio will work for them.â&#x20AC;? Salary numbers alone often donâ&#x20AC;&#x2122;t favor Northeast Ohioâ&#x20AC;&#x2122;s job market in the competition against other cities.

Itâ&#x20AC;&#x2122;s the work of recruiters, employers and city cheerleaders like Ms. Judd to bring the Cleveland area to the top of a potential employeeâ&#x20AC;&#x2122;s heap.

Whoâ&#x20AC;&#x2122;s the competition? Ms. Judd can cite examples of helping her clients land talent from far-flung places such as San Francisco, San Antonio, New York City and even Tokyo. But results like that arenâ&#x20AC;&#x2122;t typical, said Mike Milby, president and CEO of executive recruiting firm Ratliff & Taylor. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s always hard to recruit off the coasts,â&#x20AC;? he said. â&#x20AC;&#x153;Our major competition (for talent) would be similarly situated cities whose economic base is similar to ours.â&#x20AC;? Judging solely by numbers, Clevelandâ&#x20AC;&#x2122;s compensation performance against national and regional competitors isnâ&#x20AC;&#x2122;t impressive. Our mean annual salary across professions of $43,690 is 3% lower than the national mean annual salary, according to May 2011 Bureau of Labor Statistics data, which analyzes the Elyria-ClevelandMentor metropolitan statistical area.

Looking more closely by occupation, a registered nurse makes 6% less than the national average, a chemical engineer 12% less, and a chief executive 3% less. On the lower end of the pay scale, cashiers make 5% less than the national average, telemarketers 22% less, and personal trainers 12% less. National survey data collected by the Economic Research Institute in Redmond, Wash., look more closely at how we fare against our competition cities. Occupations like CFOs, secondary school teachers and software engineers make slightly more here than in Columbus and Pittsburgh, but less than their colleagues in Detroit and Chicago. â&#x20AC;&#x153;If you look at those numbers in a vacuum, itâ&#x20AC;&#x2122;s not a fair comparison,â&#x20AC;? says Marty Mordarski, director of research and membership for the Employers Resource Council, which conducts local salary surveys. â&#x20AC;&#x153;One of the strong advantages Cleveland has is that its cost of living is significantly lower than other areas.â&#x20AC;?

Quality of life, quantity of dollars Itâ&#x20AC;&#x2122;s the job of recruiters like Mr. Milby â&#x20AC;&#x201D; who estimates that 30% to 40% of his candidates are from outside of Northeast Ohio â&#x20AC;&#x201D; to put such

WE ARE ROETZEL.

COST OF LIVING COMPARISONS Experts say that Clevelandâ&#x20AC;&#x2122;s cost of living should be factored in when comparing salaries to those offered elsewhere. While Clevelandâ&#x20AC;&#x2122;s cost of living is comparable to some of its Midwest neighbors, itâ&#x20AC;&#x2122;s much lower than what might be found on the coasts. (On the chart, 100 is the national average.)