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Material costs jump, vex weary contractors

(TWO) DOLLARS AND SENSE Again for a buck, former Nat City CEO Peter Raskind tries to rescue a Cleveland institution

As area construction stirs, spike in staple prices forces tough decisions

By MICHELLE PARK mpark@crain.com

I

t’s curious that, early in this interview, Peter Raskind says talented people are attracted to stable situations. When asked to address why, then, he’s doing what he’s doing — leading the Cleveland city schools — he grins. You caught me, he replies. “It’s not that I’m some sort of adrenaline junkie,” he remarks. EDITORIAL: “I’m far from it, actually.” Mr. Raskind Mr. Raskind, who was CEO of and Cleveland National City Corp. in the final school offimonths before it disappeared cials have no from Cleveland’s landscape, choice but to now has twice become interim make difficult head of organizations in difficuts. Page 10 cult straits. His salary in each case: $1. His goal with both bodies: to leave them more stable for the talent that follows. He worked first beginning in late 2009 for the then-beleaguered Cleveland-Cuyahoga County Port Authority. Now, he’s striving to close by June 30 a $47.5 million budget shortfall for the 2011-2012 school year at the Cleveland Metropolitan School District as its interim CEO. Mr. Raskind, 54, hadn’t set out to do any of this. For a time, he was just tired. See RASKIND Page 4

INSIDE On the right trak

13

Calling 2010 a “stability year,” Datatrak International Inc. CEO Laurence Birch (pictured) sees 2011 as an opportunity to rebound even further from a disastrous 2009 when the software company lost $1.9 million. The company’s profit last year was its first since 2005. Read Chuck Soder’s story on Page 5.

By STAN BULLARD sbullard@crain.com

MARC GOLUB

Peter Raskind in January was named the interim CEO of the Cleveland Metropolitan School District and must close a $47.5 million gap in the district’s budget.

Last week, the price for a five-pound box of sinkers — coated nails used in wall-frame construction — shot up to $8.50 from $7.50 at Cleveland Lumber Co. Vince Valentino, who owns the West Side building goods supplier, said previous 2% or 3% hikes in the price his supplier charged Cleveland Lumber for the nails weren’t worth changing the signs at his place for his own customers. But he couldn’t swallow in its entirety a INSIDE: A sample recent 20%, across-the-board of prices for conspike in nail prices — hence, his struction materials own 13% price increase. products that are at “That’s the profit margin,” the whim of global Mr. Valentino said. demand. Page 9 Rapidly rising costs of building materials such as copper and steel pose a new problem for a construction industry already bedeviled by its worst slowdown in 50 years. Materials linked to the global commodity markets spiked astronomically over the last few years even as U.S. construction was at a virtual standstill. Now, with the real estate market starting to revive, even higher material costs are whacking the bottom lines of contractors who already were slashing their margins to win work — a situation that could drive more contractors out of business. See COSTS Page 9

Crowne Plaza sale talks awaken prior tunnel plans Bidders eye connection to convention center By STAN BULLARD sbullard@crain.com

A potential sale of the Crowne Plaza City Centre in downtown Cleveland has revived talk of building a tunnel beneath East Sixth Street that would connect the property at 777 St. Clair Ave. to the Cleveland Medical Mart and Convention Center under construction at the old convention center site.

Talk of such a weather-shielding connection is not new. The idea has been bandied about since the hotel was proposed in the early 1970s, discussed again in a joint venture with the city of Cleveland in the mid-1980s and yet again when Lane Hotels of St. Louis bought the property in 1989 from the original developer, the late John Carney. Dave Johnson, public relations director for the medical mart and

convention center, said he has received calls from as many as five prospective bidders for the property over the last six months about the possibility of connecting the hotel to the rebuilt convention center. He said he is not aware of specific talks between the mart, Cuyahoga County officials and a successful bidder for the property. The nearly 500-room hotel clearly is in play. A web site of Atlanta-based TriMont Real Estate Advisors, at www .TriMontrea.com, lists the property See SALE Page 21

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EVENT PLANNING The green movement is hitting the events industry, albeit slowly ■ Page 13 PLUS: VENDORS EYE MED MART ■ JUMP BACK BALL ■ & MORE

Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 13


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CRAIN’S CLEVELAND BUSINESS

COMING NEXT WEEK Family Business: Crain’s profiles nine companies that have kept it in the family.

CORRECTIONS ■ The caption in the photograph on Page One of the March 14 issue incorrectly identifies the piece of construction equipment in the photo. It is a backhoe. ■ A March 21, Page One story on business reaction to Gov. John Kasich’s budget incorrectly attributes certain quotes to a Mr. Clark. The person quoted is J. Clarke Price, president and CEO of the Ohio Society of Certified Public Accountants.

WWW.CRAINSCLEVELAND.COM

STILL WAITING FOR THE RECOVERY Home sales statewide in February fell more than 5% from the like month of 2010, and the tumble was considerably steeper — 13.5% — in Northeast Ohio, according to data from the Ohio Association of Realtors. In a 17-county area known as the Northeast Ohio Real Estate Exchange, or NEOHREX, there were 1,615 homes sold in February, down 13.5% from 1,868 sales in February 2010. By contrast, sales in Cincinnati and Dayton were up 1.9% and 6%, respectively, while Columbus and Toledo were down only 4.2% and 3.4%, respectively. Here’s how the numbers looked last month, and at bottom right, for January and February: Number of units sold

Average sale price

Feb. ’11 Feb. ’10 change 1,615

1,868

-13.5%

NEOHREX

$108,650

$110,122

-1.3%

Statewide

5,524

5,839

-5.4

Statewide

118,037

119,994

-1.6

Dollar volume

List: Commercial real estate brokerages ..20 Personal View ..10

Feb. ’11 Feb. ’10 change

NEOHREX

REGULAR FEATURES Classified..........22 Editorial............10 Going Places ....13 Letters..............12

MARCH 28 - APRIL 3, 2011

Number of units sold — Jan.-Feb.

Feb. ’11 Feb. ’10 change

2011

2010

change

NEOHREX

$175.5M

$205.7M

-14.7%

NEOHREX

3,206

3,573

-10.3%

Statewide

652.0

700.6

-6.9

Statewide

10,854

11,147

-2.6

weatherhead

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OUR LETTERS CARRY THE STRENGTH OF NUMBERS

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Kasich set to channel JobsOhio mission By JAY MILLER jmiller@crain.com

Economic development body designed to court, aid startups

The bill Gov. John Kasich signed into law to create the independent, economic development body known as JobsOhio could make Ohio a more attractive place to do business by providing companies with a fuller plate of financing options than has been legally available under the Ohio Department of

Development. Those new options could range from direct equity investments in companies to investments in buildings that would provide leased space to new or expanded businesses. JobsOhio investments also could return a profit — or suffer a loss.

JobsOhio will be run by a nineperson board led by the governor, and the board will appoint a chief investment officer who will hire a staff and negotiate investment and incentive deals. The administration intends to channel profits from the state-run liquor distribution business to fund JobsOhio’s investment program. Mark Kvamme, recently named

JobsOhio will help fill a gap in the financing options available to young compaOhio’s director of job crenies because of a lack of ination, helped Gov. Kasich vestment capital flowing to set up JobsOhio. He had Ohio. been a partner in Mr. Kvamme believes Sequoia Capital, a Menlo Ohio has had a critical Park, Calif., venture capital Kvamme shortage of venture capital. firm that was an early in“Access to capital is very vestor in Google. difficult” for young Ohio companies, In a telephone interview, Mr. Mr. Kvamme said. “There was not Kvamme said he’s “still working that much money available.” through all the details,” but he hopes See JOBS Page 22

INSIGHT

Highland Hills IT firm has its nerve, but in a good way NDI morphs into incubator, VC fund By CHUCK SODER csoder@crain.com

KAREN SCHIELY/AKRON BEACON JOURNAL

Tom Ganley, left, greets a constituent last year during his campaign for Ohio’s 13th District congressional seat. Mr. Ganley, CEO of Ganley Auto, has been accused of sexual misconduct and will be arraigned this Tuesday, March 29, on criminal charges.

Turning a $200,000 investment into $42 million wasn’t enough for NDI Medical LLC. Since 2008, when NDI sold its first spinout company to Medtronic Inc. for more than 200 times its initial investment, the neurological device developer in Highland Hills has made several moves that illustrate the company’s bigger goal: To become a vehicle for creating startups, helping them grow and, of course, making more money. To finance the effort, the company and its spinouts over the past three Thrope years have raised $15 million in equity and $7 million in grants, said NDI’s CEO, Geoff Thrope. Some of that equity came from Mr. Thrope and several other early investors in the company. They had a few extra dollars on hand after Medtronic bought NDI’s See NDI Page 14

THE WEEK IN QUOTES

GANLEY’S BUSINESS FACES TEST Crisis communications experts say embattled car dealer owner should remain transparent to protect company’s image By MICHELLE PARK mpark@crain.com

K

en Ganley found out his father — the CEO of their family business — was in legal jeopardy when one of the attorneys representing his dad called. It was March 15, and a Cuyahoga County grand jury had indicted car dealer Tom Ganley on seven counts, including one of kidnapping and three of gross sexual imposition. The action came several months after a woman filed in county court a lawsuit accusing Tom Ganley of sexual misconduct. Ken’s immediate thought, he said, was not about the indictment’s

impact on the dealership chain that bears his family name. “I was more concerned that it’s my dad,” said Ken, vice president of Ganley Auto Group. However, Tom Ganley himself has articulated concern about the effect of his indictment on the family business, according to Brent Buckley, one of Tom Ganley’s attorneys and managing partner of Buckley King in Cleveland. His fears are far from irrational: Scandal involving a key executive can attach a stigma to a company, particularly when the person’s name is on the front door. There’s the potential for lost business and distracted and disconcerted employees. See GANLEY Page 21

“We’re told prices are fluctuating because of global demand for steel. You can’t say it’s demand from around here, that’s for sure.” — Philip Melinz, president of Melinz Rebar Inc. Page One

“It’s ... amazing that people complain that there isn’t much to do in Cleveland. Are they serious?” — From a Letter to the Editor. Page 12

“I am of the belief the economy has been a stumbling block for (green meetings).” — Nick Borelli, director of marketing for Executive Caterers Inc. Page 15

“The business is definitely picking up in Cleveland and will continue to pick up with the new assets that we’re getting.” — Dan Williams, vice president of sales for Positively Cleveland, the city’s convention and visitor bureau. Page 19


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Raskind: Presence felt already continued from PAGE 1

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After several years with National City, he became CEO in July 2007, a week, he said, before the subprime mortgage crisis landed the bank in trouble. Between then and late 2008, it was a “dead non-stop sprint� to salvage it. Ultimately, after a night of no sleep and negotiating, in the auditorium of the National City building where hundreds had gathered and presumably thousands dialed in to listen, Mr. Raskind notified company employees that their bank would be acquired by PNC Financial Services Group Inc. The historic company would fade from existence. “I remember it perfectly,� Mr. Raskind said. “It may have been 15 minutes. It felt like hours. “It was incredibly disappointing,� he continued. “I didn’t feel I could do any better, but I didn’t know if I had done enough.� A week after the merger announcement, Mr. Raskind announced he would leave. The position offered to him wasn’t particularly meaningful, he said, nor particularly enticing. He separated from the company Dec. 31, 2008, the day of the merger. He took a breather to become reacquainted with his wife, and to spend more time with his daughter, who was still at home. (Mr. Raskind and his wife, Julie Adler Raskind, live in Shaker Heights. Their two children now are college-age.) This, he recalled, was “an opportunity for me to stop and think and reassess.� Months later, the phone rang, and Robert C. Smith, then a board member of the port authority and now its chairman, was on the other end of the line.

No sugarcoating Mr. Raskind had spent more than 29 years in banking. The port authority interim CEO position that

Mr. Smith called to discuss seemed an interesting opportunity with a finite beginning and end. The authority, which was struggling to balance its budget and faced criticism for how well it compensated the former CEO, Adam Wasserman, who had resigned abruptly, made Mr. Raskind an offer. He countered with a dollar. From the perspective of Cleveland Mayor Frank Jackson, Mr. Raskind restored stability and credibility to the port authority. He started in December 2009 and immediately set about identifying what the maritime agency’s priorities needed to be, Mr. Smith said; the expensive proposed relocation of the Port of Cleveland was not one of them. He also told the board when he needed its judgment and perspectives and when he didn’t, Mr. Smith said — something the board continues to benefit from to this day. That Mr. Raskind had confronted great adversity at National City, which was in danger of going under because of billions of dollars of subprime mortgage and home equity loans that had gone sour, made him all the more attractive, Mr. Smith said. “Others could have lost it all,� Mr. Smith said. “He kept his wits about him. People learn most in their career from those really challenging situations. They’ve been through the fire, and they’re tested.� Mr. Raskind acknowledges that some people might say he performed all right while National City faltered. Others might say “crummy.� “What I know is I learned a ton that is transferrable to other challenging situations,� he said. Communicating without sugarcoating is key, as is keeping a level head, he said. Mr. Smith estimates he must have asked Mr. Raskind six times if he was sure he didn’t want to make the port authority job a career change. But the answer was no, and after about six months there, Mr. Raskind moved on.

This will get ‘unpleasant’

Real Estate/Construction John Funk,

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It’s 4 p.m. last Tuesday, March 22, the day of a Cleveland school board meeting during which Mr. Raskind will present before the public recommendations he and other administrators have drafted for eliminating the district’s budget shortfall. He’s feeling a little stressed, frankly. He doesn’t tend to get nervous. “This is difficult news in a very public setting,� he said. “I’m worried about it. I want it to go as well as something like this can go.� The next day, the recommendations are splashed all over the news: $74

million in cuts, seven school closures, 835 layoffs over the next two years. That, he said, has been his most stressful experience to date with the district, where he started as interim CEO Feb. 1. “Not confronting reality doesn’t help anyone; it just defers probably a more difficult confrontation with reality,� he said last Friday. “The situation has to be dealt with.� Louise P. Dempsey, the school board vice chair, watched Mr. Raskind perform well under pressure. She, Mayor Jackson and school board chair Denise W. Link, who worked for National City and continued on with PNC, were involved early in Mr. Raskind’s hiring. Ms. Dempsey said she already sees Mr. Raskind’s impact already, in improved communication. He has chosen to respond to questions posed by the public during meetings unlike some past administrations. In coming weeks, the budgetary recommendations may be tuned and tweaked. After a board vote, which could take place in early April, Mr. Raskind’s work will center on implementation — “much of which will be unpleasant,� he acknowledged. By the time he leaves the district, which he anticipates in June, he wants it on a more sustainable financial course and functioning better.

Community spirit Mr. Raskind actually hasn’t seen his collective $2 (“I know, I’ve been stiffed,â€? he quips). Though, to be fair, the port authority gave him a plaque with a dollar bill embedded in it. That hangs in his home office. He is careful in explaining why he’s working for free. He doesn’t want to sound “too syrupy.â€? “I really am drawn to sit where I feel like I can make a difference, where I can make a difference that’s visible,â€? Mr. Raskind said. He’d worked for three decades and hadn’t lived “particularly extravagantly,â€? he says, and so is in a position to contribute. “One of the advantages of being paid a dollar is it takes that (the compensation issue) off the table,â€? he said. “At least no one can say, ‘Oh sure, you’re pulling down some big salary doing this.’â€? The work Mr. Raskind has taken on requires difficult conversations and unpopular decisions. That he has done it voluntarily “speaks volumesâ€? about the man, Mr. Smith said. “Everybody wants to talk about what the city ought to do, what the school district ought to do,â€? he said. “But to be in a position where he can roll up his sleeves and say, ‘Let me help you,’ ‌ that’s a great example for others who could provide comparable leadership and management in the public sector.â€? â– 

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Mayfield Hts.-based software maker endures its own trial After rocky period, Datatrak stabilizes, plans steady growth By CHUCK SODER csoder@crain.com

A software company based in Mayfield Heights that almost collapsed two years ago has figured out how to make money again. Now it just has to make more. Datatrak International Inc. announced last week that it turned a profit in 2010, its first profitable year since 2005. Granted, the publicly traded maker of software for managing clinical trials didn’t make a whole lot: just $101,109, or 1 cent a share. Still, it represents a big turnaround for a company that lost $1.9 million in 2009, said CEO Laurence Birch. In previous years, Datatrak on multiple occasions lost more than a million dollars in a single quarter. Not only did Datatrak turn a profit in 2010, but it made money in all four quarters, and its backlog of contracts in hand grew to $11.2 million as of Dec. 31, up 18% from $9.5 million at the end of 2009. Datatrak now knows “what levers to pull or push to maintain a profitable business,” Mr. Birch said. Now it’s time to go back to growing the company, he said. “2009 was a restructuring year. 2010 was a stability year. 2011 is going to be about responsible growth,” Mr. Birch said. Datatrak today has 53 employees, including 19 in Mayfield Heights. The company’s staff should grow this year as it expands its sales, marketing and product development efforts as well as a new division called Datatrak Consulting and Clinical Services, Mr. Birch said. The company is in the process of looking for an office in the Raleigh, N.C., region that already is home to six employees who work for the consulting division; that division is helping a handful of clients use Datatrak’s software and manage and analyze data from their clinical trials. The company also has 17 people at an office in Bryan, Texas, and another 11 in outside sales. Datatrak would use profits to finance the expansion, Mr. Birch said. He doesn’t want to sell more shares on the open market because he believes Datatrak’s shares are undervalued. The company’s shares were selling for 84 cents on the Pink Sheets Electronic Markets at the close of business last Wednesday, March 23.

Back from the brink The price still is too low for Datatrak to get back on the Nasdaq Stock Market, which delisted the company in mid-2009 after the amount of stockholders’ equity in the company

Volume 32, Number 13 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

dropped below $2.5 million. But since Datatrak was delisted, the stock has more than doubled in value. The company has been through a lot. At the start of 2007, its stock was valued at $5.06 a share and it had 117 employees — more than twice as many people as it employs today. The company narrowly avoided filing for bankruptcy, Mr. Birch said. In December 2008, two months before a deadline, Datatrak reached an agreement that allowed it to avoid paying off $3 million in promissory notes to some former shareholders of ClickFind Inc., a Bryan, Texas-based software company it acquired in February 2006. Datatrak didn’t have the cash to make that payment.

In January 2009, Mr. Birch replaced Jeffrey Green as Datatrak’s CEO. Since then he has revamped the company’s sales strategy, putting more focus on selling its software through contract research organizations that run clinical trials for pharmaceutical companies and other medical product developers. That approach — which Datatrak competitors have been using for years — is producing early results, Mr. Birch said. The company also now allows customers to sign contracts for multiple trials at once, he said. Datatrak faces larger competitors, but Mr. Birch said he believes it has an advantage because its software is a “unified” system built to manage several aspects of a clinical

trial. Some competitors sell systems with fewer capabilities, while others have had to acquire multiple companies and then program their technologies to work together.

Patent protection Mr. Birch aims to keep that advantage: In a patent infringement lawsuit filed March 4 in the U.S. District Court in Cleveland, Datatrak accused Medidata Solutions Inc. of New York of building a similar system. Mr. Birch said Datatrak owns a patent that should prevent Medidata from unifying data from multiple databases. The filing is “the first step” in Datatrak’s plan to protect its intellectual property, Mr. Birch said,

adding the company plans to review what competitors are doing. It’s important for Datatrak to protect its patent because its software gives it an advantage over competitors, said Ken Nagy, senior technology analyst for Zacks Equity Research’s Boston office. That advantage should grow over time, Mr. Nagy said, adding that he expects new laws and regulations to make clinical trials more complex. Though 2010 was not a year of “crazy top-line growth,” Mr. Nagy said, Datatrak is making money and winning clients. He expects the company’s stock price to hit $3 a share within 12 months. “Explosive growth will come,” he said. ■

Delivering results. Raising over $24 billion in equity capital markets transactions. March 2011

March 2011

March 2011

January 2011

$72.8 Million

$2.1 Billion

$221.9 Million

$123.0 Million

Common Stock Follow-On Offering

Common Stock Follow-On Offering and Convertible Preferred Offering

Common Stock Follow-On Offering

Common Stock Follow-On Offering

Co-Manager

Co-Lead Manager

Joint Bookrunner

Joint Bookrunner

December 2010

December 2010

October 2010

September 2010

$110.0 Million

$158.1 Million

$202.4 Million

$243.8 Million

Common Stock Follow-On Offering

Common Stock Follow-On Offering

Common Stock Initial Public Offering

Common Stock Follow-On Offering

Co-Manager

Joint Bookrunner

Co-Manager

Co-Manager

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Kasich’s courseload push riles profs Budget mostly spared colleges, but officials worry extra classes could hurt research By TIMOTHY MAGAW tmagaw@crain.com

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Gov. John Kasich is proposing that faculty at Ohio’s public colleges and universities take on heavier course loads, which isn’t scoring points with many professors, who already are soured by his push to diminish the role collective bargaining plays in public employee contracts. Though universities’ coffers weren’t walloped in the governor’s budget proposal, the Kasich administration this month suggested that full-time faculty take on an extra course every other year and that the universities develop undergraduate programs students can complete in three years. Some professors say forcing them to teach an additional class could cut into research productivity, and the idea of the state dictating course loads might go against the governor’s core philosophy of freeing them from burdensome regulations. The governor’s push comes as many of the region’s universities are imploring faculty to bring in more research dollars. Kent State, for one, brought in about $36 million in research money last year, but its president, Lester Lefton, would like to see that number increase to as much as $100 million. Kara Robinson, president of the tenure-track unit of Kent State’s faculty union and a professor, said Dr. Lefton’s expectations and the

governor’s notion that instructors should teach more could present challenges. “It’s a balancing act that gets very tricky,” Ms. Robinson said. “Research doesn’t start and stop. Research is ongoing.” Connie Wehrkamp, a spokeswoman for Gov. Kasich, said in an email that the governor intended to lift some of the regulations that have hindered university operations in the past, but at the same time, it was reasonable for the state to set expectations to benefit students. “By giving students the option to finish school in three years and ensuring they have greater access to their professors, we are setting these expectations with the students in mind while giving the universities the ability to meet these expectations in the most efficient manner possible,” Ms. Wehrkamp wrote.

Yin yang issue Kent State provost Robert Frank said a faculty member’s required research and course portfolio varies widely across disciplines. Given the university’s recent push for more research dollars, Dr. Frank said the governor should understand the many roles of a university, which include both teaching students and generating research that can spur new businesses. “It’s hard to know (how it will affect us) until we see how language comes out,” Dr. Frank said. “I think it’s important he knows that universities are economic engines through more than one mechanism.” A Cleveland State University spokesman noted the school would need to study the governor’s full proposal before indicating how it might impact operations. However, Jeff Karem, president of Cleveland State’s faculty union and an English professor, said he was concerned the governor doesn’t know how universities operate. “Simply viewing the faculty course load as the only work we do can be a mistake,” Dr. Karem said. Some academics also suggest it’s troubling that an official in Columbus wants to dictate how much a professor should teach. Those decisions should be left to the individual colleges, according to Walter Hixson, president of the University of Akron’s

“I think it’s important that (Gov. Kasich) knows that universities are economic engines through more than one mechanism.” – Robert Frank, provost, Kent State University faculty union and a history professor. “The governor is meddling in things in which he lacks expertise,” Dr. Hixson said. “Any changes in the curriculum and teaching load have to be dealt with on a discipline-by-discipline basis.”

Accelerating a degree During the gubernatorial campaign, Gov. Kasich said few college students graduate within four years, but now he’s pushing for universities to provide high-achieving students the opportunity to graduate within three years. Some college officials and faculty say that goal could be difficult to achieve, considering it would take more faculty to teach additional courses. Also, students might find it hard to work extra jobs to finance their education during such an intensive academic program. “I don’t understand what the goal is there,” Cleveland State’s Dr. Karem said. “I can’t imagine (the accelerated degree) improving the quality of the educational experience, and there doesn’t appear to be any clamoring on the part of students to cram more courses into a shorter period of time.” However, the University of Akron already has taken strides to develop three-year programs, said Chand Midha, the university’s associate provost and dean of the College of Arts and Science. Dr. Midha said the college is looking at develop threeyear degree programs for psychology, English, public policy, criminal justice and political science. The university is modeling the three-year programs after a twoyear program in place for pre-med majors who earn their undergraduate degree in two years before starting medical school, Dr. Midha said. “If a student can do it two years, why can’t they do it in three years?” he said. ■


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Penske shifts into high gear Mich. group plans $10M in local upgrades By DAN SHINGLER dshingler@crain.com

Whoever said Northeast Ohio was down and out must not be in the luxury car business, where more dollars continue to flow into the area from dealers who hope to increase their local sales of high-end autos. Penske Automotive Group is the latest to disclose that it’s pouring money into its operations here. The Michigan-based dealership group — which describes itself as the largest publicly traded auto retailer in the world — will pump up to $10 million into three Cleveland-area

dealerships this year, said Penske senior vice president Anthony Pordon. “Capital expenditure numbers can change over time, but I’d expect we’ll be somewhere between $5 million and $10 million in terms of investing in these facilities and in that marketplace this year,” he said. That money will be used to revitalize and expand Penske’s Porsche/ Audi dealerships here. It bought Stoddard Porsche/Audi in Willoughby in February, after purchasing Fred Baker Porsche/Audi in Bedford last September. Penske plans to remodel the Willoughby dealership and to move the Bedford Audi dealer into a

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former Honda dealership nearby, which Penske already owns. That, too, will undergo an extensive remodeling, Mr. Pordon said. Penske will consolidate the two Porsche dealers into a single location at a former Chrysler dealership on Chagrin Boulevard in Beachwood. The planned capital expenditures do not include the purchase price for the two active dealerships or the third, now-closed location, Mr. Pordon said. When it’s all said and done, Penske probably will increase the number of employees at the dealerships — currently at just more than 300 workers — by about 10%, Mr. Pordon said. The Audi dealers will focus exclusively on that brand, which is among the fastest growing in the United States, according to Mr. Pordon. Meanwhile, Mr. Pordon said, the Porsche dealership should be a perfect fit in Beachwood, where it will be surrounded by some of the Cleveland area’s ritziest suburbs. “That’s the intent — to have the dealership in a demographic area that’s commensurate with the brand and where we can be in a highertraffic area and later invest further in the brand itself,” Mr. Pordon said. Yes, $10 million is a lot of money to remodel three buildings. But that’s what it takes to sell high-end luxury vehicles these days and to meet the expectations not only of buyers, but also the car makers, say Mr. Pordon and others in the industry. “The automakers demand it,” said Bernie Moreno, himself a local dealer of luxury automobiles, such as Lexus and Mercedes. Mr. Moreno said over the last three years he has spent about $20 million buying and remodeling seven Northeast Ohio dealerships that sell 11 brands of cars. Why spend all this money in the Cleveland area? Because Cleveland is a growing market, said Messrs. Moreno and Pordon. “For car sales, Northeast Ohio is way up,” Mr. Moreno said. “Year to date, we’re up about 40% (in sales), while the nation is only up about 20%, so we’re doing well.” Penske, too, has significant holdings here, Mr. Pordon said. It already operates six other dealerships in the market in addition to the three it’s now remodeling. That concentration of ownership allows Penske to capitalize on its scale when it buys advertising, does other marketing or buys services that can be shared among the dealerships, Mr. Pordon said. Penske founder Roger Penske is originally from Cleveland, so he has a fondness for the region and a belief in its resilience, Mr. Pordon said. But scale and experience in the market were the keys driving the latest deals. “We might not go in and buy those stores if we didn’t already have a store and some expertise in the marketplace,” Mr. Pordon said. Buyers such as Penske and Mr. Moreno aggressively are buying dealerships these days, in part because there are many sellers looking to get out of the business — especially older dealers who do not want to take on significant new debt to update their dealerships to the automakers’ standards and who don’t have children taking over the business. “There’s a desire by the OEMs to make sure that the dealerships represent the brand image properly, and that requires capital,” Mr. Pordon said. “Quite frankly, many of the mom and pops don’t have access to the capital or a line of credit or don’t want to go through the process.” ■


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WWW.CRAINSCLEVELAND.COM

GOING NATIONAL Prices for construction materials that are subject to global market demand have risen greatly.

Material

Past month

Past 12 months

Diesel fuel

7%

40%

Copper, brass items

4.5

20

Steel products

4.7

13

Meanwhile, prices for locally sourced products used only in the United States mostly have declined:

Material

Past month

Past 12 months

Asphalt paving mixtures

0.9%

2.2%

Brick and clay tile

-0.4

-1.9

Gypsum (drywall)

-0.7

-0.6

Concrete products

-0.3

-0.5

SOURCE: ASSOCIATED GENERAL CONTRACTORS OF AMERICA

Costs: Contractors will suffer continued from PAGE 1

Moreover, contractors speculate the myriad items that go into buildings may push up project costs as much as 10%, which may make new projects harder to finance and could discourage some from proceeding. For contractors who make their living in the risky business of estimating what jobs will cost and then delivering them for that figure or offering a good case why they can’t, the price hikes are a big deal. “They’re going off the ceilings,” Adelbert “Chip” Marous, CEO of Marous Brothers Construction Co. in Willoughby, said of building material costs. “We’re seeing things go up 15% to 20% in a week, such as metal studs or petroleum products. We’ve been being warned for three years prices would go up; now, in the last three months, we’re seeing prices jump.” Consider the simple reinforced steel bar — called rebar in the building business — found throughout construction jobs, particularly in concrete forms. Philip Melinz, president of Melinz Rebar Inc. in Cleveland, said current prices shock customers. Such steel bars that cost $1,000 a ton now were $850 a year ago. “We’re told prices are fluctuating because of global demand for steel,” Mr. Melinz said. “You can’t say it’s demand from around here, that’s for sure.” He and others say they hope prices fall later in the year, just as they have in the past few years.

Hot commodities Figures from The Associated General Contractors of America trade group in Arlington, Va., show the producer price index for products in the construction industries rose 1.1% in February and 6% over the last year. Commodities with the most profound effect on construction prices include diesel fuel, up 7% for February over January and 40% over a year ago; copper and brass items, which climbed 4.5% in February and 20% from a year ago; and steel mill products, which were up 4.7% in February and 13% from a year ago. The weak construction market may moderate the impact of material cost increases on the overall price customers pay for projects, though it will cut contractors where it hurts. That’s because weak markets force more contractors to try to absorb price hikes as they sacrifice margins to win work. ���This will cause contractors to sacrifice margins and put more of them out of business,” Ken Simonson, the economist for the contractors’

group, said. Statistics support him: Bureau of Labor Statistics figures show little change in prices of finished buildings in February over the prior month and a year ago — which includes labor, overhead and profits. The impact of higher raw material costs can show up in ways that aren’t obvious. For example, Mr. Simonson noted that price hikes for fuel wreak havoc on construction at many levels, not only on the job site when running construction equipment, but also at the outset of the supply chain as extracting materials such as copper and stone requires gas-voracious heavy equipment.

‘Hanging on by a thread’ Mr. Marous agrees on what rising material prices mean for the industry short-term. “A lot of guys are hanging on by a thread,” Mr. Marous said. “They are going after work they should not be going after and cut (their job bids) too close. It’s good to have a cleansing, but we’re seeing guys we’ve known in the business for 25 years go out of business now.” Mr. Marous said his family-owned firm is quoting prices to prospective clients on a 60-day basis and locking in prices from suppliers as soon as it can. Typically in the industry, suppliers must hold to the prices they quote contractors and subcontractors for the duration of a job. Bob Strickland, president and CEO of Project and Construction Services Inc. in Cleveland, which does business as PCS, said the rising prices make it hard for would-be owners to plan projects, but the situation is familiar. He likens it to the types of price increases he saw due to oil price hikes in 2004 and 2005 — a time when a go-go housing market and low interest rates made the building business surge. Mac Donley, CEO of Donley’s Inc., a general contracting and concrete subcontracting firm in Valley View, said rising material prices will start to diminish the two-year buyer’s market for construction work because they’ll force builders to start raising prices despite the generally soft market. The level at which cumulative material price increases will quell new projects is an open question, especially in a market with scarce activity outside the region’s handful of megaprojects. Dominic Ozanne, CEO of Ozanne Construction Inc. in Cleveland, said on future projects contractors will pass along rising steel and fuel prices because at some point all will be forced to do so. “If construction costs get too high, people won’t do it,” he said. ■

CRAIN’S CLEVELAND BUSINESS

9

Data security firm CEO big on new space SecureState triples its Bedford Heights HQ on sales, employee growth By CHUCK SODER csoder@crain.com

SecureState LLC’s headquarters is now way bigger and, in the eyes of CEO Ken Stasiak, way cooler. The information security consulting firm just finished making $2 million in upgrades to the Bedford Heights facility, which Mr. Stasiak bought in June 2010. The move more than tripled the size of SecureState’s offices. The company — which uses computer hacking techniques and other tactics to help businesses and other organizations find and fix flaws in their security systems — now fills the entire 19,000-square-foot building at 23340 Miles Road, whereas it formerly used just 5,500 square feet. The space gives the company room for future growth. Today it employs more than 50 people, up from 35 in July 2009, Mr. Stasiak said, adding that 30 to 35 work from the headquarters on any given day.

The company’s sales grew about 35% last year, he added, though he declined to give revenue figures. The upgrades also should help SecureState attract both employees and clients, Mr. Stasiak said. “We wanted a show- Stasiak case,” he said, adding that 20 to 30 clients were scheduled to visit SecureState last Thursday, March 17. For instance, the company turned an old warehouse into what it calls the DMZ, which stands for demilitarized zone. It includes a gourmet kitchen, a full bar, a pool table, pinball machines and even an overnight suite for clients and remote employees visiting headquarters. In keeping with the military theme, SecureState has a “war room,” where employees use sophisticated computer equipment to gain access to confidential client information. The company expanded the war room as well as its computer forensics lab and its analytics lab. SecureState also built what Mr. Stasiak described as a “high-end” server room protected by a concrete shell as well as drill-proof locks that

unlock only after scanning the fingerprint of an authorized employee. The revamped headquarters was designed to be a “smart building,” according to an announcement about the renovations. For instance, using an iPad or touch panels at the facility, employees can control the building’s security system, its heating and air conditioning systems, and other electronic devices. “When we leave at night, we can hit ‘all off,’ and everything shuts itself off,” he said, noting that key devices stay on. The expansion effort began in June 2010, when Mr. Stasiak bought the building from Doan Pyramid and Nyman Construction. The contractors previously used the offices on both sides of SecureState’s headquarters. The investment was worth the $900,000 price tag, Mr. Stasiak said. It gave SecureState the opportunity to use the whole building and make changes without seeking permission, he said. “The thing for me is having that control without any other tenants,” he said. ■


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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MARCH 28 - APRIL 3, 2011

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Tough stuff

P

eter Raskind has been in the education business for less than two months. Nonetheless, the interim CEO of the Cleveland public schools gave voice last week to words that likely will be repeated in one form or another by the heads of school districts throughout Northeast Ohio. “There are no easy answers to the district’s budget woes,” Mr. Raskind said in unveiling a budget proposal for his district that recommends nearly $74 million in cuts across the 2011-2012 and 20122013 school years. “We have only to look at the deficit conditions in Ohio, in states throughout the nation, and at the federal government to know we must make tough choices at the local level, if we are to overcome our current and future fiscal challenges,” he said. Mr. Raskind is no novice to dealing with fiscal challenges or troubled institutions. He took the helm of the former National City Corp. at a time when the beleaguered bank was in stormy financial seas brought on by the subprime mortgage crisis. The Cleveland-Cuyahoga County Port Authority also brought him in as its interim chief after its departed president, Adam Wasserman, left behind an expensive, bloated management structure and an overly ambitious port expansion plan. With Gov. John Kasich trying to push more of the cost of government down to the local level, Mr. Raskind recognizes the Cleveland Metropolitan District School must take the initiative to put itself on what he called “a sustainable financial course.” In a city that lost 17% of its population in the last decade, that effort takes the form of closing seven schools and laying off 835 employees, 650 of whom are teachers. It also could lead to the long-overdue sale of the school district’s downtown headquarters on East Sixth Street, possibly for conversion to a hotel. Opportunities to turn the building into cash have been muffed in the past, but now could be a swell time to find a buyer because of the structure’s proximity to the new medical merchandise mart and convention center that will rise nearby. Mr. Raskind said last week the leaders of Cleveland schools “fully appreciate the serious impact of these decisions on people’s lives and their livelihoods.” But, in a district where the student population continues to erode, there isn’t a real choice. Cleveland Teachers Union president David Quolke groused last week that the Board of Education should have put a new school levy on the ballot last year to avoid the current mess, but it’s a hollow lament. Voters reeling from the aftereffects of the recession likely would have rejected a levy, especially because many still see the district as mismanaged. The challenges faced by the Cleveland schools may be grander in scale than those in other districts, but nearly every school superintendent and school board will be dealing with stagnant state support for primary and secondary education. Careful selfexaminations of their operations will be necessary to close their budget gaps; so, too, will a willingness to make tough choices once those examinations are complete.

FROM THE PUBLISHER

State should step in to stop poaching

T

but once this whole dance began, there his is how messed up “economic was no stopping it. American Greetings, development” efforts can be in a robust and decades-old employer here, Ohio, or in any nearby state, for made it known it was looking at Chicago that matter. sites, and the company got the personal A couple weeks ago, just days after attention of our new governor and new Columbus lost the Bob Evans headquarters county executive. and its 350 corporate jobs to suburban It’s certain American Greetings will New Albany, the city council then receive a package of benefits, approved tax breaks for a comas would any 2,000-employee pany that says it will bring 300 BRIAN company considering a move jobs to the capital city from TUCKER here from another state, or another suburb, Westerville. overseas. Dan Williamson, a spokesman That’s just the way the system for Columbus Mayor Michael has evolved. Coleman, called Bob Evans “the And it’s a shame, because in poster child for what’s wrong the end, it simply trades one with this system” when the sort of tax revenue for another, company used a potential move and the community has less to Texas in order to get the best real gain than in the old days possible package here in the when companies decided on locations Buckeye State. because of the work force, proximity to The mayor was angry about getting markets, quality of life for their employees whipsawed, and decried Bob Evans’ and so forth. decision, but then turned around and But that genie won’t be put back into did the same thing to another of his subthe bottle until all sides stop poaching urban colleagues. from each other, and that’s just not likely Self-styled populists will decry the moves until it’s stopped by law. by businesses to create this competition,

**** HERE’S A SUGGESTION for interim Cleveland schools chief Peter Raskind and County Executive Ed FitzGerald: Could the two of you sit down and talk about a deal that could help the schools’ financial crisis, improve county government and perhaps spur more downtown redevelopment? Real estate observers say the school district’s historic office building is perfect for a hotel redevelopment, given that it sits across the street from the new convention center and medical mart. The county administration building is outmoded at best, and county employees are scattered across Greater Cleveland. When the new convention center and medical mart are finished, the county administration building will be an eyesore on the site, while occupying a valuable piece of real estate. Perhaps the county and school district could join forces on a new government center that could serve both, while helping to build on the momentum of Cleveland’s newest — and longest-debated — civic construction project? ■

PERSONAL VIEW

Economic gain tied to effective education By IRA KAPLAN

A

s we know from recent news reports, Cleveland lost approximately 17% of its population in the most recent census period and now has fewer than 400,000 residents. A related fact, but one that has been less reported, is that in the last five years, enrollment has declined by about 13,000 students in the Cleveland public schools. No doubt a good portion of these losses resulted from families looking elsewhere for the best solution for the education of their children. We have been engaged in Cleveland in efforts to energize our local economy through the investment of resources in developing business sectors, including, among others, biotechnology and alter-

Mr. Kaplan is managing partner of the Benesch Friedlander Coplan & Aronoff law firm. native energies, while working to maintain and strengthen our core of businesses related to manufacturing and health care services. It is clear from studies done that until we effectively educate our children, leading to a well-educated work force, our economic development will lag. That is why it is so exciting to look at the tangible gains being made by the public charter school movement in Cleveland as evidenced by the nonprofit Breakthrough Charter Schools, which include E Prep, the Intergenerational School and Citizens Academy. The city of Cleveland and Mayor Frank

Jackson are to be congratulated for their support of these public charter schools. In fact, these high-performing public charter schools are a critical component of the Cleveland Metropolitan School District’s Transformation Plan. I recently had the pleasure of touring E Prep (Entrepreneurship Preparatory School), which is located in the city of Cleveland in a renovated factory on East 36th Street. If you have not visited E Prep, you should. You will get an immediate sense as to what can be accomplished in an environment such as this that is well run and both challenging and nurturing for our children. The Breakthrough Schools offer at-risk, inner-city children a safe place to learn at levels that match or exceed those of See VIEW Page 11


20110328-NEWS--11-NAT-CCI-CL_--

3/24/2011

3:41 PM

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MARCH 28 - APRIL 3, 2011

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View: Charter schools have produced their suburban and private school counterparts. One cannot help but walk away from a visit to E Prep feeling energized and a compelling need to get involved with and help these programs grow successfully. In a city the size of Cleveland, the expansion of well-run public charter schools will make a significant difference. In keeping with our entrepreneurial spirit, Cleveland can become known nationally as a center of excellence in the education of children. Prior to learning about the Breakthrough Schools and spending time investigating the public charter school movement, I believed that a strong pubic charter school sector was counterproductive to our education system. I no longer am of that view. We need results, and these schools have produced. In the city of Cleveland, there are about 59,000 children. The majority of the schools are failing public schools that are not effectively educating our children. At the same time, many of the public charter schools are doing the job effectively. Half of the public schools in Cleveland that are rated “excellent” or “effective” are charter schools, including six of the 10 highest-ranked schools. The Cleveland charter schools do

not pick their students. Every student who applies is accepted regardless of race, income, academic results or family status. If more students apply than can be accepted, there is a lottery. Students are admitted without cost or other entrance requirement just as they are in other public schools. Public charter schools are independent public schools that are given the freedom to operate but are held accountable for the achievement of their students. They give parents another public school option to address the needs of their children. They provide a forum for teachers to try new ways to improve student performance. The public charter schools deserve the resources to continue what they are doing and to expand the number of students that they are able to serve. Public charter schools do receive state and federal funding but do not receive any local tax levy funding. This results in the public charter schools receiving about $4,000 less per student than the district public schools receive. This gap should be eliminated, and these tax dollars should follow the students. Because these schools provide better results with less money, the Breakthrough Schools deficit per student is approximately $2,000,

not the full $4,000 gap. The laws should be modified to allow at least this amount to be allocated to the schools so that they can continue to grow and to do what they have done so effectively to this point — provide an excellent education to our children. In the long run, this will directly and tangibly contribute to what appears to be the significant progress that we are making in recharging our economy. ■

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Monthly, year-over-year mass layoffs drop, data show Initial claims for unemployment insurance caused by mass layoff events — where 50 or more workers are laid off from a single workplace — fell in February from the previous month and on a year-over-year basis, the U.S. Bureau of Labor Statistics reported last week. On a seasonally adjusted basis, 130,818 initial claims for unemployment insurance related to mass layoffs were filed in February. That’s down 12.7% from January and

11

12.4% from January 2010. The number of mass layoff events — 1,421 in February — was down 7.4% from the previous month and down 4.8% from January 2010. The industry with the most initial claims for unemployment insurance resulting from mass layoffs in February was “temporary help services” at 8,334, according to numbers that were not seasonally adjusted. — Staffing Industry Analysts

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Risk. Reinsurance. Human Resources.


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Kasich’s budget proposal Automakers close to full strength burdens wrong groups Last laid-off Detroit workers expected back ■ I’ve got one word for Gov. Kasich’s budget: brilliant. By pushing the state’s problem down to the cities and townships, he can force them to raise taxes while bragging about how he balanced the budget and the state kept cutting taxes. Furthermore, just knowing that our teachers, police and firemen are the real cause of the state’s financial problems can help turn everyone against these greedy public servants. If I can suggest a next step: Blame the high cost of Medicaid on overpaid nurses. Alan J. Larris Copley

Up with Cleveland ■ I’m so sick and tired of people dumping on this city. I was born here, moved away for a number of years, but decided to move back because this is a great city to live in. It’s amazing that some of the most negative people are native Clevelanders. It’s also amazing that people complain that there isn’t much to do in Cleveland. Are they serious? Do they venture very far from their homes?

By DAVID BARKHOLZ Automotive News

LETTERS What do you want to do? We have a multiple number of sporting events, pro and college. We have a very, very vibrant theater district. We have multiple comedy venues. We have a good number of fine restaurants. We have a great lake. We have a great symphony and art museum. This, of course, doesn’t even talk about the Rock Hall or the Science Center. This also doesn’t include the venues opening in a couple of years. I congratulate your newspaper for not dwelling on the negative of Cleveland. You do a great job talking about the business atmosphere in this city. There is much to be proud of in this city. Thank you for helping showcase that. Leon D. Atterberry Cleveland

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business email: mdodosh@crain.com

DETROIT — The Detroit 3 automakers are on the verge of full employment at their U.S. operations after several years of hardship and layoffs, officials of the United Auto Workers said last week at the union’s special bargaining convention in Detroit. UAW vice president Joe Ashton said the final 2,000 hourly workers at General Motors on layoff will be back to work by September. UAW vice president Jimmy Settles said Ford Motor Co.’s hourly workers represented by the union also are all back to work, except for some temporary layoffs at Ford’s Louisville Assembly Plant. Ford is retooling the Louisville factory to build the nextgeneration Ford Escape. Chrysler has added about 5,000 workers since 2009 and now has about 25,000 hourly workers, said UAW-Chrysler department vice president General Holiefield. The automaker will have about 500 workers idled in the coming weeks when Chrysler winds down its Trenton

North engine plant in Michigan and its Detroit axle plant, Mr. Holiefield said. But those workers, displaced when new replacement Chrysler plants couldn’t use all the workers, are expected to be reabsorbed quickly at other Chrysler factories, he said. UAW-represented employment at the Detroit 3 has stabilized as U.S. auto sales have risen to an annualized rate of 13.4 million light vehicles in February. Since the last bargaining convention in 2007, GM’s UAWrepresented work force has dropped from around 75,000 to 49,000 as plants have closed and workers departed either through attrition or retirement.

A good problem Interviewed on the sidelines of the union’s convention, Mr. Holiefield said it feels good to hear workers complaining of too much overtime. “That’s a good problem to have,” he said. Mr. Ashton, who heads the union’s GM department, said the ramp-up of GM’s Orion Township assembly plant in Michigan combined with new shifts at the automaker’s Flint and Detroit-Hamtramck plants, also in Michigan, will bring full employment to UAW-represented workers at GM. GM’s Orion plant is ramping up for the launch of the Chevrolet Sonic subcompact. Flint builds pickups,

while Detroit-Hamtramck builds the Chevrolet Volt and other sedans. Mr. Ashton, who addressed delegates at the UAW special bargaining convention here, said the union would fight in the coming contract negotiations with GM to find work to restart idled plants in Spring Hill, Tenn., and Janesville, Wis., and to keep the Shreveport, La., factory operating. The Shreveport plant is scheduled to close in 2012. Last week the plant, which makes the GMC Canyon and Chevrolet Colorado compact pickups, was idled because of a shortage of parts stemming from the disaster in Japan earlier this month.

Orion contract praised Mr. Ashton said he was proud of the UAW’s Orion Township plant contract that has been controversial with rank-and-file workers. “I wouldn’t change a thing,” he said, explaining that the Sonic would not have been built in the United States if not for contract changes at the plant. Among those change is the requirement that no more than 60% of hourly workers receive traditional $28-an-hour wages, while the rest receive entry-level wages and benefits equal to about half those of traditional workers. The Orion plant will begin production of the Sonic this summer. ■ David Barkholz is a reporter with Automotive News, a sister publication of Crain’s Cleveland Business.

Cleveland Thermal is pleased to welcome Cleveland Medical Mart & Convention Center

March 2011

as our newest district energy customer! Thank you for selecting us to be your heating and cooling energy provider.

“Cleveland Thermal offers the reliability and cost savings that are essential for us in creating and operating a world-class, comfortable and energyefficient facility in downtown Cleveland.” Mark J. Bettin, PE Merchandise Mart Properties Inc.

has been recapitalized by

“The selection of Cleveland Thermal will help Cleveland Medical Mart & Convention Center reduce project first cost, address its sustainability goals, meet peak-level capacity needs, and free up valuable additional floor space for other uses.” Dennis J. Wessel, PE Karpinski Engineering

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GOING PLACES SCOTT SNOW (FINANCIAL ADVISORS) LLC: Ginger Supeck to executive administrative assistant.

JOB CHANGES ARCHITECTURE HASENSTAB ARCHITECTS INC.: Michelle Tomei to intern; Pamela Schneider to interior designer. OSPORTS: Christopher A. Wynn to principal; Richard Bauschard to project director.

DESIGN RICHARDSON DESIGN: Garrett Thompson to creative director.

EDUCATION BALDWIN-WALLACE COLLEGE: Linda L. Bluso to chair, Division of Business Administration. CITIZENS LEADERSHIP ACADEMY: Kevin Alin to director of operations and external affairs; Jia Cunningham to dean of school culture.

WELLS FARGO ADVISORS: Elisa R. Budoff and Pamela GuggenheimLongenbaker to senior vice presidents, investments, Pepper Pike.

HEALTH CARE PRIORITY HOME HEALTH CARE INC.: Reba Allison-Mahanera to director of human resources.

INSURANCE KNEZEVICH & FOERSTER LLC: Laura Prednesky to account manager. MEDICAL MUTUAL OF OHIO: Annette Hill to director of operations. WESTFIELD INSURANCE: Joseph

C. Kohmann to group finance leader.

account executive.

LEGAL

INSIVIA: Michael DeAloia to director of e-marketing.

MARC E. DANN CO. LPA: Grace Doberdruk to associate.

NONPROFIT

PORTER WRIGHT: Natalie H. Rauf and Charles W. Zepp to partners.

DIABETES ASSOCIATION OF GREATER CLEVELAND: Suzanne K. Johnson to chief operating officer; Tracy Francescone to director of development.

MANUFACTURING

THE MUSIC SETTLEMENT: LuAnn Ashby to controller.

MCGLINCHEY STAFFORD PLLC: Melany Kotlarek Fontanazza to associate.

MATERION CORP.: Brent W. Van Scoik to vice president, corporate procurement. ROCHESTER MIDLAND CORP.: Jack Kananian to sales representative, Distributed Products Division.

MARKETING FAHLGREN MORTINE PUBLIC RELATIONS: Cari Steiner to

RECOVERY RESOURCES: Amanda Hershberger to development associate.

REAL ESTATE KELLER WILLIAMS REALTY: Charles Jackson to sales associate, Greater Cleveland Downtown.

SERVICE EZENERGY: Melodie Mareth to

director of support services; Jim Pierce to staff accountant; Marilyn Salvucci to office administrator; Keith Schade to manager, financial planning and analysis; Frank White to director of marketing; David Worrell to director of operations; Scott Bishop to field merchandising manager; Joel Unroe to associate category manager.

TECHNOLOGY WARWICK COMMUNICATIONS INC.: Jim Leedy to account executive.

RETIREMENT WESTFIELD INSURANCE: Robert Krisowaty after 10 years of service.

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

WWW.DOLLARBANKBIZ.COM

Bluso

Calabrese

Schulte

Hill

Fontanazza Van Scoik

ENGINEERING OSBORN ENGINEERING: James H. Price to senior mechanical engineer; Joseph M. Cruz and Monica Castele to mechanical engineers; Imad Kolak to electrical engineer; Sarah Moses to executive assistant.

FINANCE CHARTER ONE: Irene Diamantis to mortgage loan officer, University Heights. FIRST FEDERAL OF LAKEWOOD: Jeffrey J. Calabrese to vice president, commercial loan relationship manager; Bethany Schulte to assistant vice president, retail operations manager, Eastern division.

FINANCIAL SERVICE 212 CAPITAL GROUP/NEW ENGLAND FINANCIAL: Liz Powe and Michael Douglas to financial advisers. BCG & CO.: Jennifer Davies, Chris Martin and Corey Centofanti to associates. MALONEY + NOVOTNY LLC: Jon Watts to senior tax accountant.

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NDI: New businesses keep emerging continued from PAGE 3

MedStim, which owned the rights to a treatment for urinary incontinence developed by NDI and Case Western Reserve University. “Ninety-five percent of them said, ‘I’m in. I want to keep doing this,’” Mr. Thrope said. Much of the money raised has gone into NDI Healthcare Fund, which the company created to invest in NDI Medical spinouts as well as other startups commercializing neurological technologies. In addition to MedStim, NDI has spun out two other businesses. In 2009, NDI created Checkpoint Surgical, which is selling a disposable device surgeons use to find and avoid nerves and evaluate nerve and muscle function. In 2010, NDI spun out SPR Therapeutics, which is developing a device that stimulates nerves to treat chronic pain. Mr. Thrope wouldn’t say what else the company is working on, but future technologies could treat conditions ranging from sleep disorders to depression to Parkinson’s disease — anything that can be fixed by activating or inhibiting nerves, which Mr. Thrope said is NDI’s specialty. The company’s name stands for neurostimulation design and inno-

Small businesses connect through CLE.

“What would you pay if you could spare a loved one a lifetime of pain?” – Ralph Della Ratta, founder, Western Reserve Partners LLC vation. “We’re not starting from scratch,” he said.

A risk pays off Mr. Thrope, who graduated from Case Western Reserve University in 1979 with a degree in biomedical engineering, spent 15 years in academia before joining NeuroControl Corp. in the early 1990s. The company in Valley View raised more than $30 million, but it eventually failed because its target market, patients with spinal injuries, was too small, said Mr. Thrope, who had served as a project manager, sales manager and vice president of new business development for NeuroControl. The experience, Mr. Thrope said, taught him to focus only on big, validated markets. It also allowed him to work with Julie Grill, who would introduce him to her husband, Warren, then a clinical research associate at CWRU. Mr. Thrope said he and Warren Grill quickly became friends, partly because they both had a competitive side. Eventually, Mr. Thrope took advantage of his friend’s competitiveness: To get Dr. Grill to help him start NDI, Mr. Thrope asked him if he was ever going to get around to doing anything outside of academia. “I don’t think anybody had ever talked to him that way,” Mr. Thrope said with a laugh. Dr. Grill already had figured out how to “stop cats from peeing,” Mr. Thrope said. Their market research showed “huge” demand, he said, for an implantable device that could do the same thing for humans with bladder control problems. So, in 2002, they formed NDI with $200,000. Dr. Grill and eight others contributed half the money, and the other half came from Mr. Thrope’s personal savings. It was a big risk, he said, especially considering that he took no salary and had two boys in school. “Every month we’d see our bank

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account go down and down and down,” he said. Soon enough, NDI started bringing in grant money to fuel the development of its urinary incontinence technology. From the start, though, the company had planned to develop all sorts of neurological devices, Mr. Thrope said.

An incu-vestor model Today, NDI has about 20 employees. Checkpoint Surgical has seven located across the country, and SPR Therapeutics has four. Both are led by former NDI employees and are based at the company’s Highland Hills headquarters, where they have easy access to NDI’s expertise. NDI Healthcare plans to invest in new spinouts and other neurological device companies that are ready to sell a product or are deep into clinical trials. Baiju Shah, president of BioEnterprise Corp., which assists health care companies in Northeast Ohio, said NDI has taken on aspects of both an incubator and a venture capital fund. He said he isn’t aware of any other incubators focused on neurological devices. “From that perspective, Geoff has got a first mover advantage,” he said. Ralph Della Ratta wishes he would have moved faster on NDI. The founder of investment banking firm Western Reserve Partners LLC in Cleveland and several others — including former Steris Corp. CEO Les Vinney — invested in NDI only after the Medtronic deal. Mr. Della Ratta said he’s particularly excited about SPR Therapeutics’ pain management technology. “What would you pay if you could spare a loved one a lifetime of pain?” he said. Of course, not every spinout will need to be a success for NDI to be considered successful, Mr. Thrope said. “As long as you have one, you win,” he said. ■

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INSIDE

18 LOCAL NONPROFITS HAVE A BALL WITH PARTIES.

15

EVENT PLANNING Vendors on standby as med mart takes shape Event specialists hope for boost in business when facility opens By JOEL HAMMOND jmhammond@crain.com

V

endors who support the meeting and event industry have a close eye fixed on the ongoing construction at the site of Cleveland’s new medical merchandise mart and convention center. As in, can’t you all hurry up with that thing? Officials — including Cleveland Mayor Frank Jackson, Ohio Gov. John Kasich and Chris Kennedy, the president of MMPI Inc., the Chicagobased developer of the facilities — broke ground in a much-hyped ceremony in January and are expecting the doors to open in 2013.

OPPORTUNITIES ON THE TABLE Recession may have slowed green movement; planners say efforts set to gain momentum By AMY ANN STOESSEL astoessel@crain.com

I

s green the new black of the meeting and event world? Not quite yet, at least in Northeast Ohio. Some observers even say the recession may have taken its toll on the push to make meetings more environmentally responsible, putting the brakes on a movement that seemed to be gaining momentum before the economic collapse. That’s not to say sustainable meeting measures aren’t used in this region — or that they won’t eventually become more commonplace. But, according to those working within this area’s events industry, the steps being taken toward green meetings are more of the slow-and-steady variety than they are of the full-out sprint. See GREEN Page 16

INSIDE: Northeast Ohio’s event planning industry expects uptick in business when casino, medical mart and convention center open. Page 19

FERTILE GROUND Tamera Brown, vice president of marketing for Positively Cleveland, the region’s convention and visitors bureau, said she believes Cleveland is ahead of the curve in terms of its sustainable offerings, and Positively Cleveland tries to use that fact to its advantage in terms of promoting the area as an event destination. “We’re really well-positioned,” said Ms. Brown, whose organization puts out a list of 75 attributes that make Cleveland eco-friendly. “We’re much greener than a lot of people would guess.” The city is about to add a few more bullet points to that list — the new Cleveland Medical Mart and Convention Center. Dave Johnson, public relations director for the facilities, said in an e-mail that since the onset of planning for the Cleveland Medical Mart and Convention Center, its Chicago-based developer, MMPI Inc., has incorporated sustainability into the project’s design, construction and operation. Mr. Johnson noted that MMPI is pursuing Leadership in Energy and Environmental Design Silver Certification for the new medical mart and convention center through a comprehensive sustainability plan. That means reducing the quantity of

FILE PHOTO/MARC GOLUB

State and local leaders shovel dirt at the Jan. 14 official groundbreaking of the Cleveland Medical Mart and Convention Center in Cleveland. water needed for the facility by using more efficient fixtures, optimizing energy efficiency through lighting and HVAC designs, purchasing materials with less environmental impact and eliminating sources of indoor air pollution during demolition, construction and management of the facility. Additionally, the use of alternate transportation will be encouraged, Mr. Johnson said, including the creation of 275 bike racks on the malls, nearby connections to RTA bus and rail lines and the elimination of parking spaces. — Amy Ann Stoessel

While display and audio/visual companies and event planners say it’s still a little premature to add staff or make more tangible preparations, they’re anticipating a nice boost from the new facilities. “We’re going to have high-profile clientele in Cleveland who never have had a presence here,” said Joel Solloway, the owner of EventWorks Inc., an event planning and audio/ visual company in Beachwood. “God willing, they’re looking for local resources to develop their space and media.” Mr. Solloway said the company is in the process of creating a pitch to the medical mart’s 58 charter tenants, including Cleveland-area entities the Cleveland Clinic, Invacare and Steris. Those organizations plan to take up permanent residence in the 235,000-squarefoot medical mart, part of a project approved by voters that has risen to $465 million in overall costs. The other half is a new, 230,000-squarefoot convention center. Each half of the equation has Rittman-based PFI Displays Inc. looking ahead. PFI helps its clients “educate visitors” to a convention or showroom, CEO Tony Tricomi said. The firm plans to hire additional design personnel in anticipation of new business opportunities. And if the new Cleveland venues follow what Vince Tricomi has seen at all types of facilities nationwide, See MART Page 16


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EVENT PLANNING

Green: Price point still main consideration Mart: More continued from PAGE 15

Nick Borelli, director of marketing for Mayfield Heights-based Executive Caterers Inc., for one, believes the recession very well may have made a difference in clients’ priorities. “I am of the belief the economy has been a stumbling block for this,” Mr. Borelli said. “It’s reported about and discussed in the media far more often than it is brought up by a client in any meetings we have,” he noted via email. Mr. Borelli, whose background includes time working for a Pittsburgh-area operation certified by the Green Restaurant Association, said he has even noticed a broader drop in interest, a shift evidenced by the lack of informational sessions devoted to green practices during a recent caterers’ association conference. “If you were to look at the schedule three years ago, 25% was on it,” noted Mr. Borelli, who said this year there was much less concentration on the subject. The focus now, he said, is “very much business basics.” Benchmark Hospitality International recently made a similar observation after a survey of its 30 hotels, resorts and conference centers. It included “Cost Still Trumps Green” as one of its “Top Ten Meeting Trends” for 2011.

The

Figures provided by Meeting Professionals International, meanwhile, give a slightly different view with 42% of senior industry professionals saying they are fully committed to corporate social responsibility and 26% saying they are currently developing such policies. Tamara Kennedy-Hill, executive director of the Green Meeting Industry Council, a Portland, Ore., nonprofit, said uniform industry standards for green meetings are near completion, and she anticipates that they will be ready no later than this summer. Currently, there are no minimum best practices. For her part, Ms. Kennedy-Hill does not see the recession as having had a wide-reaching effect, especially for those entities already committed to sustainability. But she does believe awareness is becoming more prevalent, even if it’s not always the No. 1 factor used in planning. “It’s starting to be a decision factor in site selection,” she said.

‘Not a deal breaker’ For Jessica Stogran, whether a facility is green does not make or break a deal with a potential venue. Ms. Stogran is managing director of Exchange Networks for Willoughby-based Marsh, Berry & Co., an insurance consulting firm

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that works with independent insurance companies nationwide. She also is secretary of the Pittsburgh, Ohio, West Virginia, Erie Region (POWER) chapter of the Professional Convention Management Association. The meetings that Ms. Stogran facilitates are held in central locations such as Chicago, Dallas, Phoenix and Nashville. She does not include any type of green standards in her requests for proposals to venues. While it may not be a “make-orbreak” situation, Ms. Stogran said she has made some strides toward being more environmentally friendly at the firm’s request. At the top of that list has been eliminating “amazing, amazing amounts” of presentation materials, a move that resulted in the company spending 80% less. Ms. Stogran said there was “a little bit of a push back” from some attendees. To account for the backlash, she said an on-site print station was made available; that is an amenity that increasingly has become less necessary. All things being equal, however, if a facility is offering green amenities — at no extra cost — certainly Ms. Stogran said she’ll take advantage of the offerings. The Hyatt Regency Cleveland at The Arcade even gives its clients an additional incentive with its “Be Green and Save 3%” program, which is part of a corporate-wide initiative. Gary Goroyan, the director of sales and marketing at the Hyatt Regency Cleveland at The Arcade, said interest in green meetings slowed down a bit during the recession. “Cost became the predominant factor in securing facilities,” he said. Mr. Goroyan estimates that 20% to 30% of events at his location take advantage of the “Be Green” incentive, which requests that groups commit to green measures such as planning ahead, recycling, printing local, eating local and shipping less. “It’s becoming more common … it’s definitely not a deal breaker,” said Mr. Goroyan of the inclusion of

green standards in RFPs. “It may put you at a competitive advantage.”

Cost and commitment Executive Caterers’ Mr. Borelli said sustainability efforts in large part are driven by customer demand. For the most part, that demand originates from corporations with some sort of mandate to be sustainable in their practices. “That’s where it comes up,” he said. While Mr. Borelli believes there may be a greater push for sustainability in other markets, what is commonly important to Northeast Ohio clients is that food be locally sourced. He also said it’s only a matter of time until green meetings in general become a larger concern in Northeast Ohio. Executive Caterers in 2010 produced its first zero-waste event for Cleveland Mayor Frank Jackson’s sustainability summit, which means no traditional garbage was produced. Of course, such an event includes items, such as biodegradable straws, that can come with a higher price tag. “The more popular it gets, the more the costs will come down,” Mr. Borelli said. Mike Smith, association strategic account manager for Twinsburgbased meeting and event services firm Experient, said most often there’s a cost savings to be had by being sustainable. As for green practices that cost money, he agrees with Mr. Borelli, noting, “It’s kind of an evolution of the whole process of supply and demand.” Mr. Smith, whose firm several years ago formally integrated green meeting consultation into its standard practice, said the recession may have had some impact on green meetings. “I don’t know if the priority went down … but it had to have a (return on investment),” he said. But that just might be poised to change, he said. “When gas prices go up, then all of a sudden sustainability is everyone’s concern.” ■

suit your needs Day or night custom packages to Picnic menus - traditional to gourmet Team-building activities Attached 500-car parking garage

open setup preferred continued from PAGE 15

that may be the right move. “There are more companies exhibiting, with new booths,” said Vince Tricomi, the company’s vice president of business development and Tony’s son. “When the economy first dove, attendance was down 50% or 60%, but there’s been an increase. We’re taking those as signs that the industry as a whole has picked up.”

Equal opportunity? Chagrin Falls-based At Last Event Planning traditionally has been known as a wedding planner, and has done only a handful of corporate events per year. But Amy Hissa, the company’s founder, said with the new venue on tap and a successful big-ticket event — the opening of Toa Technologies’ new headquarters in Beachwood — recently completed, she’s looking for more. “We view (the medical mart and convention center) as an opportunity for additional corporate events,” Ms. Hissa said. Dave Lutz, meanwhile, minces no words when asked about the potential for the new medical mart and convention center: “The old building was one of the worst in the country, so something shiny and new should serve as an attraction.” Yet Mr. Lutz, the managing director of Aurora-based Velvet Chainsaw Consulting, a meeting and event consultant, says the impact may be limited if officials offer exclusive vendor relationships to select companies. Not only would fewer area companies benefit, but fewer conventions may come to the city. “The larger shows have companies they partner with wherever they go,” Mr. Lutz said. “When you can’t use them, it can be a deal breaker.” Dave Johnson, a spokesman for the medical mart and convention center, said no decision on vendor exclusivity has been made. Mr. Lutz said a preferred model would be a “recommended” structure, where conventioneers can have access to a roster of companies familiar with the building and its ins and outs, but also can use vendors with whom they have long-standing relationships and, perhaps, contracts.

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The companies that spoke with Crain’s Cleveland Business for this story say the Cleveland mart’s health care focus — and Cleveland’s top reputation in the health care industry — will help the venue succeed. “There’s a lot of money in health care,” said Dave Wheeler, the founder of Hughie’s Audio-Visual, located on East 38th Street in Cleveland. “We have a specialization in that field in Cleveland. This will be a great boost for a lot of local companies.” PFI Displays’ Tony Tricomi agreed Cleveland’s background in health care will set the city’s venue apart. “There have been a lot of cities, midsize cities, that without a focus, they draw business for a year or two and then drop off,” Mr. Tricomi said. “The hospital leaders that are here are key to our success.” ■


3/24/2011

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planning an r o f e m o t t n e Thanks to . k r All the credit w o w e h t f o int did most o P r a d e C h g u o d something a h t in even th o P r a d e d a blast. C a h p u o r g e ir t n and of , h c a e them, our e b a , s w o h d, sizzling s o o f y t s a t : e n o for every universe. e h t in s e id r t s course the be rom making f ; g in h t y r e v e f took care o f f a t s ly d n ie atering r c f o t , The s t e k ic t n best deal o e t lu o s b a e h t t just as y b sure we go t n e w g in n n eal. The pla m t a e n a c u o an all-y he rides. t f o e m o s s a fast gram that’s o r p t e k ic t d e t s a discoun a h o ls a t in o P r Ceda oups or call r /g m o .c t in o p r a ust visit ced J ! y a d y n a d programs. o h go t o b n o ils a t e get all the d o t 8 2 4 2 8 4 4 1-800time ever! t s e b e im t e h t You’ll have

Later, Linda

© 2011 Peanuts Worldwide LLC Peanut.com


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18 CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MARCH 28 - APRIL 3, 2011

EVENT PLANNING

Galas, entertainment-centric events boost fundraising By KATHY AMES CARR kcarr@crain.com

F

or 20 years, the Jump Back Ball has drawn hundreds of well-dressed revelers to party at the State Theatre at PlayhouseSquare. From the attendees’ standpoint, the black-tie gala is a chance to mingle with other Northeast Ohio movers and shakers. From PlayhouseSquare’s perspective, the event is an opportunity to engage young

professionals with the performing arts center and to raise funds. “People love seeing the theaters, and each year, there’s a new theme and new excitement,” said Lawrence Hatch, a co-founder of PlayhouseSquare Partners, the nonprofit theater group’s young professionals’ organization and Jump Back Ball organizer. “That’s why 1,000 people show up.” The most recent gala in February — the theme of which was “Passport to Party”— drew 950 people, its fifth

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consecutive sellout. Partners membership coordinator Molly Franz said the ball generated about $135,000 between ticket sales and sponsorships, which was an increase of 10.5% over 2010’s total of $122,145. PlayhouseSquare and other area nonprofits say entertainmentoriented events have continued to generate a healthy attendance over the last couple of years during what otherwise has been a challenging fundraising environment. Susan L. Golden, principal of Beachwood-based The Golden Group, said she’s been surprised at the resiliency of participation at certain local events, including black-tie affairs, galas and even runs or golf outings, because of the difficulty nonprofits in general are having in raising money. Ms. Golden, who has helped 150 nonprofits, including the Cleveland Clinic and Case Western Reserve University, raise nearly $1 billion in funds over her 30-year career, said entertainment-oriented events can be a hard sell to prospective attendees during tough economic times. Many nonprofits, however, are well-connected and have loyal donors, including affluent attendees who haven’t been as impacted by the recession, said Ms. Golden, who said fundraising events seem to be holding their own. “Many are receiving less support, but most are staying the course,” she said. “Many organizations are modifying the tone and tenor of events and making them less glitzy.”

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One of the Cleveland Clinic’s

PHOTOS PROVIDED

ABOVE: The Jump Back Ball at PlayhouseSquare’s State Theatre offers blackjack aficionados the chance to gamble for a good cause. BELOW: The Cleveland Clinic’s “An Evening with Scott Hamilton & Friends” is one of the health care provider’s largest events in terms of attendance and funds raised.

largest annual fundraising events, “An Evening with Scott Hamilton and Friends” ice show and gala, in November generated about $1.3 million, up 18.2% from $1.1 million in 2009. The proceeds benefit the Scott Hamilton CARES Initiative at Taussig Cancer Institute. Last year’s ice skating show and music performance by country singer Vince Gill (and a surprise appearance by singer Brad Paisley) at Quicken Loans Arena was the second consecutive sellout, with about 7,000 at the ice show and about 800 at a black-tie gala at the Renaissance Cleveland Hotel. “We always have headline entertainment and gold medal skaters performing,” said Brad Fellows, director of the Scott Hamilton CARES Initiative, which is named after the Olympic ice-skating champion and cancer survivor, who received treatment at the Clinic’s Taussig Cancer Institute. Mr. Fellows said he was pleasantly surprised when the gala sold out even after organizers for the first time in the event’s 11-year run raised ticket prices from $250 to $300. The ice show tickets have remained within the $25 to $60 range. “It’s the million-dollar question,” Mr. Fellows said when asked why he thought the gala still sold out after the price hike. “I think it’s a combination of things. We have a diverse crowd who attends, we have headlining entertainment and people are passionate about finding a cure for cancer.” Event organizers plan to get the word out even earlier for 2011’s Nov. 5 show, especially because this year’s star performer — Sheryl Crow — already is lined up. “It’s the first time (the main performer) committed a year in advance,” Mr. Fellows said.

Hear them roar The Cleveland Zoological Society’s annual fundraiser, Twilight at the Zoo, “always has been a sell-out

situation” of about 7,000 during each of its 18 years in operation, although sponsorship dollars have dwindled over the last couple of years, said Tara Turner, director of external relations. Twilight at the Zoo is held at the zoo, with music, food and the opportunity to peruse exhibits. The event has been a tougher sell with many folks “waiting until the last minute” before buying tickets, which cost between $65 and $75, depending when they’re purchased. The event in 2010 raised $460,000, down 6% from $490,000 in 2008. Still, Ms. Turner said she expects another sellout crowd for the Aug. 5 evening affair, in part because of a new elephant exhibit that opens this May. Further, Scene magazine pledged a two-year sponsorship, which will enable the Cleveland Zoological Society to expand the event’s marketing efforts. Meanwhile, the Ohio Canal Corridor and its park system development projects benefit from the annual Scrooge’s Night Out, now entering its 23rd year. December’s holiday party drew a throng of about 850, an increase over the estimated attendance of 700 during the previous couple of years, said Tim Donovan, executive director. He pointed to the event’s return to Gray’s Armory, a historic fortress in Cleveland, after being held for the prior five years at The Galleria at Erieview as a possible reason for the attendance uptick. The event’s proceeds support such projects as the completion of the $70 million Towpath Trail, a project that when complete in 2014 will connect through 110 miles of trail Cleveland’s Flats at Canal Basin Park to New Philadelphia. As for PlayhouseSquare’s Jump Back Ball, it is “a small but critical part” of the nonprofit’s fundraising campaign, organizer Mr. Hatch said. “The real goal is to get people interested in the theaters,” he said. ■


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CRAIN’S CLEVELAND BUSINESS 19

WWW.CRAINSCLEVELAND.COM

EVENT PLANNING

Industry prepares for influx of activity Large construction projects expected to rejuvenate business By DAN SHINGLER dshingler@crain.com

B

usiness still is slow in Cleveland’s business conference and special events world, say those who track and survive off the industry. But the bad times look like they are in the past and good times may be ahead. A variety of circumstances — from an old and nonfunctioning convention center to foundering sports teams and a dour economy — have driven down the industry in the last three years. However, a long list of coming attractions, including a casino, medical mart, aquarium and new hotels, will do just as much to increase activity going forward, observers said. “The business is definitely picking up in Cleveland and will continue to pick up with the new assets that we’re getting,” said Dan Williams, vice president of sales for Positively Cleveland, the city’s convention and visitor bureau. Even so, probably the biggest factor affecting the recent market for special events and conferences has been the economy itself. With sales down, businesses cut costs anywhere they could, experts say, and reducing the amount of time and money spent on trade shows, sales seminars, industry group meetings and other events was one way they saved money. Also, with many businesses laying people off, that left less time for existing managers or employees to either attend or work on such events, since they often were doing double duty at their desks. “There’s a cautious optimism. They’re doing meetings, but if they had quarterly meetings, maybe they’re doing it twice a year now,” said Bob Megazzini, general manager for the Cleveland Marriott Downtown at Key Center. “But we’re not seeing it come back gang-

CORPORATE

busters like it was in 2006 and 2007.” Mr. Megazzini said his wedding business is strong, and the hotel did well from Cleveland’s recent hosting of some of the NCAA men’s basketball tournament. So far, though, the corporate business has not fully returned. Even some groups well-loved by their members say they have seen a decrease in interest. The National Association of Women Business Owners’ Cleveland chapter is reconfiguring its events to better suit members who attend fewer events, but want more from each, said NAWBO Cleveland president Mary Cilia. “I think they’re still watching their costs. So they’re looking to try to get more out of each event that they do attend,” Ms. Cilia said. So this year, instead of a 350-person evening event for the group’s annual awards, there will be a midday meeting that will include lunch and workshops to help members with business issues. Ms. Cilia is expecting about 150 people to attend that event this fall. In today’s demanding business climate, time constraints, as well as thriftiness, are driving some of that change, she said.

“There are not a lot of other cities where you’re going to see a billion dollars of development over the next couple of years.” – Dan Williams vice president of sales, Positively Cleveland That’s a year hotly anticipated by Mr. Williams and others in the corporate events field. In 2013, the city is expected to have its new convention center and medical mart open, along with its new permanent casino and possibly an aquarium and other development in the Flats. That’s already causing inquiries and future bookings to pick up, say industry experts. “There have been people just waiting for Cleveland to come back, from a convention standpoint, and now that they see ground being broken, there is definitely much more interest in our city,” he said. “There are not a lot of other cities where you’re going to see a billion dollars of development over the next couple of years.”■

PHOTO ILLUSTRATION PROVIDED

Kalahari Resort Convention Center expansion aerial mockup

Kalahari convention center expands Todd Nelson, president and owner of Kalahari Resort Convention Center in Sandusky, thinks it’s a good time to embark on a $22 million project designed to more than double the property’s meeting capacity. The expansion project, for which ground recently was broken, will result in a 215,000-square-foot convention center and increase its capacity from 2,200 to 5,200 attendees. The resort, at a cost of $6 million, also will start construction on six “Ny-Um-Ba Entertainment Units” bringing the total guest room count from 884 to 890. “We’ve completely outgrown our existing facility,” Mr. Nelson said of Kalahari’s 95,000-square-foot meeting space opened in 2006. The self-funded project was spurred in part as way to drive more overnight

guests to the facility. Kalahari’s current market is drawn from a threehour driving radius, but that target area is expected to expand. The goal, Mr. Nelson said, is for 45% of room bookings at the property to originate from group business. That figure currently stands at 29%, with tourists making up the majority. The expansion will include a 38,000-square-foot grand ballroom/ expo center, a 12,000 square-foot junior ballroom, 14 meeting rooms, a 4,000-square-foot themed outdoor plaza connected to an indoor ballroom and 30,000 square feet of prefunction space. “Sandusky is going to end up being a tremendous meeting market,” Mr. Nelson said. Construction on the project is slated for completion in mid-December. — Amy Ann Stoessel

Land of promise And Cleveland has not exactly been a Mecca for visitors, business or otherwise, in recent years, many point out. The Indians used to make the town a draw when they were winning, but are far less magnetic when the main topic of conversation is whether they’ll lose 100 games. The Cavs were a draw, or LeBron James was at least, but that magic went to South Beach. Meanwhile, the city’s convention center was aging and recently shuttered, limiting Cleveland to hosting smaller events. “For the much larger meetings you need a central point, like a convention center, and right now ours is under construction,” Mr. Williams said. “We’re booking much smaller meetings, with one or two hotels at smaller venues. But in 2013, you’ll start to see larger meetings come back to Cleveland and in greater number.”

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

WWW.CRAINSCLEVELAND.COM

MARCH 28 - APRIL 3, 2011

COMMERCIAL REAL ESTATE BROKERAGES RANKED BY NUMBER OF LOCAL AGENTS/BROKERS

Name Address Rank Phone/Web site

Number of Number Square feet sold agents/brokers of FTEs or leased 2010

Dollar value of sales transactions 2010

Dollar value of lease transactions 2010

Number of sales and lease transactions 2010 Top 2010 broker

Top local executive Title

1

CB Richard Ellis Inc. 200 Public Square, Suite 2560, Cleveland 44114 (216) 687-1800/www.cbre.com/cleveland

46

125

5,399,066

$37,936,000

$225,702,000

343

Browning Chandler Converse, Jr. David managing director

2

Grubb & Ellis 1350 Euclid Ave., Suite 300, Cleveland 44115 (216) 861-3040/www.grubb-ellis.com

41

44

NA

NA

NA

NA

Terry Coyne

Robert C. Nosal executive vice president, managing director

3

Ostendorf-Morris Co. 1100 Superior Ave E, Suite 800, Cleveland 44114 (216) 861-7200/www.omcle.com

37

54

2,642,000

$32,404,000

$51,149,000

181

Jack W. Drescher

Geoff Coyle managing partner

4

Jones Lang LaSalle Americas Inc. 127 Public Square, Suite 2410, Cleveland 44114 (216) 861-7171/www.us.joneslanglasalle.com

23

68

1,946,732

$27,269,418

$214,352,070

87

AJ Magner

Robert J. Roe managing director

5

Kowit & Passov Real Estate Group 6001 - D Landerhaven Drive, Mayfield Heights 44124 (216) 514-5100/www.kowitpassov.com

22

6

NA

NA

NA

176

Tori Nook

Brad Kowit Steve Passov partners

6

NAI Daus 23240 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-3310/www.naidaus.com

18

12

2,600,000

$30,250,000

$29,000,000

214

Jeffrey Kahn

Robert Brehmer managing partner

7

Cresco Real Estate 3 Summit Park Drive, Suite 200, Independence 44131 (216) 520-1200/www.crescorealestate.com

16

24

5,250,731

$37,369,582

$94,016,449

360

Fred Christie

Joseph Barna Robert Garber co-managing partners

8

Chartwell Group LLC 1301 E. Ninth St., Suite 2210, Cleveland 44114 (216) 360-0009/www.chartwellgroup.com

15

38

2,489,923

NA

NA

NA

David R. Stover Mark S. Abood

William P. Nice, David C. Wagner, principals, co-managing directors

8

Marcus & Millichap Real Estate Investment Services 5005 Rockside Road, Suite 1100, Independence 44131 (216) 264-2000/www.marcusmillichap.com

15

2

NA

$128,996,000

NA

45

Michael S. Barron Daniel J. Burkons

Michael L. Glass vice president, regional manager

10

NAI Cummins Real Estate 787 White Pond Drive, Suite A, Akron 44320 (330) 535-2661/www.naicummins.com

14

2

1,655,903

$20,023,809

$12,403,825

137

Mike Stacy

Tom Fox, president Bob Raskow, vice president

11

Goodman Real Estate Services Group LLC 25333 Cedar Road, Suite 305, Lyndhurst 44124 (216) 381-8200/www.goodmanrealestate.com

11

3

1,509,775

$7,165,000

$40,295,100

94

Randall J. Goodman

Randall J. Goodman principal, broker

12

Allegro Realty Advisors Ltd. 1938 Euclid Ave., Suite 200, Cleveland 44115 (216) 965-0630/www.allegrorealty.com

10

10

NA

NA

NA

NA

NA

George B. Hutchinson president, CEO

12

RJ Wohl Co. 24960 Center Ridge Road, Suite 300, Westlake 44145 (440) 835-0300/www.rjwohl.com

10

NA

NA

NA

NA

NA

Jack M. Sanfilippo

Jack M. Sanfilippo executive vice president

14

Arnold J. Eisenberg Inc. 24500 Chagrin Blvd., Suite 120, Beachwood 44122 (216) 831-6773/www.arnoldjeisenberg.com

9

2

1,450,000

$14,000,000

$11,024,000

124

Steven B. Eisenberg

Steven B. Eisenberg president

14

Coakley Real Estate Co. LLC 1382 W. Ninth St., Cleveland 44113-1231 (216) 772-4700/www.coakleyrealestate.com

9

2

97,300

$675,000

$775,000

18

Francis M. Coakley

Francis M. Coakley president

14

Gerspacher Real Estate Group Inc. 113 W. Liberty St., Medina 44256 (330) 722-5002/www.theggrp.com

9

9

NA

NA

NA

NA

Troy L. Gerspacher

Troy L. Gerspacher president, broker

14

Munsell Realty Advisors Inc. 23250 Chagrin Blvd., Suite 255, Beachwood 44122 (216) 504-4820

9

15

81,353

$6,520,000

NA

2

Tony Lehman

Mark R. Munsell president

18

The Krone Group 2101 Richmond Road, Suite 1000, Beachwood 44122 (216) 464-5900/www.thekronegroup.com

8

NA

NA

NA

NA

NA

James Becker

David Krone president

19

Kelly & Visconsi Associates LLC 28601 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-0300/www.kelly-visconsi.com

7

9

NA

$2,500,000

$25,491,880

118

Greg Slyman

Anthony T. Visconsi partner

20

The Gatto Group 29010 Chardon Road, Willoughby Hills 44092 (216) 621-1800/www.gattogroup.com

6

1

NA

NA

NA

NA

Michael Gatto

Steve Joseph vice president

20

The King Group 25550 Chagrin Blvd., Suite 300, Beachwood 44122 (216) 831-9330/www.thekinggroup.com

6

NA

NA

NA

NA

NA

Dick Bialosky

Donald M. King president

20

Reisenfeld & Co. 3659 Green Road, Suite 315, Beachwood 44122 (216) 765-8080/www.reisenfeld.com

6

1

NA

NA

NA

NA

Mike Herzfeld

Drew Sulzer president

23

Davison West 526 Superior Ave., Ste 240, Cleveland 44114 (216) 861-0600/www.davisonwest.com

5

1

NA

NA

NA

NA

Dyann Davison

Dyann Davison partner

23

Emmco Corp. 3681 S. Green Road, Suite 201, Beachwood 44122 (216) 292-3700/www.emmcocorp.com

5

15

NA

NA

NA

NA

NA

Jeffrey E. Soclof president

23

Global Real Estate Advisors Inc. 8585 East Ave., Cleveland 44060 (440) 255-5552/www.globalcommercialre.com

5

2

1,526,000

$26,000,000

$950,000

54

Neil Sawicki

Tim Sawicki senior vice president

23

Najm Real Estate Inc. 3030 Euclid Ave., Suite 406, Cleveland 44115 (216) 881-6256/najmrealestate.com

5

5

15,000

NA

NA

NA

Charles Najm

Chuck Najm president

23

Pinnacle Real Estate Services 4807 Rockside Road, Suite 270, Independence 44131 (216) 328-1555/www.pinnaclecleveland.com

5

4

NA

NA

NA

NA

Doug Smith

Donald M. Rudy president, owner

23

Weber Wood Medinger 25800 Science Park Drive, Suite 150, Beachwood 44122 (216) 464-7100/www.wwmrealestate.com

5

1

NA

NA

NA

NA

Alan W. Wood

Gerald B. Medinger president

29

Mohr Partners Inc. 812 Huron Road East, Suite 315, Cleveland 44115 (216) 812-4862/www.mohrpartners.com

4

5

NA

NA

NA

NA

NA

Dennis R. Burnside managing partner

30

Cooper Group 6120 Parkland Blvd., Suite 206, Cleveland 44124 (216) 916-7313 /www.coopergrp.com

3

5

NA

$87,000,000

NA

19

Dan Cooper

Dan Cooper president, broker

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

RESEARCHED BY Deborah W. Hillyer


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21

Sale: Market for hotel sales, development has improved continued from PAGE 1

for sale. A call to TriMont was not returned. Stephen Moran, the Crowne Plaza’s general manager for Denverbased Sage Hospitality Inc., said that Sage is part of a group bidding for the property. He said he focuses on daily tasks of managing the hotel and will focus on the sale when it occurs. He said ownership changes are part of life for hotel managers. One tantalizing name that has surfaced in connection with the new ownership is Miami-based Optima Management Co., which has acquired four office buildings in downtown Cleveland since 2008. Those buildings include Penton Media Center, which abuts Crowne Plaza. Chaim Schochet, the investment executive who runs Optima’s Cleveland office buildings, did not return three calls by Crain’s deadline last week.

Talk of the town The hotel’s current ownership explains why it is for sale: It is part of the Lehman Brothers Holdings Inc.’s Chapter 11 reorganization in U.S. Bankruptcy Court of Southern New York. Cuyahoga County mortgage records show the prior owner, Lane City Centre Ltd., deeded the

property to Lehman in 2005. However, direct references to the hotel could not be located in the Lehman bankruptcy filings or associated cases. Word that a sale of the property is pending and a major renovation is in the works is circulating among downtown hotel operators and property owners. David Gilbert, president and CEO of the Positively Cleveland and Greater Cleveland Sports Commission nonprofits that market the city to visitors and conventions, said rumors of a Crowne Plaza sale have circulated for some time, but he does not know the identities of prospective bidders. Mr. Gilbert said he likes the idea of connecting the properties because such connections strengthen bids by Midwest cities for winter meetings. Likewise, longtime Ward 4 Cleveland Councilman Kenneth Johnson also is hearing the idea of a tunnel make the rounds — again — as chairman of City Council’s city properties committee. “I first heard the idea when I got on council 20 years ago,” Mr. Johnson said. He ascribes a revival of the idea to prospective Crowne Plaza buyers investigating such a possibility.

Fix-ups needed Construction of the medical mart

and convention center dramatically enhances the potential upside of buying Crowne Plaza. David Sangree, president of Hotel and Leisure Advisors of Lakewood, said in the past buyers of the hotel only could look at historic sales figures to reckon its value. Now, if the new convention center and medical mart are successful, they could revitalize the city’s lodging business. Even so, Mr. Sangree expects Crowne Plaza to sell for a low price because it would need significant investments, including an expensive updating of its dated brick exterior. The market for selling hotels is much improved over last year, he said, as there are buyers such as real estate investment trusts and developers who buy and upgrade hotels in the hunt once more. Lenders also are gaining an appetite for hotel acquisitions, Mr. Sangree said, although they remain cool toward developing new hotels. Talk of a potential sale of Crowne Plaza comes amid several potential conversions of old office buildings to hotels downtown. It also occurs as business brightens a bit for local hotels in the wake of the 2008 recession. PKF Hospitality Research of Indianapolis estimates that occupancy in the Cleveland-Elyria Metropolitan Statistical Area, which includes

Ganley: Silence often can be harmful when companies deal with crises continued from PAGE 3

“There’s certainly always a great level of concern as to any potential impact on a business,” Mr. Buckley said. When a company executive come under fire, says criminal defense lawyer Gerald Gold, it is “like having a dreaded disease.” Mr. Gold, who is not involved in Tom Ganley’s case but is counsel for Michael Forlani, a businessman identified in the ongoing Cuyahoga County public corruption saga, said he has seen small companies shuttered as a result of such trouble. He noted that executives often are major shareholders in their businesses and may cash in the stakes to fund their defense amid scandal. There is no cookie-cutter approach for responding when crisis strikes. Sometimes it’s best for an executive to step away until it blows over, said Ed Stevens, president of Stevens Strategic Communications Inc. in Westlake. Other times, companies distance themselves from a person in trouble to protect the company. Ganley Auto has done the opposite: Ken Ganley publicly has stated his family’s confidence in and support of his father.

Business keeps clicking “He says the allegations aren’t true, and I believe him,” Ken Ganley said in an interview last week. “People say to me, ‘How’s this going to affect business?’” he said. “Here’s all I can tell you: Numbers don’t lie.” Last year was Ganley Auto’s best, which opened its doors in 1968. Ken Ganley said unit sales, dollar sales and store profits all increased. This year is on pace to be “well ahead of that,” he added.

Tom Ganley is to be arraigned on the criminal charges this Tuesday, March 29. He remains CEO and is in his office regularly, Ken said. About two years ago, as part of the company’s succession plan, Ken assumed control of day-to-day operations of the company, which employs 1,200 at more than 25 dealerships in Northeast Ohio. Ken, who’s transitioning to the role of president, hired Hennes-Paynter Crisis Communications in Cleveland Heights last fall after the woman filed the civil suit during Tom Ganley’s campaign for Ohio’s 13th District congressional seat. He said he wasn’t sure what would transpire with, or how to handle, the media. “Nobody trains for this,” Ken said. “You don’t learn how to deal with this until it really happens.” One of the lessons he’s learned, he said: Don’t hide.

Ostriches need not apply Getting in front of bad news is imperative, said Barbara Paynter, a partner with the firm hired by Ganley Auto. Though she wouldn’t discuss the specific advice provided to Ganley Auto, Ms. Paynter summarized her general advice colorfully: “Eff up, fess up, fix up. “Let’s face it: In Cuyahoga County, we’ve had a lot of companies that have gone through situations,” Ms. Paynter said, referring to the corruption probe that implicated a number of Northeast Ohio businesses. “We always tell them, ‘You have to actually increase your marketing, make sure that you continue to have your name out there, that customers are reminded why they do business with you.’” Mr. Stevens, who assisted King

Nut Co. in Solon during a salmonella outbreak in early 2009, agreed it’s better to talk. “When you say, ‘No comment,’ it typically indicates to the listening public that you’re hiding something,” he said. “Give the best answer you can, or get back with an answer to whatever questions are asked.” The most critical piece of crisis communication, Ms. Paynter noted, is employee communication because employees may worry about their jobs and are the ones speaking directly with customers. It’s important to keep good news coming, she added. Do community service. Make donations. Increase the company’s social media presence. “The customers need to know this is not who you are as a company,” she said. The message needs to be, she added: “We’re doing everything we did yesterday.” ■

downtown, will increase this year by 2.5 percentage points to 56.8%, and average daily rates will rise 3.7% to an average room rate of $88.83. Mark Eble, PKF vice president, said room rate increases will be

diminished locally and nationally by continued strong competition among hotels. However, an increase could help set the table for a sale — particularly with the convention center under construction. ■

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MARCH 28 - APRIL 3, 2011

Jobs: Venture capital access key to growth “The kinds of stuff (Mr. Kvamme) is talking about investing in are a real positive.”

continued from PAGE 3

He cited a 2009 Ohio Venture Capital Report prepared for Gov. Ted Strickland that showed $313.5 million in venture capital investment in the state in 2009. “(That’s) what’s done in Silicon Valley in two weeks,” he said. “The bottom line is you have to have capital.” And the state needs to be able to use its money in new ways, Mr. Kvamme said.

– Steven Schoeny, principal, SZD Whiteboard that would construct the building and lease it to the expanding business. Most investments would be done with the state as a secondary partner, with either a real estate developer, investment banker or venture capitalist in the lead. “We would work with venture capital firms,” Mr. Kvamme said. “We never want to lead (an investment). We have some great investment managers (in the state) who don’t have enough work.” The $100 million Mr. Kvamme said he expects JobsOhio to inject annually into business investment will be in addition to roughly $500 million the state will have available for technology and other strategic business investments through its Third Frontier and Innovation Ohio programs. Gov. Kasich has said he expects that by investing wisely but aggres-

Tools of the trade Among the financing tools the new agency might use are direct equity investments in businesses; subordinated debt; line-of-credit financing related to a business expansion; or equity investments in real estate that would house a company coming to the state. Mr. Kwamme said he was in talks with one company, which he would not identify, that he hopes to convince to expand its operation in southern Ohio. The company needs a new building for specialized operations. He said JobsOhio could invest $2 million in a partnership

Contact: Phone: Fax: E-mail:

sively, JobsOhio can fund future growth from the profits of its investments. Existing, government-run financing programs are constrained by state laws that were designed when most public investment was meant for old-line manufacturing businesses, where investments in bricks and mortar and heavy equipment could be used as collateral for loans. “The kinds of stuff (Mr. Kvamme) is talking about investing in are a real positive, and I think (JobsOhio) is looking at investing in companies in a way that is appropriate for the modern economy,” said Steven Schoeny, a former state development department manager. “A lot of the state programs were put in place for somebody buying a machine and bolting it to the floor,” said Mr. Schoeny, who now is a principal in SZD Whiteboard, an business consultancy affiliated with Schottenstein, Zox & Dunn Co., a Columbus law firm. “That’s not economic development today.”

Meeting a need Today’s startups need invest-

ments to attract product development staff or to run a clinical trial for a medical device. Or, a virtual company may want the state to invest in its contract manufacturing partner. Because of its independent status, JobsOhio could make those investments, even though they likely wouldn’t meet traditional state lending guidelines. One reason for cautious government investing is the different objectives of government and the typical venture investor. Governmental agencies traditionally are more risk averse than venture investors, and new companies are more likely to fail and leave the government agency holding an empty bag. “When bureaucrats and politicians invest in companies that fail, there is a public backlash that can be a political and media problem for those people,” said Jonathan Murray, managing director of Early Stage Partners, a Cleveland venture capital firm. “I think the kinds of things he (Gov. Kasich) is talking about investing in are the kinds of things you see other states doing.” ■

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THEINSIDER

THEWEEK MARCH 21 - 27 The big story: Interim Cleveland schools CEO Peter Raskind proposed nearly $74 million in cuts to offset the struggling school district’s massive budget shortfall, in a move that could result in the layoffs of hundreds of teachers and the shuttering of several schools. The proposal calls for laying off 835 employees — 650 of whom are teachers — as well as closing seven schools; trimming $2.5 million from the central office’s budget through pay, benefit and staff reductions; and selling unneeded school buildings. The proposed cuts would eliminate the deficit over the next two school years. See story, Page One A longer process: Federal regulators have given Steris Corp.’s System 1 processor another six months to live. The U.S. Food & Drug Administration has given health care providers until Feb. 2, 2012, to replace the processor, which is used to clean endoscopes and other heat-sensitive medical devices. The FDA previously told System 1 users that they had until August to find a substitute for the machine. The agency in December 2009 revoked its approval for the device because Steris had made several changes to the machine that the agency didn’t sanction. With friends like these …: The largest shareholder of Cedar Fair LP called for the resignation of seven board members of the amusement park operator, saying the seven were “involved in mischaracterizing the supposed resignation” last year of Cedar Fair chief operating officer Jack Falfas. Texas hedge fund Q Investments, which owns about 18% of Cedar Fair’s stock, said an arbitration panel “recently upheld Mr. Falfas’ contention that he was wrongfully terminated and ordered the company to reinstate him to his previous position.” Among the board members Q Investments wants to resign is president and CEO Richard Kinzel. Expecting a bounce: Goodyear Tire & Rubber Co. outlined performance targets for itself at an investor conference in New York. Goodyear said it is targeting 2013 segment operating income in its North American Tire unit of $450 million and improved segment operating income in its international businesses. In total, Goodyear is targeting record segment operating income of $1.6 billion in 2013. Going forward, the company anticipates making capital investments of between $1.1 billion and $1.3 billion per year in 2012 and 2013, up slightly from an expected $1.1 billion to $1.2 billion in 2011. Trading places: MMPI, the Chicago-based developer of the Cleveland Medical Mart and Convention Center, named a 30-year trade show veteran as the project’s general manager. Brian Casey takes the job effective May 2. He will be responsible for attracting trade show business to the facility and for identifying potential clients and events for the medical mart. Since 2006, he has served as president and CEO of High Point Market Authority, which organizes trade shows for the furniture industry and oversees the downtown marketplace of High Point, N.C.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

So, tell us what you really think, Marc? ■ Who needs Charlie Sheen? Northeast Ohio has its own quote machine in Marc Canter. The Silicon Valley entrepreneur, who moved here in 2009, is one of three entrepreneurs who have been hurling criticisms at JumpStart Inc., which assists and invests in local technology startups. At a March 21 meeting JumpStart organized in response to the complaints, Mr. Canter often made his thoughts known before he was handed the microphone. “This machine kills fascists!” he shouted at the end of the meeting, raising his laptop above his head. Though eccentric, Mr. Canter has made his mark in the tech world. In the 1980s, he co-founded MacroMind, which became Macromedia. The company developed the multimedia player that would become Flash. Today he is CEO of BroadBand Mechanics, which designs interactive web sites for both startups and “old stodgy industrialists,” according to the company’s web site. No one can accuse Mr. Canter of being stodgy. In an email criticizing JumpStart, he describes himself as a “catalyst” who “demands the best” for Northeast Ohio, even when some would rather tune him out. “I put fear and hate into the hearts of others,” he said in the email. He also says on his blog that JumpStart chose a black man to chair its compensation committee so no one would question the salary of JumpStart CEO Ray Leach. When

asked if such comments might hurt his cause, he rephrased the statement slightly: “What I should have said is that the exact reason he’s on the comp committee is to defend the kind of RIDICULOUS comp they’re paying themselves,” he said. — Chuck Soder

Female perspective needed in downtown development ■ You wouldn’t think the best way to revive downtown retailing would be to ignore half the population. But it just might work. “If we design downtowns for women, men will follow,” urban consultant David Feehan told a City Club of Cleveland audience last Wednesday, March 21. Mr. Feehan said women control 51% of the wealth in the United States but do 85% of the retail purchasing. “We have not designed our downtowns accordingly,” he said. “We’ve got men designing downtowns and women are the primary market.” Mr. Feehan, president of Civitas Consultants LLC of Silver Spring, Md., was speaking on a panel examining the state of downtown Cleveland and ways to improve it. Targeting women was one idea he offered to the soldout City Club audience. “Ask your wife, ‘Do you like to park in a downtown parking garage? Are you willing to use a public toilet that is grimy and dirty?’” he asked a reporter after the program. “They don’t want to do it.” — Jay Miller

MILESTONE

BEST OF THE BLOGS

COMPANY: Maloney + Novotny, Cleveland THE OCCASION: Its 80th anniversary

Excerpts from recent blog entries on CrainsCleveland.com.

The regional CPA firm is headquartered downtown but also has large offices in Canton and Elyria. It also has achieved a national profile, as it has been named one of the 100 best accounting firms to work for by Accounting Today. The firm was founded by Herb Hausser and Carl Heintel as Hausser & Heintel. In 1981, it merged with Brubaker, Helfrich & Taylor. In 2008, the firm changed its name to Matthew Maloney + Novotny LLC. Maloney Today, the firm has 18 shareholders and more than 100 employees. “The firm’s founders and prior leaders heavily influenced Maloney + Novotny’s culture and commitment to the business community,” says Matthew J. Maloney, managing shareholder. “I believe the firm has thrived over the years, in part, because of those core values and entrepreneurial culture that run so deeply through the firm and its people.”

Reading this item just might make you a bit sad ■ Gallup’s new Well-Being Index for 188 U.S. metropolitan areas is out, and Northeast Ohio doesn’t fare very well. The index is an average of six sub-indexes, which individually examine life evaluation, emotional health, work environment, physical health, healthy behaviors, and access to basic necessities. The overall score and each of the six sub-index scores are calculated on a scale from 0 to 100, where a score of 100 represents the ideal. Youngstown-Warren-Boardman ranks as the second least-happy area in the country, with a score of 61. Cleveland, at 64, and Akron, at 65, weren’t a whole lot better. You can compare all 188 areas at tinyurl.com/49c4wjs.

Everyone’s a critic — of the orchestra’s in-house critic ■ Wall Street Journal drama critic Terry

weatherhead Learn more about the Weatherhead School of Management’s Part-Time MBA program, ranked #14 in the U.S., and Executive MBA program, ranked #16 nationally, by visiting weatherhead.case.edu. OUR LETTERS CARRY THE STRENGTH OF NUMBERS

A diverse guy in more ways than one ■ The new dean of the Cleveland-Marshall College of Law can identify with students. “Cleveland-Marshall has always been known as a school of opportunity — not just for students of color, but students who come from all sorts of places,” said Craig M. Boise, the law school’s first black dean. “There’s opportunity for folks who’ve come from challenged backgrounds.” Mr. Boise, who was named dean last week, said he has known financial struggle. He studied piano performance in college before halting his education for lack of money. Because police jobs offered a salary and benefits, he joined the police academy and worked as a Kansas City, Mo., police officer. It was in that line of work that he became interested in law. So while Mr. Boise worked full time, he finished an undergraduate degree in political science at the University of Missouri-Kansas City. He’d go on to graduate from the University of Chicago Law School in 1994. Mr. Boise begins his deanship July 1. He’s coming from DePaul University College of Law in Chicago, where he’s a professor and director of the graduate tax program. His move will bring him closer to his two youngest children, who live here, and back to the city in which he used to work. Beginning in 1999, he was a tax lawyer for Thompson Hine LLP and later an associate law professor at Case Western Reserve University. Other fun facts: Mr. Boise still plays piano, has sailed a number of places and rides a 2002 Harley Road King. — Michelle Park

Teachout chided the Cleveland Orchestra for its use of a “critic-in-residence” in Miami, where the orchestra has conducted an annual residency since 2007. You can read the work of that critic, Enrique Fernández, at ClevelandOrchestra Miami.com/category/blog. Mr. Teachout argued that Mr. Fernández’s title “points to the great flaw of institutional blogging, which is that it is, well, institutional. “Whatever else he does with ‘his’ blog, you can bet he won’t be saying anything on it that’s even mildly critical of the Cleveland Orchestra,” Mr. Teachout wrote. Here, for instance, is the last sentence of a recent posting about a performance by Giancarlo Guerrero, the principal conductor of the orchestra’s Miami residency: “As my 18year-old jock hip-hopper college freshman would say, ‘What a beast!’” Arts-related blogs caught on, Mr. Teachout argued, because they “frequently offered a sharper, better-informed alternative to the bland arts coverage published in regional newspapers. … It remains to be seen whether any institutional blog will ever pack that kind of punch.”


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