Crain's Cleveland Business by Crain's Cleveland Business

20141124-NEWS--1-NAT-CCI-CL_--

11/21/2014

3:37 PM

Page 1

$2.00/NOVEMBER 24 - 30, 2014

Product demand sparking business Manufacturing industry is getting significant boost from companies investing in tooling and equipment By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

of white and black students. And considering the Hispanic population was one of the fastest-growing communities in the city and poised to make up a major part of the future workforce, concerns continued to mount. But in a few short years, the district managed to double the Hispanic graduation rate to about 61% in 2013, which is more in line with the national average.

Manufacturers across the nation have opened their wallets to buy more tooling and equipment this fall. That’s driving business for the companies that make those products, and it indicates growing optimism in the industry at large. Bill Beattie, president of BarMORE INSIDE dons & Oliver, a Brown Gibbons Lang machinery mak& Co. report shows er in Solon, said high growth for U.S. companies manufacturing across the counsector. Page 19 try are approaching 80% capacity utilization, which is a high number based on historical norms. Customers that might have been putting off purchasing equipment are having a harder time doing so now, he said. Bardons & Oliver makes equipment for processing tube, pipe and bar for a diverse range of industries, including energy,

See CURVE, page 8

See DEMAND, page 17

JANET CENTURY

Esperanza executive director Victor Ruiz, a product of Cleveland public schools, says the Hispanic community is critical to Cleveland’s growth.

GETTING AHEAD OF THE CURVE 30% The graduation rate of Hispanic students in Cleveland public schools in 2011, an all-time low.

64.3% The current graduation rate for Hispanic students, an all-time best.

With help of Esperanza, Hispanic graduation rates in Cleveland have soared By TIMOTHY MAGAW tmagaw@crain.com

In 2011, Cleveland Metropolitan School District CEO Eric Gordon decried the district’s dismal Hispanic graduation rate as a crisis in the community. At 30%, that figure — an all-time low — was more than 20 percentage points lower than that of the district’s overall student population and well below that

Firefighters banking on Lorain County with latest addition By JEREMY NOBILE jnobile@crain.com

Firefighters Community Credit Union in Cleveland is continuing expansion efforts with its first foray into Lorain County at the end of the year via its acquisition of Sun Center Federal Credit Union of LaGrange.The transaction takes effect

ographic footprint and bolstering membership since the adoption of its community charter in 2005. Firefighters, which currently serves Lake and Cuyahoga counties, will take over operations of Sun’s five Lorain County locations. The deal has been in the works since spring. Firefighters will add $35 million in assets, about 4,000 members and

18 employees with the merger, said CEO Ben Laurendeau. The deal will take Firefighters to $235 million in assets with about 32,000 members and 80 employees. Mergers of credit unions have become increasingly common since the end of the Great Recession, Laurendeau said, especially for Firefighters, which is complet-

ing its fourth acquisition in about as many years in the transaction with Sun. “It’s just very difficult for a small credit union to survive with additional regulatory burdens (and) aging memberships. … There are a lot of forces that make it hard to survive,” he said. “We want to be an See FIREFIGHTERS, page 8

ALSO INSIDE: NEWSPAPER

74470 83781 0

Dec. 31, pending regulatory approvals. Financial terms of the transaction were not disclosed. The deal is rooted in succession planning for Sun, from which CEO Brenda Hammond will retire in December, and in strategic planning for Firefighters, where board members have been pushing the credit union to continue expanding its ge-

SMALL BUSINESS Entering its third year, the Cleveland Flea is popular, profitable and entrepreneur-friendly ■ Pages 13-15 PLUS: ADVISER ■ TAX TIPS ■ & MORE

20141124-NEWS--2-NAT-CCI-CL_--

11/21/2014

11:44 AM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

Sale to private equity firm should bolster Q Holding Co. By MIKE McNULTY Rubber & Plastics News

Precision molded rubber and silicone components maker Q Holding Co. of Twinsburg will get an opportunity to further expand its growing business in Europe and in other regions of the world under the guidance of a new owner. Private equity firm 3i Group P.L.C., with a strong foundation in Europe and elsewhere, plans to purchase the company and its three operating businesses — Qure Medical, QSR, and Quadra Tooling and Automation — from Industrial Growth Partners for an estimated $160 million.

Both 3i and Q Holding have a common goal of expanding in a number of regions. The transaction, which is subject to standard regulatory approvals, is expected to close in mid- to late-December. Q Holding President and CEO Randy Ross said the company’s management team and workforce of about 1,100 will remain intact. The firm operates six manufacturing facilities in the United States and China, selling products in more than 50 countries, and has a sales and engineering office in Germany. He said the management team was given an opportunity to invest in the operation, “so I have an in-

terest in the company.” Q Holding primarily serves the automotive, medical and pharmaceutical markets with goods made by Qure Medical and QSR.

Well positioned Richard Relyea, a 3i North America partner based in New York, said Q Holding “is an excellent business and a global leader in the majority of its product categories. It’s well positioned in the markets it serves.” He said his firm is looking forward to working with Q Holding’s management team “to build upon this strong platform for growth, in particular leveraging our local pres-

ence and network to help accelerate the company’s continued international expansion.” Relyea said there are excellent growth opportunities for Q Holding not only in the United States but in Mexico, Europe and China. “We have a terrific depth of resources to help them grow.” 3i is a leading international investment manager based in England. It is well-known throughout Europe where it has had a strong base since the 1940s, Ross said. It “has the network to help us be a global partner to our key customers. Our shared vision of ‘customer first’ philosophies and 3i’s unique position to help support Q’s

end market strategies makes 3i an ideal partner for this phase of the business.” With its expertise and contacts in Europe, 3i will be able to help Q Holding navigate in its bid to grow further in Europe, he said. A good portion of that growth is expected to be organic driven by the creation of new or improved products, he added, but some could come via acquisitions. “I see this (acquisition) as a benefit to us in order to find the right platform for us as we expand in Europe,” according to Ross. Relyea agreed, noting that in addition to organic growth, selective See Q HOLDING, page 7

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com

Let your health plan go to the birds. D you see a solution to the Do growing gaps in your benefits? g Your employees may. Y It’s called voluntary insurance, and almost It 60 percent of employees wish their employer 6 offered it1. o In this changing insurance landscape, Aflac has offered voluntary coverage and nothing else for o nearly 60 years. And it shows. With a one-day n average turnaround2 for online claims, Aflac is a a great way to make employees happy, which may g make you happy as well. m Best of all, Aflac comes at no direct cost to B employers like you. Just add a payroll deduction, e notify your workforce and let it fly. n

Call your local agent and visit C aﬂac.com/business a

Publisher: John Campanelli (jcampanelli@crain.com) Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Kevin Kleps (kkleps@crain.com) Sports 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) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Rachel McCafferty (rmccafferty@crain.com) Manufacturing and energy Jeremy Nobile (jnobile@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Art director: Rebecca R. Markovitz (rmarkovitz@crain.com) Events manager: Jessica Rasmussen (jrasmussen@crain.com) Special events coordinator: Kim Hill (kehill@crain.com) Marketing strategist : Michelle Sustar (msustar@crain.com) Advertising director: Nicole Mastrangelo (nmastrangelo@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsie Bowman (lbowman@crain.com) John Banks (jbanks@crain.com) Laura Kulber Mintz (lmintz@crain.com) Office coordinator: Denise Donaldson (ddonaldson@crain.com) Web Editor: Damon Sims (dpsims@crain.com) Digital strategy director: Nancy Hanus (nhanus@crain.com) Audience development director: Eric Cedo (ecedo@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Billing: Lana Semaan, 313-446-6091 (lsemaan@crain.com ) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Customer service/subscriptions 877-824-9373

Crain Communications Inc.

2013 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 7 – 24, 2013. 2Aflac Company Statistics, October 2013, One day processing turnaround based on business days after required documents are received. Online claims available for Accident, Sickness, Cancer & Wellness claims. Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York. Worldwide Headquarters | 1932 Wynnton Road | Columbus, GA 31999

Z131176

11/13

Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Chris Crain: Executive Vice President, Director of Strategic Operations KC Crain: Executive Vice President, Director of Corporate Operations Dave Kamis: Vice president/production & manufacturing Anthony DiPonio: Chief Information Officer Thomas Stevens : Chief financial Officer Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)

20141124-NEWS--3-NAT-CCI-CL_--

11/21/2014

1:13 PM

Page 1

Have you picked-up one of these for the holidays?

How about one of these?

CLASSIC BMW

2014 320i XDRIVE PER MO LEASE

$329*

36 Month lease requiring $3,995 Cash or Trade due at signing 10,000 miles per year and 20¢ charge per mile over. Plus tax, title, license and doc. fee. *Additional charge for certain exterior colors

And a few more delicious offers to whet your appetite.

BMW 2014 528i xDrive MONTHLY LEASE

BMW 2014 X3 xDrive28i

$497

MONTHLY LEASE

BMW 2014 750Li xDrive

$554

MONTHLY LEASE

$1170

36 Month lease requiring $3,995 Cash or Trade due at signing. 10,000 miles per year and 20¢ charge per mile over. Plus tax, title, license and doc. fee

36 Month lease requiring $3,995 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee

CADILLAC AWD 2014 ATS MONTHLY LEASE $309

CADILLAC 2015 SRX MONTHLY LEASE $369

CADILLAC AWD 2014 CTS MONTHLY LEASE $429

39 Month lease requiring $799 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $38,160 - ST#W11244) No Security dep. required.

39 Month lease requiring $2,999 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $38,600 - ST#W11714) No Security dep. required.

39 Month lease requiring $999 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $53,925 - ST#W11737) No Security dep. required.

Save an extra $750 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required ....

Save an extra $1,000 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required .... OR, Save an extra $1,500 with GM LEASE LOYALTY - Trade-in not required.

FWD

2.0 TURBO

Save an extra $1,000 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required OR, Save an extra $1,000 with GM LEASE LOYALTY - Trade-in not required.

Please call for complete list of qualifying vehicles and details.

LUXURY COLL.

Please call for complete list of qualifying vehicles and details.

LEXUS

2015 Lexus RX350 AWD

2014 Lexus ES350

2014 Lexus GX460 AWD

“Ranks #1 Luxury Midsize SUV’s, #1 Luxury SUVs with 2 Rows, #1 Luxury Crossover SUVs”

“The 2014 Lexus ES350 remains the standard bearer for a relaxed, luxuriously

“I love the car, drives smoothly, has the power. It is pure luxury my kids love it as well... “ - Cars.com Consumer Review

insulated form of transportation.” – Edmunds.com “This is one smooth operator...” - Autoweek Review

-U.S. News, Best Car Rankings For The Money

BMW

CADILLAC

LEXUS

WILLOUGHBY HILLS 888 439 8833

MENTOR 440 255 6955

WILLOUGHBY HILLS 800 525 7594

CLASSIC DRIVECLASSIC.COM

Offers end 11/30/14

20141124-NEWS--4-NAT-CCI-CL_--

11/21/2014

11:45 AM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

Cleveland is anxiously awaiting the madness

SOLD 1120 WEST 120TH STREET BRUNSWICK, OHIO

City is among top two or three sites in ticket sales for NCAA tournament By KEVIN KLEPS kkleps@crain.com

Newmark Grubb Knight Frank is pleased to announce the sale of the 100,301 square foot industrial building at 1120 West 120th Street in Brunswick, Ohio. Terry Coyne and Kristy Hull represented the buyer, RRR Brunswick Acquisition LLC.

Visit

TerryCoyne.com Or Call Terry at

216.453.3001 1350 Euclid Ave., Suite 300 Cleveland, Ohio 44115

ARE YOU WORKING WITH A LOAN PROCESSOR OR A DEAL MAKER? Call the lender that can get your deal closed.

Jonathan Mokri 440.526.8700 jmokri@cbscuso.com

SIVE AGGRES CING S FINAN BUSINES N 0 MILLIO UP TO $1 Toll Free: 888.697.9555 | www.cbscuso.com SM Providing Commercial Loan Financing in Partnership with Area Credit Unions SM

In late March, the NCAA men’s basketball tournament will return to Cleveland for the fourth time. On this occasion, a Final Four berth will be on the line, and the city is already getting a taste of the madness. As of Thursday, Nov. 20, fewer than two dozen individual tickets remained for the Midwest Regional semifinals and championship, which will be held March 26 and 28 at Quicken Loans Arena. As many as 3,000 more tickets could be available on the eve of the event, said Jeff Bacon, the MidAmerican Conference’s senior associate commissioner for championships and sport development. Because of that, the MAC will soon start collecting names for a waiting list. There are 13 cities that will host March Madness games prior to the 2015 Final Four, and Cleveland is in the top two or three in ticket sales, Bacon said. “The tournament always sells well, but we are outperforming the norm,” Bacon said. There will be four college hoops teams traveling to Cleveland for the Sweet 16 and Elite Eight, and the NCAA requires each university to purchase at least 500 tickets. The schools have the option of purchasing an additional 750 tickets each. If they decline, those seats are made available for purchase — but not until the day before the event, which in Cleveland’s case would be Wednesday, March 25. “Odds are heavy that a lot will get turned back in to us,” Bacon said. “We’ll get those turned into us Wednesday at noon, so there will be a huge push in those 24 hours between Wednesday and Thursday. That will be their best chance (to buy tickets).” The number of tickets that become available depends on the draw. If Ohio State plays here, as the Buckeyes did in the rounds of 64 and 32 in 2011, that total goes down significantly. The same goes if Cleveland State, or a MAC school such as Kent State or Ohio, makes an unexpected run to the NCAA tournament’s second week.

Cleveland is ‘pacing ahead’ A sold-out venue for the NCAA tournament, especially for three games that eventually determine a Final Four participant, is nothing new. In fact, Jeff Pacini, the Greater Cleveland Sports Commission’s vice president of business development, said the sales thus far are “sort of what was expected.”

KEVIN KLEPS

Quicken Loans Arena will host the NCAA Midwest Regional semifinals and title game on March 26 and 28, 2015. But Pacini said Cleveland has been “pacing ahead” of other 2015 NCAA tournament venues. “We’re doing very well compared to other markets,” he said. “Without having seen the numbers, if you look at a facility like Syracuse, they’re playing in a dome, and they obviously have a much longer road to sell it out.” Two of the four regional sites for the Sweet 16 will be held in facilities that can hold crowds of at least 49,000 — the Carrier Dome in Syracuse, N.Y., and NRG Stadium, the 71,500-seat home of the Houston Texans. The other 2015 Sweet 16 hosts — Staples Center in Los Angeles, with a capacity of 18,997, and The Q (20,562) — aren’t nearly as large. But Cleveland’s arena is no slouch. The Q’s capacity is the NBA’s third-largest, and only six college teams play in larger venues. Pacini believes the heightened interest is due in part to Cleveland getting selected to host games on the second weekend of the tournament, after being home to openingweekend contests in 2000, 2005 and 2011. “The advantage we have is this is the first time that a team will qualify for the Final Four out of Cleveland,” the sports commission VP said. “There’s certainly a high level of interest and demand.” In addition to the small allotment of individual tickets — as of Nov. 20, only eight of The Q’s 33 sections had tickets that could be purchased (at $200 a pop), and the seats available in each upper-level spot were extremely limited — basketball enthusiasts can buy Fan Experience packages from the NCAA. Those tickets, which the NCAA says include a “pregame happy hour with light hors d’oeuvres and a cash

Volume 35, Number 47 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2014 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750

bar,” are much more costly. The Fan Experience tickets range from $295 to $1,015 for individual days, and $455 to $15,800 each for all three Cleveland games.

How sweet it is There will be plenty of high-profile organizations working together to make sure Cleveland’s first Sweet 16 is a success. The MAC and Cleveland State are running the basketball operations, the Cavs and the staff at The Q will take care of the in-arena logistics, and the sports commission will make sure the hotels are ready and the participating schools get “unique experiences,” Pacini said. Cities that have hosted the regional semifinals and finals have projected an economic impact of $8 million to $10 million, Pacini said. He said the sports commission likely will do an economic study of the event, but it’s “comfortable with that number.” Pacini compared the Midwest Regional to the MAC tournament in terms of the number of visitors. The MAC men’s and women’s basketball championships annually bring a combined 16 teams and 14 games to The Q in March. According to a study released by the conference in June 2013, the four-day MAC tournament that spring produced an economic impact of $14.5 million, with 70% of the visitors from outside the region. “There are more teams and more games for the MAC tournament,” Pacini said. “When you balance it out, it’s very similar. The advantage of the regional is you have a massive TV audience seeing Cleveland showcased and seeing Cleveland in the spotlight.”

Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 482079911, or email to customerservice@crainscleveland.com, or call 877824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

20141124-NEWS--5-NAT-CCI-CL_--

11/21/2014

3:21 PM

Page 1

NOVEMBER 24 - 30, 2014

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

CANDY MAN SHINES IN SKIN SECTOR La Lumiere gets $20 million investment from Johnson & Johnson for mask it’s developed that uses LED light to fight acne and aging By CHUCK SODER csoder@crain.com

An entrepreneur who once modeled himself after Willy Wonka could have another huge hit on his hands. Johnson & Johnson just invested $20 million in Jay Tapper’s latest company, which has developed a mask that uses LED light to fight acne or wrinkles, depending on which version you buy. The company, La Lumiere, has generated about $10 million in sales since February, when the illuMask started appearing in Walmart, Target and other stores throughout the country. That’s a lot of illuMasks, considering that the device only costs $30. It’s significantly cheaper — often many times cheaper — than other light therapy devices on the market. But Tapper is aiming higher: He expects sales to quadruple next year. Sound far-fetched? Consider this: Tapper already has played a key role in commercializing a string of hit products, including the Spin Pop (a spinning lollipop), the Dish Doctor (a spinning dish scrubber) and the Original Goody Bag (a bag full of candy and toys). He and the teams he’s worked with over the years have sold several businesses to big-name companies in the consumer products sector, including Procter & Gamble, Unilever and Hallmark. Plus, La Lumiere, which has offices in Oakwood Village and New

CONTRIBUTED PHOTO

La Lumiere founder Jay Tapper wants to sell the illuMask “to the masses.” That’s why it costs only $30.

See MASK, page 18

Hanna-Ostendorf merger includes new digs Brokerage soon will be housed at US Bank Centre in PlayhouseSquare By STAN BULLARD sbullard@crain.com

Hanna Chartwell and OstendorfMorris Co. will start the new year — and their future as a merged commercial real estate brokerage — on the seventh floor of the 16-story US Bank Centre building in PlayhouseSquare. Mac Biggar, a founding principal of Hanna Chartwell, said the companies landed at PlayhouseSquare to participate in the excitement of the theater district’s revival and continue to support downtown. In taking 15,000 square feet of the building at 1350 Euclid Ave., the combined company also obtained leasing and property management assignments for US Bank Centre from its ownership, a joint venture of office and industrial developer Ross Farro and Moreland Hillsbased Wolstein Group.

Howard “Hoby” Hanna IV, the Cleveland-based president of the Howard Hanna Midwest unit of Pittsburgh-based Howard Hanna Real Estate Services, said the newly renovated office will allow the firms to start working together in a fresh environment that also gives them room to grow. Howard Hanna last June announced the purchase of Ostendorf-Morris, a 75-year-old firm considered the dean of the city’s commercial brokerages. It plans to combine O-M with Hanna Chartwell, a commercial realty brokerage and auction firm the residential brokerage acquired in 2013 to enter the commercial business here. “We’re excited to develop the relationship with (the owners) and do business with them at the building,” Hanna said. “The new space is designed to inspire our commercial

brokers to do more business locally, nationally and globally.” To combine, O-M will exit the 1100 Superior office building, which has been its home for 30 years, and Hanna Chartwell will leave the Tower at Erieview, 1301 E. Ninth St., where it has been located since 2006. Hanna and O-M will shed space to become more efficient as they combine operations, Biggar said. OM is in about 20,000 square feet, while Hanna Chartwell is in about 8,000 square feet. The new office will accommodate about 100 people from the combined companies, with about 30 offices and 40 work stations as well as shared desk space for brokers, who spend substantial amounts of time in the field. The space can accommodate about 100 staffers from the combined firms See DIGS, page 16

STAN BULLARD

Hanna Chartwell and Ostendorf-Morris Co. will occupy the seventh floor of the 16-story US Bank Centre building in PlayhouseSquare.

20141124-NEWS--6-NAT-CCI-CL_--

11/21/2014

1:12 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

Income Producing Property Available for Sale or Lease 1495 Warren Road, Lakewood

• Multi-Tenant Ofﬁce Building • 12,200 Total SF • 3,000 SF Available • Remodeled in 2004 Gregory B. West

• 21 Parking Spaces • Located in Downtown Lakewood • Close to I-90 and the Shoreway

seventy-fifth

David R. Horowitz 216-861-7200 www.ostendorf-morris.com

anniversary

global commercial real estate services

Offering breakfast, lunch and catering with private room available for meetings Hours: Monday - Saturday 7 AM to 3 PM 1332 Carnegie Ave Cleveland 216-239-1141 www.hotspotcafecleveland.com

Region gains 1,272 jobs in October By JAY MILLER jmiller@crain.com

Nowacki Asset Management LLC

Period

Nowacki Asset Management (NET)

Growth of $1 Million

S&P 500 Total Return

Growth of $1 Million

May 2011 - Year End

-7.46%

$925,400

-6.37%

$936,300

2012

29.99%

$1,202,927

16.00%

$1,086,108

2013

51.76%

$1,825,563

32.39%

$1,437,898

10/31/2014

21.59%

$2,219,459

10.99%

$1,595,988

The Northeast Ohio jobs rollercoaster — recently more like a kiddie coaster because of its modest up-and-down slopes — continues. The region in October saw a slight month-to-month gain of 1,272 jobs in the non-farm private sector over September, according to the Ahola Crain’s Employment Report. That’s a 0.11% increase to 1,161,098 jobs in October from 1,159,825 in September. After a steady increase over the early months of 2014, up months have been followed by down months, with the biggest dip in July. Seasonally adjusted employment in June reached 1,162,665 in the seven counties of Northeast Ohio before a loss of 6,645 jobs in July to 1,156,020. October to October, employment in 2014 is up 13,494 jobs over the like month in 2013, a 1.17% increase. “What (the ACE Report) shows is that growth is happening, but it’s slower than anyone would like,” said Joel Elvery, an economist with the Federal Reserve Bank of Cleve-

MORE ON THE WEB For a breakdown of the monthly job numbers by industry, a look at Crain’s previous monthly reports, links to employment data resources and more, go to our ACE Report homepage: crainscleveland.com/acereport.

land. “I don’t see it picking up or slowing down.” Northeast Ohio’s gain, however, lags slightly behind the month-tomonth employment growth statewide and nationally. Ohio gained 6,290 private sector jobs in October, according to the ADP Regional Employment Report, a 0.14% increase. Nationally, ADP reported a 230,000 increase in the working population, about a 0.17% increase. The ACE Report is based on payroll data from 3,000 employers gathered by The Ahola Corp., a Brecksville payroll and human services firm. ADP LLC, a Roseland, N.J.-based human resources and payroll management firm, compiles similar information based on its payroll processing base of 24 million workers nationwide.

“It looks like manufacturing is up a little bit,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “We’re also seeing the benefits of (growth in) the national economy that is moving a little faster.” Of the 1,272-job increase, 737 of those jobs were in manufacturing, a 0.34% increase. Service industry jobs grew by 535, a 0.06% increase, the report shows. “That’s not surprising. We’re still a manufacturing-based economy (in Northeast Ohio) that’s tied to the auto industry,” Kleinhenz said. “We’ve seen a reasonably strong uptick in car sales.” Closer to the ground, Jeff Ahola, CEO of Ahola Corp., said his company is seeing another kind of employment growth. “We’re seeing more and more businesses getting formed and they tend to outsource their payroll processing” to Ahola and competing companies, he said. “The sales reps here see people who have been sitting on opening up their franchise or ramping up a new business. Now, they are starting to get these business formed.”

Note: Returns are shown in U.S. dollars after fees. Date of inception for Nowacki Asset Management is May 2nd, 2011. Nowacki Asset Management (NAM) is a registered investment advisory firm specializing in value-oriented investment management. All client assets are included in one composite and invested using a value-oriented strategy. NAM claims compliance with the Global Investment Performance Standards (GIPS®). The S&P 500 Total Return index is subject to volatility and the NAM composite may or may not be more volatile than the index. Past performance is not aguarantee of future performance. Investments carry risks and the potential for loss. Results as of 10/31/2014 are still subject to final verification by an independent third-party. NAM only uses short-term margin or leverage to buy securities after a client commits to deposit funds and the funds are in the process of being transferred, but the money has not yet completed the transfer process. To receive a list of composite descriptions of NAM and/or a presentation that complies with the GIPS standards, contact Michael T. Nowacki at (440) 488-6936 or write Nowacki Asset Management, 29525 Chagrin Blvd. Suite 301, Pepper Pike, Ohio 44122, or michael@nowackiassetmgmt.com.

CRAIN’S BLOGS GET THE LATEST FROM OUR EDITORS AND REPORTERS, INCLUDING: EDITOR’S CHOICE: Managing editor Scott Suttell rounds up news and views about business, and stories of interest in Northeast Ohio. Weekdays

HEALTH CARE: Reporter Timothy Magaw breaks down the latest news about the region’s hospitals. Tuesdays

SPORTS BIZ: Assistant editor Kevin Kleps writes about the Browns, Cavaliers, Indians and much more. Weekdays

WHAT’S COOKING: Twice per month, freelance reporter Kathy Ames Carr has morsels on the local restaurant scene.

CRAINSCLEVELAND.COM/SECTION/BLOGS

20141124-NEWS--7-NAT-CCI-CL_--

11/20/2014

3:46 PM

Page 1

NOVEMBER 24 - 30, 2014

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

Ricerca will ‘have Q HOLDING to hire,’ not cut its Concord workforce continued from page 2

acquisitions in Europe and North America within the fragmented silicone molding sector would benefit Q Holding. Any acquisitions would have to fit well with the companies within the Q Holding operation, he cautioned.

Stronger base

By CHUCK SODER csoder@crain.com

Ricerca Biosciences will survive. The idea that Ricerca might close down or lay off lots of people has been tossed out the window by the investors who just bought the chemical research company. They’d rather help the company grow — and add more employees. “We’re going to have to hire,” said Cliff Croley, Ricerca’s new CEO. “We know that for sure.” An Akron-based investment firm called Main Market Partners LLC bought Ricerca last week. The firm describes itself as a “growth-oriented equity investment group” — which is a good sign for Ricerca’s 200 employees, most of whom work at the company’s headquarters in Concord. Croley said the company had been “underperforming.” Much of Ricerca’s revenue traditionally has come from pharmaceutical companies. In recent years, those companies have spent less on drug development, which meant less demand for Ricerca’s services. Thus, Ricerca in August sent a letter to the state of Ohio saying it might lay off a significant number of employees or close down. But Croley said the company sent the letter to cover its bases. In early September, Croley told Crain’s that layoffs could be prevented if Ricerca found a buyer for at least part of the business. And Ricerca already had identified a few potential buyers. One potential buyer already was working on behalf of the company. Ricerca had hired a management consulting firm called Croley, Martell & Associates, which specializes in helping companies deal with challenges and changes. That company is named after Cliff Croley and Michael Martell, who also run Main Market Partners from the same office in Akron. In order to prevent a conflict with their role as management consultants, they didn’t express interest in buying Ricerca until company officials asked it they would consider it,

according to Croley, who had served as chief restructuring officer for Ricerca. While working to restructure the company, they “fell in love with the business,” according to Martell, who noted that roughly a third of its employees hold doctorate degrees. They feel like there are opportunities for Ricerca to grow. A few of the company’s European competitors have gone out of business. Plus, pharmaceutical companies are starting to spend more on research and development, Croley said. “We think the market timing is right,” he said. Today, the pharmaceutical industry accounts for about one-third of Ricerca’s revenue, which is in the range of $40 million to $50 million annually. The rest comes from the agricultural chemicals industry and other chemical-related businesses. The company’s new owners see opportunity to expand in those areas as well, though they wouldn’t go into detail about their plans. Ricerca’s new owners have access to the financing the company might need to expand. Today, the company is “well capitalized” and debt free, according to Croley, who said he couldn’t provide details about the company’s previous financial situation. And if Ricerca needs even more money, Croley said Main Market Partners could probably find it. The company regularly makes investments with other investors. “We have partners who are there and ready for us when the time is right,” he said. Ricerca — which was previously owned by large investment funds — may benefit by having local owners, Croley said. Main Market Partners isn’t required to sell the company after a given number of years, he added. But it won’t be long before Ricerca starts growing again, Croley said, noting that the company would look a lot different in six months. “I predict you’re going to see a place that’s just absolutely cranking — and growing,” he said.

GET DAILY NEWS ALERTS FROM CRAIN’S

As Q Holding’s companies have grown, Ross said, “The level of funds you need to continue growing gets bigger.” 3i can help the company in that department and has a bank of contacts in Europe, which made it a good match for Q Holding, he said, adding that 3i reached out to him and proactively courted the company because of its growth potential. Q Holding has strong representation in NAFTA countries and in China, he said. And its sales and engineering office in Germany is a good beginning for the company in Europe. Its next logical step is to put a manufacturing operation in place in Europe, Ross said. Both QSR — a maker of automotive, industrial and aerospace rubber goods, such as connector seals and ignition insulators — and Qure Medical — a producer of elastomeric products, including catheters and syringe plungers, for the medical and pharmaceutical industries — can operate out of the same facility, he said. “Normally they operate out of separate plants,” he said, “so down the line we could be talking about two separate plants. Ultimately ... we’re going to need more brick and mortar.” But that’s down the road. Right now, Ross said he’s

RUBBER & PLASTICS NEWS

Q Holding Co. of Twinsburg “is an excellent business and a global leader in the majority of its product categories,” according to 3i North America partner Richard Relyea. happy with the company’s present position and looking forward to the development of new products that will help Q Holding’s operations grow. (McNulty is a senior reporter at Rubber & Plastics News, a sister publication of Crain’s Cleveland Business.)

Brag. Did your company have a stellar year? Looking for a unique way to thank your clients?

An ad in Crain’s is the best way to boast to the Cleveland business community.

REGISTER FOR FREE E-MAIL ALERTS AND RECEIVE: THE MORNING ROUNDUP: The day’s business news from Ohio’s daily papers BREAKING NEWS ALERTS DAILY HEADLINES: Crain’s-produced news and blog items from the day REAL ESTATE REPORT: A weekly guide to real estate news. Published Monday. HEALTH CARE REPORT: A weekly guide of changes in the health care industry. Published Tuesday.

DEALMAKER ALERT: A weekly guide on M&A trends and recent transactions in Ohio. Published Wednesday. MANUFACTURING REPORT: A weekly guide to Northeast Ohio’s manufacturing sector. Published every other Wednesday. SMALL BUSINESS REPORT: A weekly guide to small business news. Published Thursday. SHALE AND ENERGY REPORT: A weekly guide to the energy industry. Published Friday.

Book your ad by December 4th to run in our best issues.

Contact Nicole Mastrangelo nmastrangelo@crain.com • 216-771-5158

20141124-NEWS--8-NAT-CCI-CL_--

11/20/2014

3:47 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

CURVE continued from page 1

The district’s overall graduation rate continues to inch upward — the most recent data put it at a record 64.3% — but the improvements among the Hispanic population have been among the most dramatic. Some of the credit, of course, can be attributed to the district, but much of the success can be chalked up to Esperanza, a local nonprofit that retooled its strategy to focus primarily on guiding young Hispanics toward graduation. “If we want to grow Cleveland, if we want to have those 21st century jobs, the population we’re going to turn to 15-20 years is the Hispanic community,” said Victor Ruiz, Esperanza’s executive director and a product of the Cleveland public schools. “We weren’t going to be ready (with the current graduation rate.)” Esperanza was birthed in the early 1980s as a vehicle to award student scholarships. While that’s still part of the group’s mission — it gave out $120,000 in student scholarships this year — Esperanza has focused more so on developing programs designed to help students complete high school. For example, Esperanza now offers three rounds of Ohio Graduation Test prep each year, one-on-one mentoring, tutoring and services. The organization also offers what it calls Saturday Academy, which runs six consecutive weeks and provides students information on careers, colleges, college-entrance testing and financial aid, and programs designed to support students’ parents. The group teaches parents, for example, how to read report cards and make appoint-

NOVEMBER 24 - 30, 2014

FIREFIGHTERS ments with teachers and principals. As Esperanza’s programming has expanded, so has its budget. In 2009, the organization was barely a $600,000-a-year operation — a figure that is expected to reach about $2 million next year. Some of the group’s major funders have included The George Gund Foundation, Saint Luke’s Foundation and United Way of Greater Cleveland. The Cleveland Foundation has been one of the group’s biggest backers and helped fund its work to revamp its strategic plan to focus on graduation issues. “They’ve really seen significant improvements,” said Bob Eckardt, the foundation’s executive vice president. “They’ve moved beyond scholarships to ensure kids get all the support they need,” he said. “The district only has the kids a certain number of hours a day. It’s hard to provide the individual enriched services when you’re in a group setting. Groups like Esperanza can have additional hours and offer those individualized services to the students.”

Parental support With three years of marked success under its belt, Ruiz said Esperanza is looking to expand its educational mission as it pieces its new strategic plan. The bulk of its programs now are geared toward middle and high school students. He envisions Esperanza focusing more on third grade and even pre-school reading programs and STEM — science, technology, engineering and mathematics — education. He’d also like to see Esperanza do more work to boost school attendance. All of that,

Ruiz said, depends on whether Esperanza can attract the required funds to do that work. Meanwhile, late last year, the United Way of Greater Cleveland and the district announced that a group of local nonprofits would assist select schools in the district with academic and social support services for students and their families. One of the schools Esperanza works with is Luis Munoz Marin elementary school in Tremont, which over the last year has seen a 500% increase in the number of parents coming through the school’s doors, according to its principal, Jeffery Keruski. “It’s very difficult for educators to educate children without having parent support and creating those community relationships,” Keruski said. “What an organization like Esperanza does is bridge that gap. They’ve been able to engage the Hispanic community, but also the community as a whole.” Jose Feliciano, who chairs the Hispanic Roundtable, described Esperanza as the “most important organization in the Hispanic community.” However, he expressed some worry that it may be taking on too much and cautioned against pushing Esperanza to solve every educational issue the Hispanic community has. Still, he lauded the district CEO’s willingness to work with the Hispanic community and particularly Ruiz’s leadership. “Victor is one of our young superstars,” said Feliciano, a partner at BakerHostetler and a former city prosecutor. “We need to keep supporting him and developing him. He’s really taken that organization to proverbial next level.”

A Riddle for Smart Businesses:

continued from page 1

active player, and so this is part of our growth and expansion strategy.” The deal is bittersweet for Hammond, who has served members at Sun for more than 34 years. But it’s in the best interest of the credit union’s members, she said, and even employees who will now have further career opportunities. “As regulatory compliance becomes more prevalent, more and more small credit unions across the United States are choosing to merge with much larger credit unions to be able to continue serving the membership that has made them successful,” Hammond said. “With that being said, I felt that (Firefighters) was our best choice in our surrounding area,” she said. “Their focus is on excellent member service and creating loyalty as well. Sun Center FCU was in a position to select a partner that we felt mirrored our overall business plan, and fortunately Firefighters saw value in (Sun).” Laurendeau predicted that consolidations will continue, based on factors including the need to attract younger members, the growing costs of meeting new regulations that smaller credit unions might find hard to absorb, and the looming retirements of leaders of many credit unions formed decades ago. He added that he’s “pretty optimistic” another deal for Firefighters could materialize in 2015 that would bring the credit union into yet another new market. But those talks are early on. Firefighters’ other mergers in recent years were also partly driven by retirements of the acquired credit unions’ CEOs. Laurendeau describes Firefighters as a “breakout” credit union

partly because of its “very serious strategy” to establish itself as a “true community financial institution” with a broader footprint and expan- Laurendeau sive membership base. “But we certainly are not attempting to put any credit unions out of business or steal other business from other credit unions,” he said. Beyond accomplishing Firefighters’ various growth goals of branches, members and assets, chief marketing officer Jennifer Norris said the acquisition of Sun benefits the latter’s members by offering contemporary, technology-driven services like text and email alerts, remote deposit and a mobile app. Firefighters also is a member of a shared-branching network — a national network of credit unions that allows the cooperative sharing of more than 5,000 facilities across the country. “This collaborative partnership will provide our Lorain County members much more technology, services and locations in our immediate area,” Hammond said. “In addition, it affords Firefighters members in Cuyahoga County the same benefits.” Firefighters was founded in 1936 exclusively for members of its namesake safety force. The credit union opened membership up to all in 2005. But while the institution continues to evolve, there aren’t any plans to change the name. “The history and heritage of our credit union is very important to our board,” Laurendeau said.

SALT • SALT • SALT • Water Softener • Industrial • Food • Ice Melt • Sea Salt

Call For Pricing!!

55% OF BUSINESSES SAY THIS BRINGS IN MORE REVENUE.*

Minimum Delivery: 1Pallet

WHAT IS IT? It’s WiFi. And with Guest WiFi from Cox Business, you can beneﬁt your business and your customers with the ability to separate your business’ WiFi from your guests’. Give your customers fast speeds and the best available WiFi service, while keeping your network secure. See why Guest WiFi is the smart business solution. Book an appointment with your Cox Business Account Representative and ask how you can receive 50% off your ﬁrst two months.

CALL TODAY (216) 535-3323 *

Small Business WiFi Survey. Bredin Research, Dec 2013. Offer expires 9/30/2014. Available to new commercial subscribers of Cox Business Guest WiFi. Offer applies to monthly service fees for Guest WiFi service. Guest WiFi requires separate subscription to Cox Business Internet SM Gateway service for your Business Internet access. Offer excludes equipment, installation, taxes, and fees unless otherwise indicated. Speeds not guaranteed and may vary. Other restrictions apply. © 2014 Cox Communications, Inc. All rights reserved.

1-800-547-1538 Salt Distributors Since 1966

20141124-NEWS--9-NAT-CCI-CL_--

11/20/2014

3:10 PM

Page 1

NOVEMBER 24 - 30, 2014

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

CRAIN’S BUSINESS DIVERSITY COUNCIL Earlier this year, Crain’s Cleveland Business formed an 11-member minority advisory board to provide objective, constructive input on minority-based issues for Crain’s. The Crain’s Business Diversity Council has met regularly since April. This is one in a series of profiles of its members.

MICHAEL J. HOUSER Political and community activist Michael J. Houser knows that other members of the Crain’s Business Diversity Council have more business experience. So what does he bring to the group? For one, more diversity. The 26-year-old political junkie is the youngest member of the council, which Crain’s formed this past spring. His age gives him a unique perspective. For instance, he’s involved in several local organizations for young professionals, such as Engage! Cleveland, Cleveland Young Professional Senate and Social Society Cleveland. Those groups have helped him get to know some of the up-and-coming leaders in Northeast Ohio. “Young people are going to be the future of our city,” he said. Plus, he has first-hand knowledge of some of the challenges that keep some young people from succeeding these days. After graduating from Cleveland’s Lincoln-West High School in 2006, Houser struggled during his first year at Kent State University. But he graduated with a degree in public communications in 2011. While at Kent State, he served as an intern on the campaign of Marian Harris, a Democrat who served one term in the Ohio House of Representatives. That experience helped ignite his already-growing

passion for politics. Houser later served as a field organizer for We Are Ohio, a group that worked to repeal Ohio Senate Bill 5, a law that would have reduced the power held by unionized state employees. Next, he spent a year as president of the Northeast Ohio chapter of the Ohio Young Black Democrats, a group he remains involved with today. He has worked for two Democratic congressmen in Ohio — U.S. Sen. Sherrod Brown and U.S. Rep. Tim Ryan — and he even ran for a seat in the Ohio House of Representatives. But he finished third in the primary this past May. One of his opponents, Democrat Stephanie Howse, went on to represent District 11, which includes much of Cleveland’s East Side and Garfield Heights. Houser also was recently laid off from a part-time position as an education specialist with the Boys & Girls Club of Cleveland. The non-

profit eliminated his program, which sent employees to run afterschool programs at area schools. So he knows what it’s like to struggle in his career. But he also knows what it’s like to persevere. “If I ran every year, how could I not become an elected official?” he said on Oct. 29, immediately after interviewing for a government relations position at a large local organization. In Houser’s opinion, businesses that embrace diversity shouldn’t just add a person’s skin color or ethnic background to the list of things they evaluate when hiring someone. They also should consider whether the person lives in their community — whether that community is in the inner city or in a suburb. For one, local people might care a little bit more about helping a local company, he said. But hiring local people also ensures that the community surrounding a given business remains strong. “You help your economy, people have jobs, and the cycle continues,” he said. Houser is vice chair of the Cleveland branch of the NAACP Young Professional Committee. He continues to work with the Boys & Girls Club of Cleveland as well as New Tech East, which is located at Cleveland’s East Technical High School. He also is active with Bethany Christian Church (Disciples of Christ) in Cleveland. — Chuck Soder

Free Estimates - Contact Us Today! Double Enterprises LTD, Cleveland, Ohio, USA Phone: (440) 230-9000 E-Mail: sales@doubleenterprises.com

100% Online Master of Public Health in Health Policy & Management

Limi Schola ted rs Availa hips ble

Advance your health care career With a Master of Public Health kent.edu/publichealth| 330.672.6500 | publichealth@kent.edu

Prefer a traditional, in-class program? Attend our Twinsburg Regional Academic Center or Trumbull Campus for our Leadership MPH, OR choose from 5 specializations at our Kent Main Campus Also offering online public health Bachelor’s degree and certificate programs

College of Public Health

kent.edu/publichealth 330.672.6500 | publichealth@kent.edu

20141124-NEWS--10-NAT-CCI-CL_--

11/20/2014

3:46 PM

CRAIN’S CLEVELAND BUSINESS

Page 1

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

PUBLISHER:

John Campanelli (jcampanelli@crain.com) EDITOR:

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

Scott Suttell (ssuttell@crain.com)

OPINION

Giving thanks With last week’s winds ripping the last of the leaves off the trees and dumping early snow on driveways, highways and windshields, it might be tempting to feel some lake-effect damage to our attitude. But it’s Thanksgiving week. And while there are always reasons for business people to worry, this is not the week to fret. Instead, it’s the week to count the things that are keeping the cold away, the reasons for optimism that may be actually making us eager for the months ahead. Thankfully, there are many: ■ Brain gain: Cleveland is in fifth place nationally in

the growth of population with advanced degrees. ■ More than 13,000 people now live in downtown

Cleveland, where apartment occupancy remains above 95%. In eight years, the city-center population is expected to hit 25,000. ■ All three of our professional sports teams, for the

moment at least, sit with either a winning record or championship potential. ■ We can fill up our tanks for less than $3 a gallon. ■ Our national deficit is less than half of what it was

in 2009. ■ Retailers are seeing strong early demand and are

expecting a profitable holiday shopping season. ■ U.S. oil production is at an all-time high, and oil

imports are at their lowest levels in more than a decade. ■ The stock market is at or near all-time highs. ■ Lending rates remain low, allowing businesses and

consumers to access funds to spend, invest and grow. ■ The unemployment rate — Ohio and national — is

under 6%. ■ Although it may at first seem like bad news, work-

ers are quitting their jobs at the highest rate since 2008. It’s a sign the workforce is beginning to feel more confident about finding new and better jobs. ■ Instead of an Ebola outbreak in the U.S., we’ve had

FROM THE EDITOR

We should listen first, then act In the business world, “netbusinesses to the purchasing working” is out, “relationdepartments of large corporaships” are in. tions to try to increase proIt’s who you know, who curement and supplier diverknows you and the value you sity. The NMSDC has 24 bring. affiliates nationwide, includAnd the most useful tools to ing one in Ohio, with more help you bring that value than 12,000 certified minoritymight surprise you: Your ears. owned businesses and 1,750 Clifford Bailey delivered this corporate members. advice to a gathering of minorHis recommendations were ELIZABETH ity business owners in Indegeared that day toward minorpendence who eagerly used MCINTYRE ity business owners, but it those tools to hear what the struck me that he was deliverpresident and CEO of TechSoft Systems, ing solid advice for all entrepreneurs Inc. had to say about building business looking to grow their own businesses. relationships and a successful business. It begins, Bailey said, in knowing your TechSoft is a Cincinnati-based techcore strength — then working hard to be nology firm that he founded in 1983. He the best in that area. was in town to speak at a lunchtime “You don’t want to be on the sidelines gathering of the Northern Ohio Minority asking, ‘What didn’t I do to get in the Business Enterprise Input Committee game?’ ” he said. “If I’m good, they’re goabout growth strategies for minoritying to put me in the game. They won’t owned enterprises, or MBEs. leave me on the bench. His advice centered on building rela“But you have to have the skills.” tionships through the National Minority Next, he said, identify the types of Supplier Development Council, an orgabusinesses with which you want to work. nization that connects minority-owned Develop a relationship that involves a bit

TALK ON THE WEB

only two contracted-inside-the-U.S. cases, with both victims now healthy.

Re: Invacare founder Mal Mixon to retire

■ Housing prices are on the rebound.

He’s truly one of the good guys of Cleveland. Thank you, Mr. Mixon, for all that you have done for our city and the surrounding communities. Your leadership is an example for us all. — John Park

■ Inflation remains in check. ■ Violent crime rates are down again and have fallen

for every year since at least 1994. ■ There are roughly 600 days until the 2016 RNC

Convention. ■ Development everywhere, including the Public

Square renovation, a pedestrian bridge to the lakefront, Flats East Bank Phase II, Hilton Convention Center, Drury Plaza Hotel, CSU’s Center for Innovation in Health Professions, Rivergate Park and so much more. ■ Snow? Sure we get it, but not Buffalo-sized. ■ And of course, friends, family, colleagues, trusted

business relationships … and a young professional from Akron named Mr. James.

of questioning on your part and a whole lot of listening. Find out what the other person needs to succeed, Bailey said, with a simple request: “Share with me what it is that you desire that you’re not receiving today.” Then explain how you can meet their needs and deliver. That’s when I realized that Bailey had really nailed it: The key in any good relationship — whether it’s business or personal — is the ability to listen. So often, we are so busy talking that we forget to hear what the other person is saying, and we lose the opportunity to find out what they need to be successful. And that’s the takeaway. If you can help someone reach his or her goals — you both succeed. It all starts with building a network — not a social network of acquaintances that you’ve piled up on LinkedIn — but a network of support, a group of people you make real and genuine relationships with. People you know, who know you; people with whom you’ve made connections. And people who know you can meet their needs because you know their needs. Because you listened.

Re: Regional council banks on NE Ohio’s potential When we in Northeast Ohio truly understand that Cleveland’s real competition is Canton, China, and not Canton and Akron (and of course visa versa) then, and only then can we really expect to develop a game plan and drive an intermediary organization to help us win at regional economic development. The hyper-connected and globally competitive world that we live in has no use for our rear-view mirror parochialism. There is nothing wrong with a re-set and

an effort to re-invigorate the commitment to regional economic development. It’s time for Northeast Ohio’s business leaders to redouble efforts and commitments to the region’s future as more than just the sum of the parts. — Lev Gonick

Re: Cleveland Clinic’s second face transplant surgery I didn’t participate in any part of this, yet somehow I still feel so proud that the Clinic has built the team that can actually accomplish such a magnificent feat here in Cleveland. I get more pleasure from knowing this than Cory Kluber, Brian Hoyer and LBJ could bring. This is important. — Robert Chalfant

Re: Why is payday lending still so strong in Ohio? I am just astonished that they have

enough business to stay in business. That is VERY sad since everyone knows that once you start with them it is very easy to get more and more and more in debt to them and never get out. — Adam Brot There is an obvious need for short term lending to high-risk consumers, so if you have found a way to provide loans at a lower interest rate, you will weed out the poor performers. There is no need for legislation — just innovation!! — Jwil We’d have to shut down all access to credit for the people that use these loans in order to shut down payday lenders. Instead we should try working to create good-paying jobs to reduce demand. And while we’re at it, stop giving tax breaks to employers that pay their employees so little that they need a safety net of welfare and payday loans to survive. — Nadia

20141124-NEWS--11-NAT-CCI-CL_--

11/20/2014

3:09 PM

Page 1

NOVEMBER 24 - 30, 2014

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

PERSONAL VIEW

AVAILABLE FOR SALE OR LEASE

Cleveland neighborhoods are at the core of real estate revival

33,000 SF Industrial Building 3325 St. Clair Ave., Cleveland, OH 44114

By JOEL RATNER

The city of Cleveland and the entire Northeast Ohio region continue to enjoy the local, regional and national news that touts the city’s successes. Ratner is president and CEO of Cleveland Neighborhood Progress, a community development nonprofit. For the residents of Cleveland, now is an especially exciting time. From the planned lakefront development and Public Square makeover to ongoing redevelopment of many of our neighborhoods, we are experiencing a revitalization that has been years in the making. One headline that you may have missed is this: Three Cleveland neighborhoods are leading the region’s residential real estate market rebound. According to real estate firm Keller Williams, Detroit Shoreway, Ohio City and Tremont are home to the hottest real estate markets. The study compared more than 50 communities in six counties, and the communities were ranked according to increases in average home sales prices and the length of time units spent on the market. The Keller Williams study compared sales statistics in July 2013 to July 2014. This news confirms what is apparent to even the casual observer. Cleveland’s neighborhoods are in the midst of a rebirth. Young professionals, millennials and empty nesters are very interested in living in the city. They have filled our downtown units and are taking root in many of our neighborhoods. Even young families, once a nonstarter in this conversation, are choosing to locate — or stay — in Cleveland and enjoy the diverse offering of higher performing urban schools. Demand for city living is growing, and we are prepared to

• • • • •

Bay Size 44’ x 90’ Drive-in can be created 15,000 SF to 33,000 SF Available 240V/400 AMP/3-Phase Power 17’ Clear Height

David R. Stover, SIOR

216.839.2012 HannaChartwell.com STAN BULLARD

Tremont North — a four-townhouse development — is among Tremont’s notable recent real estate developments. welcome more residents into our city. At Cleveland Neighborhood Progress, we work with community partners to create neighborhoods of choice and opportunity. A foundational part of this is sustaining a healthy and affordable housing stock. While the Near West Side neighborhoods have been acknowledged for recent success, we will not ignore ongoing challenges. Cuyahoga County is still plagued with thousands of vacant and abandoned properties and distressed property values, as foreclosures have deeply impacted some parts of the city and many suburbs. This has shifted nearly $45 million in real property taxes to the county’s more affluent communities. This trend, however, is reversible as long as existing and new residents opt to invest where it matters most. Detroit Shoreway, Ohio City and Tremont were not always “hot” markets. Community visioning, strategic

investments, strong partnerships, dedicated stakeholders and passionate residents allowed this to happen. Those same currents of change are in place in many other Cleveland neighborhoods. And a robust number of public and private partners are in line to create and sustain more complete neighborhoods in the region’s urban core. We understand that many Northeast Ohio residents purposefully chose to move away from the city over the course of the past 50 years. But just as challenges take time to develop, so do successes. The momentum is now in place and the headline has been written. What was once thought of as unthinkable is now a reality: Cleveland’s neighborhoods are leading the real estate rebound. Cleveland continues to be one of the best places to call home in Northeast Ohio and the nation. We invite you to discover our neighborhoods. Who knows, you may just be the next person to move in.

LETTER TO THE EDITOR

City needs to invest in flights, too Crain’s recent article on Datatrak International Inc. noted that Datatrak is aiming its future growth at Chicago because of that city’s “ease of global access.” This points out again the importance of international air service if Cleveland is to remain competitive as a corporate headquarters location. Cities comparable to Cleveland, such as Baltimore, Pittsburgh and Raleigh, do not hesitate to

33,000 SF Total Area 3,000 SF Office Area 1,700 SF Mezzanine 1.39 Acres 7 Docks

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

“buy” international flights either through sales guarantees, promotion or direct subsidy.

If the city is prepared to spend up to $800,000 a month underwriting a container ship service to Europe, perhaps the next project should be an air route to a European hub. It wouldn’t cost nearly as much. Raleigh, for example, has recently offered any willing airline $2.5 million a year for a route to Paris or Frankfurt. Robert Salmon Chevy Chase, Md.

STAY CONNECTED WITH CRAIN’S TWITTER: @CrainsCleveland; FACEBOOK: Facebook.com/CrainsCleveland LINKEDIN: linkedin.com/company/crain’s-cleveland-business; INSTAGRAM: instagram.com/crainscleveland DAILY E-NEWSLETTERS: CrainsCleveland.com/register Look for Crain’s new Weekly Report webcast, which will hit your inbox on Sunday morning. To sign up, go to: crainscleveland.com/register.

ST. AUGUSTINE HUNGER CENTER Help us restock the pantry at St. Augustine Roman Catholic Church and Hunger Center on Wednesday, November 26. You don’t even have to get out of your vehicle, volunteers will be on hand to unload any items you wish to contribute. Donations are accepted year round, so if you plan to come another day, please call ahead. St. Augustine is located at 2486 on W.14th St. in Tremont. ELK & ELK CO., LTD.

elkandelk.com/restockthepantry

20141124-NEWS--12-NAT-CCI-CL_--

11/20/2014

3:46 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

GOING PLACES

Send information for Going Places to dhillyer@crain.com

JOB CHANGES ARCHITECTURE STANTEC: Jennifer Storey and Bob Seaman to senior architects; Marc Beljan to architectural BIM modeler; Elaine Gleason to interior designer.

Storey

Seaman

Gleason

Wilson

Kluchin

Scipione

Sittema

Cook

MAROON GROUP: Brian Wilson to chief financial officer.

Ettorre

Fegen

Hamilton

Trebilcock

Green

Andriamasilalao

Stoner

O’Neil

FINANCIAL SERVICE

INSURANCE

BOBER MARKEY FEDOROVICH: Keith Libman, Alan Goldstine and Tod Wagner to partners.

BRUNSWICK COS.: Rachel Weinberg to vice president; Elizabeth Fulk to account executive; Susan Horner to marketing manager; Taylor Mclaughlin to executive assistant; Rachel Deuring to account coordinator.

BIOTECHNOLOGY OXYRASE INC.; Casey Zace to president; James C. Copeland to chief technology officer and chairman.

DISTRIBUTION

ENCORE WEALTH PLANNING: Richard A. Kluchin to president; Victoria McWilliams to office manager. GRANT THORNTON LLP: Gino Scipione to audit partner; Rich Sittema to business advisory services principal. ST. CLAIR ADVISORS: Craig A. Steinbrink to partner. WESTERN RESERVE PARTNERS: Margaret E. Graham, Kevin M. Harper and Gregory D. Waller to senior analysts.

LEGAL

LESBIAN GAY BISEXUAL TRANSGENDER COMMUNITY CENTER OF GREATER CLEVELAND: Craig Hoffman to development associate; Jenn Ettorre to office manager.

REAL ESTATE Hughes

Heitlinger

BENESCH: Nora Cook to staff attorney.

LANDMARK PLASTIC CORP.: Steven P. Merzweiler to president and chief operating officer.

MCDONALD HOPKINS: Ukeme Awakessien Jeter to associate.

NONPROFIT

MANUFACTURING DIEBOLD INC.: Henry Orphys to vice president, tax; David Kuhl to vice president, treasury.

COMMUNITY ASSESSMENT & TREATMENT SERVICES: Lou LaMarca to clinical services director; Kayla O’Malley to program manager.

KOWIT & CO. REAL ESTATE GROUP: Sue Fegen to office leasing agent.

TECHNOLOGY BLUEBRIDGE: Stephen Hamilton to senior account executive. MCPC: Alyssa Trebilcock to wellness and onboarding coordinator; Jordan Green to operations service center analyst; Tantely Andriamasilalao and Dan Stoner

to help desk technicians; Tom O’Neil to support systems administrator.

BOARDS MUSIC SETTLEMENT: Maura L. Hughes (Calfee, Halter & Griswold LLP) to chair; Karen Heitlinger (Music Settlement) to chair, Center for Early Childhood.

AWARDS AKRON CLEVELAND ASSOCIATION OF REALTORS: Cyndi Kane (Re/Max Crossroads Properties) received the Realtor of the Year Award.

20141124-NEWS--13-NAT-CCI-CL_--

11/20/2014

3:10 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

NOVEMBER 24 - 30, 2014

SMALL BUSINESS There’s a market for everything In two years, the self-funded, profitable Cleveland Flea has become quite a gathering place for eager entrepreneurs By KATHY AMES CARR clbfreelancer@crain.com

Artists and food entrepreneurs excel at making things. They don’t always make a lot of money at it, especially when trying to weave their business into something on their own. Enter the Cleveland Flea, a monthly urban pop-up event and business incubator for Clevelandarea creatives. Each month between April and November, thousands of shoppers descend upon the whimsical outdoor event, seeking anything from vintage clothing and knickknacks that could’ve been plucked from grandma’s attic to handmade jewelry or upcycled home furnishings. The Flea itself is a macrocosm of the businesses it nurtures, facing the same financial and operational issues that affect startups before their ventures — if they are lucky enough — take off. About to enter its third year of operation, the for-profit venture is completely self-funded and profitable, said founder Stephanie Sheldon, although at this point she’s still reinvesting all profits back into the operation. “We have a very lean, bootstrap operational approach,” Sheldon said. Sheldon co-operates the Flea with one paid staffer and freelance photographer Suzanne Price, who does all the photography for the Flea’s website, social media and monthly newsletters. “We hit hard last year with photo shoots. Branding is so integral to this,” Sheldon said. “Last year was about finding our voice, understanding who we are and building a community. This year was about scaling up.”

KATHERINE CASE

The Cleveland Flea is a popular attraction even on dreary October days.

Nuts and bolts These portable flea markets have been surfacing in urban parking garages, lots and weathered industrial buildings throughout the United States since the recession, when creative entrepreneurs gained a foothold in the marketplace.

Artists inspired by flea markets in other cities secured a city permit to operate their own, whether as a forprofit or nonprofit entity, said William Perrine, an associate lecturer in fashion merchandising at Kent State University’s Fashion School.

“These are grassroots operations with varying business models,” Perrine said. The Cleveland Flea operates under Sheldon’s branding firm Indie Foundry, which consults with startups — many of which are Flea vendors — on building their businesses.

Flea vendors pay $75 for each free Flea event, or they can buy a reduced season pass at the beginning of the year, which ensures a spot at each of the regularly scheduled markets. Overhead is kept at a minimum, See MARKET, page 15

Aurora company provides power backup at flip of switch By SHARON SCHNALL clbfreelancer@crain.com

Pieces of equipment that process information and transactions are the operational lifelines of most businesses. But they depend on a continuous power stream — any brief and unwanted loss of power can threaten those lifelines. “If you lose power for a second, equipment is shut down,” said Paul G. Hines, vice president of data center operations and engineering for Sentinel Data Center, a New York City company that designs, builds, owns and operates co-location (long-term leased) data centers for Fortune 50 and Fortune 1000 companies.

2ND STAGE

“Anything more than two to four milliseconds (1/250th of a second) is unacceptable.” Two to four milliseconds is roughly the amount of time it takes a static transfer switch to shift a power load from a primary source to an alternative source when power cannot be provided by the primary source, Hines said. And that’s where LayerZero Power Systems Inc. comes in. The Aurora company designs and manufactures power-switching, distribution and monitoring products for mission critical applications. It was founded in 2001 by James M. Galm, vice president and chief technical officer, and Milind Bhanoo, president. To be clear, the static transfer switch is not a wall-mounted light

MORE INSIDE A Q&A with LayerZero co-founders Milind Bhanoo and James M. Galm. Page 14

switch. First, there’s the size: It’s housed in a 6-foot-wide, 3-footdeep, 6.5-foot-tall steel cabinet. Then there’s the weight: approximately 4,300 pounds for a typical static transfer switch configuration. Lastly, the switch is a self-contained router of electrical current. “Using no moving parts, it can switch enough power to run a dozen suburban homes, within 1/250th of a second, and without making a sound,” Galm said. “We’ve got about 30 static transfer switches of theirs installed and more on order,” said Hines of Sen-

tinel Data Center. LayerZero lists Sentinel, along with Eaton Corp., Intel Corp., Visa, Texas Instruments Inc., IBM and Bank of America N.A., as longtime customers.

Helping divert disaster The static transfer switch — from low-cost offerings to the more intelligent costlier components like those offered by LayerZero — is “very much in demand in industry today,” said Gary Blank, president of the Institute of Electrical and Electronics Engineers-USA. Based in Washington, D.C., IEEE-USA promotes the careers and public policy interests of more than 200,000 engineering, computing and technology professionals.

“The (LayerZero) switch is very sophisticated electronically, going back and forth (between power sources) without creating problems,” Blank said. He added, “They have found a way to avoid crises.” If LayerZero’s products are intelligent and complex, so too are LayerZero’s founders. Although the two attended Case Western Reserve University in the 1980s, they first became acquainted as employees of Cyberex, a company once located in Mentor that designed and manufactured solid state electrical power conversion equipment. Galm, whose three degrees, up through a doctorate, are in electrical engineering and applied physics, was vice president of technology; Bhanoo, also possessing See SWITCH, page 14

20141124-NEWS--14-NAT-CCI-CL_--

11/20/2014

3:11 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

TAX TIPS

WWW.CRAINSCLEVELAND.COM

PETER A. DEMARCO

Small biz owners get needed clarity Just a year into some new regulations on tangible property, the Internal Revenue Service has recognized the need for some adjustment that can be important to some small business owners. The IRS spent more than 10 years trying to write the new regulations to address longstanding problems in determining when tangible property should be expensed immediately and reduced from the current year’s taxable income compared with when it needed to be capitalized and depreciated over time. Before the new regulations, the rules in place had accumulated over generations of pronouncements and case law that became difficult for everyone to follow. The new tangible property regulations provide new rules for when property should be deductible because it is only meant to maintain or restore property to its proper working order, compared with when property should be capitalized because it prolongs life, increases value or adapts property to a different use. The new rules focus on breaking an asset like a building into components and then focusing on the extent to which components are being improved or simply repaired. The new rules have provided the needed clarity on when a particular expense is deductible or must be capitalized. Now the IRS is extending to taxpayers some leniency under the new rules to accelerate depreciation when they’ve made new replacements or repairs to old capitalized items. Perhaps the easiest way to explain is through an example. Consider what happens when a company buys a building for $1 million

DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland. and begins a 39-year depreciation schedule for the entire building. That 39-year schedule applies to all the individual components of the building. Five years later, the company replaces the roof, a capitalized improvement that must be depreciated over 39 years as well. The tax effect here is that the company is now carrying two different depreciation cycles on the roof, a single component of the building. The first cycle began when the company bought the building, and the second one begins when the company replaces the roof. Imagine how this could play out for the company over the 39 years following the purchase of the building, with each new improvement beginning a new, independent 39year depreciation schedule. That’s a great deal of capitalized expense hung up in separate depreciation schedules that dramatically extend the tax benefit of eventually deduct-

ing the depreciation expense. That prompted the IRS recently to permit “partial dispositions” under the new regulations. Under a partial disposition, when the company puts a new roof on its five-year old building, it can go back to its original depreciation schedule and accelerate into the current tax year all the unrecognized depreciation that would be associated with the original roof. If the value of the roof as a separate component of the $1 million building could be estimated at $50,000, that’s a dramatic acceleration of depreciation only five years into a 39-year schedule. The equation isn’t quite that simple, as the value of the roof as a component must be clearly established in order to determine the amount of unrecognized depreciation. The partial disposition could apply to any number of capitalized improvements, such as a new HVAC system in building, a new engine in a truck, or a major new component on a piece of industrial machinery. Small business owners would be wise to review their historic fixed asset schedules and look for retirements that are still being capitalized to see if they might qualify for these new partial dispositions. The recently issued guidance from IRS allows a business to apply the partial disposition rules to replacements that occurred in years prior to 2012 and claim the unrecognized depreciation on its 2014 tax return. Previously, the IRS only permitted the new rules to apply if the replacements occurred during 2012 and 2013 with the additional depreciation deduction being claimed on the 2013 tax return. Where taxpayers identify retirements that might qualify for a partial disposition, then comes the costbenefit analysis to determine if the disposition is worth pursuing. If a depreciation cycle is nearly complete on a smaller-ticket item, the incremental tax benefit of claiming a partial disposition may not be worth the work that will go into documenting it. The new IRS guidance provides a potentially meaningful tax benefit to small business owners who have kept up their property and would welcome some acceleration of old depreciation.

NOVEMBER 24 - 30, 2014

Q & A: LAYERZERO CO-FOUNDERS How do you define a startup business? Milind Bhanoo: Can-do attitude. Starving for funds. Lack of sleep. Endless worries. A relentless pursuit of excellence. An uncompromising pursuit of standards. Are you a startup now? James M. Galm: We don’t feel like a startup. We have our own building. We have our own factory. We’re completely vertically integrated. We have a base of customers with whom we have been doing repeat business for many years. We are not living hand to mouth. Our planning horizon is now significantly longer than when we were a startup.

Bhanoo

What does it mean to take a company to the next level? Bhanoo: It’s to have stable processes. You are able to plan … and you are able to execute the plan. … Galm That’s what changed, moving from a startup environment. The startup people are basically firefighters. Where we are today is planning, setting up processes so people can know where they are in the company. It’s a people and organization change. It’s the communication of that change, the willingness to change, the — Sharon Schnall acceptance of that change.

SWITCH continued from page 13

three degrees, including electrical engineering and applied physics; systems and control engineering; and a master of business administration, was vice president of sales and marketing. They worked together for eight years. Two weeks after quitting their jobs, they formed LayerZero. Launching this company, at the end of the dot-com bust, had obvious risks, but offered opportunity. “Since many potential customers were not making capital expansions, we knew that our competitors would be scaling back and conserving cash by limiting new product development,” Galm said. “This gave us the opportunity to leapfrog what others were doing, so that when the business cycle returned to center, we would be ahead of our competition.”

Ready for the rainy day The strategy worked: Average annual gross sales, for the past four years, including 2014, are estimated at just over $16 million. Until 2012, all employees worked from their homes. A manufacturing partner, in Tulsa, Okla., produced LayerZero’s products. By 2011, Bhanoo said, they

& Sell

EVERYTHING! T

Tools

HGR Industrial Surplus, 20001 Euclid Ave., Euclid (216) 200-4110

www.hgrinc.com

SHARON SCHNALL

Each LayerZero wire harness connects devices in one part of the product with devices located in a different area of the product. had reached the manufacturing capacity limit with that partner. “It was a seismic event for us,” he said. “We talked and said, ‘Let’s aggressively set aside funds. The rainy day is here.’ Literally, in a year we were there.” In 2012, using personal funds, Galm and Bhanoo purchased a 45,000-square-foot building, formerly owned by Swagelok Co. The two own the building and are LayerZero’s majority owners. Three associates round out the owner roster, and employees total 33. It’s clear the two founders admire and respect one another. “Jim is the engineer’s engineer,” Bhanoo said. “There is no problem he cannot solve, if you give him the right tools and the time to solve it.” “Milind, he is far, far better equipped than I am to handle sales, management, finances. He has been the prime person behind that side,” Galm said. Those are critical skills, given that purchasing a switch and associated components is a complex and costly process typically transacted by likeminded personnel with similarly extensive engineering and design know-how. Driven by customers’ projectbased needs, the average sale is $300,000 to $600,000. Product offerings are priced from approximately $7,000 to $420,000, depending on customization and complexity. Fulfillment ranges from four to 16 weeks. “It’s a very sophisticated sale. We have to sell up and down the line of the process,” Bhanoo said.

20141124-NEWS--15-NAT-CCI-CL_--

11/20/2014

3:11 PM

Page 1

NOVEMBER 24 - 30, 2014

ADVISER

LAURA SHERIDAN

Rebranding is more than spicing things up Evolve or become extinct. When Darwin realized this phenomenon back in 1859, he had no idea that it applied to brands as well as plant and animal species. Savvy marketers know that to thrive they have to evolve. Unfortunately, all too often a company thinks rebranding is the answer to its problems, and it fails. Why? Rebranding is not a facelift. It’s a lot more than a revamped logo or ad campaign. It’s about inspiring employees, customers and investors to see the company in a new light. Rebranding is not something you do because you want to, it’s something you do because your business or customers demand it. Rebranding is the right solution when consumers no longer view a brand as special. It may also apply when an organization has new products, is expanding into new markets or begins marketing to a new target audience. Rebranding demands exceptional commitment, creativity and resources. It’s more than just a form of “marketing,” it’s a cultural shift that requires the support of the entire organization. ■ Case study No. 1: Rebranding for relevance From 2007 to 2012, RadioShack’s stock lost more than 95% of its value. Customers stopped coming to their stores. In 2012, the board fired the company’s CEO and replaced many senior executives. To survive, RadioShack had to reconnect with its customers. They learned from research that customers either loved them or hated them. The haters didn’t like RadioShack’s focus on smart phones, which they saw as a shift from being the place where they got to play with weird computers, cool robot kits and random electronic circuitry to a second-rate phone outlet store. Listening to their haters uncovered insights that led to a company-defining rebrand. RadioShack’s rebranding involves investing heavily in the redesign of its 8,000 retail locations. It’s marrying the RadioShack of the ’80s, where tinkerers and electronic enthusiasts gathered, with the sophisticated experiential store design that today’s consumers expect. Stores appeal to consumers’ need for a place to experience the products they want to purchase before actually buying them. “Let’s play.” RadioShack’s new tagline expresses its goal for the rebrand — become a destination for play. ■ Case study No. 2: Rebranding for vibrancy There was nothing magical about Old Spice. It was your grandfather’s aftershave. Now, it’s a viral sensation. The first Old Spice product, Early American Old Spice for women, was introduced in 1937. Old Spice for men quickly followed in 1938. The products were developed around a colonial theme complete with sailing ships and red product packages that continue to be associated with

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Sheridan is president of Viva La Brand, a Cleveland-based marketing strategy and ad agency search firm. the brand today. P&G bought the brand in 1990 when it was known mostly for its highly fragrant aftershave and graying customer base. When body wash was introduced in 2003, the product category took off, but so did its competitors’ sales. P&G strategically repositioned the brand and adapted the product mix to jumpstart sales. It moved its focus to younger men and dramatically upended its message. Enter former NFL practice-squad player Isaiah Mustafa, who starred in Old Spice’s 2010 ad sensation that launched on YouTube before the Super Bowl. By the Monday after the Super Bowl, the first day the ad was broadcast, views had already climbed to 250,000. Check it out now and you may help the brand hit the 50 million-view mark. The fun continues across social nets, including Facebook, where fans’ likes surpass 2.7 million. P&G didn’t play with the logo or packaging but rather shifted its focus to a younger demographic and developed advertising that connected on an emotional level. And it worked. Today, Old Spice is anything but stale. Same logo, totally new brand strategy. ■ Case study No. 3: Rebranding for differentiation In the late ’90s, Target was viewed as just another low-end discount retailer along with Walmart and Kmart. While its iconic bull’s-eye and vibrant red were widely recognized, consumers lacked a reason to pick Target over its competitors. Target astutely rebranded to offer more than just big brands with low prices. What didn’t change was their logo and value pricing. What did change was the addition of partnerships with high-profile designers and sassy, trendy advertising. Today, Target is the upscale discount retailer. The brand’s chichi faux French nickname, “Tar’zhay,” is a sure sign of the success of the rebrand. All three companies went all in on their rebrands because that’s what it takes. How’s your brand? Is it relevant? Vibrant? Differentiated? Is it time for a rebrand?

MARKET continued from page 13

with little to no rental fees, since most of the markets occupy parking lots or underutilized buildings in and around the diverse and historic St. Clair Superior neighborhood. Monthly “event infrastructure” expenses total about $3,000 — or about one-third of the overall $9,000 in monthly gross revenue generated from the Flea. Holiday Flea expenses are double, at about $6,000. Those costs cover security, portable toilets, facility rental fees, marketing, signage and liability insurance. The Flea does not retain any portion of the vendor sales, said Sheldon, noting that she does not require vendors to report their Flea sales. However, anonymous monthly surveys reveal that total gross vendor sales range from $100,000 to $200,000, she said.

Investment materializes Sheldon formed the Flea in early 2013 after observing the need for shared selling space among creatives and food entrepreneurs, while fulfilling consumer demand for a more authentic and locally curated shopping experience. A former architect, she recognized an opportunity for an urban flea market to reinvigorate struggling neighborhoods rich with history but scant on economic activity. “The Flea is about activating neighborhoods and spaces,” Sheldon said. “The Flea is not a fine art fair or a craft fair. We want to be seen as a community-building event and a neighborhood placemaker.” She perused Craigslist for potential vendors, attended craft fairs and familiarized herself with ob-

SUZANNE PRICE

Stephanie Sheldon taining licenses and permits. Telling the artists’ stories through visuals and narrative, both online and through monthly newsletters, became key to growing awareness about the event, Sheldon said. Vendor and consumer interest snowballed. Its first event — a mini-flea held in February 2013 at the Kurentovanje Slovenian Festival — drew 40 vendors and 1,500 shoppers. It capped its first year with a two-day Holiday Flea at the Slovenian National Home that swelled in size to about 90 vendors and 10,000 shoppers. Average attendance in 2014 doubled the holiday market, with about 20,000 shoppers connecting with 140 vendors, Sheldon said. About 250 more vendors consume a waiting list. Similar traffic was expected at this past weekend’s Holiday Flea Nov. 21-23, staged over 24,000 square feet at 6555 Carnegie in Cleveland’s MidTown neighborhood.

Michael Fleming, executive director of St. Clair Superior Development Corp., said the Flea has been a catalyst for pumping residential and commercial interest into that area. “There’s a lot of nostalgia here, but not a lot of development,” he said. “Now there’s activity and interest. The Flea has been a huge marketing piece for the neighborhood, and as a result, quite a few small businesses, like Ohio City Soda, have moved in. Existing businesses like Shelli’s, this adorable little diner on St. Clair, are busier, too.” Before it became self-funded, the Flea in 2013 was a recipient of $27,000 through St. Clair Superior Development Corp., which received grants from the Charter One Growing Communities and Dominion Foundation. The neighborhood group that year had a total project budget of $130,000 for its Retail Ready Program, which included public art, marketing and small grants for retail operations such as the Flea.

Needing her space Now, Sheldon is scouting permanent headquarters and restaurant space in St. Clair-Superior, Ohio City, Slavic Village and MidTown. Her vision calls for membershipbased food vendors to operate out of a shared kitchen, similar to the concept behind the MidTownbased food incubator, Cleveland Culinary Launch and Kitchen. Plans call for additional staff, as the Flea integrates more workshops and academic programming into its calendar while maintaining its monthly schedule of popups in reemerging neighborhoods. “We want to create depth, and grow vertically within the neighborhoods we’re a part of,” Sheldon said.

20141124-NEWS--16-NAT-CCI-CL_--

11/21/2014

1:12 PM

Page 1

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

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

DIGS continued from page 5

and still have room to add staff, Biggar said. Asked what name and sign will go on the new, consolidated office, Biggar said that will be disclosed later. The companies have maintained operations under their prior names until the new one is developed. Geoff Coyle, managing partner of O-M, called the move â&#x20AC;&#x153;a great opportunity for us. It will allow everything to come together. It will be a great launching pad for the new company.â&#x20AC;? With the assignment, O-M will gain about 50,000 square feet of empty space to lease, Biggar said. When US Bank Centre went in under its original name, Renaissance at PlayhouseSquare, in 1991, it was the first new office building constructed in the theater district in 60 years. Farro, CEO of Cleveland-based Premier Development Partners, said that when he and the late Bart Wolstein developed the building they viewed PlayhouseSquare as a resurgent part of downtown. â&#x20AC;&#x153;Now, with all the theaters and a

â&#x20AC;&#x153;We love this location.â&#x20AC;? â&#x20AC;&#x201C; Jeff Cristal executive managing director, NGKF,on US Bank Centre million visitors per year, itâ&#x20AC;&#x2122;s a phenomenal location,â&#x20AC;? Farro said of the hub of restored theaters, restaurants and apartments. The Howard Hanna commercial brokerageâ&#x20AC;&#x2122;s gain is a loss to the Cleveland office of the NGKF brokerage. NGKF is US Bank Centreâ&#x20AC;&#x2122;s second floor and, through prior incarnations, has handled leasing and management of the building since its doors opened. Jeff Cristal, an NGKF executive managing director who heads its office unit, said he understands ownership wanted to make a change and was thankful for the opportunity to represent the building, which is 92% leased. Cristal said the firm â&#x20AC;&#x153;will do for ourselves what we do for our clientsâ&#x20AC;? in determining if it will remain in the building or move elsewhere. One thing is for certain, he added: â&#x20AC;&#x153;We love this location.â&#x20AC;?

STAN BULLARD

US Bank Centre, then Renaissance at PlayhouseSquare, opened in 1991.

LARGEST SAVINGS INSTITUTIONS E E

! " Deposits Company name Headquarters address Rank Phone/website

Non-performing loans

6-30-2014

6-30-2013

% change

2014 entire market share %(2)

Total assets ($millions)

$ millions 6-30-2014

% of gross loans 6-30-2014

Net income Top local executive ($millions) Title

$ $ ( %

9DD9 7/ A B E@ 5 + @ + - %%0D# 2>0:3 %%0(:DDD;AAA5<')7 ! 7 +5 /,

: 0D#5#

# .#D5:

>5:4

:5.

00 : %5=

0=.5:

05=4

=#5%

7 E5 < ! -8*) ' )7, - 17 8) -<

( % + ( % ) $ ' &* 0 D0 5 )-<' <5 + @ + - %%00% 2>0:3 # (%0DD;AAA5,B-B 5 /,

> D.%59

> D::5#

05%4

>5%

%% %D5#

>=.5>

D594

>>95>

/- 5 B,)++ 7 17 8) -< /7<& & /5

$ 0=D0 5 )-<' <5 + @ + - %%00% 2>0:3 9=:( .DD;AAA5 /++ 7 -*5 /,

0 9=:5>

0 9# 5%

(05=4

>5D

: 9 05.

==50

D5:4

0.5D

E- 7 A 5 @/-8')7 17 8) -<

')/ -*)-& 7 &)/-

$%& $ ( % +%% # 0% D: <7/)< E@ 5 * A// %%0D9 2>0:3 >>0(9=DD;AAA5!$5- <

0 >==50

0 0995:

%594

05%

0 #095

005=

D5.4

=5%

'/, 8 5 7 8 7 17 8) -<

( % # >9# 7 + + C 5 /?-&8</A- %%#D= 2==D3 9%>(D#DD;AAA5'/, 8 @)-&85 /,

0 D %5>

0 0==5

(%5%4

05>

0 9.D59

>D5

05.4

%=5=

7B 5 , ++ 17 8) -<

%& A/ 7* )7 + 8<" + -< 7 %%>#0 2 DD3 =: ( .=D;AAA5A 8<" + ( -*5 /,

::.5#

:% 50

=5=4

>.5%

95>

05>4

),/<'B 5 ')++)18 17 8) -<

$%& $ +%% # $

=9>0 7+)- E@ 5 /7 )- %%D#= 2%%D3 > >(:0 ;AAA5"78<! +/7 )-5 /,

== 5D

=%05.

(0504

D5%

%%:5#

#5=

05.4

D5D

/'- 5 + -/A8*) 17 8) -<

* ( % ' &* 0#0 5 7* < <5 //8< 7 %%:.0 2==D3 >:%(#9:9;AAA5A B- 8 @)-&85 /,

=>95>

=D 5

:5D4

D5%

%0#59

=50

05>4

05#

/ - B 5 < )& 7 ' )7, -

' ( % 0D DD )-8, - / A ?7B %%D:# 2%%D3 #:%(.%%0;AAA5& ?& 8 @)-&85 /,

>>05:

>=.5>

(95%4

D5=

=:#5.

0#5

.504

D5=

E++ - 5 - )/-) 75 17 8) -<

& ) 0%> 5 < 7 <5 -< %%>%D 2==D3 :9=(. >9;AAA5'/, 8 @)-&8 -*5 /,

0=.5%

0=:50

>5%4

D5>

0:=5

959

#5:4

2 05D3

/A 7 5 /B+ 17 8) -<

>9>= ,)<' / )7+ A- %%=== 2==D3 :::(9.9.;AAA5 ! -*/-+)- 5 /,

0==5#

0>:5>

#594

D5>

>.059

%5%

0594

D50

), 6 ++

' 5 77B 17 8) -<

'& ( % =D# )- <5 /-- ?< %%D=D 2%%D3 #..( 0>0 ;AAA5 /-- ?<8 @)-&85 /,

:%59

:95=

(=5.4

D50

>5D

D59

05%4

D50

), 7 -" + 17 8) -<

$ ( % +%% & % ## 5 )- <5 )+ 8 %%%%: 2==D3 :#>(>#=.;AAA5'/, ! -)+ 85 /,

:05.

:=50

(05 4

D50

.95.

05=

#5.4

D5>

A7 - ! 7 * 17 8) -<

$& ) %& ( % > ) 7<B <5 77 - 5 0:=:# 2 0%3 9>=(.:.:;AAA5-/7<'A 8<8 @)-&8 -*5 /,

# 5%

#:5:

=504

D50

9 .%>5=

.:5

05:4

>95=

'/, 8 < -</@) 17 8) -< 7 A!/7 A7 - 7 7 - ')/ )8<7) < , - & 7

, $ ( % :9D0 <7/)< E@ 5 + @ + - %%0D> 2>0:3 .:0(D%>>

0=5#

0=59

(05:4

D5D

=05=

D5%

>594

D5>

)7&)-) 5 78 17 8) -<

$%& $ 0%D 5 /+?, ?8 <5 +)/- %% == 2%0.3 %: (0#0 ;AAA5"78<! 7 + -*/!/')/5 /,

#5=

%5.

95D4

D5D

>%>5=

%59

%5:4

2 D5.3

@) 5 ' 17 8) -<

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

E /7 ' 5 )++B 7

20141124-NEWS--17-NAT-CCI-CL_--

11/21/2014

3:37 PM

Page 1

NOVEMBER 24 - 30, 2014

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

DEMAND continued from page 1

automotive and agriculture. The employee-owned company, which has about 100 workers, also provides contract machining services. Beattie said the company sees strength in the industry both domestically and internationally, though he would not disclose sales. “Our order book for 2015 is very strong going into the year,” he said. Willie Eichele, president of Motch & Eichele LLC in Cuyahoga Falls, said he’s seeing particular strength in Ohio, which he attributes to a more favorable business climate created by Gov. John Kasich. Motch & Eichele is a machine tool distributor serving a variety of industries including automotive, medical and aerospace. About 70% to 80% of Motch & Eichele’s customers are in Ohio, Eichele said. And many of those customers have been seeking advanced technology like automation solutions or robotics in recent years. There’s a lot of money on the sidelines, Eichele said, and companies are looking to invest for the future. Across the board, 2014 has been stronger than 2013, he said, though he’s not seeing the huge numbers some national organizations are citing. Eichele declined to share employee numbers or specific annual revenue, but he said the company’s sales this year are up about 15% from 2013. The forecast going forward looks good for machine tool consumption, he said.

Tool time Earlier this month, the McLean, Va.-based Association for Manufacturing Technology reported nationwide increases in both cutting tool

consumption and equipment orders in September. Pat McGibbon, vice president of strategic analytics of the association, said those types of expenditures are good indicators of the outlook of the industry. Cutting tools wear out, so they’re an accurate reflection of short-term industrial activity. And companies aren’t going to make big capital investments unless they have a strong outlook to support that kind of spending, he said.

“Our order book for 2015 is very strong going into the year.” – Bill Beattie president, Bardons & Oliver Manufacturing technology orders hit $647.6 million in September — a 77.3% increase from August and a 61.4% increase from September 2013. McGibbon said sales at the well-attended International Manufacturing Technology Show it runs were very strong. September’s numbers put 2014 up 5.2% from 2013, and McGibbon said he thinks the strong orders are an indication manufacturing will continue to do well into 2015. And while not everyone has been seeing increased orders, there are signs of optimism in many corners of the industry. Sue Lewis, marketing manager for Combi Packaging Solutions LLC in Canton, said that while sales are down about 2% year-over-year for the custom packaging equipment maker, customers are spending more on sophisticated automation equipment. The company had record sales for the past four years,

and, though she declined to share specifics, Lewis expects sales to be flat in 2014. Even though Jeffrey Frantz, sales manager for Ohio Broach & Machine Co. in Willoughby, said machine sales fell a bit in 2014, he has high hopes for 2015. In just the last few weeks, he said, the company has seen an increase in machine inquiries. He hopes the company will be able to increase its sales from about $6.5 million this year to $7 million in 2015. Ohio Broach encompasses all aspects of the broaching business, which is a process similar to milling, Frantz said. It makes broach machines and tooling, sharpens and repairs parts and does some contract broaching. Although machine sales have been lackluster this year, tooling sales have been a different story. “The tooling has really bounced back,” Frantz said. He noted the year had started strong and fell off a bit in the summer before picking back up in September.

Getting busy Cutting tools have a more seasonal cycle, said McGibbon of the Association for Manufacturing Technology. There’s usually a dip in the summer, but if everything’s going well, that picks back up from September to December. The most recent numbers from the association and the U.S. Cutting Tool Institute, released Nov. 12, show national consumption of cutting tools increased 4.6% to $176.5 million in September from August. That’s up 7.7% from September 2013. Tom Schumann, president of E. C. Kitzel & Sons Inc. in Cleveland,

said he has seen a 10% increase in orders after the traditional summer slowdown ended in August or September. The diamond cutting toolmaker has a large customer in mining that has been pretty soft, but its customers in aerospace, automotive and appliances have been busy, he said. Schumann estimated the 33-employee company’s sales were up 5% in 2013 from 2012. He expects a low- to mid-single digit percentage increase this year and more of the same in 2015. The company doesn’t share specific sales, but Schumann said it is more than $5 million. Matt Schron, general manager at JIS, a division of Jergens Inc. in Cleveland, said there has been sustained growth in the 55-employee industrial supply distribution division he oversees. The division includes a full line of cutting tools and MRO supplies for customers in industries ranging from aerospace to oil and gas to general job shops. “Across the board, we’re seeing most people are busy,” Schron said. He has noticed increased activity in the oil and gas industry, as well as in the aircraft industry. Overall, he’s hearing that customers are seeing 4% to 6% growth and are projecting the same in 2015. Schron said the privately owned company doesn’t share annual sales, but his division has seen record sales for each of the past four months. The growth has been sustained this year instead of following spikes and drops in activity, Schron said. He thinks customers are more attuned to what their needs are. “They’re not overbuilding for the future,” he said.

The Pointe at Gateway is sold for $5.2 million STAN BULLARD sbullard@crain.com

The Pointe at Gateway, a mixeduse project that helped pioneer redevelopment in Historic Gateway Neighborhood near Quicken Loan Arena and Progressive Field, has changed hands. Middleburg Heights-based investor group Huron Pointe LLC on Wednesday, Nov. 19, paid $5.2 million to Pointe at Gateway LLC for the retail, office and apartment complex. Pointe at Gateway was formed by brothers Jerry and Laurence Schmelzer to convert a familyowned office building to apartments in 1996. The project included updating three adjoining buildings they acquired to create a project of scale. The property includes buildings that are between the two-story triangular, shaped building housing the Winking Lizard at 811 Huron Road and the eight-floor Finance Building at 740 Prospect Ave. The complex has street frontage on both Huron and Prospect. Pointe at Gateway originally housed 42 apartments, but only five rentals remain, as 37 suites were sold as condominiums since 2004. The project has some growth potential, as about 24,000 square feet of retail space is available, the online realty data service CoStar reports.

A NATURAL SETTING FOR SUCCESS WE’VE BEEN NAMED A GO-TO LAW FIRM® BY SOME OF THE TOP COMPANIES IN THE COUNTRY. AGAIN. For the 11th consecutive year, Vorys has been recognized as a Go-To Law Firm® in American Lawyer Media’s survey of in-house counsel at the top 500 companies in the country. Less WKDQ RQH SHUFHQW RI DOO ODZ ÀUPV LQ WKH 8 6 DUH UHFRJQL]HG with this honor. And this year, 17 companies listed Vorys as WKHLU ÀUP RI FKRLFH IRU VSHFLÀF SUDFWLFH DUHDV

Higher standards make better lawyers.® For more information, visit vorys.com.

Vorys, Sater, Seymour and Pease LLP 200 Public Square Suite 1400 Cleveland, Ohio 44114 106 South Main Street Suite 1100 Akron, Ohio 44308

22,000 Sq Ft of Meeting Space. One Exceptional Location.

Training, meetings & special events

271-room Wilson Lodge featuring 59 premium rooms & The West Spa

Creative cuisine served in banquet rooms or catered throughout the resort

Versatile meeting space to accommodate up to 400

Legendary customer service and personal attention

1,700 acres of year-round recreation

Resort & Conference Center Wheeling, West Virginia Call 800-972-1991 or email sales@oglebay-resort.com

www.oglebay-resort.com An easy 3 hour drive from Cleveland!

20141124-NEWS--18-NAT-CCI-CL_--

11/21/2014

3:15 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

NOVEMBER 24 - 30, 2014

MASK continued from page 5

York, now has the backing of one of the biggest health care companies on the planet. Johnson & Johnson Development Corp., the company’s venture capital subsidiary, invests in young companies that provide “strategic growth options” for the broader corporation, according to its website. Johnson & Johnson — which sometimes will go on to buy startups that receive investments — actively tries to help them succeed by giving them access to its internal experts. The ability to get access to experts who’ve worked for skin care brands such as Neutrogena and Clean & Clear helped push La Lumiere to accept the offer from the New Jersey-based company, Tapper said, adding that La Lumiere also received offers from “some major private equity firms.” “They have some of the smartest scientists and R&D personnel and marketing personnel out there,” he said.

Novelty act La Lumiere previously spent almost nothing on marketing, but the $20 million investment will allow it to jumpstart that effort. So don’t be surprised if you start seeing TV commercials that urge you to pick up the phone and place an order. The money also will help La Lu-

miere develop new products and hire six or seven more people. The company employs 12 today, including five in Oakwood Tapper Village. A few of La Lumiere’s top executives work from its local office, which handles invoicing, shipping, supply chain issues and other back office functions. The New York office focuses more on product design. The masks are made in the same Chinese factory that made the Spin Pop. Tapper now lives in Philadelphia, but the Northeast Ohio native racked up many of his early successes and built many local business relationships while living here. He used to work alongside his stepfather, John Osher, who founded Cap Toys Inc. That local company was acquired in 1993 — the same year it introduced the Spin Pop — by Russ Berrie & Co. The New Jersey-based novelty products company later sold the unit to Hasbro.

Frankenstein for the win Light therapy isn’t new. Dermatologists already use light to treat acne and wrinkles. La Lumiere uses the same wavelengths of light — red and infrared for wrinkles, blue and red for acne — but at a lower

intensity. Most light therapy devices sold for home use look like wands. Tapper said the mask form is better because it applies the light more evenly across the user’s entire face, and it’s easier to use. You put it on like a pair of glasses and turn it on. The light, which includes no ultraviolet rays, shines for 15 minutes and then shuts off. Each illuMask can be used 30 times — once for every dollar you spend on it. Then a controller attached to the device shuts it down permanently. The company could program the controller to keep running, but then it would have to charge more for the mask, Tapper said. “We’re monetizing light energy,” he said. Almost all of the 60 people who helped La Lumiere test its prototype showed improvement within four weeks. The company paid Dr. Z. Paul Lorenc to conduct the study; the New York-based plastic surgeon is now the company’s chief medical and scientific officer. The Florida plastic surgeon who came up with the idea for the mask, Dr. David Shuter, also serves as a medical adviser. After the study, some people didn’t want to give the prototype back, Tapper said. And it was ugly — he called it “the Frankenstein model.” “That’s when you know you have a winner,” he said.

CONTRIBUTED PHOTO

La Lumiere is “monetizing light energy” with products such as its anti-acne mask

Mass appeal Officials from Johnson & Johnson weren’t available to talk about why they think the illuMask could be a winner. However, Todd Klein said the strength of La Lumiere’s team is what drove SWaN & Legend Venture Partners to back the company. Last year, La Lumiere raised more than $4 million in an investment round led by the Leesburg, Va.-based firm. Tapper and his team had “a history of delivering consumer products at price points that expanded

the market,” according to Klein, chief investment officer for SWaN & Legend. Most of the hit products Tapper has worked on over the years have had price tags below $10. So Klein figured La Lumiere could sell the illuMask at a low price compared to the competition. Online searches show a few competing products in the $50 to $80 range, but some are well over $100. As a rule, Tapper doesn’t develop pricy products. “My relationships are at Walmart and Target,” he said. “We want to sell to the masses.”

REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Denise Donaldson E-mail: DDonaldson@crain.com RESIDENTIAL PROPERTY nt ro F ke La

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

INVESTMENT PROPERTY 18% Cap Akron Retail Investment 1947 W. Market St. 96% Leased

BUSINESS SERVICES C. W. JENNINGS INDUSTRIAL EXCHANGE Global Expansion Consulting Construction • Acquisitions Exporting • Financing

(855) 707-1944

Call Tom Fox for details NAI Cummins 330-535-2661 TFox@NAICummins.com

5480 Woodside Drive, Mentor on the Lake $375,000 Beautiful Views of Lake Erie. A one of a kind property. Large single family home is waiting for your finish work. Two boat houses, large barn,small guest house that you can also finish to your taste. Beach access!!! all on over a acre of land. Many Possibilities. For more Information Call Beth Ann Osborne

Century 21 HomeStar 216-695-2967

COMMERCIAL SPACE

Warehouse 13,500 sq ft City of Lorain, Close to I-90 & Turnpike New Electric & Lightling, Fenced yard Price $150,000 Seller financing possible

Call Jim @ 440-263-8323

List your commercial, Industrial, luxury property or Retail Space Here! Contact Denise Donaldson at 216.522-1383

ATTENTION ADVERTISERS: So we can enjoy Thanksgiving with our families, Crain’s Cleveland Business Classified deadline for December 1 issue will be Tuesday, November 25 at noon. Thank You for your understanding. To Advertise, please contact Denise Donaldson at 216-522-1383

FOR SALE

496.4 HRS. REAR ENGINE 26,591 MILES CONTACT CITY OF CAMPBELL MAYOR’S OFFICE 351 TENNEY AVE CAMPBELL, OH 44405 330-755-1451

CABINETS KITCHEN & BATH Locally Made ProMark Cabinets

(216) 453-3654

Closing warehouse N. Bedford Hts. Crown, BT prime Mover 36V forklifts, pallet racks, carts, safes, pallet jacks, Selco cardboard bailer, etc. It’s Stys – 216-641-7897

UST REMOVALS • REMEDIATION DUE DILIGENCE INVESTIGATIONS

(800) 690-9409

BUSINESS OPPRTUNITY

BUSINESS FOR SALE

Sierra-Cedar, Inc. is seeking a minority firm licensed in the State of Ohio (Cuyahoga, Summit, Lake, and Lorain Counties) with qualified change management personnel, Workday / SaaS experience preferred, for a project in the Cleveland metro area

Buying Businesses

FOR SALE SEWER JET RODDER

FLYNN ENVIRONMENTAL

Please contact Fenton Penna at fenton.penna@sierra-cedar.com

Cash investors focused on manufacturing or business to business services. No retail. Strict confidence. Call to discuss your situation: 216-213 6201

Crain’s Executive Recruiter The Urban League of Greater Cleveland is accepting applications for the position of NEO Region I Minority Business Center (MBAC) Director. The MBAC Director is responsible for coordinating activities within the region that accomplish the purposes of the MBAC grant agreement. Email info@ulcleveland.org for information.

To place your Executive Recruiter ad Call Denise Donaldson at 216-522-1383

20141124-NEWS--19-NAT-CCI-CL_--

11/21/2014

2:54 PM

Page 1

NOVEMBER 24 - 30, 2014

THE WEEK NOVEMBER 17 - 23 The big story: Cleveland in 2015 will become the first U.S. city to offer commercial Internet service at 100 gigabits per second. Nonprofit broadband provider OneCommunity plans to make the ultra-fast Internet service available along Euclid Avenue’s Health-Tech Corridor, which stretches from PlayhouseSquare to University Circle. The hope is that the service will attract startups and technology companies to the city. One-hundred gigabits per second is 300 times faster than the average download speed of typical residential Internet service.

Bloom is off: Cliffs Natural Resources Inc. said it’s “pursuing exit options” for its eastern Canadian iron ore operations that “may result in the closure” of the company’s Bloom Lake mine. “Despite the continued interest of the prospective equity partners in Bloom Lake and in its high quality ore, the potential investment is not achievable within a time frame acceptable to Cliffs,” said Lourenco Goncalves, Cliffs’ CEO. Cliffs said the investment was estimated to cost $1.2 billion. If Bloom Lake closes, he said, “the estimated closure costs are expected to be in the range of $650 million to $700 million in the next five years.”

They’re not on board: Associated Estates Realty Corp. said assertions by Land and Buildings, a Stamford, Conn.-based investment firm that intends to nominate a slate of directors to replace the AEC board, are “unfounded and misleading,” and the Richmond Heights-based apartment owner intends to continue on its current path. On Nov. 17, Land and Buildings issued a filing with the Securities and Exchange Commission stating that it wants to replace the AEC board as a result of “material underperformance and shareholder value destruction.” At Summa’s summit: Summa Health System named Dr. Thomas Malone, its current chief operating officer, as its next president and CEO. Malone will take over Jan. 1 for Thomas Strauss, who has led the Akron-based Malone health system for 15 years. Upon his retirement, Strauss will continue to work with Summa Foundation, the health system’s fundraising arm. Since joining the health system in 2013 as president of Summa’s Akron City and St. Thomas hospitals, Malone has taken on increasing responsibilities. Last May, for instance, responsibility for clinical operations was shifted from the CEO suite to Malone’s purview.

Bank on her: The Greater Cleveland Food Bank tapped Kristin Warzocha, a 14-year veteran of the organization, as its next president and CEO. Warzocha, who most recently served as vice president of external affairs, succeeds Anne Goodman, who left the organization in August to take over Saint Luke’s Foundation. Warzocha managed the food bank’s capital campaign, which raised more than $10 million for a new food distribution center. She also was a key member of the management team that helped facilitate the food bank’s mergers with Food Rescue of Northeast Ohio and the Greater Cleveland Committee on Hunger. Medical marvel: Cleveland Clinic announced last week that in September, a team of its surgeons performed the health system’s second face transplant surgery — a 24.5-hour procedure on a middle-aged man who suffered severe facial trauma and other complications from a car accident. The surgery, which involved nine surgeons and multiple specialists, replaced about 90% of the patient’s face. It included the transplantation of about two-thirds of the scalp, the forehead, upper and lower eyelids, eye sockets and nose.

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

To their credit, students take on branch duties In an effort to promote skills like smart spending, informed use of credit, and the benefits of regular saving and investing, Notre Dame-Cathedral Latin School in Chardon has launched a student-run credit union branch in conjunction with Mentor’s Cardinal Credit Union. The new branch, ran on campus entirely by students under Cardinal’s supervision, will serve as the centerpiece of a new financial literacy education program at the school. The project is the collaborative brainchild of Cardinal CEO Christine Blake and students of the ND-CL Business Club. “The timing could not be better,” Blake said. “Students who are exposed to financial education in preparation for college are better prepared for life outside of the classroom. Learning how to manage their finances early on is a critical part of their long-term success.” Blake said the program benefits students by providing an opportunity to learn realworld skills, while the school gets a boost in meeting state standards without additional training or resources. It’s also intended to help address the rising rates of student-loan defaults and students amassing crippling credit card debt. Students will receive hands-on, money-management lessons both in the classroom and as part of the branch experience. “Our community benefits when we can foster a new generation of savvy, moneysmart savers,” Blake said. “They’ll not only reap the benefits of smart money-management, but through the process, they’ll learn

to successfully manage their lives by making responsible choices.” — Jeremy Nobile

The gears of industry are moving more smoothly The U.S. manufacturing sector has reached its highest rate of growth in more than four years, according to “Shifting into High Gear,” a report released by Clevelandbased investment bank Brown Gibbons Lang & Co.

SEE FOR YOURSELF To read the manufacturing report released by Brown Gibbons Lang & Co., go to:

tinyurl.com/qjqas3a The report notes that according to the October Purchasing Managers Index, the manufacturing sector has expanded for 17 consecutive months, and the overall economy has grown for 65 straight months. An expanding U.S. manufacturing sector “is spurring investment in capital equipment and benefiting suppliers of industrial components, with manufacturers of gearing and power transmission products and systems attracting increased investment,” Brown Gibbons said. It said merger-and-acquisition activity “is on the rise as participants look to move up the value chain to capture margin, seeking acquisitions to expand product range and deliver broader capabilities, build scale, and gain access to new customers and highgrowth end markets.” Key drivers of future equipment demand

SPOTLIGHT

BEST OF THE BLOGS

RECIPIENT: I. Richmond Nettey, Ph.D., associate dean at Kent State University’s College of Applied Engineering, Sustainability and Technology

Excerpts from recent blog entries on CrainsCleveland.com.

HONOR: The University Aviation Association’s William A. Wheatley Award Nettey, a resident of Stow, is the first African-American to receive the award, which is presented annually to a professional educator who is active in the University Aviation Association, has at least 10 years of experience in the aviation education profession and has made outstanding contributions to aerospace education. The association said Nettey was selected because of his work at Kent State and on aviation committees at the National Research Council and the Transportation Research Board of the National Academy of Sciences in Washington, D.C. The award also recognizes his work as the former director of the Airway Science Program at Texas Southern University. Under his leadership, the Kent State aeronautics program became the first Aviation Accreditation Board International-accredited aviation program and Federal Aviation Administration-approved Air Traffic Collegiate Training Initiative program in Ohio. Nettey taught his first course in aviation 31 years ago at the University of Louisiana; he has been at Kent State since 2001. In addition to being an associate dean at Kent State, Nettey is a volunteer professor of the Aerospace Senior Seminar course for graduating seniors in aeronautics. He served as the senior academic program director of the aeronautics program for seven years. In a news release from Kent State, Nettey said he developed an interest in aeronautics as a child, when his father would take him to the airport on late-Saturday afternoons to watch airplanes take off and land.

A lot to like Cleveland is doing a better job than most cities at figuring out new, more productive uses for abandoned lots and homes, according to CNNMoney.com. “In and around Cleveland, nearly 6,000 foreclosed and abandoned homes are being destroyed in an effort to save neighborhoods from blight, crime and sinking home prices,” the website said. “Instead of trying to rebuild on these properties, however, the city has been turning the empty lots into parks, greenhouses, even vineyards.” Frank Ford, a policy adviser for the nonprofit Thriving Communities Institute of Cleveland, told CNNMoney.com, “For the larger body — the neighborhood — to survive, you have to remove those cancer cells.” During the housing bust, the website reported, “Ford worked at a community redevelopment group that renovated 50 foreclosed homes in Cleveland for $180,000 each. They sold the rehabbed homes for about $90,000 apiece, taking a $90,000 hit on each. If they had spent that money to demolish nine or 10 foreclosed homes instead and turned the land into green space, it would have had an immediate beneficial impact.” CNNMoney.com also shared with a national audience the story of entrepreneur Mansfield Frazier, whose Chateau Hough vineyard is at East 66th Street and Hough Avenue, on a three-quarter acre lot where a 30-unit apartment building once stood. In 2010, the story noted, the Cuyahoga County Land Bank said it would give Frazier the land if he could make a go of the vineyard within five years. Chateau Hough “produced its first wines last year and Frazier expects to produce about 1,000 bottles of the 2014 vintage.”

“will be the replenishment of aging fleets, a recovering nonresidential construction market, and increased investment in civil and energy infrastructure,” according to the report. — Scott Suttell

Hyatt Place sale price is a ‘very encouraging’ sign for the hotel market The Hyatt Place hotel in Independence was sold last Wednesday, Nov. 19, for a healthy $13.8 million, according to a deed filed in Cuyahoga County. The closing was part of the previously announced purchase by an affiliate of Lonestar Funds, a Dallas-based private equity fund, of a portfolio of 38 hotels from affiliates of Chicago-based Hyatt Hotels Corp. The 127-suite hotel was valued at $8 million for property tax purposes by Cuyahoga County. The six-story hotel was built as an Amerisuites at a project cost of $6 million in 1995, according to a Crain’s Cleveland Business story on the project. Hyatt later reflagged it as a Hyatt Place as it developed the suite chain under its own name. David Sangree, president of the Lakewood-based Hotel & Leisure Advisors consultancy, said the sale price is “very encouraging” and shows area hotels are gaining in value. Hyatt announced the agreement Sept. 8 to sell the portfolio for a total of $590 million. The hotels will continue to operate under their existing Hyatt Place or Hyatt House flags through franchises, Hyatt said. — Stan Bullard

Keeping it real LeBron James visited Fenway Park recently for an “idea exchange” with business leaders at the home of the Boston Red Sox. The Associated Press reported that James “said his goal is to remain authentic, whether it’s in his business relationships or his interactions with fans.” He won’t endorse a product unless he likes it, and he won’t speak out on an issue unless he means it, the AP said. “The people, the consumer, they know what’s real and what’s fake,” James said. “You cannot shortcut, you cannot cheat, because they will know.”

‘Crisis’ averted We know Cleveland is an affordable place to buy a home. It turns out Cleveland and Akron also are among the best cities for renters. MarketWatch.com reported that researchers from Rent.com analyzed the site’s median rents and the median household and vacancy income in 75 metropolitan areas provided by the U.S. Census Bureau. Ohio has three of the 10 most affordable cities for renters, according to Rent.com. Topping the list is Dayton, with median rent of $565. The city’s rental vacancy rate, though, is on the high side, at 16.5%. Akron was eighth on the list, with median rent of $667 and a more understandable rental vacancy rate of 10%. At No. 10 was Cleveland, with median rent of $868 and a rental vacancy rate of 10.1%. These data points arrive at a time when “rents are on the rise nationwide,” MarketWatch.com said, having risen 6.2% in October from the like month last year. Jed Kolko, chief economist for Trulia, told the website that we’re in a “rental crisis” and said it will continue to worsen until there’s more apartment construction.

20141124-NEWS--20-NAT-CCI-CL_--

11/20/2014

11:27 AM

Page 1

LIMITED TIME ONLY

GET A $300 ACCOUNT CREDIT FOR YOUR BUSINESS when you trade in your old smartphone and purchase a new 4G LTE smartphone. $200 Trade-In Account Credit plus $100 Bill Incentive Credit when activating any new 4G LTE smartphone. Trade-in smartphone must be in good working condition. Requires new 2-yr. activation on $34.99+ plans.

EXCLUSIVELY FROM VERIZON

19999 (32 GB)

New 2-yr activation required.

THE DREAM:

There’s having your dream, and then there’s dealing with the day-to-day realities to make it happen. That’s called owning your own business. Verizon can help you handle those realities. See why more businesses choose Verizon Wireless than any other wireless carrier.

OWNING YOUR OWN BUSINESS THE REALITY:

HIRING. PAYROLL. MANAGING SUPPLIERS. AND MAKING THINGS HAPPEN ON THE GO.

FOR THE DREAM AND THE REALITY, CHOOSE VERIZON.

AMERICA’S LARGEST AND MOST RELIABLE 4G LTE NETWORK 1.800.VZW.4BIZ

vzw.com/get300

vzw.com/storelocator

#LiveTheDream

Eligible devices include all 4G Smartphones and 3G iPhone 4s. Bill credit may take up to 2-3 billing cycles to appear. Credit will be removed from account if line is suspended or changed to non-qualifying price plan after activation. Offer expires 12/31/2014. Activation fee/line: Up to $35. IMPORTANT CONSUMER INFORMATION: Corporate Subscribers Only. Subject to Cust or Major Acct Agmt, Calling Plan, & credit approval. Up to $350 early termination fee. Offers & coverage, varying by svc, not available everywhere; see vzw.com. Limited time offer. While supplies last. Restocking fee may apply. DROID is a trademark of Lucasfilm Ltd. and its related companies. Used under license. © 2014 Verizon Wireless. I1118