$2.00/MARCH 12 - 18, 2012
VOL. 33, NO. 11
Business groups don’t rally for right to work Tepid response to issue may be due to wounds from collective bargaining fight By JAY MILLER email@example.com
Mayor Jackson warns that Cleveland’s schools could become wards of the state if Columbus doesn’t clear way for his School Transformation Plan By JAY MILLER and TIMOTHY MAGAW firstname.lastname@example.org, email@example.com
f he doesn’t get the state legislation he believes is needed to rebuild Cleveland’s schools, Cleveland Mayor Frank Jackson says the likelihood of passing a school levy this fall “is little or none, and the guarantee is (that the school district) will go into academic receivership and financial bankruptcy.” Mayor Jackson’s dire words come as he awaits a decision by Gov. John
Kasich on what legislation the governor will propose to clear the way for what is called the School Transformation Plan. The mayor and schools CEO Eric Gordon have proposed the plan to bring about dramatic change in the Cleveland Metropolitan School District. Mayor Jackson said in an interview last Thursday, March 8, with Crain’s that he expects Cleveland’s teachers to support this plan, despite complaints from the Cleveland Teachers
The idea of overturning a state law that forces workers to pay union dues as a condition of employment in a unionized workplace long has been favored by business groups in Ohio. But few groups nor Gov. John Kasich are rushing to back an effort to get what often is called a right-towork constitutional amendment on the statewide ballot, even though a recent poll of Ohio voters suggests a majority would support it. Call it the Issue 2 effect. Many business groups that in the past have been early and active proponents of major state issues,
such as casino gambling, made cautious statements last week to Crain’s about the proposed right-to-work amendment, despite the recent passage of comparable legislation in nearby Indiana. “We won’t even begin to take a look at it until it’s on the ballot and it’s scheduled for a vote,” said Linda Woggon, executive vice president for governmental affairs at the Ohio Chamber of Commerce. “Then we’ll run it through our process.” The right-to-work issue also isn’t on the radar of the Greater Cleveland Partnership, said Joe Roman, CEO of the regional chamber of commerce group, which has more See WORK Page 17
INSIDE Web developers’ new tool built for multimedia wave HTML5 is offering Northeast Ohio developers a better way to incorporate animation and other multimedia into websites, which in turn will make those sites more mobile-friendly. PAGE 3 ALSO: ■ Spire contractors under fire, too. PAGE 3
See SCHOOLS Page 17
Interest grows in redeveloped Parma GM plant By STAN BULLARD firstname.lastname@example.org
Joseph Greenberg last year bought the former Parma General Motors complex.
Redevelopment efforts at Parma’s former General Motors transmission plant are shifting into drive. Workers recently finished removing tons of equipment from the 525,000square-foot plant, which under dimmerthan-normal auxiliary lighting resembles a smooth-floored Mammoth Cave. Also gone is a canopy as long as a football field that sheltered workers bound to or from
parking lots across Chevrolet Boulevard. The canopy stretched over part of a site that rivals a small farm in size; that land once was set aside for plant expansion, but now is earmarked for a business park. Most importantly, the first tenant just took up residence in what’s called Parma Business Park II. Late last month, All Pro Freight Systems of Avon leased 150,000 square feet for a distribution center for a customer, according to Chris Haas, All Pro CEO. The lease is a sign of strong interest in
the property, said Joseph Greenberg, the broker as well as an owner of 54 Chevy LLC, which bought the complex last year. He sees the property as a site for today and tomorrow. For today, the plant’s tall ceilings, overhead crane and indoor rail spur will suit companies that want space immediately, Mr. Greenberg said. Meanwhile, the vacant land will yield sites for businesses that want to build when demand for construction rebounds. See PARMA Page 17
CRAIN’S CLEVELAND BUSINESS
COMING SOON Crain’s Who to Watch: Finance We’re looking to profile some of the region’s finance and banking up-and-comers in “Who to Watch: Finance,” a special section slated for publication April 23. If you think you know who will be among those leading the Northeast Ohio finance scene of the future, drop an email to Amy Ann Stoessel, email@example.com, or call 216771-5155. Please send in your suggestions by March 26.
MARCH 12 - 18, 2012
There are no hard and fast requirements for possible inclusion in this section, other than the candidate needs to have exhibited the kind of potential that makes him or her someone to watch. And mark your calendars and keep thinking about the region’s future leaders, as there will be two more of these sections in 2012: “Who to Watch: Health Care,” July 16; and “Who to Watch: Law,” Nov. 26.
Advertising and marketing executives are a chatty bunch — especially about each other. A recent survey by The Creative Group of 500 U.S. advertising and marketing executives found nearly two-thirds of respondents said it’s “very common” or “somewhat common” for employees at their agency or firm to engage in office gossip. Most of them, though, said the lunchroom/hallway whispering is harmless. Here’s how they characterized the general tone of gossip where they work:
Inoffensive and light-hearted
REGULAR FEATURES Big Issue ..................................10 Classified ................................18 Editorial....................................10 From the Publisher ..................10
Going Places ............................12 Letters ....................................11 List: Credit Unions ....................16 Reporters’ Notebook ................19
Negative; not intentionally hurtful
Malicious or hurtful
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MARCH 12 - 18, 2012
Developers speak same language with HTML5
CRAIN’S CLEVELAND BUSINESS
Contractor feels sting of Spire’s money lag
Change allows easier use of multimedia, among other benefits
Hughes-Roller supplier files suit; larger group considers next step
By CHUCK SODER firstname.lastname@example.org
Two years ago, David Skorepa started telling his clients that a big change was coming. Well, it’s here. Web developers from Northeast Ohio to Silicon Valley are changing the way they build websites because of HTML5 — a set of standards designed to make website development easier in a mobile, multimedia world. The transition is moving fast. In early 2011, Aztek Consulting Corp. rebuilt its own website with basic HTML5 features, said Mr. Skorepa, chief creative officer for the Cleveland company. By fall of that year, it was doing the same for clients. Now, more than half the websites on which Aztek works incorporate elements of HTML5 and related technologies, Mr. Skorepa said. “It really is the way things are going,” he said. HTML5 represents a structural change in how the web works. The term technically is used to describe the fifth generation of changes made to Hypertext Markup Language, or HTML, the main tool used to organize content on websites. However, it also is used as an umbrella term to include other recent changes made to web standards, such as Cascading Style Sheets, which are used to control colors, fonts and other visual elements of websites. Among other things, the changes allow developers to incorporate animation, video and other multimedia elements into websites without using software tools such as Flash, which has been criticized for using too much processing power and exposing web users to viruses. The late Steve Jobs cited those problems and others in an April 2010 letter describing why Apple doesn’t allow iPhones and iPads to access Flash software.
By JOEL HAMMOND email@example.com
The new standards also give web
Spire Institute’s failure to pay millions of dollars due its contractors is putting a squeeze on Hughes-Roller Building Co. of Ashtabula, a lead contractor at the 160acre sports complex in Harpersfield Township. Hughes-Roller, which last Dec. 19 filed an $8.57 million mechanic’s lien against Spire, is the object of 21 liens filed against it from last October through Feb. 27. Those liens total $6.13 million. In addition, Hughes-Roller has been sued for $570,000 by aluminum contractor Corporate Glass of Erie, Pa., which took that action instead of filing a lien. Crain’s reported last Monday, March 5, that contractors had filed a half-dozen mechanic’s liens as of Feb. 27 in the Ashtabula County Recorder’s Office against Spire, which is part of the Geneva area Recreational, Educational and Athletic Trust. The liens totaled $11 million. “People have Other mechanic’s liens lost houses filed in Ashtabula County are piling up against various and equipment. contractors that have been It’s very hurtinvolved with work at Spire. ful. It has the Besides the liens against potential of Hughes-Roller, liens also have been filed against Corporate putting us out Glass, Metcalf Glass of Ashtabof business.” ula, J.W. Precision Interiors – David Nolan, and HAVE Inc., an Ashtabula owner, Nolan Door mechanical contractor. David Nolan, owner of Nolan Door in Austinburg, Ohio, has filed liens for $96,096 against Corporate Glass and $161,078 against Hughes-Roller. Mr. Nolan and Chris Osborne, a project manager at Corporate Glass, each said Hughes-Roller offered their companies a token payment after Jan. 1; for Corporate Glass, that offer was about $30,000 on a nearly $600,000 bill. Mr. Nolan’s company has six employees, and he said there was “unbelievable pressure” to finish Spire’s aquatics center by last Sept. 13, despite repeated requests from Spire for changes such as moving doors. “Doors are usually 7% of a job,” Mr. Nolan said. “Extrapolate what that means for the entire job, for heating and ventilation.” Mr. Nolan, like other small contractors who spoke with Crain’s for its March 5 story, said the effects of Spire’s nonpayment have been incredibly damaging. “People have lost houses and equipment,” he said.
See DEVELOPERS Page 6
See SPIRE Page 7
‘RESHORING’ A SURE GOOD SIGN Manufacturers increasingly bringing jobs back to U.S. By DAN SHINGLER firstname.lastname@example.org
usinesses looking for low-cost markets in which to manufacture their products increasingly are turning to what’s emerging as a surprisingly affordable option — the United States. “The costs in China and other places have been rising so rapidly, it’s becoming more obvious to companies they should bring a lot of the work back to the U.S.,” said Harry Mosher, a retired manufacturing executive, former Cleveland-area resident and founder of the Chicago-based Reshoring Initiative. Mr. Mosher’s mission these days is convincing companies to move operations to the United States from other countries. Mr. Mosher, who runs a website called ReshoreNow.org, spouts off recent examples of U.S. companies that have “reshored” operations back to the United States. One of his favorites is California-
New and improved
See RESHORING Page 11
THE WEEK IN QUOTES “Our membership would clearly line up in favor of right to work since small business owners clearly believe that it is a strong concept that should be in the marketplace.”
“We individually were working on what we thought were the best practices, but when we put our heads together, we found a better solution at a far lower cost.”
— Roger Geiger, vice president and executive director, National Federal of Independent Business/Ohio. Page One
— Thomas Selden, president and CEO of Southwest General Health System, part of the Community Health Collaborative. Page 8
“I am hearing more and more from people who are downsized or tired of the corporate world who say,‘I would love to start my own company.’ In one hour every week we talk about how to do that.” — Kip Marlow, host, “Entrepreneurs Club Radio.” Page 13
“You didn’t develop your current time management system overnight. … You need to work at it.” — Larry N. Lamphier, business coach and founder of Wintergreen Associates LLC, Painesville. Page 15
WOMEN OF NOTE Crain’s is seeking nominations for the women it will profile in its annual Women of Note section, which is scheduled for the July 23 issue. Nominations can be submitted through CrainsCleveland.com by clicking on Women of Note under the Features tab of the toolbar. Nominations also can be sent via email to editor Mark Dodosh at email@example.com, or via regular mail at 700 W. St. Clair Ave., Suite 310, Cleveland, 44113. The deadline for submissions is Monday, March 19.
CRAIN’S CLEVELAND BUSINESS
MARCH 12-18, 2012
Developer eyes new rentals in River By STAN BULLARD firstname.lastname@example.org
To create a site for a 275-unit apartment building to go up, a nearly empty shopping center in Rocky River may go down. That’s if a Columbus-based real estate developer has its way. Ryan Szymanski, senior vice president of development at Edwards Communities, said the apartment owner and builder is going through due diligence to acquire part of the Rockport Shopping Center to create a location for a four-story apartment building. He said Edwards has a purchase contract with the center’s owner, Rockport Associates Co., that is contingent on several factors. “It would be a good market for upscale apartments,” Mr. Szymanski said last Thursday, March 8, in a phone interview. “It would add some new multifamily in an area that has not had any for many, many years.” Edwards builds upscale communities, Mr. Szymanski said. The proposed building in Rocky River would have a fitness center, movie theater room, pool and clubhouse. Rents for the one- and two-bedroom units would be competitive with those at
Crocker Park in Westlake and in downtown Cleveland, he said. The unit count is not final and may change as the project takes shape, so Mr. Szymanski declined to estimate a development cost for the building. However, using industry estimates, a project of 275 units would cost around $40 million. Kory Koran, Rocky River’s director of economic and community development, said the city is working with Edwards and the center’s ownership to fashion a plan that would work for all parties as well as neighboring residents. The city, the developer and the building’s current owner are exchanging site plans to work out something acceptable to all three, Mr. Koran said. Several years ago, he said, the suburb changed its zoning code to allow multifamily development in districts zoned for shopping center use. Rockport Associates is owned by principals of the Beachwood-based real estate owner and developer Wald & Fisher. Eric Wald of Wald & Fisher declined comment. Mr. Koran, eager to discuss the project, said the city suggested the site to Edwards. “This area has been a sore point
for the city for seven years,” he said. The grocery-anchored shopping center lost its supermarket when Giant Eagle moved to a location farther west on Center Ridge Road. A former movie theater-turned-retail space was demolished several years ago. Also, a Target store vacated a large, newer building on the west side of the plaza after it became the anchor for the redevelopment of Westgate Mall in Fairview Park as an open-air shopping center. The apartment plan would use about six acres of the site. The empty Target building and a freestanding Panera Bread in front of the building would remain. Mr. Szymanski said if the city approves its plans and Edwards proceeds, construction would not begin before 2013 because the handful of remaining tenants would need to move. Edwards has properties in the Toledo area but nothing in the Cleveland market among its 3,600suite portfolio. An affiliate, Edwards Student Housing Management Co., is building a 571-bed student housing complex in Kent that is set to be finished in August. The student housing arm has a total of 10,000 beds in 10 college communities nationwide. ■
Region gains from interest in ‘wet’ gases By DAN SHINGLER email@example.com
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Northeast Ohio’s economy is poised to get a shot in the arm from low natural gas prices, and it will happen faster than most observers thought just a few weeks ago, when optimism already was high. Thanks to the drop in natural gas prices, industrial companies here will have access to cheaper energy and, in some cases, cheaper raw materials than their international competitors. Even your local McDonald’s stands to benefit as it cooks your fries. “In general, the cat bird’s seat is a good place to put us right now — we have the potential for our industry in Ohio to be extremely globally competitive again,” said Jack Pounds, president of the Ohio Chemistry Technology Council in Columbus. Thanks to natural gas found in shale formations in Ohio, Pennsylvania and other states, the cost of natural gas has dropped to wellhead prices of $2.50 or less per thousand cubic feet, or mcf. That’s the lowest price since 2002, and it marks a decline of more than 25% this year alone. As recently as 2005, natural gas was selling for more than $10 per mcf at the wellhead, according to the U.S. Energy Information Administration. The decline is of importance to Ohio because of the economics of the shale gas drilling that is starting to take place in Ohio. Unlike the “dry” gas found in the Marcellus shale deposits beneath Pennsylvania and some of Ohio’s eastern counties, the “wet” gas that’s found under roughly half of Ohio, in the deeper Utica shale, is mixed with crude oil and
other valuable liquids. Now that the price of natural gas has collapsed, drillers are more interested than ever in those other liquids. That means they’ll step up drilling in Ohio and it also means the chemicals from those liquids — vital to the state’s plastic and chemical industries — will be more plentiful and less expensive.
They want a cracker Andrew Thomas, a former geophysicist and lawyer for oil and gas companies in New Orleans and now a researcher at Cleveland State University, said low natural gas prices and lease clauses that require companies to drill within five years of leasing property from landowners will cause drilling here to speed up from a handful of wells dug in 2011 to more than 1,000 per year by 2014. “Then, I think, (the Utica shale) will sustain that activity for 20 years,” Mr. Thomas predicts. Down around New Philadelphia, attorney Brad Hillyer, a longtime expert on mineral rights, said he’s already seeing the first waves of activity as drillers come after the Utica shale’s precious liquids. “That stuff is bringing in $85 a barrel now,” Mr. Hillyer said. “I get visits daily from pipeline companies that are trying to run pipelines across Guernsey County, trying to get pipelines to the refineries up in Canton.” Three small “cracker” plants, which would refine industrial chemicals from shale gas liquids, are planned for the area, Mr. Hillyer said. They would be in addition to a multibillion-dollar cracker Shell Oil Co. wants to build in Ohio, Pennsylvania or West Virginia to process those chemicals in large quantities.
Volume 33, Number 11 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 © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
The smaller cracker plants he has heard of represent investments of about $50 million each, Mr. Hillyer said.
Into the fryer Closer to Cleveland, the effects of this activity likely will be felt most dramatically by the chemical industry. Mr. Pounds of the Ohio Chemistry Technology Council said chemical companies use raw materials derived from natural gas and its associated liquids as well as use power from natural gas for their own production processes. If Shell builds its cracker, Ohio’s chemical industry will increase its output by about 20% within three years, Mr. Pounds predicts. That increase would translate into nearly $5 billion a year of additional business for Ohio’s chemical industry, which currently makes about $28 billion of product annually, he said. “With a cracker in the area producing about a million tons of ethylene a year, we would have the lowest raw material costs of any place in the world other than Saudi Arabia or Canada,” Mr. Pounds said. Mike Brakey, an energy consultant in Shaker Heights, said he’s advising any client who can to switch from using electricity to using natural gas. One businessman who took Mr. Brakey’s advice was Dave Stiles, owner of Mimax One in Broadview Heights, which is the operating company for Mr. Stiles’ five McDonald’s restaurants in the area. Mr. Stiles is converting his electric fryers over to gas-powered versions, he said, because the savings are too great to ignore — even though a new natural gas fryer costs more than $15,000. They use a lot of energy, though, so the conversion is still worth it, Mr. Stiles said. “It’s a big investment, but it takes three times the cost to run an electric fryer versus a gas fryer now,” Mr. Stiles said. “I’ll be able to pay for the thing in a year or two” from the savings. ■
CRAIN’S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
Maritime asbestos keeps law firms busy Idle for years, 3,500 cases now on the move By MICHELLE PARK firstname.lastname@example.org
A judge’s decision to move along 3,500 asbestos lawsuits — some of which have languished for more than 20 years — has created a swift current of cases that’s keeping a number of Northeast Ohio law firms busy. “There’s just a lot to do all at once,” said Julia R. Brouhard, an attorney with Ray, Robinson, Carle & Davies PLL, a Cleveland firm with a primary focus on maritime law. “For years, these things have been sitting out there in limbo,” she said. “Our clients would say every once in a while, ‘What’s going on with these cases?,’ and we would say, ‘Nothing. Don’t worry about it.’ Now, we’re needing to say, ‘You know those cases? Now you need to worry about them.’” The cases are maritime asbestos claims, brought by seamen who say they were made sick by asbestos on the ships on which they worked. The first deadline to meet was in January, the month U.S. District Court Judge Eduardo C. Robreno in Philadelphia deemed that discovery would begin for the first cases to be handled. Months before, in summer 2011, more than 30,000 of the cases were dismissed, leaving about 3,500 active cases. Those 3,500 are being handled in seven staggered groups of roughly 500 at a time; discovery for the final group begins in January 2013. Law firms nationwide are working the cases. Locally, Ray Robinson, Gallagher Sharp and Thompson Hine LLP are among those representing defendants, including ship
owners, many of which must decide whether they want to continue fighting the legal battle or settle without knowing what the seamen were exposed to, if they were exposed at all, Ms. Brouhard said. Cases that aren’t settled will be remanded to trial in the U.S. District Court, Northern District of Ohio, where they originated. “I think it’s going to take years,” Ms. Brouhard said of closing the cases. “If there’s an onslaught of cases that comes back to Cleveland, there are (only) so many federal court judges, and they can handle so many cases. It’s going to take a long time.”
Beginning of the end? With 500 cases beginning discovery every couple months, there’s a “great deal of work that’s going on right now,” said Kevin C. Alexandersen, who chairs Gallagher Sharp’s mass torts department. “We’ve got people collecting medical records, security records, seaman records, Coast Guard records, trying to compile information and confirm diseases,” Mr. Alexandersen said. “Normally, you might do that on one or two. When you’re doing it 500 at a time, you’re allocating your resources accordingly.” Mr. Alexandersen’s firm is representing five defendants in about 400 of the first 500 cases. He said he believes the cases may prove to be the last massive action of this type. “This litigation is tailing off,” he said of asbestos-related claims, noting how many potential plaintiffs have died and how new regulations have mitigated more recent exposure. “I doubt you’ll ever see a tort of this mass of asbestos litigation again.” The maritime asbestos lawsuits began popping up in the mid-1980s and at one time numbered more than 40,000, according to Ms.
Brouhard. In many cases, a plaintiff seaman sued many defendants because he worked on many ships equipped with many products. In the early 1990s, the cases were consolidated into what is called multidistrict litigation, which is used when a group of federal cases has similar issues. It was agreed that the cases would be gathered in Philadelphia for the purpose of discovery. Several years later, a judge entered an order placing all the maritime cases on an administrative dismissal docket. Nothing much happened again until 2011.
Dredging work In many cases, the asbestos exposure is alleged to have occurred decades ago, Ray Robinson’s Ms. Brouhard noted, some as long ago as the 1940s. The passage of time makes retrieving documents related to employment and illness nearly impossible, she said. “It’s very difficult just to try to dredge up all this information,” said Ms. Brouhard, who estimated her law firm is defending 30 or so clients in as many as 300 of the cases. Veritext, a national firm with an office in Cleveland, is providing case management and document retrieval services to defense attorneys during discovery. The company hired three full-time people in late 2011 in anticipation of the increased workload, said Irene Rennillo, a consultant and specialist in records at Veritext. “When you have a case of this volume, the management of it is very crucial,” Ms. Rennillo said. “You’re scheduling depositions in multiple locations for multiple people all at the same time.” Ray Robinson doesn’t need to add staff now, but Ms. Brouhard said it’s possible it may hire one or more paralegals to assist with the enormous paper load involved. ■
Developers: Clients need convincing continued from PAGE 3
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developers an easier way to build websites that adjust to fit any screen. Developers today often build separate websites to make sure content looks good on desktop computers, smart phones and tablet computers. HTML5 standards have yet to be approved formally by the World Wide Web Consortium, which defines the various standards developers should follow when building websites. Even so, new versions of most web browsers have been designed to work with many of the changes, Mr. Skorepa said. Adoption will speed up once the consortium makes its final decisions, he added. But it isn’t like other local web developers are waiting around. For instance, Briteskies LLC of Independence started building sites using HTML5 during the second half of 2011, and it has launched three more since the start of 2012, according to Michael Moores, director of delivery for the information technology services firm. Briteskies also is incorporating HTML5 tools as it overhauls its own site. Mr. Moores ticked off a long list of capabilities the new standards provide today, but noted that there are more tools developers will start to use once browsers support them. For instance, developers eventu-
ally should be able to use HTML5 tools to build online applications that, for the most part, can continue functioning even if Internet access is cut off, he said. “I think this really does have a huge impact,” he said.
HTML5, version NE Ohio HTML5 is working its way into local software products, too. Last week, OverDrive Inc. of Valley View announced that it had acquired Booki.sh, an Australian company that uses HTML5-based software that allows users to read e-books via a web browser. Now, libraries and schools will be able to access OverDrive’s catalog of e-books and digital content without downloading anything. That’s a big deal, considering that people using library and school computers often aren’t allowed to download software, said David Burleigh, director of marketing for OverDrive. “It’s just giving people more choices,” Mr. Burleigh said. Software Answers Inc. will benefit in a different way from HTML5. The Brecksville company this fall aims to start releasing HTML5 versions of its ProgressBook education software products. The main goal of the conversion is to ensure the software works well on any device, said Tony Mujic, ProgressBook product
manager. “I don’t have to make an iPhone app. I don’t have to make an Android app,” Mr. Mujic said. Some companies have been hesitant to incorporate HTML5 features into their sites because some of their customers use older browsers that aren’t compatible. Even so, several developers who spoke with Crain’s said they can build sites that recognize when users have older browsers and present those users with versions that exclude HTML5 features. They also noted that it is not hard to train web developers to learn HTML5. The move to the new standards is “inevitable,” said Tom Nolan, director of digital production at marketing firm Marcus Thomas LLC of Warrensville Heights. Marcus Thomas in late February launched an HTML5 version of its own site and is building HTML5 sites for clients, Mr. Nolan said. Its DigiKnow division used HTML5 when building the website for Sherwin-Williams Co.’s Pratt & Lambert Paints brand. Now the biggest challenge is convincing clients to take the plunge, according to Aztek’s Mr. Skorepa and other web developers. “We’re starting, by default, to try to convince people it’s OK,” Mr. Skorepa said. ■
MARCH 12 - 18, 2012
CRAIN’S CLEVELAND BUSINESS
New Magnet support group GMAC jobs could land downtown targeting entrepreneurs By STAN BULLARD email@example.com
By DAN SHINGLER firstname.lastname@example.org
Some newly minted college graduates and perhaps students reaching the end of their academic careers soon will have a place to hang out, network with one another, get on the Internet and, with some luck, form some of Northeast Ohio’s next successful businesses. And it all can happen at a special incubator built and maintained just for them. The manufacturing support group Magnet is starting the project this spring. Dubbed “The Beta Space,” its purpose is to help would-be entrepreneurs by allowing them to network more easily with each other, as well as with seasoned business professionals, said David Crain, director of entrepreneurial services for Magnet. The Beta Space will be aimed at young entrepreneurs who have an idea for a business that involves manufacturing or engineering, Mr. Crain said. Because they’ll be at Magnet’s main site near downtown Cleveland, they’ll have access to engineers, designers and other product development specialists that Magnet already uses as consultants to area manufacturers, Mr. Crain said. “They’ll be in a facility where all we do is help people make stuff, and they’ll have access to all of that,” he said. In addition, Magnet is signing up service providers — lawyers, accountants and experts in marketing and finance — who will staff a group
of three offices at The Beta Space on a rotating schedule. They’ll provide free services and general counseling not only to the young entrepreneurs, but also to other manufacturingrelated businesses in the area, Mr. Crain said. “I’m signing up service providers that will be in one to four days a month,” Mr. Crain said. The entire project is financed with about $20,000 in local contributions, including a $10,000 grant from the Burton D. Morgan Foundation, Mr. Crain said. That money will outfit the approximately 2,000square-foot room with office furniture, desks, Internet, phone connections and most of what the entrepreneurs will need to work, aside from their own computers. Mr. Crain said he already has signed up his first couple entrepreneurs and is building out the space with plans to open it in late April or early May. The Hudson-based Morgan Foundation, named after the late local entrepreneurial advocate Burt Morgan, “believes networking and building connections are important elements of successful entrepreneurial activity and that the beta space is designed to achieve that goal,” foundation president Deborah Hoover said. “We’re particularly interested in ensuring that young entrepreneurs have the opportunity to connect and we’re working to promote the availability of the space among the collegiate programs that we support,” she said. ■
Spire: Contractors hesitant to cast project in bad light continued from PAGE 3
“It’s very hurtful. It has the potential of putting us out of business.”
Figuring out the next step Instead of filing a lien, Corporate Glass sued Hughes-Roller. Mr. Osborne said until Spire’s troubles became public, Ashtabula-area contractors were hesitant to cast a negative light on the project, which has buoyed the Ashtabula area with high-profile sports events since it opened in 2010. “We chose to do the lawsuit because we thought it gave us a better chance of getting the money owed to us from the contractor than doing the lien,” Mr. Osborne said. Mr. Nolan said his door company is reluctant to file suit because that step only would delay the process of repayment. Now, those owed money for their work are trying to figure out their next step. According to Mr. Osborne, there was a meeting last Tuesday, March 6, at Hughes-Roller of subcontractors that had worked on the Spire job. Mr. Osborne, whose company’s lawyer was present, said the subject of a foreclosure action against Spire and a subsequent sheriff’s sale are potential options if the nonpayment continues. The contractors involved in the foreclosure then would use the property as a way to recoup their losses.
If they’re owed $15 million collectively, and the property is sold for that amount or more, they’d be paid in full, said Tim McGarry, a construction law attorney at Nicola, Gudbranson & Cooper. If not, and the property sold for, say, $10 million, each contractor would receive twothirds of the money they’re owed, Mr. McGarry said. One of Nicola Gudbranson’s clients, Air Control Products of Broadview Heights, has a lien filed against Spire. Stuart Cordell, a lawyer for Spire’s development group and a partner at Warren & Young PLL of Ashtabula, told Crain’s two weeks ago that the developers had been turned down by banks in their quest to obtain more financing, and now are identifying potential institutional investors. He reiterated last week that no financing agreement is in place, and he would not speculate on when one would be. Mr. Cordell also said he’s aware that a lawsuit has been discussed. “It’s one option, and the direction they go is up to them,” Mr. Cordell said. “What we are focused on is finding financing to alleviate the problem. If lawsuits get filed, it will be unfortunate, but we’ll deal with them.” Meanwhile, the contractors continue to scratch forward. “We’re paying our vendors out of our own pocket, and we’re one of the lucky ones able to do that,” said Mr. Osborne of Corporate Glass. ■
Add workers for GMAC Insurance, a better-known brand than that of its AmTrust Financial Services Inc. parent, to the list of prospective occupants of the 800 Superior Ave. building in downtown Cleveland. A total of six floors at the 23-story office building would be dedicated to auto insurer GMAC, while five floors are earmarked for AmTrust Financial, according to a construction budget that AmTrust filed with Cuyahoga County for a renovation of the building. An AmTrust affiliate bought the building last Aug. 29 for $7.5 million. The document, which Crain’s obtained in response to a federal Freedom of Information request, is in AmTrust’s application for a $3 million county loan. The loan would be part of a $23 million financing package that state, county and city officials assembled to aid AmTrust’s downtown project. AmTrust plans to invest $20 million into rehabilitating the building, which dates to 1969, for its own use and for rental tenants. AmTrust, through sister company American Capital Acquisition Corp., acquired GMAC Insurance Personal Lines of Winston-Salem, N.C., in
March 2010. At that time, American Capital said it would keep GMAC’s operations there. AmTrust officials have said most of the 1,000 jobs it plans to locate in downtown Cleveland would be newly created thanks to anticipated business growth over the next three years. An exception would be the 200 jobs the company plans to move from its Seven Hills office. AmTrust’s local spokeswoman, Nancy Lesic, declined comment about GMAC’s potential presence at 800 Superior. However, in responding to an earlier email from Crain’s asking about the possible relocation by AmTrust of jobs to Cleveland from outside the region, Ms. Lesic stated, “The job number is based on anticipated growth, and may include some consolidation from facilities in 22 other states. Plans have yet to be finalized and determined. Until they are, we can’t be more specific and we don’t want to unnecessarily alarm employees based on speculation.” Laura Jones, a spokeswoman for the new economic development nonprofit JobsOhio, said AmTrust has told the state that Ohio is in competition with other states for the AmTrust jobs. She said JobsOhio
does not identify competing states because it needs an element of confidentiality to be effective. Nathan Kelly, Cuyahoga County’s deputy chief of staff for development, declined to discuss the GMAC details in the loan application. He said he is excited AmTrust plans to expand in Cleveland. GMAC, the former insurance affiliate of General Motors Co., has a history dating back to 1929. It provides property and casualty insurance, including auto coverage and specialty insurance for recreational vehicles and motorcycles. American Capital and AmTrust told Bloomberg news at the time of the 2010 deal that buying the insurance unit for an undisclosed sum from GMAC would double AmTrust’s field sales force by adding 10,000 agents who also would sell other AmTrust products. AmTrust and American Capital remain on an acquisition binge. Since AmTrust announced its plans last December to set up the downtown office, it bought another company, Builders & Trademen’s Insurance Services Inc. of Rocklin, Calif., which provides bonding and insurance for construction companies in 12 western states. ■
CRAINâ€™S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
Independent hospitals see benefits WEDNESDAY, MARCH 21, 2012
Collaborative also gives them some needed strength
11:30 am Registration â€˘ 12 Noon Lunch & Program
By TIMOTHY MAGAW email@example.com
For more info: www.ExecutiveCaterers.com and click on Corporate Club or call 440.449.0700
A cadre of independent hospitals and physicians in Northeast Ohio is trying to show that while being part of a mammoth health care system can have its perks, remaining unattached still can be a sustainable way to do business. Thatâ€™s why EMH Healthcare in Elyria, Southwest General Health System in Middleburg Heights and Parma Community General Hospital joined forces last summer to form the Community Health Collaborative â€” an arrangement that has allowed the hospitals to remain independent but also to show more collective muscle. â€œAny of these hospitals could take the route of being consumed by one of the larger organizations,â€? said EMH president and CEO Dr. Donald Sheldon. â€œBut rather than take that route, each of the hospitals was looking for a strategy that would allow them to be independent but get some of the positive things associated with critical mass.â€? The hospitals already have reaped benefits by simply acting like a big health system without merging with one of the regionâ€™s health care juggernauts, such as the Cleveland Clinic or University Hospitals, according to Frank Lordeman, who was hired last year to be president and CEO of the collaborative, which is organized as a for-profit company. The operations of the collaborative, including Mr. Lordemanâ€™s salary, are paid for equally by the three hospitals. â€œThis preserves independence and their economic strength and adds to their sustainability,â€? said Mr. Lordeman, a longtime health
care executive and former chief operating officer at the Cleveland Clinic. â€œThis really allows them to do bigger things than they could have accomplished independently.â€? The collaborative could become even larger, according to Mr. Lordeman, who said the group is in â€œvarious stages of discussionsâ€? with other smaller, independent providers, such as Firelands Regional Medical Center in Sandusky, Lake Health in Lake County and Fisher-Titus Medical Center in Norwalk. Of the Community Health Collaborativeâ€™s efforts thus far, the groupâ€™s leaders cite its involvement in CliniSync â€” the stateâ€™s health information exchange, which transmits patient data among care providers â€” as one of its chief accomplishments. Southwest General president and CEO Thomas Selden said by bringing the hospitalsâ€™ chief information officers together to come up with the best way of installing the computer infrastructure needed to support the system, the hospitals saved a combined $8 million over a five-year period in capital expenses and ongoing maintenance costs. â€œWe individually were working on what we thought were the best practices, but when we put our heads together, we found a better solution at a far lower cost,â€? said Mr. Selden, whose hospital also has a contractual relationship with University Hospitals, though it primarily revolves around clinical endeavors. Mr. Selden said the collaborative now is exploring how the group best can exploit its group purchasing power. Southwest General, for example, spends about $50 million a year through its group purchasing organization on medical supplies and
other items. Even a 1% savings on those expenditures, or about $500,000, would make the collaborative a worthwhile endeavor, Mr. Selden said. By banding together with the other hospitals, the group could move up to a better buying tier, thus receiving better deals on supplies.
Donâ€™t forget the docs Large health systems around the country in recent years have acquired thousands of independent physician practices, but some doctors have remained steadfast in their quest to remain independent. The Community Health Collaborative has aligned with a group of independent physicians â€” the Community Medical Group â€” to give both groups even more leverage in the region. The group over the last year has recruited about 475 of the regionâ€™s independent physicians, who, like the hospitals, can band together for certain cost savings normally reserved for big health systems. For one, the group collectively can purchase malpractice insurance, health insurance, billing services and office supplies. â€œThe days of trying to do this on your own are quickly going away,â€? said Dr. John Gerace, a Westlakebased physician and chairman of the governing board of physicians of the medical group. â€œWe canâ€™t wait for that to happen and have to respond now.â€? Joan Mason, the groupâ€™s president and CEO, said the medical group is in the process of recruiting more physicians. The group has used traditional marketing tools such as its website, open meetings and newsletters to get the word out, but Ms. Mason added that the â€œmost powerful recruitment tool weâ€™ve had to date has been the physiciansâ€? already on board. â–
Cedar Brook Financial acquires again Pepper Pike firmâ€™s CEO says scale is necessary By MICHELLE PARK firstname.lastname@example.org
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A March merger is deal No. 2 in three months for Pepper Pike wealth manager Cedar Brook Financial Partners, whose leader says it remains hungry for expansion that broadens its expertise. Effective March 1, Buzek Wealth Advisors in Strongsville merged with Cedar Brook. Buzek, which has been in business for more than 20 years and has assumed the Cedar Brook name, adds three professionals and $75 million to $80 million in assets under management to the larger firm. Prior to the Buzek deal, Cedar Brook in December acquired The Professional Advisor Group, which gave the firm offices in Bloomfield Hills, Mich., and Naples, Fla., and also added nine employees. Terms of the deals were not disclosed. They are the first such deals for Cedar Brook since its founding in 2005. â€œWeâ€™ve grown and built scale since our inception,â€? said Azim Nakhooda, managing principal and CEO. â€œWe
now have the strength and positioning to go out. â€œUnfortunately, thereâ€™s been a lot of consolidation, a lot of change,â€? he said of the wealth management field. â€œA lot of firms just arenâ€™t there anymore, just not as strong, not as big. Unless youâ€™re a firm thatâ€™s scaled enough to offer comprehensive advice, I think itâ€™s a tough climate to be competitive in.â€? Cedar Brookâ€™s assets under management as of Dec. 31, 2010 â€” $1.54 billion â€” earned it the No. 7 spot in Crainâ€™s most recent list of investment advisers published last April. Through the two deals, Cedar Brook has increased its assets under management moderately to roughly $1.6 billion, Mr. Nakhooda said. Its staff rose 23% to 64 employees. Cedar Brookâ€™s acquisition of The Professional Advisor Group added a Florida office, which is compelling because of the â€œhuge connection between wealth in Northeast Ohio and retirement in Naples,â€? Mr. Nakhooda said. The deal also gave Cedar Brook more expertise in high-end charitable planning and in working with medical professionals, which is particularly important given how so much wealth in Cleveland is centered around health care, Mr. Nakhooda said. The merger with Buzek affords an
expanded presence in Cedar Brookâ€™s backyard. â€œWeâ€™d been seeking a West Side presence for years,â€? Mr. Nakhooda said. â€œWe wanted to do it with people who were already there. We didnâ€™t just want to hang a sign.â€? The Buzek deal also brings to Cedar Brook more tax planning expertise, Mr. Nakhooda said. Buzekâ€™s principal owner and founder, Ken Buzek, said the two firmsâ€™ client-centric philosophies are aligned closely, and that Cedar Brook has expertise into which Buzekâ€™s professionals now can tap. For example, Cedar Brook has a director of financial planning and a director of company retirement plans, available for assisting others in providing the right options for clients. â€œI think this is a stronger business model, merging the two firms,â€? Mr. Buzek said. â€œWeâ€™ll be able to do a better job for our clients and continue to grow.â€? Cedar Brook is involved in other merger and acquisition talks, said Mr. Nakhooda, who anticipates other deals closing in 2012. The firm has an appetite for deals that expand its expertise, particularly in retirement plans, employee benefits and corporate service, where the firm works with corporate clients, such as small businesses and hospitals, he said. â–
CRAIN’S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
Brian D. Tucker (email@example.com) EDITOR:
Mark Dodosh (firstname.lastname@example.org) MANAGING EDITOR:
Scott Suttell (email@example.com)
he Cleveland Clinic and University Hospitals have earned their reputations as excellent centers of medicine. However, it hasn’t been until recent years that both institutions have focused on leveraging the expertise within their walls in ways that impact far more than the region. Now, it appears there is no stopping them — and even members of the community are getting in on the leveraging act. Consider the Feb. 28 announcement by UH of a $250 million effort aimed at bolstering the development of new drugs. The initiative, dubbed the Harrington Project for Discovery & Development, is expected to help bridge the so-called “valley of death” — the point in the development of a new drug where it isn’t far enough along to attract outside investment to fuel the long path toward commercialization. The cornerstone of the Harrington Project is a $50 million gift to UH from Ron G. Harrington and his family. Mr. Harrington, whose family built and sold Edgepark Medical Supplies in Twinsburg, understands how this gift — the largest in UH’s history — holds the potential for leveraging medical discoveries by advancing them to clinical trials and beyond. “This is going to mean a lot of potential jobs, a lot of potential new business ventures, and it will bring physician-scientists into the Cleveland community like nothing has before,” Mr. Harrington said. The morning after UH’s big announcement, Cleveland Clinic CEO Toby Cosgrove revealed in his annual “State of the Clinic” address that the medical powerhouse plans to leverage its good name by acquiring health care institutions outside the region. Doing so would allow the Clinic to expand its service lines and better recruit top-tier talent. “I think it’s something we have to consider because health care is consolidating all across the country … All of this drives efficiency,” Dr. Cosgrove told Crain’s. It’s good for Cleveland and Northeast Ohio that UH and the Clinic want to leverage their strengths in the medical arena. Their plans stand to enhance their standing and the region’s status as a health care mecca.
FROM THE PUBLISHER
The many faces of Dennis Kucinich
till, after all these years, I just utility going, despite the costs. can’t figure out how I feel about He barely survived a recall election Dennis Kucinich. and then was voted out of office in favor Like most people around here, of a moderate Republican and fellow my most recent image of Dennis was native son, George Voinovich, who served his far-less-than-gracious speech to his the city well as mayor, and then Ohio as supporters after getting thumped in last both governor and U.S. senator. week’s Democratic congressional primary Dennis was a political cat with nine by Toledo’s favorite daughter, lives, though, and battled his Marcy Kaptur. way back, first into the state BRIAN He criticized her and her TUCKER Legislature and then on to Concampaign staff for their negative gress. His constituent service attack ads, but his campaign was known to be gold-standard, ran its own share of similar TV but he couldn’t resist those commercials. It did him no good Quixotic presidential campaigns. to whine about such tactics Perhaps the biggest disappointbecause all campaigns, especially ment was when, after pledging the close ones, seem to get to to his constituents after the first the gutter sooner or later. failed presidential run that he He knows that. He’s a veteran wouldn’t do that again — well, politician, decades removed from his he did it again. days as our city’s “boy mayor.” The So I know that Dennis, despite being 65, young Dennis was a masterful populist, but will surface again in the public light once with an ego that got in his way. He fired his current term in Congress has ended. a safety service director who was getting The only question remaining is — where? more publicity than him. He attacked **** the city’s business establishment. He MAYOR FRANK JACKSON DELIVERED fought to keep the municipal electric his annual State of the City speech last week
before a crowd at Public Hall, and reminded everyone about the successes of his administration, thanked his employees for their wage sacrifices and the civic and business leaders for their support. It was the usual speech, and one that again mirrored the man, who is a low-key public servant who seems to prefer a good day in the office to a bright day in the limelight. He reminded folks of the city’s successes, and promised that there would be more. The only topic I wondered about was his prediction that we still would be the center of manufacturing of Great Lakes wind turbines that will help reinforce his image of this city as a center of sustainability. It seems the economics don’t quite add up as the price of natural gas plummets, but I hope he’s right. He ended with a short discussion of his visionary plan for reinventing the public schools, a proposal that already has earned the applause of our Republican governor. He knows that if he gets that right, his city will become a national model for urban education. I wish him well. We all should. ■
THE BIG ISSUE How do you think the new casino will change the atmosphere downtown, if at all?
ennis Kucinich’s own words nailed down a key reason why he suffered a big loss last Tuesday to Marcy Kaptur as the two House Democrats vied to represent their party in this fall’s contest for Ohio’s redrawn 9th congressional district. In a less-than-gracious concession speech, Rep. Kucinich complained of Rep. Kaptur’s campaign tactics, then said, “I am concerned about this community and the kind of representation it will receive, because we’ve established a set of standards here of the kind of representation that people have a right to expect.” Yes, Rep. Kucinich, people do have a right to expect a certain kind of representation — and they weren’t getting it when you spent months away from Washington not once, but twice running fruitless, self-indulgent campaigns for president. Many figured out that you are about you, not them.
STATE SEN. NINA TURNER
It’ll be interesting to see how much the tax base increases. If people who go to the casino are from Northeast Ohio, then it’s money that’s going from one pocket to another versus if people are coming from different parts of the country and coming to the casino.
I hope that downtown regains its life and vibrancy, that people will come downtown in droves. ... The elements of crime are always a concern, but our law enforcement officials will be downtown in force. It might be one of the safest places in the city.
The casino will create more business coming through and create more jobs. Hopefully, crime won’t increase but (the casino will bring) more good than bad.
I think it will help (downtown). People are going to come downtown and go to the casino and the restaurants. I’m sure you’re going to have people with gambling issues, and theft might go up.
MARCH 12 - 18, 2012
CRAIN’S CLEVELAND BUSINESS
Reshoring: China presence presents inefficiencies Companies increasing D&O liability coverages continued from PAGE 3
based Wham-O, maker of one of the most iconic of American toys, the Frisbee. Two years ago, Wham-O moved half its Frisbee production to California from China, along with the production of some other plastic toys to Michigan. The changes created only a couple dozen jobs in the United States, but Mr. Mosher likes the example because it shows that almost anything can be made profitably in this country. “There’s nothing much simpler to make than a Frisbee and there’s no place in the U.S. more expensive than California or Michigan,” he said. “So if you can bring Frisbees back from China to California and Michigan, you can bring anything back to Kansas.” Closer to home, Ford Motor Co. announced last October that it would be moving production of its F-650 and F-750 medium-duty trucks to Avon Lake from Escobedo, Mexico. Likewise, Horton Archery in Kent announced last September that it had completed the move of all its production to Kent from China.
So long, China Perhaps the largest local example of reshoring is in North Canton, where Suarez Corp. moved the entire production of its main product, EdenPure portable heaters, from China to its home turf, creating more than 400 jobs at the peak of its production season last fall. “We were producing it all overseas — large volumes overseas,” said Michael Giorgio, Suarez’s general manager and chief financial officer. “But it made sense to move it here from an economic and strategic standpoint.” Labor costs were going up in China, Mr. Giorgio said, and upgrades to the product were difficult to make when engineering was on the other side of the globe from the company’s manufacturing operations. There’s another reason the move made sense, one that came into play in a big way this winter: Suarez now doesn’t need to order all its heaters six weeks or more in advance, but instead can make them to meet demand. Had the company still been making heaters in China, Mr. Giorgio said, Suarez would have ordered
FILE PHOTO/MARC GOLUB
Mike Gammella, the president of United Auto Workers Local 1250, is hopeful Ford Motor Co. continues to reshore jobs. That would help Ford’s Brook Park operations. enough heaters to see it through a typical U.S. winter, only to have the weather dash its hopes. “We would still be sitting on a substantial amount of inventory. but, as it was, we were able to produce to order,” Mr. Giorgio said. Suarez also uses local suppliers for much of its materials and components, and Mr. Giorgio figures his company’s production supports at least another 125 jobs at those suppliers.
“It takes four pallets of parts to make one pallet of heaters, so you can imagine what the supply chain was doing,” said Mr. Giorgio, who noted that the company made more than 400,000 heaters in 2011.
Trickle-down theory Some companies that never manufactured products overseas are benefitting by being in the supply chains of companies that are reshoring. Among them is Fanta/
Napco/Udylite of Cleveland, which makes large metal finishing lines for big manufacturers. The company Feb. 1 announced it was expanding by adding centrifugal dryers, also used in finishing parts, to its product line. The metal finishing systems cost from a few hundred thousand dollars to more than $1 million, and each one is made to order for a customer either building or investing in a plant, said president Frank Fanta. His company is growing, in part, because big customers such as General Electric have moved production back to the United States and installed new production lines that include Mr. Fanta’s systems, he said. “People don’t realize the trickle down when a Caterpillar or a GE comes back,” Mr. Fanta said. “It’s not just their workers — it trickles down through the whole supply chain.” That’s a big reason the Reshoring Initiative’s Mr. Mosher and others hope the trend not only continues, but also picks up speed. Mr. Mosher is traveling the country preaching the reshoring gospel; his stop include one in Cleveland set for March 15, when he speaks at an event held by Magnet, the local manufacturing advocacy and consulting group. Meanwhile, in Brook Park, United Auto Workers Local 1250 president Mike Gammella said he hopes Ford continues to reshore. Convincing the company to bring more work back to his plant from overseas is a major goal for his union here, he said. “We want them to bring more work back, like machining cam shafts and stuff,” Mr. Gammella said. “There’s no reason any more that we can’t do that work here instead of some other country.” A Ford spokeswoman declined to comment on that matter specifically, but noted that Ford has made some significant announcements that indicate it’s not done reshoring yet. Last October, the company promised its labor unions in their most recent contract that Ford would perform more work in the United States — including adding 12,000 hourly U.S. jobs and investing $16 billion in its U.S. product development and manufacturing operations by 2015. ■
By MIKE TSIKOUDAKIS Business Insurance
More companies are increasing the amount of director and officers liability coverage they purchase, while pricing for private companies buying the coverage may be showing signs of a hardening market, according to a survey released last week by Towers Watson & Co. The report, “Directors and Officers Liability: 2011 Survey of Insurance Purchasing Trends,” surveyed 401 organizations that buy D&O liability insurance. The group includes public, private and nonprofit companies. One-quarter of public companies and 14% of private/nonprofit organizations said they increased their D&O program’s total limits in 2011 versus 2010, according to the benefit consultant’s survey. “Particularly in the public space, it just shows the level of concern they have in terms of the broad range of potential constituents that can bring a claim,” said Larry Racioppo, executive liability practice leader at Towers Watson in Stamford, Conn. “We’ve seen that it’s no longer the traditional shareholder class action claim. It’s much broader than that,” Mr. Racioppo said. Sixty-two percent of public companies and 35% of private companies were able to achieve a pricing decline, according to the survey. But more private organizations experienced increased premiums — 18% compared with 14% of public companies. While the public sector still may be showing signs of competitiveness, “we’re seeing that real hardening, certainly in the private side,” Mr. Racioppo said. ■ Mike Tsikoudakis is an associate editor with Business Insurance, a sister publication of Crain’s Cleveland Business.
Taking issue with gun glamorization ■ I was struck by the placement and joyful image of a gun dealer on Page One of your Feb. 27 issue. I feel that such a subject and story could be better found in a less-conspicuous section of your weekly and a less-provocative photo used. The tragic irony of your publishing date and the murders that same day by a murder-terrorist (yes, terrorism/terrorist on a smaller scale) brandishing and using a gun to commit murder at Chardon High School are coincidental. What is not is the urban terrorism found in our region that increasingly is encroaching in our suburban-rural areas. Our society loves our guns, as illustrated by your story, which adds to the perception (reality) and, unfortunately, contributes to the acceptance, if not glamour, of guns.
Is this part of the “brand” that our region accepts as part of its marketing strategy? I hope not. I hope we, regionally, repudiate the violence that we seem to have been numbed to as a society. We shouldn’t “stick our heads in the sand.” However, there are methods and devices we can use to minimize potential, negative perceptions. I hope that with the passage of a week the reflection of the editorial staff has modified their prospective, professional decisions. John Thomas Kent
No good on guns ■ Your Feb. 27 cover story on the Burton gun seller with the front page picture of the owner holding up an oversized handgun was in
poor taste, in my opinion. The fact that it arrived at my office the day of the Chardon High School shootings just turned my stomach. Dennis Foster Westlake
“ ...the top benefit of working with Sales Concepts is, of course improved profitability and expanding our market...” Frank Sidari Vice President of Sales Sandridge Food Corporation 300 employees
Remembering Shatten ■ I just re-read Brian Tucker’s Feb. 13 commentary about Richard Shatten. He did a great job reminding us about Richard’s gifts, vision and energy. I also miss Richard greatly. He was a major influence on me and did much to provoke me to speak up and step up. Robert C. Smith President and CEO Spero-Smith Investment Advisers
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CRAIN’S CLEVELAND BUSINESS
Allen Pesec to quality assurance manager.
GOING PLACES JOB CHANGES
BRUNSWICK COS.: Rick Axel to commercial account executive; Gabrielle Meles to professional liability account coordinator.
APPLIED INDUSTRIAL TECHNOLOGIES: Christopher D. Harris to director, business development. KAPPUS CO.: Mike Romanchek, to director, sales and marketing.
EDUCATION KENT STATE UNIVERSITY: Todd Diacon to senior vice president, academic affairs and provost.
FINANCE DOLLAR BANK: John Solich to vice president, business banking. OHIO COMMERCE BANK: Cierra R. Freeman to credit analyst.
FINANCIAL SERVICE CARNEGIE INVESTMENT COUNSEL: Patrick J. Kennedy to portfolio manager. FAIRPORT ASSET MANAGEMENT: Aaron S. Nuti to staff consultant. SCOTT SNOW (FINANCIAL ADVISORS) LLC: Philip S. Postma to financial adviser. SKODA MINOTTI: Nick Ward and Jonathan Emerson to staff accountants.
EATON CORP.: Shelley McGrail to director of talent management; Carrie Ortsey to director of organizational effectiveness; Deborah Severs to senior vice president, global ethics and compliance.
MARCH 12 - 18, 2012
Jeff Walker to senior technical specialist; Kyle Burgess to account manager; Nici Crosby to marketing coordinator and education program manager; Kelly Sachs to inside sales manager. DAKOTA SOFTWARE CORP.: Bob Kimball to marketing manager.
HYLANT GROUP: Brad Croce to vice president, client executive; Janice Gallagher to vice president, client services property/casualty; Linda Langman to client service executive; Emily Weeks to senior client service manager; Andrea Stegmaier to client service specialist; Terri Ferricci and Marissa Ramsey to client service assistants.
STERLING JEWELERS INC.: Ed Hrabak to executive vice president, COO; Stuart Lee to senior vice president, merchandising; Dawn McGuire to vice president, merchandising.
FIRSTENERGY: Carl J. Bridenbaugh to vice president, transmission.
BRAVO WELLNESS: Amy Petrus to director of human resources.
BAKER & HOSTETLER LLP: Michael K. Gall, David E. Kitchen, Patrick T. Lewis and David F. Proano to partners.
THE PATTIE GROUP: John Miller to project director.
HAHN LOESER & PARKS LLP: Kelly A. Kosek, John Paul Lucci, Shannon V. McCue, Christopher W. Peer and Aaron M. VanderKaay to partners. TUCKER ELLIS & WEST: Brian O’Neill to partner and co-chair, business department.
STAFFING/EXECUTIVE SEARCH DIRECT RECRUITERS INC.: Gary Gardiner to HVAC team leader.
TECHNOLOGY ACCENTURE: Jim Dickey to chief operating officer, North America.
AZTEK: Jordan Burnside to director, web marketing.
AMERICAN ROLL FORM PRODUCTS: Melrex Ordillas to process engineer;
BOUNDARY SYSTEMS INC.: Jeff Harding to executive account manager;
BOARDS LIFEBANC: Mariann Pacak (St. Elizabeth Health Center) to president; John Geller to president-elect; Donna Luebke to secretary; Cheryl Baily to treasurer.
AWARDS AMERICAN CHEMICAL SOCIETY, DIVISION OF POLYMERIC MATERIALS — SCIENCE AND ENGINEERING: Stephen Z.D. Cheng (University of Akron) was named a PMSE fellow. AMERICAN SOCIETY FOR MICROBIOLOGY: Piet de Boer (Case Western Reserve University School of Medicine) was named a fellow.
Rebecca Peters and Heather Homolka received The Kate Madden Leadership in Service Award; Jennifer Arnold received The Sharon Griffiths Giving Heart Award.
HANDSON NORTHEAST OHIO: Chris Richardt received the Volunteer of the Year Award; J.R. Fairman,
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As Monsters’ momentum builds, ticket prices rise In business, every connection matters.
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The Lake Erie Monsters have arrived. How do we know? Because they’re raising ticket prices, even if it will take some doing for customers to see those increases. The Monsters, in their fifth season and making a push for their second straight playoff berth, will raise some ticket prices “nominally,” according to Mike Ostrowski, the team’s senior vice president and cheap operating officer — to $8 from $7 and to $25 from $23, for instance. But like their Quicken Loans Arena co-tenant, the Cleveland Cavaliers, the Monsters still are rewarding customer longevity and loyalty, as those full-season ticket buyers who use Dan Gilbert’s FlashSeats service will see the least bump. The Cavaliers operate similarly: Crain’s reported last December that the team, in its first season without a LeBron James ticket bump, lowered prices in a range of the “low single digits into the low double digits,” according to a team
spokesman. (The Cavaliers required season ticket holders to renew for the 2010-11 season before Mr. James announced his decision to leave.) But similar to the Monsters, the Cavaliers’ price decrease depended upon many factors, including longevity, renewal timing and payment plan. The Monsters, on the strength of some large weekend crowds of late, have moved to third in the 30-team league in attendance, averaging 7,595 through 29 games as of last Tuesday night, March 6. The team drew a combined 19,455 March 3 and 4, the first game of which was Browns Night and the second of which featured a “Pucks and Paws” promotion, where more than 500 dogs entered The Q. The Monsters have been buoyed by big crowds on Saturdays, on which the team has averaged 11,404 fans in seven games. That figure includes 17,109 fans on Jan. 21. The Monsters ranked sixth (6,568 per game) last season — which equates to a 15.6% attendance jump this season — and in 2009-10 (6,484). ■
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CRAIN’S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
14 TAX TIPS: CORPORATE TAX SYSTEM FACES OVERHAUL.
SMALL BUSINESS IN BRIEF ■ A HOME AWAY FROM HOME: Office Space Coworking, an operation that provides small, home-based businesses a work location, has relocated to the Everett Building, 39 E. Market St., in downtown Akron. Office Space Coworking offers members private offices or less formal community spaces. Memberships, which are month to month, also include access to high-speed Internet, whiteboards, printers, scanning equipment and shipping and mailing services. “Office Space Coworking is a refuge from the isolation of working at home and the restrictions of working in busy coffee shops,” said owner Bill Forsyth III. “Members get all the tools and community of a modern office without the stuffy, corporate environment.” Office Space Coworking also has a location in Cuyahoga Falls.
MARC GOLUB PHOTOS
Kip Marlow, on air at WELW-AM 1330’s studio with his “Entrepreneurs Club Radio” show and guest Richard Sippola of Chautauqua Consulting Inc.
A SHOW FOR STARTERS Radio program offers advice, experiences for next group of entrepreneurs By JUDY STRINGER firstname.lastname@example.org
ip Marlow is one of those baby boomers who just couldn’t stay retired. While his peers have been traveling, gardening or playing golf, the Willoughby Hills resident has turned his own entrepreneurial experience into a weekly radio program focused on what it takes to transform an idea into a revenue stream. The unique format of “Entrepreneurs Club Radio” offers “real-world Mr. Marlow says of his radio show, “I enjoy advice and guidance from real-world doing it because hopefully it helps someone.” entrepreneurs,” Mr. Marlow said. “I am hearing more and more from people programs that include 10 minutes of who are downsized or tired of the corpotopical coverage of things like the economy rate world who say, ‘I would love to start or investing as part of a two-hour program,” my own company.’ In one hour every Mr. Marlow said, but nothing to his week we talk about how to do that.” knowledge that dedicates an hour specifIn his role as host, Mr. Marlow prods ically to running and managing a startup entrepreneurs to share their own experifrom the mouths of those who have done ences and probes his guests about the it. fundamentals of creating a successful business venture. It takes one to know one The program broadcasts locally on Mr. Marlow is no stranger to the WELW-AM 1330, Mondays at 4 p.m., but entrepreneurial spirit. In the mid-1970s, soon it will get national exposure Mr. Marlow founded Marlow Surgical through a syndication agreement with Technologies, a medical device company Dallas-based Broadcast Affiliate Sales. that held 13 patents and marketed surgical The contract will make “Entrepreneurs instruments throughout the world. Club Radio” available to 2,000 indepenCooper Companies Inc. acquired Marlow dent radio stations across the country. “There are national syndicated See SHOW Page 15
■ BY THE BOOK: Amy A. Crist has opened a bookbinding and art conservation studio in the Gordon Square Arts District of Cleveland’s Detroit Shoreway neighborhood. Services offered include conservation treatments of works on paper, books and photographs; museum-style matting and framing; building custom boxes and protective enclosures; and creating one-of-a-kind books and albums. Ms. Crist is a Brecksville native whose studio is outfitted with a combination of state-of-the-art and traditional equipment, including a 100-year-old, 800-pound, cast-iron board sheer with a 55-inch blade.
■ BEER HERE: The Cleveland Ale House has opened in the Lauren Hill Plaza, North Olmsted, in the former Slam Jams site. The refurbished 7,000-squarefoot space features Cleveland memorabilia from sports teams, political figures and musicians. Owned by brothers Sean, Kevin and Scott Hanna, along with Sean’s wife, Tricia, the Cleveland Ale House has a menu that features pub fare with an upscale twist under the direction of chef Matt Auck, formerly with the Cleveland Indians and the Washington Redskins. The beer list includes a rotating selection of 12 draft beers and more than 80 domestic and imported craft bottled beers, and there is a fully stocked bar of wine and liquor.
■ GRAND OPENINGS: To submit a new business for listing in an upcoming small business section, send the following by email to Amy Ann Stoessel at email@example.com: business name, address; city and ZIP; website; brief description of business; business phone number; business fax number; business email address; and date that business opened.
14 CRAIN’S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
Marketer says brand starts within Obama urges simpler Studiothink acquires firm, adds focus on work force culture By AMY ANN STOESSEL firstname.lastname@example.org
hristine Lobas and Ron Kaminski want to change the way people think. Or at least the way the employees think within the organizations of their clients. Ms. Lobas is the founder of the Cleveland-based marketing agency Studiothink, which recently acquired Mr. Kaminski’s business, Corporate Quest, a leadership and culture development firm with locations in Cleveland and Charlotte, N.C. As part of the deal, Studiothink is the only remaining brand. Ms. Lobas is majority owner and managing partner, while Mr. Kaminski and Mark Stornes, a longtime Studiothink shareholder who has assumed the chief financial officer role, are equity partners. The idea behind the pairing of the two firms is simple: Brand management must be done from the inside out. Employees have to buy in to the same messages that are being delivered to potential clients or customers, and the work force has to be the No. 1 brand evangelist, Ms. Lobas and Mr. Kaminski said. To that end, the pair has created a product called CultureShoc, which focuses on helping a company or
organization align its external and internal brands. The process includes team-building exercises, leadership development, meeting facilitation and individual coaching. Ms. Lobas said she stresses that a brand is more than a slogan or logo; it is the conversation people are having about an organization. With the addition of Mr. Kaminski’s firm, Studiothink’s rebranding process now can include a focus on an organization’s culture. “They’re engaging us in a time of change in most cases,” said Mr. Kaminski, who now serves as president of the Galleria-housed firm’s culture development group. Such was the case with Siemens Energy Inc., which recently consolidated product lines and work forces at its Charlotte, N.C., campus. Mark Pringle, who is vice president at Siemens’ Charlotte Energy Hub, said the employee count at the location expanded from 750 to 1,450, and it eventually could peak at 1,800. Siemens worked last year with Studiothink and Corporate Quest to facilitate the transition, creating and building upon the theme of “Better Together.” “I think we helped create the culture of the new organization,”
noted Mr. Pringle, who said part of the process was getting to the root of “who are we, and what do we want to be.” The “Better Together” mantra may have even rubbed off on Ms. Lobas and Mr. Kaminski, who said the work on the Siemens project helped convince them to join as one company.
Looking to stand out The ever-changing landscape for Northeast Ohio’s advertising and marketing sector — from the shutdown of Liggett Stashower to the partnership between Adcom Group and Landau Public Relations — is not lost on Ms. Lobas and Mr. Kaminski. They see their concentration on the culture segment as a way to stand out from the crowd and differentiate the firm. “We help make the passionate engagement more possible,” Ms. Lobas said. “Nobody is putting it together in a way that moves the bar.” Ultimately, Ms. Lobas anticipates Studiothink will grow due to the acquisition, adding up to three employees this year. The combined firm currently has a staff of 13, and it will maintain a North Carolina presence. And while she anticipates an 80-20 division this year between branding and culture development, respectively, Ms. Lobas hopes to eventually eliminate the line between the two in terms of the services the firm offers. “You should not be dividing brand and culture,” she said. ■
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corporate tax system Joint proposal with Treasury Department would lower rate and eliminate loopholes, subsidies
n budget and corporate tax reform proposals, President Barack Obama is pushing for lower tax rates and new incentives to spur job growth. But he also wants to tie off some loopholes and cut through complexity to broaden the tax base and make the system more efficient. The White House and the Treasury Department recently issued a joint proposed framework for overhauling the system of business tax to make it more competitive and more effective. With incentives and exceptions layered into the tax code over many years, the system has come to distort basic business decisions about what to produce, in what to invest, how to finance a business and what business form to use, the report says. “The system is also too complicated, especially for America’s small businesses,” the proposal says. The reform proposal says the corporate tax rate should be lowered to 28%, putting it more in line with other countries, while also eliminating dozens of different loopholes and subsidies. It also proposes refocusing the manufacturing deduction and using the savings to reduce the effective rate on manufacturing to no more than 25%, while encouraging more research and development and the production of clean energy. In his fiscal year 2013 budget proposal, President Obama outlines a number of tax changes along these lines. A centerpiece to the budget proposal includes a tax credit to support investments in communities that have had major job losses, along with a temporary 10% tax credit for new jobs and wage increases for qualified employers. The credit would be equal to 10% of the increase in an employer’s 2012 eligible wages over what it paid in 2011. Another key proposal includes a general business credit against income tax to reward companies that “insource,” or bring into the United States, business that currently resides overseas. The credit would be equal to 20% of the eligible expenses paid or incurred in connection with the move to insource the activity. At the same time, it would disallow deductions for expenses to offshore any existing U.S. business. To rev up manufacturing, the budget proposes a deduction for domestic production activities, giving taxpayers a break based on activities that lead to domestic manufacturing activity. Qualifying activity would include any tangible personal property, computer software, sound recordings and certain films, electricity, natural gas, water, construction, engineering and architectural services. It would eliminate the production deduction for oil, gas and coal, and expand the deduction for high-tech manufac-
TAX TIPS turing. The president wants to extend some provisions of the 2010 Tax Act, most notably the bonus depreciation and research tax credits. The 100% bonus depreciation provision contained in the act extended through the end of 2011, but the president hopes to see it extended through the end of 2012 and into 2013 for certain long-lived property and transportation property. The 20% tax credit for qualified research expenditures also extended through 2011, and that too should be extended and made permanent, the proposal contends. The budget proposes to repeal the last-in, first-out method of accounting for inventory, which is based on the assumption that the oldest, lowest-price inventory remains on the shelf while the most recently purchased (and presumably higher-priced) inventory is moved out. The LIFO method produces a tax benefit because it expenses a higher cost for inventory, and it has been on the president’s radar for several years. The lower-of-costor-market method also would be repealed. Finally, the president is calling on Congress to authorize the Internal Revenue Service to help smaller companies put to rest problems with misclassifying workers. The IRS devotes a great deal of time and energy to assuring companies properly classify workers as employees rather than contractors to assure their wages are properly taxed. The White House believes the problem can be remedied by allowing the IRS to require reclassification of workers whose reclassification has been prohibited under current law. As these are proposals to be hashed out during an election year, it’s impossible to predict how many of these ideas will gain traction in Congress and become law in the coming months. But it’s worth noting that Congress has heard the outcry in recent years that the current tax system is burdensome for U.S. companies, making it difficult for them to compete globally. ■ Mr. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.
MARCH 12 - 18, 2012
CRAIN’S CLEVELAND BUSINESS 15
Your monthly guide to getting to the next level in your career.
Show: Unique mindset required continued from PAGE 13
Time management: Prioritizing to-do list can help limit stress By AMY ANN STOESSEL email@example.com
ometimes it seems there simply are not enough hours in the day. Time management can be an acquired skill, but experts say with enough planning and thought it’s possible to inject a bit of sanity into the 1,440 minutes that make up one’s day. Ultimately, it’s a matter of strategizing and priority setting that can put an end to the tug-ofwar that can develop between competing interests for one’s time. Artist Barbara Bloom, owner of Parma-based Images In Bloom, knows that push-and-pull feeling well, experiencing it late last year as she and her husband transitioned into having a home-based business. “When you work full-time for someone else, you have a routine … when you’re home that changes to a casual feel,” she said. Images In Bloom took root after the Blooms each were downsized from their jobs. Ms. Bloom specializes in hand-dyed silk scarves and other handmade goods, including handbags created out of plastic grocery bags. Mr. Bloom makes soap products, all of which are sold online, at local specialty shops and at craft shows. Ms. Bloom, who has a master’s
degree in public administration, said she has started to try to plan out the week a little more, list all the things that need to be done and prioritize them. She also tries to schedule out tasks for certain times of the week. “If you don’t have those goals, often those goals keep moving out,” she said. Painesville-based business coach Larry N. Lamphier agrees with the concept of prioritizing. In fact, he subscribes to the teachings of Stephen R. Covey, author of “The 7 Habits of Highly Effective People,” who uses the concept of a time-management matrix. The matrix has four quadrants, with urgent and not urgent columns intersecting with important and not important rows. Basically, Mr. Lamphier explained, every task in one’s day falls into one of these quadrants — important/urgent; important/not urgent; not important/urgent; or not important/not urgent. Time management is a matter of figuring out what activities fall into what quadrants and setting aside blocks of time for each category. As part of the process, it is essential to determine timewasters and to identify one’s “rocks,” Mr. Lamphier said, those activities — personal or professional — that are most important and non-negotiable.
“The biggest challenge people are having today is getting rid of their smart phones,” Mr. Lamphier said “It’s effecting people emotionally. … It forces people into a reactionary mode.” Erin M. Nunn, director of career services and internships at Lake Erie College, stressed that time management ultimately comes down to a lot of organization and planning ahead. She suggests taking a week to track exactly how one’s time is spent, and utilizing tools like monthly calendars and reminders on smart phones. “Sometimes people just get caught up in their day,” she said. Of course, both Ms. Nunn and Mr. Lamphier acknowledged that the process of time management is a task that might eat up some time itself. “You didn’t develop your current time management system overnight,” Mr. Lamphier said. “You need to work at it.” And that’s exactly what Ms. Bloom is continuing to do as her business continues to develop. “Probably my biggest wish is every day I could be a little more consistent,” she said. But, as a business owner, she’s also come to realize that flexibility is just as important: “Don’t be so doggedly determined to stick to your goals that you miss opportunities.” ■
FOLLOW THE LEADER: A Q&A CRAIG BOISE Dean Cleveland-Marshall College of Law
hen Craig Boise took over as dean of the ClevelandMarshall College of Law, he saw it as a chance to be back in Cleveland full time. While not a native Clevelander, Dean Boise has worked here since 1999 in a number of positions, including at Case Western Reserve University School of Law and the law firm Thompson Hine LLP. Most recently, however, he had been working at DePaul University, commuting for two years between Chicago for work and back to Cleveland, where his family continued to live. In his post since July, Dean Boise describes the current landscape for law graduates as “bleak.”
But there’s an upside: It means a person really needs to have a strong passion and desire to be a lawyer when choosing the field. “I think that’s actually good for the profession,” he said. ■ Last book read? “The End of Lawyers?” by Richard Susskind. ■ Favorite TV show? “Mad Men.” ■ Who do you admire and why? I admire the many hundreds of Cleveland-Marshall College of Law grads who overcame great obstacles to pursue their dreams of obtaining a law degree while working full-time jobs, raising children, running businesses or in between deployments in the armed forces. Their stories inspire me and make me proud to be associated with Cleveland-Marshall College of Law.
■ What most surprises you about the path your career has taken? How unpredictable all of this was at the start. From farm kid, to classical piano major, to police officer, to tax lawyer, to law professor and finally, law school dean. ■ What skill do you wish you had? I would love to have a better memory — particularly for names! ■ If you weren’t in your current occupation, what would you be doing? I’d probably own a little beach bar somewhere in the Caribbean. ■ Career advice you wish someone would have given you? There’s no hurry — take your time figuring out what you want to be when you grow up. Turns out that’s what I did, but it would have been nice not to have been worried about it along the way! ■ Favorite nonwork activity? That’s a toss-up between sailing and riding my Harley.
BUILDING YOUR NETWORK Get involved and stay informed by building your network online and in person. ■ For those in the 20-to-35 age range living or working in Lorain County, the Young Professionals Committee of Big Brothers Big Sisters of Lorain
County offers a chance to network, meet new people and get involved in other social issues within the community. Contact: Marcus Madison, resource development director and communications officer, 440-2776541
Web: www.bigloraincounty.org/ YoungProfess.html ■ A little shameless self-promotion: Stay up to date on business happenings (and networking opportunities) by checking out Crain’s calendar of events at www.crainscleveland.com/ section/events.
Surgical in 1997 in a cash and stock swap valued at $6.6 million. Mr. Marlow stayed on with the new owner for several years before a hectic travel schedule persuaded him to retire. He didn’t keep a low profile for long. Mr. Marlow began consulting in 2005 and soon took the helm of the Entrepreneurs Club of America, a networking group for established entrepreneurs and would-be company founders. It was there that he and Gary Schoeniger conceived of the radio project. “I thought, ‘Wouldn’t it be great if I had a show where I interviewed entrepreneur guests and got them to share their stories?’” Mr. Marlow said. “I realized a lot more people could learn the life’s lessons of an entrepreneur (in a radio format).” Mr. Marlow and Mr. Schoeniger, founder and CEO of The Entrepreneurial Learning Initiative (ELI), launched Entrepreneurs Radio Club in January 2010. Mr. Schoeniger left a few months later to concentrate on ELI, a source for online course content about entrepreneurialism for organizations and schools, but he frequents the show as a guest. “Kip really understands that entrepreneurs will lead us into the future,” Mr. Schoeniger said, “because he is one and has seen what an entrepreneur can do.” Now in its third year, “Entrepreneurs Club Radio” has attracted such guests as Pandora Media founder Tim Westergren, Shearer’s Foods Founder Bob Shearer and business blogger Anita Campbell. Future guests include Gail Good-
man, CEO of Constant Contact, and Eric Reis, author of the best-selling business book, “The Lean Startup,” appeared in February. Mr. Reis also is founder of IMVU, or the Instant Messaging Virtual Universe, a website on which people interact via 3-D avatars. “What is so neat is that you don’t have to be an entrepreneur to listen and learn,” said Mr. Shearer, who didn’t hesitate when Mr. Marlow reached out. “I enjoy doing it because hopefully it helps someone. … We know what (entrepreneurs) are going through because we’ve been there.”
A crazy bunch As the program moves to a national stage, Mr. Marlow is proud to play a role in demystifying the entrepreneurial process. He said most guests will credit their management team or employees. “That’s nice, but it’s more than just surrounding yourself with great people,” he said. In his own experience and in dozens of discussions with others, Mr. Marlow said the common thread of an effective entrepreneur is the ability to innovate and overcome. “Entrepreneurship is a mindset, a can-do, never-give-up, reach-yourgoals-or-fail-trying mentality,” he said. “Entrepreneurs are a bit crazy, think outside the box and eventually try to change the world.” The weekly, one-hour Entrepreneurs Club Radio program is streamed live at www.welw.com during its Monday 4 p.m. broadcast. Edited podcasts of guest interviews also are available at www.teca.com. ■
Make this your year of
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CRAINâ€™S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
RANKED BY DEC. 31, 2011 ASSETS
Name Address Rank Phone/Website
Assets (millions) Dec. 31, 2011 Dec. 31, 2010
Loans (millions) Dec. 31, 2011
Shares & deposits (millions) Number of Dec. 31, 2011 members
Top executive Title
Seven Seventeen Credit Union 3181 Larchmont Ave. NE, Warren 44483 (330) 372-8100/www.sscu.net
Live, work, worship, attend school in Trumbull, Mahoning, Columbiana, Portage or central Stark County communities
Gary Soukenik CEO
Century Federal Credit Union 1240 E. Ninth St., Room 719, Cleveland 44199 (216) 535-3200/www.cenfedcu.org
Open to federal government agencies and any Northeast Ohio business, association, municipality or educational institution
Tony Coniglio president, CEO
Firestone Federal Credit Union 31 Hanna Parkway, Akron 44319 (234) 352-1100/www.fofcu.com
Wayne A. Chapman president, CEO
GenFed Financial Credit Union 85 Massillon Road, Akron 44312 (330) 784-5451/www.genfed.com
Lorain, Erie, Summit and Medina counties; Ford, ASW, Reiter Dairy, Quality Mold, Rubbermaid, other local companies
Joyce R. Jones president, CEO
Firefighters Community Credit Union 2300 St. Clair Ave., Cleveland 44114 (216) 621-4644/www.ffcommunity.com
Open to everyone in Cuyahoga and Lake counties
Ben Laurendeau president, CEO
BFG Federal Credit Union 445 S. Main St., Akron 44311 (330) 374-2990/www.bfgfcu.org
Individuals who live, work, worship, volunteer or attend school in Summit County
Michael J. Owens president, CEO
Cardinal Community Credit Union 8500 Westport Drive, Mentor 44060 (440) 266-2200/www.cardinalcu.com
All who work, live, attend school or worship Christine Blake in Cuyahoga, Lake, Geauga and Ashtabula president, CEO counties
Ohio Catholic Federal Credit Union 13623 Rockside Road, Garfield Heights 44125 (216) 663-6800/www.ohiocatholicfcu.com
Any person connected with the Catholic Diocese of Cleveland and/or Diocesan parishes, schools, or organizations
CSE Federal Credit Union (1) 1380 Market Ave. North, Canton 44714 (330) 452-9801/www.csefcu.com
Open to persons who live, work, worship or R. Stanley Barnes attend school in Stark County CEO
Lormet Community Federal Credit Union(1) 2051 Cooper Foster Park Road, Amherst 44001 (440) 960-6600/www.lormet.com
Lorain County residents
Associated School Employees Credit Union 1690 S. Canfield Niles Road, Youngstown 44515 (330) 792-4000/www.asecu.com
Lives, works, worships or attends school in Michael Kurish Mahoning, Trumbull or Columbiana counties president, CEO
VacationLand Federal Credit Union 2409 East Perkins Ave., Sandusky 44870 (419) 625-9025/www.vlfcu.org
Lives, works, worships or attends school in Kevin J. Ralofsky Erie County CEO
School Employees Lorain County Credit Union Inc. 340 Griswold Road, Elyria 44035 (440) 324-3400/www.selccu.org
Employees and students of educational entities in Lorain County, other miscellaneous employer groups
Brent T. Binkley president, CEO
Ohio Educational Credit Union 2554 E. 22nd St., Cleveland 44115 (216) 621-6296/www.ohioedcu.com
Employees, students and alumni of public and private schools and colleges in Ohio
Jerome R. Valco CEO
Towpath Credit Union(2) 2969 Smith Road, Akron 44310 (330) 664-4700/www.towpathcu.com
Lives, works, worships or attends school in Rose Bartolomucci Akron, Fairlawn, Cuyahoga Falls, Bath and president, CEO townships of Copley and Richfield
PSE Credit Union Inc. 5225 Regency Drive, Parma 44129 (440) 843-8300/www.psecreditunion.org
Anyone who lives, works, worships or attends school in Cuyahoga or Medina counties
Janice L. Thomas president, CEO
Stark Federal Credit Union(1) 4100 Dressler Road NW, Canton 44718 (330) 493-8325/www.starkcu.org
Anyone who lives, works, worships or attends school in Stark or Carroll counties
Nino J. Gemma president, CEO
Golden Circle Credit Union(1) 4118 Lincolnway E., Massillon 44646 (330) 479-3130/http://goldencirclecu.com
Live in Stark County
Jeffrey J. McClain CEO
Best Reward Credit Union 5681 Smith Road, Brook Park 44142 (216) 367-8000/www.bestrewardcu.coop
Live, work, worship or attend school in J. Shirilla Cuyahoga, Lake, Geauga, Medina, Summit, John president, CEO Lorain and Portage counties
Cleveland Selfreliance Federal Credit Union 6108 State Road, Parma 44134 (440) 884-9111/www.clevelandselfreliance.com
Ukrainian American community
Orest Liscynesky treasurer, manager
Lakeview Federal Credit Union 2909 State Road, Ashtabula 44004 (440) 998-2707 /www.lakeviewfcu.com
Live, work or worship in Ashtabula County
Sherry S. Cornell CEO
Buckeye State Credit Union 155 E. Voris St., Akron 44311 (330) 253-9197/www.buckeyecu.org
Community membership in Shaker Heights and Summit, Stark, and Lake counties
N. Sue Preston CEO
Taleris Credit Union Inc. 1250 E. Granger Road, Cleveland 44131 (216) 739-2300/www.taleriscu.org
Individuals who live, work, worship or attend school in Cuyahoga County and select groups and organizations
Robin D. Thomas president, CEO
Unity Catholic Federal Credit Union 5839 Ridge Road , Parma 44129 (440) 886-2558/www.unitycatholiccu.org
Parishioners, families, students, employees Tamlyn M. Straightand organizations within the Catholic Schervish Diocese of Cleveland CEO
Community First 2043 E. Prospect Road, Ashtabula 44004 (440) 997-5919/www.hereforeveryoneonline.com
Live, work, worship in Ashtabula County
Medina County Federal Credit Union 1353 Reimer Road, Wadsworth 44281 (330) 334-1023/www.mcfcu.com
Open to anyone who lives, works, worships Bud Herrle or educates in Medina County chairman
Community One Credit Union of Ohio 6583 Frank Ave. NW, North Canton 44720 (330) 305-3050/www.c1cu.com
Serving Stark County
Evelyn L. Canterbury president, CEO
Eaton Family Credit Union 333 Babbitt Road, Euclid 44123 (216) 920-2000/www.eatonfamilycu.com
Eaton Corp., City of Euclid, Lake County, family of existing members
Michael Losneck CEO
Community Star Credit Union 832 Cleveland St., Elyria 44035 (440) 365-7342/www.commstar.org
Membership is open to the public
Ernie Jackson president, CEO
Emerald Group Credit Union Inc. 13201 Granger Road, Garfield Heights 44125 (216) 581-5581/www.emeraldgcu.com
Individuals who live, work, worship or attend school in Cuyahoga County
John R. Martin CEO
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. (1) Information is from the National Credit Union Administration, www.ncua.gov. (2) Towpath Credit Union and Telecommunity Credit Union merged June 1, 2011.
Randall A. Trimm CEO
Daniel R. Cwalina president, CEO
Mike Riesterer CEO
RESEARCHED BY Deborah W. Hillyer
MARCH 12 - 18, 2012
CRAIN’S CLEVELAND BUSINESS
Schools: Critics fear bureaucracy Work: Supporters say law entices businesses continued from PAGE 1
Union that it was left out of the planning process and that the plan threatens security they have won at the bargaining table. The transformation plan would let the district use measures other than seniority when it lays off teachers. In the interview after his State of the City address, Mayor Jackson had to be coaxed to acknowledge that if the Legislature doesn’t go along with the Cleveland plan, and city voters do not approve a school levy, the district and the $65 million deficit it faces would become the responsibility of the Ohio Department of Education. And if that happens, the mayor said, the teachers’ union could lose more than it would under his plan. “You can call it a hammer,” he said when that term was used by a reporter. “I call it a fact. In order for us to have any chance or likelihood of passing a levy, we have to demonstrate to the public they will get a different outcome than they are getting now and that there is accountability for what they pay for.” State lawmakers must sign off on the plan because it proposes changes to Ohio law that would apply only to Cleveland. For instance, state law requires that teachers with less seniority be laid off before teaches with more seniority, a particular sore point for Mayor Jackson and Mr. Gordon.
Under one umbrella The School Transformation Plan proposed by Mayor Jackson and Mr. Gordon seeks to change the school district in major ways. Most significantly, it would take what is called a “portfolio approach” to school management. This relatively new educational strategy, being implemented in Denver, Indianapolis and several other cities, gives school principals greater responsibility over budgeting and hiring. It also would allow private charter schools, with district administration approval, to receive public money for their programs. Mr. Gordon said bringing charter schools under the district’s levy is an important step forward. “Part of what we have to ask ourselves is, at the end of the day, are we
going to fight about who owns the schools or are we going to start fighting about how good those schools can be?” he said. And, he noted, the change would give parents of children in charter schools a reason to vote for a levy. The plan also creates something called the Transformation Alliance, a group composed of parents, educators, business people and other civic leaders who would evaluate district schools — as well as public and private charter schools — on common performance standards. It would recommend which schools should be supported and which should be closed or cut off from public money. The central office then could direct resources to the best schools and could close failing ones. The plan would override the current collective bargaining agreement with the Cleveland Teachers Union and would give the district flexibility over teacher pay and assignments. Terry Ryan, a vice president of the Thomas B. Fordham Institute, an education nonprofit based in Dayton and Washington, D.C., said he believes Cleveland is “embarking on the boldest citywide school reform effort that the state of Ohio has ever seen.” “Their success or failure will resonate throughout the state and likely beyond,” Mr. Ryan said. The Fordham group, which sponsors charter schools in Ohio, is backed by the Bill and Melinda Gates Foundation and the Walton Family Foundation. It has questioned the lack of flexibility in teacher labor contracts.
Watchdog, or added hoops? The still-amorphous Transformation Alliance is expected to be a watchdog of sorts for charter school growth. It also would be tasked with recommending to the state Department of Education whether a new charter school should open within city limits — an authority that Greater Cleveland Partnership president Joe Roman called a “very important lever” to ensure that only quality schools operate in the city. “The alliance is a place where the business community and others can directly engage,” said Mr. Roman,
whose business organization has thrown its full weight behind the plan. Moreover, the alliance would mount an aggressive marketing campaign during open enrollment season to inform the community about the best-performing schools, both charter and public, in the city. “The business community is very supportive, and the business community has a strong interest in an educated work force,” said Alan Rosskamm, former CEO of Jo-Ann Stores Inc. and now CEO of Breakthrough Schools, which operates charter schools in Cleveland. However, officials at both Constellation Schools and White Hat Management, which also run charter schools in Cleveland, argue Mayor Jackson’s proposal could inject another layer of bureaucracy to what they consider an already lengthy list of regulations imposed on charter schools. “There is a fairly rigorous system and audit and control process in place” said White Hat president and CEO Tom Barrett. “If this is better or different, I’m all for it, but I don’t think we need multiple ways of managing the process.” Constellation Schools president Rick Lukich said the alliance, if implemented, could reduce choice for parents. He went as far as calling Mayor Jackson’s proposal “an experiment on the children of Cleveland.” Mr. Lukich called the district’s assertion that it would share potential levy dollars with charter schools a “red herring,” adding that he finds it hard to believe the financially strapped district would forfeit potential revenue to the charter schools. However, Breakthrough Schools, which has four schools sponsored by the Cleveland school district, is salivating at the prospect of receiving levy revenue. It’s something the group has wanted for some time to help offset financial gaps it currently makes up with fundraising, said John Zitzner, president of Friends of Breakthrough, the fundraising and advocacy arm of the charter school network. “We don’t see this as an anticharter thing at all,” he said. “It can sound like that to some people, but we believe it’s a way to prevent bad schools from opening.” ■
Parma: Industrial demand on the rise continued from PAGE 1
“We’ve had good interest from manufacturers so far,” Mr. Greenberg said of the space, which carries an asking rent of $3 a square foot. Mr. Greenberg estimates it may take about two years to fill the former GM plant. Its relative youth — dating from 1970 — and appealing features will help the leasing effort. “The building breaks up well,” Mr. Greenberg said. “It can serve tenants from 50,000 to 250,000 square feet equally well.” Recently vacated auto plants are meeting the wrecking ball on an epic scale, as seen at the former Chrysler stamping plant in Twinsburg and the Ford Motor Co. foundry in Brook Park. However, Mr. Greenberg said the good condition of the Parma building and the strength of the industrial market around Cleveland Hopkins International Airport argued for keeping the structure intact.
“There is an infrastructure here that manufacturers otherwise would have to install,” he said, pointing to power lines above and sections of the floor containing rubber blocks below him.
Love that industrial space The resilience of the region’s manufacturing base is on Mr. Greenberg’s side. Terry Coyne, executive vice president of Grubb & Ellis Co., said the industrial market is not just warm; it’s blazing. “Stuff is going off the market so fast it’s unbelievable,” Mr. Coyne said. He estimates a 12% vacancy rate in the region’s industrial market and notes vacancy in the southwest/airport market in Cleveland dropped to 12% from 14% in a single year. George Pofok, senior vice president at the Cresco real estate brokerage in Independence, said demand for 100,000-square-foot
blocks of space is on the upswing, adding, “I’ve had clients looking for buildings with cranes for more than a year.” New development is more problematic, he said, as businesses focus on buying bargain properties shed in the recession. Also excited by the opportunity the property presents — and glad Parma retained the GM stamping plant that remains in operation next door — is Parma Mayor Timothy DeGeeter. “We’re focused on this property,” the mayor said, as it provides an opportunity for the city to land jobs and the region to keep them. Mayor DeGeeter said the city is seeking a $750,000 state grant for road construction to serve the new business park. Mr. Greenberg estimates the property can yield as many as seven structures and 500,000 square feet of business space. He estimates it may take as long as 10 years to develop the business park. ■
continued from PAGE 1
than 16,000 members. “We haven’t even discussed it yet,” Mr. Roman said. “We’ve not entertained that idea at all yet.” Both groups were active in the fight to restrict the collective bargaining rights of public employee unions under Senate Bill 5. However, that measure — passed last spring by the Republican-controlled Legislature — subsequently was rejected last November by 61% of the voters in a referendum known as Issue 2. The business groups may be taking their cue from Gov. Kasich. The Republican governor has said as recently as January that he wasn’t ready to jump back into a statewide battle after the resounding repeal of SB 5. And an email last week from his office only confirmed that reluctance. “Re-creating a jobs-friendly environment is essential to getting Ohio back on track,” said Gov. Kasich’s spokeswoman, Connie Wehrkamp, in a statement issued last Thursday, March 8, when his office was asked by Crain’s about the governor’s position on the proposed right-towork amendment. “We’ve successfully cut taxes, torn down regulatory barriers to job creation and replaced our antiquated economic development agency with a new, more effective private sector corporation,” Ms. Wehrkamp wrote. “These strategies and others are showing good results, and our focus right now is to keep pursuing them, but we’re open to additional strategies as needed.”
Indiana breaks the mold The right-to-work amendment a group called Ohioans for Workplace Freedom is floating actually expands on certain restrictions on unions that were a part of SB 5. The amendment would prohibit collective bargaining agreements between unions and public or private employers that require employees to join a union or, alternatively, to pay the equivalent of dues to the union as a condition of their employment. Indiana Gov. Mitch Daniels last month signed legislation that made his state the 23rd in the country — but the first in the Rust Belt — to allow workers in unionized operations to decide for themselves whether to pay union dues. Gov. Daniels and others argued that passing the legislation would make the state more attractive than its neighbors to companies looking to locate new operations. The only business group backing the proposed Ohio amendment so far is the Associated Builders and Contractors of Ohio, which has three state chapters. Most ABC members are non-union, or merit shop, construction contractors. Its statewide director of government affairs, Bryan Williams, a former legislator, has been active in shaping the amendment. “Our members know that states that have workplace freedom have better economies,” Mr. Williams said. “Our group wants a strong business environment, because when there is a strong business environment, there is a demand for commercial construction.”
Looking for traction Ohioans for Workplace Freedom
“Our members know that states that have workplace freedom have better economies.” – Bryan Williams, director of government affairs, Associated Builders and Contractors of Ohio got off to a slow start, after the Ohio Ballot Board initially rejected the wording of its amendment last November. It won board approval last month to start gathering the 386,000 valid signatures it will need, but the group isn’t sure whether it will have enough signatures to get on the ballot this November. If it misses the deadline to make this November’s ballot, it will shoot for 2013. The same conservative and Tea Party groups backing this proposed amendment were behind last November’s successful state Issue 3 that sought to rein in the federal health care plan in Ohio. The effort is buoyed by a recent poll by the Quinnipiac University Polling Institute. The Hamden, Conn., group last month found 54% of Ohio voters responding would favor passage of a right-to-work amendment. Chris Littleton, spokesman for Ohioans for Workplace Freedom, said he is gathering financial support from business groups to mount a successful signature-gathering campaign, though he wouldn’t identify the group’s supporters. “There is a lot of quiet supporters and donations,” he said. “But I wouldn’t want to speak for those groups and publicly announce their support.” Mr. Littleton said the group won’t file its first campaign finance report until July.
‘Freeloading concept’ One group most likely to support the effort is the National Federal of Independent Business’ Ohio chapter, a statewide advocacy group for small business owners. Roger Geiger, vice president and executive director of NFIB/Ohio, said his group “has a longstanding position that supports the concept” of a right-to-work law. “Our membership would clearly line up in favor of right to work since small business owners clearly believe that it is a strong concept that should be in the marketplace,” Mr. Geiger said. “But we haven’t made a formal proposal to our leadership council.” The Construction Employers Association, however, opposes any version of a right-to-work amendment, said Tim Linville, executive vice president of the group that represents 500 union construction contractors in Northeast Ohio. Mr. Linville said he is concerned in particular about the impact of right-to-work laws on construction worker pension funds, which are organized by trade union classification and are run by boards of construction employers and union officials. In right-to-work states, he said, workers who don’t pay dues “are still entitled to the union contract and all the benefits it has in it, including the pension fund.” “We don’t believe in getting something for nothing,” Mr. Linville said. “Basically, right to work is a freeloading concept.” ■
CRAIN’S CLEVELAND BUSINESS
MARCH 12 - 18, 2012
REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Toni Coleman E-mail: firstname.lastname@example.org PUBLIC NOTICE
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The Village of Newburgh Heights is accepting sealed bids for the sale of Permanent Parcel Number 511-14-001. Bids should be submitted in writing, sealed and mailed via certified mail or hand delivered to Newburgh Heights Village Hall, 4000 Washington Park Boulevard, Newburgh Heights, OH 44105. No bid will be accepted after 4pm on Friday, March 23rd, 2012. All bids will be opened at a public hearing on Friday, March 23, 2012 at 4:45 PM. The public bid opening shall be held at Newburgh Heights Village Hall, 4000 Washington Park Boulevard, Newburgh Heights, OH 44105. The Village of Newburgh Heights reserves the right to reject all bids. For additional information please contact the Mayor’s Office at 216-641-4650.
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MARCH 12 - 18, 2012
CRAIN’S CLEVELAND BUSINESS
THEWEEK MARCH 5 - 11 The big story: Leading e-book distributor OverDrive Inc., now based in Valley View, broke ground on a new headquarters in Garfield Heights. OverDrive said it has begun construction of a 95,000-square-foot building on a 12-acre campus to accommodate more than 300 employees. The company said its need for a new headquarters, which it is calling its Blue Sky Campus, is “a result of domestic and international growth in the e-book industry.”
Shopping spree: Westgate Shopping Center in Fairview Park has changed hands. Inland Real Estate Corp. said it has acquired Westgate and a shopping center in the Cincinnati market for a total of $109.4 million, excluding closing costs and adjustments. Inland, a real estate investment trust, said it bought STAN BULLARD Westgate on March 6 for $73.4 million. Westgate is a former enclosed mall that was transformed into an outdoor shopping center. It totals about 474,000 square feet of leasable space.
On second thought …: FirstEnergy Corp. is re-evaluating its plan to shut its Eastlake power plant. Instead of closing the Lake County plant, the company is considering replacing its coalfired turbines with four combustion turbines that could be fired by natural gas or oil. The electric company’s FirstEnergy Generation Corp. subsidiary filed an application for a feasibility study with PJM Interconnection, its regional transmission organization, to install turbines that would deliver about 800 megawatts of what the industry calls peaking power. Such power comes online only at times of high electricity demand.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Rocky Mountain firm high on West Tech Lofts ■ Monarch Investment and Management Group, an apartment owner and manager based in Franktown, Colo., is the new owner of West Tech Lofts, 2201 W. 93rd St. in Cleveland. Through MIM XXXVI West Tech Lofts LLC, Monarch on Jan. 31 paid $6.56 million for the 189-unit property, according to Cuyahoga County land records. The seller was RRE HUD MMF 2007, an affiliate of Resource Real Estate Inc. of Philadelphia that had paid $4.5 million for it in 2009. Brian Polley, Monarch’s regional manager for northern Ohio and southern Michigan, said his company was able to secure the apartment property at a price that allows it to hold the lofts profitably for a long time. The lofts are 96% occupied. The purchase also gives Monarch its first property in Cleveland; it joins six other complexes in Ohio that it already owns. The character of the 1912-vintage former high school also attracted the owner of more than 8,000 apartments. “It’s a unique property,” Mr. Polley said. “We think we can make it better.” — Stan Bullard
Barking up the right tree ■ Pat Covey now has climbed to the second branch from the top. Mr. Covey, 48, who has worked for The Davey Tree Expert Co. based in Kent for more than 20 years, has been named chief
Wear in the world: Lincoln Electric Holdings Inc. acquired Weartech International Inc., a privately held producer of cobalt-based hard facing and wear-resistant welding consumables. The maker of welding equipment did not say what it paid for Weartech, which is headquartered in Anaheim, Calif., and has manufacturing plants in Anaheim and Port Talbot, Wales. Weartech has annual sales of $40 million and employs a total of 140 people at both locations. Data-driven: Laird PLC of London acquired Summit Data Communications Inc. of Akron in a deal initially valued at $22 million. Summit, which develops and sells non-cellular wireless communications equipment, will remain in the Akron Global Business Accelerator for now. The company expects to move to another location within the city as the business grows. Off the wall: Omnova Solutions in Fairlawn sold another piece of its commercial wallcovering business. Omnova sold its U.K.-based Muraspec business to affiliates of a2e Venture Catalysts Ltd. and its principal, Amin Amiri, of Manchester, England. Muraspec has about $40 million in sales. The announcement of the Muraspec deal follows the sale last December of certain assets of Omnova’s North American commercial wallcovering business to J. Josephson.
Going public without the IPO ■ A small information technology services firm in Brecksville has gone public through a reverse merger with a shell company incorporated in Florida.
Panther Expedited on prowl for a buyer, Reuters says Debbie and Ron Russell
THE COMPANY: Russell Real Estate Services, Strongsville THE OCCASION: Its 50th anniversary Appropriately enough, this full-service real estate company was born in the basement of a family home. Newman “Russ” Russell and his brother-inlaw, Roy Waddell, started the business at home in Brook Park in June 1962. Shortly thereafter, they opened a more formal office, on West 120th Street at Lorain Avenue in Cleveland. Russell now has seven offices in Northeast Ohio — the Strongsville corporate office, plus operations in Amherst, Brecksville, Medina, North Ridgeville, Sandusky and Westlake — as well as several satellite locations. The company that began in a basement now has nearly 500 professional agents. Russell services real estate needs in not just the Cleveland and Akron areas, but in Pennsylvania, Toledo and the Lake Erie Islands. It’s still family-owned and operated, as Ron and Debbie Russell took over the business in the late-1990s. A third generation of Russell family ownership is in the offing, as their sons, Jeff and Kevin, both are licensed and working in the business. “Fifty years is a special accomplishment in today’s real estate world,” Ron Russell said. “As other companies are closing their doors … or merging, Russell just keeps on getting bigger and better.” For information, visit www.RussellRealty.com.
In an all-stock transaction, Infiniti Systems Group Inc. on Jan. 31 acquired 60% ownership in League Now Holdings Corp. (OTC Bulletin Board: LNWZ). The main purpose of the merger is to give the company access to Wall Street investors, as League Now has no operations, CEO John Bianco said. Infiniti will need money because it’s looking to buy other IT companies, Mr. Bianco said. Infiniti announced Feb. 29 that it has agreed to buy IDK Health LLC, a Northeast Ohio company that has developed a software system designed to help health care providers process medical claims. IDK stopped developing the technology a few years ago and has no employees, Mr. Bianco said. IDK’s owner, Joe Turi, will join Infiniti. Mr. Bianco declined to say much else about the company. Mr. Bianco said Infiniti, with 20 employees and about $4 million in annual revenue, is looking at buying three other companies: A local software development firm, a New York-based IT staffing business and a Texas company that provides IT security to government agencies. He did not identify any of them. Broadening Infiniti’s lineup of products and services would help it compete with larger companies, Mr. Bianco said. He added that he sometimes longs for the resources he had when he was an executive for Systemation, a Beachwood IT consulting firm that was sold to Cap Gemini of France in 1989. “Having that bandwidth in the company … made it so much easier to deliver solutions,” he said. — Chuck Soder
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
Radisphere National Radiology Group Inc. moved its Beachwood office from Commerce Park to Park East Drive. The 70 people the company employs in Beachwood will occupy most of the third floor at 3700 Park East, which was occupied by Rosetta Marketing Group until the interactive marketing firm consolidated its Northeast Ohio operations in downtown Cleveland. The 17,000-square-foot space is roughly 50% larger than the company’s previous office at 23625 Commerce Park.
operating officer for U.S. operations, making him the company’s No. 2 executive. In the new role, which he assumed last month, Mr. Covey oversees the company’s more than 7,000 U.S. employees and Covey all four of its divisions. Those divisions include its residential/ commercial group and its utility services division, which performs utility line clearance work. Davey Tree’s chairman, president and CEO Karl Warnke, 60, was chief operating officer before climbing to the top. Asked if he aspires to the highest role, Mr. Covey replied, “I’m going to do the best possible job that I can do in this position, and then we’ll see where the chips fall.” Mr. Warnke became CEO in January 2007 and said intends to remain in the post for awhile. He said Mr. Covey was promoted because of his skill set and experience. “He’s engaging, he is well accepted by the people in the company here,” Mr. Warnke said. “He has earned their respect, and I think that is absolutely critical.” — Michelle Park
responsible for 10.5 million jobs and generate $1.2 trillion in total economic impact. “The Economic Impact of Commercial Airports in 2010” quantifies the economic contributions of the 490 airports, which it dubs “Airports Inc.” The Airports Council reported that U.S. airports have increased their total number of jobs by 56% since the group’s last study of airports’ total economic impact, in 2001. The report finds the seven Ohio airports are responsible for 136,000 jobs, $4.7 billion in payroll and $13.6 billion in total economic output.
■ Reuters reported that logistics firm Panther Expedited Services Inc. of Seville, in Medina County, is trying to sell itself, three months after scrapping its IPO plans. “Panther, owned by private equity firm Fenway Partners, is being advised by J.P. Morgan, which was one of the several underwriters for the initial public offering,” the news service reported, citing two people familiar with the matter. The sources did not want to be identified, as the sale process was private. ■ Clevelanders, what do you have against One source told Reuters that XPO Logistics vacations? of Buchanan, Mich., and several private The Los Angeles Times took note of a reequity firms are eyeing Panther. cent LivingSocial.com survey of 4,000 AmerA Panther spokesman declined to comment icans about their vacation habits, in terms to Reuters. of how many vacation days they take Panther filed for an IPO of up to $110 and how many foreign counmillion in 2010 but called it off tries they have visited. last November. “Which city’s residents The company provides used the fewest days of vacay? expedited transport services Cleveland,” The Times said. via ground, air and ocean Cleveland residents “were shipping. Its annual revenue also the least likely of the rewas $142 million, according sponding residents of the 20 to a summary about the comcities to travel outside the counpany on Fenway’s website. New We Clevelanders can try for vacation,” the paper reYork-based Fenway, with $2.1 nest with the best of ported. “Can it be that the peobillion in capital under manage’em. ple who live in the city at the ment, invested in Panther in 2005. mouth of the Cuyahoga River are just that Its total investment in the company is $76 much more industrious than the rest of us? million. More satisfied with their lot in life?” Maire Griffin, a spokeswoman for Living Social.com, told The Times that Clevelanders likely are more comfortable with “nesting” than people in other parts of the ■ A study released by the Airports Council country, which prompted the story’s writer International-North America contends that to quip, “Clearly it’s time for me to visit 490 commercial airports in the United Cleveland and discover its charms.” States — including seven in Ohio — are
We must really like it in NE Ohio
Study shows airport jobs have soared in last decade
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