$1.50/MARCH 7 - 13, 2011
‘ASK (OTHER GOVERNORS) WHY THEY WEREN’T SPENDING MORE TIME HERE’
CLEVELAND’S NEWEST BFF Gov. Kasich shows he’s serious about Cleveland, making city a routine stop By JAY MILLER firstname.lastname@example.org
here is no Guinness Book of Governors’ Records, but any number of politicians and civic leaders are saying that Gov. John Kasich is a new kind of Ohio governor. He’s spending more time in Northeast Ohio than any governor in recent memory except for George Voinovich, who is a longtime resident of Cleveland’s Collinwood neighborhood, and he’s more willing to engage in the exchange of ideas. The Republican was here last Thursday, March 3, to hear the State of the City address of Cleveland See KASICH Page 8
FILE PHOTO/MARC GOLUB
Ohio Gov. John Kasich speaks at the groundbreaking of the Cleveland medical mart and convention center on Jan. 14. His expected appearance in Cleveland today will be his 10th since Jan. 7.
ArcelorMittal to expand Cleveland Works output Move by steelmaker is expected to add 200 jobs By DAN SHINGLER email@example.com
Steel giant ArcelorMittal plans to expand production at its Cleveland Works through a series of moves that should create more than 200 jobs, generate work for the mill’s local suppliers and produce more finished steel for a manufacturing sector clamoring for raw materials. Rumors of a pending expansion
in output have been circling for a couple weeks. Some mill suppliers have been told to expect new orders, and ads have popped up in The Plain Dealer seeking steelworkers. Mark Granakis, president of United Steelworkers Local 979 and the man responsible for about 1,100 union workers at the plant, said he expects the 200 new steelworkers to join his rank and file by October. See STEEL Page 22
INSIDE SW Ohio trash hauler smells potential here Rumpke Consolidated Cos. makes its second acquisition in Northeast Ohio in 18 months, deals that helped the company grow its revenues nearly 14%. “Our goal is to grow in the Cleveland area and in Northeast Ohio,” company spokesman Jonathan Kissell said. Read Dan Shingler’s story on Page 5.
IT specialists seizing on demand in health care By CHUCK SODER firstname.lastname@example.org
The Cleveland Clinic has begun mass-producing information technology companies to meet what Chris Coburn describes as a huge need in the health care field. Coburn Government pressure to get health care providers to reduce costs and to increase quality of care is creating “big opportunities” for IT companies that serve the health care business, said Mr. Coburn,
executive director of Cleveland Clinic Innovations, the hospital system’s technology commercialization arm. Some Northeast Ohio IT companies are seeing increased interest from health care providers already. However, demand still is growing, Mr. Coburn said, and to help meet that demand, the Clinic has spun out five health care IT companies over the past two years. See IT Page 14
LEGAL AFFAIRS Recent law school graduates learn that finding a job can be awfully hard work ■ Page 15 PLUS: RETALIATION ■ CERTIFIED SPECIALISTS ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 10
CRAIN’S CLEVELAND BUSINESS
CORRECTION A Feb. 28, Page 4 story about St. Vincent Charity Medical Center’s new foundation incorrectly stated how the hospital’s fundraising had been conducted in the past. St. Vincent’s did its own fundraising, but not in any systemic way. The story also incorrectly stated Joanne Clark’s title. She is the Sisters of Charity Health System’s vice president for corporate affairs and president of the St. Vincent Charity Development Foundation.
COMING NEXT WEEK A trip to the West Side
DOING MORE FOR LESS Real hourly compensation growth has failed to keep pace with productivity growth over the past three decades, and the gap between productivity growth and compensation growth is widening. New data from the U.S. Bureau of Labor Statistics show the so-called “wage gap” — the difference between real hourly compensation and labor productivity — is moving in the wrong direction for wage-earners. Here’s how the numbers break down for selected periods since 1947. Average annual percent change
REGULAR FEATURES Classified .....................22 Editorial .......................10 Going Places ................13 Letter...........................10 List: Investment banks .20
MARCH 7 - 13, 2011
The West Side Market, that is, to check in on how it’s driving new businesses to set up shop in the Ohio City neighborhood.
Real hourly compensation
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
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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 Kathy Henry: Corporate circulation/audience development director 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, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136 Audit Bureau of Circulation
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CRAIN’S CLEVELAND BUSINESS
School boards not unanimous on S.B. 5 Some elected officials fear union bargaining power, but others don’t seek radical change By JAY MILLER email@example.com
Julie A. Schafer and Jennifer Sinisgalli are both school board presidents. However, they hold divergent views on the need for Senate Bill 5, which dramatically would reduce the ability of public employees in Ohio to bargain over compensation
THE WEEK IN QUOTES
issues and working conditions. When Ms. Schafer sits at the bargaining table, the president of the Copley-Fairlawn City Board of Education said she feels outgunned by the professional union negotiators on the other side. So, Ms. Schafer supports S.B. 5. “Are we as organized as they are?” Ms. Schafer asked rhetorically. “No,
we are not. We’re just common people that do other jobs every day. We’re a UPS driver, a lawyer, we’re a homemaker; we’re just regular people. “It’s easy to put a lot of pressure on five school board members who make $125 a meeting, people just voted in from their community,” she said. Ms. Schafer, an attorney, also is a trustee of the Ohio School Board Association. And her association, which is composed of nearly all of the 600-plus school districts in the
state, believes changes in the way school districts bargain with their teachers and other employees are urgently needed. However, interviews with other school board members, as well as their attorneys and others who’ve participated in school district labor negotiations, suggest that a significant cause of the negotiating imbalance has nothing to do with the collective bargaining laws. Instead, they believe union negotiators often do a better job of presenting their case at the bargaining table and to
Tower City revival in the cards for next boss of real estate giant
— Chris Coburn, executive director, Cleveland Clinic Innovations. Page One
— Charlie Crowley, managing director, Paragon Capital Group LLC. Page 12
“You don’t even have to be laid off. Some of these charges are filed by people who believe they may be laid off, so they file a charge to protect themselves.” — Peter Kirsanow, a labor lawyer at Cleveland’s Benesch law firm. Page 15
“If someone asked me should they go to law school, I’d tell them, ‘No, maybe look into another field.’ I don’t think it’s been profitable for me.” — Jessica M. Jaeckin, a 2009 graduate of Cleveland-Marshall College of Law who works as a supervisor of two McDonald’s. Page 15
See BILL Page 21
Forest City’s LaRue sees career come full circle
“You will see many health care IT solutions coming out of this institution and probably other ones because the need is so great.”
“In a time like this, when we’re coming into an economic recovery and the worst appears to be over … if you see directors and officers stepping up to buy more shares, it can give other investors confidence.
the independent arbitrators who can decide contract disputes. Ms. Sinisgalli, president of the Strongsville Board of Education, said she shares Ms. Schafer’s belief that unions have an advantage over school boards at the bargaining table. She would like to see some changes in the contract terms that are subject to collective bargaining. In particular, she wants medical benefits removed as a subject of bargaining, and she would like to relieve the school board from paying the
By STAN BULLARD firstname.lastname@example.org
Steve Strnisha, director of financial services with Project Management Consultants of Cleveland, helped Flats East Bank developers piece together financing from 35 sources for the $275 million mixed-use project.
FROM RAGS TO RICHES Steve Strnisha revered by developers as a wizard of finance who helps get large-scale projects off the ground By STAN BULLARD email@example.com
or Steve Strnisha, helping piece together a complex, $275 million financing package to get Cleveland’s stalled Flats East Bank project going again despite a credit-starved environment is opening opportunities with clients seeking his uncommon financial expertise. Construction workers recently returned after a two-year hiatus to begin work on an office building,
hotel and parking garage at the Flats East Bank site along the Cuyahoga River, and word of the project’s revival is starting to spread and to bring more business to the financial consultant. Mr. Strnisha said he’s talking with prospective clients from as far away as Virginia, though he wouldn’t identify them. He’s already picking up work from local developers and members of the Flats East Bank team, which includes the Wolstein family and Fairmount Properties of Cleveland. See STRNISHA Page 20
FOLLOW THE MONEY Steve Strnisha, director of financial services with Project Management Consultants of Cleveland, has advised developers of various large-scale projects, such as: ■ Flats East Bank: The former banker helped developers cobble
together a $275 million financing package with 35 different sources. ■ City of Toledo housing plan: Mr. Strnisha has worked to help close a $10 million U.S. Housing and Urban Development loan, which will facilitate the
conversion of an old food warehouse near a ballpark to 150 units of housing. ■ American Greetings: He has advised the greeting card company how to maximize public funds for private developments.
When David LaRue becomes president and CEO of Forest City Enterprises Inc. this June, he’ll not only shepherd the real estate giant’s many properties and developments, but also something rare in the real estate business: a second chance. In this case, the second chance is an opportunity to remake the retail component of Tower City Center — a big, mixeduse project that LaRue means a lot for downtown Cleveland and that provided Mr. LaRue’s first assignment when he joined Forest City in 1986. Mr. LaRue, then a financial analyst who came over from SherwinWilliams Co., did the construction accounting for the building phase of Tower City. The project wrapped the iconic, 42-story Terminal Tower and its former train station into a 2.9-million-square-foot complex with hotel, office and retail space, including high-end — and now departed — stores such as Gucci and Barney’s. Over the last 20 years, Tower City has seen its share of merchants come and go from its stores. But plans by a joint venture of Dan Gilbert’s Rock Gaming LLC and Caesars Entertainment Corp. to create a $300 million casino inside Tower City’s Higbee Building and eventually to build a new casino on adjoining Huron Road have revived the prospects for Tower City’s retail space. Real estate insiders say it’s rare for a company to remain committed to an up-and-down project, yet alone have someone preside over it who rose through its ranks. But Mr. LaRue seems psyched for the task. “This is going to be a game-changer for us. We couldn’t be more excited,” Mr. LaRue, 49, said in an interview See LARUE Page 21
CRAIN’S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
Akron-based Echogen Power Systems CEO Philip Brennan said the company will use a recent investment of $10 million to advance development of a version of its Thermafficient engine, which turns industrial waste heat into electricity. MARC GOLUB
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An energizing opportunity Akron startup nabs $10M infusion for waste heat technology By CHUCK SODER firstname.lastname@example.org
Echogen Power Systems has a new ally in its effort to turn smokestacks into power plants. The Akron-based startup, which is developing an engine designed to turn industrial waste heat into electricity, has struck a deal with a publicly traded company that will serve as an investor, a marketing partner and a supplier. Dresser-Rand Group Inc. of Houston has agreed to invest $10 million in Echogen in exchange for a 20% stake in the young company. The maker of rotating industrial equipment also will provide turbines and possibly other parts for Echogen’s Thermaffi-
cient engines, and it will sell the system to companies in the oil and gas industry. The two companies began seriously discussing a partnership about six months ago, according to Mike Persichilli, vice president of business development and strategic relationships for Echogen. It was clear early on that the two companies could do a lot for each other, Mr. Persichilli said. “There were so many levels where we could formalize a relationship,” he said. Echogen, led by CEO Philip Brennan, will use the $10 million to advance development of a version of its Thermafficient engine that would be capable of producing between six and eight megawatts of electricity from a given heat source. A smaller version is almost finished. Echogen in early 2010 built a prototype of an engine capable of producing 250 kilowatts of electricity. Since then, it has been running tests on the engine at a Columbusarea research center run by American Electric Power Co. Echogen expects to begin shipping the smaller engine — which is the size of a semi-truck’s trailer — early this year. The company has received letters of interest from several potential customers, including a multinational glass maker, a multinational steel maker and a ceramics company, Mr. Persichilli said. The deal benefits both companies, Mr. Persichilli said. DresserRand gets to sell a good product, and Echogen, which employs about 20 people, gets to work with what Mr. Persichilli called a “dominant player” among suppliers to the oil and gas industry. Companies in that industry could use Thermafficient engines to capture heat emitted by the gas-powered turbines they use to keep fuel flowing through oil and gas pipelines.
“It enhances their core product … and enables us a quicker path to market,” Mr. Persichilli said. An official from Dresser-Rand did not respond to several phone messages and e-mails last week.
A welcome disruption The Houston company, however, is not Echogen’s only fan. In addition to other investments, Echogen has received a total of $500,000 from JumpStart Inc., which invests in and assists startups in Northeast Ohio. It also was the lead recipient of a $4.3 million grant from Ohio’s Third Frontier economic development program, and the city of Akron charges the company little to lease its headquarters on South High Street, Mr. Persichilli said. That assistance has helped the company create what he described as a “disruptive” technology: The Thermafficient engine uses carbon dioxide in its supercritical phase to absorb heat from smokestacks, boilers and even solar thermal concentrators. That heated carbon dioxide is used to drive a turbine. JumpStart CEO Ray Leach in the past has said Echogen is one of the most promising companies among the 50-plus startups that have received investments from the nonprofit. Lynn-Ann Gries, president and chief investment officer with JumpStart Ventures, the organization’s investment arm, described Echogen’s technology as “a game changer” for steel mills, power companies and other industries that require a lot of electricity. The technology not only should create jobs at Echogen, but it also could help make many local companies more competitive, Ms. Gries said. “Echogen is a prime example of how investing in a promising young company can result in vital job growth and technology development in the region,” Ms. Gries said. ■
Volume 32, Number 10 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth 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 © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. 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 Ride Along Included in Edition 1.
MARCH 7 - 13, 2011
CRAIN’S CLEVELAND BUSINESS
Cincinnati trash hauler aims for top of NE Ohio garbage heap Last week’s acquisition is second in 18 months By DAN SHINGLER email@example.com
Cincinnati-based Rumpke Consolidated Cos. wants to be Northeast Ohio’s next big trash hauler, and it’s pursuing acquisitions in the region to make its plans a reality. The company, already a major waste management player in Southwest Ohio and parts of Indiana and Kentucky, has purchased 30 trucks and has taken on 40 employees from Landmark Disposal of Broadview Heights, which Rumpke bought out last Tuesday, March 1, for an undisclosed sum. At the same time, it bought a Broadview Heights transfer station from Norton Environmental, a Landmark affiliate. The transaction marks Rumpke’s second acquisition in the region in the last 18 months. In August 2009, it acquired a 300-acre landfill in Mansfield, along with a Cleveland transfer station, from Republic Services. “Our goal is to grow in the Cleveland area and in Northeast Ohio — and the acquisition of Landmark will help us do that,” said Rumpke spokesman Jonathan Kissell. With the latest deal, Rumpke is gaining about 10,000 former residential and commercial Landmark customers in the Akron/Canton/ Cleveland region, Mr. Kissell said. That’s on top of its contracts to haul all the residential trash for the village of Northfield and East Cleveland — both contracts that it won since entering Northeast Ohio in 2009. Those deals and the new work were instrumental in helping the company increase its revenues from about $450 million in 2010 from $396 million in 2009, Mr. Kissell said. Rumpke, a privately held company, does not disclose its net income. Prior to 2009, the company had no business north of the Columbus suburbs and no transfer station from
which to operate in Northeast Ohio, Mr. Kissell said. Today, it employs about 60 people and runs about 40 trucks in Greater Cleveland, he said. Mr. Kissell would not say if the company would make further acquisitions here, but said it is determined to continue to grow its business.
Not just trash talk There was a time, not too long ago, when entering the trash business in and around Cleveland was a highstakes game. During the famous Cleveland garbage wars that extended from the 1970s into the 1990s, various Cleveland trash haulers accused
Crain’s Cleveland Business on May 2 will publish its Health Care Heroes section, and we’re seeking nominations to help identify honorees among the dedicated professionals who work in Northeast Ohio’s world-class medical and wellness communities. The nomination period runs through March 25. In the Advancements in Health Care segment of the section, Crain’s will honor people and institutions in the following categories: ■ Allied Health ■ Health Care Advocate ■ Nurse ■ Physician ■ Volunteer New this year to Health Care Heroes is a segment called Wellness that will honor the region’s Healthiest Employer. To tell Crain’s how your hero has touched the lives of people they serve and made a positive difference in the community, go to www .crainscleveland.com/ marketing/hcheroes.html. The 2011 Health Care Heroes luncheon is scheduled for the week of May 16. Tickets will be available beginning April 1.
of customers, Mr. Dzina said. Rumpke can make a profit with its business here now, but it looks to haul more trash in Northeast Ohio in the future — both by picking up customers and by seeing more trash-generating activity here, Mr. Kissel said. Contrary to popular belief, he said, the trash business is not recession-proof, especially in the area of commercial construction, a major source of revenue for the company. As the economy continues to gain steam, Rumpke wants to be well-positioned to take on more customers, each generating more trash, Mr. Kissel said. So far, Rumpke is receiving high marks, at least from Northfield
Mayor Victor Milani, who said he urged his council to include Rumpke last year when it put its contract out for bids. Rumpke ended up the low bidder, reducing the average residential bill by about $55 a year, and it has improved services over some of the village’s past carriers, Mayor Milani said. “They came in with a very favorable bid … but we’d been burned by others who came in with favorable bids in the past,” he said. “The service wasn’t there.” With Rumpke, it has been just the opposite, Mayor Milani said. “They’ve come in, bought new trucks, been very courteous to our residents — I’ve not gotten a single complaint,” he said. ■
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MARCH 7 - 13, 2011
Hurry in to the ER!* (*But still see doc 1st) %VTUPGGUIBU PMEHMPWFBOE IJUAFNXIFSF UIFZBJOU
Hospitals tout short wait times, though change may bring patients seeking more routine care By TIMOTHY MAGAW firstname.lastname@example.org
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In a bid to attract impatient patients, a handful of local hospitals are touting the short wait times in their emergency rooms on billboards, online and even on smart phones. But a few industry insiders wonder whether the marketing ploy will backfire by filling their ERs with people who first should seek medical care elsewhere. Many hospitals in Northeast Ohio and nationwide have changed the setup of their emergency departments so that patients can be seen more quickly. For patients with less severe injuries or illnesses, theyâ€™ve also developed tracks inside their ERs that function like urgent care clinics. The changes have improved the ability of these hospitals to attend to patients faster in their ERs, and several have decided to promote their wait times to draw more patients through their doors. â€œSome hospitals with capacity in their ERs are using that to try and capture some of that loose hospital admission population thatâ€™s out there,â€? said Bill Ryan, president and CEO of Center for Health Affairs, a group representing area hospitals. But marketing these short wait times is a delicate business decision, as it could bring an onslaught of patients who use the ER for routine medical care, Mr. Ryan said. And that outcome would be costly for
hospitals because of the expense of providing emergency room care. Still, a number of Northeast Ohio hospitals seem willing to take that chance in their quest for business. How long people wait in an emergency room is a factor many patients consider when deciding the worth of a hospital, according to Richard Hanson, president of University Hospitalsâ€™ community hospitals and ambulatory network. â€œYou have to remember that the ER is our front door, and one by which people perceive the reputation of your hospital and how well theyâ€™ll be treated,â€? Mr. Hanson said. â€œItâ€™s very critical we take care of patients when theyâ€™re very sick, and that they have a great experience.â€? Through billboards, direct mail and newspaper ads, University Hospitals has pushed its â€œED Directâ€? Program, which pledges that patients will see a medical practitioner within 30 minutes of arriving in the emergency department. The goal, Mr. Hanson said, is to have that patient in and out within a two-hour period. â€œWe are really committed to make sure we provide a good patient experience,â€? he said. â€œFrom a quality care standpoint, they donâ€™t have to wait two or three hours, and we can take care of them right away.â€? Beyond the billboards, Lake Health has forged into the digital realm with its ER wait times. Each hour the health system in Lake County uses Twitter to tweet its wait times for TriPoint Medical Center in Concord Township and West Medical
Center in Willoughby. Despite a broader push by hospitals to keep people out of the ER, the decision of where a person in need of medical care winds up ultimately is left to the patient, noted Andrea Wasdovich, vice president of perioperative, critical care services and emergency medicine at Lake Health. â€œWe want the to community know how long they would wait for a minor emergency,â€? she said. â€œWeâ€™re not afraid to tell them how long, but we want minor cases to choose the right level of care.â€? Summa Health System in Akron posts ER wait times through iTriage â€” a smart phone application â€” for five of its hospitals. Brant Russell, Summaâ€™s system director for emergency and trauma services, said Summaâ€™s market in the Akron area isnâ€™t as competitive as Clevelandâ€™s, so posting ER wait times â€” aside from serving as a convenience to patients â€” helps the system hold itself to a higher standard. â€œFor us, it was something we were already measuring, so from a systemwide perspective, it makes us more accountable to our patients,â€? Mr. Russell said. Still, touting short wait times isnâ€™t for every health system. MetroHealth, for one, has the busiest emergency room in the Cleveland area and the only Level 1 trauma center in the region. To shorten wait times, officials at MetroHealth have managed to restructure the emergency department by managing patient flow differently and changing the triage and registration processes. Dr. Charles Emerman, chairman of emergency medicine at MetroHealth, said posting emergency wait times can be a tricky business, considering a promise of a seeing a doctor within a few minutes could translate to one simply saying, â€œHello.â€? â€œThatâ€™s not necessarily what you care about,â€? Dr. Emerman said. â€œYou want to get in, get the problem taken care of and get out.â€? â–
Bridgestone remakes logo, tagline in â€˜coexistenceâ€™ effort By TIRE BUSINESS
Bridgestone Corp. is refining its corporate philosophy and unveiling a new tagline â€” Your Journey, Our Passion â€” as it marks 80 years as a corporation and moves to strengthen its brand globally. Parallel to these moves, Bridgestone has refined its corporate logo and brand marks to reflect diverse customer needs and changes in the global social environment. These evolutionary changes â€” a softening of the companyâ€™s distinct red-and-black capital â€œBâ€? and a new font â€” are intended to reflect a sense of â€œcoexistence, flexible strength
and a sense of speed in adjusting to change,â€? Bridgestone said. Bridgestone stressed it continues to heed the words of company founder Shojiro Ishibashi â€” â€œServing Society with Superior Qualityâ€? â€” while incorporating the firmâ€™s â€œintegrated corporate culture and â€Ś diversityâ€? to yield the Bridgestone Essence: a shared sense of values for all employees worldwide. Bridgestone said it will take steps to align its employees across the globe with one unifying corporate philosophy and establish a corporate culture that is consistent with the Bridgestone Essence, while leveraging the diversity of each employee. â–
CRAIN’S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
Gas may hurt economy, Kasich: Jackson shares blunt style but not before $4.50 continued from PAGE 1
Auto industry watchers say consumers no longer are shocked by $3.50, $4 per gallon By DONNA HARRIS Automotive News
Rising gas prices could strangle the economy and light vehicle sales, but it’ll take more than $4 a gallon, an auto industry economist says. How high would prices have to go? Paul Taylor, chief economist for the National Automobile Dealers Association, puts the figure at about $4.50 per gallon. In Mr. Taylor’s mind, that’s the new emotional flashpoint. In 2008, people panicked and changed their spending habits when gas prices hit $3.50. “At each dime of gasoline price increase, some consumers adjust their buying decisions, particularly for vehicle choice or at least engine choice,” Mr. Taylor said. “Generally, it takes a level that consumers have not seen before. Gasoline prices in excess of $4.50 per gallon are likely to have a more dramatic increase
upon consumer choices.” The national average price for a gallon of gasoline stood at $3.46 last Friday, March 4, according to consumer web site www.gasbuddy .com. That’s up from $3.12 a gallon a month ago and $2.71 a year ago. Yet the seasonally adjusted light vehicle sales rate rose to 13.44 million in February, up 28% from February 2010. Gasoline prices are climbing quickly. Combine high fuel prices and troubled real estate markets and that could slow growth if prolonged through this year, Mr. Taylor said. “At $4.50 per gallon, an 18-gallon fill-up is $81, and at over $5.50 per gallon it reaches $100,” Mr. Taylor said. “That would rivet the attention of consumers.” ■ Donna Harris is a reporter with Automotive News, a sister publication of Crain’s Cleveland Business.
Mayor Frank Jackson, a Democrat, and he’s expected back today, Monday, March 7, to sign Ohio House Bill 58, which zipped through the Legislature with a hard push from the governor. The bill creates a job retention tax credit tailored to keep American Greetings Corp. from moving its headquarters out of state. That visit will make 10 by the governor to Northeast Ohio since he attended a pre-inaugural event at the Rock and Roll Hall of Fame and Museum Jan. 7. Asked last Thursday why he seems to be spending more time here than previous governors, Gov. Kasich deflected the question with characteristic bluntness. “You should ask them why they weren’t spending more time here,” he said. The governor also is bringing a new style of state leader to the Cleveland area. Unlike his predecessors, Gov. Kasich, a former Fox News host, demands the spotlight and relishes the verbal give and take of the political and media arenas. Some say his presence is a sign he’s going to be paying more attention to metropolitan Cleveland than
governors past, while others say Gov. Kasich — more than his predecessors — understands that urban areas are Ohio’s future. Still others believe he’s visiting here and all around the state because he’s prepping himself for a run at the presidency in 2012 or beyond.
The John and Frank Show Gov. Kasich said one reason he was in Cleveland last week to hear the mayor at Public Auditorium is because he likes the second-term Democrat and what he’s doing for the city. Though Gov. Kasich’s gregariousness is in sharp contrast to Mayor Jackson’s quiet reserve, more than one person at the State of the City address noted the governor shares with the mayor a direct, even blunt conversational style. Gov. Kasich also appears to share a mission to transform government similar to what Mayor Jackson has preached in Cleveland since he was elected in 2005 and re-stated in his speech last Thursday. “He’s doing a good job of talking to the broad public about why changes are need,” said Robert Smith, a former chairman of the Greater Cleveland Partnership business advocacy group and a member of the board of the Ohio Bureau of Workers’ Compensation. “He seems to be getting out of Columbus a lot,” Mr. Smith said, who also is president and CEO of Spero-Smith Investment Advisers in Beachwood. “He’s getting everywhere.” Paul Clark, regional president of PNC Bank said he, too, has noticed the governor’s high local profile, and he’s happy to see him spending time in Northeast Ohio. And after watching Mayor Jackson’s speech, Mr. Clark said he thought the two men “are similar people.”
A tale of two answers Perhaps the best examples of the Kasich style were in his responses to two questions from businessmen at a recent meeting he had with members of the Greater Cleveland Partnership. At that GCP meeting Feb. 3, A. Ray Dalton, president and CEO of PartsSource Inc., an Aurora hospital equipment parts distributor, asked the governor why the state didn’t have a database of Ohio companies that a company like his could use to find suppliers. Mr. Dalton said he’d rather help another Ohio business than send his money out of state. Gov. Kasich embraced the idea immediately. “Let’s do it. Can you come to Columbus next week?” he asked Mr. Dalton. “I left that meeting thinking, ‘Yeah, sure,’” Mr. Dalton said later in a telephone interview. “To my surprise and very much to my liking,
“He seems to be embracing Cleveland. But it’s not just Cleveland. Is he going to embrace the urban agenda?” – Zack Reed, Cleveland city councilman
we did have the meeting in Columbus.” The next Wednesday Mr. Dalton was at the state capital talking with state development officials to get the ball rolling for an Ohio supplier database. A few questions later, though, Tom Pelto, president of AT&T Ohio, got a different, less accommodating answer to a question he posed. Mr. Pelto asked Gov. Kasich about OARnet, a state-run broadband network. He wondered if the governor would consider privatizing the network, the clear inference being that AT&T believed the state IT network was an unwanted competitor. “You get the first mile and the last mile; don’t complain,” Gov. Kasich shot back, using industry jargon to note that the telecommunications giant’s unique access to millions of homes in Ohio through its copper wire connections already was a strong enough business. The governor also said it appeared to him that OARnet was an appropriate staterun operation. An AT&T spokeswoman last Friday, March 4, said Mr. Pelto was out of town for the week and not reachable for comment.
Setting the agenda Gov. Kasich’s seeming omnipresence also may be a reflection of the urgency of the financial problems he believes the state faces. “He know he needs to be here” because the state had a lot challenges, said Joe Roman, president of the Greater Cleveland Partnership. Attorney Richard Pogue, long active in civic affairs, said Gov. Kasich may be more familiar with Northeast Ohio than the typical downstater. “Well, he’s been on the board of Invacare (Corp.), so he’s spent a lot of time here and has a pretty good understanding” of the needs of the region, Mr. Pogue said. Invacare is a maker of wheelchairs based in Elyria. Even a Democratic Cleveland City Council member is somewhat optimistic about the intentions of the new governor toward the city. “It’s good to see him showing up,” said councilman Zack Reed at the State of the City address. “He seems to be embracing Cleveland. But it’s not just Cleveland. Is he going to embrace the urban agenda? That agenda is different from a (traditional Republican) suburbsfirst agenda.” ■
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MARCH 7 - 13, 2011
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.
LIENS FILED Polytech Inc. 55 Public Square, Suite 510, Cleveland ID: 34-1045780 Date filed: Feb. 23, 2011 Type: Employer’s withholding Amount: $90,843 Nasus Corp. 24905 Hazelmere Road, Beachwood ID: 34-1715610 Date filed: Feb. 23, 2011 Type: Employer’s withholding, corporate income Amount: $83,201 A Childs View Inc. 24161 Lorain Road, North Olmsted ID: 34-1769666 Date filed: Feb. 23, 2011 Type: Employer’s withholding Amount: $54,399 First Fruits Child Care Center LLC 21877 Euclid Ave., Euclid ID: 20-5120191 Date filed: Feb. 23, 2011 Type: Employer’s withholding, unemployment Amount: $47,284 Sroka Advance Vehicles Inc. 21265 Westwood Drive, Strongsville ID: 34-1953389 Date filed: Feb. 23, 2011 Type: Employer’s withholding, corporate income Amount: $47,050 Ed Pawlak & Sons Florists Inc. 5264 State Road, Parma ID: 34-1111203 Date filed: Feb. 23, 2011 Type: Employer’s withholding Amount: $43,581 Serenity New Age Health Care Services Inc. 25701 N. Lakeland Blvd., Suite 200, Euclid ID: 01-0867783 Date filed: Feb. 23, 2011
CRAIN’S CLEVELAND BUSINESS
Type: Employer’s withholding Amount: $41,809 Rybak & Associates Inc. 21821 Libby Road, Suite 102, Bedford ID: 03-0514289 Date filed: Feb. 23, 2011 Type: Employer’s withholding, corporate income Amount: $40,778 Integrity Waterproofing Inc. 1334 Summit Ave., Lakewood ID: 20-2221560 Date filed: Feb, 23, 2011 Type: Employer’s withholding, unemployment Amount: $29,121 Onevue LLC 46 Shopping Plaza 218, Chagrin Falls ID: 20-5828493 Date filed: Feb. 4, 2011 Type: Employer’s withholding Amount: $23,556
Industrial Glove Cleaning Inc. 11004 Avon Ave., Cleveland ID: 34-1788500 Date filed: Feb. 1, 2011 Type: Employer’s withholding, unemployment Amount: $19,370 Garfield Heights Community Center Inc. 13455 Dressler Ave., Garfield Heights ID: 34-1381590 Date filed: Feb. 1, 2011 Type: Return of organization exempt from income tax Amount: $18,940 Obrien & Nye Cartage Co. 29855 Solon Road, Solon ID: 34-0813042 Date filed: Feb. 4, 2011 Type: Unemployment Amount: $17,244
Housing Advocates Inc. 3214 Prospect Ave. E., Cleveland ID: 51-0141693 Date filed: Feb. 14, 2011 Type: Employer’s withholding Amount: $17,052 Eglinski Enterprises Inc. 19865 Detroit Road, Rocky River ID: 34-1626136 Date filed: Feb, 14, 2011 Type: Employer’s withholding Amount: $16,144 Abbey Road on the River LLC 2673 Green Road, Shaker Heights ID: 61-1478355 Date filed: Feb. 4, 2011 Type: Partnership income Amount: $14,470 Phoenix Village Academy P-2 3120 Euclid Ave., Cleveland ID: 20-1824149
Date filed: Feb, 1, 2011 Type: Employer’s withholding Amount: $13,020 Amira Petroleum Inc. 1930 E. 79th St., Cleveland ID: 26-1521601 Date filed: Feb. 10, 2011 Type: Employer’s withholding Amount: $11,386 Howard-Blakley Inc. 3884 Silsby Road, Cleveland ID: 34-1931439 Date filed: Feb. 16, 2011 Type: Employer’s withholding Amount: $10,513 Euclid Fine Foods Inc. 16044 Euclid Ave., East Cleveland ID: 35-2174080 Date filed: Feb. 14, 2011 Type: Employer’s withholding Amount: $10,112
Designs for the Young at Heart LLC 16400 Miles Ave., Cleveland ID: 83-0393362 Date filed: Feb. 1, 2011 Type: Employer’s withholding Amount: $22,659 Doona Enterprises LLC Stone Mad 1306 W. 65th St., Cleveland ID: 32-0233833 Date filed: Feb. 8, 2011 Type: Employer’s withholding, unemployment Amount: $22,576 Pure Seal Inc. 1300 W. Hill Drive, Gates Mills ID: 20-1978231 Date filed: Feb. 4, 2011 Type: Employer’s annual federal tax return Amount: $20,316 Search Circus Inc. 12181 State Road, North Royalton ID: 20-4197053 Date filed: Feb. 14, 2011 Type: Employer’s withholding Amount: $19,577 Patrice Corp. Grace College of Cosmetology 13377 Smith Road, Cleveland ID: 34-1659260 Date filed: Feb. 23, 2011 Type: Employer’s withholding, unemployment Amount: $19,498
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MARCH 7 - 13, 2011
Brian D. Tucker (firstname.lastname@example.org) EDITOR:
Mark Dodosh (email@example.com) MANAGING EDITOR:
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hio would have been taken for a ride had advocates of creating a commuter rail line linking Cleveland, Columbus and Cincinnati been successful in seeing the so-called 3C corridor become a reality. However, we’re far more open to the possibility of developing along the lakeshore a high-speed rail network that would run east-west and could connect Cleveland to cities such as Chicago, Detroit and Pittsburgh. The new governor, John Kasich, did the state a favor by killing the 3C project before it really got started. The $400 million that the Obama administration had awarded last year toward the rail line would have been a waste of money, because it would have resulted in a north-south transportation link with no practical value. The limited departure and arrival times for its trains would have been horribly inconvenient for travelers, and there was nothing “high speed” about a rail line with an average speed of less than 40 miles an hour. It likely would have been a decade or two before the necessary investments in track and equipment were made so that trains on the 3C could come close to rivaling the speeds of drivers on Interstate 71. In the meantime, according to Amtrak’s own estimates, the state would have spent at least $17 million a year to subsidize the line’s operation. It was a lousy idea, and it deserved to die, especially because the “3C” cities aren’t big enough to provide the volume of ridership that would have made the line worth the investment of hundreds of millions of dollars beyond the “free” money from the federal government. The same can’t be said for an east-west rail line that could connect Cleveland with major population centers in the Northeast and Midwest. We view as positive a meeting last month between U.S. Transportation Secretary Ray LaHood and members of Congress from northern Ohio to discuss the idea of developing a high-speed rail line along Lake Erie. It is more sensible to explore the prospect for this route than the ditched 3C because of the potential of the east-west line becoming part of a high-speed, coast-to-coast transportation system. This isn’t an unqualified endorsement for a lakeshore line. The numbers would need to show that passenger levels on the line would merit spending a sum of money that ultimately would run into the billions of dollars. However, we think the potential is there for a service that would find a following with leisure and business travelers. It is a rail corridor that definitely merits study.
fter a long, cold winter, seeing the boys of summer at Cleveland Indians’ spring training camp in Goodyear, Ariz., is a welcome reminder that ugly gray banks of snow soon will give way to April showers and May flowers. Now, if we can only see some decent baseball after a season of less-than-sterling basketball ...
FROM THE PUBLISHER
FitzGerald law hire shows challenges
seeks and pays outside lawyers. Of course, wo recent appointments by Prosecutor Bill Mason was one of the Cuyahoga County Executive Ed architects of the reform ballot measure FitzGerald show how difficult that ultimately was approved by county building a government can be. voters, and he is nothing if not a highly OK, so maybe not as hard as Egypt skilled politician. Even in this reformor Tunisia or Libya, but challenging driven era at the county, a large amount nonetheless. of influence can be had by whoever hires You see, there’s no road map. Sure, outside legal counsel for one the elected Cuyahoga County of the biggest counties in the council and executive can look BRIAN state. to Summit County, its prede- TUCKER But rather than wade into a cessor in this radical change in fight with Prosecutor Mason the form of county governance, right now, the county executive but there are only so many ideas picked his law director, Gregory that work when you compare Clifford, who had been chief two very different counties. So magistrate for Cleveland’s municMr. FitzGerald and the members ipal courts. The only problem of his legislative body still are was that Mr. Clifford didn’t trying to determine the best meet the requirements set forth ways to make this new style of in the new charter, namely that he had government work best for the residents given legal advice to, or represented, a of the county. governmental entity for at least five years. A bit irked by the fact that the county Armed with an opinion from a Cleveprosecutor wants to continue to act as land law firm that this appointment was the county’s chief civil lawyer, despite kosher, Mr. FitzGerald announced the the new charter calling for the executive appointment of Magistrate Clifford. to hire a law director, Mr. FitzGerald In steps Ohio Attorney General Mike wants autonomy in the ways the county
DeWine. Not so fast, he seemed to be saying. No matter the opinions to the contrary, the attorney general said the magistrate did not meet the requirements. And clearly he didn’t; Mr. FitzGerald withdrew his nomination. Not a good moment for either gentleman. But Mr. FitzGerald, who by and large has made good decisions on appointees so far, should have thought this one out just a bit more, much as he did with the selection of the county’s new chief information officer, Jeff Mowry. For that job, he went looking for someone with bona fide experience, and signed Mr. Mowry, the former CIO for Broward County, Florida. That was thoughtful and reasoned. Mr. FitzGerald found a native Ohioan who was in key information technology positions during a couple decades at Chrysler Corp., before heading to his government job in Florida. Unlike the hiring of the magistrate, Mr. Mowry’s choice as CIO seems rock solid. Now, the county executive needs to hit a similar home run in his next choice for law director. ■
IT investing helps global competitiveness ■ The news that the state of Ohio may invest more heavily in information technology, as described in Crain’s Feb. 21, Page One story, “State may shift tech plan focus more to IT,” is welcome and long overdue. Quite simply, the question isn’t whether to invest in information technologies — it’s “How can we not?” IT plays a crucial role by itself and as a competitive driver in nearly all sectors. No industry will have a more profound impact on jobs, wealth creation and enhancing our region’s global competitiveness. Take a closer look at each of those factors in turn. Jobs: Information technology will experience more growth than any other field over the next decade, according to the U.S. Department of Labor, and is the
underpinning of almost all forms of economic expansion today. And not only does it offer the most jobs, it’s also one of the highest-paying industries. Innovation and wealth creation: In the past 10 years, technology has emerged as the nation’s biggest-growth sector, recently passing finance for that distinction. Efficiency and global competitiveness: Strong IT competency is crucial for our private industries to stay competitive, and it’s also the key tool in transforming our public health, education, work force and government systems. A recent study from Michigan State University concluded that the size of a city is no longer the key factor in building a strong local economy, but rather the city’s connectedness to other places. Through IT-enabled connections,
a city such as Cleveland can compete on the same playing field as New York or Chicago. To be sure, if we don’t develop these competencies, someone else will, and our local industries will likely be managed by leading IT systems elsewhere, perhaps overseas. So can our region become an IT mecca? Off the top of my head, I know Northeast Ohio already can claim two of the most profound early-IT developments: RFID/scanning technologies, which originated in Akron and helped transform Walmart’s supply chain (now part of Symbol Technologies/Motorola), and the first licensed spectrum Wi-Fi equipment (now a Cisco Systems Aironet product with 200 engineers working today in Richfield). What’s See LETTER Page 11
MARCH 7 - 13, 2011
CRAIN’S CLEVELAND BUSINESS
THE BIG ISSUE Are you concerned that labor troubles in the NFL and NBA might force the cancellation of games next season?
Tuesday, March 15, 2011 11:30 am Registration • 12 Noon Lunch & Program DAVID GILBERT
I see the NFL (locking out the players) and missing some games. Both sides are dealing from a position of strength. The owners will want to have the last say. I don’t see the players taking the field for the same money they have.
Yes. The NFL contracts are the worst in sports for the players. I think there’s collusion among the owners to control the players. It will definitely have an effect on some NFL games.
No. They’re the ones making fortunes. I’ve followed Cleveland teams all my life, and it’s always something. No matter what, they won’t win a championship in my lifetime.
No. I don’t follow sports. I didn’t even know that was a possibility.
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11 area shopping sites to change hands A $9 billion international real estate deal between Centro Properties Group of Australia and an affiliate of Blackstone Real Estate Group of New York stands to give 11 Northeast Ohio shopping centers a new owner. Major properties in the proposed transaction include Westgate in Fairview Park, Southland Shopping Center in Parma and Midway Mall in Elyria. The properties will trade under an agreement Centro announced last week to sell its 588 U.S. properties to BRE Retail Holdings Inc., an affiliate of Blackstone Real Estate Partners VI LP. Blackstone Real Estate Partners IV is a private equity investment fund managed by Blackstone Group. Centro announced the sale as part of a massive debt-shedding and recapitalization plan for its remaining
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Story from www.CrainsCleveland.com.
assets in Australia. The deal is structured as a binding stock purchase agreement. Centro expects the deal to close around mid-year. The 11 shopping centers and one land site Blackstone stands to gain in Northeast Ohio range from new properties such as the recently redone Westgate to the dated Midway Mall, as well as a variety of open-air, big-box and supermarket-anchored shopping centers near larger retail centers. Northeast Ohio properties in Centro’s stable, according to its web site, also include Brunswick Town Center in Brunswick, Midway Crossing and Midway Market Square in Elyria,
Southland South in Middleburg Heights, Streetsboro Crossing in Streetsboro and The Vineyards in Eastlake. The portfolio includes two shopping centers named “Tops Plaza” in North Olmsted and North Ridgeville, although other tenants since have replaced departed Tops supermarkets. It also includes an undisclosed amount of land at Arlington Street and Killian Road in Akron. All told, 36 Ohio properties are in the portfolio that Centro looks to shed. — Stan Bullard
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more, I believe Progressive Corp. leads the nation with more than $1 billion in online sales. Do we have the talent here to compete? Well, the former CEO of Sprint/Nextel is a John Carroll alumnus, and the former chief operating officer of Microsoft is a Case Western Reserve University alumnus. So, yes, I think we have the talent. Do we have some competitive advantages? Yes, actually, we do. As just one example, let’s start at the beginning, the foundation or platform for innovation: digital infrastructure. Imagine if we had one of the country’s largest, fastest broadband networks. Now realize that we’re about to have just that. This year, with the aid of federal stimulus funds, an Ohio public and private consortium has kicked off a $186 million construction project to build this platform for collaboration and innovation, and to enhance our global competitiveness. Not only will this network position Ohio as a
key driver of American competitiveness in many sectors, but it also will be a uniquely open broadband network that will enable service providers, entrepreneurs and researchers to develop innovative offerings. OneCommunity just completed a large buildout across eight Northeast Ohio counties with more to come, so discussions already have begun. In sum, IT is not an option — it’s the future. We live in a global knowledge economy. Northeast Ohio and its many new and old industries cannot enhance and sustain their global competitiveness without continued investment in IT talent and businesses. IT is the leader in jobs, wealth creation and innovation. It will have a profound impact on the public sector, the private sector and our quality of life. We can’t afford to miss that e-boat. Scot Rourke President and CEO OneCommunity
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: email@example.com
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Top executives show faith in their banks with stock buys Investments are signs of improving conditions By MICHELLE PARK firstname.lastname@example.org
A number of local bank executives and board directors have been buying up more of their companiesâ€™ stock on the open market â€” trading activity some see as a sign that those who run the institutions are optimistic about the near future. Over the past year, a buying trend has emerged among leaders of LNB Bancorp Inc., PVF Capital Corp., Middlefield Banc Corp. and Huntington Bancshares Inc., according to information compiled by the research firm SNL Financial. Thomas G. Caldwell, president and CEO of Middlefield Banc, is one of several Middlefield executives and directors buying its stock. This January, he purchased 1,000 shares for $16,000, bringing his total shares to more than 13,000. It was his first trade since July 2009. â€œI had the opportunity to buy, and the market price is well below the book value,â€? he said. He said he and other Middlefield Banc insiders bought stock â€œnot because we think weâ€™re going to get bought out, (but)
rather realizing thereâ€™s value to that stock and holding it.â€? The purchases, Mr. Caldwell said, should send a message to Middlefield Bancâ€™s investors and customers â€œthat the executives at the bank have enough confidence that theyâ€™re investing their money into that entity, also.â€? The investments can be perceived as bankers putting their money where their mouths are, particularly because many bank executives are telling people their stocks are undervalued, said Charlie Crowley, managing director of Paragon Capital Group LLC, an investment banking firm in Mayfield Heights. â€œIn a time like this, when weâ€™re coming into an economic recovery and the worst appears to be over â€Ś if you see directors and officers stepping up to buy more shares, it can give other investors confidence,â€? Mr. Crowley said. â€œPresumably, the directors and officers know best.â€? Scott Oâ€™Donnell, former state superintendent of financial institutions, shares Mr. Crowleyâ€™s view. â€œThe best sign of the condition of the bank is when the executives are
willing to put their after-tax dollars into their company securities,â€? Mr. Oâ€™Donnell said. He also noted that some bank leaders might be buying in anticipation of increased merger-and-acquisition activity in the bank sector.
Loading up Regardless of their motivations, several bank insiders arenâ€™t bashful about adding to their holdings. Increasing his stake in LNB Bancorp, the parent of Lorain National Bank, is director James R. Herrick, who bought 10,000 LNB shares for $42,500 in late August, increasing his total holdings by nearly 75% to more than 23,000 shares. Likewise, Terry D. Goode, another LNB director, has purchased a total of 7,000 shares for $30,992 in several transactions since February 2010, bringing his total shares to more than 54,000. Attempts to reach Messrs. Herrick and Goode were unsuccessful, but Daniel E. Klimas, president and CEO of LNB Bancorp and Lorain National Bank, said buying trends among a given companyâ€™s directors and executives typically reveal a â€œconfidence from the organizationâ€? and a belief that the stock is undervalued. Mr. Klimas would not speak to his
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WHOâ€™S BUYING WHAT Bank executives have been buying more stock in their own institutions. A sampling: Middlefield Banc: president and CEO Thomas Caldwell, 1,000 shares (total: more than 13,000) LNB Bancorp: director James R. Herrick, 10,000 shares (total: more than 23,000); director Terry D. Goode, 7,000 shares (total: more than 54,000); president and CEO Daniel E. Klimas, 2,000 shares PVF Capital: CFO James H. Nicholson and executive vice president Lonnie L. Shiffert, each own motivation for buying 2,000 LNB shares over the past year. However, he cautioned that an insider selling his or her stock was not necessarily an indication of a lack of confidence in an institution. As part of their companyâ€™s drive to raise capital in 2010 and because theyâ€™d joined the company recently, several PVF Capital executives dramatically increased their stakes in the parent company of Park View Federal Savings Bank. Chief financial officer James H. Nicholson, who joined the company in late 2009 along with other new managers, raised his stake to 42,345 shares from 100 shares in January 2010 via the open market, as did Lonnie L. Shiffert, executive vice president. â€œWe all believed in the (new management) team and what weâ€™re doing, so we all wanted to makeequity investments,â€? Mr. Nicholson said. Counting only open-market buys and not stock acquired as part of his compensation, Stephen D. Steinour, president, CEO and chairman of Huntington Bancshares Inc., bought 34,000 shares for $214,200 during the companyâ€™s public offering in December, bringing his total shares to more than 1.8 million. A Huntington spokeswoman declined comment on the purchases. Insiders at FirstMerit Corp. in the aggregate sold and bought almost the same totals of shares on the open market over the past year. Among the sellers was chairman, president and CEO Paul G. Greig, who sold a total of 25,000 FirstMerit shares via separate transactions last
with 42,245 shares (total: 42,345) Huntington Bancshares Inc.: president, CEO and chairman Stephen D. Steinour, 34,000 shares (total: more than 1.8 million) March and June. Director Philip A. Lloyd was by far the biggest buyer, purchasing 55,010 shares for more than $1 million last May. A FirstMerit official declined comment on the motivation for the stock trades by the insiders.
One factor among many Though the stock trades of his bank are not publicly disclosed, Bill Valerian, president, CEO and chairman of Liberty Bank N.A. in Twinsburg, said he bought more than $100,000 in Liberty Bank stock, not including stock options afforded him, over the last year to help in its efforts to raise capital. Liberty recently entered into a formal agreement with its regulator and is required to raise capital. â€œI believe in my company,â€? Mr. Valerian said of his motivation for buying. â€œStocks in community banks are way down, so it seems to me itâ€™s a good investment. Who should know better whether itâ€™s a good investment than the people running the place?â€? However, trading by bank leaders is only one factor investors should consider when evaluating a stock, Mr. Crowley said. He noted how leaders of National City Corp., which was distressed when PNC Financial Services Group acquired it, had significant wealth invested in their company and shareholders still had a rough ride. Mr. Crowley said insider stock activity â€œis interesting to talk about, and it can be a good signal of nearterm optimism and pessimism, but you canâ€™t read too much into it.â€? â–
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MARCH 7 - 13, 2011
GOING PLACES JOB CHANGES
Theresa M. Bratton to associate.
WALTER & HAVERFIELD LLP: Nick R. Catanzarite to partner.
THE RUHLIN CO.: Chuck Gillombardo to project engineer.
WESTON HURD LLP: Nancy A. Noall and Michael J. Spisak to partners.
NORTHEASTERN OHIO UNIVERSITIES COLLEGES OF MEDICINE AND PHARMACY: Dr. Anthony Costa to associate dean of community partnerships, College of Medicine; Richard Kasmer to associate dean of academic affairs and Cornelis J. Van der Schyf to associate dean for research and graduate studies, College of Pharmacy.
VENTURE LIGHTING INTERNATIONAL: Paul Johnson to director, strategic marketing and business development.
CATHOLIC CHARITIES HEALTH & HUMAN SERVICES: Patrick Gareau to secretary.
LORAIN NATIONAL BANK: Jerry McCalmont to vice president, commercial banking.
McCalmont Catanzarite Gareau
CRAIN’S CLEVELAND BUSINESS
CLEVELAND METROPARKS ZOO: Andi Kornak to curator of carnivores and large mammals.
ENTRYPOINT CONSULTING LLC: Keith Klesh to director of marketing.
GREAT LAKES SCIENCE CENTER: Whitney Owens to vice president, education.
INDUSTRIAL VIDEO: Timothy Czyzak to president.
ONECOMMUNITY: Leonard Vega to vice president, operations; Scott Tennant to vice president, marketing and communications. URBAN LEAGUE OF GREATER CLEVELAND: Marsha A. Mockabee to president, CEO.
NONPROFIT ACHIEVEMENT CENTERS FOR CHILDREN: Donald Bernardo to manager of grants and annual giving.
KELLY SERVICES INC.: Diana Comstock to partnered staffing manager; Jessica Webb to branch manager, Stow; Melanie Monagon and Shannon Bartlett to staffing supervisors. M COY GROUP LLC: Gabriela Edwards to project coordinator.
NORTH UNION LLC: Joe Prcela to vice president, operations.
BLUEBRIDGE NETWORKS: Petar Bejovic to director of operations; Jason Munsell and Rick Rohlke to sales executives.
AUDIO VIDEO INTERIORS & SAFETY TECHNOLOGIES: Kevin Kramer to
THE KARCHER GROUP: R.J. Fryan to search engine optimization
BENJAMIN ROSE INSTITUTE ON AGING: Kathryn L. Kaesberg (Organizing 4U LLC) to chairperson; Nancy A. Adams to vice chairperson; Emily A. Drake to past chairperson; Amy Scott Gilchrist to treasurer; Marcia J. Wexberg to secretary. BALDWIN-WALLACE COLLEGE: Paul H. Carleton (Carleton McKenna & Co. LLC) to chair. PHI DELTA THETA CLEVELAND AREA ALUMNI CHAPTER: Justin J. Scheeff (The Bucci Group at Morgan Stanley Smith Barney) to chairman; Joseph Borowski to vice president.
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RETIREMENT SOLUTIONS: Kristine Charkosky to senior administrative assistant. VICTORY CAPITAL MANAGEMENT: David Brown and Christopher Ohmacht to co-chief executive officers.
HEALTH CARE PHYSICIANS FIRST/GALLUCCI CHIROPRACTIC CLINIC: Matthew A. Woodworth to medical staff.
INSURANCE MCMANAMON INSURANCE: Julie Yurchenko to account manager, property and casualty; Cathy Gilchrist to account manager, employee benefits.
LEGAL MANSOUR, GAVIN, GERLACK & MANOS CO. LPA: Ann E. Knuth to associate. MEYERS, ROMAN, FRIEDBERG & LEWIS: Brittney L. Nascone to associate. SINGERMAN, MILLS, DESBERG & KAUNTZ CO. LPA: Ronald J. Teplitzky to principal; Matthew E. Parkins to associate. SUTTER, O’CONNELL & FARCHIONE: Leslie M. Jenny to shareholder;
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CRAIN’S CLEVELAND BUSINESS
IT: Health care intrigues tech investors continued from PAGE 1
Two more companies are “on the burner,” he said. “You will see many health care IT solutions coming out of this institution and probably other ones because the need is so great,” Mr. Coburn said. Explorys Inc. in Cleveland is one of those companies. Explorys, founded in 2009, has seen a lot of demand for its software, which is designed to help hospitals study both their own patient records as well as the records of other Explorys customers, said CEO Stephen McHale. Increased adoption of electronic medical record systems — accelerated by incentives in the American Recovery and Reinvestment Act of 2009, commonly called the stimulus bill — is creating more opportunities for Explorys, Mr. McHale said. The company’s software relies on data from electronic medical records. The national push to lower the cost and improve the quality of health care is helping, too, Mr. McHale said. The Patient Protection and Affordable Care Act of 2010 encourages hospitals to focus more on preventing health problems, he said. Explorys’ software can help them find ways to do so. “It’s a fun time to be in health
care IT,” Mr. McHale said.
Hitting the accelerator The Clinic isn’t the only area institution that sees opportunity in the health IT sector. BioEnterprise Corp. has been working with its institutional partners — the Clinic, University Hospitals, Case Western Reserve University, Summa Health System and the Austen BioInnovation Institute in Akron — to create an “acceleration platform” for health IT companies in the region, said BioEnterprise president Baiju Shah. The platform likely would help companies receive clinical feedback, recruit IT talent and find hospitals willing to test their products, Mr. Shah said. The group of institutions has yet to decide whether the initiative would be run by BioEnterprise, which assists health care companies in Northeast Ohio, or a separate organization, Mr. Shah said. Investors have shown plenty of interest in financing health IT companies lately, Mr. Shah said. The products the companies produce are in demand and are easier to bring to market than medical devices or pharmaceuticals, which can’t be sold without approval from
federal regulators. “They (IT products) go commercial relatively quickly, and they scale much faster than a regulated product,” Mr. Shah said.
Opportunity knocks The drive to lower costs and improve care has been increasing for a few years now, but it went into “high gear” about a year ago, said Garry Kishbaugh, CEO of SecuReach Systems LLC in Medina. Mr. Kishbaugh said growing demand for health care IT has helped SecuReach interest potential customers in its system, which uses web-based software to help doctors send messages to patients. “When we knock on the door, the door opens quicker,” he said. Hyland Software Inc. is seeing similar benefits, said Susan deCathelineau, health care business solutions manager for the document management software firm. Hyland’s health care business in 2007 became its biggest source of revenue, partly because of an increase in U.S. hospitals adopting electronic medical record systems. Demand in the health care sector continues to increase, Ms. deCathelineau said. ■
MARCH 7 - 13, 2011
Geneva-area athletic complex on a good run Horizon League, MAC warm to GaREAT, while traffic increase felt in community By JOEL HAMMOND firstname.lastname@example.org
Ron Clutter insisted he and his team could attract major sporting events — in addition to instructional camps and youth and adult leagues and tournaments — to Geneva, Ohio. And it appears they’re doing just that. The 120-acre Geneva area Recreational, Educational, Athletic Trust, or GaREAT, sports complex just off Interstate 90 in Geneva is hopping these days. Two weekends ago, the Horizon League brought its men’s and women’s indoor track and field championships to the complex, and last week, the National Association of Intercollegiate Athletics held its national indoor track and field championships there. In addition, the Mid-American Conference announced last week it would hold its women’s volleyball tournament at GaREAT the next two Novembers. Mr. Clutter, an Ashtabula native, serial entrepreneur and now the president of HDT Engineered Technologies of Solon, provided a substantial portion of the seed money for the GaREAT project, which all told will run about $60 million. The complex was financed completely through private donations. Director of operations Dave Smalley said the final phase of the project — a 300,000-square-feet aquatics center that is nearly double the size of initial estimates — is slated to open in September. That phase was pushed back from this spring as the plans grew. “There has been nothing but positive reaction,” Mr. Smalley said. “People are amazed with it. These NAIA athletes tell us that they looked at the web site, but until they got here and practiced, they couldn’t picture how big it is or the quality of the facilities.” GaREAT officials from the start have dismissed any concerns about the facility’s distance from major urban centers, touting instead its relative proximity to Cleveland Hopkins International Airport and its location right off I-90 in Ashtabula County. Both the Horizon League and the MAC said there were no such qualms. “There were no reservations from our member schools; they’re used to traveling,” said Bill Potter, a Horizon League spokesman. “We had seen it and we liked it. We make sure our schools that are hosting know about alternatives, and we liked what we saw.”
Expanded horizons The Horizon League in 2010 held its meet at the University of Michigan, with the University of DetroitMercy serving as host. This year, with Youngstown State the host school, officials chose GaREAT; there was uncertainty surrounding the completion of YSU’s $10 million Watson & Tressel Training Center — which includes track facilities. YSU sports information director
Trevor Parks said school officials, after visting GaREAT, even decided to implement some of its structural and design techniques into YSU’s new facility. “We jumped at the chance to have the meet up there,” Mr. Parks said. The NAIA the last 10 years held its indoor track championships in Johnson City, Tenn., before coming to GaREAT this year, but it already has signed up for 2012 at GaREAT, too. Athletes began arriving last Monday, and visited area secondary schools Wednesday to talk to students about college and athletics. The MAC women’s volleyball tournament for the last five years has been held at the Seagate Center in Toledo. MAC commissioner Jon Steinbrecher said GaREAT’s ability to help staff the tournament was a big factor, and that conference members were unanimous in moving the tournament to Geneva. He, too, said there was no worry about the complex’s location. Mr. Steinbrecher said while he prefers to have conference tournaments at member campuses, some events lend themselves to neutral sites. He specifically mentioned track and swimming. “You take these things on a sportby-sport basis,” Mr. Steinbrecher said. “We’ll consider those.”
Not just in Geneva The NAIA provided participating athletes and schools a list of 15 hotels, from as close as 10 minutes away (Austinburg) to 70 minutes (Cleveland Airport Sheraton). Quail Hollow Resort in Concord has seen a pickup of about 400 room nights per month since August, said Brenda Goodnight, director of sales and marketing at the hotel. GaREAT has become Quail Hollow’s No. 1 account, and Ms. Goodnight said she hired an extra full-time employee — group sales manager Cari Hazen — just to handle it. Quail Hollow was sold out last week for the NAIA meet and also will house the MAC volleyball teams. Ms. Goodnight said the best part of the uptick in business is that much of the traffic — whether for the NAIA meet, which ran Wednesday through Saturday, or the U.S. junior men’s volleyball team, which will be back this summer for two weeks — comes on weeknights. “It’s impacted us a great deal,” Ms. Goodnight said. She said the rest of Lake County also has benefited, because when Quail Hollow is full, she sends teams and other athletes to properties in Mentor, Willoughby and Eastlake. Ms. Hazen said Quail Hollow last month had visitors in from the U.S. Olympic Committee, which she said is interested in bringing rehabilitating athletes to GaREAT once the aquatics center is done this spring. On the same day, Ms. Hazen said, the U.S. Paralympic Committee visited GaREAT and Quail Hollow, with interest in bringing future summer games there. ■
CRAIN’S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
19 CERTAIN BENEFITS COME WITH ATTAINING CERTIFICATION.
LEGAL AFFAIRS Employee retaliation claims on the rise Lawyers say companies should be wary as fault now easier to prove By DAN SHINGLER email@example.com
F JESSE KRAMER
Neil Bhagat landed an entry-level position at Buckingham, Doolittle & Burroughs LLP after graduating last year from Case Western Reserve University School of Law. He says it’s unfortunate how difficult it is for graduates to get jobs in the legal field, especially because of the high tuition costs.
FINDING A JOB CAN BE HARD WORK Law school graduates grapple with new realities of starting a career By MICHELLE PARK firstname.lastname@example.org
IT STILL PAYS TO BE A LAWYER Not surprisingly, the median entry-level associate pay in Ohio increases with the size of the company. For example, an entry-level associate at a small outfit with two to 10 attorneys may make $49,000, while that same person will start at $120,000 at a large firm with more than 250 attorneys. The following numbers show the median entry-level associate pay in Ohio among classes 2007 through 2009.
hen Neil Bhagat entered law school, he said the perception at the time was that everybody would have a job upon graduation. Luckily, that was the case for Mr. Bhagat: The Canton native and May 2010 graduate of Case Western Reserve University School of Law started late last year (not long after his bar exam results posted) in an entry-level position with Buckingham, Doolittle & Burroughs LLP. But others — including some of Mr. Bhagat’s classmates — haven’t been as fortunate. “Even now, I have smart friends who were at the top of the class who are looking for jobs,” Mr. Bhagat said. “There’s just not a market for entry-level attorneys right now,” he continued. “It’s unfortunate because it’s very expensive to go to law school. At the same time, I think people understand how tough the economy is — that’s just the way it is right now.” Among those still searching — though less aggressively than she used to — is Jessica M. Jaeckin, a 2009 See WORK Page 16
Small (2 to 10 attorneys)
Class of 2009
Class of 2008
Class of 2007
Midsize (51 to 100)
Large (251 and higher)
PLAYING THE FIELD
The following data represent the percentage of Ohio law school graduates working any job, anywhere:
The following data represent the percentage of Ohio law school graduates working in a legal capacity, anywhere:
SOURCE: NATIONAL ASSOCIATION FOR LAW PLACEMENT (THE INFORMATION IS COLLECTED FROM SCHOOLS, WHICH COLLECT IT FROM GRADUATES. INFORMATION FOR THE CLASS OF 2010 IS BEING COMPILED NOW, AND SUMMARY FINDINGS ARE EXPECTED TO BE REPORTED IN MAY.)
ootball fans know that when one player takes a shot at another, the worst thing the victim can do is strike back after the play — the refs call it every time. Businesses might take a lesson from that, say attorneys who deal with discrimination lawsuits, because the fastest growing form of employee complaint these days is for retaliation. When an employee files a complaint for discrimination and an employer reacts adversely, plaintiffs’ attorneys file retaliation claims faster than a zebra can throw a yellow flag, say attorneys who represent employers in such matters. “It’s as easy, or easier, to prove retaliation as it is to prove the underlying claim itself. Once (plaintiffs and their attorneys) started figuring that out, they started adding retaliation claims to all their other claims,” said Peter Kirsanow, a labor lawyer at Cleveland’s Benesch law firm, as well as a current member of the U.S. Commission on Civil Rights and a past member of the National Labor Relations Board. The number of retaliation claims certainly has been on the rise. Nationally, there were 18,198 retaliation complaints filed with the U.S. Equal Employment Opportunity Commission in 1997. But that number steadily has been increasing, reaching 36,258 in 2010 — an increase of almost 100%. Cleveland has not been immune to the rash of new complaints. There were 281 retaliation charges filed in the Cleveland area between July 1, 2008, and June 30, 2010, according to a count conducted by the Cleveland office of the law firm Ogletree, Deakins, Nash, Smoak & Stewart, which handles and tracks such suits. Perhaps the best known involved a public relations professional named Antonia Susel, who won more than $1 million from the PR firm Dix & Eaton in 2009, claiming both age discrimination and retaliation were the reasons for her termination from the firm in 2007. “They’re the bane of an employer lawyer’s existence,” said Ogletree shareholder and employment lawyer Bruce Hearey. See EMPLOYEES Page 19
16 CRAINâ€™S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
Work: Grads must have patience continued from PAGE 15
graduate of Cleveland-Marshall College of Law. Ms. Jaeckin works as a supervisor of two McDonaldâ€™s because she says her job search hasnâ€™t turned up an offer that would pay more than what fast food pays. â€œIf someone asked me should they go to law school, Iâ€™d tell them, â€˜No, maybe look into another field,â€™â€? she said. â€œI donâ€™t think itâ€™s been profitable for me.â€? Some recent media reports, particularly one published earlier this year by The New York Times, have caught the legal communityâ€™s attention by raising the question: Is investing in law school a losing proposition? While officials with law schools
and law firms here admit itâ€™s a tougher market for law graduates now than it has been in the past, they say the situation is not nearly as grim as some might have you believe â€” and it may not be as bad here as it is elsewhere.
Reality checks The legal marketplace in Northeast Ohio has fared better than those on the coasts, say many insiders, including Michael N. Ungar, president of the Cleveland Metropolitan Bar Association. The firms here didnâ€™t experience the tremendous highs some did, and thus havenâ€™t fallen victim to the â€œmerger maniaâ€? others have, Mr. Ungar said. Indeed, some say the problems
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plaguing large cities such as New York have diverted attention toward Cleveland, he added. At least one law firm reported seeing increased interest in its Cleveland office from recruits in other areas. The recession decreased demand for legal services, prompting some firms here and elsewhere to reduce entry-level associate hiring and to decrease or eliminate the summer associate programs historically used to recruit entry-level staffers. More graduates are seeking the assistance of Major Legal Services, a legal placement firm in Cleveland and Pittsburgh, said Deborah Peters, director of recruiting. And many of them have been searching for permanent employment for longer periods of time, even up to two years, she added. â€œTheyâ€™re all resigned to it taking longer for them to find the right job,â€? she said. Graduates also are negotiating to do legal work for non-legal employers, something that wasnâ€™t happening 10 or 15 years ago, said Jennifer Blaga, director of career planning at Cleveland-Marshall. Itâ€™s an example of the creativity required today, she said. Cleveland-Marshall students, Ms. Blaga said, are getting unprecedented attention and assistance today when it comes to career planning, and it starts in the first year. â€œI think we do a very good job of being honest with the students,â€? she said. Ms. Jaeckin, meanwhile, is beginning to accept that McDonaldâ€™s may be her career path after all. She had every intention of leaving
THE COSTS OF LAW SCHOOL Tuition continues to increase each year at Case Western Reserve, Cleveland State and Akron universitiesâ€™ law schools, while new student entries into those programs has fluctuated. Tuition and fees (full time, Ohio resident)
$38,679 $36,674 $35,220 $33,384
Entering classes (full-time and part-time students)
*Case Western Reserve University School of Law does not distinguish between in-state and out-of-state students and only has a few part-time students. SOURCES: CASE WESTERN RESERVE UNIVERSITY SCHOOL OF LAW, CLEVELAND-MARSHALL COLLEGE OF LAW AND THE UNIVERSITY OF AKRON SCHOOL OF LAW
McDonaldâ€™s once she graduated. Right after she passed the bar, she said she was sending 10 to 15 rĂŠsumĂŠs a month to firms across Ohio. â€œMost places werenâ€™t hiring, or theyâ€™d get an opening and theyâ€™d have 300 applications sent in,â€? she said. â€œAfter so many letters back that theyâ€™re not hiring or theyâ€™re looking for someone more experienced, honestly you get a little discouraged.â€? Ms. Jaeckin did receive an offer from a firm in Lorain County, but she said it offered less than $40,000 â€” significantly less than she now earns. (She estimates she owes some $80,000 in consolidated school debt, the majority of which she said she borrowed for the law degree that today sits on a shelf in her home office.) Now, sheâ€™s sending out maybe one rĂŠsumĂŠ a month. â€œEvery class that graduates since me is more people looking for the same jobs Iâ€™m looking for,â€? she said.
Signs of life Both Robert H. Rawson Jr., interim dean of CWRUâ€™s law school, and Mr. Ungar expect the prospects for those graduating in 2011 and 2012 to be markedly better. The legal marketplace falls and rises behind the economy, and the economy is improving, Mr. Rawson said. â€œFor law students willing to
tough it out, I think jobs will open up,â€? Mr. Ungar agreed. â€œNobody is predicting that the demand for legal services is going to go down.â€? To hammer home his point, Mr. Ungar qualified, â€œIf law school is a losing game, I wouldnâ€™t be encouraging my daughter to do it.â€? (His daughter is a junior at Ohio State University.) Ms. Peters of Major Legal Services sees signs of improvement, too. Sheâ€™s hearing that some recent graduates are getting more â€œnibbles.â€? Plus, the contract work Major Legal Services hires people to do has been picking up for the last six months. Still, it is not what it was five years ago, she noted. The market will correct this one way or another, predicted David Hooker, managing partner of Thompson Hine LLP. It may be that demand picks up or that fewer people go to law school. For his part, Mr. Bhagat is glad he possesses a law degree. â€œAs long as people are conscientious of the reasons why they want to go to law school, as long as you make an informed decision, itâ€™s a great job once you get to it,â€? he said. While Ms. Jaeckin feels differently, she acknowledged she makes more at McDonaldâ€™s since she earned her degree and said she doesnâ€™t regret her own decision to attend. â€œI do feel that itâ€™s an achievement,â€? she said. â€œI do value my education.â€? â–
HIRING SLOW, BUT GENERALLY STEADY When it comes to opportunity for law school graduates, there are signs of strain, but also signs of consistency in the Cleveland legal marketplace. Ulmer & Berne LLP, for one, is hiring entry-level associates at roughly half the level it did a few years ago and its summer associate program is at least half what it was two summers ago, said Michael N. Ungar, a firm partner. Buckingham, Doolittle & Burroughs LLP a year ago laid off 16 attorneys â€” partners and associates â€” and in 2009 suspended its summer associate program.
While the summer program remains suspended, the firm still is hiring entry-level graduates, said Jennifer Slife, chief development officer. The number of new associate hires firmwide has been a consistent two or three per year in recent years. Hiring at Jones Dayâ€™s Cleveland office also has remained consistent: Between 15 and 18 new associates have been added annually since 2007. Thompson Hine LLP in 2010 eliminated its summer associate program, but has added 10 entry-level associates in Cleveland in the past 13 months, said managing partner David Hooker. â€” Michelle Park
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18 CRAIN’S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
Lawyers dial up outreach to current, potential clients Firms increasingly work to find new ways to emphasize value, generate more interest By MICHELLE PARK firstname.lastname@example.org
t’s fitting that an hour before an interview with Crain’s Cleveland Business about how law firms have increased their outreach to clients like himself, Fred DiSanto received a news alert from a law firm. The e-mail provides updates from the Ohio Statehouse, and it’s one example of the type of communication Mr. DiSanto said he’s receiving more frequently from the law firms with which he works, McDonald Hopkins LLC and Mansour, Gavin, Gerlack & Manos. “It’s not just me calling them, saying, ‘Hey, I’ve got a problem,’” said Mr. DiSanto, CEO of Ancora Advisors in Beachwood. “There’s a lot more information flow to us from the law firm, whether it’s a conference, e-mails. I guess it’s a way that the law firms are staying
in front of their clients and also a way for them to prospect for clients.” Firms today are competing for less work. The economic downturn has limited what some clients are willing to spend, and mergers and relocations have reduced the number of companies that would hire firms. Those clients that remain expect added value, insiders say. “Clients are scrutinizing every aspect of the relationship, like the billing, like the quality of the work, like the responsiveness of the attorneys,” said Robert E. Roland, partner with Day Ketterer Ltd., a firm with offices in Canton, Hudson and Cleveland. “The recession has increased the tendency to be critical and to be competitive. “Since the clients aren’t calling in to the attorneys, the attorneys have to reach out,” Mr. Roland said. “They have to show benefit.”
From left, McDonald Hopkins Labor and Employment Practice attorneys Todd L. Sarver, Jenny McGovern, Victor T. Geraci and Brendan J. Fitzgerald are panelists at the firm’s recent Cleveland roundtable. The topic was “All Employers Beware: The NLRB Shows Its Teeth,” which was webcast for audiences located outside of Northeast Ohio. PHOTO PROVIDED
Keeping in touch To that end, firms are ramping up and introducing services for which they aren’t billing directly. Many have taken to sending e-mail alerts, including the one Mr.
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DiSanto received from McDonald Hopkins an hour before his interview. Others are offering free seminars and are using client service teams and feedback programs to add value for clients. Jones Day, which has delivered client alerts for at least a decade, has increased the number it’s sending because the firm has expanded globally and because of greater regulatory activity, said partner Stanley Weiner. McDonald Hopkins in Cleveland increased its outreach efforts in fall 2008 after the economic crisis struck because it wanted to become a source of information at a scary time, president Carl J. Grassi said. In addition to e-mail alerts, it began offering informational webcasts, such as one on data security privacy that drew 250 viewers in January. Such initiatives, Mr. Grassi said, are raising brand awareness and are generating interest from prospective clients that previously may not have considered a midsize firm. Day Ketterer hosted last year more free educational seminars than it usually does, presenting nine or 10 to various groups about the federal health care law only months after it passed, Mr. Roland said. The firm allocated 250 attorney hours to that outreach alone, he estimated. Growing in number at Thompson Hine LLP in Cleveland are client service teams, which pull together lawyers who regularly work for the same client to ensure the lawyers are sharing information and providing services in a better informed way. Both Thompson Hine and Squire, Sanders & Dempsey also are investing in legal project management. The discipline involves defining and monitoring the scope and cost of legal work and increasing communication between a firm and a client, said Stacy Ballin, one of two Squire Sanders attorneys in Cleveland working toward legal project management certification. Once Ms. Ballin, a litigation partner, and Mitch Thompson, a tax partner, complete the six-month program in June, they plan to share firmwide what they learned. Such formalized training is pretty new, Ms. Ballin said. Project management is particularly important at a time when more clients are demanding greater predictability, increased efficiency
and cost containment, Ms. Ballin noted.
Beyond the norm Clients today are more focused on what they budget for outside legal counsel and aren’t accepting automatic rate increases every year as they may have previously, said Tom Clay, a principal with Altman Weil Inc., a management consulting firm for the legal profession based in Newtown Square, Pa. “They just don’t want to hear, ‘Well, we don’t really know how much this will cost because there are so many variables,’” Mr. Clay said. “It can be a major change, and many lawyers and many law firms would prefer not to make that change, but at some point if you want to keep the business, you make it.” So law firms increasingly are offering alternatives, such as flat fees, to the billable hour they’ve traditionally charged. Many also are making their processes more transparent so clients know for what services they’re paying. The billable hour, though, remains the overwhelming methodology of law firm pricing. Day Ketterer’s Mr. Roland estimated 95% of clients are still billed by the hour, and Thompson Hine managing partner David Hooker estimated the percentage at more than 80%. However, the minority that pays by alternative arrangement is growing, Mr. Hooker said, and Thompson Hine has invested in systems to ensure it is tracking consistently the way it prices alternative fee arrangements. Even those firms not hearing their clients demand something different should be prepared to offer alternatives, Mr. Clay said. “You cannot afford to not be very well-versed in what’s going on,” he said. “You can’t afford to say to a client, ‘We haven’t done that. We’re not sure how to do that.’ “(Alternative billing) is in the marketplace,” he said. “It’s not going away.” Many predict all the change — the alternative billing, the increased client outreach — is here to stay. “I think that all the pressures we have to be more efficient, more responsible, are going to continue,” Mr. Hooker said. “The clients have figured out, have learned to know, that they can expect more of their law firms.” ■
MARCH 7 - 13, 2011
CRAIN’S CLEVELAND BUSINESS 19
Some local lawyers see benefits of certification Firms say specialist designation elevates position in the field By JOEL HAMMOND email@example.com
embership in the Ohio State Bar Association’s certified specialists club is exclusive: Only 2.4% — 634 — of the bar association’s approximately 26,000 member lawyers are certified in one of nine areas the bar offers. And while applications and acceptances into the club have slowed in recent years, officials cite the overall membership staying steady as evidence of the program’s value. The total number of lawyers certified by the state bar association is up 15% since 2006, to 634 from 552. But, applications have slowed, from 60 in 2006 to 36 in 2011, a 40% drop, resulting in a 34% decline in the number of new certifications (38 to 25). “We think the number of attor-
neys renewing their certifications is the best way to measure the program,” said Kalpana Yalamanchili, director of bar services at the bar association. “We’re at about 90% to 95% of the lawyers who go from their initial approval to recertification.” Local law firms, too, see the benefit. A count of listed certified specialists on the bar association’s web site shows 198 who call Northeast Ohio, from Akron to Cleveland, home. That figure includes 64 in labor and employment law, the highest concentration of certified area attorneys. That total includes Jim Wilkins, a shareholder at Kastner Westman & Wilkins in Akron and one of three attorneys at the firm certified in labor and employment law. Certifications in that area of law have jumped 15% since 2006, likely a reflection of the challenging economy and an uptick in claims from laid-off or disgruntled employees, Mr. Wilkins said. Kastner Westman has “come through the economy unscathed,” Mr. Wilkins said, because employment activity has grown. Mr. Wilkins said the firm’s reputation
Employees: High court ruling expands scope of retaliation continued from PAGE 15
Those in the employee-litigation arena say a variety of factors have caused the number of retaliation claims to jump in recent years, not the least of which have been two key decisions by a U.S. Supreme Court that many expected to be more pro-employer in its rulings. In 2006, the court ruled that retaliation does not have to be something measurable or as concrete as, say, withholding a raise or promotion. It could be almost anything that pressures an employee, said Charles Billington III, a labor lawyer for Vorys, Sater, Seymour and Pease LLP in Cleveland. The court “gave it this sort of nebulous definition — if the action against you would keep a reasonable person from filing a charge, that’s retaliation. To me, that’s kind of squishy,” Mr. Billington said. That ruling increased the number of filings, because it made it far easier to prove retaliation in court and administrative proceedings — or, at least, much harder to disprove it, employers’ attorneys say. Mr. Healey said companies sometimes overreact to an initial claim of discrimination, real or imagined, and set themselves up for a retaliation charge under the broader definition of retaliation. “An employee complains, and then the supervisor quite naturally says, ‘I’m going to watch myself around this employee.’ Then the employee comes back and says, ‘My supervisor won’t talk to me.’” But another factor in the increase no doubt has been the economy, which may be the biggest driver of all types of discrimination claims, observers say. A major recession causes more employees to lose their jobs, and that more than anything will
prompt more complaints of discrimination as well as retaliation — especially in a job market where affected employees can’t quickly find new work. Employees who are laid off, or fear that they are about to be laid off, are far less tolerant of anything resembling discrimination — and might even file a complaint as a defensive effort to try to save their jobs in any event, defense attorneys say. “You don’t even have to be laid off. Some of these charges are filed by people who believe they may be laid off, so they file a charge to protect themselves,” Mr. Kirsanow said. “They do it because they understand, or they believe, that if they file a charge the employer will slow down and it will insulate them from layoffs.” In February, the Supreme Court threw another curveball at employers, by widening the scope of retaliation further so that it now includes third parties. In other words, not only can a complaining employee claim retaliation, but so can their spouse, friends and supporters if the employer also acts against them, attorneys say. Attorneys say that case is so recent, it probably has not yet resulted in more cases being filed — but they insist it will, and probably is already feeding new cases into the pipeline.
Two sides to the story While employers’ attorneys say the law is being expanded to cover more people and types of activities, that’s not the way at least some attorneys on the other side see it. To them, the Supreme Court is merely reinvigorating a law that previous courts had made more narrow. “I think there’s been a systematic narrowing of the law over the last
and the certifications have played roles, too. “(Certification) makes sense from a marketing and publicity standpoint,” Mr. Wilkins said. “Ethics rules preclude you from holding yourself as a specialist unless you are certified as one; it allows me to tell clients, ‘Yes, I am certified, and I am a specialist.’” Thirty-six Northeast Ohio attorneys each are certified in workers’ compensation law and estate planning, trust and probate law. They include Steve Gariepy, co-chair of the estate planning group at Hahn Loeser & Parks’ Cleveland office and one of five Hahn Loeser lawyers certified in estate planning; two others are certified in labor and employment and one in appellate law. Mr. Gariepy said he gets many new clients from referrals, and his
Make no mistake, though: Achieving certification isn’t easy, nor is it a given. This year, for instance, 11 applicants were denied, and eight who applied last year did not achieve certification. Requirements include: ■ devoting 25% of a lawyer’s time to the area in which he or she is trying to become certified; ■ 36 hours of continuing legal education during the previous two years, above the normal 24 hours each lawyer must complete to remain in good standing; ■ passing a written test; ■ maintaining professional liability coverage; and ■ five references. So not only is it a significant time commitment, but there’s a cost element, too. According to Barbara
Roman, a partner at Meyers, Roman, Friedberg & Lewis in Akron and president-elect of the Cleveland Metropolitan Bar Association, one credit hour of continuing education costs about $100; so, the extra classroom work necessary could cost upwards of $1,000. Ms. Roman has focused for 25 years solely on family law, but is not certified by the state bar association, reasoning that her clients find her experience more important. “I have 35 years of experience,” said Ms. Roman, who officially assumes her duties with the Cleveland bar on June 10. “Is this certification really going to make my practice take off more? I have a very viable practice in family law now.” There’s also a bit of trepidation, Ms. Roman said, especially in family law, which she said has the secondlargest number of malpractice claims. Lawyers think like lawyers, she said, and board-certified attorneys may be more susceptible to added criticism if a client is unhappy. “If I was a lawyer representing a client and they thought they didn’t get good representation, then I’d consider (a malpractice claim),” Ms. Roman said. “I’d expect (certified lawyers) not to make mistakes. It’s a deterrent for me to think about (when considering certification.)” ■
20 years and that (February) decision has just brought us back to where we used to be,” said Cathleen Bolek, a principal at the Cleveland law firm Bolek Besser Glesius. “Even the conservative Supreme Court we have now has said, ‘Let’s look at it and see what Congress really intended to do.’” Attorneys on both sides of the issue predict the number of cases
will increase. So what are employers to do? Be alert and proactive, employee attorneys say. If employees’ and managers’ handbooks don’t address retaliation, that’s a big mistake, they say — and all supervisors should have training that includes information on how to avoid retaliation claims. It doesn’t take much, said Mr. Billington, who conducts training
on retaliation and other issues for his clients’ supervisors and human resource managers — a half-day session is adequate. And it’s almost always cheaper than having to fight an administrative action or court case, he said. “Just calling someone like me, for 10 minutes, when you’re about to discipline someone can make all the difference,” he said. ■
“(Certification) makes sense from a marketing and publicity standpoint.” – Jim Wilkins shareholder, Kastner Westman & Wilkins
certification allows colleagues and others familiar with his work to be more confident in recommending him. Plus, he also often speaks to professional groups, and his credentials are more attractive with his certification attached. “It really sets you apart,”he said.
Not easy being certified
One firm. Many talents. Stephen E. Walters, Managing Partner
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Akron Cincinnati Cleveland Columbus Sandusky Toledo Youngstown Ft. Mitchell Lexington Louisville
When working with Reminger attorneys, you get the best of both worlds: the knowledge and skill set of a large firm, combined with the personal attention you would expect from a small firm. Contact Reminger Managing Partner Stephen E. Walters for more information.
CRAIN’S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
NORTHEAST OHIO INVESTMENT BANKS LISTED ALPHABETICALLY(1)
Company Address Phone/Web site
# of local investment bankers
BellMark Partners 635 W. Lakeside Ave., Suite 606, Cleveland 44113 (216) 575-1000/www.bellmarkpartners.com
Brown Gibbons Lang & Co. LLC 1111 Superior Ave., Suite 900, Cleveland 44114 (216) 241-2800/www.bglco.com
Top local executive Title
Chief investment banker(s)
Merger advisory services, restructuring, valuations and Dave Gesmondi fairness opinions, strategic alternative reviews managing director
Dave Gesmondi managing director
Michael E Gibbons Merger advisory services, restructuring, capital raising senior managing director, principal
Michael E. Gibbons senior managing director, principal
Bruml Capital Corp. 1801 E. Ninth St., Suite 1620, Cleveland 44114 (216) 771-6660/www.brumlcapital.com
Merger advisory services, sell-side and buy-side transaction advisory services, raising private capital, valuation and fairness opinions
Robert W. Bruml, president; Andrew S. Gelfand, sr. vp; Eric W. Starr, vp
Robert W. Bruml president
Candlewood Partners LLC 10 1/2 E. Washington St., Chagrin Falls 44022 (440) 247-2800/www.candlewoodpartners.com
Mergers and acquisitions, restructurings, corporate finance
Michael F. Paparella, Glenn C. Michael F. Paparella Pollack, managing directors.; Christopher S. Wagner, director managing director
EdgePoint Capital Advisors 3700 Park East Drive, Beachwood 44122 (216) 831-2430/www.edgepoint.com
Manufacturing, distribution, technology, chemicals, transportation, metal forming, health care
Thomas Zucker, president; Dan Thomas Zucker Weinmann, John Herubin, Russ president Warren, senior vps
Evarts Capital LLC 20600 Chagrin Boulevard, Suite 495, Cleveland 44122 (216) 991-1201/www.evartscapital.com
Merger and acquisition advisory services, sell-side and G. William Evarts buy-side transaction advisory services, capital Todd Peter placement and financial restructurings managing partners
G. William Evarts Todd Peter managing partners
Harris Williams & Co. 1900 E. Ninth St., 20th floor, Cleveland 44114 (216) 689-2400/www.harriswilliams.com
Sale advisory, M&A advisory, restructuring, capital raising, fairness opinions
Dave Hegeman Geoffrey Frankel managing directors
Dave Hegeman managing director
Holmes Hollister & Co. 1111 Superior Ave. E., Suite 1400, Cleveland 44114 (216) 937-2320/NA
General industrial, transportation, specialty materials, Internet, for-profit education
John B. Hollister III Douglas Q. Holmes partners
John B. Hollister III partner
KeyBanc Capital Markets 127 Public Square, Cleveland 44114 (216) 689-3000/https://www.key.com/html/keybanccapital-markets.html
Consumer, energy, financial sponsors, industrial, real estate
Randy Paine, exec. vice president, head of corporate and investment banking
Laux & Co. 672 W. Liberty St., Medina 44256 (330) 721-0100/www.lauxco.com
Middle-market investment banking firm, merger and acquisition advisory (buy-side & sell-side), recapitalizations (mezzanine & equity)
William J. Laux president
William J. Laux president
MelCap Partners LLC 5164 Normandy Park Drive, Suite 285, Medina 44256 (330) 721-1990/www.melcappartners.com
Middle market investment banking firm, merger and acquisition advisory services, private placement of debt and equity capital, general advisory services
Albert D. Melchiorre president
Albert D. Melchiorre president
Merkel & Associates Inc. 29325 Chagrin Blvd., Suite 101, Pepper Pike 44122 (216) 831-1440/www.merkelandassociates.com
Manufacturing, distribution, business services
Nicholas B. Merkel president
ParaCap Group LLC 6150 Parkland Blvd., Cleveland 44124 (440) 869-2100/www.paracapgroup.com
Insurance, financial institutions, waste management, industrial
Jeff Boyle Will Areklett managing partners
Raintree Capital Partners 1350 Euclid Ave., Suite 800, Cleveland 44115 (216) 774-1100/www.raintree-capital.com
M&A advisory services, capital placement and financial NA restructuring, turnaround management
James Lisy, Mikel Harding, Bill Frazier, Mike Boeckman, managing directors
Vetus Partners 1300 E. Ninth St., Suite 600, Cleveland 44114 (216) 333-1840/www.vetuspartners.com
Distribution and logistics, engineered products, Jay K. Greyson automation, controls and electrical products, specialty managing director, materials, corporate carve-outs principal
Jay K. Greyson managing director, principal
Western Reserve Partners LLC 200 Public Square, Suite 3750, Cleveland 44114 (216) 589-0900/www.wesrespartners.com
Corporate merger advisory services, corporate capital raising, restructuring and bankruptcy, real estate NA finance
Ralph M. Della Ratta managing director
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.
RESEARCHED BY Deborah W. Hillyer
(1) Numbers as of Jan. 1, 2011.
Strnisha: Public experience elevates expertise level continued from PAGE 3
The financial consultant role uses skills Mr. Strnisha honed as a former banker, city of Cleveland finance director and operator of Cleveland Development Fund, which provides money for catalytic real estate projects in low-income neighborhoods. And in these abnormal financial times, Mr. Strnisha, director of financial services with Project Management Consultants of Cleveland, is finding greater demand for his services. He helps developers, as well as companies including American Greetings Corp. that are pondering significant real estate projects, maximize public funds for private developments. Developer John Carney of Westlake recently hired Mr. Strnisha to serve as his consultant to help the city of Toledo close a $10 million U.S. Housing and Urban Development loan; the loan would help convert an old food warehouse near the Toledo Mud Hens minor league ballpark to 150 units of housing. Mr. Carney has known Mr. Strnisha since 1992, when the latter was city finance director and Mr. Carney’s
Landmark Management began transforming old buildings into chic lofts in Cleveland’s Warehouse District. Cities will not pay to help developers land loans, Mr. Carney said, so he retained Mr. Strnisha to navigate HUD’s loan approval process in Toledo. “HUD wants to assist projects but does not want to be the lender that forces a project into foreclosure if (a development) has trouble,” Mr. Strnisha said. “It takes a lot of work to structure that. It’s a different process if a city has not done a HUD 108 loan recently.” HUD 108 loans are low-interest loans for real estate developments that are backed by funds a city receives through the federal Community Development Block Grant program, although the developer is responsible for repaying them.
A rare bird A $30 million HUD 108 loan that Mr. Strnisha secured through the city of Cleveland and HUD was among the staggering 35 sources of funds that he helped line up to finance the Flats East Bank project. Toby Rittner, president and CEO
of the Council of Development Finance Agencies, an industry group for development finance specialists, estimates that five people in Ohio put deals together the way Mr. Strnisha does, and perhaps 25 do so nationwide. Mr. Rittner said pulling together 35 sources of financing as Mr. Strnisha did for the Flats East Bank is “amazing” because the most he had seen in a previous project was 14. What’s more, the task was complicated by the economic weaknesses of Cleveland and the Midwest. The regional approach taken by Mr. Strnisha — using federal, state, county, city and other sources of money — made the financing particularly noteworthy for Mr. Strnisha’s peers, Mr. Rittner said. “If the city of Cleveland alone had said it wanted to do this project, it would not have gotten done,” Mr. Rittner said. “The regional aspects got it done.” Mr. Strnisha isn’t resting on his laurels. Among the new projects he’s working on with Fairmount Properties are mixed-use projects the company is developing near college campuses in Kent, Toledo
and Rochester, N.Y. Mr. Strnisha also serves as a consultant to Beachwood businessman A. Eddy Zai, whose Cleveland International Fund raises investment dollars globally for U.S. real estate developments; in exchange, investors receive accelerated review of their green card applications to immigrate to this country. The fund operates under the State Department’s EB5 program. That program has produced $20 million for the Aloft Hotel and $20 million for the Ernst & Young Tower, both part of the Flats East Bank project. For Flats East Bank, the money from Cleveland International Fund was like cash falling from the clouds and may prove the same for other projects in this capital-shy period. “Having money placed helps the international fund raise more money in other countries,” Mr. Strnisha said.
Moving heaven and earth Mr. Strnisha also is helping Snavely Development Co. in Willoughby Hills and Concord Hospitality Enterprises Co. of Raleigh, N.C., close financing for their proposed $27 million hotel at Euclid Avenue
and Cornell Road in Cleveland’s University Circle neighborhood. The hotel may prove easier to finance than the Flats East Bank project, and it’s not just due to a 90% lower price tag. The University Circle hotel is eligible for Federal New Markets Tax Credits, which provide tax benefits to lenders and investors if the projects they back create jobs in qualifying lowincome areas. The search for funds for the Flats East Bank project was so intense that Mr. Strnisha’s team even investigated how to get census tract boundaries moved across the Cuyahoga River so that land on its east bank was eligible for the New Markets Tax Credits. “That is what we bring to the table because of my public experience,” Mr. Strnisha said. “I can ask governments, ‘What about this?’” Almost speaking to himself, Mr. Strnisha observed: “The Roldos (Bartimole, Cleveland’s famed muckraker) of the world may not think much of it, but I think taking steps to enhance their tax base is a legitimate role of state and local governments.” ■
MARCH 7 - 13, 2011
CRAIN’S CLEVELAND BUSINESS
Bill: Some school boards seek legal help continued from PAGE 3
employee’s portion of the pension contribution, called the pension pickup. However, Ms. Sinisgalli also believes good representation on the school side of the bargaining table can make a difference in how contract talks turn out. “We have great legal representation,” she said. “They certainly had a lot more experience then any of us on the school board.” The school board used Pepple & Waggoner, an Independence law firm that specializes in school issues, to lead its latest contract negotiations. “Without them it would have been more difficult than it was,” Ms. Sinisgalli said. Last week, Strongsville teachers announced their approval of a contract that includes a salary freeze and an increase in the amount teachers pay toward health insurance premiums. While it’s technically a two-year contract, the last contract expired last summer, so the new contract expires June 30, 2012. “The biggest decision a school board makes is, ‘Do we use outside representation or do we go it alone and send school administrators to
the (bargaining) table?’” said Glenn Waggoner, one of Pepple & Waggoner’s name partners. “That is a situation where it can be pennywise and pound foolish.”
An ‘imbalance of power’? S.B. 5 will get its first hearing in the Ohio House this week after a hastily amended version was passed by the state Senate last Wednesday, March 2, by a 17-16 vote. As passed by the Senate, the bill bans all strikes by teachers and other public employees. It also ends the use of binding arbitration, which uses a third-party neutral arbitrator when the two sides can’t reach an agreement. In place of binding arbitration, the amended bill provides for nonbinding mediation. But if an agreement isn’t reached within 14 days after a fact-finding report, the employer can choose between the last offer by the union or it can choose to accept its own last offer, a concept that pushed several Republican senators to oppose the bill because they believe this process is unconstitutional. The Ohio School Board Association’s legislative platform recog-
LaRue: Forest City eyes more prosperous future continued from PAGE 3
he and current Forest City CEO Charles Ratner conducted with Crain’s last Tuesday, March 1. That was the day Forest City announced Mr. LaRue would succeed Mr. Ratner as the first non-member of the company’s founding Ratner family to hold the top post. Charles Ratner, 69, will become chairman, and current co-chairmen Albert Ratner, 83, and Sam Miller, 89, assume co-chairmen emeritus status on June 10. As sports teams and Cleveland’s fortunes rose and sank, so did Tower City’s retail component, now populated with a few national mall retailers and lots of local shops. With the casino as an anchor, Mr. LaRue said, “We now have something to talk to retailers about.” And merchants, too, seem inclined to talk to Forest City. “From the late 1990s to 2011, we didn’t get retailers to return phone calls. Now they’re calling us,” Charles Ratner said.
A ‘star from the start’ During Tower City’s original construction, Charles Ratner said, Mr. LaRue worked directly with then-CEO Albert Ratner. Upon completion of Tower City’s development phase, Mr. LaRue was reassigned to Forest City’s headquarters, then on Brookpark Road in Brooklyn. He would take on roles of increasing importance, eventually rising to executive vice president and chief operating officer in 2010. “He was a star from the start,” Charles Ratner said of Mr. LaRue. Charles Ratner said he selected Mr. LaRue to succeed him because of Mr. LaRue’s combination of financial and operational expertise and lengthy experience with the company. Mr. Ratner said he wanted
his successor in place by the time he turns 70 on Aug. 22. “It’s the right time for a change,” Mr. Ratner said. “The company has been through some tough times. But we’re in a good place now. This was not sought by anyone but me. If I hadn’t thought the time was right, and Mr. LaRue wasn’t right, I wouldn’t have done it.” Mr. Ratner said selecting the first CEO who is not part of the 90-yearold company’s founding family also is important. “The only way to keep in touch with the marketplace is to bring in fresh ideas and new people from the outside,” he said. At the same time, the founding family retains substantial control of Forest City through its ownership of Class B shares, which carry more voting power than the company’s Class A shares.
Committed to Cleveland Outsiders see the selection of Mr. LaRue, an Ohio native who lives in Rocky River and has spent his career with Forest City here as opposed to Boston, Denver or other company outposts, as a plus for Northeast Ohio. “People have said that once the Ratner family is not running the company, there goes Cleveland as the headquarters,” said David Browning, managing director of the Cleveland office of CB Richard Ellis. “That’s myopic. (Mr. LaRue) has been as active in Cleveland as anyone on my radar screen.” As for Mr. LaRue, he said he will focus on captaining a company with $12 billion in assets as the real estate business emerges from a dreadful downturn. “There are challenges,” he said. “There are uncertainties. But there are also opportunities.” ■
nizes the right of teachers to organize and doesn’t call for the end of collective bargaining. But it does not believe teachers should be able to strike and wants to end binding arbitration. It also supports “innovative approaches” to employee compensation, which would mean a break from existing law where seniority determines pay. “There’s an imbalance of power there,” Ms. Schafer, the CopleyFairlawn school board president, said of the current situation. “In a lot of situations, school boards’ hands are tied and they are unable to do what’s in the best interest of students and taxpayers because of language in contracts that is difficult to remove.” Ms. Schafer cited contract language that now gives teachers what is called a “step increase,” a pay increase of about 3% with each additional year of service. Last July, the Copley-Fairlawn district and its teachers approved a one-year contract that provided no increase in base pay and raised the amount teachers pay for their health benefits. But state law required it to keep the step increase in place. S.B. 5 eliminates step increases.
Tough ship to turn An independent arbitrator who has reviewed what are called last, best offers from school districts and unions said he has found that unions generally are better prepared and make stronger arguments for their positions. He would not speak on the record because of the neutral role he plays in negotiations. Mr. Waggoner, the attorney who represents school districts, offered another explanation of why school boards, and likely other public agencies, believe they need legislation now to correct the perceived imbalance in contract terms in favor of unions. He compared negotiating to reclaim management authority that had been bargained away in labor negotiations to docking a Great Lakes freighter, which takes several miles of breaking and backing away from the dock before coming to a stop. “We’ve gone into districts where we’ve had to go through multiple cycles of bargaining to try to rebalance contracts that became very union-oriented,” Mr. Waggoner said. “So you don’t turn on a dime with a labor contract and a relation-
ship with a union that goes back decades and suddenly get where you want to go. “But it can be done” over time, he said. Joseph Regano, superintendent of the Solon City Schools, said he negotiates his district’s union contracts himself, along with two board members, knowing he will face professional negotiators across the table. “It seems to work very well for us,” Mr. Regano said of recent negotiations with non-teaching employees. “On the strength of the weakness of the economy we negotiated three zeros for the next three years.” (“Three zeros” means three years with no increase in wages.) Damon Asbury, director of legislative services for the state school board association, conceded that unions often have done a better job of bargaining for their members. “I always felt that the school board as an organization needed to do a better job of having a game plan,” said Mr. Asbury, a former superintendent of the Worthington school district in suburban Columbus and a former executive director of the Ohio State Teachers Retirement System. Still, even this process of equipping board members has its limits. “We offer training that works to a certain extent, but I think that unions are better at playing hardball,” Mr. Asbury said. ■
CRAINâ€™S CLEVELAND BUSINESS
MARCH 7 - 13, 2011
Steel: Suppliers to see uptick from millâ€™s growth woman that it is â€œconstantly evaluating our operations to align production based on market demand.â€?
continued from PAGE 1
â€œItâ€™s happening, and itâ€™s good news,â€? Mr. Granakis said. The mill will not expand its total steelmaking capacity but will increase its capacity to produce steel with special finishes and treatments. The pickling line, which removes impurities from steel, will move from one shift to three, as will the galvanizing line and the tandem mill that gives some steel its final shape and size. A temper mill, also used to give steel a final finish and special characteristics by rolling it, will be restarted after it was shut down at the start of the recession, Mr. Granakis said. ArcelorMittal only would say in a statement from a corporate spokes-
Contact: Phone: Fax: E-mail:
Happy stampers likely The companyâ€™s plans wonâ€™t put it at odds with the U.S. manufacturing sector, including shops and companies in Northeast Ohio that have been reporting longer lead times and rising prices for steel over the last few months. Market conditions largely have been blamed on U.S. steelmakersâ€™ slowness in bringing back production after the recession. Metal stampers will be especially pleased, because they buy and use the bulk of the flat-rolled steel that ArcelorMittal makes in Cleveland.
Some local manufacturers will be even happier, because they supply the mill with parts and materials. One local machine shop owner, who asked to remain anonymous, said heâ€™s been told by ArcelorMittalâ€™s local people that the company is preparing to expand â€” and that he should get ready to start fabricating parts. â€œIt should increase my business,â€? the shop owner said. ArcelorMittal has been advertising several positions since at least January, including two ads that it ran in The Plain Dealer on Feb. 23 seeking multiple boiler operators, stationary engineers and mobile equipment operators. Mr. Granakis said the bulk of the
new production workers will be hired over the next six months. Additional hiring likely will be needed to bring in the necessary supervisors and other non-union employees to support the operations, he said. All the hiring could bring Mr. Granakisâ€™ union local to the vicinity of 1,450, which was how many working union members Local 979 had in the mill before the recession hit. Those already working at the plant also will benefit from the additions, Mr. Granakis said, as they will be the first to get the opportunity to work in the expanded finishing operations, where conditions are cleaner, more comfortable and less dangerous than they are in the millâ€™s main blast furnace operations. â–
Genny Donley (216) 771-5172 (216) 694-4264 firstname.lastname@example.org
OFFICE SPACE Tangletown/Beachcliff Rocky River
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The Crainâ€™s Small Business Report, sponsored by COSE, brings you the latest news and trends that affect small companies and the entrepreneurial economy. Regular features include news stories, a blog, links to small business data; Bright Spots, a column highlighting positive developments in the region; and COSE Voice, offering weekly updates from the Council of Smaller Enterprises. If you already receive Crainâ€™s daily and weekly e-mail news alerts, youâ€™ll automatically receive the new report. If not, you can sign up by visiting CrainsCleveland.com/signup.
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SPORTS & ENTERTAINMENT
Lubricants & Chemicals
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Crainâ€™s Executive Recruiter Cleveland-Cuyahoga County Port Authority VP, Planning & Development The VP of Planning & Development is responsible for providing support to the President & CEO by providing expert professional assistance and guidance to the Authority on developing and implementing the Portâ€™s strategic plan, master facilities plan, and all other planning and project management efforts. This newly created position reports to the President & CEO. Duties & Responsibilities include: â€˘ Identifies and prioritizes capital improvement projects, including property acquisition, construction and expansion â€˘ Plans, implements and manages complex land use and environmental plans, projects and programs and monitors activities to ensure compliance with relevant federal, state and local laws â€˘ Works with the Army Corps of Engineers regarding the authorization, funding and coordination of dredge material management plan for Cleveland Harbor â€˘ Manages the anticipated construction of a new Confined Disposal Facility for dredge material and leads coordination effort with numerous private and public stakeholders â€˘ Leads planning and development efforts for the redevelopment of waterfront industrial property For a complete job description & requirements please visit www.portofcleveland.com Application Deadline: March 16, 2011 Please send cover letter and resume to: email@example.com
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MARCH 7 - 13, 2011
CRAIN’S CLEVELAND BUSINESS
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
FEBRUARY 28 - MARCH 6
Online sports talk venture goes offline pronto
Clinic to establish beachhead in D.C.
The big story:
■ The Digital Sports Network’s microphones have been silenced after only four months of operating at Cleveland.com. According to former program host Daryl Ruiter, the online-only sports talk partnership between the Cleveland-based startup and Cleveland.com recently ended after it launched Nov. 1. The network’s lineup included broadcasters and journalists such as The Plain Dealer’s Bud Shaw; Brian Fowler from the old “Brian and Joe” morning show on WMVX -FM, 106.5; and former “Mike Trivisonno Show” contributor Paul Rado. Denise Polverine, editor of Cleveland.com, responded to a phone call for comment about the end of the venture with a tweet to this reporter’s Twitter account that said, “Thanks for calling but cleveland.com has No Comment on DSN.” Two calls to the operation’s Tower City studios yielded several rings followed by a busy signal. Mr. Ruiter said he was “disappointed” that the venture failed. He left WKNR in September after 12 years as an anchor, reporter and producer to join the sports talkers on www.cleveland.com/dsn. “It’s too bad,” Mr. Ruiter said. “It had significant potential — that’s what attracted me to the venture.” — Kathy Ames Carr
■ President Barack Obama has held up the Cleveland Clinic as a model for health care in the nation, but officials at the giant health care system think they could make a little more racket in the nation’s capital. The Clinic plans to hire a full-time employee based in Washington, D.C., to work with federal regulators as the Obama administration’s health care law continues to take hold. Dr. Delos “Toby” Cosgrove hinted about establishing a permanent presence in D.C. during his “State of the Clinic” address last week. He noted the strength of the Clinic’s voice in the health care debate as evidenced by three visits from sitting presidents over the last decade. “I barely recognize myself how important a voice we have, but it’s becoming quite clear that our opportunity to influence health care policy going forward is enormous,” Dr. Cosgrove said last week. Clinic spokeswoman Eileen Sheil said administrators are determining what skill set is needed for the job, and a timeline hasn’t been set for filling the post. Gina Petredis, the Clinic’s director of government relations who is based in Cleveland, largely works with legislators while the new person will work primarily with federal regulators, Ms. Sheil said. — Timothy Magaw
BEST OF THE BLOGS
COMPANY: Air Technical Industries, Mentor PRODUCTS: SRBC series of selfpropelled walk-behind mobile crane
Excerpts from recent blog entries on CrainsCleveland.com.
The Ohio Senate passed Senate Bill 5, the bill limiting collective bargaining rights for public-sector employees, by a 17-16 vote. It’s expected to pass the Republicancontrolled House and be signed by Gov. John Kasich. The bill allows bargaining for wages but not other parts of the financial compensation package, such as health care benefits, nor for work force levels or the pickup by school districts of pension payments. See more, Page 3.
Time for a change: Forest City Enterprises Inc. announced that Charles Ratner, its president and CEO, will become chairman and David J. LaRue will succeed him as president and CEO in June. Also, Forest City co-chairmen Albert Ratner and Sam Miller will become co-chairmen emeritus and no longer will serve on Forest City’s board. Mr. LaRue, currently executive vice president and chief operating officer, will become the first non-member of Forest City’s founding family to head the Cleveland-based real estate concern in its 50 years as a public company and its entire 90-year history. See more, Page 3.
They shoot, they chlor: Specialized polymer company PolyOne Corp. said it sold its 50% ownership interest in the SunBelt Chlor Alkali Partnership to Olin Corp. of Clayton, Mo., for $175 million. SunBelt, a chlor alkali manufacturer, is a 50/50 joint venture that PolyOne and Olin formed in 1996. The SunBelt chlor alkali plant is located within Olin’s plant in McIntosh, Ala. PolyOne said Olin paid $132 million cash and has assumed $43 million of SunBelt debt in the deal. The companies also agreed to a three-year earn-out “if certain performance metrics are achieved.”
On a growth schedule: TOA Technologies Inc. in Beachwood acquired Aboutime, a small British company that will distribute TOA’s appointment management software. Aboutime employs fewer than 10 people, all of whom will join the company’s TOA Europe team. The acquisition furthers TOA’s efforts to expand internationally. The company already had several offices in Europe, in addition FILE PHOTO/MARC GOLUB TOA Technologies to locations in the United States, Canada and ArgenCEO Yuval Brisker tina. TOA employs roughly 230 people worldwide, including about 25 at its Beachwood headquarters.
Now that’s a gift:
Case Western Reserve University received a $7 million gift from the Kelvin and Eleanor Smith Foundation to help finance construction of a $50 million student center at the intersection of East Boulevard and Bellflower Road near Severance Hall. A timetable for the project hasn’t been announced. The foundation is named for A. Kelvin Smith, who co-founded Lubrizol Corp. The foundation has supported the university in the past, including support for the Kelvin Smith Library, which was dedicated in 1996.
Heading the geek squad: Cuyahoga County has its first chief information officer. County Executive Ed FitzGerald named Jeff B. Mowry, currently CIO of Broward County, Fla., to the new job, which will pay $178,058 a year. A Mansfield native and Ashland University graduate, Mr. Mowry spent nearly 20 years as an IT executive for Chrysler Corp. A county news release credited Mr. Mowry with reducing IT costs in Broward County by 16%.
To keep up with local business news as it happens, visit www.CrainsCleveland.com.
Air Technical bills its new line of mobile cranes as “eco-conscious and energyefficient” while at the same time boasting the “mighty muscle power” of up to 50,000 pounds of capacity. The cranes are designed for indoor use. They’re self-propelled and feature “power steering with sharp turning to each side, making it very easy to maneuver,” Air Technical says. The cranes’ powered telescopic booms are designed to get to hard-to-reach places, making it “ideal for lifting components such as large castings, motors high up on to a pedestal, gen-packs, compressors, boilers, transformers and aircraft engines.” The cranes travel on 10 polyurethane wheels to reduce and spread floor loading and to protect the floor. The propulsion is DC-battery powered 48V. An automatic braking system is built into drive-wheel motors and is applied when the controls are released. Don’t expect a fast ride, though; the top travel speed is 3 miles per hour. Air Technical says the cranes are available in a variety of capacities and sizes from 1,000- to 50,000-pound capacities. Smaller models start at 34 inches wide, narrow enough to fit through a doorway. For information, visit www.AirTechnical.com. Send new product information to managing editor Scott Suttell at firstname.lastname@example.org.
Now twice removed from SBK-Brooks ■ A team from former Cleveland-based investment banking firm SBK-Brooks Investment
Ohio sets the pace as home of the foreclosed-house discount ■ Bloomberg reported that homes in the foreclosure process sold at an average 28% discount last year — and even higher than that in Ohio — and may continue to drive down U.S. housing prices as the supply of distressed properties grows. “A total of 831,574 homes that sold in 2010 had received notices of default, auction or repossession,” Bloomberg reported, citing data from RealtyTrac of Irvine, Calif. Properties in distress accounted for almost 26% of all home sales last year, down from 29% in 2009. Distressed properties sold at a discount of 28% in 2010, 27% in 2009 and 22% in 2008, according to RealtyTrac. The discount “reflects the sales price of homes in the foreclosure process compared with those not in distress,” Bloomberg noted. Ohio had the highest average price discount for foreclosed homes at almost 43%, followed by Kentucky at 40%. California, Georgia, Illinois, Michigan, New Jersey, Pennsylvania, Tennessee and Wisconsin all had average distress discounts of at least 35%, according to RealtyTrac.
Need advice for a new grad? Katie Couric’s on the Case ■ Credit Case Western Reserve University as the inspiration for a new book by CBS News anchor Katie Couric. The New York Times reported that Ms. Couric in the past year quietly has assembled “The Best Advice I Ever Got: Lessons from
Corp. has left the firm it joined in August 2009 to hook up with another company. Seven former SBK-Brooks people now work for the minority-owned investment banking firm CastleOak Securities LP of New York. They had transitioned previously to Blaylock Robert Van LLC, a minority-owned firm based in Oakland, Calif., and New York. Three members of the newly hired team will be based in Cleveland, while one each will work from Chicago, Columbus and Indianapolis. Eric L. Small, who was president and CEO at SBK-Brooks and now is senior managing director at CastleOak, will be based in both Cleveland and Chicago. He declined to say whether there were noncompete agreements. “We felt the need to be with a stronger platform,” Mr. Small said. “CastleOak is one of the fastest-growing investment banking firms on the street.” CastleOak hired the six-member municipal finance team, plus an administrative assistant, a few weeks ago after a couple of them, including Mr. Small, approached CastleOak president and CEO David R. Jones and asked if he wanted to add a public finance arm to the investment firm. The recently hired team, which underwrites bonds for clients, had an existing pipeline of business — something Mr. Jones found attractive. And the move didn’t require buying a firm and wasn’t as tough as building a public finance arm from scratch. “I think there’s a lot of opportunity in the municipal finance area,” Mr. Jones said. “As a lot of towns are coming under revenue pressures, they’re going to have to do some refinancing or some restructuring of their existing debt obligations.” — Michelle Park
Extraordinary Lives.” It includes “essays, brief comments and even poems from a wide range of prominent people she recruited for the effort,” the newspaper said. Ms. Couric told The Times that the book, which will be published April 12, was inspired by a graduation address she gave last May at CWRU. “Seeking to find a different way to ‘get 22year-olds to think about their future possibilities,’ she solicited insights from a group of people she had come to know in recent years, including the singer Sheryl Crow; Eric Schmidt, the chief executive of Google; and Queen Rania of Jordan,” The Times reported. The speech went over well, Ms. Couric told the newspaper, and “I started to think it might be nice to cast a wider net, to reach out to a host of accomplished people in various fields.”
We’re not the only ones with lingering LeBron resentment ■ MediaBistro.com had a little fun at LeBron James’ expense, calling attention to an Allstate radio commercial being run in Chicago, one of many cities that had hoped to land the basketball superstar last summer. Chicago-based Allstate, with the help of its agency Leo Burnett, “has been calling out James — who has endorsed rival State Farm, of course — for his silly decision,” MediaBistro .com wrote. “As actor Dennis Haysbert says, Allstate is ‘from Chicagoland, for Chicagoland’ as the company is offering lower rates to Chicago drivers,” according to the web site. “Basically, a car insurance company has more integrity than LeBron James, and Allstate isn’t afraid to say it.”
March 7-13, 2011 issue