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Stepping into the future Parker Hannifin develops ‘technology incubator’ to foster innovative concepts By CHUCK SODER csoder@crain.com

Big companies have a reputation for killing big ideas. So think of Parker Hannifin’s new technology incubator as a fortress: A place designed to protect ideas that could become revolutionary products. Products like the Indego exoskeleton. Parker Hannifin’s Indego team — which is helping paralyzed research subjects walk again — has become the first tenant of the incubator, which is now home to the company’s Corporate Technology Ventures initiative. The initiative is designed to help Parker, a 100-year-old industrial company, innovate more like a

startup, according to Craig Maxwell, chief technology and innovation officer. Startups often are better at coming up with big, groundbreaking ideas. Major corporations, including Parker Hannifin, tend to develop products that are “more evolutionary than revolutionary,” Maxwell said. But that’s not good enough, if Parker plans to compete with those startups. “What do we have to do to make sure we’re relevant 100 years from now?” he said. Thus, Parker is hunting for big ideas, regardless of whether they come from Parker employees, universities or other companies. The Indego exoskeleton is the first of those ideas to take physical shape. Parker licensed the technology from Vanderbilt University in 2012, and it began testing a

new version of Indego in clinical trials this summer. The company believes it will hit the U.S. and European markets next year, assuming it wins regulatory approval in each market. At the end of August, the 19 people who make up Parker’s Human Motion & Control team set up shop in a 5,200-squarefoot lab inside the Corporate Technology Ventures incubator — a 27,000-squarefoot building in Macedonia.

Up to the challenge Michael Gore, who lost the use of his legs in a car crash several years ago, visited the lab last week to show how the product works. From his wheelchair, Gore leaned forSee PARKER, page17

Medicaid issue will land in 2015 By TIMOTHY MAGAW tmagaw@crain.com

39

MetroHealth’s top lobbyist, John Corlett, has sat down with plenty of state lawmakers and candidates over the last few months, but he says not a single one has broached the topic of Medicaid expansion — perhaps the health system’s most important legislative issue — without him or his staff raising it first. It’s a bit surprising considering the heated battle last year in the Legislature that pitted Republican Gov. John Kasich against the most conservative members of his own party in his quest to expand the governmentfunded health care program to cover more low-income Ohioans earning up to 138% of the federal poverty level. Ultimately, expecting that lawmakers would block his efforts, the governor sought and gained approval from the state Controlling Board to use more than $2.5 billion in federal funds to pay for the expansion. A lawsuit challenging Kasich’s maneuver fizzled, and

See MEDICAID, page 18

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ALSO INSIDE: NEWSPAPER

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the Tea Party-led chorus railing against the expansion, which was made possible by President Obama’s controversial health care overhaul, has faded. However, local hospitals say reauthorizing the expansion in next year’s state budget negotiations is anything but a sure bet, and they’re gearing up for a fight. And if expansion unwinds due to lawmaker inaction, Corlett and others say the result could be “catastrophic.” “There are still honest disagreements about the role of government when it comes to providing health care,” said Corlett, MetroHealth’s vice president of government relations and community affairs and a former director of the state Medicaid program. “I think those divisions are still there.” Since taking hold at the start of the year, 367,395 Ohioans have enrolled in the program under the expanded parameters, including more than 56,000 in Cuyahoga County, according to the most recent data provided by the Ohio Department of Medicaid. And if

THE AUGUST ACE REPORT

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Historic Alcazar sold to Kirt Montlack Ltd. in $1.3M deal By STAN BULLARD sbullard@crain.com

The Alcazar, a landmark apartment hotel in Cleveland Heights dating from 1923, has gained a new owner for the first time in more than 50 years. The building at 2450 Derbyshire Road, which has a distinctive redtile roof and other ornate features giving it a Spanish-Moorish eclectic design, was purchased last Monday, Sept. 22, for $1.3 million by Kirt Montlack Ltd. Kirt Montlack is the manager of the family-owned Montlack Realty in Shaker Heights. The prior owner was an affiliate of Western Reserve Residences, a

hybrid nonprofit and for profit that operated it as a mixed-use property. About half of its 175 units are occupied by senior citizens in an independent assisted living arrangement, and the remaining suites are operated as long-term corporate housing and bed-and-breakfast suites, according to Sandra Martin, a vice president of Western Reserve’s board who previously served as a manager of the property. “The time had come for us to work to fulfill our mission in some other way,” Martin said in an interview. “We had not listed the building,

but Mr. Montlack presented himself as a prospective buyer. He sounds like the right buyer, and Montlack is a popular name in Cleveland Heights.” Montlack agreed to allow senior citizens to stay in the building for six months, but after that is free to pursue whatever direction he wants and to raise rents. “It needs a lot of renovation,” she said, which was a partial motivation for the sale. Western Reserve plans to contribute proceeds from the sale to local housing organizations, she said, but it has not selected which ones. For his part, Montlack is mum. He did not return three phone mes-

sages at his office or one at the Alcazar by last Thursday, Sept. 25. The Alcazar also is listed on Montlack’s website as part of its portfolio. Although he is not familiar with Montlack’s plans, Ralph McGreevy, vice president of the Northern Ohio Apartment Association, said the Alcazar has gone into responsible hands. “(Montlack) is a smart individual who will put the investment into the Alcazar that I’m sure it needs,” McGreevy said. “I think it’s a brilliant move. That neighborhood is always ripe for a good operator.” Cleveland Heights Mayor Dennis Wilcox said he does not know about

Montlack’s plans. “They are known as good operators in Cleveland Heights,” he said. “The city would obviously work with the new owners because it’s a beautiful, historic landmark in the city.” Martin said she prized the building’s people as much as its bricks and mortar. “It’s a wonderful concept to have a senior population mixed with the public,” she said. “We really strove to do the right thing for every resident.” Martin said some independent living tenants have moved in while others have moved out since plans for the ownership change were set.

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2013 Employer Health Benefits Survey, The Henry J. Kaiser Family Foundation, August 20, 2013, http://kff.org/report-section/2013-summary-of-findings/ Accessed 11/19/2013. 2Aflac Company Statistics, October 2013, One day processing turnaround based on business days after required documents are received. Online claims available for Accident, Sickness, Cancer & Wellness claims. 3 Eastbridge Consulting Group. U.S. Worksite/Voluntary Sales Report. Carrier Results for 2012. Avon, CT: April 2013. Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York. Worldwide Headquarters | 1932 Wynnton Road | Columbus, GA 31999 Z131178

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Employment numbers climb in August By JAY MILLER jmiller@crain.com

Job growth returned to Northeast Ohio in August, with the ClevelandAkron metropolitan area showing a month-to-month gain of 5,109 jobs in the private nonfarm sector, a 0.44% increase from July, according to the Ahola Crain’s Employment Report. For July, the data showed a loss of 7,242 jobs, despite continuing modest levels of growth in employment nationally. The ACE Report also shows a 1.25% increase in jobs in August compared with August 2013, a gain of 14,520 positions. “It’s not surprising that we’re looking at gains in August,� said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “We’re trending upward.� He said that the pace of job growth in the seven-county region has picked up, with growth greater during the last three months than during the last six months, and the August growth offsetting the decline in July. “We’re trending upward,� he said. “We’ve seen some improvement throughout these last five months, save for the dip in July.

There was a softening in the national market, so it’s not surprising that maybe we lost some.� The ACE Report is based on payroll data from 3,000 employers, gathered by The Ahola Corp., a Brecksville payroll and human services firm. It shows that growth was spread evenly across the range of companies. “The growth we’re seeing in the last few months should have positive benefits� in both small and larger companies, Kleinhenz said. The region’s 14,520 job growth from August 2013 to August 2014 brings total private-sector employment to 1,178,252. Larger companies — those with more than 50 employees — saw month-to-month employment growth of 0.46%, slightly better than companies with less than 50 employees, which saw 0.41% job growth. Year over year, employment at both small and larger companies has grown by about 1.2%. Those numbers closely track the direction of similar numbers. PNC Financial Services Group predicts a 1.2% increase in employment in its Northeast Ohio region for 2014, which includes the Canton and Youngstown metro areas in addi-

Volume 35, Number 39 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, ex-

OCT. 15 The Idea CenterÂŽ at Playhouse Square For tickets, go to wcpn.org

cept for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2014 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750 Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

tion to Cleveland and Akron. But employment growth in the region lags the national recovery, as PNC forecasts a 1.7% increase in employment nationally. Still, the regional economy is growing, with the July dip an anomaly. “We see the region continuing to grow. The question is how fast,� said Mekael Teshome, assistant vice president and economist for PNC in Pittsburgh. “There is money going into the region, but it hasn’t hit job growth yet.� Teshome said the energy sector, and in particular the shale gas extraction industry that’s active in parts of the region, remains in its early stages. While that sector is creating demand for steel tube and other products, it’s not yet creating a lot of new jobs, he said. He also attributes the slower pace of economic growth in Northeast Ohio compared with the country as a whole to the lack of population growth of the region. Historic numbers presented in this report will vary from data reported in August. The numbers have been revised to reflect economic data gathered and analyzed over the last month.

CORRECTION A Sept. 8, Page One story on MaxWellness misstated the role of former OfficeMax CEO Michael Feuer in the creation of OfficeMax. He became a cofounder of OfficeMax with Robert Hurwitz and was not its sole founder. OfficeMax was launched on April 1, 1988, in a small area of a Wickliffe warehouse owned by Hurwitz.

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FULL COURT PRESS How local media is preparing for a Cavs season like no other The Cleveland Cavaliers haven’t created any new communications and public relations positions to accommodate the crush of media who will be covering the team’s every move this season, but the organization did build a tent outside its training facility in Independence. When the Cavs held their media day on Friday, Sept. 26, nearly 300 credentials were issued, which is double the average media contingent who showed for the annual gathering during LeBron James’ first tenure with the organization. On Wednesday, Sept. 24, Cavs vice president of communications Tad Carper said the anticipated crowd for media day was expected to be “somewhere between triple and quadruple” the total for 2013. “This is easily the largest we’ve ever done, from a domestic, local and international outlet perspective,” Carper said. “It’s a good situation to be in, but it does require some additional operational aspects to manage it and control it so that there’s a functional workflow for everybody involved.” That included the Cavs constructing a temporary workspace for media day — essentially a large tent, equipped with Wi-Fi and other necessities, on the lawn outside Cleveland Clinic Courts. Reporters from Brazil, Canada, China, Germany, Israel, Japan and Poland RSVP’d for the event, and media from every major U.S. outlet were scheduled to be on hand. That will be a common theme throughout the season. Carper said the amount of media members who will work the team’s regular-season opener on Oct. 30 at Quicken Loans Arena should be on par with the number who attended the Cavs’ past appearances in the Eastern Conference finals. The Cavs’ wild offseason, highlighted by the signing of James and the trade for Kevin Love, also will have a major impact on local outlets, which will be dedicating more manpower, newspaper copy and online content, and even creating jobs, to chronicle a team that should be the NBA’s most-watched this season.

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SEPTEMBER 29 - OCTOBER 5, 2014

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It’s not unusual for a pipeline to go around major impediments like large bodies of water, geologic formations, cities and other features that would make construction costly or time consuming. Some residents in Medina County hope they can build a mountain of opposition that will have the same effect. They’re trying to reroute a planned 42-inch natural gas pipeline so it doesn’t cross their land and potentially decrease their property values. “Had I known this was going to come up, I would not have bought this place,� said Paul Gierosky, who formerly was an executive with companies such as Viking Steel and Mr. Coffee and now is a private equity investor. He purchased a home on 34 acres in the county in fall 2012, for about $500,000. Since then, he has been busy remodeling and expanding the house and improving his property on Spieth Road. The pipeline in question is known as the Nexus Gas Transmission project, and it’s intended to take natural gas from a processing center in Kensington, ship it through central Ohio, Stark and Medina counties, and eventually to a terminal near Detroit where it will connect with other pipelines. Ultimately, the gas it carries would be delivered to industrial users and retail natural gas utilities in Michigan, the Chicago area and in Ontario, said Nexus spokesman Arthur Diestel. Many in Ohio are in favor of the project, because it would help drillers here to avoid selling their gas at a steep discount, said Tom Stewart, executive vice president of the Ohio Oil and Gas Association. But even OOGA wants to avoid upsetting landowners. “OOGA wants to see this pipeline built, but it’s a balancing act,� Stewart said. OOGA members certainly would benefit from the line’s development. Currently, drillers in Ohio are selling their gas for about $2 per thousand cubic feet (mcf), which is far less than the national price of about $3.80 that drillers in other parts of the nation get. That’s because there are not enough pipelines to take gas out of Ohio’s Utica shale play, and really only one profitable direction in which to ship that gas — west. There’s too much gas being produced in Pennsylvania’s Marcellus shale for Ohio’s gas to be needed in places like Boston, New York and Philadelphia. “There’s just no way that gas being produced in Ohio can beat its way through Marcellus to the East Coast,� Stewart said.

Environmentalists? Not us But that’s of little consequence to residents in Medina County, who don’t have shale wells on or beneath their property the way people in eastern Ohio do. Residents there have little incentive to want a large construction project in their backyard, let alone a large pipeline that would hinder them from developing their land in the future, or from selling it to developers. As a result, Gierosky, his wife, Elizabeth, and other residents have formed an informal group that’s call-

DAN SHINGLER

Medina resident Paul Gierosky hopes to keep a large natural gas pipeline from crossing the 34-acre property he recently purchased and is improving. ing itself Concerned Citizens of Medina County. The group has been meeting to discuss landowner options and ways to stave off the pipeline’s development in their community. “It’s a real grass-roots effort, but we’ve had two different meetings now of citizens concerned about this pipeline,â€? Gierosky said. “We’re landowners. We’re not environmentalists, safety activists or anything like that. ‌ We’re just concerned citizens.â€? The Gieroskys and other landowners in the area already have received notices from Nexus, including requests to survey their land. Some, including the Gieroskys, have refused. Nexus, however, says it is far from having its final route selected. It has defined a proposed route and is notifying landowners within a 600foot path proposed for the pipeline, Diestel said. The pipeline can easily be moved within that path, or the entire path could shift, he added. “We’re still very early in the process,â€? he said, noting that Nexus has not yet even engaged regulators to discuss the project or filed a plan for the pipeline with the Federal Energy Regulatory Commission, which regulates interstate pipelines. Nexus hopes to define its route by the end of 2015 and file its plan with FERC at that time, Diestel said.

Pipe dream Nexus hopes to get all of the affected landowners on board in a cooperative arrangement, Diestel said. But, if it does not, once FERC approves its plan, the company would in effect have the right of eminent domain and could force landowners to give the line right of way across their land. Local probate courts still would have a say in what the landowners are paid for the necessary easements, but they could not stop the project. Those easements would grant Nexus a 100-foot-wide right of way for construction, and then a 50foot-wide right of way thereafter. Landowners can use the right of way for things like crops, but they could not build upon it, plant large trees or do other things that might interfere with the pipeline three feet beneath the ground. It’s not a great proposition for

landowners, said Brad Hillyer, a New Philadelphia attorney who specializes in oil and gas issues. Hillyer said he welcomes such pipelines because he knows they will bring higher gas prices to his clients with mineral rights in eastern Ohio. But when a client asks him if they should grant a pipeline right of way, he generally does not advise them to do it. “The oil and gas leases are very fair, because you continue to get revenue from them, but that’s not the case with a pipeline,� Hillyer said. “They significantly devalue your property.�

‘Go away’ For people like the Gieroskys, however, money is not really the issue. They’re more concerned about what the pipeline would do to their land, their ability to use it and their lifestyle. Paul Gierosky said he’s been contacted by attorneys who have assured him they would get him the best deal on a right-of-way agreement, but that’s not what he wants. “I don’t want a deal. I want someone to represent me and make these people go away,� he said. The Concerned Citizens appear to be gaining momentum, too. Their first meeting, in early September, drew about 30 people. At the following meeting, there were more than 70 in attendance. The group hopes for even more at its next meeting, on Thursday, Oct. 2. The issue is a prime example of how divisive the development of the nation’s shale gas can become. Medina is not exactly known as a hotbed of liberal activism; it’s a staunchly Republican area. Even Gierosky said he’s in favor of more domestic drilling and supports fracking in the shales of Ohio and other places. But, when it comes to pipelines, support often is easier to get in areas where there is drilling. In areas without it, pipelines often meet up with fierce opposition from members of both political parties. “I’m not opposed to pipelines. I’m not against fracking,� Gierosky said. “We just think we should have a right to choose whether (a pipeline) is going through our property.�

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Northeast Ohio aviation industry is soaring ‘Booming’ commercial, aerospace and military markets are providing lift for many companies By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

The commercial aviation industry is flying high, which is a strong sign for the many companies operating within the supply chain in Ohio. And a new committee that recently launched is aiming to increase the state’s share of that growing market. Daniel W. Sedor Sr., president of metal fabricator Voss Industries Inc. in Cleveland, said the commercial aviation industry has been building momentum steadily in recent years as companies replace aging airlines, and the next generation of lighterweight, single-aisle aircrafts is on the way. He expects the increased demand to continue for at least the next five years. Aerospace and defense make up about 70% of Voss’ revenue, Sedor said, though he declined to share specific figures. On commercial aircraft, the company’s highly engineered couplings and flanges go into everything from environmental control systems to landing gear to wing deicers. “It’s a great time to be in the aviation industry,” Sedor said. Ohio is strong in aerospace research and development, as well as in the supply chain for the industry, said Mike Heil, president and CEO of the Ohio Aerospace Institute, citing big players like Parker Hannifin Corp. and Alcoa Inc., in addition to a host of small businesses. Commercial aviation is still “booming,” he said, especially in the Middle East and Asia, which opens up a huge export market for companies. Stuart Watson, president of Truline Industries Inc. in Chesterland, said he’s seeing strength in a segment of the aviation industry that has been flat the past two years. Truline makes component parts for fuel pumps — Watson estimates the company supplies about 90% of commercial and military aircraft with these components — and his business goes up as passenger traffic rises. And, he said, the Federal Aviation Administration’s 2014 forecast predicts U.S. carrier passenger growth to increase by about 2% a year during the next 20 years. Truline’s sales are between $12 million and $14 million a year, he said. Watson said he’s expecting an uptick in business in 2015 and 2016. In the past year, he has hired three to four new employees at the 67person machine shop. The airline manufacturing industry has an eight-year backlog in aircraft orders, which is important to Alcoa Forgings and Extrusions as the company works to capture its share of that market growth, said Cary Dell, communications manag-

er for Alcoa. The industry has been in a growth phase in recent years, and Dell said it’s having an effect locally. About 40% of the work at the Cleveland plant is in the commercial and military aircraft industry, Dell said. “We are adding manufacturing jobs here,” Dell said of Alcoa’s 1,000-employee Cleveland Works. The Cleveland plant also is advancing its technology to meet the demands of the aircraft industry for lighter and more durable materials, much like the demands coming from the automotive market. In July, Pittsburgh-based Alcoa announced a $1.1 billion award with Pratt & Whitney, for which Dell said the Cleveland forging operation is making aluminum lithium engine fan blades. Rich Peterson, community and public relations representative for Eastlake-based Astro Manufacturing & Design, said the company has seen an uptick in the aerospace industry recently. In the aerospace industry, the contract manufacturer makes products like parts for commercial aircraft interiors or cockpit modules for flight simulators, the latter of which the company recently received its largest ever order, Peterson said. Currently, aerospace-related products make up about 30% to 40% of the revenue at Astro’s Eastlake plant, he said. And Astro’s actively looking to increase the amount of work it can do in the sector by working toward its AS 90100 certification. Ohio’s companies already are a big part of the country’s aviation and aerospace industries, said State Rep. Rick Perales, R-Beavercreek, noting that about 17% of employees in those industries live in Ohio. “But we can do better,” Perales said. In October 2013, Perales introduced a bill to create the Ohio Aerospace and Aviation Technology Committee, which is designed to bring the state’s disparate universities, government resources and companies together. The bill was passed and signed by Gov. John Kasich in June; it went into effect Wednesday, Sept. 17. The committee will be made up of six members from the state Senate and House, along with 14 industry representatives and one gubernatorial appointee. Heil of the Ohio Aerospace Institute said he hopes the committee brings greater communication and collaboration among the state’s flight-related resources. “I think it’s going to be a huge help for the state of Ohio as we look to the future of aerospace and aviation,” he said.

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JANET CENTURY

Voss Industries president Daniel W. Sedor Sr. holds aviation components the company produces.

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SEPTEMBER 29 - OCTOBER 5, 2014

PUBLISHER:

John Campanelli (jcampanelli@crain.com) EDITOR:

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

Scott Suttell (ssuttell@crain.com)

OPINION

More Medicaid A battle is brewing in the statehouse that has hospital leaders in Northeast Ohio and around the state nervous. Come next year, the state Legislature will revisit the Medicaid expansion debate that in 2013 pitted conservative lawmakers against Republican Gov. John Kasich. The issue then was whether to accept federal money under the Affordable Care Act to extend Medicaid coverage to low-income Ohioans earning up to 138% of the federal poverty level. When more conservative members of his party stalled Kasich’s efforts to expand the government-run health care program, Kasich got creative. He went to the state Controlling Board to gain approval for the Ohio Department of Medicaid to spend $2.56 billion in federal money to expand Medicaid in Ohio. Unconventional? Yes. But it was the right thing to do, and we applauded Kasich’s decision on these pages. And we were not alone. On Sept. 18, at Crain’s Health Care Forum, University Hospitals CEO Thomas Zenty III saluted Kasich’s nontraditional approach, but warned of dire consequences if the Medicaid expansion isn’t reauthorized: “The governor was very creative in how he was able to get Medicaid expansion to occur here in the state of Ohio. … In July of next year, if there’s no intervention, Medicaid expansion in the state of Ohio disappears.” Zenty went on to explain that if that happens, thousands of people who now have access to a primary care physician will go back to using emergency departments for their health care needs. As Crain’s health care reporter Timothy Magaw reports in today’s print edition, 367,395 Ohioans have enrolled in Medicaid under the expanded parameters this year, more than 56,000 in Cuyahoga County. But Medicaid expansion isn’t just a health care issue. It’s a health care industry issue. Hospitals top the list of biggest employers in this region and Medicaid expansion helps secure those jobs. It’s also a health-of-the-industry issue. Business groups including the Ohio Chamber of Commerce and the Greater Cleveland Partnership, Cleveland’s chamber of commerce, supported expansion and expect to push for the Legislature to affirm it next year. The horror-story scenarios opponents painted before Kasich’s creative expansion of Medicaid never came to pass. Emergency rooms aren’t packed. Primary care doctors are not inaccessible. It’s time for the Republican-led Legislature to enact good public policy while also contributing to good public health. It must overcome ideological issues and partisanship involving the current occupant of the White House and assure that the expansion of Medicaid in Ohio stands. The alternative is a prescription for trouble.

FROM THE PUBLISHER

Flu can be sickening for business, too The Ebola outbreak in West Africa toms. Any outbreak here could be quickmay end up being the worst epidemic ly contained. the world has seen since AIDS began terThere’s another virus, however, that is rorizing the planet more than three spread much easier. You can get it from decades ago. a cough or a sneeze or even from someMany of the reports out of the hardestone talking next to you. And you can hit countries have read like a spread it without feeling sick. horror movie: bodies dumped This virus will kill thouin rivers or left on the streets, sands of Americans over the depleted hospital supplies, next few months, and more stricken health care workers than 100,000 will be hospitaland a population paralyzed ized. Yet no one — especially with fear. the media — seems to be conLast week, the U.S. Centers cerned about seasonal infor Disease Control and Prefluenza. vention predicted as many as In addition to the human 1.4 million victims by Janucost, the flu hurts business: ary. The U.S. Department of JOHN Fear spreads much faster — Health and Human Services CAMPANELLI and easier — than this virus, estimates that more than 110 so it’s no surprise people million workdays are lost to it everywhere are scared. every year, equaling about $7 billion in A few weeks back, a poll from Harvard sick days and lost productivity. revealed that 39% of U.S. adults are Some estimates indicate that one out “concerned” Ebola is headed to America of every nine employee absences all year and that 26% are worried they or an imis because of the flu. mediate family member is going to get Then there are the “heroes,” the colinfected. leagues who deem themselves so essenHealth care experts say there is no reatial that they stagger into the office son for concern. The virus is spread only sneezing, shivering and dripping. They through bodily fluids, and victims are then touch their fevered fingers to doorcontagious only when showing sympknobs, keyboards and phone receivers.

The next week, half their department is at home on the couch, coughing through “The Price is Right.” Go online and you can play with calculators that figure out how much the flu can potentially cost a business. Let’s say you have 100 employees, averaging $50,000 a year. If 10% of them get the flu and stay home for three days a pop (perhaps both optimistic scenarios), you’re looking at $6,000 lost in just paid sick time. The good news? This can be avoided. There is something called a flu shot. It’s cheap, it’s safe and it’s effective. Yet only about half the population bothers to get one. The other half of the population? Maybe they’re too busy. Perhaps they believe they won’t get sick. Maybe they believe the shot isn’t safe. Yet I bet they see the value in other preventative maintenance — changing their car’s oil, flossing their teeth, checking the sell-by date of scallops at the grocery store. I bet many of them would never think of leaving their computers unprotected against viruses. Maybe they are just secretly looking forward to some alone time on the couch, experiencing chills, nausea and the Showcase Showdown.

LETTER TO THE EDITOR

Cleveland’s racial divide is far too great While John Campanelli’s commentary about a diverse group of Greater Clevelanders enjoying themselves at the ballpark is a heartwarming one (“Racial divide not as deep as some say,” Sept. 22), it unfortunately doesn’t denote the absence, or even shallowness, of a racial divide. A quick look at key indicators of wellbeing by race in Cleveland shows startling disparities that cannot be wiped away by a few hours with people from different walks of life.

In contrast to the baseball game, the Cleveland-Elyria-Mentor Metropolitan Statistical Area is the eighth-most segregated in the United States. Cleveland’s African-American babies die before their first birthday at a rate 3.8 times higher than white babies; the unemployment rate for African-Americans, at 26%, is more than twice as high as the unemployment rate for whites; and the disparity in median household income between the two races is more than $12,000.

These numbers are not “political chattering”— they are the sad reality faced by thousands of people every day. The people of Cleveland deserve a better “true acceptance index”— one that ensures that health, social and economic outcomes are not influenced by race. Evaluating the problem with sound data is a good place to start. — Calley Mersmann Mersmann is a policy and planning associate for the Center for Community Solutions

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CRAIN’S CLEVELAND BUSINESS

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PERSONAL VIEW

Millennials to the rescue By ROBERT OBERST

According to a recent Wall Street Journal/NBC poll, 49% of adults think we are still in a recession. Since the Great Recession commenced, our economy has struggled, producing less than 1% average GDP growth. Sure, we have had periods when it appears we are finally reaching economic escape velocity, only to encounter yet another downturn, justifying businesses’ reluctance to invest. In each of the five years since the recession ended, we experienced at least one quarter of near-zero growth, and in the first quarter, it was an abysmal -2.1%. By the classic definition of a recession, as at least two continuous quarters of negative growth, the Great Recession ended in 2009. Perhaps we need another definition for what the 49% are expressing. Let’s call it a generational contraction — a prolonged period with average growth below 2.5%. Correspondingly, a generational expansion consists of a prolonged period with average growth above 5%. Unemployment finally fell to 6.1% in June, but after nearly every other recession it broke the 6% floor years earlier. The job market has been particularly tough for the millennials, the upcoming large generation that is nearly as large as the boomers. According to the New York Fed, more than 40% of recent college graduates work at jobs that do not require a degree; and Pew Research found that a third of 18- to 35-year-olds lived at home. The millennials’ parents, the boomers, had similar difficulties entering the work force in the ’70s with four recessions and peak unemployment higher than the Great Recession. Throughout our financial life cycle, from the time we start our first permanent job until we retire, we provide stimulus to the economy. “The Financial Time Machine” contains a model that calculates the amount of Generational Economic Stimulus (GES) a generation produces throughout their financial life cycle. As we progress in our careers, earning and spending more, we generate more GES. Taken to-

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Oberst is a financial and HR consultant who has advised more than three dozen S&P 500 companies, served as the regional practice manager for a multi-billion-dollar global consulting firm and authored “The Financial Time Machine: Predicting Our Economic Future,” where he developed the model and theory explored in this article.

gether, all the members of a generation provide trillions of economic stimulus. When a large generation such as the boomers or millennials is at the peak of their financial life cycle, they produce record levels of GES, inducing a long-term generational expansion. Conversely, as they retire and their GES declines, we endure a long-term generational contraction. When the boomers were at their peak, they produced vastly more GES than the preceding silent generation, leading to the longest generational expansion in history (25 years). GES peaks in our 40s-50s, then rapidly declines as we downsize in our 60s. The first boomers turned 60 in 2006 and became eligible for Social Security in 2008, signaling the start of the current generational contraction. The Great Recession was not the first time a peak generation’s rapidly declining GES led to a generational contraction. Over the last 140 years, we have had four peak generations and four contractions averaging 12 years with 1.5% growth. Earlier when these generations were at their peak GES, we had average expansions of 20 years and 6.7% growth. The Great Recession was predictable. As we approach retirement, we downsize, buy less and save furiously. Late in 2005, immediately before that first boomer turned 60, nearly 14 million homes sold. By 2007, just prior to the Great Recession, less than half as many sold, leading to the default of mortgage-backed securities and resultant collapse. In 2001, the GES indicator predicted a serious reces-

sion or depression in 2008, but proactive leadership could have reduced its severity. We can expect our economy will continue to experience lackluster growth with occasional rough patches and specific periods of heightened risks of recession until the early 2020s. By then, the millennials growing GES indicates a prolonged expansion. With unemployment hovering around 6% and more boomers able to retire thanks to higher housing and stock prices, the picture is improving for the millennials. The number of job openings grew to 4.7 million in July. Eventually, as the millennials approach their peak GES levels, we will experience the fifth generational expansion when skilled millennials will be in demand and wages will rise. The millennials are coming to rescue the U.S economy. This bright, technologically sophisticated, diverse, team-oriented generation is acquiring the skills necessary for the next third-century, when a highly automated service sector will represent nearly 90% of American jobs. According to the WSJ/NBC poll, 76% of adults think that for the first time, things will be worse for the following generations. Every generation has endured rough patches like the millennials, which are vital to build resilience. Although their fate is unknown, they offer exceptional hope for the future. Most of the other major world economies, including China, Japan, and Germany, fought in World War II and had large subsequent boomer generations with expected generational contractions. Their millennial generations are significantly smaller and, as a result, will not supply the same economic bounce as America’s. With declining birthrates and aging populations, the future looks particularly challenging for some of the largest economies, including China, Japan, Germany and Italy. Since we compete on a global stage, our millennials place us in an enviable position. Their energy, technical savvy and cooperation will be critical to our competitiveness and ability to solve looming national and global problems.

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

LIENS FILED CINHUFF LLC P.O. Box 93446, Cleveland ID: 37-1467050 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $25,289 TREEHUGGERS CAFE INC. 1330 W. Bagley Road, Berea ID: 26-2366244 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $23,584 SPECTRUM HOME HEALTH CARE LLC 2000 Auburn Drive, Suite 200, Beachwood ID: 20-8667298 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $20,493 TOM PAIGE CATERING CO. 2275 E. 55 St., Cleveland ID: 34-1321475 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $20,298 EUCLID FOREIGN MOTORS INC. 20020 Saint Clair Ave., Cleveland ID: 34-1087596 Date filed: Aug. 14, 2014 Type: Employer’s withholding, unemployment Amount: $19,451

FIELD DAY CLEANING INC. 14713 Granger Road, Maple Heights ID: 30-0402503 Date filed: Aug. 12, 2014 Type: Employer’s withholding, unemployment Amount: $19,062 AM TEAM INC. 25125 Detroit Road, Suite 150, Westlake ID: 27-4436964 Date filed: Aug. 14, 2014 Type: Employer’s withholding Amount: $16,481

Amount: $14,643

Amount: $11,974

LOVE 2 LEARN ABCS & 123S LLC 16224 Chagrin Blvd., Shaker Heights ID: 27-4101003 Date filed: Aug. 12, 2014 Type: Employer’s withholding Amount: $14,076

SEVEN STAR CONSTRUCTION INC. 4 Whisperwood Lane, Chagrin Falls ID: 34-1935244 Date filed: Aug. 12, 2014 Type: Employer’s withholding Amount: $11,943

THE CHILDRENS TECHNOLOGY WORKSHOP OHIO LLC 33 River St., Chagrin Falls ID: 20-4901893 Date filed: Aug. 14, 2014 Type: Employer’s withholding Amount: $13,874

CAPITOL PAINTING INC. P.O. Box 307, Chagrin Falls ID: 34-1033986 Date filed: Aug. 12, 2014 Type: Employer’s withholding Amount: $11,161

WOMENS PROFESSIONAL SERVICES CORP. 27991 Center Ridge Road, Westlake ID: 46-0922239 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $16,204

JOHN JOHN SEAFOOD WITH SOUL 15828 Euclid Ave., E. Cleveland ID: 35-2280220 Date filed: Aug. 12, 2014 Type: Employer’s withholding Amount: $13,644

SECURITY MANAGEMENT GROUP INC. 3740 Euclid Ave., Cleveland ID: 26-3798129 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $15,843

JSSE INC. ANAGO OF COLUMBUS 7055 Engle Road, Suite 6-604, Middleburg Heights ID: 56-2359423 Date filed: Aug. 19, 2014 Type: Failure to file complete return Amount: $12,702

GUARANTEE PRODUCT SPECIALTIES INC. 21693 Drake Road, Strongsville ID: 45-0673710 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $15,343

M & A FOOD STORE INC. 9300 Wade Park, Cleveland ID: 26-0147788 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $12,506

SAVOR INC. SWEET MELISSAS 19337 Detroit Road, Rocky River ID: 26-1294680 Date filed: Aug. 19, 2014 Type: Employer’s withholding, unemployment Amount: $14,998 CJT CONSTRUCTION LLC 28575 Holly Drive, North Olmsted ID: 94-3477285 Date filed: Aug. 14, 2014 Type: Employer’s withholding

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INTEGRITY TEXTILE SERVICES CO. 7500 Bessemer Ave., Cleveland ID: 34-1869769 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $12,069 FOUNTAIN ANTI AGING LLC 229111 Center Ridge Road, Westlake ID: 20-5109466 Date filed: Aug. 19, 2014 Type: Employer’s withholding, unemployment

METRO PAVING LLC 4873 Osborn Road, Garfield Heights ID: 80-0291494 Date filed: Aug. 19, 2014 Type: Employer’s withholding Amount: $11,048

LIENS RELEASED AFFORDABLE CARPET SERVICE INC. 9125 Brookpark Road, Parma ID: 34-1744848 Date filed: April 28, 2005 Date released: Aug. 19, 2014 Type: Employer’s withholding Amount: $45,392 EZRA HEALTH CARE INC. 23900 Chagrin Blvd., Beachwood ID: 34-1742752 Date filed: Feb. 28, 2005 Date released: Aug. 19, 2014 Type: Employer’s withholding Amount: $237,873 GREEN THUMB FLORISTS GARDEN CENTER AND LANDSCAPERS INC. 11515 Lorain Ave., Cleveland ID: 34-1824632 Date filed: May 18, 2004 Date released: July 17, 2014 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $24,775

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Growth of $1 Million

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-7.46%

$925,400

-6.37%

$936,300

2012

29.99%

$1,202,927

16.00%

$1,086,108

2013

51.76%

$1,825,563

32.39%

$1,437,898

8/31/2014

21.27%

$2,213,931

9.88%

$1,519,283

MADISON GROUP INC. LOGOTEC 3147 Bay Landing Drive, Westlake ID: 34-1775758 Date filed: May 16, 2014 Date released: July 18, 2014 Type: Employer’s withholding Amount: $16,874 MANSFIELD PREMIER CAR WASH & LUBE INC. PREMIER AUTO CENTER & CAR WASH 1719 Kendal Drive, Broadview Heights ID: 27-1839121 Date filed: March 12, 2014 Date released: July 18, 2014 Type: Employer’s withholding Amount: $10,759 MICHAEL MARKIEWICZ AUTOMOTIVE CORP. 5081 Warrensville Center Road, Maple Heights ID: 34-1718764 Date filed: Feb. 9, 2005 Date released: Aug. 19, 2014 Type: Employer’s withholding Amount: $14,550 MINDLIN CONSULTING GROUP INC. 16111 Clifton Blvd., Lakewood ID: 34-1941325 Date filed: April 2, 2013 Date released: Aug. 12, 2014 Type: Employer’s withholding Amount: $17,506 MLC INC. 19049 Fowles Road, Middleburg Heights ID: 34-1761275 Date filed: April 4, 2014 Date released: July 18, 2014 Type: Employer’s withholding, failure to file complete return Amount: $13,168 PHOENIX FOOD SERVICE INC. 4145 E. 79 St., Cleveland ID: 34-1912331 Date filed: Aug. 11, 2004 Date released: Aug. 14, 2014 Type: Employer’s withholding, unemployment Amount: $17,185

STAFFING SOLUTIONS ENTERPRISES INC. 5915 Landerbrook Drive, Suite 100, Mayfield Heights ID: 03-0490144 Date filed: July 19, 2014 Date released: Aug. 22, 2014 Type: Employer’s withholding, civil penalty assessment Amount: $58,250

Note: Returns are shown in U.S. dollars after fees. Date of inception for Nowacki Asset Management is May 2nd, 2011. Nowacki Asset Management (NAM) is a registered investment advisory firm specializing in value-oriented investment management. All client assets are included in one composite and invested using a value-oriented strategy. NAM claims compliance with the Global Investment Performance Standards (GIPS®). Results as of 8/31/2014 are still subject to final verification by an independent third-party. NAM only uses short-term margin or leverage to buy securities after a client commits to deposit funds and the funds are in the process of being transferred, but the money has not yet completed the transfer process. To receive a list of composite descriptions of NAM and/or a presentation that complies with the GIPS standards, contact Michael T. Nowacki at (440) 488-6936 or write Nowacki Asset Management, 29525 Chagrin Blvd. Suite 301, Pepper Pike, Ohio 44122, or michael@nowackiassetmgmt.com. www.nowackiassetmgmt.com

M A INFINITY MARKETING INC. 643 Sylvia Drive, Brookpark ID: 27-0117781 Date filed: Jan. 21, 2014 Date released: Aug. 12, 2014 Type: Employer’s withholding Amount: $9,344

RYBAK & ASSOCIATES INC. 21821 Libby Road, Suite 102, Bedford ID: 03-1514289 Date filed: Jan. 18, 2012 Date released: July 18, 2014 Type: Employer’s withholding Amount: $31,719

Growth of $1 Million

May 2011 - Year End

KEIFERS KONSTRUCTION LLC 13712 Crossburn Ave., Cleveland ID: 45-2378248 Date filed: April 25, 2013 Date released: Aug. 12, 2014 Type: Employer’s withholding Amount: $9,549

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STIBER FABRICATING INC. 3829 Hamilton Ave., Cleveland ID: 34-1774978 Date filed: Dec. 21, 2010 Date released: Aug. 19, 2014 Type: Employer’s withholding, failure to file complete return Amount: $19,161

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Iron ore will be business ‘bedrock’ for changing Cliffs By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

It has been less than two months since shareholders gave New Yorkbased hedge fund Casablanca Capital LP’s candidates control of the Cliffs Natural Resources’ board, but the company already has gone through a host of changes — and the company says it’s open to more. Lourenco Goncalves, the company’s new chairman, president and CEO, has been regularly updating the public on the company’s website. In his first message, posted Aug. 9, he called the company’s domestic iron ore assets its “bedrock” and said Cliffs would be “deliberate and disciplined — but open-minded” about its global assets. That message has been reinforced in later communications and in a statement provided via email from the company last Wednesday, Sept. 24. “Cliffs’ strategic focus is centered on its U.S. iron ore business,” the statement said. “Our most important priority is to enhance this core business, while being strategic and openminded about our global assets. It is important to remember that all our assets around the world have inherent and potential value. It is our corporate responsibility to manage the company in such a way that longterm value is created for our shareholders, and we always remain open to all alternatives.” It concluded: “As we continue to evaluate options available to us, Cliffs will make certain our customers, employees and other stakeholders are taken care of appropriately.” The recently assembled board appointed Goncalves chairman, president and CEO of Cliffs at the beginning of August, just days after the company confirmed he was elected to the board. As of Sept. 18, four directors — former CEO Gary Halverson, Richard K. Riederer, Timothy W. Sullivan and Mark E. Gaumond — have left the company, with Riederer and Sullivan citing differences with the board’s new direction. And two new directors, John T. Baldwin, director and chairman of the audit committee of Metals USA, and Michael D. Siegal, chairman and CEO of Bedford Heights-based Olympic Steel, have signed on. The company didn’t comment directly on the more recent shakeup of the board, but it defended its approach in a second statement to Crain’s. “During Cliffs’ annual general meeting, the majority of the previous directors were replaced by the vote of the majority of the shareholders,” the company said. “Today, Cliffs’ board and management team are implementing the plan that we believe is the right one for the company. And the majority of the shareholders gave us the mandate to do just that.” Casablanca had been pushing for the company to spin off its international assets before the proxy fight even began, but Goncalves has since indicated in other media reports that he would instead consider selling off the less desirable assets. At the start of September, The Wall Street Journal reported that Cliffs had hired three investment banks to sell U.S.-based coal assets and Australian-based iron ore mines. And in mid-September, the Globe and Mail reported that Cliffs was considering leaving its project in Northern Ontario’s Ring of Fire region. This leadership change was “long

overdue,” said Garrett Nelson, a mining analyst and vice president at BB&T Capital Markets in Richmond, Va. Nelson has been following the company for about three and a half years and said the stock has been performing poorly, even when compared to its peers. “Cliffs has been a major underperformer,” Nelson said. Nelson said the stock had rallied, anticipating the change in control, but it has fallen again as iron ore continues to decline. Iron ore is at a five-year low, he said. On Sept. 24, Cliffs shares ended the day at $12.53, up from a 52-week low of $12.33, but far below a 52-week high of $28.98.

Nelson said that if a sale of noncore assets were to happen, he’d rather see the company wait until pricing improves. But, if such sales went forward, and the company focused on its U.S. iron ore business, Cliffs would become a more “highquality business,” he said. The U.S. iron ore business has a stable cash flow, Nelson said. Pricing on iron ore is based on domestic steel prices and capacity utilization rates, rather than seaborne iron ore prices, and domestic steel fundamentals are strong currently, he said. Deutsche Bank gave the company a “buy” rating in a Sept. 9 report, though it just touted slight positives to the company’s outlook after a

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competitor’s planned expansion was put at risk, giving Cliffs the chance to postpone or avoid a possible contract loss. But not all analysts covering the company sound optimistic. On Sept. 3, Wells Fargo criticized some numbers cited in the Wall Street Journal article regarding plans to sell the company’s assets in Australian iron ore and U.S. coal, saying the estimated value of the Australian assets at $1 billion was too high. Wells Fargo put that value at an estimated $300 million to $400 million and said it was still “bearish” on Cliffs shares. “We continue to rate CLF shares at Underperform as we see iron ore

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pricing remaining under pressure for the foreseeable future due to ramping supply from lower cost miners combined with China’s slowdown,” Wells Fargo said. BMO Capital Markets issued an analyst note on Aug. 26 after Cliffs announced plans to buy back up to $200 million in shares, calling the plan a “near-sighted move” that was potentially sparked by pressure from Casablanca to improve the share price. “What we see as the weakened management team, poor balance sheet, and high cost assets with minimal growth optionality make Cliffs difficult to recommend to investors,” BMO said.

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TALENT DEVELOPMENT DO INTERN PROGRAMS WORK? A closer look at Geauga County’s initiative

FOTOLIA

By SHARON SCHNALL clbfreelancer@crain.com

Homegrown talent Counties often target young leaders with attraction, retention efforts Much has been done to promote the overall region and downtown Cleveland as an ideal location to live, work and play. But what about the individual counties that surround the central city? Indeed, a number of the Northeast Ohio communities situated around Cuyahoga County say they face challenges in developing and securing their own talent pools. But Mark Scheffler, president of Leadership Akron, said each of these areas has the ingredients to make a compelling case, and it’s a sentiment echoed by others. “Northeast Ohio has a fundamentally strong story to tell,” said Jenny Febbo, vice president of marketing and communications for Team NEO. In concert with regional attraction efforts, some of Northeast Ohio’s outlying counties are hard at work, each telling their particular story in an effort to attract — and in some cases bring back — talent and leadership to their communities.

Geauga County The Geauga Growth Partnership Inc., for example, wants to retain talented and motivated young Geauga County residents within Geauga County. One way is through an internship program created to serve incoming high school juniors and seniors who live there. Much more than summer job placements, the program is designed to heighten local students’ awareness of Geauga County’s career opportunities and the richness and diversity of the local employer community. The Geauga Growth Partnership’s “sole purpose is to help businesses grow,” said Tracy Jemison, the partnership’s president.

Established in fall 2010, with 24 founding members, the Newbury Township nonprofit organization has grown to 111 members. Its startup came in 2010 from a $149,400 three-year grant from the Cleveland Foundation Lake-Geauga Fund, said Ann Fairhurst, a Lake-Geauga officer with the foundation. “The Geauga Growth Partnership is about the people in the county and the businesses that are here, a lot of them family-owned and been here forever — they care about each other,” said Georgia Klemencic, the partnership’s career education coordinator. “Of course, we are about growth, about sustainability, about bringing businesses here.” The partnership, through its internship program, also prepares young professionals for the work world. In summer 2012, nine paid high school interns were placed with nine Geauga County employers. Last month, 35 paid participants, the largest group in the program’s three-year history, wrapped up internships, lasting about six weeks, with 28 Geauga County employers. And, in 2015, the partnership’s goal is to place 50 paid interns; applications will be available in December for the upcoming summer season. Participating employers have included ASM International in Russell Township and Sheoga Hardwood Flooring & Paneling Inc. in Middlefield Township. “These students are engaged. They think outside the box. A lot of businesses need this. They need this dream person, this person with fresh ideas,” Klemencic said. “There’s a huge benefit to the company and they also get the satisfaction of knowing they helped and contributed. It’s a good feeling.” — Sharon Schnall

Lorain County Brian Frederick, president and CEO of the Community Foundation of Lorain County, said Lorain County also faces a number of challenges in attracting talent, including a lack of transportation options. “It’s not downtown Cleveland. That’s getting to be a neat place to live and be, and there’s a lot of vibrancy there,” Frederick said. “We’re 30 miles away. We’re small town, suburbs, rural. It’s a great place to start a family. For a young professional, it might not be the most exciting place to live.” But Frederick said organizations promoting the Greater Cleveland area are taking a more regional view, promoting all different communities for living and working. “We brag about the fact that within 30 minutes of most places in Lorain County you can be downtown at PlayhouseSquare or going to a ballgame,” Frederick said. “Northeast Ohio is a great place. We can package it. A lot of organizations are looking at it more as a package deal than one-off neighborhoods like we were 10 to 15 years ago.” The Community Foundation also is starting with high school students to open their eyes to the benefits of working close to home. The foundation’s Youth Fund Advisory Committee, made up of eighth- through 12th-graders from across Lorain County, identifies community needs and awards grant dollars — with board approval — to address those needs. The president of the Youth Fund also serves on the foundation’s board of directors, providing the organization with a youth perspective. “We have more than 300 alumni of that program, and our hope is that it will influence their where-to-live decision either See TALENT, page 14

In his presentations about the Geauga Growth Partnership’s high school summer internship program, partnership president Tracy Jemison will joke that it’s a lot easier visiting grandchildren locally than via airplane. In other words, an internship may be one way to keep talented young Geauga County residents working and living in the county, and perhaps, those future grandchildren. And why not? A glance at the state’s 2013 Office of Policy, Research and Strategic Planning data reveals positives about Geauga County including: It’s not crowded, with a population of almost 94,000. The largest communities are just around 11,000 each in Bainbridge and Chester Townships. Elsewhere, other key communities reflect a 4,500 to 6,700 census. The financial makeup isn’t as bleak as other Ohio locales, thanks to an average median household income of $66,127. This county is scenic. Only 10.8% of its 404 square miles is devoted to urban land use. The remainder is forests and farms. Still, will former partnership interns want to remain in or return to this county? Might they be drawn regionally to the hip enclaves of Ohio City, Tremont or Gordon Square, or beyond, to out-of-state metropolitan locales? “Young people are very mobile. They go to college. They go to the military. They pursue job opportunities. They get married and live elsewhere. They move,” said David Brown, a professor with the department of development sociology in the College of Agriculture and Life Sciences at Cornell University. Brown is a population specialist whose research focuses on rural and urban relationships. True. Then can high school internship programs have an impact? “Theoretically,” said Brown, who also is the co-director of the Cornell Community and Regional Development Institute of Ithaca, N.Y. “I say, ‘theoretically,’ because there hasn’t been much empirical review of these programs.” It would take 25 to 30 years to fully review a program’s impact, measuring who returned to the county, not necessarily in their 20s, but at other ages.

Gains and losses Retention goals, he added, should not focus exclusively on young people, but also upon attracting people similar to those leaving. “Prevent net out-migration,” he advised. “Between 2000 and 2010, (Geauga) county lost about 1% of the population (or 939 residents) it otherwise would have had because of more people moving out than moving in,” said Richelle Winkler, in an email. Winkler is an assistant professor of sociology and demography, with the department of social sciences, at Michigan TechSee INTERNS, page 14

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nological University. “... Geauga County saw much more drastic net out-migration among young adults in the decade than the negative 1% you see for the total population,” said Winkler, whose research focuses upon rural community sustainability. That net out-migration activity, Winkler said, is reflective of a typical suburban/exurban trend. Geauga Growth Partnership representatives emphasize that retention is but one desired outcome of the high school internship program, one tempered by life’s realities and opportunities. “Will we lose some? Of course we will, but I would hope the majority will think about where they started and what’s good about this place and why not work here, and of what we’re doing to help them with their life choices and their career choices,” said Georgia Klemencic, education coordinator for the partnership. “That young 20-year-old is still going to go to (other areas). You have to experience that,” she added. And, optimism prevails. “The lure of the city doesn’t last long. Ultimately they want to go home,” said Barbara Titus, vice president of Sheoga Hardwood Flooring & Paneling Inc. The Middlefield Township company, to date, has hired four partnership interns. “The personalities and the family orientation of many of these (sponsoring internship) businesses will last,” she said. “They (the high school interns) will know they were part of a team and not just part of a process. I think that will stick with them.”

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The program has made an impression on Cole Prots. The 17-year-old senior attends Notre Dame-Cathedral Latin in Munson Township, and he just completed his first internship in the Newbury offices of the Geauga Growth Partnership. His duties included writing press releases, developing a membership directory and making employer site visits to videotape other interns for partnership communication initiatives. Clearly, Prots has seen Geauga County’s geographic and employer makeup. “I always thought Geauga County was a blurb on the map and there really wasn’t much hiring (here) for me. Being here, I’ve been able to see there’s a lot of opportunity for marketing and design,” said Prots, who plans to pursue a second summer internship in 2015. “For me, personally the city is very busy, it’s too much thrown at me,” he said. “It’s a very peaceful, homey atmosphere here in Geauga County.” The Geauga Growth Partnership program introduces young people to the employer community at an early age, Cornell’s Brown said, commenting on an overview of the program’s features. This, he said, reflects an attempt to get them “embedded locally” and “develop relationships with local businesses.” “If one out of 10 people (participating interns) decide they want to live locally, I would say they (the partnership) are succeeding. What if that one person influences other persons?” Brown said. “... The measure of success should not be that everyone stays in Geauga County.”

continued from page 13

now or at a later age,” Frederick said. “We’re hoping it provides a different connection to Lorain County that might open possibilities to them to stay here or to come back.” The foundation, like many other organizations and businesses, also sees the benefit of using internships as a way to both attract new talent and perspective into the foundation, as well as to help anchor college students in Lorain County and Northeast Ohio. “More and more we felt this is an area we can both get some assistance and talent tapped in, and provide opportunities for Lorain County students going to school elsewhere but still living at home,” Frederick said.

Medina County Like Lorain County, rural Medina County doesn’t offer many of the amenities of a more urban setting. But Bethany Dentler, executive director of the Medina County Economic Development Corporation, said the area has all the assets that make the county a great place to do business — education, infrastructure and people. Between 1998 and 2013, MCEDC helped companies create more than 5,000 jobs and invest $600 million. Last year the organization helped 40 companies with their expansion plans, resulting in the creation of 475 new jobs and more than $68 million in new investment. In an effort to improve its talent attraction and retention efforts, the MCEDC is in talks with manufacturers about creating a work force coalition. The idea is to provide access to a great labor force, which drives business expansion and attraction.

Dentler said the coalition is still formulating its plan, but she hopes to unveil it in the next few months. “We’d like them to know about the great job opportunities in Medina County. Live in Akron, work in Medina County,” Dentler said. “When you have a family, we’re a great place to raise a family.” MCEDC also is targeting high school students to educate them about the opportunities available in the area. The Manufacturing Roadshow is the result of concerns expressed by manufacturing companies. The repeated theme over the last few years was the difficulty in attracting, recruiting and retaining younger generations of workers into manufacturing, from the production floor to the executive offices. High school freshmen typically tour manufacturing plants and talk to everyone from the executives to the plant floor workers to learn about the different occupations. Based on pre-tour and post-tour assessments from students, the first two pilot programs report that 39% of students said they were more likely to consider a career in manufacturing. “By exposing kids, we think we’re opening eyes to the potential for a job right here waiting for them once they finish high school or go to college and come back,” Dentler said. “The idea is to keep the talent in Medina County.”

Summit County In Summit County, Leadership Akron partners with Torchbearers — a young professionals group for leaders younger than age 40 — to connect young leaders with each other to develop skills for community engagement. Torchbearers also connects young professionals with Akron-area nonprofits. “If you are more engaged in the community, you are more likely to stay and have linkage to the area beyond just having a job,” said Mark Scheffler, president of Leadership Akron. One of the partnership programs between the two entities is the summer program Intern Edge, which targets college interns within the community. Funded by a grant

Students that choose Kent State are empowered to achieve, with eight campuses across the region, more than 282 bachelor’s degree programs and unique offerings including a College of Public Health and a School of Digital Sciences.

from the John S. and James L. Knight Foundation, the program began last summer and offers weekly sessions covering topics that emphasize plugging into the community, making connections and leading by example. Leadership Akron also runs a Community Leadership Institutes program that blends leadership development and community awareness. The program plugs business leaders into the community to sharpen their skills and improve their on-the-job performance while positively building their companies’ reputations. “Organizations are comprised of people,” Scheffler said. “The region’s health is a result of the effectiveness of its leadership. It’s critically important to develop talent.” Greater Akron Chamber president and CEO Daniel C. Colantone said a study of the Akron metro market 10 years ago identified a number of strengths — educational opportunities, after-hours opportunities within a 30-minute drive of Greater Akron and the vitality and vibrancy of the area. “One of our challenges is telling our story,” Colantone said. “Young professionals continue to look at a sense of place, of where they want to live, build their careers, raise a family, future opportunities.” One of the goals of the Greater Akron Chamber includes a focus on talent attraction and retention. Colantone also serves on the board of directors of the Summit Education Initiative, which engages community stakeholders in working to improve student outcome. A well-educated student body, Colantone said, brings more young people into local businesses and organizations. And once those students graduate and become part of the work force, the Greater Akron Chamber invites them to connect to other young professionals and opportunities to serve through the Greater Akron Young Professionals Network. “If young talent is involved, a higher percentage of them will stay here raise a family, be more connected and take ownership in community development,” Colantone said. — Kimberly Bonvissuto

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Closing the transition-topractice gap in nursing By EILEEN BEAL clbfreelancer@crain.com

Around the nation, according to a recent Robert Wood Johnson Foundation report, hospitals are experiencing high turnover in new hires — 17.5 % in year one and 33.5% in year two — who have just graduated from nursing school and passed their licensure exam. While new grad turnover is less dramatic in Northeast Ohio, it’s still a concern. “It (turnover) doesn’t just impact hospitals’ finances, it impacts productivity, efficiency and team moral,” said Joan Kavanagh, associate chief nursing officer in the nursing education and professional development office at the Cleveland Clinic. “Some (new grads) feel … so overwhelmed that they leave nursing altogether,” noted Gail Bromley, co-director of nursing research and a nurse educator at University Hospitals Case Medical Center, which has had a transition-to-practice program, called a nurse residency, in place since 2008. The high turnover rate for new grads is due to two related realities. One is that health care “is an everevolving, moving target,” said Kimberly Kerr, director of professional practice, development and research for the Akron General Health System. The care needs of today’s hospital patient, technological advances, changes mandated by the Affordable Care Act and the explosion of healthrelated data are all making the field increasingly complex. The other is that the academic preparation nurses get — regardless of whether they come out of a twoyear associate of arts or a four-year bachelor of science in nursing program — often falls short of hospitals’ and patients’ real-world needs. “There’s a very real gap between what new grads know and what hospitals want their new hires to know when they come in,” explained Pam Waite, director of the health care work force and the Northeast Ohio Nursing Initiative (NEONI) at the Center for Health Affairs. Local nursing schools are working collaboratively to share best practices to address the shock that comes when new grads land their first job. They are trying to find ways to improve students’ clinical experiences with more hospital rotations, case studies, simulation labs and externships and to improve students’ soft skills in such areas as communication, punctuality and appearance. In addition, said Waite, “just about every hospital in the region is doing some kind of transition-topractice program, too.” Locally, the programs go by many names: nurse residency; nurse mentorship; nurse internship or

externship; and nurse fellowship. Depending on the type of program, and where they are done, they vary in length from several months to a year. “All (the programs)” said Tracey Galvin, residency coordinator at MetroHealth Medical Center, which has both a nursing residency and nursing internship program, are professional development programs.” And, no matter which hospital is doing them or their length, the programs are evidence-based, focused on building technical and critical thinking skills and customized to engage and connect the new nurse to the institution and to the profession.

Returns on investment Due to the fact that programs are institution-specific, “there’s no one-size-fits-all program,” stressed Kavanagh. However, the programs’ retention rates have proven their worth. “The first year we did our (nursing residency) program, we had 99% retention during the first year of practice … (It) has varied a bit from that, since then, but it’s never been lower than 90%,” said Bromley. At MetroHealth, retention rates for those in the residency program have always been well over 90% since the program began, and the retention rate in the internship program was 100% this year, said Nancy Cichra, director of nursing education and professional development at MetroHealth Medical Center. While hospitals do transition-topractice programs to build skills and retain costly-to-replace nurses, those who go through them see them in another light. Nick Frank, a registered nurse, says that while the additional classes and labs, mentoring and other experiences he had in University Hospitals’ residency program three years ago made him a better new nurse, what he really got out of the program was a career path. “It introduced me to the real impact that research can make,” he said, “and it helped me discover that I had a very real passion for end-of-life care, which up till that time I really hadn’t thought about.” Funding for transition-to-practice programs can often be iffy. At MetroHealth, said Cichra, their programs are paid for out of the hospital’s nursing budget and it “changes, based on the needs of the hospital.” At Akron General, they “utilize money that’s built into orientation and reallocate it,” Kerr said. And some hospitals, said Waite, have used their foundations to fund their programs.

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BUSINESS ACCELERATORS AND INCUBATORS A AKRON GLOBAL BUSINESS ACCELERATOR 526 S. Main St. Akron, 44311 (330) 375-2173 www.akronaccelerator.com Business description: The accelerator provides entrepreneurial support to more than 40 startups working in the fields of biomedical, energy, advanced materials, IT, instruments, controls and electronics. Top local executive: Anthony Margida, CEO

B BAD GIRL VENTURES 2800 Euclid Ave., Suite 522 Cleveland, 44115 (216) 759-4575 www.badgirlventures.com/cleveland Business description: Business accelerator and micro-loan organization focusing on women entrepreneurs. Top local executive: Reka Barabas, director, Cleveland

Cleveland, 44106 (216) 658-3999 www.bioenterprise.com Business description: Northeast Ohio business formation, recruitment and acceleration initiative designed to grow health care companies and commercialize bioscience technologies. Top local executive: Aram Nerpouni, president, CEO

business in Northeast Ohio. We focus on the industries of advanced manufacturing, alternative energy, information technology, bioscience and agriculture/food processing. Top local executive: Bob Cohen, CEO

THE BIT FACTORY 526 S. Main St., Suite 511 Akron, 44311 http://thebitfactory.com Business description: The Bit Factory is an Akron IT accelerator distinguished by actionable mentoring with client specific plans, technical entrepreneurial staff, housed in a collaborative handcrafted space. Top local executive: Anthony Margida, president

CINCINNATI SMALL BUSINESS IGNITER 260 Northland Blvd., Suite 114 Cincinnati, 45246 (513) 828-6200 www.cincinnatismall businessincubator.com Business description: The Cincinnati Small Business Igniter will provide entrepreneurs with the opportunity to pursue launching a new business with the support and the resources needed to build a strong foundation. Top local executive: Benjamin Hanania, senior adviser

BRAINTREE BUSINESS DEVELOPMENT CENTER 201 E. 5th St. Mansfield, 44902 (419) 525-1614 www.braintreepartners.org Business description: The Braintree Business Development Center is a regional entrepreneurial assistance organization that supports small

BIOENTERPRISE CORP. 11000 Cedar Ave., Suite 100

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CLEVELAND CULINARY LAUNCH & KITCHEN 2800 Euclid Ave., Suite 150 Cleveland, 44115 (216) 314-7196 http://cleculinarylaunch.com Business description: CCLK is a shared kitchen and food business incubator increasing the success rate of local food businesses. Top local executive: Carl St. John, operations manager; Tim Skaryd, processing specialist

D DUBLIN ENTREPRENEURIAL CENTER 565 Metro Place South, Suite 300 Dublin, 43017 (614) 989-2429

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www.decindublin.com Business description: To support the creation and development of new technologies, businesses and jobs. Top local executive: Chaz Freutel, director

E THE ENTREPRENEURS CENTER 714 E. Monument Ave. Dayton, 45202 (937) 281-0098 www.tecdayton.com Business description: Business technology incubator. Top local executive: Barbara Hayde, president

F FLASHSTARTS INC. 1621 Euclid Ave., Suite 2150 Cleveland, 44115 (216) 220-0200 www.flashstarts.com Business description: Flashstarts provides software startup teams with $25,000 for 8% equity, coaching, mentors and interns for 12 weeks. Follow-on funding and support available for select teams. Top local executive: Charles Stack, co-founder, CEO; Jennifer Neundorfer, co-founder, CFO, COO FOUNDERS FACTORY 51 W. Fifth Ave. Columbus, 43201 (614) 859-0473 http://10xelerator.com; http://foundersfactory.com Business description: 10X is a mentor-driven investment program designed for energetic and game-changing entrepreneurs. We focus on health care IT, e-commerce,

cybersecurity and edutech. Top local executive: Brooke Paul, managing partner; Ray Shealy, Matt Armstead, Todd Whittington, partners

G THE GREAT LAKES INNOVATION AND DEVELOPMENT ENTERPRISE 151 Innovation Drive, Suite 210 Elyria, 44035 (440) 366-4310 www.glideit.org Business description: Provides professional business assistance to companies at every stage of development and connects entrepreneurs with the tools and resources they need to succeed. Top local executive: Tracy A. Green, vice president, strategic and institutional development

H THE HAMILTON MILL 20 High St. Hamilton, 45011 (866) 540-4438 www.hamiltonmill.org Business description: We are southwestern Ohio’s small business incubator for green, clean, water, digital and advanced manufacturing technologies. Conveniently located between Cincinnati and Dayton. Top local executive: Chris Lawson, executive director; Antony Seppi, operations director HCDC BUSINESS CENTER 1776 Mentor Ave. Cincinnati, 45212 (513) 631-8292 www.hcdc.com Business description: Full-service business incubation program serving early stage and innovative companies in southwest Ohio. Top local executive: Patrick Longo, vice president, director

I INNOVATE NEW ALBANY 8000 Walton Parkway New Albany, 43054 (614) 939-2258 www.innovatenewalbany.org Business description: Innovate New Albany enables business startups to access and leverage resources to power growth.

L

MIDWEST LIGHTING GROUP Cleveland’s Premier Lighting Solution www.midwestlightinggroup.com

LAUNCHHOUSE 3558 Lee Road Shaker Heights, 44120 (216) 255-3070 www.launchhouse.com Business description: LaunchHouse is Cleveland’s first hardware accelerator, a 16-week program designed to

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accelerate startups focused on hardware, advanced manufacturing and software from idea to validation, to prototype. Top local executive: Todd Goldstein, CEO, partner LAUNCHPAD INCUBATION AT UNIVERSITY OF TOLEDO 1510 N. Westwood Ave., Toledo, 43606 (419) 530-6044, utoledo.edu/incubator Business description: LaunchPad Incubation works with early stage tech-based startups to develop investable, scaleable and sustainable companies by providing access to capital, expertise and valuable community resources. Top local executive: Molly Reams Thompson, director

M MAGNET THE MANUFACTURING ADVOCACY & GROWTH NETWORK 1768 E. 25th St., Cleveland, 44114 (216) 391-7002 www.manufacturingsuccess.org Business description: The Incubator at MAGNET is focused on early stage, high growth potential, product-focused technology startups. Top local executive: Daniel E. Berry, president, CEO; Dave Crain, executive director, Entrepreneurial Services MINORITY BUSINESS DEVELOPMENT CENTER 2145 E. Scott Park Drive Toledo, 43607 (419) 530-3170 www.utoledo.edu/incubator/mbdc Business description: Minority business incubator. Top local executive: Erik Johnson, manager MUSKINGUM COUNTY BUSINESS INCUBATOR 2725 Pinkerton Lane Zanesville, 43701 (740) 453-3649 www.mcbi.info Business description: MCBI is a rural, multi-purpose incubator that serves 10 counties. We provide a full menu of services as well as rental space, meeting facilities and a new licensed kitchen. Top local executive: Larry Triplett, executive director

N NATIONAL BUSINESS INCUBATION ASSOCIATION 340 W. State St., Unit 25 Athens, 45701-1565 (740) 593-4331, www.nbia.org Business description: The National Business Incubation Association (NBIA) is the world’s leading organization advancing business incubation and entrepreneurship. NORTECH 737 Bolivar Road, Suite 1000

Cleveland, 44115 (216) 363-6883 www.nortech.org Business description: Technologyfocused organization that strengthens Northeast Ohio’s economic vitality by accelerating the pace of innovation in the region’s advanced energy, flexible electronics and water technologies industries. Top local executive: Rebecca O. Bagley, president, CEO

O OHIO UNIVERSITY INNOVATION CENTER 340 W. State St., Athens, 45701 (740) 593-1818 www.ohio.edu/research/innovation Business description: Southeast Ohio’s technology incubator, providing business services, resources and flexible facilities and fostering growth of the entrepreneurial spirit for over 30 years. Top local executive: Jennifer Simon, director

P PARTNERSHIP FOR THE MINORITY BUSINESS ACCELERATOR 440 Vernon Odom Blvd., Akron, 44307 (234) 542-4145, www.pmba1.org Business description: We serve seasoned minority (includes women and veterans) business owners of forprofit companies with growth potential. They must be doing business in Summit, Portage or Medina counties with gross revenue under $2.5 million. Top local executive: Tobin Buckner, director

R RISE: REGIONAL INCUBATOR FOR SUSTAINABILITY & ENTREPRENEURSHIP BGSU Firelands Campus, Cedar Point Center, Rm. 1002, Huron, 44839 (419) 627-7791 www.eriecountyedc.org Business description: RISE is a comprehensive resource hub that offers assistance across the business development continuum. RISE works with a core of advisers which include seasoned entrepreneurs, business executives and respected BGSU faculty. Top local executive: Abbey Bemis, interim executive director

S SEA CHANGE http://seachangeneo.org BUSINESS DESCRIPTION: SEA Change is a collaborative initiative that provides coaching, connections and capital to social entrepreneurs seeking to improve their community and sustain their work through the sale of goods or services. SEA Change began operation in 2014.

T TBEIC-THE TECH BELT ENERGY INNOVATION CENTER 125 W. Market St., Warren, 44481 (330) 469-6829 x1404, www.tbeic.org Business description: The Tech Belt Energy Innovation Center (TBEIC) is a federally-funded center aimed at the development and commercialization of early stage energy and clean tech technologies. Top local executive: David Nestic, chief executive, regional operations TECHCOLUMBUS 1275 Kinnear Road, Columbus, 43212 (614) 487-3700 www.techcolumbus.org Business description: TechColumbus provides expert advice, access to capital, office/ laboratory space and business growth connections to central Ohio’s technology entrepreneurs. TOLLOTY TECHNOLOGY INCUBATOR 1776 Tech Park Drive, NE New Philadelphia, 44663 (330) 308-7524 www.tusctechpark.com/ business-incubator.php Business description: The Tolloty Technology Incubator is designed to support entrepreneurial efforts with dedicated business incubator space for start-up companies linked to hightech research, development and intellectual property enterprises. Opened June 17, 2014. Top local executive: Gary Little, executive director TREMONT STOREFRONT INCUBATOR 2406 Professor Ave., Cleveland, 44113 (216) 575-0920 www.tremontwest.org Business description: Tremont West Development Corp. offers 370 square feet of retail/office space in its storefront through a RFP. Terms include: free rent for the first three months. Rent of $350/month for the following seven months. Rent includes all standard utilities as well as Internet connectivity through the TWDC Wi-Fi network (telephone not included) Top local executive: Cory Riordan, executive director Y

Y

YOUNGSTOWN BUSINESS INCUBATOR 241 W. Federal St., Youngstown, 44503 (330) 746-5003, www.ybi.org Business description: The Youngstown Business Incubator is an internationally recognized program focused on the development of B2B software application companies and additive manufacturing technology companies in the Mahoning Valley. Top local executive: James W. Cossler, CEO, chief evangelist; Barbara Ewing, COO

ward to start the motorized exoskeleton strapped around his legs, which allowed him to stand up. Then, with the help of two canes, he walked across the room to have a conversation with Democratic U.S. Sen. Sherrod Brown, who has helped Parker figure out the best way to communicate with federal agencies. Future versions of Indego will include patches designed to stimulate patients’ legs and trunk muscles so that they can carry some of their own weight and gain strength before they’re ready to walk on their own. As for Gore, he still needs the wheelchair, but not all that much, especially if he’s not leaving home. “It could sit in a corner all day,” he said. The Indego exoskeleton weighs only 26 pounds, nearly half as much as a similar exoskeleton made by an Israeli company called ReWalk, which went public on the Nasdaq earlier this month. The ReWalk exoskeleton won approval from the U.S. Food & Drug Administration in June, which should make it easier for Indego to win FDA approval. Indego should cost about $70,000, the same price as ReWalk’s product. Indego will be one of many products that the Human Motion & Control team develops, according to Achilleas Dorotheou, who leads the team. The unit’s goal is to fix “human mobility challenges,” he said.

Moving out of the dorm The group is designed to operate like a startup that happens to have access to Parker’s expertise and resources. Thus, Dorotheou doesn’t have to worry about things like human resources, accounting and raising capital from investors, Maxwell said. The group was started with funding from Maxwell’s technology budget, and now it also receives money from Parker’s engineered materials group. “He (Dorotheou) doesn’t have to spend 80% of his time wondering where the next round of funding is coming from,” Maxwell said.

Originally, Parker Hannifin’s Human Motion & Control group was based at the company’s headquarters in Mayfield Heights. So why move the unit — which is developing the Indego exoskeleton — into a separate building in Macedonia, 17 miles away? Separating the group should help it focus, according to Craig Maxwell, chief technology and innovation officer at Parker. In the past, the industrial company sometimes has had trouble developing technologies that are radically different from its existing products, he said. That’s partly because those development teams tend to do things differently than their colleagues, which creates distractions. Separating a group working on groundbreaking products is often a good idea, according to Bill Nottingham of Nottingham Spirk of Cleveland, which has helped other companies develop all sorts of consumer products, including the Swiffer SweeperVac and the Spinbrush electric toothbrush. “You have to create this division that’s not going to get distracted or pulled away by the mothership,” he said during an interview last year. — Chuck Soder

But the teams that move into the incubator at 1390 E. Highland Road won’t be able to just tinker with complete freedom. If they start missing their goals, Parker will cut their funding, Maxwell said. “If this turns into arts and crafts, it’ll get cut,” he said. However, Dorotheou would rather deal with that threat than the countless obstacles he’d face if he were running the Human Motion & Control unit as a separate company, which he described as a “choose your death” scenario. And if the unit succeeds, it’ll probably end up moving out within a few years to make room for other entrepreneurial ventures, Maxwell said. “Think of it as a dormitory. They need to outgrow it,” he said.

Parker Hannifin CEO was looking out for Cleveland Parker Hannifin CEO Don Washkewicz clearly has a soft spot for his hometown. Late one night at the office about three years ago, when two Parker executives stopped by his office, the Northeast Ohio native asked them a question but told them he didn’t want an answer right away. Washkewicz asked them what was going to be the next big thing in motion and control technology. He wanted them to find something with big growth potential — something that could benefit from resources in Northeast Ohio and be built here. That conversation led the two technology executives — Craig Maxwell and Joseph Kovach, who has since retired — to explore the idea of creating wearable robotic products at Parker.

The first product, the Indego exoskeleton, is based on technology licensed from Vanderbilt University, but it has become a local product. Indego is being developed and assembled in Parker’s Corporate Technology Ventures incubator in Macedonia, and some of its more expensive parts are made by Ansco Machine Co. in nearby Cuyahoga Falls. A Cleveland company called DXY Solutions developed software for the system. And Parker plans to keep making Indego in the area, even after the company’s Human Motion & Control team leaves the incubator, according to Achilleas Dorotheou, who leads the team. “Engineering, design and manufacturing will all be here,” Dorotheou said. — Chuck Soder

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tle,” Sykes said. “They don’t have the numbers.”

lawmakers don’t act by June 30, that eligibility “for all intents and purposes will cease to exist, and that is worst case scenario for a state like Ohio,” according to Heidi Gartland, University Hospitals’ vice president of government relations. She added, “My guess we won’t know until the very, very end where that’s going to go.” Gartland said she doesn’t “have a real strong sense” that there’s a majority within the Ohio House and Senate in favor of keeping the expansion. Moreover, other political observers don’t expect the Democrats to make up any significant ground — if any at all — in this fall’s legislative elections. “I don’t think that the Democrats in the House or the Senate, based on the polls or pundits, would feel they will gain enough seats to be able to have a significant block on Republicans if they choose to eliminate it,” said state Rep. Vernon Sykes, a Democrat and term-limited incumbent from Akron, who serves on the Joint Medicaid Oversight Committee. “It would be a hard-fought bat-

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Get selling That said, Northeast Ohio’s hospitals have a lot of selling to do. They’ll likely get some help from the Greater Cleveland Partnership, the regional chamber of commerce, according to the group’s senior vice president for government advocacy Marty McGann, who said, “I would imagine we would be pretty heavily involved in this effort again.” Business groups were ardent supporters of expansion last time around, suggesting the costs of paying for the uninsured would eventually be passed onto employers through higher insurance premiums. However, because the expanded program has only been in place since the start of the year, hospitals have limited data to share, though they insist it has been a success. For one, according to a report issued last week by the Obama administration, hospitals in the states that expanded Medicaid eligibility will

Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com

save about $4.2 billion because of a sharp decline in the uninsured population. “We just have to be optimistic,” said Kristen D.W. Morris, the Cleveland Clinic’s chief government and community relations officer. “It’s been very effective at having lowincome workers get the care to take care of their own health.” Also, none of the horror stories — packed emergency rooms or the inability to get into a primary care doc — have come to bear. Many cost-conscious Republicans also feared of a so-called “woodwork effect,” whereas those individuals who previously qualified for Medicaid coverage but were not enrolled would acquire coverage because of the feds’ insurance mandate, though the state has seen little movement in that area. “(There were) all of the horror stories about what was going to go wrong, and all of it has been a nonevent,” said Bill Ryan, president and CEO of the Center for Health Affairs, a local hospital advocacy group. Many local institutions are pointing to the success Metro-

Health — Cuyahoga County’s safety-net hospital — has had with its new enrollees. MetroHealth got a head start due to an experimental waiver program that expanded eligibility in Cuyahoga County before the rest of the state. Under the waiver, MetroHealth said it spent $50 million under the cap Centers for Medicare & Medicaid Services had set for the system. Also, perhaps most importantly, MetroHealth said those patients are showing improved health outcomes. Plus, the health system, which has had financial issues over the last few years because of the amount of free care it provided, finished 2013 with a relatively healthy profit margin of more than 2%. Three major credit rating agencies also recently upgraded MetroHealth’s outlook, and all of them cited Medicaid expansion as a positive development for the health system. “If it went away, it’d be catastrophic for individuals who lose coverage and have a catastrophic impact on MetroHealth’s financials,” Corlett said.

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Of course, taking a benefit away once it’s in place can be a hard sell, especially politically. While that is a worry, some observers said they wouldn’t be surprised if conservative lawmakers try to inject more requirements on Medicaid enrollees, such as worksearch requirements or more costsharing options. Pennsylvania, for instance, explored the idea of requiring some unemployed Medicaid enrollees to search for work. Tracy Carter, Summa Health System’s for government relations, hopes next year’s debate will be less emotional than the previous year’s. But given the sensitive political environment in which she works, she’s ready for a spirited battle. “Game on,” said Carter, who also co-chairs the Akron-Canton Medicaid Expansion Coalition. “It’s going to be more intense, more heated if you will, just because a lot’s at stake. We are here to make sure health care is available and accessible to the uninsured.”

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THE WEEK AUGUST 4 - 10 The big story: Miramar, Fla.-based Spirit Airlines, an ultra-low cost carrier, said it will begin service next year from Cleveland Hopkins International Airport to eight cities, including Orlando, Dallas/Ft. Worth, Las Vegas and Los Angeles. The airline is likely to staff Cleveland Hopkins initially with about a dozen employees, though that number could grow if the service is successful and flights are added. Cleveland will be the 57th city in Spirit’s route network, which includes many Caribbean and South America cities reached through its hub at the Ft. Lauderdale-Hollywood International Airport.

Billion dollar IPO: Fairmount Santrol of Chesterland, a provider of sand and sand-based products to oil and gas exploration and production companies, expects its initial public offering under the name FMSA Holdings Inc. to be priced between $21 and $24 per share, raising up to $1.07 billion. The company, owned by private equity firm American Securities LLC, said in a filing with the Securities and Exchange Commission that it will sell 44.5 million shares in the offering. It has applied to list its common stock on the New York Stock Exchange under the symbol “FMSA.” The top end of the expected price range would value the company at $3.87 billion. Big new partner: Japan’s biggest pharmaceutical company plans to invest $25 million in BioMotiv, a Shaker Heights company that aims to commercialize all sorts of new drugs. The fiveyear investment gives Takeda Pharmaceutical Co. the right to make the first offer on any therapies BioMotiv develops related to heart disease, diabetes and other so-called cardiometabolic conditions, as well as any disease involving inflammation and the immune system. Takeda will buy a “significant” minority stake in the company, said Baiju Shah, BioMotiv’s CEO.

Time to downsize: GrafTech International Ltd. of Parma, a producer of graphite electrode and other carbon-based products, is stepping up its effort to further cut costs. The company said it has “identified approximately $30 million in cost-savings actions” that will include layoffs and a move to a “smaller, more cost effective, corporate headquarters within Northeast Ohio.” The number of layoffs was not disclosed. The moves will be on top of more than $90 million in annual cost savings the company said it has identified over the past year. Ciao, Vetriceramici: Ferro Corp. of Mayfield Heights agreed to buy Vetriceramici S.p.A., a Casola Valsenio, Italy-based supplier of ceramic coatings to high-end tile manufacturers, for about $108 million. Ferro, a supplier of technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials, said the acquisition will be funded with excess cash and a draw on the company’s existing revolving credit facility. It’s expected to close by Dec. 1.

End of the line: Proficio Mortgage Ventures intends to close four branches in the Cleveland area around early November and lay off the 124 employees working there. According to a notice filed with the state, Proficio will permanently close two branches in Independence and two in Seven Hills on Nov. 3 or within two weeks after that date. The two branches have 58 and 66 employees, respectively. Proficio has been restructuring operations throughout the year in response to “substantial changes” occurring in the industry, said John Miller, its interim president.

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REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

CSU’s space law expert expands his global portfolio

A Cleveland law firm makes them pay

Cleveland State’s resident space law expert — yes, there are laws in space — will help out the U.S. delegation to the United Nations committee on the peaceful uses of outer space. Mark J. Sundahl, associate dean of the Cleveland-Marshall College of Law, was appointed as industry adviser to the group and will attend its meetings in Vienna. The committee works on legal issues when it comes to the use of outer space, and Sundahl will advise the delegation on how those legal efforts will affect the operation and competitiveness of the United States’ space industry. The biggest legal issue in space? Space junk, Sundahl said. Think satellite debris and other man-made material floating aimlessly through space that could pose a threat to anyone doing business beyond Earth’s boundaries. “We need to ensure the countries around the world that when they operate in outer space they’re doing everything they can to reduce space debris and mitigate its creation,” Sundahl said. “It’s an environmental issue.” Sundahl’s appointment was due in part to his role as chair of a working group on international space policy as part of the Federal Aviation Administration’s commercial space transportation advisory committee. In the past, he served as assistant secretary of the International Institute of Space Law, which is based in Paris, and was a member of the working group charged with crafting a new treaty on the finance of satellites and other space assets. — Timothy Magaw

Chapman LLC, a Cleveland law firm specializing in cases of investor’s rights, was successful in securing an award of about $3.9 million for some of the investors allegedly fleeced by Resource Horizons Group LLC of Marietta, Ga., via Robert Gist, a broker whom federal regulators have accused of misusing $5.4 million of investor money The award includes about $3.7 million for compensatory damages and fees, according to findings released by the Financial Industry Regulatory Authority, plus $200,000 for punitive damages, something attorney John Chapman says is rare in fraudulent investment cases. Regulators stripped Gist of his license, barring him from the broker-dealer industry. “They intend to send a message to Wall Street that it’s important to take this supervisor responsibility seriously and that you do your job or pay the price,” Chapman said. Chapman noted that Gist settled civil fraud charges with the Securities and Exchange Commission to the tune of $5.4 million just last year after the SEC accused him of not only spending investor funds on himself, but also siphoning some of that money into a company he held some ownership of, Encap Technologies LLC. Alan Wolper, a Chicago attorney representing Resource Horizons and two of its executives, told The Journal the award was “frustrating. … There was an obvious bad guy and yet the panel has determined somehow my clients are responsible for what the

WHAT’S NEW

Mark it down

Mace says its new line of products sets out to provide “safety that reflects your style.” Exquisite is what Mace calls a “fashion line” of pepper sprays that “incorporates patterns and colors that are bold, sleek and contemporary.” The philosophy beyond the marketing of Exquisite? “No longer does safety have to be boring,” Mace says in a news release announcing the launch of the pepper sprays. “It should be a fashion safety accessory that every woman feels good carrying.” Each unit contains OC (oleoresin capsicum) pepper spray and an invisible marking dye that helps police identify an attacker using ultraviolet light, the company says. In the release, Eric Crawford, vice president of sales for Mace, says, “For many years, selfdefense sprays were only seen as utilitarian devices but recent trends, consumer feedback and point of sale data have shown that women want their defense spray to have a blend of style and function.” For information, visit www.mace.com.

Case professor recognized for brainy work in HR field When Prof. Richard Boyatzis of Case Western Reserve University speaks, people listen. At least people in the human resources field, as Boyatzis once again was named one of the 10 most influential international thinkers in a new HR Magazine survey of more than 11,000 human resources directors worldBoyatzis wide. The London-based magazine says those who made the list “are advancing thinking on talent management and combine academic rigour with practical relevance. They are taking HR in new directions, such as neuroscience, while building the evidence base in older areas like change management.” Boyatzis, who is known for his work on emotional intelligence, coaching and leadership, ranked ninth on the list — the same ranking he received in 2012. Case says Boyatzis’ research “has focused increasingly on the use of functional magnetic resonance imaging to illustrate the neural activation on different parts of the brain.” — Scott Suttell

BEST OF BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

COMPANY: Mace Security International Inc., Cleveland PRODUCT: Exquisite line of pepper sprays

acknowledged thief did.” Chapman said he’s surprised no criminal charges have been brought against Gist yet, adding, “In my view at least, justice hasn’t been done.” — Jeremy Nobile

Ohio is heavily represented — including in the No. 1 slot — on a Forbes.com list of 19 cities “where it may be easier to make your mark.” Here’s the gist of what unites the 19 cities: “Unlike major cities like New York, Chicago and Los Angeles, where professionals in the early to middle phases of their careers (ages 25 to 39) might feel overwhelmed or lost in the shuffle, most of these cities are small enough that enterprising people can really make their mark,” Forbes.com said. Taking the top spot on the list is Columbus, which benefits from a “very low cost of home ownership” and the arts and cultural amenities derived from being home to Ohio State University. There are three other Ohio cities on the list: Toledo, at No. 4; Akron, at No. 13; and Cincinnati, at No. 18. “We’re coming out of from 2008 the recession and the rubber companies have made a comeback here,” Brad Beckert, development engineering manager for the city of Akron, told Forbes.com. The website also called attention to Bridgestone and Goodyear — the biggest employers in Akron — as well as the Austen BioInnovation Institute, FirstEnergy Corp., the Knight Foundation, Summa Health System and the University of Akron.

On the edge Nearly half of all households in major cities — and well more than that in Cleveland — don’t have enough money saved to cover essential expenses in an emergency, The New York Times reported, based on a study by the Corporation for Enterprise Development.

The problem is worst in Newark, N.J., where 74.7% of the population does not have enough money to meet basic expenses for three months at the federal poverty level, about $6,000 for a family of four. Cleveland is in a group of cities where more than 60% of the population has little financial cushion. The Times said the absence of assets that can be quickly converted to cash — like stocks, bank accounts or retirement accounts — is why the study called these citizens “liquid asset poor.” Andrea Levere, president of the Corporation for Enterprise Development, a nonprofit based in Washington that is supported in large part by major banks, told The Times that the study shows “it’s not just income; it’s also assets that matter when you’re attempting to change financial opportunity.” She pointed out that the issue is “not just (about) poor people. We’re talking about almost half the nation living in a state of financial insecurity.” The Times noted that many of the cities with the highest level of liquid-asset poverty “tend to have the most people without bank accounts,” and the lack of a bank account “makes it even harder to save.”

Good taste Chef Jonathon Sawyer’s new Cleveland restaurant, Trentina, landed on a Condé Nast Traveler list of the best new restaurants in the Midwest. Trentina “is an homage to the cuisine of Italy’s Trentino region, his wife’s ancestral home,” the magazine said. “Sure, there’s house-made pasta, but there’s also ‘egg cooked in a spoon over embers’ and edible beef suet candles. Sit on the patio to order from the a la carte menu, or head inside for the 12-course tasting menu— provided, of course, that you’ve purchased a ticket to the meal in advance.” Ohio’s second restaurant on the list is Metropole, a “paleo throwback” in Cincinnati.

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THE 2015 SPRINTER

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DRIVEN LIKE YOU 1 Driver is responsible for monitoring fluid levels and tire pressure between service visits. See Maintenance Booklet for details. Options shown. Not all options are available in the U.S. ©2014 Daimler Vans USA, LLC. All rights reserved.

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