Crain's Cleveland Business

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City driving idea to Ford Brook Park mayor backs UAW local president’s concept of supplier campus

By DAN SHINGLER dshingler@crain.com

Brook Park likely can’t get another engine line into Ford Motor Co.’s production complex in the city, because it has landed three in the last four years and there’s just not room

for a fourth, company officials say.

But the city is benefiting from a big turnaround in union-company relations, and if Mike Gammella has his way, Brook Park could work with Ford to lure some of the automaker’s suppliers to town.

Mr. Gammella, who is president of United Auto Workers Local 1250, which represents hourly workers at the Brook Park plant, and who is a Brook Park city councilman, said he hopes Ford will use some of its 250 now-vacant acres at the plant to house suppliers in a campus-like setting.

See FORD Page 4

JANET CENTURY

Francois McGillicuddy was named senior vice president and general manager of Fox Sports Ohio on Jan. 7.

HE’S A FAST LEARNER Fox Sports Ohio’s new GM is a former Speed executive who takes reins as regional power adds the Indians to its growing pro TV stable

BY THE NUMBERS

KEVIN KLEPS kkleps@crain.com

F

rancois McGillicuddy has worked in the music industry and for a video game company.

For two years in the 1990s, Mr. McGillicuddy was managing director of the Pennsylvania Shakespeare Festival. He also holds an MBA from Columbia Business School and a master of fine arts in theatre management from the University of Alabama.

So you could say he has diverse interests.

See LEARNER Page 10

SAVE THE DATE

11

Fox Sports Ohio’s first broadcast of an Indians regular-season game will be April 1, a 7:07 p.m. contest at Toronto.

Fox has a group of 22 regional sports networks that own television rights for a combined 44 of the 90 teams (48.9 percent) in Major League Baseball, the NBA and NHL. A closer look at the network’s national reach: ■ MLB: 16 of 30 teams, including the Cleveland Indians, Los Angeles Dodgers, L.A. Angels and New York Yankees.

■ NBA: 16 of 30 teams, including the Cleveland Cavaliers, Miami Heat, Oklahoma City Thunder, San Antonio Spurs, L.A. Clippers and Brooklyn Nets.

■ NHL: 12 of 30 teams, including the Columbus Blue Jackets and Detroit Red Wings.

■ STRONG STATEMENT: Fox’s regional networks have TV rights for pro teams in 16 states.

INSIDE Who needs a mouse?

■ Nick Mastandrea, left, and Dave Greenspan believe they have an innovative device at their fingertips. PAGE 3 ■ Crain’s wins a Neal Award for its special report on the remaking of West 25th Street. PAGE 4

CEO is leading in a whole new way United Way’s Kitson has increased funds while stressing new strategy, connection

By TIMOTHY MAGAW tmagaw@crain.com

The United Way of Greater Cleveland in some iteration or another has been a fundraising juggernaut for a century, but with an explosion in the number of other nonprofits vying for the same pool of dollars, the organization’s latest leader — Bill Kitson —

is grappling with how to ensure the institution remains relevant.

While the local United Way chapter remains a staple in work- Kitson place philanthropy, the organization has seen its share of the area’s charitable dollars slip over the last decade. At one time, United Way’s annual campaigns brought in more than $50 million. This month, however, the group announced it had raised $41.4 million in its latest campaign.

See WAY Page 7

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SPECIAL SECTION

REAL ESTATE Realtors must be technologically savvy to excel in the current market ■ Pages 13-16 PLUS: ADVISER ■ INCREASING INTEREST IN ISLAND PROPERTIES

Entire contents © 2013

by Crain Communications Inc. Vol. 34, No. 11

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LOOKING FOR SUGGESTIONS Crain’s will highlight nonprofit up-and-comers Crain’s Cleveland Business in 2013 is continuing its series of “Who to Watch” sections.

The next section, slated for publication April 22, will highlight up-and-comers in Northeast Ohio’s nonprofit sector.

If you think you know who will be among those leading Northeast Ohio’s nonprofit scene of the future, drop an email to sections editor Amy Ann Stoessel, astoessel@crain.com, or call 216-771-5155. Please send in your suggestions no later than noon on Monday, March 25.

There are no hard-and-fast requirements for this section, other than the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the nonprofit sector. Mark your calendars for future sections: “Who to Watch: Law,” July 15; and “Who to Watch: Finance,” Nov. 25.

REGULAR FEATURES Classified ....................18 Editorial ........................8 Going Places ...............12

Letter............................8 Reporters’ Notebook....19 What’s New..................19

MARCH 18 - 24, 2013

GLOBAL PERSPECTIVE The U.S. employment rate is improving, but it’s still higher than the rate in many nations with similarly advanced economies. In January, among countries covered by the Bureau of Labor Statistics international comparisons program, Italy and France had the highest unemployment rates, followed by the United States. Japan had the lowest rate. The United States, though, has shown one of the best rates of improvement in the last year. Here are the January 2013 and 2012 unemployment rate figures:

Country

Jan. 2013

Jan. 2012

Pct. point change

Italy 11.8% 9.7% France 10.3% 9.7% United States 7.9% 8.3% Sweden 7.9% 7.9% Canada 6.0% 6.5% Netherlands 6.0% 5.0% Germany 5.8% 5.7% Australia 5.4% 5.1% Japan 3.9% 4.2% SOURCE: BUREAU OF LABOR STATISTICS; WWW.BLS.GOV

+2.1 +0.6 -0.4 0.0 0.5 +1.0 +0.1 +0.3 -0.3

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CRAIN’S CLEVELAND BUSINESS

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3

INSIGHT

All things can click from afar Internet makes a lot possible, even controlling beer at the bar

By CHUCK SODER csoder@crain.com

MARC GOLUB

Nick Mastandrea, left, the chief technology officer of Innovative Developments LLC, and CEO Dave Greenspan display the Mycestro.

COMFORT A AT HAND

By JAY MILLER jmiller@crain.com

Startup develops wireless mouse product controlled by your finger

local startup is aiming to be an electronic rodent killer. Well, actually, its product, the Mycestro, is a computer input device that slips on your finger and can augment — and, perhaps someday, replace — the ubiquitous mouse.

It’s the creation of a local engineering consultant, Nick Mastandrea. On a plane flight back to Cleveland several years ago, the Chardon resident watched a passenger in front of him try to maneuver his mouse on a corner of his tray table.

See COMFORT Page 6

THE WEEK IN QUOTES “It’s hard not to be working in an organization where they don’t have a United Way campaign every year, and you eventually start to ask, ‘Do I keep doing it?’ That’s when the question of relevance starts confronting them.”

— Raymond Cox, a University of Akron professor who has consulted nonprofits on strategic planning.

Page One

“All the bells and whistles that you would expect from a Fox baseball broadcast, you’ll begin to see with the Indians.”

“If you don’t understand the use of technology to market your properties and how to attract people through technology, you’re toast.”

— Francois McGillicuddy, senior vice president and general manager, Fox Sports Ohio. Page One

— John Ludwick, operating principal, Keller Williams in Northeast Ohio. Page 13

“Thirty years ago I would sell a lakefront home for $70,000 on Johnson’s Island to a worker at Ford’s Brook Park plant who had saved his money. … Today the typical buyer is a small business owner or professional person who wants to get away from job stresses. They pay $200,000 to $1 million for a house on Johnson’s Island.”

— Tomi Johnson, Howard Hanna broker-associate. Page 13

If you were surprised when your grandparents started using the Internet, just wait until your air conditioner jumps online.

Companies in Northeast Ohio are working to connect all sorts of consumer and industrial products to the Internet.

Thermostats. Diesel generators. Insulin pumps. Even beer taps.

The companies are among the many around the world that are creating online versions of what traditionally have been offline products, a trend often referred to as “the Internet of Things.”

For instance, a new line of compact fluorescent light bulbs that Aurora-based TCP Inc. released in January can be turned on and off from afar. So, even if you’re on the beach, you can use your smart phone to make sure you turned off your basement lights, or you can turn on a few lights at night to make it look like you’re at home, said Jim Crowcroft, vice president of marketing at TCP. The software also lets consumers turn entire groups of bulbs on and off at once while monitoring how much energy they use.

See THINGS Page 11

CORRECTION ■ A March 11, Page One story about University Hospitals’ fundraising efforts misstated the nature of a $6 million gift from Lee and Jane Seidman. The gift supported a new patient tower at the Cleveland Clinic’s Hillcrest Hospital in Mayfield Heights.

Nextant is ready to take off Aerospace company in Richmond Heights is amping up production in its new plant

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

MARC GOLUB

Sean McGeough joined Nextant Aerospace as president in January.

Sean McGeough has big plans for Nextant Aerospace.

The new president of the aircraft remanufacturing company wants to streamline production, increase the number of eight-passenger business jets it produces and expand into new markets overseas.

And he wants to do it all from

Northeast Ohio.

“This facility is a great opportunity to show customers and the world what Cleveland can do for them,” he said.

Mr. McGeough, who joined Nextant in January from Hawker Beechcraft Corp., is excited about the possibilities the company’s new production plant offers. The 125,000square-foot operation opened last November at 355 Richmond Road in

Richmond Heights, next to Cuyahoga County Airport; Mr. McGeough said it was one of the features that drew him to the company.

The plant includes four times the space for production as the previous building, giving the company enough room to overhaul up to 50 jets a year, said Jay Heublein, Nextant’s vice president of sales and marketing. Hitting that figure would be a big increase for Nextant, which Mr. Heublein said has remanufactured a total of 26 aircraft in its first 13 months of sales.

See NEXTANT Page 5

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CRAIN’S CLEVELAND BUSINESS

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MARCH 18 - 24, 2013

Crain’s wins Neal Award for special report on West 25th

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Crain’s Cleveland Business has been named a winner in the 59th annual Jesse H. Neal Awards, a national competition that each year honors the best work in business media.

Crain’s has been recognized for its April 2, 2012, special report, “Remaking West 25th Street and the Market District.” The project was one of four finalists in its division for the category of Best CrossPlatform Package, which considers print, online and multimedia components of coverage.

The award was presented last week at a luncheon in New York City. It was one of six Neal awards won by publications that are part of Crain Communications Inc. “Remaking West 25th Street and the Market District” featured extensive online coverage, including video interviews with business owners, an interactive map and

photo galleries. QR, or quick response, codes throughout the print package allowed smart phone users to gain instant access to the online content.

The overall package analyzed the transformation of Cleveland’s West 25th corridor, including a look at some of the driving forces behind it, residential growth in the neighborhood, and the work that remains to be done. In addition, it included print profiles and interviews with the owners of some of the more than 20 businesses that had opened in the Market District in the preceding 18 months.

“I couldn’t be more happy for our editorial team,” Crain’s publisher Brian Tucker said. “This was an ambitious package of multi-platform reporting and editing that highlighted the great work that transformed a once-decaying Cleveland neighborhood into the

jewel it is today.

“It shows how a small group of creative, dedicated journalists can use traditional tools melded with new technologies to tell an important story in engaging, entertaining ways,” Mr. Tucker said.

The project was spearheaded by sections editor Amy Ann Stoessel.

Editorial staff members involved with the project were managing editor Scott Suttell and reporters Stan Bullard, Michelle Park and Tim Magaw.

Web/print production coordinator Craig Mackey; production assistant/video editor Steve Bennett; graphic designer Lauren Rafferty; and digital strategy and development manager Stephen Herron worked on the project’s graphic and online components.

■ The entire West 25th project can be found at: www.crainscleveland.com/W25th.

Ford: Management has yet to hear idea continued from PAGE 1

MARCH 22ND 10AM - 7PM MOVING AT THE SPEED OF

“It’s a perfect site for that,” he said.

For now, it’s a pipe dream. Mr. Gammella said he has not yet brought up the subject with Ford’s management, and Ford’s Brook Park site manager, Charles Binger, said Ford currently is not considering that concept or any other specific use for the property.

But given the recent history of Ford in Brook Park, and Mr. Gammella’s penchant for predicting what will come next at the plant, it’s not something beyond visualization for some officials, including Brook Park Mayor Mark Elliott. He said he has discussed the Elliott matter with Mr. Gammella, as well as with commercial real estate brokers and business people, but not yet with Ford.

“I would certainly support that tremendously,” Mayor Elliott said.

“It would be important to our community and important to Ford, so everybody would win.”

Early-stage groundwork

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Although Mr. Binger declined to speculate on whether the Ford complex could next house a campus for suppliers, he was not dismissive of the idea and said he has respect for Mr. Gammella and his business acumen.

While previous union leadership had begun to repair Local 1250’s relationship with the company, “Mike has certainly progressed it to a whole new level,” Mr. Binger said.

Developing a supplier park also would not be out of step with recent trends in the auto industry to shorten supply chains, or Ford’s own longstanding efforts to draw its suppliers closer. The company has developed supplier campuses on other sites, including in Chicago, where Ford and its suppliers share 1.5 mil-

lion square feet of production space.

In Brook Park, Ford created a huge amount of empty space near its engine plant by last year razing its former casting plant in the suburb and clearing the land for potential redevelopment.

Mr. Gammella said he’ll bring the subject up soon with Brook Park City Council, to ensure that the project and any necessary zoning measures would be supported.

Mayor Elliott said the city already is doing some groundwork, including talking to industrial brokers to see what sorts of companies might be attracted to the location and what could be done to attract them.

It’s a long way from being reality, but it’s a plan worth pursuing, he said.

“There’s 250 acres there that could be developed,” Mayor Elliott said. “It’s in the city of Brook Park’s best interest to look ahead and be visionary.”

A relationship-builder While the development of a supplier campus would be a coup for Brook Park, perhaps no one would be a bigger winner than Mr. Gammella, who in his dual role as union leader and councilman is at the epicenter of the Ford-Brook Park relationship.

Securing such a campus would benefit the city, increase local employment, help cement Ford’s presence in Brook Park and, Mr. Gammella notes, help the company make engines more efficiently, with shorter supply chains.

It also would add to a string of successes for Mr. Gammella and Local 1250.

When Mr. Gammella was elected in 2008, the Ford complex was down and nearly out. Its casting plant, which once employed 10,000 people, was bound for its ultimate closure in 2010, and engine production was struggling as Ford’s sixcylinder Duratec engines lost favor with car buyers after a long run in the market.

But the plant was awarded Ford’s 3.5-liter Ecoboost engine in 2009, followed by the 3.7-liter Ecoboost in 2010. With gas prices still a big factor in buyers’ minds, the variabletimed, fuel-efficient motors became the company’s most popular power plants, available on 90% of Ford’s vehicles today, notes Mr. Binger, who came to town in 2009 to launch the new motor.

In the meantime, Mr. Gammella, his union, and the company continued to repair a relationship that was, in the past, acrimonious, as the plant seemed only to face more and more layoffs over the years.

Mr. Gammella’s approach was to support the company and then use that support to get more work and job security for his members. Far from bashing management, Mr. Gammella praised Ford and preached things like “We’ve got to deliver a top-quality product” and “If the company’s not successful, there won’t be any jobs for anyone.”

That approach worked, and Mr. Binger said the local union’s willingness to work with Ford was instrumental in winning new work for the Brook Park complex.

“The fact that we had a good relationship with the union and were able to work through issues, all of that put this plant in a good light with the company,” Mr. Binger said.

“We’ve certainly grown in stature with the company,’ Mr. Binger said, noting that the Brook Park plant is the only one that produces more than one Ecoboost engine.

The complex’s status also helped it win yet another engine to produce — a four-cylinder that Mr. Gammella had been lobbying for over the previous two years. Ford announced last month that it would begin production of the 2-liter I4 motor in Brook Park.

The engine is produced for the European market in Spain and has been a successful seller there, Mr. Binger said. Brook Park will begin making the engine for Ford’s U.S. production later this year.

■

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Nextant: About 110 workers have been hired in last 18 months “It’s innovative, and it’s good for the region.”

continued from PAGE 3

Nextant was formed in September 2007 and has spent its first years conducting feasibility studies and research and development for its aircraft, the 400XT, Mr. Heublein said. The jet received Federal Aviation Administration certification in October 2011, and sales began soon thereafter. The company last November received European Aviation Safety Agency certification for the jet, which allows the aircraft to be flown throughout the European Union.Mr. McGeough said his goal for 2013 is for Nextant to produce 24 to 30 aircraft. The company had sold about $100 million in aircraft by the end of 2012, he said, and it entered 2013 with a backlog of about $175 million in orders.“It takes time to ramp up production,” Mr. McGeough said.

In the last 18 months, Nextant has hired about 110 employees, according to Mr. Heublein, taking employment up to about 160.

Mr. McGeough said employment will rise as demand for the product increases. He doesn’t expect to have any trouble finding quality job candidates in the area and said the plant’s level of sophistication rivals that of out-of-state Cessna Aircraft Co. and Gulfstream Aerospace Corp. production plants.

A flight to opportunity Michael Heil, president of the Ohio Aerospace Institute, thinks Nextant is filing a hole in the aircraft industry by remanufacturing jets as it modernizes the Hawker Beechjet 400A/XP aircraft.

The business and commercial aircraft markets in Asia and the Middle East have been growing rapidly in recent years, Mr. Heil said. By overhauling and updating

– Michael Heil, president, Ohio Aerospace Institute and Mr. McGeough, respectively.

The Federal Aviation Administration even recognizes the 400XT as a new type of plane, not a modification, Mr. McGeough said. The jets get a new data plate — like a serial number for jets — after the remanufacturing is complete.

Quality is job one

JESSE KRAMER

This 2010 file photo shows an aircraft that Nextant Aerospace refurbished. business jets, rather than building new, Nextant can supply those growing regions in an economical way.

Mr. McGeough sees room for expansion in markets such as China, which he said has only about 200 business aircraft — well below an estimated 15,000 to 18,000 in the United States.

The new president has spent a good amount of time overseas during his first two months at Nextant, looking for ways to improve the company’s international strategy and customer experience. It’s a job for which he is well-suited, as he formerly was president in charge of sales in the Eastern Hemisphere for Hawker Beechcraft, now known just as Beechcraft.

Mr. McGeough said he also sees an opportunity in the market caused by his previous employer’s

Chapter 11 bankruptcy filing in May 2012. The Wichita Eagle reported that among the steps the company took in its restructuring was to stop production of the Hawker business jets.

While Mr. McGeough wouldn’t disclose how much it costs Nextant to buy and overhaul the 400A/XP aircraft, he said the money the company saves on designing and building new jets gets passed down to customers.

Nextant’s remanufactured 400XT sells for close to $5 million in Europe and less in the United States, with the price including factory warranties and after-sales support. By comparison, a new jet with a similar engine, interior and amenities can sell anywhere from $7.5 million to $9 million, according to estimates by the General Aviation Manufacturers Association

Dan Hubbard, spokesman for the National Business Aviation Association, said remanufactured aircraft offer another option for customers.

In the past two decades, customers have gone from the traditional model of buying and maintaining a new aircraft for themselves or their companies to enjoying a variety of options. Consumers can choose to use a charter company, buy a share in an aircraft or opt to buy a specialized aircraft, a pre-owned one or one that’s been refitted with new components, Mr. Hubbard said. Nextant is a “market leader” in the remanufacturing industry, Mr. Heil said, and unique for the state.

“It’s innovative, and it’s good for the region,” he said.

The business aviation sector is tied to the economy overall, Mr. Hubbard said. As the economy has improved, the market for business jets and transportation slowly has strengthened.

Since mid-2010, the number of flight hours companies are logging has been edging up, and orders for new jets have been increasing, he said. Pre-owned planes have started

to sell again, too, albeit at lower prices than they would have before the recession.

While Mr. McGeough is looking for more partners to provide service to Nextant’s jets as they find new homes across the globe, he wants to keep the production in one spot to ensure continuity of the processes used during production.

“We want a reputation of quality,” he said.

Faster, faster At present, it takes Nextant’s crew about 12 weeks to completely overhaul one of the old jets — replacing the engine, updating the electronics and software, creating a more aerodynamic frame and customizing the interior and the paint to the customer’s specifications.

That last step is subcontracted at the moment, but eventually could be moved in-house. Mr. Heublein said one of the new building’s three hangars is set aside to handle painting operations in the future.

Mr. McGeough would like to see production streamlined into a 10-week process. He’d also like to increase to eight the number of jets updated at any given time; as of last Monday, March 11, there were six jets in various steps of the remanufacturing process.

And it sounds like more changes are on the way for Nextant.

While there are about 750 Beechjet 400A/XP aircraft in flight now, Nextant isn’t content to constrain its business model. Mr. McGeough said the company has been researching other aircraft platforms and is poised to make an announcement before or at the European Business Aviation Convention & Exhibition in Geneva, Switzerland, in May. ■

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CRAIN’S CLEVELAND BUSINESS

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MARCH 18 - 24, 2013

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Comfort: Online fundraising site has generated $255,000 in pledges “By the time I got off the plane, I had everything worked out.”

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“I just thought to myself it would be a great idea to be able to control my PC with simple hand movements,” he said. “By the time I got off the plane, I had everything drawn out.”

Mr. Mastandrea developed proprietary and patentable technology and created Innovative Developments LLC. The company got its first outside investment in 2010 — $25,000, from the Innovation Ohio fund administered by Lorain County Community College.

Last month, to gauge interest in the idea and generate pre-production sales, the company posted a solicitation for funds on KickStarter, an online fundraising option that helps nurture artistic or technologically creative projects.

The post attracted 2,966 backers as of March 14 who pledged a total of $255,000.

KickStarter money is not considered investment dollars. Rather, people “back” projects in exchange for either a tangible reward, such as one of the first products off the line, or something less tangible, like a T-shirt or just a thank you note from an author or creator.

In Myscestro’s case, a $79 KickStarter contribution will earn a backer one of the first Mycestros.

Smaller KickStarter backers will get T-shirts or will be recognized on a website, mycestro.com, that is slated to go live at the end of March. More than 2,500 of the 2,966 backers so far have opted to pledge $79 or more.

Innovative Developments CEO Dave Greenspan said the plan is to have the product available online for the 2013 holiday shopping season.

Mr. Mastandrea, who now is the company’s chief technology officer, sees the potential for the Mycestro to interface with many platforms.

“Almost anywhere there is a mouse attached to a computer we will be able to provide (an alternative) tool,” he said.

Putting their finger on it On KickStarter, the company is using the tagline “Mycestro — Conduct Your World.”

The device will use a common Bluetooth protocol to connect to a

– Nick Mastandrea, chief technology officer, Innovative Developments LLC, on his idea to create the Mycestro personal computer, tablet or even smart phone. It slips on an index finger and has one surface with sensors underneath it that function like mouse buttons, with the thumb used to press the sensors. The user then can direct activity on the computer like an orchestra conductor — a maestro — directs an orchestra, with a thumb pressed against the Mycestro equivalent of the left mouse button.

“It’s more than just an alternative to the optical mouse,” Wired.com reported on Feb. 26 after a test drive of the device. “It changes how you interact with your desktop (computer) and, by offering new ways to control them, could even change how those desktops are designed in the first place.”

Innovation Ohio got the ball rolling for Mr. Mastandrea because it saw a niche a startup could fill.

“We thought (the product idea) had some really interesting applicability,” said Dennis Cocco, co-director of the Great Lakes Innovation and Development Enterprise, which oversees the innovation Fund at LCCC. “Our early-stage money was to help validate the technology and help build the prototype,” Mr. Cocco said. “It sounds like (Mr. Mastandrea) is making some progress.”

As the KickStarter posting expires on March 29, the next round of financing is getting under way.

“We are actively seeking investment,” said Mr. Greenspan, a veteran of several Internet and technology firms, who also is a Cuyahoga County councilman. “”We’ll do that until we reach our investment goal of $1.5 million.”

Mr. Greenspan is the former CEO of IdeaStar Inc., producer of the VeriShot Golf system for tracking and rewarding holes in one in golf contests. Mr. Mastandrea met Mr. Greenspan through Michael Finn and Tony Crisalli, who already had

joined the Mycestro team as director of business strategy and director of business finance, respectively.

Mr. Greenspan said the money will be used to build and assemble the product and for marketing and branding.

The main circuit board will be manufactured by a Chicago firm, he said, but assembly and distribution will be handled in Northeast Ohio.

Girding for competition Of course, Mr. Mastandrea isn’t the only engineer looking for better ways to connect to computers, games and phones.

Among 10 peripherals that PCWorld.com reported Jan. 30 as pushing the limits of science and technology, two were mouse wannabees. One is Sixth Sense, which uses a camera and projector to translate finger gestures into computer commands. Another, the Tobii Rex, links cursor movement to eye movements. The website reported that the Sixth Sense, though still in prototype stage, will cost $350, and the Tobii Rex, not yet priced, is due out this fall.

Also, industry giants such as Apple and Google, and input device makers such as Logitech, could overpower smaller competitors with a rival product.

“He’s competing in a fairly large market and he does have some fairly large competitors,” Mr. Cocco said of Mr. Mastandrea. “What we tried to figure out was if there was a niche in there that (Innovative Developments) can carve out and manage and be successful at.”

However, both Mr. Mastandrea and Mr. Greenspan, and Mr. Cocco of GLIDE, acknowledged that getting the attention of an industry giant wouldn’t necessarily mean a competing Goliath that would wipe out Innovative Developments’ David. There is a mutually satisfying option.

“If he’s even moderately successful, somebody is going to try to buy it,” Mr. Cocco said. “And that’s OK. Even if we have a business that gets bought by a company outside the region, Nick is going to turn around and create another enterprise.

We’re OK with that.”

■

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Way: Fundraising increase of 3.2% is largest difference in decade continued from PAGE 1

By all accounts, the latest fundraising effort was a success, up 3.2% over the previous year’s total for its largest year-to-year increase in a decade. Still, Mr. Kitson told Crain’s United Way is at a crossroads and must determine how to position itself as an irreplaceable institution that makes a difference in the community.

To tackle those issues, United Way recently launched a strategic planning process to construct a blueprint that will guide the organization during the next three years.

“Do we add value to the equation?” said Mr. Kitson, who was tapped as the group’s president and CEO last spring. “Are we important? Those are all questions we have to answer.”

United Way’s struggle — not just locally, but nationally— has been in forming a connection with donors that goes well beyond the envelope they often receive at work asking for money. The organization wants to be viewed less as an intermediary between donors and the deserving nonprofits it funds, so that it can justify keeping the 13 cents of every dollar it raises as it covers the cost of its own operations.

Raymond Cox, a University of Akron professor who has consulted nonprofits on strategic planning, understands United Way’s dilemma.

“It’s hard not to be working in an organization where they don’t have a United Way campaign every year, and you eventually start to ask, ‘Do I keep doing it?’” Mr. Cox said.

“That’s when the question of relevance starts confronting them.”

More than a number A large piece of the local United Way’s strategic plan likely will focus on engagement, with the idea of getting more individuals — donors or not — involved with the organization so they can see the types of initiatives it funds.

It’s all still amorphous at this point, but engagement could include something like promising at the start of a campaign that the money raised will ensure a certain number of children can read at a particular proficiency level, said Richard Buoncore, who is chairing United Way’s strategic planning committee.The idea is to be more specific about a gift’s impact in order to get more people attached emotionally, rather than just financially, to United Way, said Mr. Buoncore, who is managing partner at MAI Wealth Advisors in Cleveland.

“We’ve gotten too caught up in the number,” said Mr. Buoncore, referring to the annual fundraising goal. “I think the number can be negative on its own because the average person says, ‘They got $41 million, so they don’t need us.’ The truth is you need everybody.”

The group also is looking to ensure donors get the most bang for their bucks. Mr. Buoncore said United Way provides value because the organization verifies the dollars it raises are used wisely by the organizations it funds — something individual donors don’t have time to do.

At the onset of its last campaign — Mr. Kitson’s first with the organization — the United Way opted to forgo asking its campaign chairs and board members to fill in any

“He comes with such great ideas, great energy and great knowledge of United Way.” – Richard Buoncore, chair, United Way strategic planning committee, on CEO Bill Kitson remaining gaps toward the end of the fundraising effort. Instead, and in the spirit of donor engagement, Medical Mutual of Ohio, KeyBank, Eaton Corp. and law firm Baker Hostetler all pledged to double or even triple their contributions to United Way by matching certain donations.

For instance, Medical Mutual pledged to match dollar for dollar

— up to $400,000 — all new and increased gifts from individual donors. The company’s CEO, Rick Chiricosta, co-chaired the latest campaign.

“Those challenge grants made a significant impact this year,” Mr. Kitson said. “We were challenging the community up front. These types of grants are always good because people like value.”

Fresh point of view Rather than being seen as a vanilla organization with pie-inthe-sky ideals, Mr. Kitson anticipates United Way of Greater Cleveland will take more of an activist approach than in years past. The change would elevate the group’s

visibility in the community and encourage volunteer involvement, he said.

Under Mr. Kitson’s leadership, the organization already has taken a stand on the Boy Scouts of America’s prohibition of openly gay youths and adults from participating in the organization. The United Way of Greater Cleveland’s board of directors voted unanimously to add sexual orientation to its equal opportunity and diversity policy, which put in jeopardy about $100,000 United Way contributes to the local scouts’ council.

In addition, the organization lobbied on behalf of the Cleveland Metropolitan School District in its quest for more money via a four-

year, 15-mill levy that ultimately was approved by voters.

“I think this organization is going to have a point of view — absolutely,” Mr. Kitson said.

Mr. Buoncore likened the change that the local United Way is poised to make as an “evolution, not a revolution.” The goal is to ensure the organization stays top of mind for Clevelanders, and he noted that Mr. Kitson, who previously served as CEO of United Way of Greater Toledo, is the right man for the role.

“He comes with such great ideas, great energy and great knowledge of United Way,” Mr. Buoncore said.

“He’s the perfect man for the job right now. He understands change is needed.”

■

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PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Be afraid

H

ere’s a warning for all those communities that are looking down their noses at what’s happening in Strongsville, where teachers have been on strike the last two weeks: Unless the state does away with a system of paying for public education that relies heavily on property taxes, and unless there is considerable consolidation in the number of school districts in Ohio, the turmoil that has embroiled the Strongsville City Schools could be headed to your town.

Maybe not this year. Perhaps not even with your teachers’ next contract. But with few school districts rolling in dough, the conditions are ripe for costconscious school boards across Ohio to butt heads with teachers who don’t want to swallow year after year of pay freezes, with no end to them in sight.

That’s the situation in Strongsville. Told three years ago during contract talks that money was tight, teachers there agreed to accept a pay freeze for the 2011-2012 school year. Now, the district in the latest contract talks again says its finances are under duress. So, in what is labeled the district’s “last best offer,” teachers’ pay would be frozen for the next two school years (2013-2014 and 2014-2015).

We know the economy still isn’t great. However, we can’t think of many workplaces where the key employees all hold bachelor’s degrees — and where many members hold master’s degrees, too — and the salaries of those workers in 2015 essentially will be unchanged from what they were in 2010.

Similar scenarios have played out elsewhere. Last August, the Brecksville-Broadview Heights City School District barely averted a strike when teachers agreed to forgo for two years their pay hikes tied to years of experience, with the board stipulating in the teachers’ contract that it can extend that freeze a third year.

People who say teachers should be happy they have jobs take a short-term view of the consequences of putting the clamps on their compensation. Over the long haul, school districts that develop reputations for holding the line on pay won’t be able to fill job openings with quality talent, as bright, young teachers avoid places where their starting salaries might be their same pay years later. The result will be mediocre schools, followed by declining home values as families stay away from those towns.

The Ohio Supreme Court ruled way back in 1997 that the state’s reliance on property taxes to finance education wasn’t fulfilling the mandate in the Ohio Constitution for a “thorough and efficient system of public schools.” It’s 16 years later, and it still makes no sense why an older state where property values are past their peak in so many towns hasn’t come up with a better financing method.

It’s equally ridiculous that more than 600 school districts exist in Ohio. State Sen. Shirley Smith told Crain’s last week the key to holding down the cost of education is to reduce sharply the number of school districts through regionalization. That way, more money is spent on education, not administration.

Elected officials in Columbus are letting Ohio families down by not enacting big changes to how schools are financed and structured. The eventual outcome will be a second-rate education state.

FROM THE PUBLISHER

Make room for moderation on the right Attorney General William Petro came to o is Rob Portman still the consersimilar conclusions because of their chilvative U.S. senator from Cincindren. And for those of us who are parnati, arguably Ohio’s most ents, this is not a hard decision to underbedrock conservative corner? stand. You always want what’s Probably not in the eyes of best for your kids, and you cersome ideologues after he an- BRIAN tainly don’t want them to be vicnounced last week that he is re- TUCKER timized by senseless discriminaversing his long-held opposition. tion to gay marriage. But to There will be those who critiothers — I’d suspect many, cize Sen. Portman, and there many others in the Buckeye will be others — sadly — who State — this is just the compaswill try to gain politically from sionate, understanding act of a his announcement. In these loving father. days of angst for the Republican Sen. Portman issued his Party, many in its harshly radical announcement after his Tea Party wing will declare that a conser21-year-old son, Will, told his father and vative cannot be a conservative if he or the senator’s wife, Jane, that he is gay. she supports gay marriage.

“It allowed me to think of this issue from a new perspective, and that’s of a Which, of course, is quizzical at best dad who loves his son and wants him to and absurd at its worst. Isn’t a solid, have the same opportunities that his committed marriage a bedrock of “fambrother and sister would have — to have ily values?” a relationship like Jane and I have had I know they are different decisions, over 26 years,” Sen. Portman told the but Sen. Portman’s change made me press in his Washington office. think about Gov. John Kasich’s recent He is not without peers who have announcement that he’d like to expand been down this road. Former Vice PresiMedicaid so that the poorest of Ohioans dent Dick Cheney and former Ohio can be cared for better. That, too, was

S

criticized by those who claim the Ohio GOP’s “true conservative” mantle.

I think we should applaud decisions like this, and members of the Republican Party should embrace those who decide they can be more moderate without abandoning their core values. I believe both men should be applauded, especially Sen. Portman, who put love of family over concern for his own political stature. ***** DOWNTOWN CLEVELAND has grown in population, in part because of the great investments in entertainment options. And with an occupancy rate approaching 100% in its apartment buildings, there will be more growth in the city’s core.

Which is why it puzzles me when one of the marquee neighborhoods has a road that feels like it should be in downtown Baghdad. I hope that with the opening of the new Flats East Bank office building and hotel, something is done with the Warehouse District’s West Ninth Street, because it is an awful mess for the residents, restaurant goers and office workers who use it every day. ■

LETTER

Bring common sense to muny tax process

H

ouse Bill 5, a bill to simplify Ohio’s municipal tax structure, will bring much-needed uniformity to a system that today stands alone as the most complicated in the country.

Under current law, every city and village in Ohio sets its own tax rate, creates its own tax forms, and establishes its own rules, regulations and penalties. As a result, Ohio is a hodgepodge of inconsistent municipal tax law.

This situation is particularly challenging for taxpayers who work in multiple cities (think plumbers and electricians, deliverymen and women, home health care workers) and for companies that

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: editor@crainscleveland.com

operate in multiple cities. Small businesses spend millions each year just to comply with the law, when they’d rather invest those resources into growing their business and creating new jobs.

HB 5 addresses numerous concerns raised by city officials over the past two years. Yet a number of Northeast Ohio mayors recently gathered to object to the bill. Among their chief complaints was a

lack of understanding by state lawmakers of the needs of larger cities.

One of the chief sponsors of HB 5, Rep. Cheryl Grossman, served for 12 years as mayor of Grove City (population 36,000) in suburban Columbus, and prior to that was city council president. She understands well the challenges faced by cites, large and small alike. Rep. Grossman also knows that to keep our communities vibrant and growing, we must be able to keep the businesses we have and attract new ones.

Time and again, our municipal tax system is cited as a top deterrent to those goals.

See LETTER Page 9

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THE BIG ISSUE Most states ban strikes by teachers or punish teachers for striking. Do you think school teachers should be allowed to strike in Ohio?

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Absolutely. Teachers are our future. They deserve more money.

Sure. Unions exist and they have the right to strike.

Yeah, it’s within their rights. My father was in a union and my sister is an educator and I believe in the power and the brotherhood of unions.

Definitely. If they are not getting what they want they have to stand up (for what they believe) and a strike is one way they can do it.

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Business Lending Using The Power Of Collaboration

BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s highlighting positive business developments in the region.

To submit information, email Scott Suttell at ssuttell@crain.com. â– Northeast Ohio engineering companies are upbeat about the business prospects stemming from development in the Utica and Marcellus shale fields.

The Cleveland Engineering Society announced last week that a survey of members found nearly 54% say oil and gas developments in the region already are helping their business, and 77% believe it will have positive impacts on their business and employment in the next 12 months.

The engineering society said it surveyed engineering leaders within private-industry, non-government companies. Those surveyed represent companies with a total of more than 1,600 engineering and related professionals in Northeast Ohio. Respondents said about 10% of the professionals in their work force work directly on matters related to the oil and gas industry.

■Aetna Plastics Corp., a distributor of industrial plastics materials and plastic piping systems, said it’s expanding its fabrication operation in Mantua.

The expansion will add 3,000 square feet of office and production space, pushing the total operating area to more than 20,000 square feet. Aetna Plastics said the extra space will bolster its growing fabrication division and will allow the company to continue to add equipment.

Aetna Plastics serves customers in industry sectors including chemical processing, water and wastewater treatment, pollution control, aerospace, and food processing.

The expansion is expected to be completed in April. â– CinĂŠcraft Productions of Cleveland was a Bronze winner in the 34th annual Telly Awards — a leading award honoring outstanding video production and online commercials — for a video it created for North Canton-based Diebold Inc. The video was titled “Why

Diebold for Service | ATM Operations and Assisted Transactions.â€? “With nearly 11,000 entries from all 50 states and numerous countries, this is truly an honor for CinĂŠcraft,â€? said Dan Keckan, the company’s vice president of sales and marketing, in a news release.

The Telly Awards, founded in 1979, honor the best work of advertising agencies, production companies, television stations, cable operators and corporate video departments. â– Cleveland law firm Benesch announced that partner Richard A. Plewacki was elected to the board of directors of the Truckload Carriers Association for the fourth straight year. His one-year term began March 3.

Besides his role on the association’s board, Mr. Plewacki is a member of the Truckload Carriers Association’s Shippers–Carriers Relations Committee and its Independent Contractor Policy & Practices Committee.

Mr. Plewacki’s legal practice focuses on advising and defending motor carriers, leasing companies, third-party logistics providers and large private fleets.

Letter: State system is burdensome continued from PAGE 8

Analysis also shows that claims of revenue loss made by local officials have been greatly overstated. Under HB 5, some cities may lose revenue, but many will come out ahead. The goal of HB 5 is to make the bill as revenue-neutral as possible as we work to make Ohio a better place to do business.

Local officials say HB 5 is a violation of home rule. While the bill does attempt to create some com-

mon sense uniformities within the system, cities will still have the ability to set their own tax rates.

The state’s authority to legislate in this area is clearly spelled out in the Constitution: “Laws may be passed to limit the power of municipalities to levy taxes ‌â€? (§18.13) and “The General Assembly shall provide for the organization of cities, and incorporated villages, by general laws, and restrict their power of taxation, assessment, borrow-

ing money, contracting debts and loaning their credit ‌� (§13.06).

It’s a fact. Businesses operating in Ohio incur municipal tax compliance burdens and costs that they wouldn’t in any other state in the country. It’s inconceivable that Ohio would want to maintain such a system. Now is the time to act.

David M. Reape, CPA Senior manager Ciuni & Panichi

STAY CURRENT WITH CRAIN’S ! ■Crain’s on Twitter: @CrainsCleveland ■Crain’s on Facebook: Facebook.com/CrainsCleveland ■Crain’s daily e-newsletters: CrainsCleveland.com/register

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Learner: Indians president Shapiro praises new network partner continued from PAGE 1

As the new senior vice president and general manager of Fox Sports Ohio, he should fit right in.

Mr. McGillicuddy, 43, was hired Jan. 7, 10 days after Fox completed a purchase of SportsTime Ohio from the Cleveland Indians that is believed to have been worth at least $230 million.

His first day in Fox Sports Ohio’s spiffy offices on South Hills Boulevard in Broadview Heights was Feb. 1, two months before the burgeoning regional power was scheduled to broadcast the Indians’ season opener at Toronto. “I think it’s an exciting challenge,� Mr. McGillicuddy told Crain’s. “The great thing about Fox’s acquisition of SportsTime Ohio is we’re able to bring all the Fox resources to bear on the programming. We have a lot of resources we think can enhance what SportsTime Ohio has been doing. Enhance is really the right word, I think, because there are no plans currently to change any of the programming that’s on SportsTime Ohio. “They’ve created a great brand in the marketplace, and that was one of the first things we had a sense of as we looked at rebranding the

channel,� he said. “We wanted to keep the name because we think it resonates with fans and customers in the marketplace.�

The only part of the SportsTime Ohio name that will change is the acronym, STO, no longer will be used, except in instances on social media when it’s necessary because of a character count, Mr. McGillicuddy said.

The channel number will remain the same on your television, but there will other tweaks. “All the bells and whistles that you would expect from a Fox baseball broadcast, you’ll begin to see with the Indians,� Mr. McGillicuddy said.

The Fox shield logo will be introduced on Indians broadcasts, then will be “rolled out� across the rest of the network, Mr. McGillicuddy said. Other resources SportsTime Ohio will have at its disposal in the first season of its new partnership will be the high-tech graphics viewers have grown accustomed to on Fox national baseball broadcasts.

Getting up to Speed Prior to joining Fox Sports Ohio, Mr. McGillicuddy was vice president of finance and business operations for Speed, an auto racing

network owned by the Fox Sports Media Group, from 2006 to 2013.

He previously was vice president of finance for Rainbow Sports Networks, which at the time was owned by Cablevision but branded

by Fox. Mr. McGillicuddy provided financial leadership for five regional sports networks, including Fox Sports Ohio.

Now, he’s in charge of the latter at a time when it owns the television rights for the Cleveland Cavaliers, Indians, Cincinnati Reds and Columbus Blue Jackets — a multichannel conglomerate that also includes coverage of the Lake Erie Monsters of the American Hockey League, the University of Cincinnati, Xavier University and such SportsTime Ohio staples as high school game coverage, Mid-American Conference basketball and various Cleveland Browns programming. “Fox has a long history of strength in the regional network business,� Mr. McGillicuddy said. “We’re continuing to grow in that area, and Fox Sports’ acquisition of SportsTime Ohio is just another example of that. “It’s exciting to be working at the company at a time when they’re also launching a national platform,� he said, referring to Fox

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A trophy case in the Fox Sports Ohio offices in Broadview Heights displays the network’s allegiances.

Sports 1, a 24-hour cable sports network that will debut Aug. 17.

The addition of SportsTime Ohio brings Fox’s stable of regional sports networks to 22, a figure that includes a 49% stake in the YES Network, a Big Apple giant that airs New York Yankees and Brooklyn Nets games.

In all, Fox’s regional networks have television rights for 16 of the 30 teams in Major League Baseball and the NBA, along with 12 of the 30 NHL clubs. Included in its baseball arm are the Yankees and the two Los Angeles teams, the Angels and Dodgers. The basketball wing of the regional sports powerhouse includes four of the NBA’s best teams — the Miami Heat, Oklahoma City Thunder, San Antonio Spurs and L.A. Clippers.

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With rights for a combined four teams in Major League Baseball, the NBA and NHL, the Ohio portion of Fox’s professional sports reach is among its most extensive. Fox Sports Ohio’s widened scope includes 159 Indians game broadcasts in 2013, plus the usual array of pre- and post-game shows on SportsTime Ohio.

That growing network is now under the leadership of someone with a background almost as extensive as Fox’s regional sports lineup. “After getting my MBA (from Columbia), I worked in the entertainment industry,â€? Mr. McGillicuddy said. “My first job out of the MBA program was working for PolyGram (part of Universal Music Group), which at the time was the largest record company in the world. We don’t sell records anymore, but ‌ After that, I worked for a video game company called Acclaim Entertainment. But before I got my MBA in finance, I worked in the theater business. I ran a Shakespeare festival in Pennsylvania called Pennsylvania Shakespeare Festival. “Gosh, that feels like a long time ago, and in some ways it was,â€? he said. “It’s interesting. I think back to that time, and a lot of the attributes of working on a business like that, in terms of talent, in terms of live production, there are some similarities. Obviously, the scope is completely different. This is a much more significant scope, but there are some similarities.â€?

It’s Tribe time now Mr. McGillicuddy said a team of producers and directors works in each region — one for the Cavaliers

and Indians, and one for the Blue Jackets, Reds and Columbus Crew of Major League Soccer. The teams report to Tom Farmer, vice president of programming and production.

Mr. McGillicuddy ultimately is responsible for the broadcast product, and he has a fan in Mark Shapiro, president of the Indians. “I really like him,� Mr. Shapiro said. “He’s a positive, dynamic leader that we feel will be a great partner not just for the Cleveland Indians but the Cleveland sports scene. I think he immediately set the tone of looking for a win-win in a relationship. To me, people that do that foster mutually beneficial partnerships. I’m confident that we’re going to have a great relationship with them going forward and excited about it.�

Fox Sports Ohio owns SportsTime Ohio, but as is custom, still pays the Indians for broadcast rights. The Plain Dealer reported in late December that the Tribe will receive as much as $400 million for at least 10 years, per its agreement with Fox. Mr. Shapiro doesn’t expect much to change in the coming months, despite a new network partner, primarily because he said the Indians always operated SportsTime Ohio and the baseball team as separate entities. “It has not been different yet.

Maybe because it’s too early to say, or maybe because we really ran the network separately from the team,�

Mr. Shapiro said. “People might not have perceived that, but the reality is it was a separately run organization. We certainly understood that the owner of the two was the same (the Dolan family), but they were managed separately, both physically and in actuality.�

Mr. Shapiro said TV announcers Matt Underwood and Rick Manning are Fox Sports Ohio employees, and the radio team of Tom Hamilton and Jim Rosenhaus work for the Indians.

Each agreement with each professional sports team is different, Mr. McGillicuddy said. A Cavaliers source said Fox Sports Ohio announcers Fred McLeod and Austin Carr are paid by both the team and the network.

Mr. McGillicuddy makes it sound as though he’ll be thrilled listening to them all. “I am a Reds fans, an Indians fan, a Cavs fan, a Blue Jackets fan,â€? Mr. McGillicuddy said. “When it comes to Ohio sports, there is no bigger fan than I am.â€? â–

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Things: AEP customers in Oklahoma have Wi-Fi enabled thermostats, outlets continued from PAGE 3

The Internet-connected light bulbs are expensive; a four-pack costs $200. But now that the software to operate them is developed and the engineering is done, prices should fall as TCP releases more of the lights, Mr. Crowcroft said.

TCP already has started approaching retail stores and hotel chains that might be interested in controlling large numbers of lights remotely.

“This is ready for prime time,” Mr. Crowcroft said. “It’s not future stuff.”

American Electric Power of Columbus is trying to figure out whether technology from a Chagrin Falls company, Intwine Energy, is ready for widespread adoption.

Today, more than 300 AEP customers in Oklahoma have opted to let the utility install Intwine’s WiFi enabled thermostats and outlets in their homes. The hardware gives the utility a way to turn down homeowners’ air conditioners and turn off whatever they choose to plug into Intwine’s Internet-connected outlets when AEP has trouble keeping up with demand for electricity, said Dave Martin, co-founder of Intwine.

The technology also lets AEP charge higher rates to customers who run those devices during peak hours versus those who turn them on when demand tends to be low.

“This gives them (AEP officials) just another tool in the tool box to manage supply and demand,” Mr. Martin said. He noted that AEP this summer plans to add more homes to the pilot and to start using Intwine technology to control water heaters and pool pumps.

Rise of the smart machines AEP isn’t the only large corporation interested in connecting offline products to the Internet. Korean conglomerate LG in January announced it would release several “smart” home appliances, including a refrigerator that can let its owner look at what’s inside while out shopping and washer and dryer that can alert the owner when there is a mechanical problem.

In February, Cisco Systems CEO John Chambers said the maker of computer networking hardware is “all in” on the Internet of Things trend, declaring it will be a “fundamental change in the whole IT industry,” according to a story by Information Week. The San Jose, Calif., company plans to make huge investments in the sector.

One of many big companies helping Cisco plan its coming Internet of Things World Forum is Rockwell Automation Inc., a Milwaukeebased company with offices in Mayfield Heights, Twinsburg and

“You’re talking about monster numbers. And when you think of all these things being connected, how are you going to control them?”

– Tony Pietrocola, investor in Shaker Heights startup iOTOS, on Cisco’s prediction that the number of things connected to the Internet will increase from 10 billion today to 50 billion in 2020

COURTESY IOTOS

The NiOTap beer tap allows customers at bars to order a drink with a smart phone and open the tap by waving a hand over a sensor at the top of the unit.

Warrensville Heights.

Rockwell’s Mayfield Heights office last year helped M.G. Bryan Equipment Co. of Grand Prairie, Texas, create a system to monitor the performance of equipment used during the hydraulic fracturing process, a technique for drilling for oil and gas trapped beneath shale rock formations. The Internet-connected system tells M.G. Bryan customers when the machine’s diesel engine needs a new oil filter or its transmission needs work, said John Dyck, director of software business development at Rockwell’s Mayfield Heights office.

That office also recently developed systems designed to monitor remotely the health of equipment used at power plants and water treatment facilities, Mr. Dyck said.

Rockwell plans to keep looking for new ways to connect industrial machines to the Internet, he said.

“I foresee a future where virtually every asset in a manufacturing facility will have some and in some cases most of its data in the cloud,” Mr. Dyck said.

Technology on tap There’s a lot of opportunity to create Internet-connected medical products, too, said Jim Ohneck, chief marketing officer for Valtronic, a Swiss electronics maker with its U.S. headquarters in Solon.

Valtronic is working with another Swiss company to create an insulin pump that would be controlled via a dedicated smart phone.

However, many of Valtronic’s other products are designed to be implanted in the body. Although

many are built to communicate wirelessly with other devices, federal regulators still are leery about letting medical implant makers connect their products to the Internet because they “don’t want to set up a situation that enables you to hack into somebody’s device that’s in their body,” Mr. Ohneck said.

But the demand for Internetconnected implants is building, he said.

“Almost every medical company that walks in our door with a project has something in mind,” Mr. Ohneck said.

Tony Pietrocola said he believes demand for all sorts of Internetconnected devices will continue to grow. That’s one reason why Mr. Pietrocola — who founded and sold Tenth Floor Inc., a Cleveland-based interactive marketing and web content management software company — invested in a Shaker Heights startup called iOTOS in January.

Through a distributor, iOTOS, which stands for “Internet of Things Operating System,” recently started selling a beer tap that lets bars give customers the ability to order a drink with a smart phone and open the tap by waving a hand over a sensor on top of it. The company also is starting to sell a product that lets users open their garages via a smart phone.

However, the startup’s main goal is to sell hardware and software that lets other companies connect their products to the Internet, said Mr. Pietrocola, who now is vice president of sales at iOTOS. He argues that being based in the Midwest is an advantage for the company, given how many manufacturing companies are in the region Opportunities for companies such as his only are going to grow, Mr. Pietrocola added. He cited Cisco’s prediction that the number of devices connected to the Internet will climb from 10 billion today — a figure that includes computers, smart phones and tablets — to 50 billion in 2020.

“You’re talking about monster numbers,” he said. “And when you think of all these things being connected, how are you going to control them?”

■

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Nominations also can be sent via email to editor Mark Dodosh at mdodosh@crain.com, or via regular mail at 700 W. St. Clair Ave., suite 310, Cleveland 44113.

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The deadline for submissions is Monday, April 1.

n e o m e d . e d u

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INSIDE

13

REAL ESTATE

15 ADVISER: COMPLEX DEALS WITH PUBLIC ENTITIES.

Island homes seeing sunlight Developers noticing more demand for luxury lots on lake and Put-in-Bay

By STAN BULLARD sbullard@crain.com

I MARC GOLUB

Mike Zinicola and Greg Erlanger, foreground, operate the EZ Sales Team, a 17-agent, five-employee outfit, out of the Keller Williams brokerage in Westlake.

WEB WIDENS SALES BASE Being current with technology is a must for Realtors, who could be ‘toast’ if their properties aren’t properly marketed

By STAN BULLARD sbullard@crain.com

O

n a recent vacation, real estate agent Greg Erlanger worked on a new website he plans to use for the EZ Sales Team, a 17-agent, five-employee firm that he and fellow agent Mike Zinicola operate from the Westlake office of the Keller Williams brokerage.

“I’m really the Internet strategist at our firm,” Mr. Erlanger said of his role at the brokerage team.

He has created 20 websites that agents use to tap varied segments of the residential real estate market. Mr. Erlanger sees specific websites as a key part of gaining prominence in residential web searches for the team, which last year sold $56 million in residential real estate.

Specific sites even empower specific agents. For instance, mega broker Megan Cuevas uses a site called EZLuxuryLiving.com in the luxury home segment.

As home sales have climbed out of the slump, the Internet and other forms of tech-

nology have played an ever-growing role in the residential realty business. A joint study released in January by Google and the National Association of Realtors trade group reports that nine in 10 home buyers rely on the Internet as a primary research source; the web is the first stop for 52% of them when they start to house hunt.

As the embers of the residential real estate market caught fire last year, technology played an outsized part in the process. The same study notes real estate-related Google searches grew 22% in 2012 from 2011. The number of such searches of the site by mobile devices grew 120% in that period.

For John Ludwick, the operating principal of Keller Williams in Northeast Ohio, the technology is transforming brokerages and aiding a younger generation of agents, digital natives who grew up with smart phones and other advanced tools.

“If you don’t understand the use of technology to market your properties and how to attract people through technology, you’re toast,” Mr. Ludwick said.

See WEB Page 14

n the same way spring blooms renew the northern Ohio landscape, the slowly recovering economy is rejuvenating the market for real estate near Put-inBay and on the Lake Erie islands.

Although some home lots have languished through the downturn, others in amenity-rich developments have moved so that builders are looking to develop more lots for the first time in years. Sales activity has picked up among new and existing properties, although the moneyed nature of a vacation marketplace means it weathered the housing bust better than normal residential areas.

That’s because the owners have resources, so most do not need to sell.

Michael Petrigan, a Newmark Grubb Knight Frank executive managing director who grew up in Vermilion and spends summer weekends on his boat in Port Clinton, says the market is coming back — “but it did not get all that bad” in the first place.

Although his niche is commercial real estate, Mr. Petrigan over the years has watched new condos and homes rise on the grounds of Catawba Island Club in Port Clinton. He also has seen the wholesale replacement of the onetime trailer camp and docks at Bay Point Resort in Marblehead with a beach, upscale marina, pool and million-dollar homes lining a lakefront lane.

Westward, ho!

Two Northeast Ohio builders with projects on the peninsula to their west are looking for more opportunities there.

Bucky Kopf, founder of Kopf Builders of Avon Lake, said he’s laying plans to add 40 lots to his Harbor’s Edge and Sanctuary project at Catawba Island Club.

See ISLAND Page 16

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REAL ESTATE

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Web: Facebook and social media can spark business continued from PAGE 13

Still need that personal touch Familiarity with the technology aids younger agents who have gravitated to real estate, despite its lean times the past few years, because there were fewer job alternatives. Many experienced, older agents are avoiding being marginalized by teaming up with younger agents, Mr. Ludwick said.

Mr. Erlanger, 37, and Mr. Zinicola, 50, joined forces after getting the advice to “partner with your weakness” at a Keller Williams convention in Atlanta. Mr. Erlanger says he’s a heavy user of technology in his business because he’s from Columbus, and he did not have the network of family and school chums most agents use to build their base.

At the same time, Mr. Zinicola, an attorney who followed his passion into selling real estate in 2000, realized his Internet skills were not what he wanted as he watched Mr. Erlanger’s web work stoke his rise. Mr. Zinicola offered the team his experience in real estate practice, such as getting clients through potentially deal-killing issues and negotiating skills from his law practice. “(Mr. Zinicola) handles the complex problems,” Mr. Erlanger said.

“You can’t do everything by the Net. You have to meet the client, shake their hand, find the house, negotiate the best deal and walk them through to the closing.”

While both men work with clients, they also pass leads the websites generate to the team’s other agents.

Joe Dirk, an agent at the Re/Max Crossroads office in Rocky River, credits the web for increasing his market area dramatically, even though he estimates 90% of his personal practice is from referrals from prior clients or contacts.

“This year I’ve sold houses in University Heights, Chippewa Lake and Youngstown,” Mr. Dirk said, noting that would not have been realistic years ago. “This is a face-to-face side of the business, but you have to back it up with technology, especially with Gen X and Y clients. They don’t just want you to use technology. They expect you to use the technology.”

For example, two years ago he fielded about 1,000 texts monthly, most from clients — but last month he fielded 3,800. He said the market’s rebound has helped, but the rise is clear evidence of clients’ increasing reliance on doing business digitally.

Putting names with faces A more controversial issue about technology in residential real estate today is how to professionally use social networking to drive business without being heavy-handed.

Mary Strimple, an agent in Howard Hanna’s office in Aurora, considers Facebook a crucial part of her practice. After seeing how many people were sharing information on Facebook when her son graduated from high school, she realized in 2009 that having a Facebook page could be a source for new business.

She estimates contacts and leads through her Facebook business page have generated about $4 million in real estate transactions, including a relocation client for a pending $799,000 home sale.

Likewise, Coby Socher, part of the Socher Team at the Keller Williams Pepper Pike office with his mother, Shoshana Socher, says his Facebook page is a key source of business, and he has sold houses through it. In one case, a high school friend learned he was a Realtor through Facebook and contacted him for representation.

Mr. Socher, 21, who started working in real estate at 18 because he wanted to go to work rather than college, today finds Facebook helps him reconnect with friends returning to the area after college.

Although few agents put much stock in newspaper advertising today, there is no replacing some staples of the business, such as postcards, yard signs or hitting bars in Tremont. Keller Williams’s Pepper Pike office also boasts three phone booth-sized rooms that agents use to call prospects.

At EZ’s Westlake office, the team uses digital video and YouTube so much the firm has its own green screen, used to sync people with other digital content. Yet Mr. Erlanger still has a worry.

“I absolutely fear the younger agents more than the older ones,” he said.

■

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REAL ESTATE

Working with public entities isn’t business as usual

T

he recent $27 million Ameritrust complex deal is one of the more high-profile examples in a long list of real estate transactions that have taken place in or around Cleveland in the past 12 months involving a public entity.

The highly public, tightly scrutinized negotiation process that characterized the deal is representative of what should be expected in any real estate transaction involving a public entity — in this case, Cuyahoga County.

The reality is that the process of procuring property from a public entity can be a very eye-opening and often challenging experience, especially if the purchaser does not have prior experience in dealing with the public sector.

Why? Very simply, the process often is more complex and time-consuming because everything is done with the community looking on.

With some limited exceptions, there are no closed-door meetings.

The process is conducted publicly and there may be lots of factions openly arguing their case for or against the deal.

In most cases, the legislative authority of a public entity has to vote to approve the transaction.

This can take additional time, as there may be multiple committee meetings, readings of legislation to authorize the transaction and interim committee votes taken before the transaction can be formally approved.

Even after approval is given, depending upon local regulations,

JACKWALDECK TODDHUNT

ADVISERS there may be a 30-day waiting period before construction can begin. This time may allow local residents the opportunity to garner signatures for a referendum to proclaim the deal null and void if there is adequate support to oppose future building plans.

What other additional challenges might be encountered when doing business with a public entity?

■ Competitive bid process: With few exceptions related to charter municipalities, if a governmental entity wants to sell property or if a contractor or developer is planning to construct a building for a public entity and then lease it to the public entity (such is the case with the new county headquarters building in downtown Cleveland), a formal competitive process must be commenced. This can be an uncomfortable process for developers and contractors not accustomed to the open nature of the process.

■ County or city-specific regulations: Requirements can vary even from one municipality to the next for such issues as labor, prevailing wages, etc. In the city of Cleveland, for example, bidders

must agree to comply with Fannie Lewis legislation which, among other things, requires (to a certain extent) the use of Cleveland-based workers. Just a few miles away in another city, however, there is no such requirement.

■ Minority obligations: Depending on the location, it might be necessary to track and report the use of minority and female labor or subcontracts in order to meet prevailing MBE/FBE requirements.

■ Prevailing wage requirements: In an effort to keep jobs competitive (but not necessarily mandate union involvement), public entities may enforce prevailing wage requirements, which obligate the developer/contractor to pay union scale even if the laborers are non-union.

■ Restriction of entertainment and gifts: Today’s public officials are scrutinized more than ever before and are, therefore, held to higher standards of ethical behavior. This affects many codes of conduct, including the inability of public officials to be entertained

Bratenahl

at a prospective purchaser’s expense or to receive gifts of any kind from would-be bidders.

■ Ethics training: Cuyahoga County was one of the first public entities in the region to require that all prospective county contractors complete a formal county-sponsored ethics training before being considered eligible for the bidding process.

Since requirements such as these vary by geographic location and can change from time to time, it is valuable to involve legal counsel with specific expertise in dealing with public entities to help avoid undue delays as the result of not adhering to specific requirements.

Despite the added challenges, there can be many advantages to working with public entities, including a number of economic incentives.

Some of the more common incentives include: job creation tax credits, special improvement districts (SIDs) and tax abatements.

In addition, purchasers may qualify for tax increment financing, as well

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as special loans and grants for developing infrastructure, such as parking, street lights and sidewalks.

And, since most local governments in our area have good credit ratings, financing for a public project can typically be obtained quickly from a variety of sources.

In today’s economic climate, it’s more important than ever to be well versed on what it takes to conduct business with a public entity.

As a result of tax foreclosures, land bank programs or banks transferring distressed properties to local governments as a means of getting them off the bank’s books, municipalities and counties have acquired larger property portfolios in recent years. That means there are more public deals to possibly get done, assuming you have the resources and expertise to make them work to your advantage.

■ Jack Waldeck is chair of the real estate practice section of Walter Haverfield in Cleveland. Todd Hunt is chair of the public law practice section.

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Island: Broker says market often has lacked motivated sellers continued from PAGE 13

“We went from seeing minivans and crummy island cars to Lexuses, BMWs and big SUVs. ... We even see the occasional helicopter touch down at a house.”

“We’re down to a dozen lots,” Mr. Kopf said. The firm has sold 60 properties since launching the development in 2007, ranging from $300,000 condominiums to $600,000 lakefront homes.

“Over the last five years, it has been tough to get sales anywhere,” Mr. Kopf said, but the vacationland he discovered by boat 30 years ago benefits by attracting affluent buyers from a larger area than a bedroom community.

Likewise, Rick Puzzitiello, CEO of Parkview Homes of Strongsville, looks to do more homes in his second year as one of a stable of builders at part of Bay Point Resort after selling a speculative home for $700,000 before he could finish building it. Now he hopes to build villas for upwards of $280,000.

Mr. Puzzitiello said he was attracted to the Marblehead development because it allowed Parkview to diversify in order to cope with the long downturn and Northeast Ohio’s stagnant population. Parkview also plans to build this year in Ellicottville, N.Y., a

– David Sharkey president, Progressive Urban Real Estate, on Kellys Island skiing area.

“These are affluent buyers. They are buying out of discretionary income,” Mr. Puzzitiello said.

With a position on the islands as well as the ski area, he believes Parkview has covered secondhome markets prized by sailors or skiers.

Conflicted sellers Even in good times, few would call the islands area a hot or dynamic market even though development the last 15 years has transformed parts of the Lake Erie playground.

David Sharkey, president of the Progressive Urban Real Estate of Cleveland residential brokerage who has a getaway home on Kelleys Island, describes it as a place lacking motivated sellers.

“I’ve always said it takes three years to sell anything up there,” Mr. Sharkey said. “If you have a place there, chances are you don’t have to sell it. Part of you may want to sell it and part of you will want to keep it. So things sit.”

Moreover, the market generally shuts down in the winter, especially on the islands after the ferries stop plying Lake Erie.

Like the rest of the housing market, the island area’s residential sales last year escaped the doldrums.

Tomi Johnson, a Howard Hanna broker-associate with an office in quaint downtown Marblehead, said starting last September she saw prime existing homes sell after languishing for years. She said she worries about declining inventory to the point that she is

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This speculative home at Bay Point Resort was sold for $700,000 by Parkview Homes. excited about new housing efforts by the Cleveland builders and expects them to have other new projects as company.

Even so, Mrs. Johnson said, “It’s a very specific market here: one-third year-round residents, one-third weekenders and onethird snow birds. Many who had vacation homes here are looking to buy retirement homes here.”

Invasion of the BMWs The area draws buyers from Greater Cleveland, Columbus and Toledo. Increasingly, Mrs. Johnson said, she sees buyers from Akron and Dayton.

The buyer profile also has changed.

“Thirty years ago I would sell a lakefront home for $70,000 on Johnson’s Island to a worker at Ford’s Brook Park plant who had saved his money,” Mrs. Johnson said. “Today the typical buyer is a small business owner or professional person who wants to get away from job stresses. They pay $200,000 to $1 million for a house

on Johnson’s Island.”

The same transition is apparent to Mr. Sharkey since he built a home at the end of a dirt road on Kelleys Island.

“We went from seeing minivans and crummy island cars to Lexuses, BMWs and big SUVs,” Mr. Sharkey said. “We even see the occasional helicopter touch down at a house.”

A prominent Northeast Ohio property owner with deep roots on Kelleys Island is Werner Minshall, owner of Tower at Erieview and Galleria in downtown Cleveland. He owns a restored and expanded 19th century cottage near homes of his mother and brother, Cleveland lawyer William Minshall, on 120 acres the Minshalls have owned since the 1930s.

Mr. Minshall recalls riding his bike as a boy all over the island. As an adult he prizes its unique sense of community. He sums up its virtues as being relatively “inexpensive, convenient and a place to get away with your kids so they are not on video games.”

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MARCH 18 - 24, 2013

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

17

NORTHEAST OHIO INVESTMENT BANKS LISTED ALPHABETICALLY(1)

Company Address Phone/Website

Year founded

# of local investment bankers

BellMark Partners LLC 635 W. Lakeside Ave., Suite 606, Cleveland 44113 (216) 575-1000/www.bellmarkpartners.com

2009

Boenning & Scattergood(2) 2000 Auburn Drive, Suite 200, Beachwood 44122 (216) 337-1537/www.boenninginc.com

Headquarters

Specialties

Chief investment banker(s)

Top local executive Title

10

Cleveland

Merger advisory services, restructuring, valuations and fairness opinions, strategic alternative reviews

Dave Gesmondi managing director

Dave Gesmondi managing director

1914

2

Philadelphia

NA

Charles Crowley Michael Voinovich managing directors

Charles Crowley Michael Voinovich managing directors

Brown Gibbons Lang & Co. LLC 1111 Superior Ave., Suite 900, Cleveland 44114 (216) 241-2800/www.bglco.com

1989

23

Cleveland

Merger advisory services, restructuring, capital raising, valuation

Michael E Gibbons senior managing director, principal

Michael E. Gibbons senior managing director, principal

Bruml Capital Corp.

1801 E. Ninth St., Suite 1620, Cleveland 44114 (216) 771-6660/www.brumlcapital.com

1986

3

Cleveland

Merger advisory services, sell-side and buy-side transaction advisory services, raising private capital, valuation and fairness opinions

Robert W. Bruml, president; Andrew S. Gelfand, sr. vice president; Eric W. Starr, vice president

Robert W. Bruml president

Michael F. Paparella, Glenn C. Pollack, William W. Vogelgesang, managing directors; Christopher S. Wagner, Michael J. Salgat, directors

Michael F. Paparella managing director

Candlewood Partners LLC 526 Superior Ave. East, Suite 1200, Cleveland 44114 (216) 472-6660/www.candlewoodpartners.com

2001

10

Cleveland

Domestic and international advisory services regarding mergers, acquisitions, divestitures, restructurings and capital raises

Carleton McKenna & Co. 1801 E. Ninth St., Suite 1425, Cleveland 44114 (216) 523-1962/www.carletonmckenna.com

2001

4

Cleveland

Buy-side and sell-side M&A advisory services, equity and debt capital raising, valuation and fairness opinions

Paul H. Carleton, managing partner; Christopher J. McKenna, managing director

Paul H. Carleton, managing partner; Christopher J. McKenna, managing director

CastleOak Securities LP 1707 Terminal Tower, 50 Public Square, Cleveland 44113 (216) 912-4644/www.castleoaklp.com

2006

1

New York

Sales and trading, capital markets and financial advisory services, expertise in primary and secondary market transactions

William E Matlock, Jr. managing director

Matthew Middendorf managing director

Chautauqua Consulting 8365 King Memorial Road, Kirtland Hills 44060 (440) 520-5864/www.chtaqua.com

2010

2

Kirtland Hills

M&A, restructuring and financing advisory services for manufacturing, distribution, and service businesses nationwide

Rick Sippola president

Rick Sippola president

Cohen Capital Advisors 1350 Euclid Ave., Suite 800, Cleveland 44115 (216) 774-1100/www.cohenca.com

2004

1

Cleveland

M&A advisory services - manufacturing, electrical equipment, telecommunications, metals, business services, health care, specialized consulting services

James Lisy managing director

James Lisy managing director

EdgePoint Capital Advisors 3700 Park East Drive, Beachwood 44122 (216) 831-2430/www.edgepoint.com

2000

9

Beachwood

Manufacturing, distribution, technology, chemicals, transportation, industrial products, health care

Thomas Zucker, president Dan Weinmann senior vice president

Thomas Zucker president

Evarts Capital LLC 20600 Chagrin Boulevard, Suite 495, Cleveland 44122 (216) 991-1201/www.evartscapital.com

1975

2

Merger and acquisition advisory services, sell-side and G. William Evarts Shaker Heights buy-side transaction advisory services, capital placement Todd Peter and financial restructurings managing partners

Harris Williams & Co. 1900 E. Ninth St., 20th floor, Cleveland 44114 (216) 689-2400/www.harriswilliams.com

1991

6

Richmond, Va.

Sell-side and acquisition advisory, restructuring advisory, William P. Watkins board advisory, private placements and capital markets managing director, head of advisory services business development

Holmes Hollister & Co. 1111 Superior Ave. E., Suite 1400, Cleveland 44114 (216) 937-2320/NA

2000

3

Cleveland

General industrial, transportation, specialty materials, Internet, for-profit education

John B. Hollister III Douglas Q. Holmes partners

John B. Hollister III partner

KeyBanc Capital Markets 127 Public Square, Cleveland 44114 (216) 689-3000/www.key.com/html/keybanc-capitalmarkets.html

NA

75

Cleveland

Consumer, energy, power and renewables, health care, industrial, real estate, technology and diversified industries

NA

Randy Paine, exec. vice president, head of corporate and investment banking Doug Preiser, COO

Laux & Co. 672 W. Liberty St., Medina 44256 (330) 721-0100/www.lauxco.com

1994

2

Medina

Boutique investment banking firm providing middlemarket, privately-held companies with comprehensive financial and strategic advisory services

William J. Laux president

William J. Laux president

League Park Advisors 1100 Superior Ave. East, Suite 1650, Cleveland 44114 (216) 455-9985/www.leaguepark.com

2010

11

Cleveland

Mergers and acquisitions, recapitalizations, capital raising, and outsourced corporate development

J.W. Sean Dorsey founder, CEO

J.W. Sean Dorsey, founder, CEO Brian E. Powers managing director

MelCap Partners LLC 1684 Medina Road, Suite 102, Medina 44256 (330) 239-1990/www.melcap.co

2000

4

Medina

Middle-market investment banking firm focusing on M&A advisory, private placement of debt and equity capital, and general advisory services

Albert D. Melchiorre, president Robert T. Pacholewski vice president

Albert D. Melchiorre president

Merkel & Associates Inc. 29325 Chagrin Blvd., Suite 101, Pepper Pike 44122 (216) 831-1440/www.merkelandassociates.com

1986

3

Pepper Pike

Manufacturing, distribution, business services

NA

Nicholas B. Merkel president

ParaCap Group LLC 6150 Parkland Blvd., Suite 250, Mayfield Heights 44124 (440) 869-2100/www.paracapgroup.com

2006

8

Cleveland

Insurance, real estate, financial institutions, environmental services, energy, industrial

Will Areklett, Jeff Boyle, Jason Wolfe, managing directors

Will Areklett, president Jeff Boyle managing director

Red Hawk Associates Ltd. P.O. Box 24905, Cleveland 44124 (216) 245-7879/www.redhawkassociates.com

1998

3

Pepper Pike

Mergers and acquisitions, corporate finance, restructuring and turnarounds

David Brown managing director

David Brown managing director

The SJD Group 6333 Brecksville Road, Independence 44131 (216) 224-3859/www.thesjdgroup.com

2007

2

Independence

Merger advisory services, sell-side and buy-side transaction advisory services, general industrial-type companies, manufacturing and distribution

Salvatore Alberico president

Salvatore Alberico president

Vetus Partners 1300 E. Ninth St., Suite 600, Cleveland 44114 (216) 333-1840/www.vetuspartners.com

2006

6

Cleveland

Distribution and logistics, engineered products, automation, controls and electrical products, specialty materials, corporate carve-outs and divestitures

Jay K. Greyson managing director, principal

Jay K. Greyson managing director, principal

Western Reserve Partners LLC 200 Public Square, Suite 3750, Cleveland 44114 (216) 589-0900/www.wesrespartners.com

2004

26

Cleveland

Mergers and acquisitions, capital raising, financial opinions and valuations, restructuring and bankruptcy

Ralph M. Della Ratta managing partner

Ralph M. Della Ratta managing partner

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.

(1) Numbers as of Jan. 1, 2013.

(2) Cleveland office opened in January 2013.

G. William Evarts Todd Peter managing partners William P. Watkins managing director, head of business development

RESEARCHED BY Deborah W. Hillyer

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MARCH 18 - 24, 2013

Universal Rubber is united, and under one roof Purchase of Dybrook Products Inc. has led to the addition of 36,000 square feet to manufacturing facility in Middlefield

By MIKE McNULTY Rubber & Plastics News

An acquisition made last year by Universal Rubber & Polymer Ltd. not only has boosted its capabilities and sales, but the purchase also will lead soon to an expansion at the company’s Middlefield plant.

The company plans to add about 36,000 square feet to its more than 100,000-square-foot manufacturing plant in Middlefield. After the expansion project is complete, Universal Rubber will add extrusion lines and more personnel, according to president and CEO Joe

Colebank Jr. Mr. Colebank said he hopes work on the addition will begin next month, but that depends on the weather. He has set a project completion date for the end of 2013.

Financial and other details on the expansion project have not been determined, he said. The number of employees expected to be hired wasn’t disclosed. “Business has been strong for us, especially in automotive, and we’ve seen a small improvement in the housing market,� Mr. Colebank said. “We’ve grown and will continue to grow ... but we wanted every-

thing under one roof.�

He indicated the company has other irons in the fire and is pursuing more acquisitions, but didn’t elaborate.

Universal Rubber created the need for its latest expansion in 2012 when it bought Dybrook Products Inc. to unite the two molders and extruders of rubber and plastic products. Both companies have established strengths, and together they have proved to be a great fit, Mr. Colebank said.

Universal Rubber concentrates on rubber and plastic extrusion, rubber molding, secondary opera-

tions and overseas sourcing. It makes gaskets, bushings, seals, bumpers and shock mounts using silicone, polyurethane and other elastomers.

Dybrook’s expertise is in custom molding and extruding of rubber and plastic products, including bumpers, gaskets and seals.

Dybrook’s production was moved from its 60,000-square-foot plant in Warren to the Middlefield factory, Mr. Colebank said.

The Warren plant was sold, and most of the machinery at the site was mothballed, he said. Once Universal Rubber has finished constructing the addition, new extrusion lines and the mothballed machinery will be added to the Middlefield factory.

About 42 workers made up the Dybrook work force when it was sold, and all were offered positions at Universal Rubber. Only half accepted and relocated to the Middlefield factory, according to Mr. Colebank.

Universal Rubber employed about 55 at the time of the acquisition and grew by another 20 or so employees when they transferred from the Dybrook operation. “The purchase made us a stronger company,� he said, and the company has gained new ground in the last several months. ■Mike McNulty is senior reporter at Rubber & Plastics News, a sister publication of Crain’s Cleveland Business.

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Former Dentist’s Office with Several Private Offices, 2-Private Restrooms, Reception Area, Lobby Area and Basement Storage. Shaker Square Location with Adjacent 10-Car Parking Lot. Excellent Opportunity for Continued Med/Dental Office, as well as Residential Apartments Opportunity.

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CRAIN’S CLEVELAND BUSINESS

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19

THEINSIDER

THEWEEK MARCH 11 - 17 The big story: The Cleveland Clinic’s quest to extend its reach beyond Northeast Ohio took a giant leap last week when the health care juggernaut announced it had formed a “strategic alliance” with Community Health Systems Inc. — a large, publicly traded hospital company in Franklin, Tenn., that leases or operates 135 hospitals around the country. As part of the deal, the two organizations would remain independent entities. However, by working together, the organizations say they can share clinical and operational expertise in order to improve care and reduce costs.

Count him (almost) in: With a video on a new website, Cuyahoga County Executive Ed FitzGerald announced the formation of an exploratory committee that will raise money for a possible run for governor in 2014. This makes Mr. FitzGerald the first Democrat to suggest he will seek the nomination to challenge the Republican incumbent, John Kasich, for the state’s top job next year. Others believed to be considering a run are U.S. Rep. Tim Ryan of Youngstown, former U.S. Rep. Betty Sutton and former Ohio Attorney General Richard Cordray.

Solid bond: Board members of the ClevelandCuyahoga County Port Authority approved a plan to sell $90 million in tax-exempt bonds to finance the new Cuyahoga County headquarters building on East Ninth Street and Prospect Avenue. In January, Cuyahoga County Council accepted an offer from developer Geis Cos. of Streetsboro to buy the Ameritrust complex from the county for $27 million and then construct on a portion of the property a 220,000-square-foot headquarters that the county will lease for 26 years.

The prices aren’t right: Cliffs Natural Resources Inc. said it expects to idle its Wabush Pointe Noire iron ore pellet plant in the province of Quebec by the end of the second quarter, costing 165 employees their jobs. The Clevelandbased producer of iron ore and metallurgical coal said its decision to idle the plant is due to high production costs and lower pellet pricing.

Man of Steele: Summa Health System in Akron appointed Dr. Erik Steele as its chief medical officer. Dr. Steele, who starts in his new role June 24, most recently served as chief medical officer at Eastern Maine Healthcare Systems. At Summa, he will be responsible for providing systemwide strategic direction and oversight of clinical quality, patient safety and performance improvement initiatives.

Hire ground: Northeast Ohio chief financial officers have modestly positive hiring plans for the second quarter, according to a survey from Robert Half Inc. The firm found 10% of CFOs in Cleveland/Akron/Canton surveyed reported they expect to add professional-level positions in the April-through-June period, while only 3% plan to reduce staff levels. The vast majority of respondents — 71% — said they will not add positions but will fill roles that open; 15% said they will not be hiring, even to fill an open position.

This and that: Timken Co. acquired Interlube Systems Ltd., a company based in the United Kingdom that makes automated lubrication delivery systems for commercial vehicles and construction and mining equipment. Timken did not say what it paid for Interlube, which had sales last year of $13 million and has 90 employees. … Ursuline College in Pepper Pike received a $5 million gift from an anonymous donor — the largest gift in the private college’s history.

The gift kicks off the public phase of the college’s $21 million fundraising campaign, which Ursuline hopes to complete by December. So far, the college has brought in $15 million.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

School HQ’s sellers cast a very wide net

would sit across from the new Cleveland convention center complex. — Stan Bullard

■ The highest bid for the landmark headquarters of the Cleveland Metropolitan School District may not have been a headturner, but efforts to create competition for the property were striking.

The joint marketing campaign by CBRE Group Inc. and Chartwell Group before the March 17 auction included emails to 12,000 addresses as well as ads in The Plain Dealer and The Wall Street Journal. Those efforts generated queries from 75 parties from 15 states, school CEO Eric Gordon told the school board at its March 12 work session.

Drury Hotels of St. Louis, which submitted the top bid from among at least four groups vying at the auction, attended two of four CBRE-led tours of the building and, at its request, had a more extensive private tour.

Should the board accept Drury’s offer, the schools would need to move quickly to relocate its headquarters staff. The deal could close by June 5 and Drury would get the 1930-vintage building on Aug. 1.

The superintendent said he intends to ask the board to vote on the sale at its next meeting, March 26.

Drury would pay a total of $4.8 million for the property after auction expenses. Drury seeks to transform the building at 1308 E. Sixth St. into a Drury Plaza Hotel, which

Roger Dorn hopes for an Internet hit in Akron

WHAT’S NEW

BEST OF THE BLOGS

COMPANY: Diebold Inc., North Canton

Excerpts from recent blog entries on CrainsCleveland.com.

PRODUCT: Diebold 429 automated teller machine

An artful redesign

Diebold describes the 429 as “the world’s first intelligent-powered” ATM. It’s designed specifically “to meet the increasing demand for a robust self-service terminal” in urban and rural areas of India. The 429, built with a unique intelligent power management system, automatically switches between three possible power sources — solar panel, alternating current (AC) grid and internal battery — which Diebold says maximizes terminal uptime and lowers total cost of ownership.

By using the alternative power sources, the 429 “is highly efficient, consuming approximately 40% less energy than the previous generation of cash dispensers available in the Indian market,” Diebold says. The terminal also has an integrated four-hour battery backup for enhanced reliability.

The unit also boasts security features — including Europay, MasterCard and Visa card readers, biometric technology and provision for dual security cameras — designed to help combat global card fraud and digital security threats, the company says.

For information, visit www.Diebold.com.

Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.

■ He was born in California, but actor Corbin Bernsen is a big fan of Akron.

After filming two movies in the city, the former “L.A. Law” actor has come back to launch a tech-focused, group purchasing company with help from the University of Akron.

Mr. Bernsen, who currently stars in the TV comedy “Psych” and played Roger Dorn in the first two “Major League” movies, is using Indiegogo.com to finance the launch of Powsumer Inc. Powsumer, which combines the words “power” and “consumer,” aims to create a website that would let consumers come together to buy products at a discount. For instance, someone who wants a $200 smart phone would use social media to find others who want the same phone. They would set a lower price — say, $150 — and Powsumer would send that deal to companies that sell the phone to find supplies willing to take the deal.

Why Akron? Mr. Bernsen first came to town to film “25 Hill,” about Akron’s AllAmerican Soap Box Derby, then returned last year to shoot the family comedy “3 Day Test.” In the process, he spoke at a civic event, where he mentioned the idea. He then was approached by Andrew Maas of the University of Akron Research Foundation, who became a co-founder.

■ Fast Company magazine’s design blog had much praise for the user interface design of revamped galleries at the Cleveland Museum of Art. The galleries, designed by New Yorkbased Local Projects, feature cutting-edge interactivity, according to the Fast Company post, but the technology itself isn’t the point.

“We didn’t want to create a tech ghetto,” said David Franklin, the museum’s director.

Local Projects founder Jake Barton added, “We wanted to make the tech predicated Franklin on the art itself.”

Fast Company said the museum’s revamp of its galleries “bears a number of lessons that are broadly useful.” Among them: “shaping the content to the medium,” “finding a way for users to make narratives” and “lightweight interactions = fun interactions.”

The post concluded, “In the end, the exhibits that Local Projects have created for the Cleveland Museum of Art work because they’re a kind of Trojan Horse. They’re designed to elicit a certain amount of geewhiz amazement. But they contain nuggets of real curatorial insight that go down easy simply because they’re fun.”

Mr. Barton noted, helpfully, “Nothing ages worse than the newest latest gizmo.

The tech experiences that last always tell a deep story or let people tell a story.”

Attention, bargain hunters ■ Shoppers willing to buy homes in foreclo-

“Akron is at the heart of America. And that’s how we’re going to grow Powsumer — from the heartland out,” Mr. Bernsen said in a video linked on the company’s Indiegogo page.

Powsumer aims to raise $100,000 on Indiegogo, a “crowdfunding” site that allows people to contribute money to various projects in return for perks — which in this case includes a chance to meet Mr. Bernsen.

After two days, the campaign as of 2 p.m.

Friday had raised about $900 with 47 days to go. — Chuck Soder

‘Summit’ may not describe this event ■ With its proximity to the shale gas boom and its history in manufacturing, Cleveland was a natural location for last week’s national conference on reshoring — the movement of jobs and production back to the United States from overseas.

But while promoters of the Reshoring Summit said they were pleased overall, attendance was low. Just about 50 people attended on Wednesday, the summit’s first day, and fewer came back for day two, said Kathleen Breedyk, an event designer with Infocast, which creates and hosts events.

Ms. Breedyk said the company wasn’t discouraged by the turnout, though, noting that the event was expected to be small because it was the first of its kind.

Ms. Breedyk said in hindsight, she would have liked to move some speakers from the second day to the first, when attendance was higher. The event’s second day focused on reshoring initiatives at a statewide level.

— Rachel Abbey McCafferty

sure will find great deals in Cleveland.

“Nationwide, the average discount on homes sold in a foreclosure was 39% below conventional sale prices during the fourth quarter, while prices on homes sold in a short sale averaged 23% below market, according to RealtyTrac, the online marketer of foreclosed properties,” CNNMoney.com reported.

Cleveland was the hottest market among those looking to buy foreclosed homes during the last three months of 2012, with sales of bank-owned homes soaring 141% year-over-year, according to the story. The average foreclosed home here sold for $57,782, a 56% discount to non-distressed properties in the market.

The straightest of straight shooters ■ Northeast Ohio seems to be something of a hotbed when it comes to ethical behavior in business practices.

The Ethisphere Institute since 2007 has produced an annual list of companies around the world that “truly go beyond making statements about doing business ‘ethically’ and translate those words into action.” This year’s list has a record 145 companies, and five of them are based in Northeast Ohio.

Making the cut were the Cleveland Clinic, Eaton Corp., Progressive Corp., SherwinWilliams Co. and Timken Co. The institute said the winning companies “not only promote ethical business standards and practices internally, they exceed legal compliance minimums and shape future industry standards by introducing best practices today.”

It evaluates companies based on five categories: ethics and compliance programs; reputation, leadership and innovation; governance; corporate citizenship and responsibility; and culture of ethics.

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Welcome to the next three levels of customer service.

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THE TRADITION CONTINUES FRIDAY, MAY 10, 2013 5:30–7:30 P.M. Radiance, a business casual, cocktail / hors d’oeuvres reception with a short program, is Cleveland State University's signature event in support of student scholarships.

· STUDENT CENTER Business executive Trevor Jones and photographer Jennie Jones will be honored with the President's Medal for their exceptional service to CSU and their civic leadership.

For information on sponsorships and tickets, call 216.523.7207 or visit www.csuohio.edu/radiance.