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Vol. 31, No. 40

RAYS OF HOPE IN THE FLATS Business owners, city leaders see better future in district as recreation picks up By JAY MILLER and STAN BULLARD jmiller@crain.com, sbullard@crain.com

G

et ready for the new Flats. It won’t be the same, alcohol-fueled party central as the old Flats, pronounced dead years ago. At least that’s what Andy Halko is thinking. Mr. Halko, president of Insivia Marketing & Interactive Web Design, is moving his 14-person firm from Superior Avenue on the eastern edge of downtown to 2020 Center St. in the middle of the Flats. “We’re excited about having access See FLATS Page 20

Andy Halko moved Insivia Marketing & Interactive Web Design to the middle of the Flats.

Downtown officials see buildings such as the old B&O Passenger Terminal as assets.

The Cleveland Rowing Club will move to Columbus Peninsula from Scranton Peninsula.

Survey: Lack of faith in NE Ohio economy persisting By DAN SHINGLER dshingler@crain.com

40

Northeast Ohio businesses agree on many things — that the federal government should reduce its borrowing and spending, for one — but they can’t seem to agree on whether the economy is improving. When the Deloitte accounting firm did a survey of 133 Northeast

Ohio businesses in INSIDE: Responses economy was “well into August and September, recovery,” while a few to Deloitte survey it found a bit of bifurmore, 10.5%, said the questions. Page 22 cation when it asked, nation was entering a “Where do you believe the U.S. is in double-dip recession. terms of current economic cycle?” In other words, 43.6% of those One-third of the respondents surveyed were pessimistic, while said the U.S. still was in a recession, 45.9% were optimistic — a nearly while 42.1% said the nation’s even split with the remainder economy was in the beginning of undecided. a recovery. A few, 3.8%, said the On the local economy, they

generally were more downbeat. A whopping 81.2% said they were either “not particularly confident” or “not at all confident” in it, while only 18.8% said they were “very” or “somewhat confident.”

So who’s right? “It depends on the company and the industry they’re in,” said See SURVEY Page 22

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NEWSPAPER

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SPECIAL SECTION

SMALL BUSINESS Area auto dealers adjust to tough sales by offering used cars, other products ■ Page 11 PLUS: THE DREADED BED BUG ■ GRAND OPENINGS ■ & MORE

INSIDE Analyzing privatized economic development Republican gubernatorial candidate John Kasich’s plan for a nonprofit to take over the state’s economic development efforts isn’t a sure winner, in the view of experts. Page 3


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COMING NEXT WEEK

OCTOBER 11-17, 2010

MONEY MAKES THE WORLD GO ’ROUND The way to an employee’s heart is with an attractive salary. That’s one finding of a MetLife survey of 1,503 benefits decision-makers and 1,305 full-time employees. Here’s the percentage of employers and employees reporting salary and benefits as important contributors to employee loyalty:

Honoring the region’s top CFOs Crain’s for the third year identifies and profiles chief financial officers in Northeast Ohio who have helped steer their companies through a difficult economic period.

REGULAR FEATURES Classified .....................21 Editorial .........................8 From the Publisher .........8 Going Places ................15 Letters ...........................8

WWW.CRAINSCLEVELAND.COM

List: Largest accounting firms...................16, 18 List: Northeast Ohio’s top SBA lenders ..............19 Reporters’ Notebook ....23

Salary

Employers’ perception

Employees’ perception

67%

82%

Health benefits

59

74

Company culture

55

47

Advancement opportunities

45

55

Retirement benefits

43

67

Other benefits (dental, disability, vision)

39

65

Work/life programs

36

53

SOURCE: METLIFE; WWW.METLIFE.COM

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events Coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Production manager: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Kristen Wilson (klwilson@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Kathy Henry: Corporate circulation/audience development director G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136 Audit Bureau of Circulation


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NASA Glenn upbeat on replacement bill Agency, some congressional delegates at odds over impact of post-Constellation legislation By CHUCK SODER csoder@crain.com

The new NASA may not be so bad for NASA Glenn Research Center after all. The center’s director and others with close ties to NASA Glenn have voiced support for a federal bill expected to reshape NASA’s space

exploration plans. About half of Ohio’s congressional delegation opposed the NASA Authorization Act of 2010, a bill expected to replace the Bush-era Constellation program with a space exploration plan that pays private companies to develop rockets for NASA and puts more emphasis on long-term technology develop-

ment. A few members of the delegation even circulated letters saying the bill would be bad for NASA Glenn; so did the Greater Cleveland Partnership. Center director Ramon Lugo, however, stated in a letter to Crain’s that passage of Senate Bill 3729 will prove good for NASA Glenn. (The letter is on Page 8.) The union that represents NASA Glenn’s engineers and scientists agrees, and so do the only two members of Ohio’s congressional delegation who sit on the House Science and Technology

Committee. Those supporters all say the new plan’s emphasis on research and technology development plays into NASA Glenn’s specialties. “This congressional direction is good news for Glenn and Ohio,” Mr. Lugo said.

A stellar plan? Granted, the Senate bill that is awaiting President Obama’s signature doesn’t provide as much research and technology money as the House version of the bill, which was

not voted on, or the initial plan that the Obama administration proposed in February. Still, the new plan looks good, said Sheila Bailey, a senior executive vice president with the Lewis Engineers and Scientists Association, which is the local chapter of the International Federation of Professional and Technical Engineers. A big reason the NASA Glenn union supported the Senate bill is that it prevents NASA from laying off government employees for three See NASA Page 19

THE WEEK IN QUOTES

INSIGHT

“There is always some attraction here. No matter who you are, the water attracts you, even if it is eating in a restaurant and watching (ore) boats go by.” — Jack Ecke, owner of Ecke’s Towing Service in the Flats and a service station on Columbus Road. Page One

MATT SULLIVAN/REUTERS

Republican gubernatorial candidate John Kasich speaks to supporters during an Aug. 4 campaign stop in Zanesville.

A POLITICAL BATTLEFIELD Gubernatorial candidate Kasich touts plan to privatize economic development, but experts say it’s no panacea for state’s woes

By JAY MILLER jmiller@crain.com

A

look at the experiences of other states indicates a plan advanced by John Kasich to replace the Ohio Department of Development with a private, nonprofit organization might not be the economic development elixir touted by the Republican candidate for governor. Conversations with economic development professionals and

academics suggest the success of state business growth programs is more a reflection of each state’s appeal to site selectors rather than a function of the organizational structure of the business attraction effort. Jeff Finkle, president of the International Economic Development Council in Washington, D.C., said he hasn’t found any evidence that private, nonprofit agencies do a better job than public ones. See KASICH Page 6

Manufacturers butt heads over wind energy proposal By DAN SHINGLER dshingler@crain.com

Some say transition will raise costs, affect business

A new bipartisan proposal to get the United States to generate and use more renewable energy is pitting Ohio manufacturing interests against each other. Those already mining the gold of the nation’s rush to wind energy tend to favor the push to renewables, while some advocates for manufacturing generally say it’s a bad idea that would raise the nation’s energy

costs. U.S. Sen. Jeff Bingaman (D-N.M.) and his Republican colleague Sam Brownback of Kansas said on Sept. 22 that they intend to introduce legislation that would establish a national renewable energy standard. It would require the nation to derive more of its electricity from renewable sources, such as wind and solar energy. A detailed bill had

yet to be unveiled, but the two said they hope to see 15% of the nation’s electricity come from renewable sources by 2021. The bill is backed by the Great Lakes Wind Network, which works to increase the domestic content of North America’s wind turbines. The network has asked members to call their federal legislators in support of the bill and even has provided talking

points. The group suggests members tell legislators that wind energy creates U.S. manufacturing jobs and that without action on a renewable energy standard, “the United States will cede its status as the global leader in clean energy to China, and the jobs that the RES would create will go to China, not the United States.”

Thumbs up … Several companies in Northeast See WIND Page 21

“I’m less concerned about a double-dip recession today. … From everything I see and everyone I’m talking to, there’s a sort of quiet confidence going into 2011 that’s been missing the past couple of years.” — Matthew Figgie, chairman, Clark Reliance Corp. Page One

“I’m very excited. … I’m also scared to death.” — Nick Mayer, principal of Nick Mayer Lincoln-Mercury Inc. in Westlake. Page 11

“Bed-bug infestations can run into the thousands of dollars. It can spiral quickly. I know that not everybody is prepared for them. It’s just amazing. It just seemed to have gotten here faster than anticipated. — Rick Novickis, supervisor, environmental health services, Cuyahoga County Board of Health. Page 11


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Parma straps maker heads east After mulling benefits of nearby areas for move, Winston Products opts for Glenwillow Village By STAN BULLARD sbullard@crain.com

Breaking the rule that East Side companies go east and West Side companies go west in search of larger buildings, Winston Products LLC in Parma has agreed to go east — all the way to the massive Diamond Center One warehouse in Glenwillow Village. Winston Breeden, president of Winston Products, said the 38employee company has leased more than 100,000 square feet at the

multitenant office-warehouse building and plans to move its office and warehouse operation to Diamond Center One from the Venture One Building in Parma. The company looked for replacement sites in Parma and as far southeast as Streetsboro, he said. “This fit us better and the deal was right, to be honest,” Mr. Winston said, though he declined to disclose the rent the concern will pay. “It’s a new building and has a tax abatement in place,” he added. Winston Products occupies 50,000

“(Winston Breeden is) always looking for new items to come up with for their business.” – Mark Cegelka, mayor, Glenwillow Village square feet in Parma and 15,000 square feet in a satellite warehouse in Cleveland that it plans to consolidate in a single location when it moves in December. Diamond Center One also will have room for Winston to grow, Mr. Breeden said, which it plans to do with more products he declined to describe. Winston Products dubs its bestknown product “Smart Straps.” The product is a boxed rigging system that allows users to quickly release and recoil straps as they tie down or unload equipment from trucks or cars. Major retailers sell the system and associated straps, which are among 200 products the company distributes, Mr. Breeden said. Contract manufacturers produce the parts. “Our mission is to provide truly innovative product solutions,” Mr. Breeden said of the 5-year-old concern. He declined to disclose annual sales. Mark Cegelka, mayor of Glenwillow Village, said he’s looking forward to Winston Products moving to the village. He toured its Parma operation and described Mr. Breeden as “an interesting entrepreneur.” “He’s always looking for new items to come up with for their business, from their Smart Straps to bungee cords and related items with all sorts of uses,” Mayor Cegelka said. Winston Products plans to ask the village to seek state job tax credits, but it has not yet done so, the mayor said. The Diamond Center One property already has an abatement of 75% of its annual property tax bill in place, which was approved before the building was constructed. The mayor said he suggested Winston Products work with Parma for a location, but was assured it was unable to find one there. Winston Products will become the third tenant in the 400,000-squarefoot building that a joint venture of Geis Cos. of Streetsboro and Weston Inc. of Solon completed in 2007. The building is at 30339 Diamond Parkway. Terry Coyne, a senior vice president at Grubb & Ellis Co.’s Cleveland office who represents the building, said 133,000 square feet remains available following the Winston lease. Mr. Breeden said Brian Conroy and Scott Pick of Jones Lang LaSalle’s Cleveland office represented Winston Products in its search. Even with Winston Products’ move, Geis retains the company as a tenant because it also owns the Parma property that is Winston’s current home. ■

Volume 31, Number 40 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136


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Cleveland corrections facility a plus for neighborhood By TIMOTHY MAGAW tmagaw@crain.com

Ms. Connell-Freund said would be spent at local businesses.

A $10.8 million, 200-bed community-based corrections facility for nonviolent offenders is slated to open in January southeast of downtown Cleveland, and officials associated with the project say it could be a positive for the local business community. The 53,000-square-foot facility, at 3540 Croton Ave. near the Interstate 77 bridge, will offer low-level felony offenders drug treatment, counseling and employment assistance. It’s the first such facility in Cuyahoga County, and officials involved with the project say it will create about 70 good-paying, full-time jobs and 20 part-time jobs and could yield other benefits. Michael May, executive director of Maingate Business Development Corp., a nonprofit group aimed at improving the industrial area where the facility is located, said his group and the 500 businesses it represents have been supportive of the project. Mr. May said Cuyahoga County and Oriana House Inc., the nonprofit pegged to operate the facility, have taken an area that’s typically been ignored and put a good face on it. “With this brand-new, beautifully designed facility, the jobs, the security envelope and everything else, it turns that area into a very major plus,” Mr. May said.

What it is The Ohio Department of Rehabilitation and Correction contributed

Who’s in charge?

RENDERING PROVIDED

the bulk of the money to finance the facility, while the county added about $486,000. The financing was in place in the early 1990s, but the project didn’t take hold until about two years ago. The main sticking point was site selection, said Alfonso Sanchez, chair of the communitybased correction facility governing board, a group that will oversee the facility. Mr. Sanchez noted that it was hard to explain to residents or business owners that this wasn’t a jail, adding that it is “by no means a country club.” The facility will be geared toward helping criminals re-enter the community. These offenders, on average, stay in these types of facilities about 120 days. State law prevents them from staying longer than 180 days. Anne Connell-Freund, executive vice president of operations at Oriana House, said an ultimate goal is getting recovering offenders —

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who typically are drug or alcohol addicts — employed soon after leaving the facility. To accomplish that goal, she said it’s important to build relationships with local employers. “Employers tend to like our clients because we get them to work on time and drug screen them,” Ms. ConnellFreund said, adding manufacturing jobs typically are a good fit for them. In addition, government officials hope the facility will help address the problem of state prison overcrowding, which they say costs taxpayers far more money than sending offenders to a community-based facility. Also, the new Cleveland facility will receive about $6 million from the state each year for operations, which

Oriana House tapped Michael Randle, a controversial figure from the Illinois prisons system, to lead the operations at the new facility. He’s doing it for more than a 50% cut in pay from the more than $150,000 a year he earned as director of the Illinois Department of Corrections. Mr. Randle, who spent nearly two decades working for the Ohio Department of Rehabilitation and Correction before heading to Illinois in June 2009, became a central figure in a bungled Illinois early release program that put several violent offenders back on the streets starting in September 2009 after serving little jail time. A state-issued report in August ultimately said the program was “ill-conceived” and ignored the impact on public safety. The issue became a serious liability for Illinois’ sitting governor, Pat Quinn, and nearly cost him the Democratic Party’s nomination in the February primary. Mr. Quinn suspended the program at the end of last year and blamed Mr. Randle for the problems, but the governor repeatedly refused to fire Mr. Randle

despite several calls to do so from other state officials. Mr. Randle said he wasn’t forced out of his role in Illinois and took the job in Cleveland to be closer to his family. He added that he didn’t get involved with the criminal justice system to get rich. “It was totally my decision,” Mr. Randle said about his departure. “The (Illinois) governor was surprised I decided to leave.” Speaking of Mr. Randle, Charles See, community outreach coordinator for the facility governing board, said Illinois “stole him from us” and Ohio recently “stole him back.”

Moving forward Mr. Sanchez said construction of the facility should be completed in December. The facility is slated to open in early January, on time and on budget. “It couldn’t have been done any faster or anymore economically,” Mr. Sanchez said. Mr. See said this facility is an example of the “change in paradigm” of corrections as more states are looking to maximize resources and move to low-cost, more effective types of incarceration. “You’re saving money,” he said. “It’s as simple as that.” ■


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Kasich: JobsOhio staff would be paid well continued from PAGE 3

“Here’s the bottom line: I can’t prove, nobody can prove, that a quasi-public/private partnership will produce more jobs than a public agency,” said Mr. Finkle, whose group consists of 4,500 economic development professionals worldwide. Geraldine Gambale, editor of Area Development, a publication that serves site selection and facilities planning professionals, concurred with Mr. Finkle. “You can’t just say the state-run, or the ones that aren’t state-run, do a better job because it’s a mix,” Ms. Gambale said. “Enterprise Florida has been successful at it, but in California they privatized it and now it’s back with the state.” California dismantled its Technology, Trade and Commerce Agency in 2003 and turned economic development marketing over to a nonprofit, TeamCalifornia. However, last April, Gov. Arnold Schwarzenegger created the Governor’s Office of Economic Development to bring economic development back in house. A government reform task force, the Little Hoover Commission, had recommended the state of California

reclaim the business attraction and retention role. “No one is setting a vision for the state’s role or articulating it for business and cities and regions desperate to create new jobs,” the commission said in its report to the governor and legislature. “No one knows what programs are working. No one is building or following a strategy to guide and align these programs.” Mr. Finkle and others say even states that have privatized economic development continue to rely entirely or in large measure on public money. “You’re really not getting rid of public involvement,” Mr. Finkle said. “There’s still a government function going on around this (economic development) game.” Even Enterprise Florida, one of the most lauded private agencies, got $19.3 million of its $20.6 million budget for 2008 from government grants, according to its 2008 income tax filing. Don Jakeway, a former director of the Ohio Department of Development and former president and CEO of the private Michigan Economic Development Corp., said, “If you’re using taxpayers’ dollars to

fund a private organization, it ain’t private.” Mr. Jakeway now is president and CEO of the Brooks Development Authority in San Antonio, Texas.

Strickland discarded idea Mr. Kasich maintains that moving business development to a nonprofit organization — which he would call JobsOhio — would create a faster-to-respond, more business-friendly agency. The Kasich plan follows similar programs created in the last decade in states that include California, Florida, Indiana, Michigan and Missouri. However, the experiences of those states suggest a private agency likely would not be any more effective at creating jobs than the current state agency, said Ohio development department director Lisa Patt-McDaniel. Ms. Patt-McDaniel said the Strickland administration a little over a year ago explored best practices in other states and examined whether to adopt the privatization model. “What we found out when we looked at efforts in some other states was that the public-private partnerships they had, in the end, were mostly funded by the public

sector, so the private funding model didn’t seem sustainable,” she said. “So we dropped it at that point.” Nonetheless, Ned Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University and a consultant on economic development issues nationwide, does see some advantages to a nonprofit approach to business assistance. In particular, he said a private agency’s ability to offer higher salaries to its staff can attract and retain the most skilled economic development professionals. He said he has watched the churn in the Ohio Department of Development as quality mid- and upper-level officials depart for the private sector, where salaries are significantly higher. Still, he gives the current state agency high marks for effectiveness. “They do a very good job,” he said. Mr. Hill and Judy McKinney Cherry, former director of the Delaware Economic Development Office, said privatizing a state’s economic development department doesn’t eliminate the need for expanding businesses to deal with state bureaucrats. They still must plow through state agencies for permits and other approvals.

Sounds like a plan JobsOhio would be run by a 12member board of directors appointed by the governor and composed of CEOs and former CEOs. They would hire a professional staff that, Mr. Kasich said, could be paid more than

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the state employee pay scale and could receive incentive bonuses for successful efforts. The state development department employs more than 400 people and has a budget of more than $1.1 billion for fiscal 2011, though only a portion of that budget pays for business attraction and retention programs. A significant part is federal pass-through money, such as the $137 million that goes to a home energy assistance program, or money that flows from state bonds approved by voters, such as the Third Frontier technology development program. Under the Kasich plan, the development department would be dismantled and those operations that aren’t related to business attraction and retention would be moved into other departments. Gov. Ted Strickland has opposed the plan, calling it a case of “the fox guarding the hen house.” Mr. Finkle of the International Economic Development Council went so far as to say that putting business people in charge of doling out public money or tax credits to businesses creates conflicts of interest. Democratic Attorney General Richard Cordray also has come out against the plan, saying it lacks public accountability and transparency. Mr. Kasich opened the door to the reservations expressed by Mr. Cordray and others when he said privatization would allow the nonprofit to attract the best people by offering high salaries and bonuses, then added, “The whole bonus thing, we will not require them to disclose their bonuses.” ■


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Software maker restructures staff MRI eliminates remote positions, plans to hire more at Highland Hills HQ By CHUCK SODER csoder@crain.com

David Post would rather his employees work from headquarters than from home. MRI Software LLC late last month laid off an undisclosed number of employees across the country who worked from home. Now the Highland Hills company is hiring their replacements at its headquarters and its office in Secaucus, N.J. The company, which makes software that investors and large companies use to manage their real estate holdings, was called Intuit Real Estate Solutions until January, when Vista Equity Partners of San Francisco bought the firm from Intuit Inc. of Mountain View, Calif. Bringing more of its employees into its offices should help MRI Software improve employee oversight, shift people from one function to another and increase the transfer of knowledge among employees, said Mr. Post, whom Vista Equity Partners hired to serve as CEO of the company. He said the only MRI Software employees who will continue working from home are those who need to be close to customers. The restructuring is part of the company’s new three-part plan to improve customer support, Mr. Post said. In addition to bringing more employees into its offices, the company also is about to upgrade the portal clients use when seeking support services, and it is revamping its employee training program. “Those are the three things that

ON THE WEB

Story from www.CrainsCleveland.com.

Man pleads guilty in church embezzlement A federal magistrate judge last week accepted a guilty plea from Stanley S. Chapman, formerly of Aurora, on two counts of embezzling money from the Blessed Hope Missionary Baptist Church of Cleveland and on two counts of failing to pay income taxes. In April, federal prosecutors charged Mr. Chapman with four counts of income tax evasion and 12 counts of employment tax offenses. The government alleged that between 2003 and 2006, Mr. Chapman embezzled $336,777 from the church by diverting federal FICA tax money to his own account. The indictment alleged that Mr. Chapman failed to report taxable income of approximately $283,136 and income taxes of approximately $51,301 for those years. Sentencing has been set for Dec. 15. — Jay Miller

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are going to give us what I see as a world-class client support organization,” he said. The company’s web site last week listed 20 positions that MRI Software is looking to fill at its Highland Hills headquarters. Post Mr. Post noted, however, that not all of those positions are open because of the restructuring. He said some individual postings also may represent more than one job opening. Mr. Post would not say how many employees MRI Software has today, but he noted that the company employs more people today than it did when Vista Equity Partners

bought the firm in January. The company employed nearly 200 people in Highland Hills at the start of the year. MRI Software needed to add employees to handle administrative functions previously provided by Intuit, the company that makes TurboTax and Quicken accounting software. The company also is hiring software developers, account executives and even a few recruiters. MRI Software expects to continue hiring, Mr. Post said, adding that customer demand appears to be improving with the economy. “It feels like things are going in the right direction,” he said. ■

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OCTOBER 11-17, 2010

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

It’s time, Ted

T

ed Strickland is a good man, but not a good governor. When put to the test, he dragged his feet in dealing with the big deficit Ohio faced when putting together its two-year budget in the spring and summer of 2009. Now, with an $8 billion hole staring the state in the face in its next biennial budget, Ohio can’t afford a governor who is hesitant to lead. We are not in love with Gov. Strickland’s Republican challenger, John Kasich. However, we believe Mr. Kasich is the better choice in this year’s election for governor, in part because he is unlikely to show the same reluctance to taking on a budget challenge that the incumbent displayed last year. The campaigns of these two men haven’t been impressive, nor have they been particularly forthright. It has been unfair of the Kasich campaign, for example, to lay at Gov. Strickland’s feet the loss of 400,000 jobs statewide over the last few years. The length and depth of the recession created a tidal wave of job losses that no occupant of the governor’s mansion could have stopped. However, it’s equally insincere for Gov. Strickland to proclaim that he managed to balance the budget without a tax increase despite the worst economic crisis since the Great Depression. The main reason the state made ends meet was because of billions of dollars of one-time federal stimulus money from the Obama administration. Even with that money, Gov. Strickland was left with a $900 million budget gap that he tried to fill with phantom revenue from the state’s expected share of the take from video slot machines that did not exist at Ohio’s seven horse race tracks. It was a flawed gambit, as the governor’s attempt to authorize the video slots as an extension of the Ohio Lottery was sure to face a court challenge, which it did. Three months into the budget year, he gave up on slots and was forced to raise revenue by postponing the last of five annual tax cuts that were scheduled during the administration of former Gov. Bob Taft. We would prefer not to see a replay of this thrashing about next year when addressing what will be an incredibly tough budget to balance, given that a big pot of stimulus money won’t be available next time around. Based on his performance last year, Gov. Strickland does not instill in us the confidence that he is up to the task. Mr. Kasich only has described in broad brush strokes how he’d tackle the looming deficit — stuff such as putting every program and agency under the microscope and not using one-time funds for recurring expenses. His lack of detail is disappointing. However, the former congressman brings with him the experience of serving as chairman of the House Budget Committee. The hope is that his knowledge would make Mr. Kasich better suited than the current governor to devise a budget game plan for Ohio. We’re obsessed with the budget because how it’s balanced will influence state support for education, health care, transportation and almost any other aspect of life in Ohio. We’d rather see John Kasich in charge of that assignment than Ted Strickland. It’s that simple.

FROM THE PUBLISHER

Next governor at major disadvantage

I

’ve asked it before: Who will be the be left for the next General Assembly and winner of next month’s gubernatogovernor to “concur that a promise has rial election — the loser? even been made” if that payment is A quizzical question, I admit. But shoved into the next biennial budget. the biennial budget that Ohio’s next So the higher ed institutions would governor and General Assembly will receive only 11 monthly payments, with confront is shaping up to be a bloodbath, the last one wedged into the next budget. and so far I haven’t read or heard Maybe. “It’s a cut,” state Sen. John anything concrete from either candidate Carey, R-Wellston, chair of the Senate about how they plan to staunch Finance Committee, told The the wounds. Dispatch. “There is no other BRIAN At a time when higher educa- TUCKER way to put it.” tion is more important than In this political season, the ever for Ohioans, the Strickland last thing a Strickland adminisadministration apparently is tration that pledged to help trying to delay $127 million in higher education wants to do is payments to state-supported, cut funding to these institutions higher education institutions so vital to our economic future. until the 2012 biennium. Wait Let’s face it. Any governor — we can’t find the money this unlucky enough to have his or budget year, so we’re going to her job in this Great Recession hope we can make it up in 2012? has faced a horrible set of circumstances Bruce Johnson is a former lieutenant that has little — perhaps nothing — to do governor who’s now president of the with party affiliation. Thousands of job Inter-University Council that represents losses have slashed income tax receipts the state’s 14 publicly supported four-year in a state that’s becoming steadily older colleges and universities. He told The and poorer, like the rest of the industriColumbus Dispatch last week that it would alized world.

That’s why I find it hard to understand why Eric Fingerhut, chancellor of higher education, is blocking Kent State University’s plan to sell bonds in a once-in-ageneration attempt to make badly needed repairs and renovations — as well as build a new home for its acclaimed architecture school. If done now, the university estimates it can save $57 million because of low-interest bond rates and one-time federal assistance. The chancellor, whom I’ve long respected, doesn’t want the university (at which I recently served as trustee) to levy student fees to pay off the bonds, and is rightly concerned that others might follow suit. But it appears there are no better options — given the rare circumstances presented at this point in time. Also, after the fees are fully phased in, Kent State likely still will be among the more affordable universities while also enhancing its place as a regional economic engine. The free market, rather than a limping state government, would then determine the university’s place in Ohio’s future, as it should. ■

LETTERS

NASA’s new plan offers Glenn opportunity ■ The NASA Authorization Act of 2010 is good news for the space community and for NASA Glenn Research Center. In fact, the Glenn Research Center is uniquely suited to take advantage of many of NASA’s new programs, and I applaud Congress for supporting this ambitious path forward. First, the fact that NASA now has an approved road map is definitely good news. The uncertainties of recent months have tested the resolve of those in the aerospace industry. The Glenn work force, however, has never ceased to focus on the job at hand and has safely and effectively continued to implement our nation’s space program. The president asked, and the authorizers approved, $19 billion for NASA for fiscal year 2011. While the appropriators will provide the specifics, this increase is a strong vote of confidence in these tough economic times.

The bill also supports the president’s proposal for reinvigorating NASA’s space technology mission. The program will likely include significant new opportunities for Glenn in areas of technology development such as advanced in-space propulsion and development of new engines that more efficiently use cryogenic fuels, electric propulsion or nuclear energy; advanced systems for energy generation, storage and distribution; and new techniques for in-situ resource utilization. Glenn has already been a pioneer in many of these areas, and NASA won’t be recreating the wheel here, but looking to build on existing expertise. The extension of the International Space Station to at least 2020 is also good news for Glenn. This will expand our focus on the station as a national lab to help us learn more about human health

in space and develop technologies relevant to long-term human exploration. Back in April, the president said in a speech at the Kennedy Space Center in Florida that he wanted NASA to develop a crew vehicle that would build on Orion’s features. The authorizers agreed, and Glenn will likely have a role in that work, as it has previously on Orion. These are just a few of the areas where the future of exploration is likely to touch the Cleveland area, with long-term benefits in jobs and a strong local pride that we will be contributing to national goals. This congressional direction is good news for NASA Glenn and Ohio. Ramon “Ray” Lugo Director NASA Glenn Research Center See LETTERS Page 9


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OCTOBER 11-17, 2010

9

THE BIG ISSUE Nationally, the personal savings rate is going up. Are you saving more? Why or why not?

SANDRA RICTOR

STEVEN RODGERS

ELISE MCKNIGHT

CAMILL UNDERWOOD

North Ridgeville

Brook Park

Berea

Cleveland

Yes, we have a savings account with a credit union. … We’re using it to pay bills and pay for vacations.

I’m saving more. I have to retire sometime, and I don’t want to live on credit cards.

I’m not. It’s just a time to stabilize what you have. I’m a single parent with four kids … Personal savings is not in the picture yet.

No, I’m not. Everything is expensive. You can’t save money anywhere. … You know that when milk goes up to $3.

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Push on to trim chronic care spending

Senior Vice President Commercial Banking

Providers would finance programs with help from insurers, companies

440.953.3614

By TIMOTHY MAGAW tmagaw@crain.com

A nonprofit coalition of health care professionals is working with local insurers and companies to get them to pay medical providers a few extra bucks per patient Cebul to help finance programs that ultimately would help keep people with chronic diseases out of hospitals. The goal, the project leaders say, is to chip away at the $4 billion spent on hospital visits by patients with chronic diseases such as diabetes, hypertension and heart failure. Most of these emergency hospital visits, they say, could be avoided if people properly cared for their conditions. “That’s a non-trivial amount of money. That money could be used for a variety of services,” said Dr. Randall Cebul, the director of Better Health Greater Cleveland, the group spearheading the initiative. Thus far, about half the major insurance groups and companies contacted by Better Health Greater Cleveland have signed on to the initiative. Dr. Cebul noted that it’s important to get all of them on board because all patients are going to benefit — not just the ones from a

specific insurance provider. Medical Mutual of Ohio, UnitedHealthcare, CareSource and Kaiser Permanente have signed on to the initiative, and project leaders say they’ve also gotten signals of support from Medicaid and the Ohio Coverage and Quality Council. They’re still in talks with Buckeye Community Health Plan, Anthem and Aetna, which have yet to come on board. Aetna spokesman Scot Roskelley said in an e-mailed statement that Aetna has signed on to similar projects elsewhere in the country and is awaiting results from those before signing on to others. “Until we have further data from these pilot projects, we are limiting our involvement in these types of projects,” Mr. Roskelley wrote. These types of projects focus on reinvigorating primary care while simultaneously controlling costs. Some of the measures that could be implemented with the extra money would offer more coordinated care and patient follow-ups. They also could include hiring additional staff such as nurse practitioners. “The idea is that if they were

managed appropriately with more patient engagement as well as some other measures to coordinate their care, that would reduce those costs,” said Diane Solov, program manager for Better Health Greater Cleveland. Tom Campanella, a longtime health care observer and executive director of the health care MBA program at Baldwin-Wallace College, said similar initiatives throughout the country are focused on elevating primary care toward a “much more dominant role in health care.” “If they focus on prevention, play a lead role in wellness, have a team approach with staff and a lot of education, hopefully we’ll be in a position where people don’t get sick in the first place,” Mr. Campanella said. Meanwhile, Better Health Greater Cleveland is involved with other initiatives aimed at boosting the overall health of the region. The group, for instance, is focused on using data from electronic medical records to drive improvements in care delivery and clinical outcomes. It also coordinates a regionwide learning collaborative, which Dr. Cebul said offers health care professionals the opportunity “rub elbows” and share the best practices for delivering care. ■

LETTERS continued from PAGE 8

Big environmental impact ■ Thank you, Crain’s, for a memorable evening for Ruffing Montessori School at your Emerald Awards Recognition Event. The party was exceptionally welcoming and a wonderful opportunity to meet others working for sustainability. Of course, the evening’s highlight was the receipt of the Emerald Award in our category. Ruffing is a small school, but we work to have a large impact. We are firmly committed to our mission of being a safe and smart school for the future. Families who aspire to these values are keenly interested in being part of our school community. A key part of our mission is to work to spread the word about the importance of sustainable living,

through our programs and, most importantly, in our curriculum. Receiving this honor from Crain’s is a significant and prestigious honor for us. Gordon L. Maas Head of school Ruffing Montessori School

South Euclid goes green ■ I am writing to express my deep appreciation for the selection of the city of South Euclid as a finalist for the Crain’s 2010 Emerald Awards. I know it is very rare for a municipality to even apply, let alone be selected as a finalist, and for that I would like to thank you. This selection as a finalist also serves to publicize our Green Neighborhoods Initiative. A countless number of

community stakeholders have now been exposed to South Euclid’s efforts to embrace a sustainable economy. Housing manager Sally Martin and housing programs coordinator Tracie Zamiska have worked tirelessly to make the Green Neighborhoods Initiative a reality and being named a finalist for the Emerald Awards serves to validate all their hard work. I would also like to thank the Natural History Museum and your fellow sponsors for a wonderful reception. It was great to meet all the other finalists and truly see firsthand how the Northeast Ohio region is transitioning to a 21st-century economy. Georgine Welo Mayor South Euclid

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Crisis communication more a focus at area PR firms Citizens Bank Falls joins those responding to market demand By KATHY AMES CARR kcarr@crain.com

Falls Communications today, Oct. 11, officially launches a new division of its business that aims to shape long-term strategies for clients that have endured crises ranging from employee layoffs to bankruptcy filings. The Cleveland public relations firm created the business and reputation management group in response to some clients’ growing concerns about how various negative issues affect their organization’s image and their bottom line. “We’re responding to the marketplace,” said Robert Falls, president and CEO. “We’re trying to be more proactive with clients to ensure their sustainability.” Other local public relations firms that specialize in crisis communications, say they, too, are hearing more from clients wanting to make

sure longer-term counseling and crisis prevention practices are in place. To tackle the potential increase in business, Mr. Falls since last spring has been putting together a team of four communications veterans with various strengths that include finance and public affairs. The team already has been working over the summer with at least a half-dozen of the firm’s 35 or so clients — particularly in the legal and financial industries — on enterprise business strategies and expects that part of the business to grow as the public relations firm reaches out to existing and new clients throughout Ohio. The new division also is helping the firm reach projected 2010 revenue growth of 12% to 15% from 2009, Mr. Falls said. “Our intention is to have more than a Midwest presence,” he said. “I anticipate this business to grow rapidly.” Typically, crisis management is

pretty episodic. Something bad happens, such as mass layoffs at a manufacturing plant. The message then is communicated and mitigated, and then it’s time to move on. The business and reputation management group will function more like a long-term retainer for companies who need to repair and reshape their image after a crisis hits. The new group will aim to make sure that client has certain policies in place to determine the cause of the problem and identify whether any organizational and structural changes need to be made to prevent something bad from reoccurring. The individuals whose roles will help round out the extension of Mr. Falls’ crisis communications department are: Kevin Donahue, managing director; Ronald Fountain, executive counsel; Elizabeth Krouse, vice president; and John Znidarsic, senior account executive. “We believe we’ve made a significant, well-thought-out investment that has already paid off,” Mr. Falls said. Meanwhile, Dix & Eaton, North-

east Ohio’s largest public relations firm, has noticed an uptick in its crisis communications work, and finds itself working more comprehensively on certain clients’ longerterm strategies. “Financial services is a big area, as well as hospital systems’ because of health care reform, and manufacturing,” said Matt Barkett, managing director of the crisis communications practice. Kathleen Obert, managing director of Columbus-based Fahlgren Inc., says reputation management work within the Cleveland office of Fahlgren Mortine Public Relations, formerly Edward Howard, continues to increase as corporate entities undergo further scrutiny from both the government and media that include bloggers and citizen journalists. The phones also are “ringing off the hook” for Cleveland-based Hennes Paynter Communications — whose sole focus is crisis communications — while the three-person staff has had to turn away business, said partner Barbara Paynter. ■

reinstates NE Ohio post By MICHELLE PARK mpark@crain.com

Nearly a year after it did away with the job of regional president for Northeast Ohio, Citizens Bank of Flint, Mich., has created the position of Ohio district president in the hope of boosting its business in the region. Jamie Lynch, who most recently oversaw health care lending for all of Citizens Bank, started the new job Sept. 7. He reports to the president of the bank’s Southeast Michigan and Ohio region. The district president position was created because Citizens Bank officials view Cleveland as a place where the bank can grow, said Clinton Sampson, executive vice president of Citizens Bank, which is part of Citizens Republic Bancorp Inc. “We needed to give greater focus to the Cleveland market, and we needed a strong leader in that market,” said Mr. Sampson, former Northeast Ohio president for the former Bank One. “There are great businesses there. There are great consumers there. We’ve got 14 branches; it’s time to raise the bar on performance.” Citizens Bank entered the Cleveland market when it bought Republic Bank in 2006. Mr. Sampson said Northeast Ohio was too small to be considered a region at Citizens Bank, so it eliminated its regional president position in October 2009 and consolidated its Ohio operations with those in Southeast Michigan. However, the Northeast Ohio region is not too small to be a district led by a district president, Mr. Sampson said in explaining the new, “very similar” position. Bank executives are happy with the district’s performance, but believe growth is possible, particularly because industrial and commercial businesses such as those in Northeast Ohio are “really our sweet spot,” Mr. Sampson said. However, no new branches are planned in the Ohio district, which is “profitable and doing well,” Mr. Lynch said. Mr. Lynch has worked for Citizens Bank since 2007, when he became senior vice president and commercial banking manager for the Ohio region. His role later changed to commercial banking manager responsible for the health care finance group for the bank, which has locations in Ohio, Michigan and Wisconsin. The salary for his new role was not disclosed. From the company’s Ohio headquarters in Warrensville Heights, Mr. Lynch, 42, will oversee the bank’s 14 local branches, most of which are located in Cleveland suburbs, including Middleburg Heights, North Olmsted and Strongsville. Two branches are in Fairlawn and Medina, too. Mr. Lynch’s goal is to grow several business lines, including mortgage lending, and manage internal expenses. Increasing loans to both businesses and consumers and growing deposits are a “major charge” of his position, he said, as is managing the existing client base. Mr. Lynch said he will measure his success based on internal performance reports and also by branch activities and the net growth in loan balances — “the number of new names we’re able to bring to the table.” ■


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SMALL BUSINESS

INSIDE

14 BUSINESSES CAN BENEFIT FROM PAYROLL TAX CREDITS.

Bed bugs may bite into more than skin Exterminators say that eliminating the pests can be a tough job By AMY ANN STOESSEL astoessel@crain.com

I MARC GOLUB

Mark Sims, president of Sims Chevrolet in Lyndhurst, says his dealership remains profitable this year despite an overall punch last year to auto sales nationwide. He credits the dealership’s financial position primarily to focusing on selling used cars.

A SIGN OF THE TIMES Local auto dealers learn how to roll through tough year in sales by shifting some focus to selling used cars, other products By STAN BULLARD sbullard@crain.com

M

ark Sims, president of Sims Chevrolet in Lyndhurst, said he believes he’s “in a completely different industry” since the big 2008 downturn in the auto business, bankruptcy reorganization by General Motors Corp. and Chrysler Corp., and massive downsizing of dealer ranks. “Things have changed so much,” Mr. Sims said. Although year-to-date auto sales are up 10% through September from the like period last year, dealers still are recovering from 2009, the weakest year in nearly two decades. Making money takes a different set of skills than simply moving cars based on how hot they are. Sims Chevrolet remained profitable this year and last, but Mr. Sims credits that primarily to its used-car sales. Although things are better for dealers than last year, and many dealers are

more optimistic about the future than they were a year ago, challenges remain. The dealership shakeout will continue, in part due to Ford Motor Co.’s decision to drop its Mercury line and emerging reports that it intends to slash the number of Lincoln dealers nationally. Estimates of the bloodletting among local auto dealers are imprecise. Louis Vitantonio, president of the Greater Cleveland Automobile Dealers’ Association, estimates that fewer than 15 of the association’s 255 members closed in the last year, but he cautions that number still is in flux. Jeff Sherman, a partner at the Willoughby-based Sherman-Andrzejczyk appraisal firm, said online realty data provider CoStar shows a 9% vacancy rate among the region’s car dealership properties, compared to an all-time low of 4% in 2006. Vacancy peaked at 12% at the end of June, he said, and since has fallen as other dealerships take over empty stores and new owners convert them to See AUTO Page 12

ncidences of bed bugs are on the rise in Northeast Ohio, and exterminators are busy with new work from the bloodsucking squatters. Even so, there’s something that’s been bugging some local pest managers: Is the bed-bug business worth all of the time, energy and investment involved? “It’s an uptick in business,” said John Gedeon Jr., president and general manager of General Pest Control Co. in Cleveland. “But we’re still trying to figure out if it’s a profitable uptick.” That’s because bed bugs are tough little critters, often resistant to conventional methods that are available to exterminators. From a business perspective, that can mean new equipment, employee training and labor-intensive, repeated visits to customers. Rick Novickis, supervisor of environmental health services at the Cuyahoga County Board of Health, said his department this year has responded to 50 bed-bug complaints compared with 39 complaints for all of 2009. He expects that by year’s end his office will end up having investigated 100 complaints, in addition to “dozens and dozens of calls.” In response to the uptick in cases, the Cuyahoga County Board of Health, the Cleveland Department of Public Health and the Cleveland Museum of Natural History are hosting a Bed Bug Symposium on Nov. 4. “Bed-bug infestations can run into the thousands of dollars,” Mr. Novickis said. “It can spiral quickly.” Indeed, according to a recent survey by the National Pest Management Association and the University of Kentucky, 76% of pest control managers say bed bugs are the most difficult pest to treat. “I know that not everybody is prepared for them,” Mr. Novickis said. “It’s just amazing. … It just seemed to have gotten here faster than anticipated.”

Bugged out General Pest’s Mr. Gedeon said while he’s seen a definite increase in the parasites over the past five See BUGS Page 12


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SMALL BUSINESS

Auto: Arbitration process helped continued from PAGE 11

new uses, from tire stores to offices. “We’re still shedding dealerships, and will for some time,” Mr. Sherman said.

Cautiously optimistic Even against that backdrop, confidence is greater than last year. Consider the way Nick Mayer, principal of the Nick Mayer Lincoln-Mercury Inc. dealership in Westlake, looks at the future. “I’m very excited,” Mr. Mayer said. “I’m also scared to death.” He estimates the loss of the Mercury brand will cut his business by 60%. However, he focuses on the benefit of Ford already cutting six luxury lines such as Jaguar from its business. “What gets me excited is Ford focusing on the blue oval again,” said Mr. Mayer, who expects to survive the Lincoln dealer downsizing. He also hopes the automaker will reward his labors with a larger, lively lineup of distinct vehicles under the Lincoln label. Meanwhile, Mr. Mayer said, it is the responsibility of the dealership owner to steer the ship to safety. “When the forecast is for a storm, you prepare for it. It was the same thing for a business owner in this economy,” Mr. Mayer said. At the 38-employee Westlake dealership, the approach was to

emphasize used cars, slash advertising costs rather than staff and add a “Quick Lane Tire & Auto Center” in the dealership to compete directly with auto repair shops. “If a guy comes in with a Toyota for an oil change,” Mr. Mayer said, “what is he going to do? He’ll look around our dealership. We have a chance to wow him with our Lincolns.” One reason dealers are faring better was last December’s federal action to set up an arbitration process for auto dealers being cut by Chrysler and GM. Alan Spitzer, chairman of Elyria-based Spitzer Auto Group, played a leadership role in that effort he compared to “climbing a mountain against GM, Chrysler and the White House.” “More than half the dealers nationally benefited from the act,” Mr. Spitzer said. In Spitzer’s case, the 18-store chain wound up with four fewer stores. Mr. Spitzer expects to gain two more stores in locations outside Cleveland this year — a far different outcome than the 10 dealerships GM and Chrysler wanted to shed from his group. Spitzer wound up retaining its Chrysler Dodge dealerships in Parma and Akron. Mr. Spitzer expects deliveries of new cars to resume at both locations later this month. However, it will spend “six figures” to renovate the Parma

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dealership to Chrysler’s current specifications. Spitzer also will replace the Akron store with a new one on a site it owns in Green. After securing Chrysler approval of its designs, Spitzer hopes to begin building the new Green dealership later this year. “We’re bullish about the future,” Mr. Spitzer said. “We’re more optimistic about the auto business than in some time.” Mr. Spitzer and other dealers expect diminished auto retailer ranks to reap improved results whenever car sales return to normal levels.

No bed of roses However, problems remain. Beyond high unemployment continuing to sap consumer confidence, credit remains an issue for buyers. “Credit availability is better than any time since 2008,” Mr. Spitzer said. “But it has improved marginally. It is nowhere that we need it to be.” Likewise, Mr. Sims said, lack of available credit is “absolutely an issue.” He said on a new car averaging $24,000, many buyers with credit scores of 600 have trouble financing the entire amount; they often settle for used vehicles costing $15,000. Another challenge is inventory. Mr. Sims has not gotten a new Chevy Cruze yet, but GM is heavily promoting the new car on TV. “They’d be better off promoting it with word of mouth,” Mr. Sims said. Many dealers see reduced inventory levels as part of the reshaping of the auto industry in the U.S. because automakers want to produce fewer vehicles to maintain profitability. In Nick Mayer’s case, the dealer carries a 45-day inventory of new cars compared to three months of inventory prior to 2008. Ed Babcock, the owner of Junction Buick GMC — now shy the Pontiac name — in Chardon, said dealers are having to adjust to a change from the old days when factories operated on a “push basis and shoved product down our throats” to a pull basis where new cars arrive after floor models sell. Mr. Babcock said his great grandfather started the business in 1931. He is the fourth generation to cope with its cycles. “During World War II we did not have any new vehicles to sell,” Mr. Babcock said. “I was here in 1980 when we did not sell many vehicles because of high interest rates. You try to be smart and don’t overextend.” ■

Bugs: Many anticipate pest problems only will get worse continued from PAGE 11

years, “last year it just took off.” The 35-employee family business founded in 1937 works with a lot of apartment buildings, hotels and motels, incorporating a combination of treatments, including chemicals, vacuuming and steam. Over the last three years, General Pest has addressed bed bugs at 230 buildings, both apartments and hotels. “We’re one company in the market. … Look what we have touched,” he said. One of the methods considered to be effective in treating bed bugs is the use of heating equipment, which can cost an exterminator anywhere from $25,000 to $60,000 to purchase. Anything over 113 degrees is considered lethal for a bed bug, Mr. Gedeon said. General Pest recently invested close to $30,000 on such equipment, and over the past two years it has hired six employees to handle bed bugs. Mr. Gedeon said for an apartment owner, the cost of treatment can run from $350 to $600 per suite. “That’s where the money really gets to be an issue,” he said, stressing that it also depends on the building’s residents. “It’s very easy for bed bugs to re-infest.” Female bed bugs lay from one to 12 eggs a day; and while bed bug eggs can be hard to spot, adults are brown to reddish-brown, oval shaped and flattened. (Of course, their bodies can become elongated, swollen and dark red following a tasty late-night snack at your expense.) For his part, William P. Kirchner of Cleveland Chemical Pest Control is not necessarily complaining about the bed bug work his firm is seeing, but he stresses it is very labor intensive, and involves tearing apart a room and moving furniture. For a typical single-family home, a job could amount to anywhere from three to eight man hours, using a two-man crew. “Granted, it’s more business, everybody’s making more money,” he said. “But we have other areas where we can make more money.”

They don’t have to bite No one quite knows why bed bugs are making such a grand return: Some point to increased travel, others to the re-use of furniture. Still others say the rise in bed bugs can be attributed to restrictions on the use of certain chemicals. And despite industry efforts, the U.S. EPA has not changed its

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PATRA 28601 Chagrin Blvd., Suite 705 Woodmere 44122 www.patradesigns.com Durga Chigurupati, owner of event design company Adhya Productions, has opened Patra, an upscale stationery and floral boutique at Eton Chagrin Boulevard. Featured merchandise includes hand-engraved stationery from all over the world, greeting cards, journals, custom invitations and gift wrapping, as well as floral arrangements. Store hours are 10 a.m. to 6

p.m., Monday, Tuesday, Wednesday and Friday; 10 a.m. to 8 p.m. Thursday; and 10 a.m. to 5 p.m. Saturday. 216-342-1420 info@patradesigns.com

THE BLACK ORCHID ACCESSORIES & MORE 28450 Chagrin Blvd. Woodmere 44122 www.theblackorchidaccessories.com Corinne Dodero has opened a women’s accessories boutique featuring a variety of items, including one-of-a-kind

policies to respond to the current resurgence. “Until the EPA gets an effective product in the hands of the public, it’s going to get nothing but worse,” said Mr. Kirchner, who also is past president of the Ohio Pest Management Association. In the meantime, Todd Anderson, owner of A-Best Termite and Pest Control, which does business in the Akron and Ravenna areas, thinks he and a friend may have cooked up way to get some extra business out of the little buggers. Along with Tom Shetler of Action Now Pest Control in Strasburg, Mr. Anderson has designed a mobile heat unit, which is a 16-foot trailer that makes it possible to turn up the heat on items emptied from an infested room. Mr. Anderson, who invested $12,000 on his trailer, which is still in production, said using the mobile unit could be less expensive for a customer (a conventional heat treatment can cost a customer a couple thousand dollars), and it could help alleviate the problems associated with bed bugs moving from room to room when they sense an increase in temperature. The hope is that eventually the trailer could be marketed to others in the industry. In the first six months of this year, A-Best Termite and Pest Control responded to 24 cases of bed bugs in comparison to four in all of 2009. In addition, his eightperson staff also has been conducting inspections and training for hotels. “We really feel in this industry this is the tip of the iceberg,” said Mr. Anderson.

Hard to sleep tight Molly Patton, chief operating officer of Patton Pest Control in Chagrin Falls, hasn’t treated many cases, but her business is taking on average three phone calls a day about bed bugs, and has done 25 to 30 inspections so far this year. Universally, local pest managers say bed bugs are starting to get under people’s skin, so to speak. “You don’t have to be embarrassed,” Ms. Patton said. “The richest people can have them and the poorest people can have them.” And while bed begs don’t carry any known diseases, they are still taking a toll. “It has turned into a public health issue from the mental side of it,” Mr. Kirchner said. “If they’re in your house, they’re going to find you.” ■ jewelry pieces, wardrobe accessories, purses, hats, scarves and pieces designed by local artists. The Black Orchid carries lounge wear by David and Goliath, necklaces by Dog Eared, dresses by Judith March and The House of Harlow jewelry collection by Nicole Richie. 216-464-4444 theblackorchid@sbcglobal.net To submit a new business, send the following information by e-mail to astoessel@crain.com: business name; address; city and ZIP; web site; description of business; phone number; fax number; business e-mail address; and date that business opened.


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WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS 13

SMALL BUSINESS

Review strategy before shifting marketing approach

B

efore you invest more in marketing, take another look at your business strategy. We’ve worked with many clients who want to grow their businesses. Often they’ve underinvested in marketing and then decide that to meet their goals, they need to spend more. However, marketing the wrong messages or using the wrong media tools wastes valuable time and money. Sure, it’s important to advertise to attract buyers, but that’s often not the first step in the process. Instead, understanding what your target audience wants and being able to deliver it comes first. After completing inexpensive and quick consumer research, our clients often learn that they need to refine their business strategy before developing a “new or improved” marketing plan. Here are three real world lessons learned by other Cleveland businesses: ■ Real life lesson No. 1: The Power of Speed. A manufacturing company was growing and profitable but had never put a lot of energy into marketing. After being badgered by the board for the company’s unsophisticated marketing program, the CEO decided to invest more heavily in advertising. The company engaged an ad agency and attempted to provide direction regarding what they wanted the advertising to communicate. This effort was wasted when the CEO quickly realized that they didn’t know what messages to include in their advertising. After this initial misstep, and with the help of a third party, they devised a streamlined research plan to hear, firsthand, what their prospects cared about. While the CEO was convinced that he knew what they would say, he was surprised at the study’s findings. Prospects shared more about their perceptions of the company, its service and products with the thirdparty researcher than they had with the CEO or sales manager over many years. The research identified a key insight that dramatically influenced the future of the company. They learned that speed matters. Prospects were clamoring for a company to provide fast delivery. So, the CEO changed its inventory strategy and manufacturing operations to ship faster. Only after this change was implemented was the company ready to invest in marketing. By conducting research before embarking on advertising, our client was able to identify a message that resonated with its audience and differentiated its brand from competitors. ■ Real life lesson No. 2: The Importance of Quality. A medical device company’s sales were sluggish and they decided to focus on marketing. As a first step, they chose to conduct research to identify what was important to their target audience. They also probed to find out how their prospects wanted to receive their messages. Should their ads appear on TV, radio, the Internet, cell phones or in ways they may not have considered? Once again, customer research led to uncovering a major customer insight which resulted in the CEO

modifying his initial plan. During one-on-one phone interviews with a third-party researcher, customers and prospects talked about their need for quality products. They also explained that this particular company had a reputation for delivering products with inconsistent quality. The CEO took the research results seriously and the marketing planning went on the back burner. Improvements to the company’s manufacturing processes and intense customer service training were implemented. After making quantified progress on product quality, the company was ready to

LAURASHERIDAN

ADVISER begin marketing. ■ Real life lesson No. 3: The Value of Focus. A specialty consumer goods manufacturing firm had designed a new product and was

ready to develop a marketing plan. Unsure of which of the new product features to promote in its advertising, the company opted to conduct multiple online surveys. The investment of a few weeks and the minimal budget required to conduct the research turned out to be vital to the brand’s continued success. The key insight uncovered with research was that the brand’s success was tied to being a niche player. The new product, however, targeted a mass audience. Consumers were clear in their research responses. Part of the brand’s appeal was its exclusivity.

So, offering a product for a mass audience would confuse and alienate their loyal customer base. The company abandoned the new product and focused its engineering and design expertise exclusively on products that fit its niche. How do these real life lessons apply to your business? If you’re itching to put more energy into your marketing, re-examine your business strategy first. And, don’t forget to check in with your customers before getting started to ensure you understand what’s important to them. ■ Ms. Sheridan is president of Viva La Brand, a Cleveland-based marketing strategy and ad agency search firm. www.vivalabrand.com.


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14 CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

OCTOBER 11-17, 2010

SMALL BUSINESS

IRS offers insight on payroll tax credits for new hires

W

ith the economy finally showing signs of life in certain sectors, some employers are beginning to evaluate whether now is the time to begin hiring new employees. The IRS recently issued a list of frequently asked questions relating to the 2010 payroll tax credit for hiring unemployed workers, and the related tax credit for retaining these workers. The FAQs provide important guidance on critical issues relating to the availability of both the

payroll tax exemption and the tax credit. Legislation enacted earlier this year provides for a payroll tax exemption for employers who hire unemployed workers, and a tax credit of up to $1,000 for retaining these new hires for at least one year. The tax savings from these two programs potentially is significant. The Treasury Department has estimated that, through June, employers who hired workers eligible for the payroll tax exemption would, in the aggregate, save

CARLGRASSI

TAX TIPS over $10 billion, assuming 75% of those workers were employed for the full year required to take advantage of the tax credit.

The employment tax exemption applies to the employer’s 6.2% share of the Social Security tax on wages paid to qualified employees from March 19 through the end of the year. A qualified employee is a previously unemployed individual who began employment after Feb. 3 and before the end of this year. The employee will qualify for the payroll tax exemption if he or she has not been employed for more than 40 hours during the 60-day period ending on the date employment begins. The worker must certify by signed affidavit under

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penalties of perjury that this is the case. The FAQs make it clear that work performed as a self-employed individual does not count in determining whether the worker has met this test. The FAQs on the payroll tax exemption provide guidance in the areas of hiring employees who were formerly terminated and employees who are replacing a former employee. For instance, the FAQs make it clear that individuals who have been on furlough or have been subject to a temporary layoff can be qualified employees when they resume active status as long as the furlough or temporary layoff constituted a termination of employment and, upon hiring, the requirements to be a qualified employee as noted above are satisfied. Obviously, the IRS doesn’t want the tax benefits to create an incentive to terminate an employee for the sole purpose of hiring a new employee in order to get the credit. A new hire who replaces a former employee can be a qualified employee if the employee whose position is being filled either terminated employment voluntarily; was terminated for misconduct or poor performance; or was terminated as part of a reduction in force due to lack of work. The FAQs also provide guidance on the credit for retaining new hires. The amount of the credit is the lesser of $1,000 or 6.2% of wages, as defined for income tax withholding purposes. In order to receive this credit, the employment relationship of the newly hired employee must not be terminated during the 52-week period after hire. The wages paid for the second half of the year must be at least 80% of the wages for the first half. The IRS has made several clarifications regarding this credit. First, there is the potential for an employer to receive multiple credits for the same employee. The FAQs make it clear, for example, that an employer who claims the “work opportunity tax credit” for a particular employee also can take the new hire retention credit. The FAQs also make it clear that in addition to the requirement that the employee must be retained for 52 weeks in order to claim the credit, the employee must be hired before Jan. 1, 2011. Since the credit only can be claimed for the first taxable year in which the retained worker satisfies the 52 consecutive week test, for calendar-year businesses the credit will be taken on the 2011 tax return. Both the payroll tax exemption and the credit for the retention of newly hired individuals provide a significant tax benefit for employers considering an increase in their work force. At the same time, employers should pay careful attention to the qualification rules and recordkeeping requirements to ensure they receive the benefits of these ■ programs. Mr. Grassi is a member and president of McDonald Hopkins LLC.


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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

GOING PLACES

NONPROFIT

controller, corporate.

Fowler to vice presidents; Mary Ann Stropkey to treasurer.

TRANSPORTATION

NATIONAL ASSOCIATION OF PERSONAL FINANCIAL ADVISORS, MIDWEST BOARD: Barbara Camaglia (Legacy Financial Advisors LLC) to president.

director of client services.

CLEVELAND LEADERSHIP CENTER: Marianne Crosley to president, CEO.

ZINNER & CO.: Andrea Sheets to tax manager.

UNIVERSITY CIRCLE INC.: Erika McLaughlin to public affairs manager.

GREATER CLEVELAND REGIONAL TRANSIT AUTHORITY: Mary McCahon to media relations manager.

HEALTH CARE

REAL ESTATE

BOARDS

JONES LANG LASALLE: Steve Scheer to senior manager, Project and Development Services.

APICS CLEVELAND CHAPTER: Dennis Okocha (Henkel Corp.) to president.

FINANCIAL SERVICE

SUMMA HEALTH SYSTEM: Tom DeBord to president, Summa Barberton Hospital and Summa Wadsworth-Rittman Hospital.

MORGAN STANLEY SMITH BARNEY: Eve Moss to financial adviser.

INSURANCE

JOB CHANGES EDUCATION NORTHEASTERN OHIO UNIVERSITIES COLLEGES OF MEDICINE AND PHARMACY: Dr. Jeffrey l. Susman to dean, College of Medicine.

PARKLAND FINANCIAL ADVISORS LLC: Nicoleta Bortan to vice president.

MEDICAL MUTUAL OF OHIO: Dan Polk to director, sales and broker relations.

MANUFACTURING FABER-CASTELL USA: Susan Mintmire to national sales manager, craft market; Rebecca Adkins to human resources manager.

Susman

Bortan

Dombcik

Goldberg

Polk

Mintmire

Adkins

McLaughlin Scheer

Kistler

Taylor

Burgess

SS&G: Tina Holyak, Megan Bair and Christopher Kerr to senior associates; Tracey Campbell to billing senior associate; Heather Ross to operations manager; Robert Thorne II to project manager/analyst; Matt Keppler to operations senior associate. WEALTH STRATEGIC ADVISORS LLC: Shari Dombcik to director of operations; Laurel Goldberg to

GET DAILY NEWS ALERTS FROM CRAIN’S ! Register for free e-mail alerts and receive: ■ The Morning Roundup: A collection of the day’s business news from Ohio’s daily papers ■ Breaking news alerts: When major news happens, you’ll know ■ Daily headlines: A collection of Crain’s-produced news and blog items from the day ■ e!Cleveland: A weekly guide to arts and leisure in Northeast Ohio

SIGN UP NOW AT: CrainsCleveland.com/register ■ Crain’s on Twitter: @CrainsCleveland ■ Crain’s on Facebook: Facebook.com/CrainsCleveland

OPTIMA VENTURES LLC: Margaret Toth to chief financial officer.

RETAIL COLLECTION AUTO GROUP: Rob Kistler to vice president, CFO.

UTILITY FIRSTENERGY CORP.: Jon Taylor to assistant controller, FirstEnergy Utilities; Kevin Burgess to assistant

15

BEECH BROOK: Bari Goggins (Ulmer & Berne) to chairman; Nancy Klein and Walter Stuelpe to vice co-chairs, administration; Kathy Pender and Jane Outcalt to vice co-chairs, development; Tom Seifert to vice chair, finance and treasurer. MUSEUM OF CONTEMPORARY ART CLEVELAND: Scott Mueller (Dealer Tire) to chairman; Ronald H. Neill to president; Toby Lewis, Harriet L. Warm and Charlotte

AWARDS ARTHRITIS FOUNDATION NORTHEASTERN OHIO CHAPTER: Ronald B. Richard (Cleveland Foundation) received a Community Leader of the Year Award. OHIO HOTEL & LODGING ASSOCIATION: Michael Cooper (InterContinental Hotels Cleveland) received the Cleveland Area Manager of the Year Award.

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


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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

OCTOBER 11-17, 2010

LARGEST ACCOUNTING FIRMS RANKED BY NUMBER OF LOCAL CPAS

Name Address Rank Phone/Web site

Number of local CPAs 8/31/2010

8/31/2009

% change

Number of degreed professionals 8/31/2010

Practice personnel engaged in

Full-time permanent employees

Auditaccounting

Tax

Consulting

Other

Top local executive Title

1

Ernst & Young LLP 925 Euclid Ave., Suite 1300, Cleveland 44115 (216) 861-5000/www.ey.com

222

234

-5.1%

801

995

376

116

NA

503

Donald T. Misheff Northeast Ohio managing partner

2

PricewaterhouseCoopers LLP 200 Public Square, 18th floor, Cleveland 44114 (216) 875-3000/www.pwc.com

161

155

3.9%

285

299

180

85

0

44

Bob Saada, Lake Erie Market and Cleveland office managing partner

3

Deloitte 127 Public Square, Cleveland 44114 (216) 589-1300/www.deloitte.com

130

130

0.0%

400

442

121

61

188

4

Craig Donnan managing partner

4

SS&G 32125 Solon Road, Cleveland 44139 (440) 248-8787/www.ssandg.com

113

112

0.9%

357

329

91

81

164

66

Gary S. Shamis managing director

5

KPMG LLP 1375 E. Ninth St., Suite 2600, Cleveland 44114 (216) 696-9100/www.us.kpmg.com

100

90

11.1%

165

175

70

10

85

10

John S. MacIntosh managing partner

6

Cohen & Co. 1350 Euclid Ave., Suite 800, Cleveland 44115 (216) 579-1040/www.cohencpa.com

96

89

7.9%

169

183

75

44

36

28

Randall S. Myeroff president, CEO

7

Meaden & Moore LLP 1100 Superior Ave., Suite 1100, Cleveland 44114 (216) 241-3272/www.meadenmoore.com

80

78

2.6%

156

124

58

36

54

22

James P. Carulas CEO

8

Maloney + Novotny LLC 1111 Superior Ave., seventh floor, Cleveland 44114 (216) 363-0100/www.maloneynovotny.com

67

59

13.6%

93

120

80

22

6

12

Matthew J. Maloney managing shareholder

9

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

56

53

5.7%

136

188

29

18

49

119

Steven L. Gerard chairman, CEO

10

Skoda Minotti 6685 Beta Drive, Mayfield Village 44143 (440) 449-6800/www.skodaminotti.com

55

54

1.9%

104

120

59

23

27

11

Gregory J. Skoda chairman

11

Bruner-Cox LLP 388 S. Main St., Suite 403, Akron 44311 (330) 376-0100/www.brunercox.com

50

50

0.0%

83

102

31

32

20

19

Ronald J. Manse managing partner

12

Grant Thornton LLP 1228 Euclid Ave., Suite 800, Cleveland 44115 (216) 771-1400/www.grantthornton.com

48

54

-11.1%

85

95

50

25

7

10

Daniel S. Zittnan managing partner

NEW TAX-SAVING OPPORTUNITIES Register for a free seminar: http://clevelandtaxseminar.plantemoran.com

Number of local CPAs Name Address Rank Phone/Web site

Practice personnel engaged in

8/31/2010

8/31/2009

% change

Number of degreed professionals 8/31/2010

Full-time permanent employees

Auditaccounting

Tax

Consulting

Other

Top local executive Title

13

RSM McGladrey/McGladrey & Pullen LLP 1001 Lakeside Ave., Suite 1400, Cleveland 44114 (216) 523-1900/www.mcgladrey.com

45

58

-22.4%

65

77

42

18

1

15

Jim Grigg Donna Sciarappa managing directors

14

Apple Growth Partners 1540 W. Market St., Akron 44313 (330) 867-7350/www.applegrowth.com

38

39

-2.6%

82

90

33

43

40

22

David J. Gaino chairman

14

Hill Barth & King 7680 Market St., Boardman 44512 (330) 758-8613/www.hbkcpa.com

38

34

11.8%

56

84

NA

NA

NA

NA

Phillip L. Wilson COO

16

Howard, Wershbale & Co. 23240 Chagrin Blvd., Cleveland 44122 (216) 831-1200/www.hwco.com

37

35

5.7%

68

75

25

12

22

9

17

Bober, Markey, Fedorovich & Co. 3421 Ridgewood Road, Suite 300, Akron 44333 (330) 762-9785/www.bobermarkey.com

35

32

9.4%

65

70

42

18

5

NA

18

Ciuni & Panichi Inc. 25201 Chagrin Blvd., Suite 200, Cleveland 44122 (216) 831-7171/www.cp-advisors.com

34

31

9.7%

53

60

30

13

10

7

Charles M. Ciuni chairman

19

Barnes Wendling CPAs Inc. 1215 Superior Ave., Suite 400, Cleveland 44114 (216) 566-9000/www.barneswendling.com

32

36

-11.1%

65

75

42

35

10

16

Jeffrey D. Neuman president

19

Walthall Drake & Wallace LLP 6300 Rockside Road, Suite 100, Cleveland 44131 (216) 573-2330/www.walthall.com

32

33

-3.0%

42

48

30

8

3

1

Richard T. Lash chairman

21

BCG & Co. 1735 Merriman Road, Akron 44313 (330) 864-6661/www.bcgcompany.com

29

30

-3.3%

64

77

17

26

23

0

David A. Brockman managing director

22

Zinner & Co. LLP 29125 Chagrin Blvd., Pepper Pike 44122 (216) 831-0733/www.zinnerco.com

24

23

4.3%

30

37

19

14

4

0

Robin L. Baum managing partner

23

Four-Fifteen Group 4100 Holiday St., Canton 44718 (330) 492-0094/www.415group.com

21

20

5.0%

38

44

10

21

8

5

Frank J. Monaco managing partner

23

Hobe & Lucas CPAs Inc. 4807 Rockside Road, Suite 510, Independence 44131 (216) 524-8900/www.hobe.com

21

21

0.0%

29

34

23

3

2

1

Jerome J. Lucas president, COO

23

Pease & Associates Inc. 1422 Euclid Ave., Suite 801, Cleveland 44115 (216) 348-9600/www.peasecpa.com

21

19

10.5%

41

48

19

20

2

7

Joseph V. Pease Jr. president

Stephen E. Stanisa president, CEO Richard C. Fedorovich CEO, managing partner

See LIST Page 18


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WWW.CRAINSCLEVELAND.COM

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 Lakewood Foursquare Church 2150 Warren Road, Lakewood ID: 94-2961674 Date filed: Aug. 3, 2010 Type: Employer’s withholding Amount: $48,928 Crossroads REO Inc. 17149 Southpark Center, Strongsville ID: 13-4324891 Date filed: Aug. 17, 2010 Type: Employer’s annual federal tax return Amount: $38,090 First Choice Homecare Inc. 401 Towpath Trail, Suite C, Broadview Heights ID: 34-1876809 Date filed: Aug. 19, 2010 Type: Employer’s withholding Amount: $38,043

Date filed: Aug. 24, 2010 Type: Employer’s withholding Amount: $22,434 Harold Pollock Co. LPA 5900 Harper Road, Suite 107, Solon ID: 34-1530164 Date filed: Aug. 19, 2010 Type: Employer’s withholding Amount: $21,964 Systems Modulation and Integration for Life-Style Enhancement Inc. 24000 Mercantile Road, Suite 1, Beachwood ID: 34-1874127 Date filed: Aug. 10, 2010 Type: Employer’s withholding Amount: $21,476 Ohio Natural Stone LLC 760 W. Bagley Road, Berea ID: 30-0260193 Date filed: Aug. 3, 2010 Type: Employer’s withholding Amount: $19,716 Quality Care Residential Homes Inc. 9402 Rosewood Ave., Cleveland ID: 75-3189085 Date filed: Aug. 17, 2010 Type: Employer’s withholding Amount: $19,488 Clinical Technology Inc. 1801 E. Ninth St., Cleveland ID: 34-1293451 Date filed: Aug. 24, 1010 Type: Employer’s withholding Amount: $19,370

Close to Home Child Development Center Inc. 3855 Carnegie Ave., Cleveland ID: 34-1894838 Date filed: Aug. 12, 2010 Type: Employer’s withholding, unemployment Amount: $29,349

Bass Lake Child Care of Mentor 1970 S. Taylor Road, Cleveland Heights ID: 30-0566013 Date filed: Aug. 19, 2010 Type: Employer’s withholding, unemployment Amount: $17,505

J. Gerchak III Inc. 8601 Oakridge Drive, Olmsted Falls ID: 34-1836749 Date filed: Aug. 5, 2010 Type: Employer’s withholding, unemployment Amount: $27,403

Global Tracking Services Inc. 1414 S. Green Road, Suite 106, South Euclid ID: 26-1733470 Date filed: Aug. 27, 2010 Type: Employer’s withholding Amount: $16,579

Royal American Group Co. 30195 Chagrin Blvd., Suite 210, Pepper Pike ID: 34-1847147 Date filed: Aug. 24, 2010 Type: Employer’s withholding Amount: $24,208

Disaster Restoration Management Inc. Servicemaster of Shaker 4530 Renaissance Parkway, Cleveland ID: 34-1942028 Date filed: Aug. 17, 2010 Type: Employer’s withholding Amount: $15,817

GC&E Inc. 25440 Miles Road, Bedford Heights ID: 31-1491227

Etcetera Services Inc. Housework Etc. and Unpacking Etc. P.O. Box 40041, Bay Village

BUSINESS. Commercial Banking is our business.

CRAIN’S CLEVELAND BUSINESS

ID: 34-1816713 Date filed: Aug. 10, 2010 Type: Employer’s withholding Amount: $15,597 K & L Transport Inc. 24381 Aurora Road, Bedford Heights ID: 34-1798453 Date filed: Aug. 17, 2010 Type: Employer’s withholding Amount: $15,160 Joseph J. Bibbo Inc. 3601 Trumbull Ave., Cleveland ID: 34-1478456 Date filed: Aug. 24, 2010 Type: Civil penalty assessment Amount: $14,550

Real Estate/Construction John Funk, Director of Real Estate Practice

Property is as unique as its owner. Our

Buckeye Painting and Decks Inc. 4518 Renaissance Parkway, Cleveland ID: 34-1790702 Date filed: Aug. 5, 2010 Type: Employer’s withholding, unemployment Amount: $13,880

clients benefit from our depth of industry knowledge and our commitment to offering personalized attention and insightful solutions. The knowledge of a trusted advisor can make the difference between a strong or shaky foundation.

New Management Inc. 12800 Shaker Blvd., Cleveland ID: 20-3059036 Date filed: Aug. 10, 2010 Type: Employer’s withholding, unemployment Amount: $13,268

The Maloney + Novotny Real Estate Practice combines a wealth of experience with a passion for understanding the ever-changing landscape involved in property development, ownership and management.

Premium Technical Services Inc. 4760 Lander Road, Orange Village ID: 34-1743417 Date filed: Aug. 3, 2010 Type: Corporate income Amount: $11,766 Young Futures 18320 Euclid Ave., Cleveland ID: 34-1870360 Date filed: Aug. 24, 2010 Type: Employer’s withholding, unemployment Amount: $11,583

+ Business Advisors and Certified Public Accountants

+ Cleveland 216.363.0100 Canton 330.966.9400 Elyria 440.323.3200 maloneynovotny.com

Title Access LLC 27887 Clemens Road, Suite 1, Westlake ID: 34-1926916 Date filed: Aug. 24, 2010 Type: Failure to file complete return Amount: $11,100

Dollars and Sense When choosing an accounting firm, our quality people, service and results just make good sense. Let us bring our accounting expertise to your organization. To schedule a consultation, please Proud Recipient call Joe Pease at of the 2010 216.348.9600.

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17

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CRAIN’S CLEVELAND BUSINESS

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OCTOBER 11-17, 2010

LARGEST ACCOUNTING FIRMS RANKED BY NUMBER OF LOCAL CPAS

Name Address Rank Phone/Web site

Number of local CPAs 8/31/2010

8/31/2009

% change

Number of degreed professionals 8/31/2010

Practice personnel engaged in

Full-time permanent employees

Auditaccounting

Tax

Consulting

Other

Top local executive Title

26

Corrigan Krause 2055 Crocker Road, Suite 300, Westlake 44145 (440) 471-0800/www.corrigankrause.com

19

19

0.0%

27

26

15

6

3

NA

26

Plante & Moran PLLC 1111 Superior Ave., Suite 1250, Cleveland 44114 (216) 523-1010/www.plantemoran.com

19

18

5.6%

31

37

20

6

5

0

Daniel P. Hursh office managing partner

26

Schroedel, Scullin & Bestic LLC 196 N. Broad St., Canfield 44406 (330) 533-1131/www.ssb-cpa.com

19

17

11.8%

27

27

19

7

5

4

Gregory C. Bestic managing principal

29

Rea & Associates Inc. 7325 Production Drive, Suite C, Mentor 44060 (440) 266-0077/www.reacpa.com

17

23

-26.1%

30

45

20

15

3

0

Ryan Dumermuth Mentor office manager

30

Crowe Horwath LLP 600 E. Superior Ave., Suite 902, Cleveland 44114 (216) 623-7500/www.crowehorwath.com

14

17

-17.6%

36

41

19

1

16

5

Greg McClure partner

31

Card, Palmer, Sibbison & Co. 4545 Hinckley Parkway, Cleveland 44109 (216) 621-6100/www.cps-cpa.com

11

10

10.0%

14

16

15

16

7

NA

James E. Stroh president

31

McManus, Dosen & Co. 7251 Engle Road, Suite 406, Middleburg Heights 44130 (440) 243-3400/www.mcmanusdosen.com

11

11

0.0%

15

17

15

15

10

NA

Michael D. McManus managing partner

33

The D'Amore Tatman Group LLC 3659 Green Road, Suite 124, Beachwood 44122 (216) 378-1550/www.dtgroup.net

10

9

11.1%

12

16

6

7

NA

NA

Dominic M. D'Amore Jr. managing member

33

Schlabig & Associates Ltd. 525 Wolf Ledges Parkway, Akron 44311 (330) 253-4424/www.schlabig.com

10

11

-9.1%

NA

16

5

6

4

NA

Thomas R. Hager managing partner

35

Levin Swedler & Co. 3501 Embassy Parkway, Akron 44333 (330) 666-4199/www.levinswedler.com

9

9

0.0%

10

12

12

12

3

NA

Gary D. Levin president

36

Baumgarten & Co. LLP CPA 1422 Euclid Ave., Suite 1104, Cleveland 44115 (216) 781-4300/www.baumgartencpa.com

8

8

0.0%

14

17

14

14

6

NA

Larry Yunaska managing partner

36

Cunningham & Associates CPAs Inc. 60 Eagle Valley Court, Broadview Heights 44147 (440) 717-1350/www.c-p-a.com

8

9

-11.1%

11

18

7

13

3

3

Glenn Cunningham president

36

Dingus & Daga Inc. 20600 Chagrin Blvd., Suite 701, Shaker Heights 44122 (216) 561-9200/www.dndcpas.com

8

9

-11.1%

18

21

15

3

NA

NA

Manohar Daga president

36

Libman, Goldstine, Kopperman & Wolf 600 Superior Ave. E., Suite 925, Cleveland 44114 (216) 373-2500/www.lgkw.com

8

NA

NA

NA

NA

NA

NA

NA

NA

NA

40

The Siegfried Group LLP 6100 Oak Tree Blvd, Suite 200, Independence 44131 (216) 643-2917/www.siegfriedgroup.com

7

5

40.0%

10

10

9

1

9

10

Brian D. Seidner director, Northeast Ohio

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

Thomas L. Harrison managing director

RESEARCHED BY Deborah W. Hillyer

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20101011-NEWS--19-NAT-CCI-CL_--

10/8/2010

1:52 PM

Page 1

OCTOBER 11-17, 2010

NORTHEAST OHIO'S TOP SBA LENDERS

RANKED BY DOLLAR VALUE OF 7(A) LOANS THROUGH FOURTH QUARTER FY 2010

This Company name year Headquarters

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Dollar value of approved loans

Number of loans

1

Huntington National Bank Columbus

54,599,300

352

2

Fifth Third Bank Cincinnati

12,197,500

30

3

JPMorgan Chase & Co. New York

10,902,800

76

4

KeyBank NA Cleveland

10,521,000

71

5

Lorain National Bank Lorain

6,142,900

24

6

CFBank Fairlawn

5,449,000

23

7

First Place Bank Warren

4,902,000

8

8

Grow America Fund Inc. New York

4,871,000

7

9

Ohio Commerce Bank Beachwood

4,248,500

9

10

FirstMerit Bank NA Akron

4,080,300

37

11

Charter One Bank NA Providence, R.I.

3,686,500

65

12

PNC Bank Pittsburgh

3,610,800

14

13

Westfield Bank FSB Westfield Center

3,428,400

12

14

Citizens Bank Flint, Mich.

3,098,100

17

15

Citizens Banking Co. Sandusky

2,951,000

7

16

Genoa Banking Co. Genoa

2,309,000

7

17

Consumers National Bank Minerva

2,147,100

10

18

United Western Bank Denver

2,103,000

2

19

First Federal Bank of the Midwest Defiance

2,059,100

4

20

First Western SBLC Inc. Dallas, Texas

1,965,000

2

21

U.S. Bank NA Cincinnati

1,903,500

29

22

First Colorado National Bank Paonia, Colo.

1,800,000

2

23

Compass Bank Birmingham, Ala.

1,564,600

3

24

CIT Small Business Lending Corp. Livingston, N.J.

1,543,000

2

25

The Henry County Bank Napoleon

1,469,500

2

26

First Financial Bank El Dorado, Ark.

1,409,400

1

27

First National Bank Orrville

1,325,000

4

28

Enterprise Bank Alison Park, Pa.

1,300,000

1

29

Portage Community Bank Ravenna

1,298,800

9

30

Wayne Savings Community Bank Wooster

1,032,500

4

This list was compiled from information provided by the Cleveland District office of the SBA through the fourth quarter of FY 2010 ending Sept. 30, 2010. The Cleveland District covers 28 northern Ohio counties. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.

Researched by Deborah W. Hillyer

Order Lists on-line... www.CrainsCleveland.com/Lists

19

NASA: R&D funding an issue continued from PAGE 3

years, said Dr. Bailey, who also is a senior physicist at NASA Glenn. Private contractors, however, still could be laid off. Aside from that protection, Dr. Bailey didn’t heavily favor either the Senate bill or the House bill. Though the House bill provides more for research and technology, the numbers in the bills only matter so much, she said, because final dollar figures won’t be determined until the bill goes through the appropriations process. Either bill, however, would have been better for NASA Glenn than Constellation, Dr. Bailey said. The Bush-era program, which focused on designing two new rockets to replace the Space Shuttle, was underfunded and destined to miss its original goal of returning to the moon by 2020 as a precursor to putting a human on Mars, she said, agreeing with a presidential task force’s assessment. Under the new plan, NASA aims to send humans to an asteroid by 2025 and to Mars by the mid2030s. Dr. Bailey said she imagines there is some trepidation among the estimated 250 people at NASA Glenn who are assigned to Constellation projects, but she says many center employees think NASA Glenn will be better off under the new plan. Both Mr. Lugo and Dr. Bailey said they expect NASA Glenn will win work related to the heavy lift rocket that NASA will develop to complement privately developed rockets. The bill specifies that the space agency is to use technologies from the Space Shuttle and the Constellation program to the extent practical,

giving it a chance to build off work already started. “In the end I think it’ll work out pretty well for Glenn,� Dr. Bailey said.

Wrestling over the pie U.S. Reps. Marcia Fudge and Charlie Wilson — the only members of Ohio’s congressional delegation who sit on the House Science and Technology Committee — supported the bill as well. Rep. Fudge, a Democrat from Warrensville Heights, said NASA Glenn will fare better under the new plan than it did under Constellation. She cited as one reason the $250 million that the Senate bill marked for a new financing category called “Exploration Technology Development� in fiscal year 2011. The bill also provides $350 million in fiscal 2011 for another new category called “Space Technology.� NASA Glenn expertise is expected to help the center win assignments in both categories. Rep. Fudge said many NASA officials, including administrator Charles Bolden, the agency’s leader, assured her the plan would benefit NASA Glenn. U.S. Reps. Steven LaTourette and Dennis Kucinich were among those who opposed the legislation. They circulated a letter to the rest of Ohio’s delegation, urging its members to back the House bill over the Senate bill. The letter attacked the Senate bill for reducing money available for technology research and development while putting too much focus on helping private companies develop rockets. In a conversation with Crain’s,

Rep. LaTourette argued that NASA Glenn was better off under Constellation. The center had won a solid spot in that program and now will need to go back to fighting bigger NASA centers for money, the Bainbridge Township Republican said. “NASA Glenn is going to have to fight tooth and nail every year to get its piece of the pie,â€? he said. The House on Sept. 29 passed the bill 304-118, but in August the Senate passed it unanimously. Allison Preiss, a spokeswoman for U.S. Sen. Sherrod Brown, said the Avon Democrat pushed for language protecting NASA’s government employees. She described the bill’s passage as “an important first step towards NASA Glenn’s revitalization.â€? U.S. Sen. George Voinovich has said in news reports he allowed the bill to pass only because he was promised language protecting NASA Glenn’s role would later be added. The House made no changes to the bill. The Greater Cleveland Partnership plans to push for such protections when Congress starts the appropriations process, said Nick Gattozzi, vice president of government relations for the group. The partnership is concerned that money might be shifted from research and technology development to pay for an extra Shuttle flight that the Senate bill added to NASA’s schedule for fiscal 2011 and other nearterm projects focused on space travel. “When exploration needs additional funds they go and raid places like technology development, research and aeronautics,â€? Mr. Gattozzi said. â–

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20101011-NEWS--20-NAT-CCI-CL_--

20

10/8/2010

3:15 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

OCTOBER 11-17, 2010

Flats: Prospects for residential growth intrigue stakeholders continued from PAGE 1

to things like the West Side Market and all the restaurants in Ohio City and Tremont,” said Mr. Halko, who lives on West Ninth Street just up the hill from the Flats. His new office will be two blocks from the Cuyahoga River and the Center Street bridge. People always have been drawn to water. Indeed, the history of most great cities is tied to their location along rivers or lakes. And when access is available and attractive, waterfronts are magnets for tourists and residents alike. Those factors helped make the Flats the nightlife mecca it was in the 1980s and into the 1990s, but the new Flats is learning to play more than one tune. Bars and restaurants may return, but the hope is that daytime visitors and more residents will inhabit the banks of the Cuyahoga that run through the Flats. People who talk up the Flats see recreation as a new calling card of the neighborhood. They cite as an example last month’s announcement that the

Cleveland Rowing Foundation has bought the former Commodore Club marina for $3 million. The rowing group plans to use the property for boat storage and meeting space and intends to create Rivergate Park, a new, two-acre public park. It also wants to offer kayak and canoe rentals. The river draws rowers from area clubs, high schools and colleges to the Flats, sometimes in big numbers. On Sept. 18, for example, the 15th annual Head of the Cuyahoga Regatta attracted 1,000 rowers from colleges and high schools around the region and 2,000-plus spectators to the river. “You’re seeing more recreational uses down there,” said Anthony Coyne, a lawyer and chairman of the Cleveland City Planning Commission, who was one of those spectators. “It bodes well for the Flats.” In August, two nonprofit groups, the Ohio Canal Corridor and the Trust for Public Land, engineered the purchase for $4.8 million of two parcels of land that will help connect the Towpath Trail — a pedestrian and bike trail that begins near New Philadelphia in southeast Ohio —

STATEMENT OF OWNERSHIP MANAGEMENT AND CIRCULATION 1. Publication title: Crain’s Cleveland Business 2. Publication No.: 532-210 3. Filing Date: 9/30/10 4. Issue Frequency: Weekly, except combined issues on 4th & 5th week of May, 4th week of June and 1st week of July and 3rd and 4th week of December. 5. No. of Issues Published Annually: 49 6. Annual Subscription Price: $64.00 7. Complete Mailing Address of Known Office of Publication: Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland, Cuyahoga County, OH 44113-1230. Contact Person: Jim Cantley (313) 446-1615 8. Complete Mailing Address of Headquarters or General Business Office of Publisher: Crain Communications, Inc., 700 W. St. Clair, Suite 310, Cleveland, OH 44113-1230. 9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor: publisher: Brian Tucker, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230; editor: Mark Dodosh, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230; managing editor: Scott Suttell, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230 10. Owner (If the publication is owned by a corporation, give the name and address of the corporation immediately followed by the names and addresses of all stockholders owning or holding 1 percent or more of total amount of stock. If not owned by a corporation, give the names and addresses of the individual owners. If owned by a partnership or other unincorporated firm, give its name and address, as well as those of each individual owner. If the publication is published by a nonprofit organization, give its name and address.) Crain Communications Inc., 1155 Gratiot Avenue, Detroit, MI 48207-2997; K.E. Crain, 1155 Gratiot Avenue, Detroit, MI 48207-2997; R.E. Crain, 711 Third Avenue, New York, NY 10017-4036. 11. Known Bondholders, Mortgagees and other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages, or Other Securities: None. 12. Tax Status: (For completion by nonprofit organizations authorized to mail at nonprofit rates.) The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: (Check One) ❑ Has Not Changed During Preceding 12 Months ❑ Has changed During Preceding 12 Months (Publisher must submit explanation of change with this statement) 13. Publication Name: Crain’s Cleveland Business 14. Issue Date for Circulation Data Below: September 27, 2010 15. Extent and Nature of Circulation No. Copies Average no. of copies of single issue each issue during published nearest preceding 12 months to filing date A. Total No. Copies (Net Press Run) 20,465 20,848 B. Paid Circulation (by mail and outside the mail) (1) Mailed Outside-County Mail Subscriptions Stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies and exchange copies) 6,257 6,401 (2) Mailed In-County Paid Subscriptions stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies and exchange copies) 12,299 12,910 (3) Paid distribution Outside the Mails including Sales through dealers and carriers, street vendors, counter sales, and other paid distribution outside USPS 179 181 (4) Paid distribution by other classes of mail through the USPS 0 0 C. Total Paid and/or Requested Circulation (Sum of 15B(1), (2), (3) and (4)) 18,735 19,492 D. Free or Nominal Rate Distribution (by mail and outside the mail) (1) Free or Nominal Rate Outside-County Copies included on PS form 3541 129 47 (2) Free or Nominal Rate In-County Copies included on PS form 3541 271 114 (3) Free or Nominal Rate Copies mailed at other classes through the USPS 0 0 (4) Free or Nominal Rate Distribution outside the mail (Carriers or other means) 155 3 E. Total Free or Nominal Rate Distribution (Sun of 15D (1), (2), (3) and (4)) 555 164 F. Total Distribution (Sum of 15C and 15E) 19,290 19,656 G. Copies not distributed 1,175 1,192 H. Total (Sum of 15F and G) 20,465 20,848 I.Percent Paid and/or Requested Circulation (15C/15F x 100) 97.12% 99.17% 16. Publication of Statement of Ownership printed in the 10/11/10 issue of this publication. 17. I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties). Brian Tucker, Publisher 9-28-10

ABOVE: Longtime Flats business owner Jack Ecke, who owns the Sunoco service station and Ecke’s Towing Service on Columbus Road, bought the 2,200-square-foot building on the left of this photo because of the Flats’ potential. “There is always attraction here. No matter who you are, the water attracts you, even if it is eating in a restaurant and watching (ore) boats go by.” BELOW: A portion of the land acquired by the Ohio Canal Corridor and the Trust for Public Land for the Towpath Trail. with Canal Basin Park, a 20-acre park the city of Cleveland plans to create along the river near the southern end of the Center Street bridge. Those two projects are vital links in a trail that runs 100 miles and takes in the Cuyahoga Valley National Park.

From martinis to marketing Cleveland City Councilman Joe Cimperman, whose ward covers downtown, includes those projects in what he foresees as more than $1 billion in investment in the Flats area in the next few years. Also on his list is the stalled, $275 million Flats East Bank mixed-use project of the Wolstein Group and Fairmount Properties, a skateboard park the city plans to build near Rivergate Park and a new aquarium at Nautica. He even includes, with some justification, the planned, $287 million Inner Belt Bridge and the $700 million casino pushed by Cleveland Cavaliers owner Dan Gilbert. Both those projects will include at least facelifts to Flats streets and maybe more. While Mr. Cimperman is a cheerleader for projects in his ward, the prospects he sees for the Flats are shared by Mr. Halko and others. Its prospects helped convince Mr. Halko to move Invisia’s office into a building that in the days of the old Flats had been the Cantina del Rio restaurant and later the 2020 Martini Lounge & Café — names from the Flats past, when it was one of Cleveland’s first urban entertainment districts. That era began to die before the turn of the new century, and the Flats is mostly remembered for street crime and underage drinking. Now, Mr. Cimperman said, the area is evolving into a residential neighborhood. Tom Newman, executive director of the Flats Oxbow Association, the area’s development group, said 2,500 people now live in the Flats, many of them at the Stonebridge Apartments and Condominiums that cropped up in the last decade. The prospects of more residents and visitors have some longtime Flats business owners expanding their horizons.

Pumped up Jack Ecke, who owns Ecke’s Towing Service and a service station on Columbus Road, said he has seen

the service station’s business shift from serving primarily commercial and boating accounts to selling gas to residents of Stonebridge and to people on weekends visiting the remaining night spots. So, Mr. Ecke is buying a new property. He paid $210,000 to the estate of Rosemary Vinci for the triangular point of a building at 1700 Columbus. He sees the threestory building with 2,200-squarefoot floors as ready for a variety of uses, including perhaps a coffee shop on the first floor and live-work loft studios above. At 66, Mr. Ecke has worked in the Flats since starting to run the business at 16 for his mother after his father died. And for all its changes, he has faith the Flats will rebound once more. “There is always some attraction here,” Mr. Ecke said. “No matter who you are, the water attracts you, even if it is eating in a restaurant and watching (ore) boats go by.” Charles Bredt, chairman of the Flats Oxbow Association and president of retailer Northern Ohio Lumber and Timber Co., also remains optimistic about the future of the Flats, as he has for years. “It has just taken longer than we expected,” Mr. Bredt said. “Reality got in the way. There are many ideas (afoot) that have not been (publicly) shared. There is a desire, a willingness to turn things over to a neighborhood feel.” In May, brothers Tim and Todd West paid $110,000 for an old factory building at 2341 Scranton Road and plan to move their Any Heating & Air Conditioning business there. Tim West said he and has brother bought the building because it was cheap — half what they paid for

twice the space as their Lorain Road office in North Olmsted. But, he added, the two want to position their heating and cooling business to participate in the growth of downtown Cleveland and the nearby Tremont neighborhood.

Big landholders linger Another asset of the Flats is a number of old, underused buildings harking back almost to the Ohio Canal era, according to Tom Yablonsky, executive vice president of the Downtown Cleveland Partnership. A prime example is the B&O Passenger Terminal on Canal Road, which dates from the 19th century and could become a mixeduse project oriented to the Towpath Trail and Ohio Canal Corridor, Mr. Yablonsky said. Sherwin-Williams Co. owns the structure, which is next to its research center. Many observers, such as Mr. Bredt, also expect at some point — and perhaps sooner than later — to see big things from two major Flats property owners. Forest City Enterprises Inc. holds at least 60 acres along Scranton Road and the Scranton Averell Trust holds at least 25 acres. Several Flats property owners and observers have heard speculation that Forest City, which owns Tower City Center across the Cuyahoga from its Scranton peninsula holdings, might build a bridge across the river to connect its orphaned property to the casino that will rise behind Tower City. “I know that Forest City did not spend $2 million” for Scranton Road land in the 1980s “to use it as a parking lot,” Mr. Ecke said. A Forest City spokesman would not comment on the company’s plans. ■


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1:39 PM

Page 1

OCTOBER 11-17, 2010

Wind: Ohio already seeing rising rates industry. “Passage of an RES would definitely be beneficial for domestic manufacturers and the overall national employment,” Mr. Grabner wrote in an e-mail to Crain’s. “Presently, too many manufacturers are reluctant to invest in new manufacturing capacity without a clear, consistent energy policy out of Washington. Specifically, with regards to Cardinal Fastener, we would anticipate our volume increasing with a resultant increase in employment

continued from PAGE 3

Ohio already supply the wind energy industry. Among them are Cantonbased steel and gear maker Timken Co. and Cardinal Fastener in Bedford Heights, which produces special bolts that go into wind turbines. Cardinal Fastener CEO John Grabner said he’d love to see a national renewable energy standard put in place because it would help his business, which is deriving much of its growth from the wind

Contact: Phone: Fax: E-mail:

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com

and capital expenditures from the passage of a national energy standard.” But many manufacturers that are large consumers of power aren’t thrilled with the legislation.

… and thumbs down Sam Randazzo, general counsel for the Industrial Energy Users-Ohio group in Columbus, said renewable standards raise electricity rates and already have done so in Ohio. Ohio is one of 24 states to adopt

its own renewable energy standard, which requires the Buckeye State to derive about 12.5% of its power from renewable sources by 2023. It’s a goal Mr. Randazzo said is “hugely aggressive,” though it is a lower percentage than is proposed by Sens. Bingaman and Brownback. Some Ohio electric users already have seen their rates go up by 4% in areas where utilities have taken steps to meet the state’s standard, Mr. Randazzo contends. “Unfortunately, the discussion of this has disintegrated into a jobs discussion, but the net impact is what you need to look at,” Mr Randazzo said.

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Besides, Mr. Randazzo said, the loss of jobs at a single coal plant affects employment more than the operation of many wind turbines. There is one way a national renewable energy standard could benefit Ohio, though, even in the eyes of Mr. Randazzo. If such a federal law pre-empted the laws already in place at the state level, it would put Ohio on a level playing field with other states, even those that have not adopted their own standard. “One of the problems that exists presently is each state is acting as an island and there’s not a lot of coordination,” Mr. Randazzo said. ■

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Crain’s Executive Recruiter Chair of the Division of Business Administration Baldwin-Wallace College invites applications for the position of Chair of the Business Administration Division. The Division Chair is expected to have a productive presence in the region and work effectively with area business leaders and members of the B-W Business Advisory Council. A rich track record of working with corporations and their management leaders is necessary as well as an MBA or Ph.D. in Business Administration/Management or related field. Multiculturalism is highly valued at Baldwin-Wallace College and the successful candidate will have a demonstrated track-record of working within diverse communities and embracing interculturalism from the broadest possible perspective. The Division Chair is a full-time appointment that reports to the Vice President for Academic Affairs and Dean of the College. Salary and professorial rank are commensurate with qualifications. Additional information about this position and the Business Administration Division can be found at http://www.bw.edu/resources/hr/jobs and at www.bw.edu/academics/bus/ Electronic applications are encouraged and may be submitted to blennox@bw.edu Applicants should submit a letter of application, curriculum vita, statement of leadership philosophy, and the names and contact information of three current references to: Dr. Mary Lou Higgerson Vice President for Academic Affairs and Dean of the College Baldwin-Wallace College 275 Eastland Road Berea, OH 44017 The search committee will commence reviewing applications October 15, 2010, and will continue until the position is filled. Baldwin-Wallace College is an EEO/AA employer and educator. At BW, we support and encourage diversity in a variety of forms. We value and appreciate inclusive excellence in the classroom, within extracurricular activities, and as we engage our community partners. Learn more at Diversity Affairs - http://www.bw.edu/quickfacts/diversity/


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Survey: Uncertainty often stalls long-term investment continued from PAGE 1

Deloitte’s Fiona Chambers, head of the firm’s Cleveland tax practice who worked on the survey. Ms. Chambers explains that, in any economy, not all companies experience the same economic circumstances. Companies selling into highgrowth sectors like medical devices, wind energy or certain automotive supply chains are doing well. Those selling into still-struggling sectors, such as construction, are limping. Similarly, companies with significant sales in growing markets like China say their recovery is more robust than companies more dependent upon U.S. sales. Both factors have helped

Strongsville’s Clark Reliance Corp., which makes instruments and controls used largely in the oil and gas industries in the U.S. and abroad, said company chairman Matthew Figgie. Sales at the private company declined in 2009, but not enough to cause the company to lose money. Mr. Figgie also chairs Pepper Pikebased Figgie Capital, an investment firm that puts money into stocks, bonds, commodities and other investments. His dual roles cause Mr. Figgie to look at the world through a broad lens, he said — and he sees things getting better. “I’m less concerned about a doubledip recession today than I was back in the springtime,” Mr. Figgie said. “From everything I see and every-

one I’m talking to, there’s a sort of quiet confidence going into 2011 that’s been missing the past couple of years.” Asia is similarly helping other large local companies, such as Cleveland-based Cliffs Natural Resources, which sells iron ore, metallurgical coal and other resources used by steelmakers around the world. “We’ve certainly come back from the 2009 decline in our domestic business, but the international area is where our business is growing,” said Cliffs CFO Laurie Brlas. “We are looking at a global economy and the growth in Asia, particularly in China, is extremely strong and we expect China will continue to grow,” she said. However, Cliffs expects the U.S.

economy to grow only slowly in the next few years, she said. Smaller companies are much the same. Pick most any small machine shop, plastics maker or stamping plant in Northeast Ohio and their view of the economy’s health is largely determined by the industries and geographies they serve. Smaller companies, however, are less likely to have overseas plants or subsidiaries that can fully take advantage of overseas growth the way their larger counterparts do.

A taxing future Another factor is still at play, said William Beaufait, a shareholder in the Cleveland accounting firm Maloney + Novotny who specializes in

ECONOMIC ATTITUDES How confident are you in Northeast Ohio’s economy?

Response

Percentage

Very

3%

Somewhat

15.8

Not particularly

58.6

Not at all

22.6

How confident are you that Northeast Ohio’s economy can strengthen in the next five years?

Response

Percentage

Very

8.3%

Somewhat

40.6

Not particularly

36.1

Not at all

15

working with manufacturers: There still is too much uncertainty about the future economy and governmental policies. Companies have downsized and streamlined their way to increased profits — but that doesn’t make them optimists, he said. “You’ve got a lot of businesses now saying, ‘I’m making good money now, but I don’t know if I want to invest long-term because I don’t know what’s going to happen.’” Mr. Beaufait cited uncertainty over future tax rates and the ability to quickly depreciate capital investments as two chief client concerns. The source of much of that uncertainty is the federal government’s debt, said Deloitte’s Ms. Chambers, and her survey results show near universal agreement that the nation needs to reign in its borrowing and spending. When Deloitte asked businesses here about the federal budget deficit, 86.5% said they were either “alarmed” or “very concerned,” and only 1.5% said they were “not particularly concerned.” Ms. Chambers said companies are concerned not only that higher tax rates might eat into their profits and the capital they have to invest, but also that the tax laws are becoming increasingly complicated and difficult to plan around. “Companies are being forced to assign more resources to (tax compliance and planning),” she said. Businesses worry that things like a so-called value-added tax on goods and services throughout the supply chain or a cap-and-trade program for energy will drive up their costs, Ms. Chambers said. In Deloitte’s survey, 42.9% of respondents said they were most concerned about a possible value-added tax, while 14.3% worried about cap and trade the most.

Better times ahead? If there’s a bright spot, it’s that about half of those surveyed think the local economy will improve over the next five years, said Craig Donnan, managing partner of Deloitte’s Cleveland office. The reform of Cuyahoga County’s government, efforts to grow medical device manufacturing and other local efforts are winning some support among businesses, he said. Asked how confident they were that Northeast Ohio’s economy will improve in five years, 48.9% said they were very or somewhat confident, while 51.1% were not particularly confident or not at all confident. Not stellar numbers, but they at least show more faith in the future than in the present, Mr. Donnan said. “Five years out, they’re more confident, which we view as a very positive thing,” he said. ■


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THEINSIDER

THEWEEK OCTOBER 4 - 10 The big story:

The state of Ohio is ready to sign off on a $42 million borrowing deal that would finance the construction of a 77,000-square-foot research building at the Northeastern Ohio Universities Colleges of Medicine and Pharmacy in Rootstown. The bonds would be repaid with existing revenue from tuition and student fees, with no added costs passed along to students. Officials say the construction project would bring 1,000 temporary jobs over the next 18 months, and 60 permanent research faculty and staff would be hired to run the facility.

Micro managing: Nordson Corp. agreed to buy Micromedics Inc., a company in St. Paul, Minn., that makes devices for applying and dispensing biomaterials that control bleeding and heal wounds. Nordson did not disclose terms of the deal, which is expected to close in about 30 days. The acquired business will be integrated into Westlake-based Nordson’s Advanced Technology Systems segment. Family ties: University Hospitals is naming a three-story outpatient building at the health system’s new Ahuja Medical Center in Beachwood after a member of a family that donated a significant amount of money to UH’s $1.2 billion Vision 2010 renovation and construction project. Eleanore and Robert Risman and their daughter Kathy donated the money because of the culture of high-quality, personalized health care that University Hospitals and its physicians offer patients, according to a statement from Mr. Risman. The dollar amount was not disclosed. Carbon aided: A team of Kent State University

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Rokakis makes move to the movies

With these gift cards, it’s the thoughts that count

Magnet looks to create new supply chain links

■ Cuyahoga County Treasurer Jim Rokakis will be out of a job come January, but it looks like he’s already planning a new career. He’s one of the founders and executive producer of HomeTown Productions, a film production team he’s started with local screenwriter John Vourlis. The pair is working on a film called “Garden Avenue,” described on the film’s web site, www.Garden AvenueTheMovie.com, as the “funny, inspired” story of a “young man’s struggle against power and corruption, cynicism and self-doubt, racism, intolerance and ignorance.” It’s set in 1977 on Cleveland’s West Side. That young man, Jimmy Petrakis, the son of Greek immigrants, decides at age 22 to try to unseat the entrenched but callous and uncaring ward councilman and, presumably, to transform Cleveland. If that story sounds at all familiar to anyone who was in Cleveland at the time, it should. It’s a replay of Mr. Rokakis’ first run for Cleveland City Council. Not a big-budget film, HomeTown Productions is using a web site called Kickstarter.com to raise money. According to that web site, HomeTown Productions has more than $13,000 from 33 backers, exceeding the company’s goal of raising $12,500 it needs to start production. — Jay Miller

■ A handful of $10 gift cards is all it takes for a company to build a culture of innovation, according to Renovo Neural president Satish Medicetty. The Cleveland Clinic spinoff two months ago started challenging its employees to come up with ways to make Renovo Neural a better company and a better place to work. Each week, the person who submits the best idea gets a $10 gift card and a nomination for the company’s new Innovator of the Year award — which comes with a paid day off. Thanks to the program, the company now has a few community umbrellas for rainy days, and internal meetings automatically are rescheduled if a key person is more than 15 minutes late. Funny that a company developing assays for drug developers targeting neurological diseases, as well as drugs of its own, would be concerned with such ordinary ideas. The program, however, has been a great team-building activity, Mr. Medicetty said Sept. 28 during a short presentation at BioOhio’s annual conference in Independence. The program also has encouraged Renovo Neural’s six employees to be on the lookout for good ideas. You never know when one might emerge: The company is studying the feasibility of providing a new service because of one employee’s suggestion. “I think it has a significant impact on what we do on a day-to-day basis,” he said. — Chuck Soder

■ The Cleveland-based manufacturing advocacy and consulting group Magnet has been awarded a $285,000 contract by the National Institute of Standards and Technology. The money will go to fund a one-year pilot project that is to assist small manufacturers who hope to sell into the supply chains for biomass, electric vehicles and Bagley other advanced energy segments, Magnet reports. Under the contract, Magnet will work with the technology-oriented economic development nonprofit, NorTech, to train manufacturing companies to work in the new industries. “Our goal is to establish Northeast Ohio as a regional model for helping manufacturers transition from slow growth markets to new, high-demand markets with stronger growth potential in emerging technology sectors, such as advanced energy” NorTech president and CEO Rebecca O. Bagley said in announcing the contract with Magnet CEO Dan Berry. “Ohio ranks third in the U.S. in manufacturing production output and manufacturing employment,” she said. “Working with Magnet, we can help our region’s manufacturers leverage their existing strengths and diversify their business to capture more global market opportunities in advanced energy.” — Dan Shingler

WHAT’S NEW

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

professors received a grant exceeding $1 million to analyze how micro-organisms known as “cheaters” affect the carbon cycle. The team will use the money to study how the microbes — which feed on small chemicals that already have been digested by other microbes — affect the process of decomposition and the effect they have on whether carbon is stored or released into the atmosphere. Many believe excess carbon in the atmosphere contributes to global warming.

Blowing into the Windy City: Accounting firm SS&G said it merged with Chicago-based Ahlbeck & Co., adding 22 staff members to its roster of more than 400 employees. SS&G, which has offices in Cleveland, Akron, Cincinnati, Columbus and Erlanger, Ky., said the deal creates a new presence for the firm in the Chicago market, which will help expand what it called its “already strong” base of Illinois clients.

Streaking: RPM International Inc. increased its quarterly dividend by 2.4%, to 21 cents per share, marking the 37th consecutive year the dividend has been increased. The Medina-based producer of coatings and sealants said it’s one of just 48 publicly traded companies — of a total of about 19,000 — in the United States to have increased its dividend every year during those 37 years.

This and that: RSB Spine LLC received a $1.5 million investment that the Cleveland company plans to use to increase production of its spinal implant products. The company wants to boost its inventory of products to keep pace with rising demand. … Progressive Corp., an aggressive marketer in the competitive insurance industry, named a new chief marketing officer. Jeff Charney, 51, comes to Mayfield Village-based Progressive from insurance company Aflac, where he was senior vice president and chief marketing officer. To keep up with local business news as it happens, visit www.CrainsCleveland.com.

Big-company profits suggest the recession is long gone

COMPANY: GE Lighting, Cleveland PRODUCT: Energy-efficient lighting system Engineers at GE Lighting teamed up with their counterparts at California-based Janmar Lighting to create a lighting system for the Tacoma Art Museum in Washington State that cuts system energy use by 85%, uses nearly 20% fewer fixtures and raises light levels 35%. The 50,000-square-foot, 3,500-piece art museum previously consumed an estimated 373,000 kWh annually. The new system features a GE ceramic metal halide lamp and Janmar Lighting fixture configuration using just 23 watts — instead of an antiquated, 150-watt incandescent system — that is estimated to consume a total of 56,000 kWh per year. The difference is expected to help the museum save about $10,000 per year, GE Lighting estimates. The museum’s new lighting system also reduces the fixture count to 505 from 621, which helps to eliminate ceiling clutter and reduces maintenance. “The net effect of this change is greater intensity, clarity and visual focus for each piece of art on display,” says Jason Raak, a Cleveland-based marketing manager with GE Lighting. For information, visit www.BetterMuseum Lighting.com.

gressive Corp., among the wealthy Democratic patrons not enamored with the party’s direction in this election cycle. Mr. Lewis and George Soros, who each gave more than $20 million to Democraticoriented groups in the 2004 election, appear to be holding back so far this year, according to The New York Times. Jennifer Frutchy, who advises Mr. Lewis on his philanthropy, told The Times that he is focused on “building progressive infrastructure and marijuana reform.” “That’s just where his head is right now,” Ms. Frutchy said.

■ The government says the recession is over, even though no one really believes that. But an Oct. 4 Wall Street Journal story might convince you good times are here again — at least if you run a large company such as Parker Hannifin Corp., the maker of motion and control technologies and systems. An analysis by The Journal found companies in the Standard & Poor’s 500 stock index “posted second-quarter profits of $189 billion, up 38% from a year earlier and their sixth-highest quarterly total ever, without ■ Here’s something to give you even more adjustment for inflation,” the newspaper faith in Cleveland’s entrepreneurial class. reported. For all U.S. companies, The Journal BusinessWeek.com is running said, “The Commerce Departan online contest to identify the ment estimates second-quarter country’s most promising entreafter-tax profits rose to an annual preneurs age 25 or under. From rate of $1.208 trillion, up 3.9% hundreds of candidates, the from the first quarter and up magazine’s web site came up 26.5% from a year earlier.” with a list of 25 finalists, two of The profit rebound is the whom are in Cleveland. result of aggressive cost-cutting One of the companies, Citizento cope with lower revenue and Groove, produces software for an uncertain outlook. digitizing music school applicaAt Parker, for instance, “profit tions. It’s the brainchild of four more than quadrupled from a friends from Case Western Reyear earlier to $222.2 million in JASON MILLER serve University. the company’s fiscal quarter ended Democrats: not high A second company with local June 30,” The Journal said. “But on Peter B. Lewis’ list ties is LifeServe Innovations, sales grew only 25% to $2.8 which is developing a new way to open pabillion.” tients’ airways in emergency situations such Parker now is stretching its work force by as might occur in combat zones. using part-timers and adding weekend shifts. “The device is intended to help emerIt intends to continue doing so for the foregency medical providers with minimal seeable future, CEO Donald Washkewicz said. training to deliver oxygen to patients,” according to the web site. LifeServe is based in Bethlehem, Pa., and Cleveland, where co-founder Rick Arlow, ■ Count Peter B. Lewis, chairman of Pro22, is a medical student at Case.

When the idea’s good, your age is irrelevant

His heart’s with Democrats, but his head is elsewhere


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October 11-17, 2010 issue

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