$2.00/DECEMBER 16 - 22, 2013
Gas Natural under fire from PUCO State utilities commission orders investigative audit of two subsidiaries of company that has ties to Osborne family By MICHELLE PARK LAZETTE email@example.com
Following what it termed an “unprecedented recommendation” by its staff, the Public Utilities Commission of Ohio has ordered an in-
vestigative audit of two subsidiaries of Gas Natural Inc. and all related companies, citing concerns about the companies’ internal controls, the propriety of their executive compensation system and alleged self-dealing by management,
which includes members of the well-known Osborne family of Mentor. The PUCO, which regulates investor-owned utilities in the state, also ordered the two subsidiaries — Northeast Ohio Natural Gas Corp.
ON THE WEB Read the Public Utilities Commission of Ohio’s order at: tinyurl.com/ndg8eoz and Orwell Natural Gas Co., which are local distribution companies that serve portions of Ohio — to pay civil forfeiture fines of $26,000 and $50,000, respectively. In a 65-page opinion and order
made public Nov. 13, the PUCO raised questions about the true corporate separation of Northeast Ohio Natural Gas and Orwell Natural Gas from their affiliates, and the “inflated” fees the two subsidiaries paid to an affiliate company for natural gas purchases. The PUCO in its order said its staff’s call for an investigation into the management practices of the See PUCO Page 7
Vitamix searching for overseas blend Strongsville move could be just the start of expansion
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By STAN BULLARD firstname.lastname@example.org
Vita-Mix Corp. of Olmsted Township is stirring things up in Strongsville with plans to move about 120 employees next month to the former MCPc building on Drake Road, though the maker of high-
By RACHEL ABBEY McCAFFERTY email@example.com
For many people, the 2013 holiday shopping season hasn’t kicked into high gear as yet, but local retailers don’t sound too worried. Store owners and managers cited a variety of possible reasons for a slow start to December after the
See VITAMIX Page 5
Retailers banking on late shopping sprees Some Northeast Ohio companies attribute so-so sales to late Thanksgiving season
You should. They are our 2013 Newsmakers. Pages 11-16
end blenders could find its next growth-driven property deals overseas. Tony Ciepiel, chief operating officer of the company, which brands itself as Vitamix, said the domestic growth that prompted the latest expansions in Strongsville is smaller on a percentage basis than its growth in international sales. Thus, the family-owned company expects to decide in mid-2014 where to establish operations for the first time in Asia and Europe.
hype of Black Friday weekend; among them are a lack of spending downtime between Thanksgiving and Christmas, an increased focus on online shopping and unseasonably cold weather. But most expect sales to pick up in the remaining days before Christmas, and national expectations are for this year’s sales to exceed last year’s. Steve Presser, owner of the Big Fun toy and collectible stores in Cleveland, Cleveland Heights and Columbus, said crowds are usually robust about two weeks before Christmas. That hasn’t been the case this year, which Mr. Presser attributes to a trick of the calendar. See RETAILERS Page 22
PATENT POWER Crain’s takes a look at some of Northeast Ohio’s most prolific innovators ■ Pages 17-21 PLUS: PATENT POWER INDEX ■ MASTER INVENTORS ■ & MORE
Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 50
CRAIN’S CLEVELAND BUSINESS
COMING NEXT WEEK Learn more about all those local companies who could one day be your clients. Check out our annual Book of Lists next Monday.
DECEMBER 16 - 22, 2013
WHERE THE JOBS ARE There were 3.9 million job openings in September, an increase of more than 8% from the like month of 2012, according to the latest monthly figures compiled by the U.S. Bureau of Labor Statistics. Most major job categories showed substantial increases in job openings; the exception was government, where there were fewer jobs available in September than a year ago.
Corrections ■ In the Dec. 9, page three profile of Market Garden Brewery brewmaster Andy Tveekrem, the name of one of Sam McNulty’s bars on West 25th Street in Cleveland was spelled incorrectly due to an editing error. The correct name is the Bier Markt.
■ A profile of Akron Beacon Journal reporter Bob Downing on page 17 of the Winter 2013-14 Shale magazine misstated the traffic to Mr. Downing’s Ohio Utica Shale blog. It gets 10,000 to 17,000 page views per week.
REGULAR FEATURES Classified ....................22 Editorial ........................8 From the Publisher ........8 Going Places ...............10
Reporters’ Notebook....23 Tax Liens.....................10 Talk on the Web .............8 What’s New..................23
Openings Sept. ’13
Openings Sept. ’12
■ Note: *Including utilities. Total includes services not shown separately.
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Crain Communications Inc. 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 Dave Kamis: Vice president/production & manufacturing Anthony DiPonio: Chief Information Officer Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to email@example.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
DECEMBER 16 - 22, 2013
CRAIN’S CLEVELAND BUSINESS
Parking spaces are at root of dispute County officials fear shortage of places for vehicles because of problems that scrapped garage below planned Hilton hotel By JAY MILLER firstname.lastname@example.org
Problems underground that scotched a plan to put 280 parking spaces below the planned, $260 million Hilton convention center hotel on Cleveland’s Mall should not delay the hotel’s opening, but
they have produced discord over how to resolve a parking dilemma that impacts city, county and federal operations in downtown’s civic core. Cuyahoga County government and general contractor Turner Construction Co. had hoped to build the hotel atop what is called a
mat foundation, which would have provided sufficient depth below grade for two levels of parking on top of a steel-reinforced concrete pad several yards deep. But the complex geology of downtown Cleveland is forcing the county to use a deep foundation technique that drives supports 200 feet below
ground. Project adviser Jeffrey Appelbaum told Cuyahoga County Council on Dec. 3 that the more complicated foundation will add $5 million to $7 million to its cost, but will not extend the completion date of the hotel beyond its June 2016 target or increase the projected cost of construction. He said the total cost of the hotel won’t rise because the original budget anticipated the possibility of the more expensive foundation.
County Council was conducting an informational briefing with Mr. Appelbaum that day and did not take immediate action to approve or reject the planned change. The lost parking spaces, however, have thrown a wrench into the cooperative agreement that lays out various financing and operational responsibilities for the hotel among the county, the city of Cleveland and the Cleveland-Cuyahoga County Port Authority. See PARKING Page 6
Incubators are granted more leeway Six of state’s 11 Edison organizations pick option giving them cash to share By CHUCK SODER email@example.com
Dante Boccuzzi will open Next Door beside his signature restaurant, Dante, in Cleveland’s Tremont neighborhood
GETTING A TASTE FOR MORE Notable Northeast Ohio chefs are expanding their operations beyond region INSIDE: Michael Symon plans to open six more B Spot locations in 2014, including five outside Cleveland. Page 9
By KATHY AMES CARR firstname.lastname@example.org
ante Boccuzzi says he can’t imagine replicating any of his fine-dining restaurants in other markets because of his inability to control regularly the consistency of quality.
“I’m very hands-on and work directly with the chefs, so I like to make sure my restaurants are within a 30-minute drive of my house,” said the Broadview Heights resident and owner of five restaurants, including his namesake Dante at 2247 Professor Ave. in Cleveland’s Tremont neighborhood. See TASTE Page 9
Officials from local business incubators no longer cringe when talking about the state of Ohio’s effort to make them give more of their money directly to the ON THE WEB companies they serve. Actually, more than To read more about half of them have volun- the 11 incubators in teered to give some of Ohio, go to the Third their grant money to their Frontier page on the client companies — part- state’s website. ly because the state of That page can be Ohio sweetened the pot found at: for doing so. tinyurl.com/kb7px2j State officials have retooled a plan that would have required incubators financed through the Ohio Edison Technology Incubators program to give a third of their state grant money directly to their client companies.Incubator officials immediately started complaining about the plan, so instead the state gave them two options: The incubators could a.) apply for the same amount of state money they received last year, or b.) lose $100,000 for services and administrative costs but gain $200,000 that they could give to companies in the form grants, loans or investments. See INCUBATORS Page 6
EDITOR’S NOTE This is Crain’s last standard editorial issue of 2013. The Book of Lists will be published on Dec. 23, and the next issue will be available on Jan. 6, 2014.
THE WEEK IN QUOTES “There are a lot of laws that apply, and in some cases, the commission is not going to agree with us. So we’re going to have to address that and make adjustments.” — Mark S. Yurick, a lawyer representing Gas Natural Inc. Page One
“The high-net-worth entrepreneurs have a much more complex situation, which gives us the ability to implement some financial strategies and use some different financial tools that we weren’t using for the middle-class millionaires.”
“Last year was one of the most rewarding years I’ve ever been a part of. The fun part was every day working with Chris (Antonetti, the Indians’ general manager) and his guys and the coaches. I landed in a spot where I was really comfortable.”
— Mark M. Tepper, president, Strategic Wealth Partners. Page 4
— Newsmaker Terry Francona, Cleveland Indians manager. Page 12
“The employees have gravitated toward him amazingly. He’s just getting started. There’s a lot of great stuff on the horizon for MetroHealth. … By the way, he’s also a very good businessman. Our results are proving that.” — Thomas McDonald, MetroHealth’s board chairman, in regard to Newsmaker Dr. Akram Boutros, CEO, The MetroHealth System. Page 12
CRAINâ€™S CLEVELAND BUSINESS
Advisory firm thinks bigger
Strategic Wealth Partners adds staff, services
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Newmark Grubb Knight Frank is pleased to announce that we represented First Commonwealth Bank, of Pennsylvania, in opening their Ă€UVW2KLRORFDWLRQDW Superior Avenue in Cleveland. Terry Coyne and Kristy Hull represented the Tenant.
DECEMBER 16 - 22, 2013
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With the goal of becoming a onestop shop for high-net-worth entrepreneurs, Strategic Wealth Partners has tripled its square footage with a move to Independence as it adds staff who can offer clients services beyond financial planning. President Mark M. Tepper estimates the firm has spent more than $200,000 on furnishings and on contracted work for its new quarters at 5005 Rockside Road, Suite 1200, which measure 9,600 square feet. It had occupied 3,200 square feet in the Seven Hills office it vacated when it moved Nov. 1. The wealth management firm, which Mr. Tepper says has $170 million of assets under management, is hiring to fill that space. In the last
90 days, it added a certified public accountant, a vice president of operations and a marketing coordinator, bringing its headcount to 13. And Mr. Tepper said he plans to hire another five people in the first half of 2014, among them an attorney and someone with mergers and acquisitions experience. These are the firmâ€™s first employees to carry designations beyond financial planner, Mr. Tepper said. â€œOur goal really is to become a family office for high-net-worth entrepreneurs,â€? he said. â€œWeâ€™re looking to bring in the different professionals who could provide good advice for those types of people.â€? Rounding out the services Strategic Wealth Partners provides also helps to ensure that even when investment returns arenâ€™t rising, as in recessions, for example, â€œclients find our services valuable,â€? he said. This isnâ€™t the first time the firm â€” founded in 2003 â€” changed focus. By early 2009, it had downsized from
roughly 20 employees to three, cutting ties with those who worked on a commission basis because it chose to go fee-only. Thatâ€™s industry-speak for earning fees for advice, not for products one sells to clients. Then, in early 2012, Strategic Wealth Partners began to shift its focus to prospecting for high-networth entrepreneurs as clients. â€œThe high-net-worth entrepreneurs have a much more complex situation, which gives us the ability to implement some financial strategies and use some different financial tools that we werenâ€™t using for the middle-class millionaires,â€? Mr. Tepper said. Changes in recent years to the estate tax exemption and increases to income and capital gains taxes also are part of the reason for the companyâ€™s retooling, he said. â€œA lot has changed tax-wise over the course of the last few years,â€? he said. â€œItâ€™s caused us to recognize that thereâ€™s an untapped opportunity there of us providing advice to these individuals â€Ś before we even manage their investments.â€? â–
The gift that keeps on giving. RACHEL ABBEY MCCAFFERTY
Marian Cordos, a supervisor in the machine seals segment at SKFâ€™s Highland Heights plant, shows students examples of what the company makes.
SKF to invest in plant New lines of business should lead to new jobs By RACHEL ABBEY McCAFFERTY firstname.lastname@example.org
This holiday season, go the thoughtful, and lasting, route. Show your employees and your clients how much you care by giving them a gift subscription to Northeast Ohioâ€™s premier source of business news and information. Discounted group subscriptions are now available. Interested in purchasing a group subscription? Contact Eric Cedo at 216.771.5229 or email@example.com.
SKF, a Swedish company that offers services to industrial customers and makes products such as bearings and seals, is investing in its plant in Highland Heights. The plant, called a Solution Factory, opened in August 2012 as the second such location for the company in the United States, manager Edward Zitney Jr. said. Today, it offers spindle remanufacturing and custom seal manufacturing, and opens its doors for customers to use as a training facility or meeting place. Soon, the plant also will house a power transmission/custom chain business and will assemble and sell solid oil, self-lubricated bearings. The bearings are an SKF product made elsewhere; this plant will mix and pack the solid oil into the bearings. Those operations should be up and running by year-end, Mr. Zitney said. SKF is being â€œvery aggressiveâ€? in terms of expanding this location, Mr. Zitney said, noting that he could see seven business areas running
under the plantâ€™s roof by 2015. He would not share the cost of the investments being made at the plant. The power transmission business will supply small-volume custom chain for products such as conveyor belts. The chain can be cut to length, and SKF will keep material on hand so customers can expect a rapid turnaround, Mr. Zitney said. SKFâ€™s solid oil business, which the company is moving to Highland Heights from Mexico, makes selflubricated bearings. The bearings are used in equipment that operates in mines and other harsh environments, Mr. Zitney said. These new businesses may lead to some hiring, but it will be incremental. Mr. Zitney expects to need a couple new employees for the chain business and another three to four for the solid oil business, one of whom was recently hired. There are about 40 people at the Highland Heights plant now and more than 46,000 SKF employees worldwide. At 71,000 square feet â€” 40,000 square feet of which currently is dedicated to manufacturing â€” the Highland Heights location is large enough to accommodate growth. â€œWe have room for expansion,â€? Mr. Zitney said. â–
DECEMBER 16 - 22, 2013
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CRAIN’S CLEVELAND BUSINESS
Vitamix: Company is adding a third shift at plant continued from PAGE 1
Mr. Ciepiel would not be more specific on which countries Vitamix may consider. “Our domestic products will continue to be made in America, and a large portion of our product components will continue to be made in the United States to protect our intellectual property,” Mr. Ciepiel said. “But a portion of our distribution and a portion of the assembly might be elsewhere to create cost savings on shipping costs for global customers.” That decision may impact how much and where Vitamix grows domestically. Mr. Ciepiel brought up the possibility of future expansion offshore when he was asked if Vitamix was considering growth options beyond Strongsville, where the company recently won state and city incentives to expand employment in the suburb by 265 jobs. The incentives accompanied a commitment by Vitamix to add jobs in the former MCPc building, 21555 Drake Road, a space that had been available since the technology company MCPc moved to downtown Cleveland in 2011. Vitamix also is adding a third shift and is starting to add the first of 145 more jobs through 2016 to the work force it has in place at an industrial building at 23221 Morgan Court in the city-owned Strongsville Business and Technology Park. The company leased the building last year for operations
“Vitamix is fortunate to be in the right place at the right time. The macro trends are driving demand, such as the juicing and smoothie trend and the consumer’s interest in eating healthier.” – Tony Ciepiel, chief operating officer, Vitamix from manufacturing to warehousing. To accommodate job growth and the additional shift at the Morgan Court building, Mr. Ciepiel said Vitamix had to expand the parking lot by 260 spaces. Members of the company’s customer service and information technology units will occupy the Drake Road property, which only needed slight cosmetic improvements, Mr. Ciepiel said. Those employees could have moved sooner, but Vitamix is waiting until the busy holiday season is over before making the transfers. “Our facilities in Olmsted Township are very full,” Mr. Ciepiel said. The company has expanded its headquarters and operations at 8615 Usher Road twice over the past decade. The leased Morgan Court property went into service earlier this year.
Protective measures The incentives Vitamix received Dec. 3 to expand in Strongsville in-
clude a city job/payroll creation incentive grant; it calls for the city to cut a check to Vitamix equal to 30% of the city income tax its workers pay after it adds 265 jobs in the suburb, or upwards of $45,600 yearly. The state of Ohio also extended job creation tax credits to Vitamix in the past that will apply to the current expansion.Longer-term plans to add some operations outside the United States were no surprise to Brent Painter, Strongsville economic development director. He said the company indicated it soon might add operations in another country as it discussed its international growth. Rather than a threat to jobs here, Mr. Painter views the possibility as a plus because he has been told by several manufacturers over the years that foreign sales and operations bolster their domestic strengths. The company will lose the city and state incentives if it does not continue to add or maintain jobs in Strongsville, Mr. Painter said, noting, “We’re protected.”
Right place, right time Vitamix is another case of a Northeast Ohio company quietly building stature in its industry sector since its founding in 1921. Its president, Jodi Berg, is the fourth generation of the family at the helm of the producer of blenders and related products for both the residential and commercial markets.
Mr. Ciepiel said the company’s fastest growth is outside the United States, although the rate of increase is from a smaller base. About 22% of the company’s products are sold to offshore customers; Vitamix forecasts that figure may grow to more than 28% by 2018. In 2012, its domestic sales jumped 52% from levels of 2011 and in 2013 should rise by a comparable percentage, Mr. Ciepiel said, though privately held Vitamix doesn’t disclose sales figures. Vitamix has been the target of attack a recent TV ad campaign by a competitor, Euro-Pro Operation LLC of Newton, Mass., which brags that its Ninja blender is $100 less than the Vitamix residential blender. “When you are No. 1,” Mr. Ciepiel said, “all your competitors want to compare themselves to you.” He was nonplussed by the ad, as he noted 78% of the people who buy a residential blender do research on the Internet, and Vitamix has a strong commercial following. This year, residential customers account for 80% of its business, and commercial customers make up the rest, Mr. Ciepiel said. “Vitamix is fortunate to be in the right place at the right time,” he said. “The macro trends are driving demand, such as the juicing and smoothie trend and the consumer’s interest in eating healthier to improve the vitality of their lives through better diet.” ■
CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
Parking: County councilwoman says Huntington garage is ‘falling apart’ continued from PAGE 3
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While $150 million in bonds and a county investment of $83 million will provide the bulk of the money for the project, the city has pledged $8 million and will offer tax increment financing, which would direct tax dollars on the increase in value of the property to the project. The Port Authority will be the property owner of record, because neither the city nor county believes they have statutory authority to own a hotel. When the joint financing and operating agreement came before Cleveland City Council for approval this fall, some council members wanted assurances that visitors to City Hall and the nearby Federal Building, convention center and the city-county Justice Center will be able to find places to park. Councilman Anthony Brancatelli, who chairs the community and economic development committee, told Crain’s the deal council approved accepted the 260 spaces within the hotel as meeting the council’s requirement. But when the construction plans changed, Mr. Brancatelli and City Council insisted on a provision in the cooperative agreement that the county had to find no less than 500 spaces available to hotel patrons within 1,000 feet of the hotel. Mr. Appelbaum had anticipated the need for an alternative and told City Council that before the hotel
opened in 2016, the county administration would occupy its new headquarters building at East Ninth Street and Prospect Avenue and would move hundreds of county employees out of the area. In the process, it would free up 500 spaces in the county-owned Huntington Park Garage for use by hotel guests. That satisfied City Council, but, it turned out, not County Council.
Not so fast, sir As Mr. Appelbaum finished explaining the foundation and parking changes to County Council members Dec. 3 and was moving on to other details of the hotel project, he was interrupted by council president C. Ellen Connolly. “I just want to cut you off right here and talk about this Huntington garage,” Ms. Connolly said. “The Huntington Park Garage needs a lot of work. It is nearly crumbling; it’s like falling apart.” Ms. Connolly added that she was concerned about whether there would be enough room in that garage for people using the Justice Center. Mr. Appelbaum countered that improvements to the county garage are beyond the scope of the hotel project and are the responsibility of the county. In fact, earlier this year, County Council approved spending $1 million to repair cracked concrete, expansion joints and other deterioration of the structure,
which dates to the mid-1970s. Mr. Appelbaum went on to say that Hilton, the designated hotel operator, was satisfied with the updated parking plan. “Most urban hotels do not having parking underground. Most convention center hotels in other cities don’t have attached parking,” he told County Council. “Drive-up parking in an urban hotel may be across the street or someplace else.” But that didn’t mollify council members.
A push for something new “I can tell you right now, Huntington is not the answer; for 20 years it’s been leaking from the roof to the third- floor basement,” said councilman Michael Gallagher. “The big plan here should be a big parking place attached by a walkway to the north of the (railroad) tracks.” Mr. Gallagher was referring to a plan by the city and county to anchor a pedestrian bridge spanning from the north edge of the Mall across railroad tracks and the Shoreway to the Rock and Roll Hall of Fame and Museum with a parking garage of at least 700 space alongside the Amtrak station. Mr. Appelbaum said he will continue to work toward a solution. “We’re going to come up with other solutions for parking,” he said. “We have to solve for it.” ■
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Incubators: State pushing Edison groups to ensure startups graduate in good time continued from PAGE 3
The extra cash was enough of an incentive to lure six of the 11 Edison incubators to choose the second option; among them are Magnet, a manufacturing-oriented incubator in Cleveland, the Youngstown Business Incubator and the Braintree Business Development Center in Mansfield. Last week, they each were awarded $450,000 grants from the Ohio Third Frontier economic development program, which recently began managing the Edison incubators.Officials from both the Youngstown and Mansfield incubators voiced concern about the original plan when Crain’s spoke with them last April. Even so, they both ended up choosing option “b.” They liked that option “b” provided them with more cash overall. Plus, both incubators already give out small grants and loans, so it will be a natural transition for them to start offering larger amounts of capital to more mature startups. “Actually, I think it was probably a good idea,” said Bob Leach, who is director of operations at Braintree and chairman of the Edison Technology Incubator Directors Collaborative. Five of the 11 Edison incubators
turned down the extra cash in order to keep their operating dollars. They included BioEnterprise Corp. in Cleveland and the Great Lakes Innovation & Development Enterprise (GLIDE) in Elyria, each of which received $350,000 grants from the Third Frontier Commission last week, as well as the Akron Global Business Accelerator, which got $500,000 because it houses more businesses.
The option ‘a’ crowd Some incubators that chose option “a” preferred the operating dollars because they already have access to investment capital and other sources of financing for their companies, said Norm Chagnon, deputy chief of the state’s Office of Technology Investments. Among them was GLIDE. The incubator has a close relationship with the Lorain County Community College Foundation’s Innovation Fund, which gives grants to startups. That fund has at least a few million dollars at its disposal, so adding another $200,000 wouldn’t have a large impact, said GLIDE codirector Dennis Cocco. The operating dollars are more important to GLIDE, which was among the incubators that were unhappy with the
original plan and had sought to be exempt from the requirement to give part of their state money to client companies. “We asked them to make it an option, and fortunately, they did that,” Mr. Cocco said. Companies that receive money from an Edison incubator should be moving to the point where they no longer need subsidized office space and other incubator services, said Dr. Chagnon, who helps manage the Third Frontier program. The extra capital provided by option “b” should help companies can graduate from their incubators, he said. The state is pushing the Edison incubators to make sure their client companies graduate in a reasonable amount of time by grading the incubators on that measure when they apply for grant money, Dr. Chagnon said. What’s a reasonable amount of time? In April, state officials said roughly three to five years. Last week, Dr. Chagnon said the state is trying to be flexible on that front, given that different incubators serve different types of startups. “The time it’s going to take to incubate a software, IT company is going to be very different from a biotech company,” he said. ■
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DECEMBER 16 - 22, 2013
CRAIN’S CLEVELAND BUSINESS
PUCO: Richard Osborne says he sold stock to pay back FirstMerit continued from PAGE 1
companies “is, in fact, an unprecedented recommendation; however, it comes following a series of extremely frustrating audits of the companies, rife with self-dealing that demonstrates a remarkable lack of control.” “The companies management (sic) has demonstrated an alarming lack of regard for the best interests of its customer and has put the interest of ownership ahead of customers,” it added. Besides levying punitive fines, the PUCO found the premiums for gas purchases that Northeast and Orwell paid to another affiliate company — John D. Oil and Gas Marketing Co. — were “excessive” and ordered that the companies credit their customers’ future bills because “the companies failed to demonstrate that their purchasing policies and procedures were fair, just, and reasonable or that they resulted in minimum gas prices.” The adjustments total roughly $580,000 for Northeast and $220,000 for Orwell, though they will be recalculated because the PUCO staff audited beyond the prescribed audit period. “We are concerned that the evidence shows a pattern of behavior favoring affiliates of the companies and appearing not at arms-length,” the order stated. The PUCO intends to move “expeditiously” with the audit, according to the order. In the meantime, an attorney for three of Gas Natural’s subsidiaries said last week he would file a motion for rehearing, asking the PUCO to reconsider various points. “Have there been times that the commission hasn’t agreed with the companies’ interpretation of a regulatory provision? Yeah, but that’s not rare,” said Mark S. Yurick, a partner in the utilities practice of Taft Stettinius & Hollister in Columbus. “There are a lot of laws that apply and in some cases, the commission is not going to agree with us. So we’re going to have to address that and make adjustments. “I do believe that my clients try to act in the best interest of their customers and try to scrupulously act in accordance with the law,” Mr. Yurick said. Given that there’s a 30-day period for filing an appeal, the companies’ deadline for doing so was last Friday, Dec. 13. No such application had been filed as of Crain’s deadline Friday.
An eye on corporate makeup Gas Natural, led by president and CEO Richard M. Osborne, operates local distribution companies in seven states and serves roughly 74,000 customers, according to public filings. It counts nine natural gas utility subsidiaries, including Northeast and Orwell. As of June 2012, Northeast Ohio Natural Gas served about 14,100 residential and 1,060 commercial customers, and Orwell served 7,230 residential and 860 commercial customers, according to the PUCO. The PUCO order said it is concerned about evidence that shows senior management of the regulated companies “were paid by other related companies for which they have no functional duties.” It said some employees “held senior positional titles, yet had no knowledge of the fiduciary duties and responsibilities associated with those titles.” But, Mr. Yurick said, these are smaller companies with small staffs,
“Most companies just manage the businesses. They’re not interested in growing, they’re not interested in serving new customers.” – Richard M. Osborne, president and CEO, Gas Natural and “it’s not necessarily rare for employees of smaller businesses to multi-task.” That said, the companies are working to “address their corporate makeup,” Mr. Yurick said. The commission’s order also cited problems with auditing safeguards and noted its staff cited evidence that the companies bought and were paying for a Cadillac Escalade for one of Mr. Osborne’s sons who was not an employee. According to the order, “the accounting treatment was corrected by making that individual an employee of the companies.” “The commission finds that the fact that these allegations were not disputed by the companies raises additional questions about the judgment of the current management of the companies,” the order said. Mr. Yurick said he “respectfully” disagrees with the fines levied by the PUCO and has a “qualm” with the commission’s statement that the companies didn’t refute some of the allegations. “The commission allowed some former employees to be subpoenaed and testify and make allegations … (and) I wasn’t permitted to depose those people or conduct any discovery,” he said. “I don’t know how I’m supposed to prepare evidence to dispute evidence that I don’t know.” Asked about the findings contained in the order and the impending investigative audit, Richard Osborne said in an interview last Monday, Dec. 9, that the PUCO is “wrong” in raising concerns about the practices of the companies. He said his son, Richard Jr., used the Escalade for environmental work he did for the companies. Mr. Osborne’s other son, Gregory J. Osborne, in late November was promoted to president and chief operating officer of Gas Natural, replacing Kevin J. Degenstein. In a news release, Gas Natural’s vice chairman W.E. “Gene” Argo said the company is consolidating its management, accounting and administrative operations in its Mentor offices. Richard Osborne said neither the management change nor the pending retirement of chief financial officer Thomas J. Smith, announced in early December, is related to the PUCO’s order. Asked to respond to the PUCO questioning whether Northeast and Orwell are “sufficiently responsible and capable to continue to manage a public utility in accordance with acceptable business practices,” Mr. Osborne replied, “Heck yes, we’re capable. I’ve managed companies all my life.”
Go-around over bidding Another mandate of the PUCO order requires that Northeast Ohio Natural Gas and Orwell Natural Gas again conduct a bidding process for the purchase of gas. Local distribution companies are not allowed by law to make a profit on the purchase and resale of natural gas. They are to earn their profits
through its distribution. The PUCO retrospectively reviews company purchases of natural gas on an annual basis. The purpose of such gas cost recovery reviews is to reconcile the differences, if any, between the amount companies paid for natural gas and the amount the companies’ customers paid for natural gas. Back in 2010, as a result of gas cost recovery audit cases involving the companies, the PUCO and Northeast and Orwell reached a stipulation to resolve certain issues, including concerns about relatedparty transactions. Part of that stipulation was that the companies would terminate contracts with their affiliate, John D. Oil and Gas Marketing Co., and that Gas Natural would work to develop and implement a request-forproposal process for the gas purchases of Northeast and Orwell. According to the PUCO, the companies completed their request-forproposals process 13 months after the agreed-upon deadline of Nov. 1, 2011, and Gas Natural ultimately selected John D. Oil and Gas Marketing Co., which submitted the only bid. The companies’ use of the affiliate for gas procurement “resulted in increased costs and little
benefit” to customers, the commission staff said. In its latest order, the PUCO said the two companies failed to prove their request-for-proposals process “was reasonable and appropriate,” and directed the companies “to immediately commence a new RFP process with assistance from staff and OCC (Ohio Consumers’ Counsel).” The companies, though, had an expert witness testify that the prices paid to John D. Oil and Gas Marketing Co. were prudent, attorney Mr. Yurick said.
Suit questions stock sales Last week, a shareholder of Gas Natural sued Richard M. Osborne, its CFO Mr. Smith and others, alleging the company’s executives unjustly have enriched themselves for years, including just recently. “Knowing that trouble was imminent, defendants Richard Osborne … and Thomas J. Smith abused their possession of this non-public information by unloading a massive amount of stock less than two weeks before the 2013 order was published,” alleges the lawsuit filed Dec. 10 in U.S. District Court in Cleveland on behalf of Richard J. Wickham. Mr. Osborne in an early Novem-
ber public offering sold more than 1 million of his 1.4 million Gas Natural shares for $10 apiece, and Mr. Smith sold 47,244 of his 50,457 shares for the same price. Mr. Osborne said last week that he sold his stock because FirstMerit Bank called a $9.5 million loan he had used to buy stock and land. He said he used the proceeds of the sale to pay back the loan. “In no way did I want to sell my stock,” he said. Gas Natural stock closed at $10.04 on Nov. 1 and $8.01 last Thursday, Dec. 12. Mr. Osborne said Gas Natural has acted in the best interests of its shareholders and customers. It has paid a dividend for several years, he said, and the companies are committed to continuing to put their profits into the ground to expand pipeline and service to people in rural Ohio. “Most companies just manage the businesses,” he said. “They’re not interested in growing, they’re not interested in serving new customers. (They’re) interested in managing businesses so they can maximize the profit. We’re going into new areas every month. These are people using propane or fuel oil, and we’re saving them 50%.” ■
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CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
John Campanelli (email@example.com) EDITOR:
Mark Dodosh (firstname.lastname@example.org) MANAGING EDITOR:
Scott Suttell (email@example.com)
A fine mess
d FitzGerald and Eric Kearney may have combined to cheat Ohio voters out of a legitimate race next year for the governor’s seat. Incumbency already gave John Kasich an edge, though there are issues where the Republican standard-bearer is vulnerable. The Ohio Democratic Party must figure out, and quickly, whether Mr. FitzGerald still is the one to exploit those weaknesses, or whether it needs to find a different candidate to mount a serious challenge to the governor. It was state Sen. Kearney who took the bullet last Tuesday when he announced that his three-week stint as Mr. FitzGerald’s running mate was over and that he wouldn’t be seeking the lieutenant governor’s post. However, Mr. FitzGerald and Sen. Kearney both share blame for the fine mess they created at the top of the Democratic ticket. Sen. Kearney is a solid legislator. However, his failure soon after joining the ticket to be forthcoming about the extent of back taxes owed by himself, his wife and the newspaper publishing business in which they were involved left a singular thought in voters’ minds: “We pay our taxes; this guy doesn’t.” It isn’t clear whether the FitzGerald team didn’t dig deep enough into Sen. Kearney’s finances or whether it minimized the expected impact of the senator’s tax troubles, which were not a big deal in his last run for a Statehouse seat. Either way, voters have been left to question the judgment of a gubernatorial candidate who would pick a running mate with any kind of tax baggage in tow. Within an hour of the announcement that Sen. Kearney was leaving the race, the Ohio Republican Party beat on Mr. FitzGerald with both fists. “We have learned a lot about FitzGerald and his priorities throughout this entire episode,” party spokesman Chris Schrimpf said in a one-paragraph news release. “His lack of judgment and honesty will haunt him for the remainder of this campaign.” Mr. Schrimpf would end his statement with this haymaker: “If anyone should leave this race, it’s FitzGerald, who is clearly not prepared for statewide office.” Mr. FitzGerald is still a year away from wrapping up just his first term as Cuyahoga County executive. Even so, we’re not ready to cast him as a member of the “not ready for primetime players” on the statewide stage. He has been an effective administrator and has helped put the corruption-filled years of county government behind it. The skill he has displayed in that job would translate well to the state level. However, as Mr. FitzGerald acknowledged last week in an interview with The Columbus Dispatch, the negative publicity surrounding the ticket “had gotten to the point where it was just drowning out any other discussion we wanted to have.” Whether he now is the one to bring the discussion back to what Sen. Kearney called “the vital issues facing Ohio” is the question the state’s Democratic leaders must answer. Ohioans deserve a competitive, issues-base race for the office Gov. Kasich holds. It will be extremely disappointing if the Ohio Democratic Party can’t deliver one.
FROM THE PUBLISHER
The Cleveland advantage: Helping hands somewhere at 6:45 a.m.? Not unless it’s s I’m settling into the publishan after-after party. er’s chair here at Crain’s CleveSecond, you guys know how to netland Business, I’m learning work. I’ve seen connections about Cleveland from established, cards exchanged a whole different vantage JOHN emails promised during a point. CAMPANELLI and two-minute break at a conferWhen I was a reporter at ence. No joke. It’s a thing of The Plain Dealer, it was more beauty the way professionals street level. I interviewed peoconnect with each other ple as they rode buses. I talked around here. to folks in libraries. I visited That’s not to say newspaper them in their living rooms. journalists don’t take advanNow I’m meeting people in tage of their business cards, conference rooms, nice offices too. They do, using them as and at networking events. In bookmarks, the back of them addition to the general imas to-do lists and the corners provement in the surroundings (and of them to remove roast beef from bequality of haircuts), I’m noticing some tween their teeth. other interesting differences. But perhaps the most significant difFirst off, you guys get up early. ference is the way Cleveland business For some godforsaken reason, 7 a.m. people, especially the leadership, help meetings are not unusual. We had a great each other. sustainability breakfast last week at CleveLast week, we published a Page One land State, and people — not just a couple, story on the amazing behind-the-scenes but dozens of people — were there at 6:45 cooperation it took to lure Nestle’s Pizza a.m. Not only that, they looked awake, like Division to town. With Team NEO and the Greater Cleveland Partnership leadthey had already breezed through five ing the way, more than two dozen local miles on the treadmill. businesses, colleges, recruiting firms and Get a daily newspaper journalist
individuals mobilized. Most helped without compensation — and without knowing the identity of the company interested in moving here. For all they knew, they could have been recruiting a competitor. It didn’t seem to matter. Sherwin-Williams CEO Chris Connor penned a letter extolling the region, Ernst & Young and Jones Day provided office space and more than a dozen other companies delivered consulting services, data and research on real estate, staffing, demographics, incentives and more. “It’s what makes and differentiates the economic development partners in Greater Cleveland from others,” GCP’s Deb Janik told Crain’s reporter Jay Miller. It’s not just corporate stuff, either. Not too long ago, I asked a local chef why our relatively small city had become such a great restaurant town. His answer, without hesitation, was that in Cleveland the chefs work to support, not destroy, each other. That’s not the case in other cities. I’ve seen it, too. Almost everyone I’ve met has asked what they can do to help me in my new job. It’s inspiring me to wake up early, get on the treadmill … and pass out a few business cards to the folks on the ellipticals. ■
TALK ON THE WEB Re: 87.7-FM format change ■ Such a shame. This news confirmed my decision to subscribe to XM radio. — Robert Parker ■ As a now FORMER listener to 87.7, this is an EPIC FAIL. It’s great they are finally accommodating Hispanic listeners, but to kill the only decent radio station in Cleveland is a crime. It was bad enough when they let go Archie Berwick, who was the best morning DJ Cleveland has seen in decades, but bringing back Dan Stansbury to afternoons eased the pain a bit. You tricked us all into becoming loyal listeners and have just let down probably most of us. Good luck holding on to sponsors. — Lisa Empkey
Re: GrafTech’s Orion spacecraft contract ■ It is good to read a positive story about GrafTech after it settled a civil
penalty case with the U.S. Department of Commerce in October for several apparent violations of the Export Administration Regulations. Onward and upward! — Jon Yormick
Re: Cuyahoga County’s deal with MMPI ■ This is the guy (Cuyahoga County Executive Ed FitzGerald) who is attempting to run the state. Ohio will be following Detroit if that happens. Amazing. — Allan Wood ■ Divorces are expensive. I hope SMG’s deal is incentive driven. — Robert Salmon
Re: Amsdell development downtown ■ Financial printer Judson-Brooks (now owned by Donnelly) previously occupied one of the buildings. I have many fond memories of spending late nights
over printers’ proofs. — David O’Loughlin
Re: Renewable energy’s advantages ■ Another tricky issue is in deciphering what value to put on “premature” deaths. Premature by how much? A day? A year? 466 premature deaths per year in Cleveland is, at first blush, breathtaking, and enough to end all debate over the value proposition of distributed generation. But we do need to be careful in how we interpret this sort of data. — Andrew Thomas ■ Agreed, Andrew. That is one of the tricks. Another is the fact that more people mean more environmental degradation. I think the consideration of a freestanding fact such as better air quality is more agreeable than the somewhat nebulous concept of “lives saved,” which … is affected in varying ways by a complex set of influences. — John Dzwonczyk
DECEMBER 16 - 22, 2013
Taste: New path brings new challenges continued from PAGE 3
But once he opens Next Door in early 2014 — which, as the name implies, will be next to Dante — the globally experienced chef will focus on developing a fast-casual Italian concept that could be replicated in airports and suburban shopping destinations. “There’s not a lot of babysitting with fast-casual franchises since they follow the same standards,” he said. Mr. Boccuzzi is among a handful of recognizable names — including Michael Symon, Rocco Whalen and Matt Fish — who are expanding their eateries or ancillary products into markets beyond Northeast Ohio, thereby building a broader business presence. Thanks to the Food Network, social media and exposure in leading industry publications, the Cleveland-based proprietors already are familiar names among their target markets, said Bonnie Riggs, a restaurant industry analyst for NPD Group, a global market research firm in New York. Because of that increased awareness, customers are energized when chefs from food-centric cities such as Cleveland are investing in their communities, thus easing the barrier of new market entry. “We all love to try new things,” Ms. Riggs said. Yet despite that brand familiarity, forging a new path beyond one’s home base comes with its own set of considerations and challenges.
PR offensive in Charlotte Rocco Whalen, chef and owner of Fahrenheit as well as Rosie & Rocco’s, a quick-service Italian concept found at Horseshoe Cleveland Casino, Quicken Loans Arena and FirstEnergy Stadium, said he was approached by developers of a 22story luxury high-rise in Charlotte to ice the top of that building with an 8,000-square-foot Fahrenheit. Mr. Whalen said he thinks his exposure as a result of his 2012 participation on the Food Network’s “Fat Chef” may have played a role in the developers’ interest. But even with that visibility, Mr. Whalen recently hired a public relations firm for the first time in his career to market his new restaurant. “When I purchased the lease … on Professor (Avenue in Tremont) and opened Fahrenheit early in 2002, I had no idea what public relations were. I self-promoted,” Mr. Whalen said. Though Mr. Whalen plans regular trips to oversee the Charlotte operation, the chef emphasizes his roots are in Cleveland. He said he even is considering relocating Fahrenheit downtown and reimagining the Tremont location, much as Michael Symon did with Lola and Lolita.
Testing the water, literally Matt Cole, owner of Fat Head’s Brewery at 24581 Lorain Road in North Olmsted, moved this month out to Portland, Ore., for five months to open by mid-summer a second brewpub at that craft beer mecca. “Why not? We’re a very hop-forward brewery, and 30% of the world’s hops are harvested from Washington and Oregon,” Mr. Cole said. Once that brewpub is open, Mr. Cole said, he will make the crosscountry commute from Cleveland to Portland one week a month for a year. A myriad of factors — from regulations to understanding consumer expectations — accompany the growth learning curve. So does adjusting beer recipes to the Port-
CRAIN’S CLEVELAND BUSINESS
Dante Boccuzzi, left, goes over plans for his new Tremont restaurant, Next Door, with Tom Marenchek, center, of Ace Fixtures and general contractor Tim Jeffries.
Burgers that hit the spot Celebrity chef Michael Symon plans to open in 2014 six more B Spots, beyond the locations in Westlake, Woodmere and Strongsville and three entertainment/sports venues in downtown Cleveland. Targeted cities are Detroit, Columbus, Pittsburgh, Washington, D.C., Las Vegas and Cleveland, involving a mix of airport, hotel, casino and street restaurants, according to Doug Petkovic, a business partner of Michael Symon Restaurants. Mr. Symon in 2012 opened Bar Symon at Pittsburgh International Airport. — Kathy Ames Carr land river water. “It has more stuff from the Earth’s crust, so the chemical composition is different,” Mr. Cole said. Mr. Cole’s long-term goal — in partnership with a restaurant group he declined to identify — is to expand into Washington, California, Colorado and Texas. “We’d also like to see our beer packaged in cans for West Coast distribution,” he said. Meanwhile, he’s looking to further Fat Head’s local market penetration, and is scouting Ohio City for a brewpub expansion.
Melt keeps on truckin’ Matt Fish’s fifth Melt Bar and Grilled opened just last month in Columbus — the first foray outside Northeast Ohio for his eclectic grilled cheese restaurants. “Moving to Columbus will help us prove that the brand is not just a local success,” he said. However, Mr. Fish said has no immediate plans to open another Melt, noting that shipping ingredients two hours south adds a new challenge to his business. Nearly all the menu items — from the bread and sandwich dressings to sauces and soups — are made from scratch at Melt’s commissary in Cleveland’s Midtown neighborhood, then are delivered to its four Cleveland-area locations. Mr. Fish had to add a second delivery truck once the Columbus store opened; shipments began at four times a week but now are six times a week to ensure enough products are on hand. “We want to make sure all recipes are made at our commissary so we have that consistency at each Melt,” said Mr. Fish, who be-
lieves Northeast Ohio still has the potential for a couple more Melt locations, along with more outposts throughout Columbus and beyond.
Smart space from any angle.
Galleria & Tower @ Erieview 1301 E. Ninth St. Cleveland, OH
Interested in leasing the best views in Cleveland? Contact: David C. Wagner - 216.360.0009
Kings of the keyboard Driftwood Restaurant Group, a partnership of seasoned restaurateur Scott Kuhn and celebrity chef Chris Hodgson, so far only operates one out-of-state eatery, Allegheny Grille in Foxburg, Pa., Mr. Kuhn has found the remote venture along the Allegheny River requires constant communication. “A restaurant takes on the personality of the person running it,” he said. “If you don’t have a direct presence in the space, it takes a whole lot of emails and teleconferences to keep your fingers on the business.” A member of company management also makes the two-hour drive weekly to oversee operations. Meanwhile, the restaurant group that already operates Hodge’s, Washington Place Bistro, 87 West and four other eateries in the Cleveland area has opened within the last year two PlayhouseSquare eateries — Cibreo and Rothschild Farms — with plans to increase its presence in that downtown district. It also is casting a wider net with a 2014 opening of restaurants in DoubleTree by Hilton hotels in Beachwood and Westlake. Mr. Kuhn has said he believes the deal with Twin Tier Hospitality, a Pennsylvania-based hotel operator that runs the two DoubleTree properties, presents opportunities throughout Ohio and beyond for more restaurants.
Save the date:
Thursday, February 20, 2014 Executive Caterers at Landerhaven
Sawyer serves up vinegar Jonathon Sawyer, who has gained national attention for his Greenhouse Tavern on East Fourth Street in downtown Cleveland because of its emphasis on locally sourced ingredients and his sustainability practices, is taking a different road to market expansion. The November launch of Tavern Vinegar Co. in partnership with Columbus-based Middle West Spirits invigorates the chef’s hobby of making hand-crafted, barrel-aged vinegars. Those products either are or will be available in select locations in Boston, Chicago, Houston, Los Angeles, New York and other cities. “Our target client base is foodminded cities,” Mr. Sawyer said. Initial production calls for about 30,000 bottles annually, with a 30% to 50% increase over the next couple years, he said. “Our goal is 100,000 bottles a year, but we’re moving slowly,” Mr. Sawyer said. “It takes months to make vinegar.” ■
Advertising & sponsorship opportunities Contact Michelle Sustar at 216-771-5371 or firstname.lastname@example.org
CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office. Apple Construction 2893 Euclid Heights Blvd., Cleveland Heights ID: 34-1745285 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $10,700 El & Beriha Corp. TA JJ’s Food & Deli 4282 W. 130 St., Cleveland ID: 34-1874840 Date filed: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $8,552 All Care Transportation LLC 13117 Cedar Road, Cleveland Heights ID: 30-0555942 Date filed: Nov. 5, 2013 Type: Employer’s withholding,
unemployment Amount: $8,031 Flashnotes Biz 5257 Millwood Drive, Broadview Heights ID: 27-2183536 Date filed: Nov. 5, 2013 Type: Partnership income Amount: $6,435 Quest Technology Systems Inc. 4536 Pearl Road, Cleveland ID: 34-1782662 Date filed: Nov. 5, 2013 Type: Employer’s withholding, corporate income Amount: $6,002 Wilhelm Dance Co. 19555 Center Ridge Road, Rocky River ID: 26-0569114 Date filed: Nov. 5, 2013 Type: Failure to file complete return Amount: $5,745
LIENS RELEASED Accounting Services 2 1285 W. Ninth St., Cleveland ID: 26-3550329 Date filed: Nov. 30, 2011 Date released: Nov. 5, 2013 Type: Employer’s withholding Amount: $24,318
Clifford Thomas DDS Inc. 14601 Detroit Ave., Lakewood ID: 34-1742888 Date filed: Oct. 5, 2010 Date released: Nov. 5, 2013 Type: Employer’s withholding Amount: $8,821 Emerald Painting & Decorating Inc. 496 E. 200 St., Euclid ID: 34-1846730 Date filed: May 22, 2012 Date released: Nov. 5, 2013 Type: Employer’s withholding Amount: $10,978 Giant Petroleum Inc. 12436 Euclid Ave., Cleveland ID: 26-3516983 Date filed: Dec. 16, 2011 Date released: Nov. 5, 2013 Type: Unemployment, employer’s annual federal tax return Amount: $24,035 Heights Laundry & Dry Cleaning Inc. 5596 Mayfield Road, Lyndhurst ID: 34-0823743 Date filed: June 26, 2013 Date released: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $18,267
Save the date
Tuesday, April 15, 2014
CIO OF THE YEAR
2014 NOW ACCEPTING NOMINATIONS PRESENTED BY
For nomination inquiries email
Kim Hill at email@example.com or visit
CrainsCleveland.com/CIO Deadline: February 3, 2014
GOING PLACES JOB CHANGES AUTOMOTIVE COLLECTION AUTO GROUP: Dennis Lafferty to vice president, strategic operations and community relations.
CONSULTING TRINITY PENSION CONSULTANTS: Gary Geiger to defined benefit rtelationship manager.
Krutkiewicz to health management coordinator.
LEGAL JONES DAY: Justin Herdman to of counsel. WELTMAN, WEINBERG & REIS CO.: Courtney J. Blowers to associate.
MANUFACTURING FEDERAL METAL CO.: Michael Buyarski to COO.
BEAUMONT SCHOOL: Molly Drake to public relations and marketing manager; Stephanie Luck DeLuca to recruitment and admissions associate.
GERSPACHER REAL ESTATE GROUP: Steve Masica to real estate agent and consultant.
ENGINEERING CT CONSULTANTS INC.: Gene Arters to engineer 4.
TRANSACTION REALTY: J.B. Spencer and Randy Cramer to sales associates.
SPECIALTY FITNESS EQUIPMENT: Chuck Herman to managing partner.
EXPERIENT: Dawn D. Rockas to strategic sales executive, association market.
TODAY’S BUSINESS PRODUCTS: Rachel James to furniture operations manager.
PNC FINANCIAL SERVICES GROUP INC.: Dina A. Anzevino to vice president, team director, PNC Wealth Management.
C.TRAC: Brooke Winslow to marketing specialist; Jennifer Grove to account director.
AXA ADVISORS: Alex Solove and Melissa Daley to financial professionals, Retirement Benefits Group.
PARK PLACE TECHNOLOGIES: Ken Barhoover to director, interactive marketing; Pattie Kilroy to vice president, channel development; Jackie Canter to manager, pricing and contracts.
CIUNI & PANICHI INC.: Silvia McClellan to staff accountant.
LANDING POINT FINANCIAL GROUP: Susan S. Vasu to practice manager. MCGLADREY LLP: Matt Garvey, Jessica Hartman and Paul Nadin to assurance directors; Steve Ansberry, John Guyer and Amolika Phadke to assurance managers. SKODA MINOTTI: Sean Burris to art director, strategic marketing services group.
INSURANCE OSWALD COS.: Heather Casselberry, Mary Fessler and Denise Lamb to client service administrators; Susan Loy to ERC health data management specialist; Meghan George to senior client service administrator; Natalie Yakunich to ERC health wellness representative; Lisa Michalk to ERC health wellness consultant; Mitchell Berman and James Patterson to benefit counselors; Nicole Pawlowski to health management consultant; Robin Kish to senior health management consultant; Pamela
AKRON COUNCIL OF ENGINEERING AND SCIENTIFIC SOCIETIES: Satyendra Kumar (Kent State University) received the Distinguished Award of Council. AMERICAN HEART ASSOCIATION: Jonathan Stamler, M.D. (University Hospitals Case Medical Center) received the 2013 Distinguished Scientist Award. MIDWEST CARE ALLIANCE: Mary Ellen Yeager (Akron General Hospice of Visiting Nurse Service volunteer) received the Volunteers are the Heart of Hospice Award. PRACTICE MANAGEMENT INSTITUTE: Dennis Nordquest (Akron General) received the 2012-2013 Outstanding National Host Client Award.
RETIREMENT WELTMAN, WEINBERG & REIS CO.: Alan H. Weinberg, after 40 years of service.
Send information for Going Places to firstname.lastname@example.org.
look back at the headlines of 2013 offers a mix of good news — and well, not so good news. Long talked-about developments such as the Global Center for Health Innovation, Convention Center and work to the Ameritrust complex became a reality, and a mentality of
ED FITZGERALD FRANK JACKSON Cuyahoga County City of Cleveland By JAY MILLER email@example.com
n June 5, Cuyahoga County Executive Ed FitzGerald and Cleveland Mayor Frank Jackson stood together behind a podium on Lakeside Avenue, in the line of sight from both Mr. FitzGerald’s office in the county administration building and Mayor Jackson’s office at Cleveland City Hall. They were there to announce an agreement to pool their resources on a FitzGerald $350 million downtown redevelopment plan that would link Public Square to the Lake Erie waterfront. It was one of 2013’s biggest news stories. It was an opportunity for a political leader to bask in the warm glow of public Jackson praise for his or her leadership and vision. For any other two politicians, especially two facing election campaigns as these two were — Mayor Jackson was seeking re-election to a third term as mayor and Mr. FitzGerald has his eyes on the governor’s office — there might not have been enough of a warm glow to share. But for this pair, standing together has had its rewards for the benefit of the overlapping communities they serve. It shouldn’t be surprising that the mayor of the region’s largest city and the head of the state’s largest county would make this year’s list of top newsmakers, even without a blockbuster joint announcement. What is perhaps surprising, though, is how often they cropped up in the same news stories throughout the year. It’s a reflection of the growing realization that they represent constituencies that need each other. For Cleveland, it’s a matter of linking up with a financially stronger partner in the face of a declining city tax base as population drops and homes are abandoned. For Mr. FitzGerald, it’s an acknowledgement that the central city is critical to the continued vitality of the suburbs, which is his exclusive constituency. In addition to the redevelopment of downtown, the administrations of Messrs. Jackson and FitzGerald are working together to back an extension of the sin tax on alcoholic beverages and tobacco products that finances the Gateway sports complex and FirstEnergy Stadium. The pair also support plans for a new roadway through Cleveland’s East Side — the Opportunity Corridor. Additionally, both administrations are part of a consortium with the Cuyahoga Land
TIMELINES FRANK JACKSON ■ June 5: With Cuyahoga County Executive FitzGerald, Mayor Jackson announces an agreement to jointly commit $350 million to redevelop downtown Cleveland. ■ June 11: Mayor Jackson announces disciplinary action for 11 police sergeants and supervisors for their roles in the police chase Nov. 29, 2012, that ended in the fatal shooting of two fleeing suspects. ■ Sept. 30: The Jackson administration tells city council it will be asking Westlake homeowners for $291 a quarter for five years to cover the cost of Westlake’s plan to start buying its water from the Avon Lake system. Westlake would eventually sue Cleveland to block the charge. ■ Nov. 5: Mayor Jackson wins election to a third term as mayor of Cleveland. ■ Nov. 19: He announces an agreement to commit $2 million a year for the next 15 years toward the Browns’ plan for a $120 million upgrade of FirstEnergy Stadium. ED FITZGERALD ■ Feb. 19: In his State of the County address, Mr. FitzGerald reveals a plan to bring a major exhibition to Cleveland — reminiscent of the Great Lakes Exposition of 1936 — that would showcase the community’s accomplishments in areas such as medicine, health care, music and the performing arts. ■ April 24: Mr. FitzGerald makes his longexpected announcement that he will run for governor in 2014. ■ May 31: He presides over the opening of the $465 million Cleveland Convention Center and Global Center for Health Innovation. ■ June 5: With Mayor Jackson, he announces an agreement to jointly commit $350 million to redevelop Downtown Cleveland. ■ Dec. 10: The FitzGerald for Governor 2014 campaign announces that state Sen. Eric Kearney will not run for lieutenant governor in 2014 after details of the senator’s tax problems festered in the two weeks since Mr. FitzGerald announced him as his running mate. Mr. FitzGerald said he will not name a replacement until next year. Bank that is raising money for rehabilitating or demolishing vacant and abandoned properties in the city and the suburbs. The two shared another podium in June, at the opening of the new Cleveland Convention Center and Global Center for Health Innovation and they appeared side by side when they welcomed President Obama to the city in November. Naturally, each made news separately. And for the most part, the news they made together has been well received — what they did separately, not so much. Mr. FitzGerald most recently found himself in the headlines when the man he chose as a running mate in his run for governor, state Sen. Eric Kearney, flamed out after it was discovered he and his wife owed nearly $1 million in back taxes. He also struggled this year in his relationship with the county council, which is beginning to assert its independence three years after its creation. See FITZGERALD AND JACKSON Page 14
turnaround and revival became more common. Then, of course, there were the not-so-flattering stories linked to the leaders of some of region’s top organizations. In this section, we take a look at some of those who helped shape the headlines of the past year — for the better or the worse.
GEIS BROTHERS Geis Cos. By STAN BULLARD firstname.lastname@example.org
oving “at the speed of Geis” is an inside joke among associates at the Streetsboro-based real estate development and construction firm. Northeast Ohio witnessed it in 2013. In less than a year, the company took the Ameritrust complex, which includes a 29-story office tower that had stood empty for two decades, and began reshaping it as a $250 million real estate development project. Two buildings on its Fred Geis Prospect Avenue side were razed. In their place stands by year’s end an eight-story structural frame that will become Cuyahoga County’s new headquarters. In the meantime, a Heinen’s grocery store was snagged for the comGreg Geis plex’s landmark rotunda. The 29-story tower and adjoining Swetland Building, 1010 Euclid Ave., were gutted to make way to become a hotel, apartments, offices and restaurants. As hard as it is to believe — especially in downtown Cleveland where projects often linger for years — the starting gun for all that work went off last January, when brothers Greg and Fred Geis won a bidding process for the county-owned site. They then sold the county on using part of the site for a leased building for the county’s own proposed headquarters. Such a megaproject typically takes two years for architects and engineers simply to design, much less turn it almost immediately into a massive construction job. Tom Yablonsky, vice president of Downtown Cleveland Alliance, said the Geis team quickly grasped how valuable state and federal historic tax credits were to the project when he met with them as they prepared their bid to the county for the site in late 2012. The final project was conceived so it maximized those and other financial incentives, he said, noting their process “is fast but not haphazard.” The performance brings to mind the saying about how years of preparation breeds instant success. John Ferchill, the national real estate developer based here who is friends with Fred Geis, said, “They pushed the envelope to a level I never thought they would get. I don’t think anyone realized these guys did a lot of big stuff before. It just wasn’t downtown. They hired some very good people for their team, brought them in and learned what they had to do.” Credit some of that skill to both brothers growing up in a family-owned construction and development firm which, under their
TIMELINE ■ Jan. 22: Cuyahoga County Council ratifies Cuyahoga County Executive Ed FitzGerald’s proposal to sell the old five-building corporate headquarters of Ameritrust Corp. to affiliates of Geis Cos. for $27 million. The Geis brothers agree to build a new headquarters for the county on the Prospect Avenue side of the site. The plan calls for the 29-story former corporate headquarters and two attached buildings to become a mixed-use apartment, hotel and retail complex. ■ March 14: Cleveland-Cuyahoga County Port Authority’s board of directors authorizes the sale of $90 million in tax-exempt bonds to finance the construction of a new county headquarters building. ■ April 9: Demolition of two buildings on Prospect Avenue begins to create the site for the new county headquarters building. ■ May 14: Members of the Greater Cleveland Mortgage Bankers Association trade group hear that Geis will call the apartment and hotel portions of the former Ameritrust tower “The M on 9th,” which the company later shortened to “The M.” ■ Sept. 13: Heinen’s announces it will install a grocery store in the old Ameritrust rotunda and on the first floor of the adjoining Swetland Building, 1010 Euclid Ave. ■ Oct. 4: Geis announces the 156-room hotel will be named the Metropolitan and will be part of Marriott International’s “Autograph Collection.” ■ Nov. 21: The port authority board OKs the sale of $57 million in tax-exempt revenue bonds to finance the hotel and apartment sections of The 9. watch, became a regional powerhouse in the suburbs years before they climbed into the market inside Cleveland’s city limits. In the same way the old bank skyscraper stands out on the city’s skyline, the Geis Cos. and its owners are in the spotlight to produce in 2014. They have to deliver the county building July 15. They also have set their own public deadline to open the M in the fall.
What they said ■ Fred Geis, May 20, Crain’s: “It’s going to be a circus.” (Talking about more than 1,000 workers on the site daily at the peak of construction of the $250 million Ameritrust project)
What others are saying ■ John Ferchill, CEO, Ferchill Group, Cleveland: “I think there was a lot of lamenting when they got the Cuyahoga County deal. It’s obvious (now) that they were the right choice.” ■ Tom Yablonsky, vice president, Downtown Cleveland Alliance and executive director of Historic Gateway Neighborhood and Historic Warehouse District Development Corp.: “A lot of people talk and don’t do. They clearly do. A lot of (real estate developers) structure deals so that they don’t own the property if all the pieces don’t come together; we saw Geis buy the property and then move forward.”
12 CRAIN’S CLEVELAND BUSINESS
DR. AKRAM BOUTROS The MetroHealth System By TIMOTHY MAGAW email@example.com
he final months of 2012 proved difficult for The MetroHealth
System. The man who promised to take over as CEO backed out of the job just weeks after accepting the offer. The health system scrambled to appoint an interim leader as Mark Moran quietly exited the CEO post more than a year after he announced his intention to step down. Enter Dr. Akram Boutros, a former health care consultant appointed as MetroHealth’s next CEO last May. It didn’t take long for Dr. Boutros to make his presence known at the hospital or throughout Cuyahoga County. While he was the health system’s second choice for the job, Dr. Boutros embraced the role as if he was destined for it. The particularly blunt Dr. Boutros talks a big game. He stresses often that MetroHealth should be known as one of the best health care providers in the country, not as the financially stressed hospital subsidized by Cuyahoga County taxpayers. Rarely is he found in the C-suite at MetroHealth’s main campus off West 25th Street in Cleveland. Instead, he’s routinely mingling with patients and employees. While he has been on the job for less than a year, Dr. Boutros has been responsible for a cultural
reboot of sorts at the health system. He hasn’t been shy in reaching out to those who had felt neglected by MetroHealth’s administration in recent years, such as its employee union. MetroHealth’s leaders had been criticized in recent years for what some observers considered unwarranted administrative bonuses, financial mismanagement and poor public relations. So far in his relatively short tenure, Dr. Boutros has made advancements in all those areas. He has reworked the health system’s administrative bonus structure, launched an initiative aimed at improving patient experience and taken a hard look at its books. Of course, Dr. Boutros’ outgoing and gregarious personality only will get him so far. Keeping MetroHealth in the black has always been a challenge, as many of its patients are uninsured and unable to pay their bills. Its main campus needs a major facelift — one that could cost as much as $650 million — and the health system must find the money to pay for it. Dr. Boutros also must have the business acumen to ensure that the health system’s strategy to build freestanding health centers throughout the county takes hold. Dr. Boutros has conceded that MetroHealth might not meet every goal it sets for itself, and he’s OK with that. “How motivating is it for the team when you’re all working on something and you don’t make it?” Dr. Boutros said in an interview earlier this year with Crain’s. “The greatest athletes have only performed extraordinary feats after failures.”
What he said ■ In an interview last summer with Crain’s about his vision for MetroHealth: “Most public health systems in the nation are severely criticized for their bureaucracy,
TIMELINE ■ May 8: Dr. Boutros is named MetroHealth’s next CEO. He was the health system’s second choice, as the board’s first choice, Dr. John Brennan, backed out of the job. ■ June 1: Dr. Boutros takes over as CEO of MetroHealth and later that month unveils his strategic plan for the health system. ■ July 11: MetroHealth opens a $23 million health center in Middleburg Heights. ■ Oct. 22: MetroHealth announces plans for a sprawling health center straddling the suburbs of Brecksville and Broadview Heights. their clinical outcomes, their poor service and are usually financially weak. What are we going to be known for? Just the opposite.”
What others are saying ■ Thomas McDonald, MetroHealth’s board chairman: “The employees have gravitated toward him amazingly. He’s just getting started. There’s a lot of great stuff on the horizon for MetroHealth. We’re excited and energized … By the way, he’s also a very good businessman. Our results are proving that.” ■ Ed FitzGerald, Cuyahoga County executive: “We are partnering with Dr. Boutros and MetroHealth on a first-of- its-kind partnership to provide a HealthSpot station for our employees to virtually seek medical care from a physician. In working with Dr. Boutros on this project, I witnessed the new energy and vision that he brings to the MetroHealth System, and I believe he will take Metro to the next level of health care. We are looking forward to continuing our partnership with Dr. Boutros and the MetroHealth System.”
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DECEMBER 16 - 22, 2013
JENNIFFER DECKARD Fairmount Minerals By DAN SHINGLER firstname.lastname@example.org
hat else can you say — it was a big year for Jenniffer Deckard and the company she now runs, Chesterland-based Fairmount Minerals. Fairmount’s been on a tear ever since oil and gas drillers discovered that they could extract more of the stuff they were after if they pumped water and some other stuff deep into subterranean shale deposits to bust up the rock. Some of that other stuff is the very sand that Fairmount mines, and the company has grown in lockstep with the nation’s horizontal drilling and hydraulic fracturing, or “fracking” industry. Fairmount, a private company, does not reveal its revenues, but it’s widely believed that the company now brings in a billion dollars a year from its frack-sand sales. Ms. Deckard is both riding and guiding that growth. After serving as president of Fairmount for the past two years, she was named in May to be the company’s CEO. No small accomplishment, especially in a mining industry not exactly known for having a multitude of top female executives. Fairmount, however, appears to be more progressive than most. Not only has it put Ms. Deckard in its top post, but under her leadership the company is a leader both technologically and socially. Not content to merely sell plain sand, Fairmount has found ways to improve its product. Special coatings and treatments make the sand tougher and better able to hold open cracks in the shale where it is used. Still more advanced processes allow that coated sand to suspend in solution, rather than sink, which also increases its efficacy for shale drillers. In the meantime, Fairmount has
TERRY FRANCONA Cleveland Indians By KEVIN KLEPS email@example.com
he Cleveland Indians had five losing streaks of at least five games in 2013. Each time, they bounced back in their first season under manager Terry Francona, who was hired in October 2012 and led the Boston Red Sox to World Series championships in 2004 and 2007. The resilience was never more evident than after the Tribe followed a five-game losing streak to end August by going 21-6 in September and clinching their first postseason berth since 2007. “That’s such a separator for him,” Indians president Mark Shapiro said of his manager’s ability to keep the Tribe on track. “He has a clear sense of urgency and expects to win every game. But when you don’t win, he respects how hard it is, and is supportive of the players and is on to the next day.” The Indians won their final 10
TIMELINE ■ Jan. 23: While Ms. Deckard is still president, Fairmount opens a new terminal to deliver proppant sand to oil and gas drillers in the Utica and Marcellus shale plays, following up on its previous growth in the hydraulic fracking industry. ■ May 14: Fairmount’s Santrol unit acquires new technology that helps sand to float in hydraulic fracturing fluid — a potentially important development for shale gas and oil drilling. ■ May 30: Ms. Deckard is named CEO of Fairmount Minerals Ltd., succeeding longtime chief executive Chuck Fowler. ■ June 26: Fairmount’s Santrol unit acquires a major operation from Northern White Sand Mine in Minnesota. ■ July 24: Fairmount acquires additional major assets, including sand-mining operations, resin-coating plants and shipping terminals in a transaction with FTS International. taken upon itself to become an industry leader in the area of sustainability and social responsibility. All with Ms. Deckard at the wheel and now fully in charge of the helm. Little wonder her predecessor as CEO, Chuck Fowler, and the company’s board has put its trust in Ms. Deckard’s leadership.
What she said ■ Upon announcing Fairmount’s sustainable development progress in August: “With the amount of talent within Fairmount Minerals and with our commitment to ongoing conversations with our stakeholders, we have limitless potential for growth and innovation.”
What others are saying ■ Outgoing Fairmount CEO Chuck Fowler in announcing Ms. Deckard’s promotion as his successor: “I am extremely confident that under Jenniffer’s leadership Fairmount will continue to grow as a result of her continuing emphasis on technical and commercial developments, acquisitions and organic expansions, while emphasizing the strength of Fairmount’s dedication to the keys of Sustainability, the three P’s: People, Planet and Prosperity.”
regular-season games, and they needed every one in order to beat out the Texas Rangers and Tampa Bay Rays in the race for the American League’s two wild-card berths. The Tribe finished the regular season 92-70, a 24-win improvement from 2012 that matched the 1986 Indians for the biggest season-to-season leap in franchise history. The Indians’ playoff trip was a brief one. They lost 4-0 to the Rays in the AL wild-card game at soldout Progressive Field on Oct. 2. But a positive tone has been set by Mr. Francona, who is signed through the 2016 season. “I think we all get down when we’re not playing well,” Mr. Francona said. “What’s important is how you react to it — whether you feel sorry for yourself or try to find a way to dig out of it. You try to surround yourself with people you trust — people you can lean on when times get tough.” See FRANCONA Page 13
DECEMBER 16 - 22, 2013
DAVID FRANKLIN Formerly of the Cleveland Museum of Art By SCOTT SUTTELL firstname.lastname@example.org
avid Franklin came to the Cleveland Museum of Art in September 2010 with a hint of controversy in his past. He left the museum in late October amid a full-blown scandal that involved the suicide of a woman with whom he had an extramarital affair. The museum on Oct. 21 announced that Dr. Franklin, an expert in Italian Renaissance art, was resigning from the job “effective immediately.” It did not specify a reason for his departure, but noted that he would be “retained as a consultant for a period of time in order to insure an orderly transition.” The transition was anything but orderly. Commenters on stories posted on Cleveland.com, Clevescene.com and elsewhere quickly filled in their own reason for Dr. Franklin’s sudden departure — an affair he had with a museum employee who had committed suicide in the spring. Scene soon posted a story about the matter, and by Oct. 23, R. Steven Kestner, a Cleveland lawyer and chairman of the museum board, confirmed to The Plain Dealer that it was an affair that led to Dr. Franklin’s resignation (Mr. Kestner later clarified that it was lies about the affair that led to the resignation.) The unseemly episode continued a pattern of sudden departures in the career of Dr. Franklin. In mid-2008, Dr. Franklin was dismissed as deputy director and chief curator of the National Gallery of Canada after museum lawyers concluded he improperly
Francona continued from PAGE 12
The Indians will face more adversity in 2014 after the free-agent departures of starting pitcher Scott Kazmir and key relief pitcher Joe Smith, along with the likely exit of starting pitcher Ubaldo Jimenez. “You don’t know how you’re going to do,” Mr. Francona said. “There are no guarantees. We just wanted a chance. Once you start playing well, you gain confidence, and that’s what happened last year. Now we need to use it to our advantage.”
What he said ■ In a Dec. 10 interview with Crain’s Cleveland Business: “Last year was one of the most rewarding years I’ve ever been a part of. The fun part was every day working with Chris (Antonetti, the Indians’ general manager) and his guys and the coaches. I landed in a spot where I was really comfortable. I knew I was taking the job for the right reasons.” ■ In the same interview, on his love for baseball: “It’s all I’ve ever done and all I’ll ever do. I get excited to go to work every day. What a blessing that is. I would do this job for a lot less than what they’re paying me. Chris knows that.”
What others are saying ■ Indians president Mark Shapiro, to Crain’s Cleveland Busi-
had deleted emails during his firing of an assistant curator. Dr. Franklin filed a lawsuit and subsequently was rehired by the National Gallery, though the episode involved what The New York Times characterized as “the release of a series of unusually vitriolic internal email messages.” (Dr. Franklin said in 2010 when he was hired in Cleveland that the allegations about the emails were never substantiated.) Dr. Franklin’s departure came as the museum was putting the finishing touches on a $350 million expansion project that has received raves in the art and architectural worlds. Museum trustee Fred Bidwell is serving as interim director until a new director is in place. The retired advertising executive and his wife, Laura, have a longstanding commitment to the arts. Most recently, the Fred and Laura Ruth Bidwell Foundation opened Transformer Station, an arts and exhibition space in Ohio City.
What he said ■ Dr. Franklin in a statement on Oct. 21, the day he resigned: “Over the past few months, I have concluded that it’s time to spend more time on research and writing.” (Mr. Franklin to date has not commented publicly about his resignation or the circumstances surrounding it.)
CRAIN’S CLEVELAND BUSINESS 13
■ Oct. 21: Dr. Franklin announces his resignation as director of the Cleveland Museum of Art, effective immediately. The announcement does not state a reason. ■ Oct. 22: Commenters on Cleveland.com and Scene’s website begin talking about an affair Dr. Franklin had with a museum employee who subsequently committed suicide. Scene that evening posts a story about the affair but does not name the woman, who later is identified as Christina Gaston. Ms. Gaston committed suicide in late April. ■ Oct. 23: Mr. Kestner, a Cleveland lawyer and chairman of the museum board, confirms that an extramarital affair with a museum employee led to Dr. Franklin’s resignation. (Mr. Kestner later clarified that it was lies about the affair that led to the resignation.) ■ Nov. 12: The museum cancels “Exporting Florence: Donatello to Michelangelo,” a major international loan exhibition that Dr. Franklin had been planning for a fall 2014 opening. ■ Nov. 22: Dr. Franklin’s consulting at the museum ends with the termination of a non-renewable contract.
doing it right, one person or two people or a small group of people can’t affect a world-class organization.”
By KEVIN KLEPS email@example.com
n the same day, Nov. 25, that Cleveland City Council agreed to the financing plan for a two-year, $120 million upgrade to FirstEnergy Stadium, Cleveland Browns owner Jimmy Haslam was tending to other matters. In Little Rock, Ark., a federal judge approved an $84.9 million settlement that will be paid to 5,500 trucking companies that were victims of a rebate scam by Pilot Flying J, Mr. Haslam’s Knoxville, Tenn.based family truck stop empire. You could say Mr. Haslam has had an up-and-down year. His Browns again have struggled on the field, but off of it they have thrived. In mid-January, FirstEnergy Corp. and the Browns agreed to a 17-year, $102 million deal for stadium naming rights. In the months that followed, the Browns and Cleveland Mayor Frank Jackson agreed to fund the nine-figure upgrade to the 15-year-old
stadium that will include massive new scoreboards in each end zone, LED video boards, a new audio system, new escalators and several other improvements. During that time, Mr. Haslam wasn’t as publicly visible in Northeast Ohio as he had been in the months after buying the Browns for $1 billion from Randy Lerner in 2012. The reason: Mr. Haslam’s other business — Pilot Flying J — was under fire for cheating trucking companies out of rebates. Seven Pilot employees have entered guilty pleas in the wide-ranging probe. An FBI affidavit that was unsealed in April alleged that Mr. Haslam knew about the fraud — which the Browns’ owner has strongly denied. Mr. Haslam repeatedly has said he has no plans to sell the team, and his hire of Joe Banner to manage the Browns’ day-to-day operations has seemed to be a wise move. It was Mr. Banner who spoke for the Browns at a press conference at City Hall on Nov. 19 in which it was announced that the city had agreed to kick in $2 million a year for the next 15 years to help fund the stadium upgrade. Mr. Banner also stated the team’s case before City Council six days later, when the stadium financing plan came under fire from five members of council in the hours before it was approved by a 13-5 margin.
What others are saying ■ R. Steven Kestner, board chairman, Cleveland Museum of Art, in a Nov. 13 Plain Dealer interview: “I don’t think you can have someone in charge of your organization that you can’t trust.” ■ Mike Benz, an executive in residence in development for Cuyahoga Community College who has been involved for decades in Cleveland’s nonprofit community: “At the end of the day, world-class institutions and organizations usually have world-class leaders, both volunteers and staff, and frankly you can have an interruption. If you’re
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TIMELINE ■ April 8: Mr. Francona amuses reporters before the Indians’ home opener against the New York Yankees by telling them he got lost “three times” during a two-block walk from his downtown apartment to Progressive Field. Cleveland has “the nicest people I’ve ever met,” Mr. Francona says. ■ Sept. 29: The Indians clinch their first postseason berth since 2007 with a 5-1 win in the regularseason finale at Minnesota. The Tribe is the first team to win its final 10 regular-season contests since the 1971 Baltimore Orioles closed with 11 straight victories. ■ Oct. 2: The Indians fall to Tampa Bay in the American League wildcard game, ending their season. ■ Nov. 12: Mr. Francona is named the American League Manager of the Year, receiving 16 of 30 first-place votes. He edges friend and Red Sox manager John Farrell, a former Indians player and executive, in the voting. ness on Dec. 5: “It’s interesting. You take a guy you’ve known for 15 years and knew he would impart positive energy and would form good relationships with our players. Those were givens. What maybe Chris (Antonetti) and I didn’t realize was how competitive he is, how prepared he is and how he was able to strike a balance between urgency and moving on to the next day.”
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14 CRAIN’S CLEVELAND BUSINESS
ANDREA HOGBEN Northeast Ohio Media Group By RACHEL ABBEY McCAFFERTY email@example.com
his summer, the size of the staff of Cleveland’s daily newspaper was drastically reduced and its customers lost regular home delivery as the company moved toward a focus on digital media. Since then, Andrea Hogben has been operating for the most part behind the scenes in her first months as president of The Plain Dealer Publishing Co.’s new digital arm, the Northeast Ohio Media Group. The Northeast Ohio Media Group is in charge of the operations for Cleveland.com and the Sun News. The company also oversees multimedia ad sales and marketing for The Plain Dealer, Cleveland.com and the Sun News, which consists of 11 community papers, and its staff contributes editorial content for all three. Before taking the reins of the Northeast Ohio Media Group, Ms. Hogben was The Plain Dealer’s senior vice president of sales and marketing, a position in which she was not in charge of editorial content. She has been with the company for almost 20 years, mostly working in advertising, marketing and operations. Terry Egger, chairman of Plain Dealer Publishing, didn’t sound concerned about the additional responsibility. Ms. Hogben’s becoming more active in the community, he said, and she knows the market and the customer base, having spent her entire career here. She has an extremely broad skill set, he said, and she’s focused on success.
“It’s been fun to just watch her continue to grow,” Mr. Egger said. Plain Dealer Publishing is owned by Advance Publications Inc., which has been making similar cuts at the papers it owns across the country as it pushes the publications toward a focus on online media instead of print. The Plain Dealer fared a bit better than some Advance papers, which only print a few days a week, if at all. The official plan for The Plain Dealer was announced in April, causing concern and criticism from readers and advertisers alike. The company made some concessions in the months that followed, expanding home delivery plans from three days to four, adding Saturday after hearing pushback from auto dealers, a big source of advertising, Ms. Hogben told Crain’s in July. “The response was loud and clear, so we adjusted the strategy,” she wrote at that time. The media organization’s unionized editorial workers still are employed by Plain Dealer Publishing, while the nonunionized editorial employees are under the oversight of Ms. Hogben’s group. Employees in both companies took a hit this summer as The Plain Dealer laid off about 45 members of its editorial staff, and Sun Newspapers let go about 20 employees, Cleveland.com reported at the end of July. When combined with resignations that means about onethird of The Plain Dealer’s newsroom left this summer. Anup Kumar, an assistant professor of communications at Cleveland State University and a board member at the Society of Professional Journalists and Eye on Ohio, said that in a business sense, the transition to more digital media has been a smooth one. But the cuts in staff are cause for concern, he said, noting what he says is decreased and less in-depth coverage. “I’m a little bit concerned about the journalism,” he said.
2013NEWSMAKERS TIMELINE ■ April 4: The Plain Dealer announced the creation of the Northeast Ohio Media Group, naming Andrea Hogben president and unveiling plans to reduce home delivery to three days a week. ■ July 31: The Plain Dealer Publishing Co. officially let go editorial staff at the Sun Newspapers and The Plain Dealer. The job cuts at The Plain Dealer, coupled with voluntary resignations, added up to about one-third of the newsroom. ■ Aug. 5: The scaled-back home delivery of The Plain Dealer began. Customers can still receive the paper at home four days a week, rather than the originally planned three, and individual copies of the paper are available at retail locations seven days a week.
What she said ■ Recent email to Crain’s: “The focus of the Northeast Ohio Media Group is to do great journalism, do great work for our business partners, and do great work in the community. In that respect, nothing has changed. Our core competencies are providing quality news and information to Northeast Ohio and connecting our local businesses with consumers. But certainly a lot has changed in how we accomplish those things.”
What others are saying ■ Terry Egger, chairman, The Plain Dealer Publishing Co.: “The job is not bigger than her.” ■ Marianne Crosley, president and CEO, Cleveland Leadership Center (Ms. Hogben was in the 2012 Leadership Cleveland class): “I expect her to be highly responsible in how she disseminates the news … (and) willing to make course corrections along the way to make sure she’s traveling the right path.”
DECEMBER 16 - 22, 2013
FitzGerald and Jackson continued from PAGE 11
The council passed a budget larger than he had proposed and members have been raising questions about the new hotel planned for the Mall adjacent to the new Convention Center complex. Mr. Jackson, not surprisingly, was successful in his bid for a third, and probably last, term as the city’s mayor. But he spent long hours in 2013 fighting fires in several city departments. In June, Mayor Jackson announced disciplinary action for 11 police sergeants and supervisors for their roles in the police chase Nov. 29, 2012, that ended in the fatal shooting of two fleeing suspects. Dozens more officers still face disciplinary charges in the fatal chase. He also reorganized the city’s water department, hiring a new public utilities director in March in the face of problems untangling customer billing problems. In part because of the billing problems, Westlake was mulling a plan to cut its ties with Cleveland’s water service and start buying water for its residents from the Avon Lake system. That set off a Cleveland plan to charge Westlake property owners for the cost of the suburb’s uncoupling, which triggered a lawsuit by Westlake to block the separation charges. Then, Mayor Jackson was embarrassed after he hired a new fire chief in January to clean up a problem with payroll recordkeeping that saw firefighters illegally swapping shifts with other firefighters. But it turned out that the new chief, Daryl McGinnis, soon had to be reprimanded for mistreating a colleague and then, in August, it was discovered that he had failed to keep up with his continuing education requirements. Mr. McGinnis was relieved of duty and retired before the end of August. Two weeks after his successful re-election, Mayor Jackson announced that the city would commit $2 million a year for the next 15 years to help cover the cost of new scoreboards and other facets of the Cleveland Browns upgrade of FirstEnergy Stadium.
What Mayor Jackson said ■ Oct. 7 meeting with the Crain’s editorial board: “I firmly believe that if you’re put in a position of making a decision and your focus of what is right for where you are and who you’re serving, then nine out of 10 times that public official will make the right decision.”
What others are saying about the mayor ■ Cuyahoga County Executive FitzGerald, June 5, in a comment to a Crain’s reporter: “One thing the mayor and I have in common is we’re direct, we’re honest with each other and we agree on the general direction of things.” ■ Mayoral opponent Ken Lanci, Sept. 24, in comments to Crain’s: “He has failed miserably on everything. He makes the same statements about schools, safety and jobs. And he’s done nothing.”
What Mr. FitzGerald said ■ Oct. 8 ribbon-cutting for the Global Center: “We’re turning the page and starting a new chapter in Cleveland history. This will be a catalyst economic and community improvement.”
What others are saying about Mr. FitzGerald ■ U.S. Rep. Marcia Fudge, Nov. 29, in endorsing Mr. FitzGerald in his race for governor: “Ed has shown forward-looking leadership that puts a premium on equal opportunity and investing in our children, and I’m happy to endorse him for governor.” ■ Chris Schrimpf, Ohio Republican Party spokesman, in a statement Dec. 10, following state Sen. Eric Kearney’s announcement that he would not be Mr. FitzGerald’s running mate: “We have learned a lot about FitzGerald and his priorities throughout this entire episode. His lack of judgment and honesty will haunt him for the remainder of this campaign. If anyone should leave this race, it’s FitzGerald who is clearly not prepared for statewide office.”
needs our leadership, it’s right now.”
continued from PAGE 13
What others are saying
Construction is expected to begin shortly after the 2013 season ends on Dec. 29.
■ Joe Banner, Browns CEO, to the media on July 24, the day before the start of the team’s training camp: “Jimmy is here and incredibly supportive and a huge asset to us. I think he’s made it clear and I’ve tried to make it clear without any ambiguity at all that he’s not going to sell the team. But I understand why until that actually happens and this thing plays itself out that it’s a legitimate question.”
What he said ■ To reporters on April 19, one day after federal authorities released an affidavit that linked him to the corporate fraud scheme: “Candidly, I haven’t done anything wrong, No. 1. And No. 2, if there’s ever a time the company
Defining Cleveland’s skyline Thank you, Commonwealth REIT, for your commitment to the city of Cleveland and your ongoing confidence in Jones Lang LaSalle at North Point Tower. jll.com/cleveland For a copy of our Cleveland Skyline Review, email firstname.lastname@example.org. Leasing – Sales – Management – Office – Industrial
■ Feb. 11: Less than six months after hiring former PepsiCo president John Compton to run Pilot Flying J, Mr. Haslam announces he is returning to the role of CEO. ■ April 15: Agents from the FBI and IRS raid Pilot’s headquarters in Knoxville, Tenn. ■ May 29: Two Pilot employees — regional sales director Arnold Ralenkotter and regional accounts representative Ashley Smith Judd — plead guilty to federal charges of conspiracy to commit mail fraud. They are the first of seven employees to enter guilty pleas to date. ■ July 15: Sports Business Daily
reports that the Browns have selected Los Angeles-based architect Gensler to “design a major renovation” to FirstEnergy Stadium. The Browns confirm the report, and two weeks later, detail their vast fan experience and stadium improvement initiatives. ■ Nov. 25: A federal judge in Arkansas approves an $84.9 million settlement involving 5,500 trucking companies that were cheated out of promised rebates by Pilot. A few hours later, Cleveland City Council signs off on the $120 million stadium financing agreement that was hammered out by the Browns and Cleveland Mayor Frank Jackson.
CRAIN’S CLEVELAND BUSINESS MAKES CONNECTIONS CONGRATULATIONS TO OUR 2013 PROGRAM ALUMNI - Akron Surface Technologies, Inc. - Nottingham Spirk/CardioInsight - quasar energy group
- SNS Nano Fiber Technology, LLC - CODONICS Inc. - Cleveland HeartLab - NASA Glenn Research Center/Ohio Aerospace Institute
- Jane Alexander, The Cleveland Museum of Art - Terri Rini Barber, Southwest General - George Mehok, Safeguard Properties
- Mark Danczak, Cohen & Co. - Ester Potash, Olympic Steel Inc.
- Mary Didonato, Medical Office of Dr. Sandra Hazra - Cynthia Moore-Hardy, Lake Health - Daniel Storey, The Village at Marymount - Lee E. Elmore, North Coast Health Ministry - Dr. Scott Sedlacek, The Eye Place - Dr. Wael Barsoum, Cleveland Clinic - Barbara Ruhlman, University Hospitals - Bob Juzenas, Hospice of the Western Reserve - Dr. Goutham Narla, UH Case Medical Center - Independence Excavating Inc.
- Dr. Michael Lederman, UH Case Medical Center - Catherine Koppelman, UH Case Medical Center - Kevin Goodman, Leukemia & Lymphoma Society - Dr. Philip Tomsik, North Coast Health Ministry - Pamela Hetrick, UH MacDonald Women’s Hospital - Gary Mahoney, The Visiting Nurse Association of Ohio - Meghann Featherstun, UH Accountable Care Organization - Janine E. Janosky, Austen BioInnovation Instutite in Akron
- Noble Davis Consulting Inc.
- Ingrid Angel, El Barrio - Colleen Arthur, Lockheed Martin Akron - Rebecca Bagley, NorTech - Jacqueline Forestall, Alego Health - Bethany Pugh, The PFM Group - Jan Roller, Davis & Young - Joy Roller, Global Cleveland - Sharon Toerek, Licata & Toerek
- Miguel Zubizarreta, Hyland Software Inc. - Don Shadrake, The Reserves Network
- Oswald Companies
- Geauga County
- Marcia Fudge, U.S. Representative, Congressional Black Caucus - Marcie Goodman, Cleveland International Film Festival - Sharon Sobol Jordan, The Centers for Families and Children - SueAnn Naso, Staffing Solutions - Susan V. Juris, University Hospitals Ahuja Medical Center - Jeanette Preston, Smithers Quality Assessments - Denise San Antonio Zeman, Saint Luke’s Foundation - Diana Richards, Vacuum Systems International Inc.
- Debra Lyons, Westfield Group - Carla Fitzpatrick, The Pattie Group - Diane Giorgi, Reminger Co. LPA - Tom Maxwell, Fifth Third Bank
- Nicolette Kynkor, FedEx Custom Critical - Kate Lawrence, MetroHealth System - Shana Zollar, Dwellworks - Susie Barragate, Vocational Guidance Services
- Terry Bichsel, FirstMerit Corp. - Susan Carlson, ASMGi - Loree Connors, Vitamix Corp. - Michael Stanek, Hunt Imaging LLC
- Dianne Brehm, United Way of Greater Lorain County - Julie McGraw, National Interstate - Wade Steen, Cuyahoga County - Marlene Tehi, Evolution Capital Partners
- Frederick Stueber, LIncoln Electric - Kim Bixenstine, University Hospitals
- Douglas Kordel, Proforma - Geri Presti, Forest City Enterprises
- Christopher A. Bayham, AssuraMed - Anne Bitong, Akron Marathon - Matt Brakey, Brakey Energy - Tim Brokaw, Brokaw Inc. - Tessa Burg, SparkBase Inc. - Dan Burkons, Marcus & Millichap - Ken Burns, TinyCircuits - Dan Charney, Direct Recruiters Inc. - J. Brandon Davis, URS Corp. - Jacob Duritsky, Team NEO - Rob Heiser, Segmint Inc. - Chris Salata, Fairmount Properties - Marybeth Shamrock, KPMG LLP - Ryan White, Price for Profit
- Medical Mutual of Ohio
- Will Lazzaro, Dakota Software - Jonathan Levoy, Alego Health - Shannon I. Lyons, LaunchHouse - Cary Majors, Steris Corp. - Drew Martin, PNC - Brian Muskoff, IBM - Scott Orr, Gilbane Building Co. - Laura Passerallo, Fifth Third Bank - Rico Pietro, Cresco Real Estate - Kim Wilson, Slate Rock Safety LLC - David Sawicki, Cleveland Construction Inc. - Jay Masurekar, KeyBanc Capital Markets - Sarah Forrer, Main Street Cupcakes - Victor Ruiz, Esperanza Inc.
- Sam Maniar, Jo-Ann Fabric and Craft Stores - Jeanette Saunders, Cleveland Airport System
- Mark Belgya, The J.M. Smucker Co. - Richard Marabito, Olympic Steel
- Nadine Ezzie, Broadvox - Marilyn Tobocman, Ohio Attorney General’s Office
- Lynlee Altman, Pinnacle Construction and Devlopment Group - Bridget Meehan Brennan, United States Attorney’s Office Northern District of Ohio - Michael Foran, Market Garden Brewery, Nano Brew, Bar Cento, Bier Markt, Speakeasy - Troy Gerspacher, Gerspacher Real Estate Group - Julie Maurer, Echogen Power Systems, SilverLine Consulting - Marty McGann, Greater Cleveland Partnership - Jeff Pacini, Greater Cleveland Sports Commission - Stella Paparizos Dilik, The Salvation Army of Greater Cleveland - Tony Rospert, Thompson Hine LLP, Cornucopia Inc. - Andrew Samtoy, Civic Commons ideastream - Fattar Thomas, Delaware North SportService - Keith Williams, Good Karma Broadcasting, ESPN Cleveland
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16 CRAIN’S CLEVELAND BUSINESS
LAWRENCE MITCHELL Case Western Reserve University By MICHELLE PARK LAZETTE email@example.com
he headline of the June 20, 2011, Crain’s Cleveland Business story announced: “He’s bringing order.” It was the news that many at Case Western Reserve University School of Law had welcomed. After 2½ years during which leadership was in a state of transition, the school had a new dean, Lawrence E. Mitchell, who said he was determined to stay awhile. An expected seven to 10 years, in his words. It’s another 2½ years later, and Mr. Mitchell is not presently at the helm of the law school. He has taken a temporary leave of absence after he was sued by Raymond Ku, a professor at the school. Mr. Ku’s Oct. 23 lawsuit alleges that Mr. Mitchell and the university retaliated against him for reporting potential sexual harassment of women by the dean. His complaints present some scandalous allegations, among them that the dean joked to CWRU faculty members that a CWRU graduate student “wasn’t good for anything but keeping the bed warm,” and that Mr. Mitchell propositioned a student for a “threesome.” Through his attorneys, Mr. Mitchell has asserted that Mr. Ku’s “irrelevant and salacious allegations” are an outlet for the professor’s disappointment about vying for, and losing, a deanship position that went to Mr. Mitchell and
“to cover up and distract from his unsatisfactory performance.” The back-and-forth between Messrs. Ku and Mitchell and the university has made headlines in multiple media outlets, including the legal site, Above the Law. It remains to be seen what impact, if any, the maelstrom has on the recruitment of students at a time when applications are on the decline. Many say the matters at hand will prove to be a short-term distraction for the law school. But it’s also clear in online comments that there are concerns for its reputation. “Let’s see how the annual fundraisers explain this to already pissed off law school alums [sic],” one commenter wrote, responding to a Nov. 6 Cleveland Scene story about Mr. Mitchell’s leave of absence. So much for Case Western’s reputation, another lamented. That reputation, though, is a good one, asserted John Carey, chancellor of the Ohio Board of Regents, which oversees colleges and universities in Ohio. “Case Western in general is a very highly respected university, and they’re very important to the state,” he said. “The law school is important because of the graduates it produces. “No one can avoid being sued completely,” Mr. Carey added. “You have to handle yourself in a professional way and manage around it.”
What he said ■ Nov. 6, email to law school faculty, students and staff: “I am confident that this review will be done expeditiously and that this review, again, will affirm that neither I nor the university have done anything wrong or improper. I am also confident that it will put this behind us. I intend to take full advantage of the legal process to seek justice. We have dramatically improved admissions efforts, broadened our global
■ Oct. 23: Raymond Ku, a Case Western Reserve law school professor and former associate dean, files a lawsuit in Cuyahoga County Common Pleas Court, alleging that the dean and the university retaliated against him after he reported to various university officials that Mr. Mitchell potentially had sexually harassed women. The same day, the university responds, stating, in part: “This situation is categorically not an instance of retaliation.” ■ Nov. 6: Mr. Mitchell announces he is taking a temporary leave of absence as the university conducts an independent review related to the allegations of Mr. Ku’s lawsuit. ■ Nov. 14: Case Western Reserve names Jessica Berg and Michael Scharf — two people it describes as “renowned scholars” — to lead the university’s law school while Mr. Mitchell is away. ■ Nov. 27: Cuyahoga County Judge Peter J. Corrigan denies a motion Mr. Mitchell’s attorneys filed on Nov. 7 to strike “certain immaterial, impertinent and scandalous allegations and materials” from Mr. Ku’s complaints. The same court record also notes, “Parties indicated that no further media releases will be necessary.”
Greater Cleveland Film Commission
■ March 5: Media outlets report Cleveland lured the movie “Draft Day” away from Buffalo, with help from the Ohio Motion Picture Tax Credit. As a result, the movie will focus on the Browns instead of the Bills. ■ May 31: The city of Cleveland closes the West Shoreway for “Captain America: The Winter Soldier.” People on the West Side start complaining about their commutes. ■ June 15: The West Shoreway reopens. ■ Nov. 8: Online rumors suggest that filming of a “Ghostbusters” sequel could come to Cleveland. Mr. Schwarz says he cannot comment.
reach, and developed and implemented an innovative new curriculum. The momentum is just beginning. I look forward to continuing our work together.”
What others are saying ■ John Carey, chancellor, Ohio Board of Regents: “As long as the university is forthcoming with information about the controversy and presents it in a credible way, I don’t think it has any long-term impact. It would be a distraction but I don’t think it means that the students aren’t going to get the education that they need.”
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DECEMBER 16 - 22, 2013
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By CHUCK SODER firstname.lastname@example.org
ocal historians may look back and say Northeast Ohio’s movie industry didn’t really get started until 2013. By far, 2013 has been the biggest year for movies in the area since the Greater Cleveland Film Commission was founded in 1998. Since May, the region has hosted shoots “back to back to back,” said commission president Ivan Schwarz. There are two reasons: ■ The state of Ohio in 2012 voted to raise the cap on the Ohio Motion Picture Tax Credit to $20 million per year from $10 million. The cap had put a serious crimp in the state’s still-developing movie industry: Producers wanting to shoot in Ohio sucked up all $10 million in the first 15 days of fiscal year 2012, which started in July 2011, Mr. Schwarz said. ■ Northeast Ohio started to win repeat business from movie makers. For instance, “Captain America: The Winter Soldier” — the biggest, most expensive movie shot in the region this past year — might not have come to Cleveland if the city hadn’t already gotten its foot in the door in 2011 when it hosted “The Avengers,” another movie made by Marvel Studios, Mr. Schwarz said. The same phenomenon could’ve helped the region attract a few other productions shot locally in 2013. Two executives who worked on “Draft Day,” a football movie starring Kevin Costner and Jennifer Garner, had worked on other movies shot in town since the film tax credit went into effect in the state’s 2010 fiscal year. Plus, the producer of “Miss Meadows,” a Katie Holmes comedy that started shooting in Cleveland this past August, is in the process of shooting a horror movie called “Fear Clinic” in Medina. Mr. Schwarz played a large role in getting the region to this point. He replaced film commission founder Chris Carmody in 2007 and spent much of the next few years pushing the state to pass the tax credit. He’s got lots of contacts, having spent more than 25 years in the business.
There are downsides. For the “Captain America” sequel, the city shut down the West Shoreway for two weeks, causing traffic jams and bickering. Mr. Schwarz said it was worth it, but even Chris Evans, who plays “Captain America,” apologized on Twitter for “screwing up” traffic. Then there’s the tax credit itself. It brings $1.20 into Ohio for every tax dollar spent, according to a March 2012 Cleveland State University study paid for by the film commission. But the credit doesn’t pay for itself in tax revenue: The study said 27 films shot over a three-year period received $28.3 million in credits but generated just $5.9 million in new local and state taxes. The benefits to Northeast Ohio will increase, however, if the region can build a sustainable film industry that employs lots of local residents, Mr. Schwarz said.
What he said ■ On the film commission’s early stage plan to start a media technology campus in Northeast Ohio: “I want to make people see Cleveland as a center of excellence for global filmmaking.”
What others are saying ■ Carrie Carpenter, vice chair, Greater Cleveland Film Commission: “He has worked very closely with local government, especially city hall, to make this a very filmfriendly environment.” ■ June 17, Plain Dealer editorial: “Our long regional nightmare is over. The West Shoreway is open again. … The ‘Captain America’ crew is still in the area, bringing creative disruption to other lives. But at least it gives Clevelanders something new and interesting to gripe about.”
CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
19, 21: A LOOK AT THREE PROLIFIC LOCAL INVENTORS
PATENT POWER Creating ways to make an impact Nottingham Spirk says 70-20-10 rule can help companies develop innovations
STRONG IDEAS START HERE And they don’t necessarily come from big corporations, as small businesses dominate Crain’s Patent Power Index
obert Yeggy is thorough. The Medina man searched through 2,000 patents before he and fellow scientist Vito Altavilla filed their own patent to protect VARY Petrochem’s first chemical compound, which separates oil from sand and other materials. Dr. Yeggy printed the other patents out and initialed all the pages, which ended up filling both the trunk and the backseat of a car. He often wrote comments on them to make sure his patent attorneys knew why the compound he and Mr. Altavilla created was different from the compounds described in Yeggy the other patents. Thus, it makes sense that their INSIDE: Patent Power Index. Page 18 tiny, Brooklyn-based company is ranked third on the Crain’s Cleveland Business Patent Power Index. The index is meant to showcase local companies that produce highquality patents. It relies on the Ocean Tomo Rating System, which analyzes more than 50 factors to determine whether any given patent is likely to be renewed and commercialized. For instance, renewal rates tend to be higher for patents containing more references to older patents and more claims, which describe the aspects of an invention that supposedly make it unique. Thus, those patents score higher. See IDEAS Page 18
STORY BY CHUCK SODER email@example.com | Twitter: @ChuckSoder
This illustration shows an image of an actual United States patent.
By CHUCK SODER firstname.lastname@example.org
Struggling to come up with the next big thing? Maybe you need a few pointers from Nottingham Spirk. The Cleveland-based product design company has nearly 1,000 U.S. and international patents covering all sorts of consumer products. Among them: The popular Spinbrush electric toothbrush, the Swiffer SweeperVac and the Twist & Pour paint container used by Sherwin-Williams. Co-founder John Nottingham himself is listed as lead inventor on more than 90 U.S. patents. So here are some tips from him and his son, Bill, who is a director in the company’s new business development and design management areas. See IMPACT Page 19
ON THE WEB In reporter Chuck Soder’s Tech Talk podcast, Bill and John Nottingham of Nottingham Spirk discuss what companies need to do to create the next big thing — before someone else does. Listen at: www.crainscleveland.com/ section/AUDIO
18 CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
Ideas: Scores help indicate different strategies
The following Northeast Ohio companies produce high-quality patents — at least according to the Ocean Tomo Rating System. The formula scores patents based on more than 50 factors designed to predict whether a patent will be renewed and commercialized. To be included, a company had to receive at least three patents from 2010 through 2012. A score of 100 represents a patent of average quality. The number of patents issued are from 2010-2012.
continued from PAGE 17
The nine patents VARY Petrochem received from 2010 through 2012 apparently are quite good: They earned a quality score of 158.4 on the rating system, which was developed by Ocean Tomo LLC, an intellectual property services firm in Chicago. All companies on the Patent Power Index received at least three patents from 2010 through 2012, but the index otherwise ignores the number of patents that companies hold — we rank Ohio companies by that standard in the list on page 20. That list is led by big companies, but only one major corporation, ATM maker Diebold Inc., cracked the Patent Power top 10. The Patent Power Index is dominated by small businesses. For instance, Responsive Innovations LLC — which serves as the hardware division of a sister company, Turning Technologies in Youngstown, a provider of audience response technology — received just three patents from 2010 to 2012. But those patents earned a combined score of 173.3. By comparison, Rockwell Automation’s local offices received 427 patents from 2010 to 2012, more than any other business in Northeast Ohio, according to the list on page 20. But the manufacturing technology company’s quality score is only in the middle of the pack: It hovered close to 100, the average score for all industries, in all three years. The gap in quality scores between big and small businesses shows one way they approach patent strategy differently. Small companies don’t have the money to patent whatever they want, so they aim to make the most of the few they do file, according to Jack Malackowski, CEO of Ocean Tomo. “They can only afford to keep the few crown jewels,” Mr. Malackowski said. VARY Petrochem’s first patent met that criteria. Dr. Yeggy worked so hard to secure it because the company’s entire business was going to be based around that chemical compound. And the effort paid off — they got the patent without much trouble. “That was a big day in our lives,” he said.
Should we, or shouldn’t we? Some industry sectors ranked higher on the Patent Power Index than others. For instance, the top 20 spots included four medical technology developers, but no software company shows up until No. 22, a spot occupied by CardinalCommerce Corp. The Mentor company makes software for securing online purchases. Those two sectors approach patents differently, according to Craig Nard, an intellectual property attorney who is director of the Center for Law, Technology and the Arts at Case Western Reserve University. Software products come and go, so it doesn’t always make sense to file for a patent, which offers 20 years of protection, Mr. Nard said. For software companies, being first to market and creating a strong brand is often more important, he said.
THE PATENT POWER INDEX
Average patent score
Number of patents x-Responsive Innovations, Akron 3 173.3 NOx II Ltd., Stow
VARY Petrochem LLC, Brooklyn
158.4 Diebold Inc., North Canton
154.0 Akron Polymer Systems, Akron MCKINLEY WILEY
Robert Yeggy, right, searched through 2,000 patents before he and fellow scientist Vito Altavilla filed their own patent to protect VARY Petrochem’s first chemical compound.
“If your technology is going to be obsolete in a year, do you really want to get a patent?” – Craig Nard, intellectual property attorney and director of the Center for Law, Technology and the Arts at Case Western Reserve University “If your technology is going to be obsolete in a year, do you really want to get a patent?” Mr. Nard said. On the other hand, that 20-year monopoly is crucial for many medical device and drug companies, given how much time and money they spend developing their products and winning approval from federal regulators. Patents are especially important for new medical technology companies, Mr. Nard said. They’ll often need patents if they want to raise money from investors or be acquired by a larger business, he said. Plus, those startups that take a single product to market on their own need to do everything they can to protect it, whereas big companies with tons of products, such as medical device giant Medtronic Inc., “can absorb more risk in some ways,” Mr. Nard said. Even so, big companies naturally file for way more patents than small ones. Consumer products giant Procter & Gamble of Cincinnati, the third-largest business in Ohio by sales, received 1,076 patents from 2010 to 2012. That’s twice as many as any other business in the state.
Armed to the teeth Big companies use patents differently than their smaller counterparts. For example, Rockwell is one of many large corporations that use a “mutually assured destruction” strategy to defend themselves from patent infringement lawsuits, according to Ken Hall, vice president of advanced technology at the company. Rockwell, he said, probably has developed a few technologies that violate patents held by competitors, but the same is true in reverse. So if a competitor sued
Rockwell for patent infringement, the Milwaukee-based company could go through its arsenal of patents and file a lawsuit of its own. Then nobody wins. “Hence, the two companies aren’t going to sue each other,” he said. It’s no accident that Rockwell receives so many patents. The producer of manufacturing automation technology — with offices in Mayfield Heights, Twinsburg and Warrensville Heights — gives cash awards to inventors when it files for a patent on one of their inventions. Inventors receive another bonus when patents are granted. Then they’re recognized at a banquet where the CEO hands them their patents, said Mr. Hall, who also is a distinguished engineering fellow at Rockwell and is named on more than 90 patents (read more about him on page 21). “It’s elevated to a very high level,” he said of the patenting process. “We look for them, we encourage them and we reward you for them.” But Rockwell doesn’t patent everything, Mr. Hall said. The company will file for a patent only if the invention is novel, if it could be reverse engineered by a competitor and if it could have a significant financial impact on the business, Mr. Hall said. He equated inventions to rocks in a stream. “You want to patent the boulders and not the pebbles,” he said.
Keeping secrets instead What about those inventions that can’t be reverse engineered? It’s often smarter to skip the patent and protect those inventions as trade secrets, Mr. Nard said. For instance, if a chemical was created
with an innovative process, you might be able to protect the chemical by keeping the process behind closed doors, he said. Trade secrets have their benefits. They can last as long as the invention is kept a secret — the recipe for Coca-Cola is a common example — and the inventor doesn’t need to go to through the trouble and expense of securing a patent. The median cost to prepare and file a basic patent is $6,500, a price that goes up to $10,000 for a more complex patent, according to a 2013 survey by the American Intellectual Property Law Association. The median cost to defend a patent in court is $700,000 for cases with less than $1 million at risk, a median figure that rises to $5.5 million for cases with more than $25 million at stake, according to the survey. Still, Brian Kolkowski errs on the side of filing patents. He’s executive vice president and general counsel for several companies founded by entrepreneur Bob Schmidt, including Orbital Research Inc., No. 10 on the Patent Power Index, and Cleveland Medical Devices, No. 18. Companies that prosecute someone for stealing a trade secret won’t get far if they don’t take reasonable steps to keep the secret under wraps, Mr. Kolkowski said. That means hiding inventions from many of your own employees and requiring the rest to sign nondisclosure agreements, which can be a pain if your employees are as curious as those at Orbital Research and CleveMed. “All the scientists and engineers want to know what the others are working on,” he said. Regardless of how it’s done, protecting intellectual property should be a top priority, especially in an age where a company’s ideas and knowledge often are worth more than its physical assets, Mr. Nard said. “The more sophisticated companies, they understand it’s a board room issue,” he said. ■
144.1 RSB Spine LLC, Cleveland
143.9 Alpha Security Products Inc., North Canton
143.1 y-Athersys Inc., Cleveland
140.9 Enpress LLC of Eastlake
140.5 Orbital Research Inc. of Cleveland
140.3 Diebold Self-Service Systems division, North Canton
139.9 Freedom Health LLC, Aurora
139.8 Promerus LLC, Brecksville
138.5 Ohio Aerospace Institute, Brook Park
133.1 Arisdyne Systems Inc., Cleveland
129.3 The remainder of the top 30 OrthHelix Surgical Designs Inc., Medina, 128.5 (14 patents issued); Avery Dennison Corp., Mentor, 125.3 (3); Cleveland Medical Devices Inc., Cleveland, 124.9 (8); Ohio Gratings Inc., Canton, 124.7 (6); Woodpeckers Inc., North Royalton, 123.7 (7); Service Pro Monitoring, LLC, Milan, 123.6 (5); Beckett Gas Inc., North Ridgeville, 123.2 (6); CardinalCommerce Corp., Mentor, 123.0 (11); Kent Displays Inc., Kent, 122.3 (12); Mac Trailer Manufacturing Inc., Alliance, 132.3 (11) ■ Source: Ocean Tomo LLC; x-affiliate of Turning Technologies; y-patents held by ABT Holding Co.
DECEMBER 16 - 22, 2013
Silly concepts can bring good results
Bruce Banks stands next to an atomic oxygen beam system he helped develop at NASA Glenn Research Center.
BRUCE BANKS NASA Glenn Research Center
ack in high school, Bruce Banks tied pogo sticks to his legs to see if it would help him run faster. The experiment proved just one thing: His girlfriend Judy, who is now his wife, is extremely tolerant. “‘What are you doing?’” he said, imitating her as she stopped in to visit. “‘Oh, making pogo stick legs,’” he responded, laughing about the memory. Mr. Banks — who has conducted research at NASA Glenn Research Center since 1966 — admits that most of his ideas go nowhere. But he’s had tons of them over the years. Some have been out-of-thisworld successes. For instance, NASA estimates Mr. Banks’ method of coating solar panels on satellites has created more than $15 billion in value for the U.S. government. Without the glass coating, the
panels would be so badly damaged by atomic oxygen floating in low Earth orbit that they’d need to be replaced every year. That technology has flown on Russia’s Mir space station, the International Space Station and other spacecraft, said Mr. Banks, who spent 22 years as chief of the electro-physics branch at NASA Glenn and continues to work at the center as a senior physicist for SAIC, a Virginia-based NASA contractor. The ion thruster technology he helped develop in the 1970s also has done a lot of flying. The technology has been used to propel at least 33 satellites and two spacecraft, Deep Space 1 and Dawn. The latter just visited the asteroid Vesta and now is headed to Ceres, a dwarf planet between Mars and Jupiter. Mr. Banks, who holds 38 U.S. and international patents, got some of his interest in science from his father, who had a large tool collection in his basement and regularly took his son on industrial plant tours. The 71-year-old Mr. Banks also had great science teachers during his days in the Rocky River school
system, singling out Marko Brdar, who later spent a few years doing research at NASA Glenn. Some of Mr. Banks’ inventions work on Earth, too. For instance, he developed a way to use atomic oxygen to restore paintings, which is something NASA Glenn now does regularly. Plus, he and Tom Stueber, an electrical engineer at NASA Glenn, developed a piece of software designed to help people make various business and technical decisions. “That’s been used for some very important decisions at NASA,” Mr. Banks said, adding that he’s a member of the Kiwanis Club of Olmsted Falls, which has used the software to help pick who would get scholarships. Mr. Banks also is the proud inventor of a system he uses to remember ideas that come to him in the middle of the night. It consists of a notepad installed under the headboard of his bed and a pen with a light on it. “When you’ve got something good, you’ve got to preserve it so you don’t lose it,” he said. — Chuck Soder
Impact: ‘Mothership’ can be distraction continued from PAGE 17
First, you can’t focus 100% of your research and development efforts on your core product lines. Nottingham Spirk suggests companies follow the same rule Google uses: 70% of your product development efforts should be focused on your core business, 20% should look at adjacent opportunities and 10% should consider areas that are “going to disrupt your business,” as John Nottingham put it. If your company doesn’t create that new disruptive product, someone else will, Mr. Nottingham said. “If you focus on it (your core business) 100% and not do the next big thing, you’re going to lose the 100%,” he said. If Eastman Kodak Co. had followed the 70-20-10 rule, the company might not have been hurt so badly by the rise of digital photography, they said. Years ago, East-
CRAIN’S CLEVELAND BUSINESS 19
man Kodak should have focused 20% of its development efforts on digital products, which would have been a great example of an adjacent opportunity back when print photography ruled the industry. As for the other 10%? Maybe the company could have developed something such as Instagram, Bill Nottingham said. Facebook recently bought Instagram for about $1 billion. Established companies need to make a serious commitment to the 10% and the 20%, they said. That
means separate budgets and separate development teams. It’s best if those teams are in different rooms or even different buildings, Bill Nottingham said. “You have to create this division that’s not going to get distracted or pulled away by the mothership,” he said. But even then, developing disruptive technology isn’t easy. For instance, Barnes & Noble developed the Nook, one of many electronic readers disrupting the book business. Nook has its own team in Silicon Valley, far from the book retailer’s New York headquarters. Still, the tablet is struggling to complete with Apple’s iPad and Amazon’s Kindle. But Bill Nottingham doesn’t expect Barnes & Noble to end up like its now-defunct rival, Borders. “I still think Barnes & Noble will succeed if they keep going,” he said. ■
When Andrew Bell is stuck on a tough problem at material technology developer Promerus LLC, he thinks back to an episode of “M*A*S*H” in which everybody in the mobile medical unit is playing poker. They’re all losing to Maj. Charles Emerson Winchester III — until he steps out for a break. While venting Bell their frustration, Hawkeye Pierce and the others accidentally discover Maj. Winchester’s tell: He whistles louder when he’s bluffing. Then they clean him out. Sometimes if a technical discussion moves in the right direction, the answer to a problem becomes obvious, said Dr. Bell, chief operating officer at Promerus. The Brecksville company, a developer of polymers for semiconductors and other electronic products, ranked No. 13 on the Crain’s Patent Power Index, which rates local companies based on the quality of their patents. (Check out the story that starts on page 17 for details on how the index was compiled.)
Mentioning a completely ridiculous idea can prompt people to explore new ideas, Dr. Bell said. For instance, two years ago, Promerus was trying to figure out how to isolate a valuable molecule through a chemical reaction that turned the molecule into a gas. The problem was, that gas still contained impurities. To purify it with a typical distillation tube, they’d need to build one through the roof — an idea that Dr. Bell jokingly suggested. Then his colleague offered a better idea: Pack a shorter distillation tube with metal mesh, which can help pull impurities out of a gas. It worked, both in the laboratory and in a larger pilot plant. Ideas that seem silly can break down barriers, Dr. Bell said. Sometimes they work, he said, but if not they can inspire ideas that aren’t so ludicrous — even if the first person says, “We shouldn’t be doing that.” “Then someone goes, ‘I think he’s right, we should try this,’” he said. — Chuck Soder
ON THE WEB Patents mean the world to some companies. To others, not so much. Learn more about the strategies that different businesses and industries employ to protect their intellectual property: Check out reporter Chuck Soder’s Tech Talk podcast with IP attorney Craig Nard, who is director of the Center for Law Technology and the Arts at Case Western Reserve University. Listen at: www.crainscleveland.com/section/AUDIO
20 CRAIN’S CLEVELAND BUSINESS
DECEMBER 16 - 22, 2013
OHIO COMPANY PATENTS RANKED BY TOTAL PATENTS ISSUED 2010-2012 Company/City Rank Website
Total patents 2010-2012
Total patents 2012
Total patents 2011
Total patents 2010
Total patents 2010-2012
Total patents 2012
Total patents 2011
Total patents 2010
Devicor Medical Products Inc./Cincinnati www.devicormedical.com
Company/City Rank Website
Procter & Gamble Co./Cincinnati www.pg.com
Ethicon Endo-Surgery Inc./Cincinnati www.ethicon.com
University of Cincinnati/Cincinnati www.uc.edu
Rockwell Automation Technologies Inc./Mayfield Heights www.rockwellautomation.com
University of Akron/Akron www.uakron.edu
Liebert Corp./Columbus www.emersonnetworkpower.com
PPG Industries Ohio Inc./Cleveland www.ppg.com
Imaging Systems Technology Inc./Toledo www.teamist.com
Goodyear Tire & Rubber Co./Akron www.goodyear.com
Bendix Commercial Vehicle Systems LLC/Elyria www.bendix.com
Gojo Industries Inc./Akron www.gojo.com
Diebold Self-Service Systems, division of Diebold Inc./North Canton www.diebold.com
Invacare Corp./Elyria www.invacare.com
Teradata US Inc./Dayton www.teradata.com
Kent State University/Kent www.kent.edu
Parker Hannifin Corp./Cleveland www.parker.com
Ferro Corp./Mayfield Heights www.ferro.com
Nordson Corp./Westlake www.nordson.com
Nanotek Instruments Inc./Dayton http://nanotekinstruments.com
Diebold Inc./North Canton www.diebold.com
PolyOne Corp./Avon Lake www.polyone.com
Case Western Reserve University/Cleveland www.case.edu
Lubrizol Advanced Materials Inc./Cleveland www.lubrizol.com
Cleveland Clinic Foundation/Cleveland http://my.clevelandclinic.org
Velocys Inc./Plain City www.velocys.com
Electrolux Home Products Inc./Cleveland www.electroluxappliances.com
American Greetings Corp./Cleveland www.americangreetings.com
Lubrizol Corp./Wickliffe www.lubrizol.com
Veyance Technologies Inc./Fairlawn www.goodyearep.com
Emerson Climate Technologies Inc./Sidney www.emersonclimate.com
Timken Co./Canton www.timken.com
Owens Corning Intellectual Capital LLC/Toledo www.owenscorning.com
GrafTech International Holdings Inc./Lakewood www.graftechaet.com
Ohio State University Research Foundation/Columbus http://orc.osu.edu
Ohio University/Athens www.ohio.edu
Ohio State University/Columbus http://orc.osu.edu
University of Dayton/Dayton www.udayton.edu
American Sterilizer Co./Mentor www.steris.com
RESEARCHED BY Deborah W. Hillyer
Source: Ocean Tomo LLC.
Prolific Cleveland Clinic innovator passes away By TIMOTHY MAGAW email@example.com
Dr. Roy Greenberg — one of the Cleveland Clinic's most prolific innovators — died Dec. 7 at his home on Lake Erie after a battle with cancer. He was 49. Dr. Greenberg, who was born in Ithaca, N.Y., had been with the health system since 1999. He was known as a pioneer in the field of treating complex aortic disease and held more than 50 patents.
ON THE WEB Story from: www.crainscleveland.com Dr. Greenberg helped create a 3D navigation technology that lowers exposure to radiation. He also developed a modeling technology for 3D printing that can create custom endovascular grafts. His work has been credited with a dramatic reduction in mortality for endovascular aortic repair patients over the last decade. In 2012, the Clinic awarded Dr. Greenberg its Sones Innovation Award, which recognizes an individual's efforts in advancing medical innovation. The award is named for Dr. F. Mason Sones, a
Dr. Roy Greenberg Clinic cardiologist who researched imaging of arterial blockages. Dr. Greenberg earned his bachelor's degree at Cornell University and his medical degree from the University of Cincinnati. He trained in general and vascular surgery at the University of Rochester Medical Center, where he met his wife, Alicia Fanning. After they completed their training, they both joined the Clinic. Dr. Greenberg has two children: Zachary, 11, and Lucas, 10. A memorial service will be held Jan. 11, 2014 at 1:00 p.m. at the InterContinental Hotel on Carnegie Avenue. ■
DECEMBER 16 - 22, 2013
CRAIN’S CLEVELAND BUSINESS 21
MASTER INVENTORS PAUL SANDSTROM Goodyear Tire & Rubber Co.
oodyear Tire & Rubber Co. should be glad Paul Sandstrom didn’t like his electrical engineering classes in college. If he hadn’t switched his major to chemistry, there would be a serious hole in the Akron tire maker’s patent portfolio. That is, unless they managed to find someone else who would go on to be the lead inventor on more than 280 U.S. patents. In addition to those patents — which make Mr. Sandstrom the most prolific inventor in Northeast Ohio over the past 40 years — he has his name on a total of nearly 1,400 U.S. and international patents that Goodyear has filed since he was hired in 1967.
“My first thought after I use it for a while is, ‘You know, they could make it better.’ ” – Paul Sandstrom, polymer chemist, Goodyear Tire & Rubber Co., on how he wants to tinker with products he uses Several of those patents cover the DuraWall technology Mr. Sandstrom helped develop to strengthen the sidewall of Goodyear’s Wrangler tires more than 10 years ago. The chemical compound helps prevent rocks from penetrating the sidewall. If a crack does form, the compound prevents it from spreading, Mr. Sandstrom said. More recently, he helped develop the tread on Goodyear’s Assurance Fuel Max tires, which won a Best of What’s New award from Popular Science in 2009. “You name it, I probably worked on it,” he said. Growing up in Boardman, Mr. Sandstrom owned multiple chemistry sets that he used to conduct experiments in his parents’ basement. Though he started college as an electri-
Paul Sandstrom of Goodyear Tire & Rubber Co. is the most prolific inventor in Northeast Ohio over the past 40 years. cal engineering major at Youngstown State University, the classes were too abstract, so he switched to chemistry. He lived at home and worked 40 hours a week during college to pay his tuition. Since then, the 70-year-old Mr. Sandstrom has earned his master’s degree in polymer science from the University of Akron. Today,
which he admits isn’t good for his sleep schedule. And he involuntarily finds himself thinking about how to improve products he uses at his home in Akron, where he lives with his wife, Marcia. “My first thought after I use it for a while is, ‘You know, they could make it better,’ ” he said with a laugh. — Chuck Soder
MOST PROLIFIC INVENTORS
These are Northeast Ohio’s most prolific inventors from the past 40 years, ranked by the number of U.S. patents that list them as the lead inventor: Patents Companies Paul H. Sandstrom 280 Goodyear Tire & Rubber Co. Adel F. Halasa 224 Goodyear Tire & Rubber Co. Lawson G. Wideman 156 Goodyear Tire & Rubber Co. Wen-Liang Hsu 139 Goodyear Tire & Rubber Co. John M. Davenport 115 GE Lighting, Energy Focus Inc. Louis R. Nerone 113 GE Lighting Robert K. Grasselli 112 Standard Oil Co. David F. Lawson 93 Bridgestone Corp. John R. Nottingham 91 Nottingham Spirk Dane K. Parker 87 Goodyear Tire & Rubber Co. John T. Lai 82 Goodrich Corp., Lubrizol Corp., Noveon IP Holdings Richard L. Hansler 77 GE Lighting, Federal Sign, American Sterilizer Corp. Frederick Lederman 77 General Motors Corp. Craig M. Saunders 68 Royal Appliance Manufacturing, Nottingham Spirk Russell W. Koch 67 Bridgestone Corp. Aubert Y. Coran 66 Advanced Elastomer Systems, Flexsys America, Monsanto Co. Wilfrid G. Shaw 66 Standard Oil Co. Richard M. Lange 62 Lubrizol Corp., Noveon IP Holdings Richard O. Ratzel 60 Ranpak Corp. Raman Patel 59 Advanced Elastomer Systems
Ken Hall has a hand in developing almost all of Rockwell’s integrated circuits.
he spends four to six hours a week mentoring new polymer chemists and compounders at Goodyear. So why has he stayed with the company for 46 years? He enjoys his work. Mr. Sandstrom always is thinking about how to develop new technologies, even in the middle of the night,
here are about 85 boxes stacked in the corner of Ken Hall’s office. Each contains one of his patents, engraved in metal on a wooden plaque. Clearly, he can’t hang them all up. Mr. Hall has spent 20 years helping Rockwell Automation develop technology used to automate manufacturing processes. Many of his inventions are related to the integrated circuits used to control machinery. It would be tough to find a Rockwell integrated circuit that he didn’t help create. “I’ve been doing this for a long time,” he said. Mr. Hall is vice president of architecture in Rockwell’s advanced technology group, which is tasked with making big breakthroughs, even if their work doesn’t pay off for five to 10 years. A patent Mr. Hall secured in 2008 should pay off soon. He led the development of a technology that should improve the backup system Rockwell is incorporating into its next generation of redundant industrial controllers, which are used to run oil rigs and other machines that can’t afford to stop running. Mr. Hall and colleague Ronald Schultz repurposed a memory management unit that normally is used to help a computer move information from its working memory (RAM) onto a hard disk and back again. Instead, they used the unit to help an industrial controller feed a
backup controller the updates it would need, should the backup need to take over. The new system is faster and cheaper than the custom communication systems Rockwell had been using, he said. The 62-year-old Mr. Hall said he was “always building something” while growing up. He was an apprentice of sorts to his father, who had a workshop and worked frequently on their home in Willoughby Hills. In his youth, Mr. Hall also launched his own amateur radio station, building his own transmitter and antennas. He still has ham radio gear at his home in Hudson, where he lives with his wife, Constance.
After graduating with a degree in electrical engineering from Cleveland State University in 1974, Mr. Hall spent a few years at Keithley Instruments Inc. in Solon before joining Allen-Bradley LLC, which is now part of Rockwell, in 1981. In the mid-1980s, however, he spent a few years at other companies and even ended up using some of the automation products he designed at Allen-Bradley, “which was a humbling experience,” he said. He’s also humble about all the patents in his office. He mentioned that he didn’t earn them alone. “There are very few patents I have where I am the only inventor,” he said. — Chuck Soder
CRAIN’S CLEVELAND BUSINESS
FlashStarts business accelerator invests in startup RegulatoryBinder is the The company will use the inON THE WEB Story from second startup to receive an www.crainscleveland.com vestment to hire more employinvestment from the Flashees experienced in customer Starts business accelerator in downtown Clevesupport, quality management, sales, software land. development and clinical research. The company has raised $425,000 from a Founder Rick Arlow was studying for detotal of nine investors, with FlashStarts congrees as both an M.D. and a Ph.D but decided tributing the largest amount, according to inforinstead “to start RegulatoryBinder after witnessmation from a FlashStarts news release and a ing hospitals waste valuable resources managdocument filed with the U.S. Securities and Exing rooms of paper documents and shut down change Commission. studies due to paper-based deviations,” the reRegulatoryBinder has developed software lease stated. used to organize documents related to clinical FlashStarts previously made a follow-on intrials. The U.S. Food and Drug Administration vestment in Crowdentials, a company that aims has told the company it meets the agency’s to help connect other startups with investors standards for electronic documentation. and vice versa. — Chuck Soder
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DECEMBER 16 - 22, 2013
Retailers: Business should pick up during ‘crunch time’ continued from PAGE 1
In recent years, shoppers have had about a week between Thanksgiving and the start of December to reboot their wallets, Mr. Presser said. This year, the calendar turned to December before the end of the Black Friday weekend. It happens about every seven years, but it never fails to throw people out of step, he said. “The calendar really has wreaked havoc on the shoppers’ psyche,” Mr. Presser said. Candra Squire, owner of Salty Not Sweet in Cleveland’s Ohio City neighborhood, said sales for the homemade contemporary craft and home goods store have been up for 2013 versus 2012, which makes the drop in sales so far in December all the more surprising. Sales this month are down about 22% from this point in December 2012, she said. Last year, Black Friday seemed to kick off the nonstop shopping, but that has not been the case in 2013. “People are just taking their time,” Ms. Squire said. And it’s not just independent shops seeing a so-so start to the season. Andy Selesnik, marketing director for SouthPark Mall in Strongsville, said the mall had a very good Black Friday in terms of traffic through the door — up 20% over 2012 — but traffic has been pretty flat for the start of December compared with last year. Mr. Selesknik said he expects people soon will panic a bit and start their shopping in earnest. He said the stores at SouthPark are preparing for the final weeks of the season by adding stock, since Black Friday sales cleaned them out. “It’s Christmas. We call it crunch time,” he said.
Great expectations, sort of Across the country, more people set out to shop during Thanksgiving weekend than they did last year — an estimated 141 million unique shoppers in 2013 compared with 139 million in 2012 — but customers spent a little less on average, according to the National Retail Federation. On average, customers spent or planned to spend $407.02 from that Thursdaythrough-Sunday period, or $16.53 less than during the like period in 2012. Aggressive discounts and pre-holiday shopping could have contributed to the decline in spending, the association said. But for all of November and December, the federation projects sales will increase 3.9% from 2012. The Columbus-based Ohio Council of Retail Merchants also expects a slight increase in holiday spending this year, predicting an increase of 3.5% in sales across the state compared with 2012, said president and CEO Gordon Gough. The council represents about 5,400 retailers. An increase in salaries and wages and a recovering housing market in Ohio, along with declining fuel prices and increasing stock prices, gave the council reason for optimism, Mr. Gough said.
Onward online Suzanne DeGaetano, co-owner and manager at Mac’s Backs-Books on Coventry in Cleveland Heights, expects sales at her store to pick up at the end of the season. Sales for Black Friday weekend were up compared with 2012, Ms. DeGaetano said, but the first dozen days of December at the seller of new and used books were slower for a variety of reasons, including the unseasonably cold weather. Ms. DeGaetano noted that people also were bombarded with Cyber Monday deals this year and responded to those offers. Mac’s Backs offers online shopping, but it didn’t do anything special for Cyber Monday. However, the store could take advantage of that hype in the future, Ms. DeGaetano said. She isn’t alone in considering a bigger online push in the future. Management and
WHAT THEY’RE SAYING ABOUT THE HOLIDAY SHOPPING SEASON “The calendar really has wreaked havoc on the shoppers’ psyche.” – Steve Presser, owner, Big Fun
“People are just taking their time.” – Candra Squire, owner, Salty Not Sweet
“It’s Christmas. We call it crunch time.” – Andy Selesnik, marketing director, SouthPark Mall
“I have a good feeling about this holiday season.” – Suzanne DeGaetano, co-owner and manager, Mac’s Backs-Books on Coventry staff members at Big Fun, Visible Voice Books in Cleveland and home furnishings and personal accessories store City Buddha in Cleveland Heights all mentioned online shopping as a priority for 2014. Larry Collins, owner of City Buddha, said there have been “tumbleweeds in the streets” this season, adding that it has been a disappointing year for his store. Besides increasing his store’s presence online in 2014, he plans to put a stronger focus on his wholesale business to other shop owners. Big Fun’s Mr. Presser expects customers to turn out in force during the final weeks of the season and said the retailer will see improved sales in 2013. Even so, he’s looking for ways to diversify his business and expand his online offerings. “If you’re not flexible, you’re going to really suffer in a down economy,” he said.
Activity report Still, it hasn’t been a disappointing early season for everyone. For instance, Details Accessory Gallery at Eton Chagrin Boulevard in Woodmere is seeing a great start to the holidays, said manager Bridget Farkas. The boutiques at Eton have a loyal customer base, one that is a bit more mature and well-off than a typical mall, Ms. Farkas said. She couldn’t share specific details on sales numbers, but said traffic consistently has been steady or up. Part of that increased traffic could be spillover from the recently added Apple and Tiffany & Co.’s stores at Eton, Ms. Farkas said. There also hasn’t been any slowdown at the downtown location of CLE Clothing Co., said merchandiser Jillian Doskocil. The store opened in November 2011 and has been getting busier every year. Ms. Doskocil said she thinks part of the improvement is because more people know about the shop, and the rest is due to a busier downtown. Many customers discover the shop while doing something else nearby. For concerned business owners, activity around their stores might be a key. Chris Sorensen, owner of Crafty Goodness in Lakewood, said she saw sales start to pick up after the city’s Light Up Lakewood event Dec. 7. Ms. DeGaetano of Mac’s Backs-Books early last week hoped Coventry’s holiday festival, scheduled for Saturday, Dec. 14, would kick off the crunch season. Overall, Ms. DeGaetano is optimistic sales will increase in the final few weeks of 2013, providing a fitting end to a year in which sales are up an estimated 5% to 10% from levels of 2012. “I have a good feeling about this holiday season,” she said. ■
DECEMBER 16 - 22, 2013
CRAIN’S CLEVELAND BUSINESS
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
DECEMBER 9 - 15
Longer ‘Fishing Without Nets’ could land Sundance award
The big story: State Sen. Eric Kearney will not be the running mate next year for Democratic gubernatorial candidate Ed FitzGerald. Sen. Kearney announced his withdrawal from the ticket amid ongoing media coverage of the tax debts of the senator and his wife. “It’s undeniable that this has come to be a distraction from a discussion of the vital issues facing Ohio, and the choice voters must make in this election,” Sen. Kearney said.
■ The holidays came a little early for video and event production company Think Media Studios of Cleveland, which has earned a spot for its film “Fishing Without Nets” in the main U.S. Dramatic Competition of the Sundance Film Festival, which will be held Jan. 16-26, 2014, in Park City, Utah. “Fishing Without Nets,” directed by Cutter Hodierne, is a story of pirates in Somalia told from the perspective of a struggling, young Somali fisherman. It’s cast largely with Somali refugees found on the streets of Mombasa, Kenya, as well as former hostages and the pirates themselves. Production began last fall and wrapped in January. A short version of “Fishing Without Nets” previously won Sundance’s Grand Jury Prize. That version’s success led Think Media Studios to make the full-length film with Vice, a youth-focused media company. “Proud as we are of our work for local and national companies, its gratifying to be part of a project that has the potential to reach a worldwide audience,” said Brian Glazen, owner and producer for Think Media Studios, in a statement about the film’s inclusion at Sundance. “Fishing Without Nets” will be up against some heavy hitters. Among them: “God’s Pocket,” directed by John Slattery of “Mad Men” and starring Academy Award-winner Philip Seymour Hoffman; and “Happy
Keeping it local: Avtron Aersopace Inc., a designer and producer of aircraft component test technology that is based in Independence, changed hands between private equity firms with Cleveland ties. Morgenthaler Private Equity, based in Cleveland and Boston, sold Avtron Aerospace to CapitalWorks, a private equity firm in Cleveland. Avtron Aerospace was one of three companies owned by Avtron Holdings LLC, which Morgenthaler acquired in November 2007. The other two companies were sold previously.
Changing the channel: A little more than a year after its launch, 87.7 Cleveland Sound will swap its alternative rock format for a Hispanic one. On Jan. 1, the primarily Spanish language station, La Mega 87.7 Latino and Proud, will go live, said Tom Wilson, whose Murray Hill Broadcasting is partnering with Cincinnatibased TSJ Media to introduce the format to this market. Cleveland Sound will remain at its current location in The Agora, but it probably won’t retain its current on-air talent, Mr. Wilson said.
End of the line:
Chris Warren, the city of Cleveland’s chief of regional development, is retiring. Mr. Warren oversaw the city’s community development, economic development and city planning departments, will serve for six months as a consultant to the city on lakefront development — an effort he has spearheaded during his six- Warren and-a-half years with the administration of Mayor Frank Jackson. Mr. Warren, 63, was the first person to hold the position.
Ready to Rolls: Look for new Rolls-Royce cars to roll into North Olmsted as Collection Auto Group owner Bernie Moreno adds to his chain of dealerships. Mr. Moreno said starting today, Dec. 16, the Rolls dealership will be housed with Collection’s Aston Martin showroom at 28300 Lorain Road. That location will be its home for the next 12 to 18 months until a nearby building Mr. Moreno owns is ready for the Rolls dealership. The dealership will operate under the Rolls Royce of Cleveland name.
Cleveland law firm Walter | Haverfield opened the only office it has had in recent times outside downtown Cleveland; it’s in Lorain County, where the firm sees opportunities for growing its corporate and school district work. The new location, in the Avon Pointe office park in Avon, is staffed with three attorneys and is led by Kenneth S. Stumphauzer.
A patented technique for pilfering patent art ■ I have committed intellectual property theft. Check out the illustration on page 17, the beginning of this week’s Patent Power section. You’ll notice that the background resembles the cover of an actual patent. Well, we didn’t need to go online and pay for a stock photo of a patent — who wants to do that? Instead, I told my wife, Laura, to take one from her dad, Richard “Dick” West, who has acquired a handful of patents over the years. He runs West Roofing Systems and West Development Group, both of which are based in LaGrange. The one my wife “stole” is a patent for what is essentially a roofing robot. It rolls back and forth across a flat roof, spraying foam along the way. West Roofing uses the robots for its own purposes, and it sells them as well. You can have one, too. Just make that $17,000 check out to me — I’ll take care of it. — Chuck Soder
What’s the hubbub? A pub at the Radisson ■ Limited-service hotels that eschew food and beverage services are a big part of the lodging business, but the operator of the Radisson Cleveland Gateway, 651 Huron Road, is preparing to go the other way with
Money to burn
COMPANY: Osborn, Cleveland PRODUCT: New line of ceramic filament ATB brushes Osborn says its new line of brushes is designed for use on alloys employed in aerospace and high-technology industries where precision deburring is required. The company, a supplier of surface treatment products and finishing tools for industrial and commercial applications such as metal finishing and surface polishing, calls ceramic filament brushes “a proven problem solver for titanium turbine engine components.” ATB ceramic brushes “diminish burrs on the toughest materials,” the company says. Their design “allows for faster run times, higher output and precision deburring and polishing.” The new line includes master wheels; aggressive composite wheels; flexible composite wheels; ringlocks; bridled end brushes; and uni-lock quick change tools. “The new line of ATB ceramic brushes enable manufacturers to be innovative and competitive,” said Jeff Naymik, marketing manager at Osborn, in a news release. Osborn, which celebrated its 125th anniversary in 2012, has operations in 15 countries. The unit of Jason Inc. carries more than 10,000 standard products.
a new pub. A 120-seat restaurant and bar is in the works in one-time office space in the hotel that has its own storefront entrance on Huron, according to Scott Schmelzer, general manager of the hotel for Marshall Hotels & Resorts Inc. of Salisbury, Md. The operation will open Jan. 20 and will offer breakfast, lunch and dinner seven days a week, he said. It will stay open as late as 2 a.m. Mr. Schmelzer would not disclose the budget for converting the space to a pub, but described it as “substantial.” Designs by mbi | k2m Architecture Inc. of Cleveland call for installing movable window walls at the Huron entrance; concrete floors and weathered brick walls will give it an industrial design. — Stan Bullard
Hiram College gets state green to go greener ■ The Ohio Development Services Agency has loaned Hiram College about $5 million to assist the private college in Portage County with its sustainability efforts. The low-interest, 15-year loan is expected to help the school cut its yearly carbon dioxide emissions by about 5,000 metric tons and cut its energy costs almost in half. The college plans to improve its lighting and air systems, install new windows and add new low-flow sinks and shower heads that will allow Hiram to reduce and track water usage. The loan is through the state’s Energy Loan Fund, which offers low-interest financing to businesses, manufacturers, public entities and nonprofits for energyefficiency and advanced energy projects. — Timothy Magaw
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
Healthy start: Cleveland State University broke ground on a $45 million health sciences building that’s expected to open in June 2015. The 100,000-square-foot building at Euclid Avenue and East 22nd Street will house CSU programs offered by the School of Nursing and the School of Health Sciences, as well as the Cleveland cohort of Northeast Ohio Medical University programs within NEOMED’s College of Medicine, College of Pharmacy and College of Graduate Studies. It will be the home of the NEOMED-CSU Partnership for Urban Health. NEOMED will enter a 25-year lease to occupy about 20% of the building.
Christmas” from director Joe Swanberg, reunited with Anna Kendrick, one of the stars of this year’s acclaimed “Drinking Buddies.” — Scott Suttell
■ Cleveland is a hotbed for anti-Obamacare ad money. Kantar Media produced an interactive map that shows which markets are attracting the most dollars in advertising that takes aim at the Affordable Care Act and the performance of Healthcare.gov. The map measures the amount of money spent on Obamacare attack ads and the percentage of uninsured people in each media market. Slate.com noted that “almost all of the money has been funneled into markets where a high proportion — at least 15% — of the population is uninsured.” Topping the list was Charlotte, with $710,860 in spending to date on ads against Obamacare. In that market, 23% of citizens are uninsured. Cleveland was No. 2, with $703,140 in ad spending. About 17% of this area’s residents are uninsured, according to Kantar Media.
Sticking to their business ■ CNBC “Mad Money” talker Jim Cramer had some kind words about Clevelandbased KeyCorp in a recent discussion about the Volcker Rule — the long-planned ban on certain kinds of speculative trading at investment banks. Mr. Kramer said most bank CEOs expected a tough version of the rule. He said he would short well-known banks still involved in trading that would be banned under the rule. “If you’re a bank and you’re still doing this stuff, I’m shorting you” against smaller, regional banks such as KeyCorp, Mr. Cramer said. “Do you think Key does any of this stuff? You know what Key does? They lend.”
They go together … ■ This may not qualify as groundbreaking news, but it appears Clevelanders are very fond of beer and pizza. A study from Infogroup Targeting Solutions of Omaha found that the cities with the most pizza restaurants per capita also tend to have the greatest number of bars. Cleveland, for instance, was No. 4 in pizza establishments, with 6.7 per 10,000 people. It was No. 3 in bars, at 11.5 per 10,000 people. The top pizza city: Orlando, at 10.3 per 10,000 residents. The top bar city was Pittsburgh, at 11.8 per 10,000 people.
Looking good ■ Beauty probably isn’t high on the list of reasons people choose to attend a business school. But it doesn’t hurt, and a ranking of the “50 most beautiful business schools in the world,” from TopManagementDegrees.com, gave Case Western Reserve University’s Weatherhead School of Management something to brag about. Weatherhead ranked 35th on the list of schools that are “as aesthetically pleasing on the outside as they are innovative on the inside,” the website noted. Weatherhead’s Peter B. Lewis Building “brings to mind the titanium-clad Guggenheim Museum in Bilbao, Spain, another iconic (Frank) Gehry creation,” according to the ranking. “In contrast, the building’s interior is cleaner and more minimal than the imposing exterior, and it features some small, intimate spaces that encourage students to work together and even get to know each other.”
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Published on Dec 13, 2013