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Landmark on verge of landing new owner Illinois company is close to purchasing former Eaton Corp. home on Superior By STAN BULLARD sbullard@crain.com

on serving it again. I want to serve quality fish that tastes good and doesn’t contain chemicals found in Lake Erie,” said Michael Bruno, owner of the Blue Door Bakery & Café in Cuyahoga Falls, which primarily ships in fresh wild fish through Sea to Table, a sustainable seafood distributor.

The 1111 Superior office building, better known as Eaton Corp’s former home, is on the verge of getting a new owner — Skokie, Ill.-based American Landmark Properties Inc., which already owns a skyscraper in downtown Cleveland. Paperwork pointing to a potential deal is on file with the Ohio Secretary of State’s office. A newly formed limited liability corporation bears the name 1111 Superior LLC and lists as its address the same address as the headquarters of American Landmark: 8114 N. Lawndale Ave., Skokie, Ill. Insiders familiar with the pending transaction for the 28-floor office tower say American Landmark, an aggressive deal-making landlord at 1100 Superior, may get 1111 Superior at a low enough price — perhaps as little as $20 million — that it could become a formidable competitor for office tenants who are ready to make a move. American Landmark has leased more than 100,000 square feet at 1100 Superior in the past two years. A visible sign of dealmaking moxie is that it awarded naming rights to 1100 Superior, now known as Oswald Centre, to the Oswald Cos. insurance brokerage, to cinch a deal for 70,000 square feet of office space.

See FISHY Page 22

See LANDMARK Page 21

CONTRIBUTED PHOTO

Catanese Classic Seafood fishermen are shown during a recent Lake Erie haul of yellow perch.

SOMETHING’S FISHY NUMBERS GAME 515 million The population of yellow perch that were at least 2 years old, at its peak in 2005, according to a review.

155 million The projected population of the same perch in 2014.

Taking action

22

A proposed state bill is aiming to clean up the lake. Page 22

By KATHY AMES CARR clbfreelancer@crain.com

T

he advent of spring and summer means we can now look for perch, walleye and our other favorite Lake Erie fish on local restaurant menus. The warmer months also introduce to the lake raw sewage after heavy storms, phosphorus runoff from fertilizer and algae blooms, exacerbating a decades-long problem of environmental degradation caused by pollution from heavy in-

The quality of fish caught on Lake Erie is a concern for some local restaurant owners dustry, agriculture and human negligence. So what do these toxins mean for the fish we eat? For local chefs who are meticulous about ingredient sourcing, the contaminants’ impact on the quality of the lake fish is of particular concern. “I hesitantly served walleye once about a year ago, and I don’t plan

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PERSONAL TOUCH Local chef Jonathon Sawyer’s latest venture, Trentina, hits close to home ■ Page 5

Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 22


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Equity Engineering scoops up another floor at Tower East By STAN BULLARD sbullard@crain.com

The employee-owners of Equity Engineering Group like Tower East in Shaker Heights so much that they have accumulated four floors in the building. Indeed, Equity president David Osage says the 12story building works so well for the firm that he hopes that floor-byfloor deals eventually will give it the whole thing. Equity, a long-time tenant in the building, recently bought the ninth floor for $1 million, according to Cuyahoga County land records. Earlier this year, it bought three floors from building owner Rosemont Realty of Santa Fe, N.M., for $3 million. Equity needed room to expand and toyed with — then rejected — the trendy idea of shedding its suburban office for a building in downtown Cleveland. However, the nature of the firm’s work, the central location for its employees and its affection for the building’s International Style design by worldrenowned architect Walter Gropius kept the company in Shaker. Osage said Equity provides what amounts to health care services for oil and related companies, particularly for overseeing operations of oil refineries. Its engineers have developed strategies for how long an oil refinery may run before the owner needs to repair or replace it, which involves a costly shutdown in operations. “We have an around-the-clock operation,� Osage said. “It’s common for us to have a meeting over Skype at 2 a.m.,� so having a secure

location and parking the firm controls was vital. What it already had in Shaker beat downtown’s options, he felt. However, Equity also wanted to own its space, as Osage considers rent wasted money. The solution was buying three floors in the building last January. The city of Shaker Heights helped the deal along last year by providing Equity a $250,000 grant, which is being forgiven because the firm met required hiring goals when it hiked its staff to 72 from 60. Earl Leikin, mayor of Shaker Heights, said providing incentives to cement Equity’s presence and bolster Tower East was attractive to the city. “Equity is a very important business in Shaker Heights,� Leikin said. “They have a positive presence in the building and the city. Having a firm of (Equity’s) caliber in our city is a real asset.� Jim Warshawski, Rosemont’s national portfolio director, said in an email that Rosemont went through several steps to accommodate Equity. Rosemont does not plan to try to sell other parts of the building as office condominiums on the open market, but the strategy worked in the case of such a major tenant. “Rosemont worked with them to convert the space into commercial condominiums, which would accomplish both objectives,� Warshawski said. “It took about three months to work through the process, which included having the building surveyed and the property recorded as a condo plat.� Retaining Equity was important to Rosemont, as Tower East has

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about 38,000 square feet of other office space available in the 173,000square-foot building. Equity has 80 employees in Shaker Heights — eight more than it had at the beginning of 2014 — and most are engineers in the civil, mechanical and process disciplines. Osage said Equity is looking to hire five to 10 more people in Shaker and another five in its other offices, which are Dallas; Houston; Alberta, Canada; and Abu Dhabi. Equity is the type of talent that can be footloose — and it once almost left Cleveland. Technically, it was formed in Cleveland as a result of the 1999 departure of BP America from Cleveland. Osage and five other former BP workers launched what became Equity rather than leaving town. Initially they were part of the M&M Engineering Associates Inc., a unit of Hartford Steamboiler Inc., before going on their own in 2002. Equity became an ESOP in 2010. Besides appreciating the views of the city from the building’s top floors, Osage is in love with the spare, modernist design by Gropius. Parts of the building, such as tiled walls in elevator lobbies, look as contemporary as today’s kitchen backsplashes. Only a few elements of the building date it from 1969. The building even has a display in its lobby to honor Gropius. The city of Shaker Heights also recognized the building’s status by getting the structure placed on the U.S. National Register of Historic Places in March. The hallmarks of its International Style are exposed concrete and its modular, grid-like pattern. â–

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Deal could revitalize Ben Venue plant By CHUCK SODER csoder@crain.com

Ben Venue Laboratories said it would have endured $700 million in losses over five years if it tried to keep running its troubled drug manufacturing complex in Bedford. So why is Hikma Pharmaceuticals thinking about buying it? Last week, London-based Hikma announced plans to buy Bedford Labs — the division of Ben Venue

Hikma Pharmaceuticals’ purchase of Bedford Labs could be start of something bigger: Purchase of manufacturing complex that makes and sells its own generic, injectable drugs — in a deal that could reach $300 million. Granted, Hikma plans to move production of Bedford Labs’ drugs to its own manufacturing plants, but Hikma also signed an exclusivity agreement that gives the company the right to buy the sprawling

Ben Venue complex. After spending years and hundreds of millions of dollars trying to fix a long list of problems pointed out by federal regulators, Ben Venue announced last October that it would permanently shut down almost all manufacturing operations at the plant by the end of

2013. Since the announcement, the contract drug manufacturer’s work force has shrunk from about 1,100 to just 325, including about 100 employees dedicated mainly to the Bedford Labs division. So if Hikma buys the complex, wouldn’t it be plagued by the same regulatory problems that ham-

pered Ben Venue? Not necessarily. Sure, the U.S. Food & Drug Administration pointed out dozens of problems at the facility, but most of them were related to Ben Venue’s quality-control processes. If Hikma buys the plant, it would be instituting its own processes, giving the publicly traded company — which was founded in Jordan, where some of its executives live — a clean slate in that area. See BEN VENUE Page 21

BoxCast teams up with ESPN Cleveland Local startup forms partnership to boost live streaming of high school football games By KEVIN KLEPS kkleps@crain.com

When Gordon Daily and a few of his friends set up their first online broadcast in 2008, they believed it could be the start of something big. Their first client was a Westlake funeral home. Late this summer, Daily’s company, BoxCast, plans to be a fixture for Northeast Ohio’s rabid high school football fans. The Cleveland startup and ESPN Cleveland have announced a partnership that will deliver live, Daily high-definition video broadcasts of high school football games to smart phones, tablets and computers. Delivering live streams of sports broadcasts is nothing new for BoxCast, which counts 70 colleges and universities as clients, said Daily, the company’s president and co-founder. But making its mark in high school football, with ESPN Cleveland serving as the “aggregator” of its content, is a “game-changer,” Daily believes. “This is a long time coming,” Daily said. “High school sports are the most amazing competitions you see in athletics.” Daily and fellow Case Western Reserve University graduates Justin Hartman, Ron Harper and Joel Helbling (who is no longer with the company) founded BoxCast six years ago, when they developed a way for Jenkins Funeral Chapel to broadcast a service on its website for out-oftown friends and family members who weren’t able to attend. The technology, now on its seventh version, is a plug-and-play broadcast box that is a little bulkier than a smart phone. See BOXCAST Page 6

MCKINLEY WILEY

Jonathon and Amelia Sawyer are shown in front of Trentina, which will open late this month. Inside the Uptown restaurant, a large, beaded crystal chandelier (below right) hangs above the dining room.

RESTAURANT HITS HOME FOR SAWYER Wife’s roots in northern Italy are the inspiration for noted chef’s latest venture, which opens in late June By KATHY AMES CARR clbfreelancer@crain.com

T

he unveiling of Jonathon Sawyer’s much-anticipated Trentina is drawing near. The intimate eatery, a result of several years of planning and overseas research, is targeting a lateJune opening in Cleveland’s cultural Uptown neighborhood. The menu emphasizes the chef’s inspiration for the cuisine from the northern Italian region of Trentino, which also represents the heritage of his wife, Amelia. The equivocal

TRENTINA ■ Location: 1903 Ford Drive, Cleveland ■ Hours: Dinner Tuesday through Saturday, with plans to eventually open for lunch and patio service. ■ More information: www.restauranttrentina.com growing season means Jonathon can execute the dishes with bounty sourced from Northeast Ohio. “Our menu is inspired by the

commonality of ingredients between the vals and mountains of Trentino and Cuyahoga Valley,” Jonathon said. “This project definitely holds personal meaning.” The 33-seat restaurant introduces Jonathon’s interpretation of simple classics, like lamb shoulder; crusto de polenta, or crispy polenta chips infused with Jonathon’s handcrafted vinegar; and strangolapreti, or cheesy dumplings made with day-old bread. Imported Italian wines, olive oils and specialty cheeses support the scratch creations.

“There are Germanic and Austrian influences in the dishes,” said Jonathon, who also is chef and owner of Greenhouse Tavern and Noodlecat in downtown Cleveland. “This is a region that is very proud of its cuisine and the confluence of so many cultures.” A six- to eight-course tasting spread will treat diners to the complexities in technique and culinary artistry that have earmarked Jonathon as a James Beard award finalist and Food & Wine best new chef. See SAWYER Page 6


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The box is hooked up to a video camera and, in the case of sporting events, a scoreboard, to produce a live, and inexpensive, broadcast to customersâ&#x20AC;&#x2122; websites. â&#x20AC;&#x153;Every modern phone has an HD camera,â&#x20AC;? Daily said. â&#x20AC;&#x153;Our equipment is compatible with anything. The coachesâ&#x20AC;&#x2122; camera in the press box is already HD. You hear HD and it seems expensive, but the reality is, itâ&#x20AC;&#x2122;s already in place.â&#x20AC;?

Partnership is â&#x20AC;&#x2DC;even splitâ&#x20AC;&#x2122; Something many people take for granted is what sold Keith Williams on BoxCast. â&#x20AC;&#x153;The thing that tipped it for me is the picture is clear as can be,â&#x20AC;? said Williams, ESPN Clevelandâ&#x20AC;&#x2122;s general manager. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s buffered before you watch it, so there is no spinning wheel or any of that stuff.â&#x20AC;? When the high school football season kicks off in late August, ESPN Clevelandâ&#x20AC;&#x2122;s website will serve as the hub for what BoxCast hopes will be a large crowd of high school partners. Williams said the website will have a live scoreboard with what he envisions as something similar to ESPNâ&#x20AC;&#x2122;s major online scoreboards. Only instead of a link to a live box score or GameCast, ESPN Cleveland will have a â&#x20AC;&#x153;watch nowâ&#x20AC;? icon that will take viewers to live broadcasts on each individual schoolâ&#x20AC;&#x2122;s website. Subscribers to each schoolâ&#x20AC;&#x2122;s broadcasts will be charged $9.99 per month, and ESPN Cleveland expects to provide free highlights for local games in the days following a broadcast. Daily said the partnership is â&#x20AC;&#x153;a three-way splitâ&#x20AC;? between BoxCast, ESPN Cleveland and the high schools that agree to participate. There is no charge for the schools to get involved, but Daily and his team strive to make sure each is up to the task from a technological standpoint. â&#x20AC;&#x153;The better broadcast they have, the more people will watch,â&#x20AC;? Daily said. To ensure the best experience for subscribers, BoxCast works with each schoolâ&#x20AC;&#x2122;s IT department to prepare it for the live broadcast. Some

schools have play-by-play announcers who detail the action; others let the public-address announcer and the crowd serve as all the noise that is necessary. â&#x20AC;&#x153;All weâ&#x20AC;&#x2122;re doing is plugging into those two things (the video camera and the scoreboard),â&#x20AC;? Daily said. â&#x20AC;&#x153;We take the people out of the equation.â&#x20AC;?

Getting the kids involved Online broadcasts of sporting events are much more common at colleges and universities than on high school campuses. â&#x20AC;&#x153;There are a lot of people streaming,â&#x20AC;? Daily said. â&#x20AC;&#x153;A ton are trying to get into high school sports to stream. But they take the media rights and put the event on TV and take all the revenue. Thatâ&#x20AC;&#x2122;s where the business model breaks down.â&#x20AC;? To make headway in Ohio, Daily said BoxCastâ&#x20AC;&#x2122;s live broadcasts must be run by students. â&#x20AC;&#x153;They (the Ohio High School Athletic Association) are OK with this being a moneymaker for the school and us,â&#x20AC;? Daily said. â&#x20AC;&#x153;They want to make sure the students are involved, and they want the school to benefit.â&#x20AC;? BoxCastâ&#x20AC;&#x2122;s mission, according to its president, is to make the technology â&#x20AC;&#x153;so doggone simpleâ&#x20AC;? that anyone can broadcast a live event. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s really, really cool technology,â&#x20AC;? ESPN Clevelandâ&#x20AC;&#x2122;s Williams said. The company, which has grown from four to 15 employees in the past year, has been housed in a 3,600-square-foot space on the second floor of Burke Lakefront Airport since June 2013. Daily said more than 100 of BoxCastâ&#x20AC;&#x2122;s clients are churches, which broadcast such events as services, weddings and funerals. â&#x20AC;&#x153;Any time there is an opportunity to gather, there is an opportunity to sell our product,â&#x20AC;? he said. In the past year, a timeframe that coincided with Daily leaving his job as a product manager and software developer at Rockwell Automation to concentrate all of his efforts on BoxCast, the company made quite a bit of progress in collegiate athletics. Case Western Reserve University (the alma mater of the four cofounders), John Carroll University

and Baldwin Wallace University are among BoxCastâ&#x20AC;&#x2122;s clients. John Carroll assistant athletic director for communications Chris Wenzler said the Blue Streaks used BoxCast for more than 75 live broadcasts in the 2013-14 school year. The school pays the company a fee for the service, and charges its customers $6.95 per month for HD broadcasts. Standard-definition broadcasts are free. â&#x20AC;&#x153;We have nothing but great things to say,â&#x20AC;? Wenzler said of the service. Baldwin Wallace and Case Western Reserve donâ&#x20AC;&#x2122;t charge a subscription fee for their live broadcasts. The online streaming â&#x20AC;&#x153;has been great for us,â&#x20AC;? Baldwin Wallace director of sports information Kevin Ruple said. Case assistant athletic director Nicholas Minerd said what sets BoxCast apart from other companies that offer a similar service are its â&#x20AC;&#x153;affordable rateâ&#x20AC;? (packages start at $300 per year) and easy-to-use technology.

Hoops could be next Williams said the partnership could â&#x20AC;&#x153;be an entry pointâ&#x20AC;? for future high school basketball broadcasts that would be housed on ESPN Cleveland. For the time being, heâ&#x20AC;&#x2122;s focused on what he sees as the huge potential for high school football broadcasts in Northeast Ohio. â&#x20AC;&#x153;Other people have done it, but not to this scale,â&#x20AC;? Williams said. â&#x20AC;&#x153;From a reliability standpoint, from a crisp picture standpoint, this is pretty unique.â&#x20AC;? Daily said partnering with ESPN Cleveland â&#x20AC;&#x153;builds awareness of what is possible.â&#x20AC;? â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s our biggest problem â&#x20AC;&#x201D; people knowing itâ&#x20AC;&#x2122;s possible,â&#x20AC;? he said. He describes relationships with high schools as a â&#x20AC;&#x153;very local, tell-yourbuddies type of deal.â&#x20AC;? About a dozen local high schools have already signed up for the 2014 football season. BoxCast believes many more will follow. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re really excited about it,â&#x20AC;? Daily said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re doing what should have been done for a long time.â&#x20AC;? â&#x2013;

Sawyer: Restaurant has 50 employees continued from PAGE 5

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â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m really excited about the multi-course tasting menu, where guests will experience a lot of tableside flourishes and luxurious ingredients, like duck aged an extra three weeksâ&#x20AC;? or using chemistry to change the consistency of aged cheddar, he said. Matt Danko, who was promoted from pastry chef at the Greenhouse Tavern to Trentinaâ&#x20AC;&#x2122;s executive chef, said the eatery fills a gap in Cleveland for that Italian region-specific cuisine. â&#x20AC;&#x153;This is not a primarily red-sauce Italian restaurant,â&#x20AC;? said Danko, who also is a partner. â&#x20AC;&#x153;Northern Italian cuisine is unexplored in this region.â&#x20AC;?

Fine dining Navy- and biscuit-colored walls and a gold leaf-painted ceiling set the tone for an indulgent yet comfortable dining experience. The dining room itself is really no bigger than a century homeâ&#x20AC;&#x2122;s foyer and living room, which enhances the in-

timate ambience. Both family and local artists contributed to the aesthetics. Cleveland furniture designer Jason Radcliffe of Forty Four Steel, for one, embellished the spaceâ&#x20AC;&#x2122;s former dining room tabletops with mirrors. A community art project in the form of a multistrand-beaded crystal chandelier hangs above the dining room. The art piece is a collaboration between the Sawyers and Museum of Contemporary Art visitors, and includes 25,000 beads strung by 500 individuals. â&#x20AC;&#x153;This was an incredible success story for us, the Sawyers and the community, to bond over art,â&#x20AC;? said MOCA communications manager Sarah Rehm. Upstairs, 1970s-style foil wallpaper with duplicating female silhouettes lines bathroom walls. The restrooms feature faucets that both wash and dry hands to minimize electricity and water use. A Washlet toilet seat reduces paper waste, instead acting like a bidet to cleanse and dry the bum after each use.

Breath of fresh air Outside, a wood-fired pizza oven on the 40-seat street-facing patio will facilitate the same types of dishes offered inside, as well as some suited for alfresco dining. â&#x20AC;&#x153;The patio will share the same breath as inside, with the pastas, but weâ&#x20AC;&#x2122;ll also do pan-roasted squab or spatchcocked hen over the wood fire,â&#x20AC;? Jonathon said. With a staff of 50 â&#x20AC;&#x201D; including two certified sommeliers and a dedicated wild food forager â&#x20AC;&#x201D; attentive service to match the cuisine is a key component. Trentina addresses the revival of fine dining that waned in popularity nationwide during the recession but has since regained a foothold in the contemporary dining scene. â&#x20AC;&#x153;This is a white tablecloth restaurant without the white tablecloths,â&#x20AC;? Amelia said. â&#x20AC;&#x153;The cuisine, the gold, the mirrors, the design and the bling are all aspects of redefining the modern fine dining restaurant.â&#x20AC;? â&#x2013;


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JUNE 2 - 8, 2014

New ruling on pension fund reporting has vast impact By JAY MILLER jmiller@crain.com

A change in accounting and actuarial standards usually is only big news to Excel Jedi masters. A new ruling by the Government Accounting Standards Board, though, is likely to have a broader impact. It could affect the cost of borrowing by cities and school districts in Ohio and across the country. GASB is the independent organization that defines accounting and financial reporting standards for public agencies. It is implementing two changes for fiscal year 2015 that will require public agencies, for the first time, to disclose on their annual balance sheets their share of any shortfalls in employee pension funds. “We’re concerned with how (the new information on financial reports) will be used,” said Lisa Morris, executive director of the Ohio State Employee Retirement System, one of Ohio’s five major pension funds. That’s because the new reporting requirements don’t change the financial condition of any government agency in Ohio directly. The

reporting changes are designed to make the public and the municipal bond market more aware of what could be a long-term problem that could affect the way bond rating agencies and investors appraise the financial condition of cities and school districts. That, in turn, could make it more difficult — or at least more expensive — for them to borrow money for new schools, roads or swimming pools. The GASB changes are a response to the decline in the value of pension-fund stock holdings resulting from the stock market’s downward trajectory over much of the last decade and the prospect that those stock portfolios won’t recover fast enough to cover future pension obligations. The pension fund world has also been rocked by Detroit’s bankruptcy and its impact on that city’s pension funds. At the same time, a November 2012 report by Morningstar Inc., a financial reporting service, found pension funds in 21 states that Morningstar considered financially unsound. Ohio’s pension funds are not in that group, though they do have a level of what’s called “unfunded liability.” Because local governments don’t

run their own pension funds, until now, the municipal bond market hasn’t known how much pension debt the communities might be on the hook for. Now, every city and school board’s share of the state pension debt will appear on their financial statements. Ohio pension funds pay benefits from past contributions by employers and employees and from investment income. State law sets the employer’s contribution at 14% of salary, while employees contribute 10% of salary. Because payouts to retirees will stretch out over decades, a pension fund does not need to have 100% of its future liabilities on hand. Instead, a typical pension plan may have assets on hand that will equal to 70% to 80% of its future needs, with the expectation that future investment returns will cover the rest. The sour investment environment since the recession, though, has pushed some public pension funds around the country — but not in Ohio — below a comfortable cashon-hand ratio. Now, the amount of those unfunded liabilities will be prominently displayed on local financial statements for the first time, not

just on the pension’s fund’s balance sheet.

thrilled about it, but we understand the logic behind it. It will impact everybody.”

‘It will impact everybody’ State Auditor Dave Yost has been touring the state offering local finance directors advice on how to make sure their financial statements are accurately compiled. A forum in Parma April 17 drew about 250 finance officers. Yost explained to the audience how the impact could be shouldered by local governments, their employees or by shifts of spending from other local services to cover the cost of pensions. If future investments don’t produce the anticipated return, typically 7.75% annually, a pension fund could find itself lacking the cash to be able to issue monthly pension checks. If that happens, it’s likely that the state would change the law and boost the pension contributions required of the public employers, the employees or both. So, because the municipal bond market takes the long view, showing the unfunded pension liabilities on local financial statements will emphasize that the city or school district could someday end up with a big debt. Until the 2015 financial statements are reported, Ohio public agencies won’t know how much they might be on the hook for. But one study of 2009 pension shortfalls in 61 cities found more than $100 billion in unfunded liabilities. The study, by the Pew Charitable Trust, did not include Cleveland but reported that Columbus had unfunded liabilities of nearly $1.4 billion. Matthew Rubino, finance director of Shaker Heights, who attended the Parma briefing, said, “No one is

More information helps One rating agency already has changed its ratings analysis to account for these unfunded pension liabilities. “We identified last year a series of local government ratings that were outliers,” said Thomas Aaron, a public finance analyst for Moody’s Investor Service. “We did have a number of Ohio school districts on that list.” As a result, seven southern and central Ohio school districts have had their credit ratings downgraded. The other rating agencies — Standard & Poor’s Financial Services LLC and Fitch Ratings Inc. — could add to that list as they review future financial statements. Tim Offtermatt, an investment banker with the Cleveland office of Stifel Financial Corp. who specializes in public finance, thinks the new reporting requirements could help Ohio communities in the municipal market. He believes that some potential investors have been shying away from municipal bonds of even well-funded cities because they read about the financial problems in Detroit and other cities. “Anything that’s done (because of the GASB reporting changes) that adds clarity to a state or local government’s financial situation is helpful,” he said. “If investors don’t have the data in audited financial statements, they react to newspaper headlines and they don’t buy (municipal bonds). The additional information will be good for investors.” ■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

9

GOING PLACES JOB CHANGES CONSTRUCTION CLEVELAND CONSTRUCTION INC.: Michael Busanus to health and safety director; Jonathan Trau to assistant project manager; Steve Skelinski to project superintendent.

Trau

Skelinski

CONSULTING

Bergmann

engagement; Joette Orsini to office manager; Corrie Adams to emergent leaders liaison, alumni relations; Cheryl Crooks to business and grants officer; Lori Wiebe to administrative and special projects officer; Jennifer Roller to president.

CENTRIC CONSULTING: Patrick Barnhart and Mallory Manke to business analysts; Joe Rea to business development lead.

FINANCIAL SERVICE SKODA MINOTTI: Cary Chaitoff to director of marketing.

Stevens

U.S. BANCORP INVESTMENTS: Gus Marzavas to financial adviser.

resources.

LEGAL

WRL ADVERTISING: Brian Frantz to account executive; Angela Bergmann to web developer.

Trapp

SLAVIC VILLAGE DEVELOPMENT: Christopher Alvarado to executive director.

ANKUDA, STADLER & MOELLER LTD.: Karoline Maciak and Jamie Ganner to associates.

NONPROFIT

OGLETREE, DEAKINS, NASH, SMOAK & STEWART P.C.: Rebecca J. Bennett to shareholder.

CLEVELAND HEARING & SPEECH CENTER: Sharon Dundee to manager, marketing, communications and events.

MARKETING

NEAR WEST THEATRE: Joseph Castellano to director of development.

DIX & EATON: David Hertz to managing director; Stephanie Harig to account executive; Sarah Hihn to director of human

Chaitoff

RAYMOND JOHN WEAN FOUNDATION: Beverly-Ann Burks to program officer, resident

REAL ESTATE ALLEGRO REALTY ADVISORS LTD.: Jeffrey R. Jackson to associate, corporate services. GREEN BRIDGE REAL ESTATE: Debra Kaplan to commercial real estate specialist. TRANSACTION REALTY: Michael Smith and Patty Carpenter to sales associates.

TECHNOLOGY WARWICK COMMUNICATIONS: Paul Tuttle and Steve Manna

Castellano

Alvarado

to senior technology consultants.

TELECOMMUNICATION DCT TELECOM GROUP INC.: Rick Cavanaugh to account executive; Aaron Redd to sales manager; Jonathan Susini to senior account executive; Amy Snyder to marketing manager.

BOARDS MEDICAL MUTUAL OF OHIO: Sam Miller (Forest City Enterprises Inc.) to chairman emeritus. PUBLIC RELATIONS GLOBAL NETWORK: Ed Stevens (Stevens Strategic Communications Inc.) to president-elect.

AWARDS AMERICAN SOCIETY OF HEALTHCARE PUBLICATION EDITORS: Lois A. Bowers, Sandra Hoban and Pamela Tabar (Long-Term Living) received a Gold Award, Best Print/Digital Integration.

Jackson

Kaplan

COLUMBUS SCHOOL FOR GIRLS’ ALUMNAE ASSOCIATION: Mary Jane Trapp (Thrasher, Dinsmore & Dolan) received the Alumna of the Year Award. COMMUNITY LEGAL AID SERVICES INC.: Darci S. Jay (Bober Markey Fedorovich) received the 2013 Volunteer of the Year Award. UNIVERSITY OF AKRON SCHOOL OF LAW: Peter Cahoon (Buckingham, Doolittle & Burroughs LLC) received the 2014 J. Dean Carro Professionalism Award from the Black Law Cahoon Students Association.

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

To watch Crain’s Weekly, a video that looks ahead to each week’s issue, go to CrainsCleveland.com or sign up for our newsletters at CrainsCleveland.com/register.

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CRAIN’S CLEVELAND BUSINESS

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JUNE 2 - 8, 2014

PUBLISHER:

John Campanelli (jcampanelli@crain.com) EDITOR:

Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Red light T

he wrestling match over Ohio Senate Bill 310 is over. It might take awhile to figure out who is left sprawled out on the mat. At first glance, it seems like it might be green energy in Ohio. SB 310, approved by the Legislature last week, freezes renewable-energy and energy-efficiency mandates for two years (when the benchmarks were passed in 2008, utilities were told they would need to get a quarter of their energy from green sources by 2025 and that consumer energy usage needed to be cut by 22%). Lawmakers say the two-year stay will give a new commission time to study the costs of the requirements. SB 310 also alters energy rules when the freeze ends in 2017. More projects will fall under the “energy efficiency” umbrella, and utilities will no longer be required to purchase at least half of their renewable energy from sources within Ohio. Opponents of the bill say the state has virtually given up on green energy and the emerging alternative energy economy in favor of cheaper, nonrenewable electricity from traditional energy sources. Supporters of the bill say the standards were unrealistic and keeping them would have clobbered rate-paying Ohioans in their wallets. While we are not pleased that Ohio lawmakers have become the first in the union to pull back on their own renewable energy standards — and the message that sends to businesses looking for government stability — we think much of the debate surrounding SB 310 will become moot way before 2025. By then, it is likely that green energy won’t need any mandates at all. The break-neck speed of innovation in the renewable energy sector is exciting, especially in solar technology. Low-cost, high-efficiency solar panels are becoming a reality and headed to the market (the average price of a solar panel has dropped 60% in the past three years). “Market” is the word our lawmakers need to focus on. When green energy, especially solar, becomes cheaper — without standards and mandates — utility companies will have no choice but to make the switch. Then it may be the traditional non-renewable energy sector that will be scrambling for more subsidies. Instead of fretting over percentages and subsidies, we’d like to see lawmakers making sure Ohio is along for the economic ride. That means luring more energy jobs and keeping rates low for consumers and businesses. Safely mined shale gas, clean coal, soon-to-betruly-affordable solar — we are confident our state will be more than able to hold its own in creating true energy independence. When that happens, we will no longer need to worry about crying uncle.

FROM THE PUBLISHER

Opportunity can come from an unwanted exit general or (yikes) your skills as ur bad bosses can often JOHN a boss are inferior to the new teach us more than our CAMPANELLI gig. It’s a breakup … and good bosses. you’re getting dumped. How I once worked for an editor the heck can a boss not feel who shouted, swore, criticized hurt, even if it’s just a smidge? and belittled his way through “How can someone not want the workday. It was a tough to work for me?” stretch, but I am actually We had a wonderful regrateful for the experience, beporter leave us last month for cause my skin grew as thick a new job. It’s a real loss of taland tough as a buffet steak. ent for us. As she broke the I left there with the ability to news and submitted her resigtake almost nothing personally. That was nation, I’d be lying if I said I didn’t feel a an incredible gift. Work is heavy enough pang down deep. these days without an anvil of hurt, After she broke the news, there was a anger, pride and spite. short silence. This angry editor was also legendary Thankfully, I somehow realized there for his reaction to employees quitting. If was someone in the room besides poor you were leaving because you landed a little hurt me, someone wrestling with a job at a competing newspaper, even if it huge life decision and on the edge of a was a better job, he’d blow up and kick great opportunity. you out of the newsroom. They tell you That crazy editor would not have been not to burn a bridge; this guy would blow proud. I did not kick her out of the office. it up before you got a match. Instead, I told her that I was happy for Since becoming an editor — and now her (I don’t think she saw the crossed finpublisher — myself, a tiny part of me ungers). derstands the reaction. The point is that bridges burn both When an employee tells you he or she ways. If you tell an exiting worker to hit is leaving, there is an implied message: the bricks, do something else petty or Either the job you’ve been providing, even display a subtle “don’t let the door your office culture, your company in

O

hit you” attitude, that worker leaves with a trail of bitterness. And a one-person whisper campaign begins. With the competition for good talent so tight, we all need our former employees to be ambassadors, not saboteurs, of our brands and businesses.

Turnover happens. It’s tough in the short term, but like all setbacks, it’s an opportunity, too: an opportunity for new faces, fresh perspectives and new focus. Good feelings are good karma. Being known as a great place to work and a launching pad — that’s a pretty good reputation to have. Turnover happens. It’s tough in the short term, but like all setbacks, it’s an opportunity, too: an opportunity for new faces, fresh perspectives and new focus. And who knows, maybe a former teammate will see the light and come back home one day. Hear that, LeBron? ■

TALK ON THE WEB Re: Blinded to science ■ Per publisher John Campanelli’s May 26 commentary, “Even science can’t cure their thinking,” the growing level of scientific ignorance in this country is frightening and does not bode well for our advancement as a nation. Growing up in the ’50s and ’60s, scientists and engineers were respected and the public felt that federal standards for and investment in science and math in the schools was a good thing. No coincidence that our economic growth was higher during that era and the decades that followed than now. Unfortunately, the distrust in science is found on both sides of the political divide, with conservatives and evangelicals denying scientific truths and railing against evolution, and liberals fighting

Reader responses to stories and blogs that appeared on: www.crainscleveland.com

bio-engineering applications in agriculture and refusing to inoculate their kids against polio and other diseases that science previously defeated. Much more of this idiotic behavior and we’re going to become a third-rate nation. — 174745

Re: Health of the Cuyahoga River ■ The “overnight” success of the Cuyahoga River has been years in the making (and there are still many years to go) but substantial progress IS being made. See WEB Page 11

POLL POSITIONS Which city has the best chance to host the 2016 Republican National Convention? Cleveland

59% Dallas

26% Denver

9% Kansas City

7%


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Web: Reactions vary on use of river

11

The skyâ&#x20AC;&#x2122;s the limit.

continued from PAGE 10

The unique blend of industry, retail, residential and recreation occurring on or near the birthplace of the environmental movement is an essential component of Clevelandâ&#x20AC;&#x2122;s resurgent downtown that in turn is enhancing our regionâ&#x20AC;&#x2122;s quality of life and desirability to potential newcomers. â&#x20AC;&#x201D; Share the River â&#x2013; The Port Authority can finance American Greetingsâ&#x20AC;&#x2122; $100 million headquarters a dozen miles away from the port, but it cannot repair Irishtown Bend bulkheading? Uh, tell me again the job of a port authority, please. â&#x20AC;&#x201D; Robert Salmon â&#x2013;  â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s the cleanest itâ&#x20AC;&#x2122;s been in a long time â&#x20AC;&#x201D; I donâ&#x20AC;&#x2122;t think anyone is afraid to go out on the river at all,â&#x20AC;? one observer said in Crainâ&#x20AC;&#x2122;s May 26, Page One story about the Cuyahoga River. This is not exactly a glowing endorsement. The progress so far is commendable. However, the river is still brown, not blue or even green. We need to raise our standards and seek waterways that look like they came from a Tom Sawyer novel. We also need the political will and wisdom to restore Cleveland to the great city it once was. (I was born there in 1942.) â&#x20AC;&#x201D; Libra9 â&#x2013;  The river will ALWAYS be brown or muddy, at least in the lower part; itâ&#x20AC;&#x2122;s a mud-bottomed river. The river has come a LONG way from 42, 62, or even 82 years ago. There are fish in the river now, even the lower part. Thatâ&#x20AC;&#x2122;s amazing, considering the river and Lake Erie were considered dead back in the â&#x20AC;&#x2122;60s. I have seen many changes over the years and LOVE the recreational uses of the river, but also realize that industry is what we need more of, and it has to help sustain the mighty Cuyahoga River. â&#x20AC;&#x201D; Captain Rick Fryan

Re: Senate Bill 310 â&#x2013; Brakey Energy president Matthew Brakey is correct as far as his May 23 guest blog, â&#x20AC;&#x153;Seven things you need to know about Senate Bill 310,â&#x20AC;? goes. But the bill has another side, too. Renewables, with wind being the most highly subsidized and lowest value, also get a mandated market

DAN SHINGLER

Crainâ&#x20AC;&#x2122;s May 26 story about the Cuyahoga River generated quite a few reactions from readers. share â&#x20AC;&#x201D; even larger than efficiency, and at far lower bang for your buck. Renewables (and/or another category called â&#x20AC;&#x153;advanced) must provide another 25% new energy sources by 2025. 22.5% efficiency + 25% renewables? Thatâ&#x20AC;&#x2122;s 47.5% new sources forced into a market where incumbent generators have nearly limitless lifespans; ratepayers are already required to cover the cost of existing generators with profit; and electricity demand is on a steady downward trend. Specified annual increases of new things that arenâ&#x20AC;&#x2122;t needed is bad in any market. Canned lima beans might be cheap and green, but what if the government forced you to buy ever increasing amounts of them every year? Would they stack up in the pantry year after year, representing wasted money you could have spent on Cheetos? The mandates force consumers to spend their money in ways they otherwise wouldnâ&#x20AC;&#x2122;t. Thatâ&#x20AC;&#x2122;s not freedom. In fact itâ&#x20AC;&#x2122;s Un-American. â&#x20AC;&#x201D; Thomas Stacy â&#x2013; A relatively simple payback analysis can be done, and has been done, when evaluating whether to complete energy efficiency projects. Energy efficiency was pursued by businesses prior to Senate Bill 221â&#x20AC;&#x2122;s passage, and energy efficiency will be pursued by businesses after SB 310â&#x20AC;&#x2122;s passage. This notion that we either pursue energy efficiency or we donâ&#x20AC;&#x2122;t is a false choice. The question is whether we allow businesses to make business decisions, which will undoubtedly include the pursuit of energy efficiency projects, or we

grease the palms of rent seekers and peddlers of uneconomic technologies. â&#x20AC;&#x201D; Matthew Brakey â&#x2013; Would that we could â&#x20AC;&#x153;let the market decideâ&#x20AC;? but that is no longer possible. The market has been distorted for years by regulations and preferences written by lobbyists for their big clients and passed by legislators responding to large campaign donations. The individual users have no negotiating power with the PUC. The very creation of SB 310 is the perfect example of this. FirstEnergy will always behave in a way that protects their investments, as every corporation rightfully does. They have a built-in disincentive to reduce demand because they get paid by the kilowatt hour. Iâ&#x20AC;&#x2122;ve never seen Wal-Mart asking us to buy less, nor should FirstEnergy. Given that the only way to get major polluters to change their behavior is by changing their incentives, then so be it. I dislike Big Brother as much as the next guy, but I donâ&#x20AC;&#x2122;t like it being replaced by big energy writing its own legislation. â&#x20AC;&#x201D; Robert E. Chalfant

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TAX LIENS

ACCESS BEGINS WITH A CAPITAL â&#x20AC;&#x153;Gâ&#x20AC;?. At Glenmede, we believe the best way to serve our clients is to give them direct access to our experts and best thinking â&#x20AC;&#x201D; with no barriers or bureaucracy. Our low client-to-staff ratio means youâ&#x20AC;&#x2122;ll always have our full attention. Founded as an independent trust company by the Pew family in 1956, weâ&#x20AC;&#x2122;re free from conďŹ&#x201A;icting, short-term interests. We take a long-term outlook and measure success solely by how we manage your wealth, from one generation to the next.

The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorderâ&#x20AC;&#x2122;s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a companyâ&#x20AC;&#x2122;s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorderâ&#x20AC;&#x2122;s Office.

LIENS FILED M A Infinity Marketing Inc. 6403 Sylvia Drive, Brookpark ID: 27-0117781 Date filed: April 4, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding Amount: $5,210

LIENS RELEASED

www.glenmede.com Glenmedeâ&#x20AC;&#x2122;s services are best suited for those with $3 million or more to invest. To learn more, please contact Linda Olejko at 216-514-7876 or linda.olejko@glenmede.com         Â&#x2DC;Â&#x2DC;2 Â&#x2DC;Â&#x2DC;         Â&#x2DC;Â&#x2DC;2 Â&#x2DC;Â&#x2DC;   Â&#x2DC;   Â&#x2DC;Â&#x2DC;2 Â&#x2DC;Â&#x2DC;      Â&#x2DC;Â&#x2DC;Â&#x2DC;2 Â&#x2DC;Â&#x2DC;Â&#x2DC;        Â&#x2DC;Â&#x2DC;Â&#x2DC;2 Â&#x2DC;Â&#x2DC;Â&#x2DC;      

Avon Drive In Laundry & Dry Cleaning Co. 1830 Superior Ave. E, Cleveland ID: 34-0866085 Date filed: Dec. 22, 2011 Date released: April 4, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding Amount: $6,156 Cobalt Group Inc. 1814 E. 40 St., Suite 4E, Cleveland ID: 34-1859596 Date filed: Feb. 6, 2014 Date released: April 14, 2013 Type: Employerâ&#x20AC;&#x2122;s withholding Amount: $7,201 Donald J Kilbane, D.D.S., Inc. 28871 Center Ridge Road, Westlake ID: 34-1763464 Date filed: Dec. 22, 2004 Date released: April 11, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding Amount: $11,957

12812 Buckeye Inc. 12812 Buckeye Road, Cleveland ID: 34-1615246 Date filed: Oct. 5, 2004 Date released: April 4, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding, unemployment Amount: $8,727

Etcetera Services Inc. P.O. Box 40041, Bay Village ID: 34-1816713 Date filed: Dec. 18, 2009 Date released: April 14, 2013 Type: Employerâ&#x20AC;&#x2122;s withholding, unemployment Amount: $49,911

Allied International Sales Co. 18224 Fernway Road, Shaker Heights ID: 34-1613053 Date filed: June 24, 2010 Date released: April 14, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding Amount: $6,385

Kelly Restoration 2166 Warren Road, Lakewood ID: 34-1702016 Date filed: Feb. 13, 2014 Date released: April 10, 2014 Type: Employerâ&#x20AC;&#x2122;s withholding, unemployment Amount: $45,087


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INVESTING GUIDE POKE! TWEET! BUY! SELL! How the pressures of social media sites and the ease of information access are influencing the world of investing By CHRISSY KADLECK clbfreelancer@crain.com ROBERT NEUBECKER

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t least a dozen worried investors forwarded a YouTube video to financial planner Les Szarka in early May that predicted a total stock market collapse and disintegration of the economy on July 1 when a new tax law takes effect. Szarka, founder and CEO of Szarka Financial, clicked on the 35minute piece, watched it for a few minutes and then began repairing the damage and calming clients manipulated by the viral video he called “pure garbage.” These “distractions” are one of the downsides of the information age fueled by social media platforms in which sharing, liking and tweeting lends credibility to erroneous financial information, Szarka says. “In the last five to six years especially, we have a deluge of information, and it’s a lot of work to filter out those few pieces that are actionable, reliable and accurate,” says Szarka, who last year published “Money Brain: How Your Subconscious Mind Can Hijack Your Investment Decisions,” a book about investor psychology. He has been a financial adviser for more than 30 years. “What ends up becoming more of an issue is when a client ends up getting anxious or scared and then it takes some time to calm them down and that might end up being a half-hour or 45minute phone call to get them back down to earth and to realize that the world is not going to end July 1,” he says. According to a 2013 survey released by Cogent Research, affluent investors are using social media. Indeed, one-third, or 34%, are utilizing plat-

forms such as Facebook, LinkedIn, Twitter, YouTube and company blogs for personal finance and investing purposes. The report, “Social Media’s Impact on Personal Finance and Investing,” also revealed that while most investors rely on a variety of resources, nearly 70% “have reallocated investments, or began or altered relationships with investment providers, based on content found through social media.”

Making connections So, how do those figures shake out to the financial activity here in Northeast Ohio? Financial advisers locally report that investors — young and old — are using social media both as an educational tool and to vet potential planners, but not as the sole source for making or reallocating investments.

“Social media is changing the way we do business and communicate overall as a society. Personal investing is not exempt from that trend,” said David P. Kocsis, a partner at Peak Wealth Solutions in Pepper Pike. Peak Wealth Solutions embraces several social media platforms including LinkedIn, Facebook and Twitter to engage with clients, share financial tips and create a credible and relevant online presence. “People are definitely using social media to gather information about their finances to become more educated,” he said. “They want to have a simple and easy platform to be able to gather that information when it’s convenient to them.” Frank Legan, a partner at Cedar Brook Financial Partners LLC, says his firm shares contentdriven articles on financial planning, budget

INSIDE „ FIRMS SEE JUMPS IN VALUATIONS, P. 14 „ SUPERSTAR LIST FULL OF NEWCOMERS, P. 15 „ M&A ACTIVITY CAN AFFECT VALUE, P. 16 „ SHALE BOOM OPENS UP OPPORTUNITY, P. 17 „ PUBLIC COMPANIES LIST, P. 18-19

See SOCIAL Page 20

CRAIN’S SPECIAL SECTIONS HAVE A NEW HOME ONLINE: www.crainscleveland.com/section COMING UP: SMALL BUSINESS — JUNE 9; PREP AND PAROCHIAL EDUCATION — JUNE 16


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Top local firms experience large swings in valuations Goodyear, Parker, KeyCorp among those logging large gains By SCOTT SUTTELL ssuttell@crain.com

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he 10 largest companies in Northeast Ohio, ranked by market capitalization, are virtually identical to the list from a year ago, with one new entry — Akron-based tiremaker Goodyear Tire & Rubber Co., at No. 9 — replacing steel and bearing manufacturer The Timken Co. of Canton, which fell two spots to No. 11. But that relative tranquility at the top belies some big changes in valuations during the past year. Take Eaton Corp., which was No. 1 on this year’s list, for the 12month period ending April 30, 2014, the same position it held on the previous year’s list. That’s where the similarities end. The diversified manufacturer of electrical, hydraulic, aerospace, truck and automotive products saw its market valuation soar nearly 20%, to $34.5 billion on April 30, 2014, from $28.9 billion on April 30, 2013, as Eaton’s stock price rose to $72.64 from $59.18. Net income in 2013 was up nearly 53% to $1.86 billion. (So that’s a lot of money Eaton’s saving with those official corporate headquarters in Dublin, Ireland.) Eaton’s performance of late has been sufficiently strong that directors in late February raised the company’s quarterly dividend by 16.7%, to 49 cents a share from the previous rate of 42 cents. And talk about steady — Eaton has paid dividends on its common shares every year since 1923. The gap between Eaton’s market valuation and that of the No. 2 company on this year’s list — Cleveland-based paintmaker and coatings giant Sherwin-Williams Co. — is $14.6 billion, given S-W’s $19.9 billion valuation. On the 2013 list, when Akron-based electric utility

FirstEnergy Corp. occupied the No. 2 spot with a market value of $19.5 billion, the gap was just $9.4 billion. In other words, Eaton in the past 12 months has extended its Northeast Ohio market valuation lead by $5.2 billion — about the size of the No. 13 company on the list, Euclidbased welding equipment market Lincoln Electric Holdings Inc. Eaton was not the year’s only big gainer in the top 10. Indeed, there were four companies that surpassed Eaton’s 19.4% rise in market valuation in the 12-month period: ■ The biggest gainer, by far, was Goodyear, which saw its market valuation jump 103.3% to nearly $6.3 billion and put the company in the No. 9 spot this year, up from No. 17 a year ago. (You can read more about Goodyear in our Superstar 10 story on page 15.) On a percentage basis, only one other public company in Northeast Ohio saw its market valuation rise more than Goodyear’s in the past 12 months. That company, Solon-based Energy Focus Inc., had its market cap rise 240%, but it’s playing on a vastly different field from Goodyear. Energy Focus, No. 55 on this year’s list, has a market valuation of $35 million compared with $10.3 million a year ago. ■ Parker Hannifin Corp., the maker of motion and control technologies and systems, took over the No. 3 position on this year’s list, compared with No. 5 a year ago, as its market valuation rose 40.4% to $18.9 billion from $13.5 billion. Mayfield Heights-based Parker is pushing its technologies in new directions and has entered into clinical trial agreements with four of the top-ranked rehabilitation institutions in the United States to support testing and development of the Indego robotic exoskeleton, a pow-

ered orthotic device that allows users to stand and walk. Parker is developing a second-generation device for clinical trials starting in July to support submission for U.S. Food and Drug Administration approval. ■ Financial services company KeyCorp registered a 31.2% rise in market valuation to $12.1 billion, good for No. 6 on this year’s list. In the company’s fourth-quarter earnings release, CEO Beth Mooney said average loans were up 5% in 2013 compared to the prior year, “driven by a 12% increase in commercial, financial and agricultural loans, and our credit quality improved to levels not seen since 2007.” ■ TransDigm Group Inc. was another high-flyer, with a market valuation increase of 22.8% to $9.4 billion. The Cleveland-based designer and producer of highly engineered aircraft components held steady at the No. 8 spot on the list. There were three companies among the top 10 that posted a market valuation decline this year. Only one of them — FirstEnergy — experienced a decline that reached double-digit percentages. FirstEnergy’s 27.5% drop in market valuation, to $14.1 billion this year from $19.5 billion a year ago, moved the company to the No. 5 position on the list from No. 2 in 2013. It was the largest percentage decline among any of the 28 companies on Crain’s public companies list that have market valuations of at least $1 billion. Overall, though, it was a strong year for all most public companies in Northeast Ohio. Of the 63 companies on the public companies list, 47 posted increases in market valuation, while just 12 posted a decrease. (Year-toyear comparisons for four companies were not available.) ■


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Goodyear races to top of Superstar pack Park-Ohio is only firm making repeat appearance on list full of newcomers SCOTT SUTTELL ssuttell@crain.com

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here’s a changing of the guard in the Crain’s Superstar 10, our annual look at public company performance in Northeast Ohio. After a two-year run at the top of the rankings, amusement park operator Cedar Fair LP of Sandusky is out of the top 10. It didn’t go too far, though; by the Superstar ranking criteria, Cedar Fair was 12th in this year’s edition. Taking over the top spot is one of Northeast Ohio’s most iconic manufacturing companies — Akronbased tiremaker Goodyear Tire & Rubber Co., which in 2013 saw net income available to common shareholders rise to $600 million, or $2.28 per share, from $183 million, or 74 cents per share, in 2012. It was a fast ride to the top for Goodyear, which was not on last year’s Superstar 10 list. From May 1, 2013, to April 30, 2014, the time period covered by this year’s Superstar 10 ranking data, Goodyear stock more than doubled. The stock closed trading this April 30 at $25.20, a 106.6% increase from the May 1, 2013, close of $12.20. Steve McClellan, Goodyear North America president, recently told Rubber & Plastics News, a sister publication of Crain’s Cleveland Business, that in the years since the end of the recession, there has been “no big snap-back in the general economy or in the tire business.” But conditions have improved steadily, McClellan said, and signs are out there for a bigger rebound this year and beyond, including an increase in miles driven. “It’s not if, it’s just kind of when is it going to happen,” McClellan said. “We wouldn’t necessarily say we’re predicting you’re going to see the Big Bang in ’14, but it’s sooner rather than later.” Three performance-based indicators determine the companies that make up the Superstar 10. A composite score for each public company in the 15 counties Crain’s tracks is obtained by adding its rank on three different lists — 12month total return to shareholders; the percentage change in profits in the trailing 12-month period; and return on equity during the latest 12 months reported by the company. The lower the composite score, the better a company’s overall performance is considered to be, and the higher it ranks on the Superstar 10 list. Goodyear, for instance, ranked second in 12-month total return to shareholders, eighth in 12month net income change and third in return on equity. Adding 2, 8 and 3 give Goodyear a composite score of 13 — a strong figure, historically, for the Superstar 10. When Cedar Fair took the top spot on last year’s Superstar 10, it had a composite score of 21. In something of a statistical oddity for the Superstar 10, none of the 10 companies on this year’s list were first in any of the three ranking criteria. Only one other company, PolyOne Corp., the polymer producer

based in Avon Lake, also managed top-10 finishes in all three ranking criteria on this year’s list. That was good enough to propel PolyOne to the No. 2 spot on the list, after not making the Superstar 10 a year ago. PolyOne reported a big leap in fourth-quarter 2013 earnings thanks in large part to the acquisition of Spartech Corp., a producer of specialized polymer materials. PolyOne’s net income in the quarter soared to $24.6 million, or 25 cents a share, from $3.1 million, or 3 cents a share, in the fourth quarter of 2012. The company as of May 15 has a new president and CEO, Robert M. Patterson, who succeed Stephen D. Newlin. Newlin had been CEO for more than eight years and remains executive chairman of the PolyOne board. Goodyear and PolyOne were hardly alone in occupying spots in the Superstar 10 this year after not making the list in the prior year. Indeed, nine of the 10 spots on this year’s list are occupied by newcomers. Only Park-Ohio Holdings Corp., a diversified manufacturer and supply chain management concern that was No. 7 on this year’s list, was on the list in the prior year, when it ranked No. 4. It’s a manufacturing heavy Superstar 10 this year, as only one company on the list — business services firm CBIZ Inc. of Independence, which is No. 6 on the list — does not manufacture a product. Tying for third on this year’s Superstar 10 list, with a composite score of 24, were Ferro Corp., a producer of specialty chemicals, and OurPet’s Co. of Fairport Harbor, which makes pet supplies. Other manufacturers on the Superstar 10 are automotive supplier Shiloh Industries Inc. of Valley City, which ranked No. 5; coatings and sealants producer RPM International Inc. of Medina, which ranked No. 8; Hyster-Yale Materials Handling Inc. of Cleveland, a maker of lift trucks and aftermarket parts, which ranked No. 9; and Warren-based Stoneridge Inc., a maker of electrical and electronic components and systems for the commercial vehicle, automotive and agricultural, motorcycle and off-highway vehicle markets, which ranked No. 10. A couple of those manufacturers have been in an acquisitive mood of late: Shiloh on May 22 agreed to acquire Finnveden Metal Structures of Sweden in a deal that adds a European foothold and expands Shiloh’s customer base. The acquisition, valued at about $56.6 million, is expected to close at the end of June. Shiloh said the Swedish company “represents nearly $180 million in annual sales revenue” and has about 800 employees. RPM’s Rust-Oleum Group in January bought Citadel Restoration and Repair Inc., a producer and marketer of concrete and wood deck floor coatings, for an undisclosed price. Citadel, based in North St. Paul, Minn., has annual sales of about $10 million. ■

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M&A activity can trickle down to shareholder level Acquisitions can affect company value, for the good or the bad By MICHELLE PARK LAZETTE

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f business leaders’ answers to one recent survey are a harbinger of deals to come and megadeals keep getting inked, this year’s robust volume of mergers and acquisitions is likely to stay brisk. The May 2014 KeyBank Middle Market Business Sentiment Survey found that one-third of middlemarket business executives surveyed said they are likely to complete an acquisition in the next six months. As companies change hands, the value of their stock often changes, too, immediately and long-term. Thus, shareholders have reason to gauge whether deals make sense and are fair. “The value of the company will be influenced by the merger or acquisition,” said Michael Nowacki, owner of Nowacki Asset Management, a Pepper Pike investment advisory firm. “The company being acquired rarely gets a bad deal,” he added, citing how the acquirer pays a premium to where the target’s stock is trading. The other advantage to the acquired entity’s investors is they get liquidity, noted Ben Mackovak, founder and portfolio manager of Cavalier Capital LLC, a Cleveland hedge fund that invests primarily in small-cap companies. “Especially for companies that don’t trade at high volume, this allows them to monetize that investment,” he said. The greatest disadvantage, Mackovak said, is having to put that money back to work elsewhere. Cavalier Capital has felt the impact of recent M&A: It held stock in one company that was acquired this year and in three acquired last year. From Mackovak’s perspective, while shareholders “still did well” on one particular deal, the price could have been higher. “When you’re trying to figure out if this deal is fair, you need to look at where it’s coming from,” Mackovak said. “If it’s a strategic buyer, there’s a greater likelihood that it’s a fair deal; they’re willing to pay a higher price for the synergies. If it’s a private equity deal, it could be a fair deal, it could be opportunistic, and if it’s a management-led buyout, it’s probably opportunistic.” “I’d caution shareholders when they see a management-led buyout — that’s when you should probably do the work and find out if it’s a fair deal,” he stressed.

Is it good or bad? To gauge a deal, Mackovak suggests using the valuation to determine what multiple of cash flow is being paid, then comparing that multiple to those of comparable deals. So, if a shareholder owns stock in a widget company, he said, and it’s selling for five times cash flow when another was acquired for 10 times, the lower price could be

unfair. Nowacki suggested valuing both companies individually, and then considering what the given deal affords the acquirer, be it new customers and/or cost savings. “The company that’s doing the acquiring sometimes will make bad decisions,” Nowacki said. “Usually, it’s hard to tell when it’s announced. If people do think it’s a bad deal, it’ll be reflected in the stock price. “A warning sign of a poor acquisition is when your company acquires a company that has no operational strategic basis for being acquired,” Nowacki wrote in an email. “If Coca-Cola buys a movie production studio you should view it with skepticism; if they buy a bottled water company, tea, energy drink company or Green Mountain Coffee there are clear synergies. However, even when there are clear synergies, companies can still overpay or make mistakes.”

“The company being acquired rarely gets a bad deal.” – Michael Nowacki, owner, Nowacki Asset Management Talking to other investors, watching for what the media reports about a deal and reading the reactions of sell-side analysts, who tend to know the companies the best, are other ways of gauging whether a deal is perceived to be good for a company, said Lisa Rose, the senior managing director who leads the investor relations practice at Dix & Eaton in Cleveland. That said, the ultimate success of a deal and its impact on stock price are unknowns until they aren’t. “Everyone knows that acquisitions are difficult to integrate,” Rose said. “When you’re bringing companies together, you’re blending cultures.”

All about timing Marc Morgenstern, who invests in private operating businesses through the firm he founded, Blue Mesa Partners, says environments like that in 2014 — with cheap and plentiful capital combined with an appetite for acquisitions — are when companies should be sellers. From his perspective, people actually forget that one makes an investment to get in, but more importantly to get out. “When you can get liquid, you should get liquid,” he said. “I think people should have a predisposition to sell rather than to hold. When everybody desperately wants what you have, that’s a very good time to sell. “Most companies, there are very logical buyers of them — might be three, might be 20,” Morgenstern added. “It’s not thousands. Timing really is 99% of life, and you can’t just say to somebody … ‘Buy me in

three years.’” The management team making the decision to sell knows more than most, he also asserted. When deals are done right at the right price and integration happens successfully, stock value typically appreciates, Rose noted. When integration is difficult and a company culture is damaged, you can bet there will be an impact on stock price, she added. Decided you don’t like a deal? There’s not much small shareholders can do, according to Nowacki. Options are limited to selling one’s shares or voting against the deal. “The biggest thing a shareholder has to decide is do I stick it through until the acquisition is complete, or do I take the price that’s currently available now and run,” agreed Kevin H. Myeroff, CEO and president of NCA Financial Planners in Maple Heights. “Most people stick it out because often in negotiations, the price will go up.”

No end in sight There are shareholders — typically those who hold larger positions in companies — who can influence decisions, and most investment professionals expect an increase in shareholder activism, wherein investors approach management with concerns and the intention of forcing change or attaining a board seat, among other things. “Every single day, there’s a story in the paper about an activist coming after a company,” Dix & Eaton’s Rose said. “A number of clients that we have worked with have had situations where activists have come to them. Sometimes it’s public, and sometimes it’s not.” And according to what she’s hearing from advisers about this year’s proxy season, there are signs that activism is accelerating. “Activists have become louder because they’ve been unhappy with results or decisions that management has been making with respect to M&A activity — or lack of M&A activity,” Rose said. “I think activism is becoming more the norm than it used to be.” Most investment professionals say they aren’t attempting to guess which companies will be acquired in order to buy stock in them. “You can’t predict the markets, you can’t predict how it will do for one sector and you certainly can’t predict acquisition candidates,” said Charlie Crowley, managing director at independent securities, asset management and investment banking firm, Boenning & Scattergood. “The key is to find good companies at good values,” Crowley said. “You can never count on an acquisition helping, but if you’re a patient, long-term investor, and you’re backing a good management team and getting in on the front end at a reasonable valuation, you should do well in the long run.” „


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Drill deeper when investing in shale By RACHEL ABBEY McCAFFERTY rmcafferty@crain.com

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here are plenty of opportunities for Northeast Ohioans to invest in the area’s shale boom, so long as they’re open to looking up and down the supply chain. Jesse Hurst, a founding partner at Millennial Group Wealth Advisors in Akron, said one of the mistakes people make is thinking there’s a big opportunity to invest directly in natural gas because there’s so much activity in the industry. But it could ultimately be wiser to invest in the companies that are benefiting from that influx of natural gas. “That might be the better opportunity,” Hurst said. Hurst said the discovery of natural gas is just creating a huge supply and driving down prices — not exactly a good yield opportunity for an investor. But if investors can identify companies that are gaining from the growing industry, like those creating the technology that helps convert vehicle fleets to natural gas, that could be a good investment. He compared it to the dot-com days or the California gold rush. Not everyone found gold, he said, but everyone bought picks and shovels.

Getting in midstream The opportunities in the shale play range from those companies making products that sell directly to drillers to those helping to transport the oil and natural gas. Investment professionals pointed to companies that support the industry — or those that benefit from it — as good possible investments. Floyd Trouten, a director at accounting and business consulting firm SS&G Inc.’s Cleveland office, said two areas potential investors should especially look into are the chemical industry and the metals industry. The chemical industry uses natural gas as feedstock, which means those companies ultimately will

have a competitive advantage, he said. And the steel and metals industries are on the other side of that supply chain, but could be just as lucrative. Trouten noted there’s a large need for pipelines to build the infrastructure to get the oil and gas to production. Other possible targets that Trouten mentioned are construction companies and companies that build construction equipment, as the infrastructure for the shale oil and gas boom is built. And area investors also should watch the transportation industry, including manufacturers of truck trailers and water tanks, Trouten said. Companies drilling for oil and gas need lots of water, and there is a push toward using vehicles powered by liquefied natural gas. Zachary Abrams, a manager at wealth management firm Capital Advisors Ltd. in Shaker Heights, said from an investing standpoint, it’s better to be involved in the midstream industries, although it’s difficult for investors to get pure exposure to the Utica shale, without touching on other industries. But there is a way for investors to put some dollars in their portfolios to work and get directly involved in oil and gas pipelines — by investing in master limited partnerships. John Micklitsch, chief investment officer at investment management firm Ancora Advisors in Beachwood, said these partnerships have been around for a long time, but the discovery of shale deposits is making them more “acutely interesting” now. Micklitsch said the vast majority of these partnerships are in the energy and natural resources industries. In the energy industry, master limited partnerships make money from energy-related infrastructure, like pipelines or storage terminals, essentially signing companies to long-term contracts for the right to use it. Much like a lease, companies are bound to those fees whether they use the infrastructure or not. What makes these master limited partnerships attractive, Micklitsch

said, is their “attractive risk-reward characteristics.” They give investors the opportunity to participate in the volume growth that’s happening as shale basins are developed, but they also pay their investors steady distributions. The units of the partnerships trade just like shares of stock on most major exchanges, Micklitsch said, but can be subject to complex taxes. There are also opportunities to invest in these partnerships through structures like mutual funds.

Nothing’s a sure bet The benefits of the shale play can extend even further to companies up the pipeline. Todd McCuaig, a managing director at Cornerstone Industrial Group LLC in Chagrin Falls, said one of the businesses the company owns has seen some increased success selling to oil and gas industry suppliers. Wahl Refractory Solutions LLC in Fremont sells products to such companies as steel mills making tubular products for pipelines and cement makers selling to companies making wells, McCuaig said.

It’s hard to quantify the growth Wahl has seen directly due to fracking, but McCuaig said he has seen the company benefit. Wahl also sells to companies that make ceramic proppants used in fracking, an area in which the company has added a customer. And it’s not necessarily limited to companies with a clear connection to the industry. Don Fischbach, chairman of the Calfee, Halter & Griswold LLP Energy and Natural Resources Group, said there are lots of opportunities for companies or individuals that have a widget that resolves an issue along the fracking process. “They’re always interested in staying ahead of the regulatory curve,” Fischbach said. Joe Arnold, the president of Foundation Wealth Advisors LLC in Westlake, said he hasn’t had many individual clients wanting to invest in the shale industry, but if he did, he’d advise them to make it just a small portion of their portfolio. It looks like shale will be a big industry, he said, but it could go bust, just like the dot coms did. “You really can’t take that much risk in a portfolio,” he said. ■

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While Ohio’s shale play is growing, investing in portfolios with a foundation in fossil fuels isn’t for everyone. In fact, a survey from First Affirmative Financial Network LLC in Colorado recently found nearly 72% of respondents thought it was time for investors to assess — and possibly change — their approach to investing in oil, gas and coal companies. Steve Schueth, president of sustainable investing firm First Affirmative, said this is the second year of the survey. In that time, the growth of interest in offering fossil fuel-free portfolios has been “fairly significant,” he said. A little more than one-third of investors who took the survey reported managing portfolios without any fossil fuel extraction companies. Schueth said that about 60 of First Affirmative’s more than 3,000 clients have come to the company and asked them to get fossil fuels out of their portfolios. The reasons for divesting of fossil fuel-based investments range from the altruistic to the practical, Schueth said. The valuation of companies like Exxon Mobile Corp. and Chesapeake Energy are based on the value of the companies’ reserves, and it only pays off if they can get the resources out of the ground. — Rachel Abbey McCafferty


20140602-NEWS--18-NAT-CCI-CL_--

5/30/2014

11:49 AM

Page 1

INVESTING GUIDE 2014

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

JUNE 2 - 8, 2014

LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE

Company/Ticker symbol This Last Headquarters year year Phone/Website

Market value (millions) 4-30-2014

4-30-2013

Percent change

Net income (millions) 2013

2012

Percent change

2013 return on equity

Lines of business

Top local executive Title

1

1

Eaton/ETN 1000 Eaton Blvd., Cleveland 44122 (440) 523-5000/www.eaton.com

$34,511.3

$28,905.7

19.4%

$1,861.0

$1,217.0

52.9

11.1

Electrical, hydraulic, aerospace, truck and automotive products

Alexander M. Cutler chairman, CEO, president

2

3

Sherwin-Williams Co./SHW 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin.com

$19,914.5

$18,890.5

5.4%

$752.6

$631.0

19.3

42.4

Coatings and related products

Christopher M. Connor chairman, CEO

3

5

Parker Hannifin Corp./PH 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com

$18,921.5

$13,480.4

40.4%

$1,025.3

$1,034.7

-0.9

16.3

Fluid power systems, electromechanical controls

Donald E. Washkewicz chairman, president, CEO

4

4

Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com

$14,382.7

$15,254.9

-5.7%

$1,165.4

$902.3

29.2

18.8

Insurance and financial company

Glenn M. Renwick chairman, president, CEO

5

2

FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 736-3402/www.firstenergycorp.com

$14,128.7

$19,488.9

-27.5%

$392.0

$770.0

-49.1

3.1

Electric utility holding company

Anthony J. Alexander president, CEO

6

7

KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com

$12,069.6

$9,198.1

31.2%

$910.0

$858.0

6.1

8.8

Bank holding company

Beth E. Mooney chairman, CEO

7

6

The J.M. Smucker Co./SJM One Strawberry Lane, Orrville 44667 (330) 682-3000/www.smuckers.com

$10,107.3

$11,198.7

-9.7%

$577.0

$518.1

11.4

11.1

Manufacturer of branded food products

Richard K. Smucker CEO

8

8

TransDigm Group Inc./TDG 1301 E. Ninth St., Suite 3000, Cleveland 44114 (216) 706-2939/www.transdigm.com

$9,380.0

$7,639.2

22.8%

$314.7

$334.0

-5.8

NM

Goodyear Tire & Rubber Co./GT 200 Innovation Way, Akron 44316 (330) 796-2121/www.goodyear.com

$6,249.6

$3,073.8

103.3%

$629.0

$212.0

196.7

39.2

10 9

DDR Corp./DDR 3300 Enterprise Parkway, Beachwood 44122 (216) 755-5500/www.ddr.com

$6,152.9

$5,823.0

5.7%

($10.2)

($25.8)

NM

11 10

The Timken Co./TKR 1835 Dueber Ave. SW, Canton 44706 (330) 438-3000/www.timken.com

$5,874.1

$5,041.4

16.5%

$262.7

$495.5

12 13

RPM International Inc./RPM 2628 Pearl Road, Medina 44258 (330) 273-5090/www.rpminc.com

$5,684.4

$4,293.2

32.4%

$248.3

13 12

Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com

$5,412.3

$4,382.9

23.5%

14 11

Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com

$4,784.5

$4,482.0

15 15

TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com

$4,113.4

16 14

Forest City Enterprises Inc./FCE-A 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.forestcity.net

17 21

9 17

Designer and producer of W. Nicholas Howley highly engineered aircraft chairman, CEO components Tire manufacturer

Richard J. Kramer chairman, president, CEO

NM

Real estate investment trust

Daniel B. Hurwitz CEO

-47.0

9.9

Specialty steels and highly engineered bearings and related products

Richard G. Kyle president, CEO

$115.8

114.4

19.0

Specialty coatings for industrial and consumer markets

Frank C. Sullivan chairman, CEO

$293.8

$257.4

14.1

19.2

Designs and manufactures welding products

Christopher L. Mapes chairman, president, CEO

6.7%

$214.7

$228.5

-6.0

23.6

Adhesives, coating and sealant applicators

Michael F. Hilton president, CEO

$3,360.1

22.4%

$60.8

$14.2

329.2

3.3

Bank holding company

Marc A. Stefanski president, CEO

$3,739.1

$3,434.5

8.9%

($5.3)

$36.4

NM

NM

Owner and developer of real estate

Charles A. Ratner, chairman David J. LaRue president, CEO

PolyOne Corp./POL 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com

$3,563.4

$2,016.3

76.7%

$243.8

$71.9

239.1

25.0

Provider of specialized polymer materials, services and solutions

Robert M. Patterson president, CEO

18 22

FirstMerit Corp./FMER III Cascade Plaza, Akron 44308 (330) 996-6300/www.firstmerit.com

$3,201.0

$1,879.9

70.3%

$183.7

$134.1

37.0

6.8

Bank holding company

Paul G. Greig chairman, president, CEO

19 20

Cedar Fair LP/FUN One Cedar Point Drive, Sandusky 44870-5259 (419) 627-2233/www.cedarfair.com

$2,890.5

$2,336.0

23.7%

$108.2

$101.9

6.2

77.8

Amusement and water parks in the United States Matthew A. Ouimet president, CEO and Canada

20 19

Steris Corp./STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com

$2,830.5

$2,429.5

16.5%

$131.9

$162.8

-18.9

13.1

Maker of sterile processing and infection prevention systems

Walter M. Rosebrough Jr. president, CEO

21 16

Cliffs Natural Resources Inc./CLF 200 Public Square, Suite 3300, Cleveland 44114 (216) 694-5700/www.cleveland-cliffs.com

$2,713.4

$3,267.1

-16.9%

$413.5

($899.4)

NM

6.8

Full-service iron ore company

Gary B. Halverson president, CEO

22 23

Diebold Inc./DBD 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com

$2,409.6

$1,852.3

30.1%

($181.6)

$73.6

NM

NM

Integrated self-service delivery systems and services

Andy W. Mattes president, CEO

23 18

Chart Industries Inc./GTLS One Infinity Corporate Centre Dr., Suite 300, Garfield Heights 44125 (440) 753-1490/www.chartindustries.com

$2,072.5

$2,571.0

-19.4%

$83.2

$71.3

16.7

10.3

Maker of cryogenic Samuel F. Thomas processes and equipment chairman, president, CEO

24 24

Applied Industrial Technologies Inc./AIT 1 Applied Plaza , Cleveland 44115 (216) 426-4000/www.applied.com

$2,012.1

$1,778.9

13.1%

$114.3

$118.0

-3.1

14.8

Distributor and provider of industrial parts and service

Neil A. Schrimsher president, CEO

25 27

Hyster-Yale Materials Handling Inc./HY 5875 Landerbrook Drive, Suite 300, Cleveland 44124 (440) 229-5168/www.hyster-yale.com

$1,621.8

$873.2

85.7%

$110.0

$98.0

12.3

24.5

Manufacturer of lift trucks, provider of aftermarket parts

Alfred M. Rankin Jr. chairman, president, CEO

26 25

GrafTech International Ltd./GTI 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com

$1,520.9

$967.7

57.2%

($27.3)

$117.6

NM

NM

Manufacturer of graphite electrodes and cathodes

Joel L. Hawthorne president, CEO

27 30

Ferro Corp./FOE 6060 Parkland Boulevard, Mayfield Heights 44124 (216) 875-5600/www.ferro.com

$1,125.4

$609.4

84.7%

$71.9

($374.3)

NM

27.5

Manufacturer of specialty Peter T. Thomas performance materials chairman, president, CEO

28 29

A. Schulman Inc./SHLM 3637 Ridgewood Road, Akron 44333 (330) 666-3751/www.aschulman.com

$1,049.0

$764.1

37.3%

$24.5

$51.8

-52.7

4.6

High-performance plastic compounds and resins

Joseph M. Gingo chairman, president, CEO

29 26

Associated Estates Realty Corp./AEC 1 AEC Parkway, Richmond Heights 44143 (216) 261-5000/www.associatedestates.com

$966.0

$900.1

7.3%

$61.3

$30.6

100.2

11.3

Real estate investment trust

Jeffrey I. Friedman chairman, president, CEO

30 28

OM Group Inc./OMG 950 Main Ave., Suite 1300, Cleveland 44113 (216) 781-0083/www.omgi.com

$922.0

$780.7

18.1%

($84.0)

($38.7)

NM

NM

Producer/marketer of metal-based specialty chemicals

Joseph M. Scaminace chairman, CEO


20140602-NEWS--19-NAT-CCI-CL_--

6/4/2014

1:36 PM

Page 1

INVESTING GUIDE 2014

JUNE 2 - 8, 2014

Company/Ticker symbol This Last Headquarters year year Phone/Website

Market value (millions) 4-30-2014

4-30-2013

Percent change

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS 19

Net income (millions) 2013

2012

Percent change

2013 return on equity

Lines of business

Top local executive Title

31 35

Park-Ohio Holdings Corp./PKOH 6065 Parkland Blvd., Cleveland 44124 (440) 947-2000/www.pkoh.com

$725.7

$450.1

61.2%

$43.4

$31.8

36.5

27.3

Diversified manufacturer

Edward F. Crawford chairman, CEO

32 32

Materion Corp./MTRN 6070 Parkland Blvd., Mayfield Heights 44124 (216) 486-4200/www.materion.com

$702.9

$541.5

29.8%

$19.7

$24.7

-20.1

4.3

High-performance engineered materials

Richard J. Hipple chairman, president, CEO

33 33

Myers Industries Inc./MYE 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com

$627.8

$496.2

26.5%

$26.0

$30.0

-13.2

11.0

Polymer and metal products; equipment for tire service

John C. Orr president, CEO

34 31

National Interstate Insurance Co./NATL 3250 Interstate Drive, Richfield 44286 (330) 659-8900/www.natl.com

$550.9

$570.4

-3.4%

$17.6

$34.3

-48.8

5.0

Specialty property and casualty insurance

David W. Michelson president, CEO

35 37

Invacare Corp./IVC One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com

$505.8

$429.1

17.9%

$33.1

$1.8

1,709.0

4.9

Home health care equipment

Gerald B. Blouch president, CEO

36 40

Omnova Solutions Inc./OMN 175 Ghent Road, Fairlawn 44333 (330) 869-4200/www.omnova.com

$432.3

$314.2

37.6%

$21.0

$13.9

51.1

11.6

Decorative and functional interior surfaces

Kevin M. McMullen chairman, CEO, president

37 39

CBIZ Inc./CBZ 6050 Oak Tree Blvd. S., Suite 500, Cleveland 44131 (216) 447-9000/www.cbiz.com

$424.9

$326.9

30.0%

$85.9

$31.1

175.7

22.9

Provides outsourced business services

Steven L. Gerard, chairman, CEO; Chris Spurio, president, financial services

38 34

Nacco Industries Inc./NC 5875 Landerbrook Drive, Suite 300, Cleveland 44124 (440) 449-9600/www.nacco.com

$421.9

$484.6

-13.0%

$44.5

$108.7

-59.1

14.9

Coal mining, lift trucks, Alfred M. Rankin Jr. small electrical appliances chairman, president, CEO

39 43

Shiloh Industries Inc./SHLO 880 Steel Drive, Valley City 44280 (330) 558-2600/www.shiloh.com

$338.2

$167.4

102.0%

$23.9

$14.5

64.7

17.6

Steel processing

Ramzi Y. Hermiz president, CEO

40 36

Preformed Line Products Co./PLPC 660 Beta Drive, Mayfield Village 44143 (440) 461-5200/www.preformed.com

$322.0

$432.9

-25.6%

$20.6

$29.3

-29.7

8.2

Wire and cable products

Robert G. Ruhlman chairman, president, CEO

41 42

Stoneridge Inc./SRI 9400 E. Market St., Warren 44484 (330) 856-2443/www.stoneridge.com

$304.5

$211.3

44.1%

$15.1

$5.4

182.2

10.2

Highly engineered electrical and electronic components

John C. Corey president, CEO

42 41

Olympic Steel Inc./ZEUS 5096 Richmond Road, Bedford Heights 44146 (216) 292-3800/www.olysteel.com

$289.0

$218.8

32.1%

$7.6

$2.3

235.8

2.6

Steel service center

Michael D. Siegal chairman, CEO

43 38

TravelCenters of America LLC/TA 24601 Center Ridge Road, Suite 200, Westlake 44145 (440) 808-9100/www.tatravelcenters.com

$223.8

$340.3

-34.2%

$17.2

$32.2

-46.6

4.6

Interstate travel plazas; fuel, food, convenience stores and truck repairs

Thomas M. O'Brien managing director, president, CEO

44 47

Sifco Industries Inc./SIF 970 E. 64th St., Cleveland 44103 (216) 881-8600/www.sifco.com

$178.2

$91.7

94.5%

$7.8

$8.8

-11.5

10.6

Production, repair, plating, machining and marketing of jet engines

Michael S. Lipscomb president, CEO

45 44

United Community Financial Corp./UCFC 275 Federal Plaza West, Youngstown 44503 (330) 742-0500/www.ucfconline.com

$167.9

$136.7

22.8%

$10.0

($20.4)

NM

5.7

Bank holding company

Gary M. Small president, CEO

46 45

Farmers National Banc Corp./FMNB 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com

$143.7

$124.0

15.8%

$7.8

$9.9

-21.7

6.9

Bank holding company

Kevin J. Helmick president, CEO

47

Gas Natural Inc./EGAS 8500 Station St., Suite 100, Mentor 44060 (440) 974-3770/ www.egas.net

$113.9

NA

NA

$6.7

$3.7

79.4

6.8

Distributes and sells natural gas

Gregory J. Osborne CEO

48 48

LNB Bancorp Inc./LNBB 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com

$110.4

$67.1

64.4%

$6.2

$6.1

1.0

5.5

Bank holding company

Daniel E. Klimas president, CEO

49 46

Athersys Inc./ATHX 3201 Carnegie Ave., Cleveland 44115 (216) 431-9900/www.athersys.com

$103.6

$117.8

-12.1%

($30.7)

($14.7)

NM

NM

Biopharmaceutical company

Gil Van Bokkelen chairman, CEO

50 50

First Citizens Banc Corp./FCZA 100 E. Water St., Sandusky 44870 (419) 625-4121/www.fcza.com

$68.2

$55.6

22.8%

$6.2

$5.6

10.8

4.8

Bank holding company

James O. Miller president, CEO

51 49

Middlefield Banc Corp./MBCN.PK 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com

$55.5

$56.4

-1.7%

$7.0

$6.3

11.9

13.1

Bank holding company

Thomas G. Caldwell president, CEO

52 53

Consumers Bancorp Inc./CBKM 614 E. Lincoln Way, Minerva 44657 (330) 868-7701/www.consumersbancorp.com

$54.5

$33.0

65.0%

$2.7

$2.6

1.3

7.1

Bank holding company

Ralph J. Lober II president, CEO

53 51

Cortland Bancorp/CLDB 194 W. Main St., Cortland 44410 (330) 637-8040/www.cortland-banks.com

$53.2

$45.7

16.3%

$1.8

$2.9

-38.8

3.6

Bank holding company

James M. Gasior president, CEO

54 52

National Bancshares Corp./NBOH 112 W. Market St., Orrville 44667 (330) 682-1010/www.discoverfirstnational.com

$45.6

$38.9

17.4%

$4.1

$2.8

46.4

8.8

Bank holding company

Mark R. Witmer president, CEO

55 59

Energy Focus Inc./EFOI 32000 Aurora Road, Solon 44139 (440) 715-1300 /www.energyfocusinc.com

$35.0

$10.3

240.1%

($2.4)

($5.7)

NM

NM

LED lighting products and James Tu solutions executive chairman

56 54

Wayne Savings Bancshares Inc. /WAYN 151 N. Market St., Wooster 44691 (330) 264-5767/www.waynesavings.com

$34.1

$29.4

16.0%

$2.1

$1.7

19.4

5.3

Bank holding company

Rodney C. Steiger president, CEO

57 55

Central Federal Corp./CFBK 2923 Smith Road, Fairlawn 44333 (330) 666-7979/www.cfbankonline.com

$24.2

$23.6

2.7%

($0.9)

($3.8)

75.6

NM

Bank holding company

Tim O'Dell CEO

58

Mace Security International Inc./MACE 4400 Carnegie Ave., Cleveland 44103 (440) 424-5321 /www.mace.com

$21.2

NA

NA

($2.0)

($4.0)

NM

NM

A diversified manufacturer John J. McCann of defense, safety, and president, CEO security products

59

EnzymeBioSystems/OTCBB:ENZB 16773 W. Park Drive, Chagrin Falls 44023 (440) 708-0012/www.enzymebiosystems.com

$18.9

NA

NA

($0.0)

($0.1)

NM

NM

Manufactures specialty enzymes and enzyme related products

Gary Rojewski CEO

60 57

Avalon Holdings Corp./AWX One American Way, Warren 44484 (330) 856-8800/www.avalonholdings.com

$17.0

$13.9

22.7%

$0.4

($0.3)

NM

1.1

Hazardous and nonhazardous waste brokerage

Ronald E. Klingle chairman, CEO

61

OurPet's Co./OPCO.OB 1300 East St., Fairport Harbor 44077 (440) 354-6500/www.our-pets.com

$16.8

NA

NA

$1.1

$0.2

454.9

16.2

Products for the retail pet Steven Tsengas business chairman, president, CEO

62 56

Ohio Legacy Corp./OLCB 600 S. Main St., North Canton 44720 (330) 263-1955/www.ohiolegacycorp.com

$16.2

$15.4

5.5%

$0.9

$0.1

709.7

4.6

Bank holding company

Rick L. Hull president, CEO

63 58

Datatrak International Inc./DTRK 6150 Parkland Blvd., Suite 100, Mayfield Heights 44124 (440) 443-0082/www.datatrak.net

$10.1

$10.6

-4.7%

($0.1)

($1.5)

NM

NM

Provider of clinical research services

Laurence P. Birch chairman, CEO

Numerical information provided by S&P Capital IQ, www.spcapitaliq.com. The Market Cap and Total Return data used the April 30, 2014 close price for each company, net income figures represent trailing 12-month data through the quarter ending December, January or February depending on the fiscal year end of each company. NA=Not available. NM=Not meaningful. 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.

RESEARCHED BY Deborah W. Hillyer


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INVESTING GUIDE 2014

20 CRAIN’S CLEVELAND BUSINESS

Social: Marketing use is key communication back and forth.”

continued from PAGE 13

strategies and investment planning techniques via Facebook and Twitter three times a week. “Companies are using these platforms to market themselves by providing content that people are interested in,” Legan says. LinkedIn, for example, is a popular site for making connections and learning from influential people. “Your credibility can be increased by the number and quality of your connections, and it’s a great way to share content with your network,” he said. While social media is cost-effective way to market and communicate to both clients and prospects, the financial industry is heavily regulated and because of that many financial advisers are cautious about how they use social media, says Kelley Keane Drumm, marketing director at Szarka Financial. “We have a lot of rules and regulations that we have to follow, social media has not been overly embraced by our industry,” she says. “The regulators are nervous about the whole testimonial side of things and social media is very much about testimonials and having that

Finding a platform Kocsis says his research shows that people of all ages and income levels are using social media and as wealth increases so does the usage of some social media. Take LinkedIn. It’s widely considered the best platform for sharing and researching credible financial news, planners say. In the 55- to 64-year-old bracket, 30% of people with $100,000 or more in liquid net worth are using the platform; that percentage increases to 40% among those with $1 million to $5 million of net worth; and then to 48% of people with $5 million or more, Kocsis said. In that landscape, Kocsis said the real danger for financial advisers and wealth management firms is not to participate in social media. “It’s going to be hard to grow your business as a wealth management firm if you are not marketing to them in the primary way our society is communicating,” he said. “ It’s something that I really think adviser firms need to focus on.” On the investor side, the risk is

making decisions based solely on what one reads or sees on social media, Legan said. “It might have an influence on them but it shouldn’t be the only factor in their decision making,” he says. “You don’t want to reprioritize your life based on something you read on a blog or Twitter or LinkedIn. When you take a strategy and you try to apply it to yourself without getting help or without completely understanding all the intricacies, you could make mistakes and that’s the role of the adviser to protect the clients from making those mistakes.” Most investors — young and old — still want to sit down face to face and have that personal interaction and guidance, Kocsis says. “Now more than ever, you need to be talking to somebody who is an expert and who understands the bigger picture because you can be completely inundated and swayed and manipulated and it can have devastating effects if you make the wrong choices based on an article or a post you saw,” Szarka’s Drumm says. “You could lose your life savings, and unfortunately, it does happen.”

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JUNE 2 - 8, 2014


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Ben Venue: Plant is among worldâ&#x20AC;&#x2122;s largest for injectable drugs ufacture Doxil, a popular cancer drug that had been in short supply. Ben Venue had been the only manufacturer of Doxil back when the Bedford company voluntarily shut down all manufacturing operations in 2011, so it could start working on problems cited by the FDA. The shutdown caused a Doxil shortage. The FDA eventually approved a generic form of the drug and allowed Ben Venue to continue working with Alza to make the brandname version. But when Ben Venue decided to close up shop for good, Alza had to scramble to figure out a way to keep making Doxil. The solution? Alza would take over Doxil production, leasing space at Ben Venue. That lease continues through June. Alzaâ&#x20AC;&#x2122;s probably not going to use this setup forever: The FDA hasnâ&#x20AC;&#x2122;t given its stamp of approval to the current manufacturing process; instead, the agency decides whether to approve individual batches of the drug, as they are produced.

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The facilities and the equipment at Ben Venue still appear to be in good shape for the most part, Hikma executive Riad Mechlaoui said during a conference call with stock analysts last week. â&#x20AC;&#x153;We think the facilities they have, especially the newer ones, theyâ&#x20AC;&#x2122;re complete and theyâ&#x20AC;&#x2122;re new, and they could be functional without much capital cost,â&#x20AC;? said Mechlaoui, global head of Hikmaâ&#x20AC;&#x2122;s injectable drug business. Hikma is still evaluating the plant, but the company is â&#x20AC;&#x153;very seriouslyâ&#x20AC;? thinking about buying it, according to Matthew Cole, a spokesman for the business. Hikma sees a lot of opportunity in the injectable drug market, and Ben Venue owns what Hikma described as one of the largest injectable drug plants in the world. Because of regulations, the injectable drug business has a high barrier to entry that limits competition. And the market is â&#x20AC;&#x153;large and fast-growing,â&#x20AC;? especially in the United States, according to comments Hikma CEO Said Darwazah made during the conference call. The U.S. market for injectable drugs that arenâ&#x20AC;&#x2122;t covered by patents has grown from $10.5 billion in 2008 to $18.9 billion in 2013, an 80% increase, according to a Hikma presentation that cited research from IMS Healthcare, a health care-focused data services company in Connecticut. Plus, the market regularly experiences drug shortages, the presentation noted. And shortages mean more profit for those companies that continue to make those drugs.

Injecting new life Hikmaâ&#x20AC;&#x2122;s injectable drug business expanded slowly until 2011, when it bought the socalled multi-source injectable drug division of Baxter Healthcare. The New Jersey-based division transformed Hikmaâ&#x20AC;&#x2122;s injectable drug business; its sales jumped from $157 million in 2010 to $470 million in 2012. And the business has continued to grow organically. Revenue hit $536 million last year, and that figure was projected to grow by another 20% in 2014 â&#x20AC;&#x201D;

JANET CENTURY

A Hikma Pharmaceuticals spokesman said the majority of the equipment at the Ben Venue complex in Bedford is in good shape. a number published before Hikma announced the deal to buy Ben Venueâ&#x20AC;&#x2122;s Bedford Labs division, according to Cole, the company spokesman. Although Hikma already has enough capacity to make the Bedford Labs products in other plants, all that growth means that the company may need more capacity â&#x20AC;&#x153;in the not-too-distant future,â&#x20AC;? Cole said. But not just any capacity will do. Much of the revenue from Hikmaâ&#x20AC;&#x2122;s injectable drug business comes from products that fetch relatively low prices. Now, however, the company is focusing on developing and acquiring high-value pharmaceuticals. The Bedford Labs acquisition, which is scheduled to close in the second half of 2014, is part of that effort. Many of the companyâ&#x20AC;&#x2122;s 84 drugs are used to treat cancer and sell for higher prices than most generics. Ben Venue, which previously made those

drugs, has relatively new facilities that were built to make cancer drugs and other products that contain toxic chemicals that need to be handled with care. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not just about capacity,â&#x20AC;? Cole said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s about the kinds of products it can make.â&#x20AC;?

Up in the air But donâ&#x20AC;&#x2122;t count on Hikma to save the Ben Venue plant just yet. Hikma has not decided whether to buy the plant. Plus, even if the company does strike a deal, it could decide to move equipment from Ben Venueâ&#x20AC;&#x2122;s headquarters to another plant, Hikma officials said during the conference call. Thereâ&#x20AC;&#x2122;s one other issue that neither company will speak about, but itâ&#x20AC;&#x2122;s unclear how it might affect Hikmaâ&#x20AC;&#x2122;s decision. Alza Corp., a subsidiary of Johnson & Johnson, uses part of Ben Venueâ&#x20AC;&#x2122;s facility to man-

Will it stay or will it go? So if Hikma buys the plant, will Alza stick around? Or might Hikma go after FDA approval to take over manufacturing duties for Doxil? Thereâ&#x20AC;&#x2122;s no way to know, but Hikma says in its annual report that it wants to go after opportunities where competition is limited. To some degree, that description would apply to Doxil: Other companies can make generic forms of the drug, but all brand-name Doxil is made at Ben Venue. And Hikma does have experience filling shortages. For instance, the company made a killing last year because of a shortage of an antibiotic called doxycycline. The shortage â&#x20AC;&#x201D; which has ended â&#x20AC;&#x201D; supercharged sales within Hikmaâ&#x20AC;&#x2122;s oral generic drug business: The unit posted $268 million in sales last year, up from $104 million in 2012. Hikmaâ&#x20AC;&#x2122;s overall adjusted annual profit more than doubled, too, hitting $274 million in 2013, up from $120 million in 2012. Revenue hit $1.4 billion in 2013, up from $1.1 billion in 2012, a 23% increase. â&#x2013;

Landmark: Tower has high vacancy ket of older or poorly located Class B buildings is being improved by taking them off the market to remake them The 1111 Superior building, formerly the Eaton Cenas apartments. ter Building, got a body blow last year when Eaton Corp. Even so, vacancy remains a challenge in downtown moved its American headquarters to a new office camCleveland. CoStar estimates a 17.4% vacancy rate in pus in Beachwood. Although the Cleveland Metropolidowntown Cleveland at the end of tan School District has occupied 2014â&#x20AC;&#x2122;s first quarter, down from 90,000 square feet of the tower, about 19.3% a year ago. 280,000 square feet remains empty in However, big challenges are part the building, according to CoStar, an of the strategy at American Landonline realty data service. The office marks, which is a part-owner of the tower is just shy of 615,000 square 110-floor Willis Tower, better known feet in size. as the former Sears Tower, in ChicaMost other downtown buildings go. A spokeswoman for American with as much or more empty office Landmark did not return two telespace as 1111 Superior are being phone messages by Crainâ&#x20AC;&#x2122;s deadline converted to apartments or hotels or last week. plans are afoot to remake them to The current owner of 1111 Superisuch uses. or is Superior Cleveland LLC, which is However, 1111 Superior is likely to led by a Weinraub Management remain an office play. Since 1111 SuSTAN BULLARD Group of New York City. Jack Weinperior dates from 1983, it could not raub, its principal, did not return two benefit from historic tax credit pro- The 1111 Superior building emails about the pending sale. An assistant who answers grams at the state and federal level that are vital to prothe phone at the company said Weinraub is too busy to jects that convert old office buildings to new aparttake phone calls and email is the only way to reach him. ments. CBRE Group manages and handles leasing of 1111 Terry Coyne, an executive managing director at NewSuperior. David Browning, CBREâ&#x20AC;&#x2122;s Cleveland office mark Grubb Knight Frankâ&#x20AC;&#x2122;s Cleveland office, said he bemanager, declined comment. lieves itâ&#x20AC;&#x2122;s an encouraging sign that an existing building Over the long term, downtown Cleveland tends to owner may be looking at buying again downtown. have one building cut rents each year and rake in tenâ&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a sign they see the market is improving,â&#x20AC;? Coyne ants. American Landmark did that to good effect in 2012 said. â&#x20AC;&#x153;They must see opportunities in the market. If (American Landmark) pays the price they are rumored at Oswald Centre. Taking advantage of a chance to buy to be paying, it will be a tough building to compete 1111 Superior positions it to capitalize on its market with.â&#x20AC;? knowledge with a competitive product rather than seeGeoff Coyle, managing partner of the Ostendorf-Moring a potent competitor surface with an opportunity on ris Co. real estate brokerage, said the market for office the other side of Superior Avenue. leasing has picked up the past few years as tenants want Both Oswald Centre and 1111 Superior were designed to upgrade after sitting tight through the recession. by Skidmore, Owings & Merrill LLP, a globally famous The Class A market is strong, Coyle said, and the mararchitecture and urban planning firm. â&#x2013;

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Fishy: This year’s inclement weather could add to algae problem continued from PAGE 1

Ben Bebenroth, chef and owner of Spice Kitchen + Bar, said he is perplexed about the contaminants in the fish, although his unease doesn’t prevent him from serving lake fish at his Gordon Square Arts District eatery. “The damage has been done to our environment in general. Toxicity is the reality with almost all our foodstuffs,” he said. “But I’d rather eat our local walleye than quarter pounders with cheese.” The Ohio Department of Natural Resources does not share the same level of concern over the quality of the fish, but rather the health of the lake water. “It’s safe to eat perch and walleye,” said Jeff Tyson, Lake Erie program administrator for the department’s Wildlife Division. “Fish are highly migratory and spread out to areas where they can thrive.” Lake Erie recreational and commercial fishing is an $800 millionplus industry, and pollution threatens its economic impact. Recurring problems with contaminants are prompting increased awareness and action to protect the habitat of the fragile fresh water resource that supplies what we eat and drink.

That stinks Lake Erie is the shallowest and warmest of the Great Lakes, and it’s most susceptible to the impacts of climate change and pollution. Prior to the 1970s, the concentration of nutrients — particularly phosphorus from municipal sewage treatment plants — harmed the lake with algae, resulting in lower oxygen levels and fish die-

offs, according to the International Joint Commission, a United StatesCanadian agency. Governments on both sides subsequently upgraded their sewage treatment plants. Phosphorus levels by the mid-1980s declined by more than half from 1970s levels, which improved water quality. Lake Erie’s recovery, according to the agency, was recognized as a global success story. Problems with excess nutrients in the early 2000s reappeared. In 2011, heavy spring rains washed so much phosphorus into the lake that the summer’s algal bloom, at nearly 2,000 square miles, was three times bigger than any previous one and could be seen from space. The decomposing algae consume the ecosystem’s oxygen, creating dead zones where deepwater fish such as perch cannot exist. This year’s substantial snow melt and spring rains could produce a resurgence of algae, though forecasters are still uncertain of the extent based on weather predictions that are calling for a cooler summer.

Taking stock Habitat destruction causes fish population to suffer. Walleye fishing was banned in 1970 because of mercury contamination from the Detroit and St. Clair rivers. Legal walleye harvest was renewed in 1972. Population levels of both walleye and perch increased in the mid1980s, but have fluctuated since then (although other factors, including overfishing and invasive species contribute to the vacillating

TAKING ACTION ■ Following Lake Erie’s historic algal bloom in 2011, the International Joint Commission in 2012 established the Lake Erie Ecosystem Priority, which is calling for reduced limits of phosphorus that comes from commercial fertilizers and sewage. Gov. John Kasich is expected to sign a bill that would require farmers who use commercial fertilizer to be certified by the state, as well as to track fertilizer sales. ■ At the same time, the Northeast Ohio Regional Sewer District is upgrading its infrastructure through a $3 billion, 25-year federally mandated program to reduce by 2036 its raw sewage discharge from 4.5 billion gallons to 494 million gallons annually. — Kathy Ames Carr population). A review since 2000 of the population of yellow perch — one of the most popular recreational and commercial fish in Lake Erie and an indicator of the lake’s ecological condition — that are at least 2 years old shows a peak of 515 million in 2005. Stock has declined since then. The perch population reached its lowest level in 2013, at 131 million, though this year’s abundance is projected to rebound at 155 million. The highest level of Lake Erie walleye, at 99 million, was also experienced in 2005. This year’s estimated abundance is 23 million, the lowest level during the 14-year span. “There are other factors

involved, but phosphorus and harmful algal blooms impact production of yellow perch and walleye,” Tyson said.

Here’s the catch The state’s Department of Health, Department of Natural Resources and Environmental Protection Agency also set annual consumption advisories, which specifically target pregnant women and children. While most Ohio sport fish are safe to eat, low levels of chemicals like polychlorinated biphenyls (PCBs) and mercury have been found in lake fish. It’s acceptable to eat 6 ounces of yellow perch twice a week (although only once a week if caught in the Cuyahoga River). Recommended consumption of walleye is once per week. Others, such as catfish, freshwater drum, lake trout, smallmouth bass, steelhead trout and white bass, should be limited to one meal per month. Fishermen for Catanese Classic Seafood, a Cleveland-based second-generation fish distributor, navigate the waters carefully. Longtime angler Holly Szuch said she avoids the more toxic western edge of the lake, trolling the waters between Huron and Ashtabula. “The fillets we catch are clean. I eat a lot of fish,” she said. “If there were any issues, I wouldn’t be catching it.” Still, a full inspection of the harvest is customary. “We don’t see red marks or trauma,” she said. “Any mercury deposits would be in their bellies, and we don’t sell bellies.”

Pier W’s in-house fish cutting room enables executive chef Regan Reik to scrutinize the health of his Lake Erie perch and walleye, the quality of which meets his sustainable Lakewood restaurant’s high standards. “They still seem vibrant,” he said. “Right now, we’re getting in yellow perch and walleye that are just beautiful.” Douglas Katz, chef/owner of Fire, Food and Drink, said the only locally featured fish on his Shaker Square eatery’s menu is walleye, which Katz is only commercially harvested from Ontario waters because of binational state and fishing agency agreements to protect walleye population. Katz eschews the smaller perch, not primarily because of health suspicions but because of its lack of utility. “Perch is small, so it’s hard to do anything besides fry it,” he said. Still, the delicate state of our oceans and lakes is what motivates his advocacy role as an ambassador of the Monterey Bay Aquarium’s Seafood Watch program, which educates consumers and businesses on purchasing seafood that is fished or farmed in ways that don’t harm the environment. “It’s really important that we keep asking questions, and find out what the lake fish are ingesting,” he said. “We want sustainable seafood for future generations. We don’t want fish swimming in dead zones.” ■

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THEINSIDER

THEWEEK MAY 26 – JUNE 1 The big story: Goodyear Rubber & Tire Co. said it plans to build a consumer tire plant — its first new tire plant in 20 years — at an as-yet-undetermined location in the Americas. Akronbased Goodyear will invest about $500 million in the new plant, which it said will be its most technologically advanced yet. It will have an initial capacity of about 6 million tires a year and will have the ability to increase that capacity over time. Tire production is expected to start in the first half of 2017.

Complex solution: Jacobs Entertainment Inc. now is operating the Greater Cleveland Aquarium and is in the process of investing at least $500,000 to upgrade the 2year-old marine center on the West Bank of the Flats. Jacobs Entertainment owns the 22-acre Nautica Entertainment Complex, including the Powerhouse building housing the aquarium. The company is taking control from Marinescape NZ Ltd. to better integrate the aquarium into Nautica. The aquarium was a joint venture of Marinescape and Jacobs Entertainment. Terms were not disclosed.

Prime time: Simon Property Group transferred Great Lakes Mall in Mentor and Richmond Town Square in Richmond Heights to Washington Prime Group, a new, publicly traded real estate investment trust that it spun off on May 28. The new REIT primarily is the home of Indianapolis-based Simon’s 54 open-air shopping centers and 44 malls that Green Street Advisors, a Newport Beach, Calif.-based real estate research firm, described as “low productivity” properties. Aurora Premium Outlets in Aurora and Summit Square Mall in Fairlawn— the two other Simon-owned properties in Northeast Ohio — remain in Simon’s portfolio.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Cleveland Clinic doctors put savings to the test

Advanced RV kicks its business into a new gear

■ The Cleveland Clinic saved more than $183,000 over a two-year period thanks to a tool that prevented doctors from ordering tests that had already been requested, according to a recent study in the American Journal of Clinical Pathology. In the study, researchers determined the program blocked the ordering of 11,790 unnecessary tests. The cost savings are likely far greater because researchers did not calculate, for instance, the savings incurred by using fewer needle sticks and not having to process the specimens. The initiative focused on implementation of a tool incorporated in the health system’s computerized physician order entry program. The tool prevented physicians from ordering a test if it had already been ordered that day. Most importantly, it provided the results of the earlier test. Researchers said while many hospitals’ systems alerts docs that tests have already been ordered, physicians often ignore the message because they don’t have the results on hand or the time to track them down. “The difference in our program is that we provided a ‘hard stop,’ meaning the system won’t allow doctors to order the duplicate tests, and even more importantly, the program provides the result of the test that had been previously ordered,” said Dr. Gary W. Procop, the study’s author and medical director of enterprise test utilization and consultation services at the Clinic. “Doctors appreciated that. One told me that he was thrilled that computers were finally helping him do a better job.” — Timothy Magaw

■ Advanced RV in Willoughby, which currently offers for-sale, custom-designed recreational vehicles, is expanding its business to enable customers to rent RVs on a daily or weekly basis. The company customizes Mercedes-Benz Sprinter chassis for its customers, making luxury motor homes. The three rental RVs the company now offers include upscale features like air suspension for a smooth ride, battery power for camping off the grid, and a strong stereo system. “They’re not built for rentals,” said company founder Mike Neundorfer. “They’re built for clients.” The website for the new business should be up within the next two weeks, Neundorfer said, but Advanced RV already is renting out the vehicles. The cost is $350 per day or $2,000 per week. The company, founded in 2012, sold and shipped five vehicles last year, Neundorfer said. He said the pace has picked up this year, and employment has increased to 20. — Rachel Abbey McCafferty

WHAT’S NEW

BEST OF THE BLOGS

The Motherson of all deals: Warren-based Stoneridge Inc., a maker of electrical and electronic components and systems for the commercial vehicle, automotive and agricultural, motorcycle and off-highway vehicle markets, agreed to sell assets of its wiring business to Motherson Sumi Systems Ltd. of India for $65.7 million. Included in the transaction are a total of six manufacturing facilities — in Portland, Ind., and Chihuahua, Saltillo and Monclova, Mexico — as well as an engineering and administrative center in Warren. The transaction involves about 4,700 employees and is expected to close in the third quarter.

Tastefully done: Morgan’s Foods Inc. of Beachwood officially was swallowed up by Apex Restaurant Management Inc. The companies announced the completion of Apex’s $20.6 million acquisition of Morgan’s Foods. Shareholders will receive $5 per share, in cash. Morgan’s Foods, which was formed in 1925, owns and operates 68 KFC, Taco Bell and Pizza Hut Express franchises in Ohio, Pennsylvania, West Virginia, Illinois, New York and Missouri.

■ Cuyahoga Community College on Friday, June 20, will host a free Re-Entry Fair for women looking to re-enter the work force, go to school or otherwise re-establish themselves in the community after incarceration.

Excerpts from recent blog entries on CrainsCleveland.com.

The place to be

Power players:

Partners of Cleveland’s Squire Sanders and Washington, D.C.-based law firm/lobbying powerhouse Patton Boggs approved a combination that will create a firm with about 1,600 lawyers spanning 45 offices in 21 countries. The combined firm will be called Squire Patton Boggs. The deal creates a firm that will rank “among the top 25 firms globally in terms of lawyer headcount, and eighth by number of countries where they have offices,” Squire Sanders said. The firm will rank as one of the 10 largest firms in Washington, with approximately 280 lawyers, and among the largest in the United States, with roughly 785 lawyers.

Tri-C extends helping hand to ex-offenders

COMPANY: The Garland Co., Cleveland PRODUCT: CPR System Garland says the CPR System is a “highly reflective, low-odor, synthetic liquid rubber membrane” designed to waterproof and restore existing metal roof and wall panel systems, “delaying costly roof replacement and improving the overall performance of the roof system.” The multi-layer waterproofing system “will only add one-fifth of a pound per square foot to existing roof systems when completed, eliminating the time and cost associated with engineering a new roof system,” according to the company. It also provides resistance to UV damage and deterioration due to weathering “by forming a rubber-like monolithic membrane over the entire surface,” Garland says. It’s designed for application to properly prepare stainless steel, galvanized metals, copper, aluminum and other metal roof systems. Garland product manager Tom Stuewe says the system was designed for easy application to make it possible for in-house maintenance use, and its cold-process, lowodor formulation “allows restoration projects to proceed with minimal disruptions to building operations and occupants.” The system is available in brush-grade or trowel-grade versions and can be applied over sloped, contour surfaces. “When properly installed and maintained, this system can provide an additional 10 to 15 years of service life,” the company says.

■ The New York Times took a look, with a story and a nearly six-minute video, at how the Cleveland Orchestra is “maintaining a classical music miracle” in the city by focusing on building young audiences. Central to the effort are Milton and Tamar Maltz, who have donated $20 million to “help the orchestra build a younger audience by offering all-you-can hear ‘FanCards’ to young concertgoers that allow them to attend as many concerts as they like each season for $50,” The Times noted. That generous financial support is key for the Cleveland Orchestra to meet its goal of attracting the youngest audience of any orchestra in America by its 100th birthday in 2018. “If we don’t get young people involved in classical music, in theater, in the arts, the opera, ballet, there won’t be the arts of tomorrow,” Milton Maltz said. Younger audience members in Cleveland can purchase FanCards that allow them to attend as many concerts as they like during the main season. The orchestra offers free admission to its summer outdoor concerts at Blossom Music Center for youth under age 18. Also helping: community residencies, such as the just-completed residency in Lakewood. The story noted that students can attend any concert during the subscription season for $10. “If you’re lucky, you get good seats,” said Rina Sugawara, a music student at Baldwin Wallace University. “I’ve gotten dress circle seats.” She’s also a campus ambassador who urges other BW students to come to concerts. The effort seems to be working: When the Center for Future Audiences was first endowed by the Maltz Family Foundation in 2010, students made up 8% of the audience. Last year, according to the orchestra’s figures, the number was 20%. Franz Welser-Möst, the Cleveland Orches-

“There’s a lot of good people who might have made bad decisions in the past, and we don’t want them to be inhibited for that,” said Cicely Campbell, director of the school’s Women in Transition program and its Carl D. Perkins grant. The Women in Transition program at Tri-C helps women at any stage of change in their lives, whether they’re ex-offenders or mothers adjusting to an empty nest, Campbell said. The non-credit course helps the women update and develop resumes and introduces them to Tri-C’s different opportunities. About 15% to 20% of the women in the classes are ex-offenders, Campbell said. The June 20 event will be held from 10 a.m. until 4 p.m. and will feature workshops on topics ranging from resume writing to financial literacy from 1 p.m. to 3 p.m. At 11:30 a.m., Cuyahoga County Common Pleas Judge Nancy M. Russo will speak to attendees. Russo presides over Cuyahoga County’s Re-Entry Court, which addresses the needs of people transitioning from prison. Lunch will be provided after Russo’s speech, thanks to a donation from U.S. Rep Marcia L. Fudge, D-Cleveland. The event is co-sponsored by Tri-C’s Women in Transition Program and the Covenant Outreach Through Advocacy and Agency Networking, which is a prison aftercare program for women and girls run by the Covenant Baptist Church. It will be held at the college’s Advanced Technology Training Center at 3409 Woodland Ave. in Cleveland. Registration is not required. — Rachel Abbey McCafferty

tra’s music director, told The Times that young people are turning weekend evenings at Severance Hall into date nights. “It’s the place to go on a Saturday night,” he said. “It’s such a shrine of music, and such a beautiful building.”

Welser-Möst

Good time for a comeback ■ Cleveland’s used to being an underdog, and it’s in just such a position for attracting the 2016 Republican convention, according to the conventional wisdom in political circles. The finalists for the event are Cleveland, Dallas, Denver and Kansas City. Politico.com’s take: “Watch Dallas, which can probably cobble the most money together,” the website said. “This counts, since fundraising is a perennial problem for these affairs and there’s less public money on the table than in the past.” On the plus side for the others is that “Ohio and Colorado are both swing states, which gives them a boost. Kansas City also carries symbolism: the last competitive national convention was at the Cow Palace in 1976.” Politico.com might think Dallas is the leader, but Phillip Jones, CEO of the Dallas Convention & Visitors Bureau, doesn’t see it that way. According to the Dallas Morning News, “He views Denver as the front-runner, because the city held a successful Democratic convention in 2008. But, he said, “They are very keen on Dallas.” David Gilbert, president of Positively Cleveland, the city’s convention and visitors bureau, told Crain’s that Cleveland 2016 Host Committee Inc. has commitments for $25 million of the roughly $50 million to $55 million it will cost to put on the four-day convention. He said he’s confident that now that Cleveland has made the final four, the committee will be able to achieve its financial goal.


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$

2500 Cargo Van 144”, Low Roof, 4-Cylinder

*Per month lease for 39 months, now ONLY $0 due at signing. MSRP $45,495

10 or more to choose from

Infiniti of Akron (I-77 and Arlington Road on the Green Auto Mile.)

Mercedes-Benz of North Olmsted

3332 South Arlington Road InfinitiofAkron.com 888-435-5952

28450 Lorain Road . 888-450-8064 . www.mbohio.com

Airport Infiniti (Just seconds off I-480, Exit 12 to Brookpark Road.) 13940 Brookpark Road AirportInfiniti.com 855-778-7732

Sprinter of North Olmsted

Infiniti of Beachwood (Minutes from Legacy Village on Mayfield Road.)

28595 Lorain Road . 888-342-0753 . www.northolmstedsprinter.com

5180 Mayfield Road InfinitiofBeachwood.com 855-409-9544

2014 Mercedes-Benz C300 4MATIC® advertised lease rate based on a gross capitalized cost of $39,344. Includes destination charge and optional sport package which includes AMG® Sportline, Avant Garde Package (Sport), Radiator Grill with Central Star, Sport Suspension, 17-Inch 5-Twin-Spoke Wheels, Heated Front Seats, Sunroof. Excludes title, taxes, registration and documentary service charge. Total monthly payments equal $8,613. Cash due at signing includes $2,771 capitalized cost reduction, $795 acquisition fee, and first month’s lease payment of $319. Total payments equal $12,179. Subject to credit approval. No security deposit required. 10,000 miles per year, $.25 thereafter. Lessee may be liable for wear and tear. Lease offers expire 6/2/14. **Excludes taxes, title and registration. Options shown. Not all options available in the U.S. © Mercedes-Benz USA, LLC.

*Prices and payments exclude tax, title, registration and documentary service charge. 10,000 allowable miles per year, $0.25 thereafter. No security deposit required, Q50—MSRP $39,755, QX60—MSRP $45,495. With approved credit thru IFS. In-stock units only or while supplies last. Disposition fee due at term. of lease. Lessee may be liable for wear and tear. See participating retailer for details. Offers end 6/2/14. ‡ Subject to tier 1 credit score of 700 or higher.

©2014 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Porsche recommends four winter tires when driving in cold, snowy, or slippery conditions.

T H E A B S O L U T E O P P O S I T E O F O R D I N A R Y.

MASER ATI OF CLEVEL AND

Any resemblance to the car of your dreams is purely intentional. It wears its heritage proudly on its sleeves. And fenders. And roofline. Introducing the Porsche Macan S. A 340-horsepower twin-turbo V6, PDK double-clutch transmission and active all-wheel drive with Porsche Traction Management for maximum grip in varying driving conditions. All standard. The Macan S is built around our defining belief that every drive should be unforgettable. And every car should be a sports car. Dream fulfillment begins with a test drive. Porsche. There is no substitute.

The new 2015 Macan S. Starting at $49,900.

EXPERIENCE THE ALL-NEW 2014 MASERATI GHIBLI WITH A TEST DRIVE.

$

598 /MO *

2014 GHIBLI

36-MONTH LEASE / 10,000 MILES PER YEAR $4,999 DUE AT SIGNING / EXPIRES 6-2-2014

Porsche of North Olmsted A Part of The Collection Auto Group 28400 Lorain Road, North Olmsted, Ohio 44070

855-218-1288

Open 24/7 at: www.clevelandporsche.com

MASERATI OF CLEVELAND 888-678-0739 / www.MaseratiofCleveland.com 28300 LORAIN ROAD, NORTH OLMSTED, OH 44070

*Available only to qualified customers through Ally Bank and Maserati of Cleveland DMA through June 02, 2014 or while inventory lasts. Not everyone will qualify. Available only on Chassis # 92725 MSRP $71,120 with delivery to be completed before June 02, 2014. Advertised 36 month lease payment based on selling price of $60,491.78 Excludes title, taxes, acquisition fee, security deposit, documentary fee, registration, license and title fees. Cash due at signing $4,999 Lessee pays for any amounts due under the lease at lease end, any official fees and taxes related to the scheduled termination, excess wear and use plus 10,000 miles per year $0.60/mile over, with no disposition fee. Purchase option at lease end for $37,693.60. plus taxes (and any other fees and charges due under the applicable lease agreement) in example shown. Subject to credit approval. Prices, payments, and Gross Cap Cost based on chassis # 82003. Subject to availability and may apply to other units in inventory depending on MSRP. Special lease rates are available for top ‘S’ Tier qualifying Ally customers. Prices includes incentives and CSI funds for clients in dealer market area. Rates may change due to credit worthiness as determined by Ally Bank. Please speak with one of our knowledgeable sales staff for an appointment or any other questions. Offer expires 06/02/2014. ©2014 Maserati North America, Inc. All rights reserved. Maserati and the Trident logo are registered trademarks of Maserati SpA. Maserati urges you to obey all posted speed limits.

www.theCAG.com

Crain's Cleveland Business  

June 2 - 8, 2014 issue

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