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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
DECEMBER 13 - 19, 2010
As parent splits, little change at Moen Informal ban on earmarks By DAN SHINGLER dshingler@crain.com
When Fortune Brands Inc. splits up sometime in the second half of 2011, faucet maker Moen will be the single biggest brand in a newly independent public company that will be formed from what is now the conglomerate’s Home and Security division. But there’s no chance Moen’s headquarters in North Olmsted will become the new corporate headquarters of that company, nor will much change for the folks at Moen, a Fortune Brands spokesman said. “The business will remain headquartered here in Deerfield, Ill.,” said Clarkson Hine, Fortune Brands’ vice president of corporate communication. Fortune Brands announced last Wednesday, Dec. 8, that it plans to split itself up. Instead of one company selling $6.7 billion of faucets, padlocks, cabinets, booze and golf balls each year, it will become three separate companies. Fortune Brands will remain as a liquor company, its Home and Security division that includes Moen will be spun off into a separate public company, and Titleist golf ball maker Acushnet either will
go public or will be sold outright. Moen will make up about $850 million of the Home and Security company’s annual sales of about $3 billion, effectively contributing nearly 30% of the business to an operation with 15 brands. But there was little to no consideration given to Moen serving as the headquarters of the new company when it’s spun off, Mr. Hine said. That’s because the Home and Security unit’s management and headquarters structure already are up and running in Deerfield. “It’s really business as usual,” Mr. Hine said. There was seemingly no time for local economic development officials to lobby the company to consider a Cleveland-area headquarters — nor was there much need, said Tom Waltermire, CEO of Team NEO, which markets the region to site selectors and corporations considering a move or expansion. In the case of Moen, which once was led by Fortune Brands CEO Bruce Carbonari, there’s no need to familiarize its parent with Northeast Ohio or its business community. “They don’t really need our help — it’s not like we have to tell them what it’s like here,” Mr. Waltermire said.
Not that the move by Fortune Brands to break up its business will be a negative for the region. When the dust settles, Moen still will be headquartered in North Olmsted and will be a big fish in a smaller corporate pond as part of a newly independent company. But the presence of another public company actually headquartered here would have been a better thing, said economist Ned Hill, dean of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. “I’d rather have the headquarters of a company here than a division or branch, because the decisionmaking is here,” Dr. Hill said in an e-mail on the subject. As it is, Moen supports the local economy, including through the use of local contractors. Those companies, too, are counting on their relationship with Moen not changing — and they’re glad for that. “We have had an outstanding relationship with Moen for 20 years. This change in the corporate structure will not have any impact on our relationship, and we will operate as business as usual,” said Rob Falls, CEO of Falls Communications in Cleveland, which handles Moen’s public relations work. ■
could hurt college budgets By TIMOTHY MAGAW tmagaw@crain.com
The state’s budget woes are a constant source of concern for colleges and universities in Northeast Ohio, but a potential congressional ban on earmarks — colloquially known as “pork” — could cause a snag for some of the schools’ burgeoning programs. The lawmaker-directed spending items known as earmarks don’t account for a huge chunk of college budgets, but a million dollars here or a few hundred thousand dollars there can go a long way in starting a program, school officials say. A formal ban on earmarks failed recently in the Senate. However, it’s still uncertain whether any legislation containing earmarks can make it through Congress, given that Republicans in the House agreed to a moratorium on them and Republicans in the Senate could filibuster any legislation containing the spending items that some suggest have become a symbol of waste in government. U.S. Rep. Tim Ryan, D-Niles, who has slated earmarks for several universities and colleges in his district, recently told Crain’s that “for all intents and purposes, earmarks are a thing of the past, at least for the next year or two.” Without this money, higher education institutions will need to look elsewhere — competitive grants or private partnerships — for the cash.
The benefactors The University of Akron received about $4 million in earmarks over the last fiscal year, according to John LaGuardia, the university’s vice president for public affairs and development. Mr. LaGuardia said the university is awaiting word on several appropriations, but he noted what will happen when the next Congress is seated in January is anybody’s guess. The university recently received a $1.6 million earmark, placed by U.S. Sen. Sherrod Brown, to help launch the school’s corrosion engineering program. It also received earmark money for its polymer innovation
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center, high-technology forensics lab and resource center and the research and development of clean vehicle technology. “Every one of those projects encouraged young people (involved with them) to consider staying (in Ohio),” Mr. LaGuardia said. “We want to keep them afterwards. The success we have also hopefully generates business in the community.” Over the last 10 years, Kent State University has received about $12 million in congressional earmarks, according to Constance Hawke, its associate counsel and associate vice president for federal relations. That’s compared with about $20 million to $25 million the university receives each year in federally awarded competitive grants. Ms. Hawke said the earmarks generally went toward new initiatives lacking certain types of equipment and where there was no grant money available. Some of the projects financed by earmarks include the university’s bio-safety training laboratory and 3D classroom, which allows researchers to study at the cellular level in three dimensions. “We’ve never looked to earmarks as our sole-source funding for any project,” Dr. Hawke said.
Looking elsewhere Rep. Ryan said budgets for the National Science Foundation and the National Institutes of Health have grown over the last few years, and universities have competed for a larger chunk of that money. He anticipates their budgets will shrink over the next couple years, though, as Congress looks to reduce spending. And with fewer, if any, earmarks, the scarcity of federal dollars could hinder future research projects that otherwise could create jobs. The University of Akron’s Mr. LaGuardia said aside from federal grant money, universities may need to look for more private investments from companies to help fund research projects. Regardless, Mr. LaGuardia noted that Northeast Ohio’s higher education institutions are using the earmarked funds for “exceptional tasks that are relevant to today’s society.” ■