Crain's Cleveland Business

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Vol. 31, No. 26

Bar’s leader sets goal of upgrade to judge ranks

‘Tech belt’ officials aim for $130M in federal funds Money, while a long shot, would help group’s green technology effort

Association will be more active in encouraging some to run

By CHUCK SODER csoder@crain.com

A group trying to spur the creation of a “tech belt” from Cleveland to Pittsburgh is swinging for the fences with one of its first initiatives: a $130 million grant application aimed at turning the region into a hub for green building technologies. It’s a long shot: The federal government is giving only one green building grant through its Energy Regional Innovation Cluster program, and roughly 40 groups have applied for the money. Nonetheless, it’s an example of how the organizations participating in the TechBelt Initiative hope to leverage the combined strengths of Northeast Ohio and western Pennsylvania to build technology clusters related to green technology, life sciences and other high-tech industries. It’s also the biggest example. Two of the 40 organizations participating in the 3-year-old collaboration — NorTech, which works to develop technology clusters in Northeast Ohio, and Innovation Works, a Pittsburgh-based nonprofit that invests in young technology companies — filed the application for the $130 million grant in May with the help of GSB Consulting in Pittsburgh. They expect to know if they’ve won the See TECH Page 7

WHERE THE CASH WOULD GO

26

Officials from Pittsburgh and Cleveland have their sights set on $130 million in federal money. NorTech vice president Dave Karpinski says the application for the money, part of the regions’ TechBelt Initiative, would fund research-and-development projects in green building technology. That would fit the TechBelt group’s goal of creating clusters in green technology and other high-tech industries.

JASON MILLER

Bluestone in Cleveland Heights has sold nine condominiums this year, thanks in part to price cuts of as much as $80,000 per unit.

CONDO COMEBACK Multiple factors, including builders slashing prices, lead to 85% uptick in sales in Northern Ohio By STAN BULLARD sbullard@crain.com

T

hanks to empty nesters who are buying again, builders say the embattled market for condominiums and low- or no-maintenance cluster homes is staging a comeback. Some builders cite the impact of the federal tax credits for STAN BULLARD housing that expired April 30, Meanwhile, Coral Co. sold out its Westhampton units particularly the first-time buyer at Crocker Park in Westlake, thanks to price cuts of tax credit because such buyers 5% to 10%. go for condos. Moreover, firstKen Lurie, one-time CEO of the time buyers who purchased existing former Rysar Homes who now is homes freed many aging boomers chief operating officer of apartment to buy condos and downsize. Howfirm Orlean Co. Mr. Lurie also conever, everybody says better sales tinues working on Rysar projects numbers are because the deals are such as Bluestone condominiums so swell, and not just because of in Cleveland Heights. low interest rates. “It’s all about survival now,” said See CONDOS Page 6

By ARIELLE KASS akass@crain.com

Mike Ungar is quick to say there are some “outstanding people” serving as judges in Cuyahoga County. But the new president of the Cleveland Metropolitan Bar Association also will tell you some members of the bench were not the most qualified candidates on the ballot, and some contenders had no business running for judge. In his year at the bar association’s helm, Mr. Ungar has decided to take advantage “There’s an of what he calls the “sea change” sweeping through other unprecedented branches of county governopportunity to ment to explore what changes get involved at might be appropriate for the the front end of local judiciary. The bar association cannot the process.” change the system that is used – Mike Ungar, to select judges, who are now president, Cleveland elected. However, in Mr. Metropolitan Bar Ungar’s view, the bar can play Association an active role in determining the quality of judges on the bench. So, Mr. Ungar has created a Judicial Excellence Task Force whose charge is to spur more competition for judge positions and to raise the caliber of those who end up on the bench. It will meet for the first time this Wednesday, June 30. “We have not created a pipeline for excellent candidates to run for judge. There’s a dearth of competition,” Mr. Ungar said. “There’s an unprecedented opportunity to get involved at the front end of the process.” The bar association has a duty, he said, to encourage the “best and brightest” to pursue careers on the bench. See JUDGES Page 22

NOTICE TO READERS Due to the Fourth of July holiday, Crain’s Cleveland Business will not publish an issue on Monday, July 5. To stay up to date on all the top business news and blogs in Northeast Ohio, check CrainsCleveland.com regularly.

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TIME KEEPS ON SLIPPING

UPCOMING CRAIN’S EVENTS Women of note

Nominations open

We’ll honor our annual class of 12 leading businesswomen at a July 22 luncheon. There is limited seating available, so visit Crains Cleveland.com/WON today to register.

Crain’s this fall will hand out its annual Emerald Awards for sustainability efforts and its CFO of the Year awards. Nominate deserving individuals at CrainsCleveland.com.

The amount of time patients spend in an acute care hospital, referred to as “average length of stay,� has been decreasing steadily for nearly two decades, according to data included in a new report from the Cleveland-based Center for Health Affairs. As a result, the segment of the health care industry that treats patients who require a longer period of recovery has grown. Here’s how average length of stay has changed over the years, and how long-term care is paid for:

REGULAR FEATURES Best of the Blogs ..........23 Big Issue ......................11 Classified .....................22 Editorial .......................10 Going Places..................8

Letters .........................10 List: Largest public companies .........I-6, I-8 Reporters’ Notebook ....23 What’s New ..................23

JUNE 28-JULY 11, 2010

Method

Percentage

Year

Stay

2007

5.5 days

2003

5.7

Medicare

25

2000

5.8

Out-of-pocket funds

22

1997

6.1

Private insurance

11

1994

6.7

1991

7.2

Medicaid/other public funds

42%

SOURCE: “THE CONTINUUM OF CARE: THE PIVOTAL ROLE OF POST-ACUTE AND LONG-TERM CARE IN HEALTH CARE DELIVERY� BY THE CENTER FOR HEALTH AFFAIRS; WWW.CHANET.ORG

'REATĂĽTHINGSĂĽHAPPENĂĽWHENĂĽĂĽ YOUĂĽMEETĂĽATĂĽAĂĽ&AIRMONT

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INSIGHT

Lubrizol in enviable position: gobs of cash Wickliffe company buys back stock, looks for strategic purchases By DAN SHINGLER dshingler@criain.com

So, what does a company with a war chest of about $1 billion do with its money? Ask Lubrizol Corp. chief financial officer Charles Cooley — everybody else has. Cooley “If you’ve got a billion dollars in cash, people want to know what you’re going to do with it,” Mr. Cooley said. He’s got answers: Make acquisitions, expand capacity and, if the right deal can’t be found, continue to buy back shares on the open market.

The Wickliffe-based producer of lubricant additives and specialty chemicals accumulated the huge cash stash in part because of a monster 2009 — a year most companies would prefer to forget. Not Lubrizol. A confluence of timely debt management, the fruition of cost-cutting efforts and an environment in which its raw material prices were plunging while prices for its finished goods held firm produced a record profit of $500.8 million in 2009, even as sales fell 9% from 2008. But, even with that wind in its

sails, Lubrizol manned the oars to deal with the debt it carried. The company had $400 million in notes that were maturing last October. Planning ahead to pay off that debt, Lubrizol in January 2009 issued $500 million in notes — when many thought the market for corporate debt was closed. Lubrizol followed that the next month by securing a three-year bank loan for another $150 million. But then cost-cutting and improved margins kicked in and cash started to pile up. The company repaid the bank loan early, Mr. Cooley said, because “we just generated so See CASH Page 6

“There is a ... double-whammy effect: product needed for current shipping needs plus product needed in anticipation of future demands.” – Ken Mayland, president, ClearView Economics

Local outfits find success with European incentives Perks often available in Northeast Ohio provide boost for those looking to raise profiles overseas By JAY MILLER jmiller@crain.com

Northeast Ohio companies, well-versed in playing the financial incentives game with governments in the 50 states, are expanding their horizons and looking for similar incentives in Europe. “We’ve identified some opportunities to pursue,” said Randall Korach, president of RPM Building Solutions Group Inc., a subsidiary of paint and coatings maker RPM International Inc. of Medina. “We just had confirmation from the Bavarian regional government in Germany that (it will) invest with us

on the capacity expansion in our plant in the Bavarian region.” Mr. Korach said the Bavarian government will make a cash grant to assist with the expansion, though he would not disclose the size of the investment. The Building Solutions Group plant makes building products, mainly an impregnated foam tape that is used to insulate the joints on installed windows. Mr. Korach said the group does business throughout Europe from five plants, including two in Germany, and one each in England, France and the Netherlands. While RPM is new to European See INCENTIVES Page 5

THE WEEK IN QUOTES

BAD.

GOOD.

And judging by the current robust activity at box and pallet makers, the local economy may be gaining steam as shipping picks up By DAN SHINGLER dshngler@crain.com

W

hen Suzy HechtRemer is busy, so are a lot of other people and businesses — and she says her business is picking up. Ms. Hecht-Remer might be a good indicator of the local economy because her company, Midwest Box Co. on Cleveland’s West Side, sells boxes used by a number of large and small area manufacturers, which ship their own finished goods in them.

When Ms. Hecht-Remer sells more boxes, it only can be because area companies are shipping more stuff, she says. It’s not a new concept — investors the world over look at the markets for corrugated cardboard to gauge levels of production and economic activity — and there are even cardboard indexes that allow investors to watch the world’s cardboard markets. Ms. HechtRemer is merely a little closer to the end markets because her company makes completed boxes, See BOX Page 5

“The whole goal is to get transformative, game-changing solutions into the marketplace.” — NorTech vice president Dave Karpinski. Page One

“Condominium sales are better now because it is less expensive housing. … For housing now, it’s a question of what people can afford and why.” — Developer Peter Rubin. Page One

“Hire professionals, be in broadly diversified funds ... and if you really think there are going to be huge structural changes in the economy, react to that.” — Ned Hill, dean of the Maxine Levin College of Urban Affairs, Cleveland State University. Page I-1

“Nobody collects for collecting’s sake anymore. … (Avid collectors) are 1% of my business; most people collect for investment.” — Jim Irwin, Shaker Coin & Jewelry. Page I-5

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Aurora firm’s tracking ability a window to profit By DAN SHINGLER dshingler@crain.com

Ron Crowl knows there’s been a heck of a recession going on. But Mr. Crowl hasn’t felt much of it in his business, FeneTech, a small Aurora software company Crowl where 32 people help the world’s glass and replacement window manufacturers keep track of their stock and trade. “We’ve never had a year where we lost money,� Mr. Crowl said, adding that 2009 was his best year since the company’s launch in 2000.

FeneTech does not disclose its revenues, but Mr. Crowl said its software sells for at least $80,000 per installation — and as much as $1 million for large, multiplant users. So far, there are about 140 companies using it, according to Mr. Crowl. They also pay an annual fee, which varies by the size of the user. Revenues grew by more than 50% in 2008 and more than 60% in 2009, Mr. Crowl said. During the past two years, the U.S. market has been fairly flat for FeneTech, Mr. Crowl said. Mean-

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while, the company has found it can grow anew in foreign markets and has entered 10 countries, including Indonesia, Mexico and Thailand. FeneTech, it seems, has found a niche. That might surprise some who can’t imagine those late-night TV window salesmen ponying up six figures for a new software package. The replacement window business sounds easy enough — go out and measure the windows, come back and make new ones, snap ’em in. That is, it’s easy until you multiply one window by the 500 or more that a window company might make in a day, each one of them a little different in size than the other. The company must order and track 500 pieces of glass, match its production and delivery with the production of 500 frames, then get all the right pieces of glass into the right places on the production line, so that they come up just as their vinyl casings are ready for them. That process, Mr. Crowl said, is why he’s been selling software right through the economic downturn. The company’s product, FeneVision, is an enterprise resource planning suite, Mr. Crowl said. It not only takes and tracks orders and manages production schedules, but it even tells users how to cut stock pieces of glass and vinyl for production, so the least amount of scrap is produced along the way.

The game’s name is savings The recession hasn’t hurt FeneTech as much as other companies in construction-related businesses because the downturn hit most heavily in new construction. In that realm, windows tend to be more standardized, and companies doing new construction aren’t a big part of FeneTech’s market for software. By contrast, efforts to make existing buildings energy efficient have been stepped up. That’s good for FeneTech and its customers because it means more replacement windows are sold. Among FeneTech’s customers is Intigral Inc., a Walton Hills glass company that sells to replacement window manufacturers in the region. “It does order entry, electronic data interchange, it manages all of our price books and it manages 100% of our scheduling,â€? said Intigral vice president DeAnna Negron. Ms. Negron said her company has been using FeneTech’s software since it became available nine years ago and that it uses it to run all three of its plants, which employ 200 people in Cleveland, Toledo and Youngstown. Intigral has bought FeneTech’s main product, as well as several customized modules. Ms. Negron said it integrates easily with her customers’ software, whether they are using FeneVision or another vendor’s product, and saves the company money. “Every single insulating glass unit we do is a different size, that’s the nature of what Intigral does,â€? Ms. Negron said. “What (FeneVision) does is it allows us to be extremely efficient and maximize our materials and labor.â€? â–

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Volume 31, Number 26 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Box: Decline Incentives: Programs similar to lauded Third Frontier “The focus is on less-developed areas (in Europe) with worries still high unemployment and higher poverty rates.” top of mind continued from PAGE 3

continued from PAGE 3

often designed and cut for specific customer needs. For Ms. Hecht-Remer, business started to turn around at the end of last year and hasn’t let up. Even the automotive supply sector, which often goes dead in June, has been humming, she said. Chemical producers, retailers, fastener makers and metal stamping companies all have been increasing their orders with Midwest. Across town, Larry Fulton, president of Lefco Worthington LLC in Cleveland, makes a variety of pallets, crates and other products that manufacturers use to ship their goods. He, too, says business is bouncing back. While he doesn’t disclose his company’s revenues, Mr. Fulton said orders are up about 25% this year, though still down slightly from prerecession levels. “We are seeing an uptick in different industries. We may see a decline in a particular customer, but across the board we’re seeing a nice increase,” Mr. Fulton said. “We had one customer in the construction-related field where for a while we weren’t shipping them anything. Now we can hardly keep up,” Mr. Fulton said. “With one of our fairly large automotive customers, we’re certainly seeing a large uptick and where we were making one shipment a week, now we’re making two or three shipments a week.”

Box scores All of this activity is good news, economists say, particularly because an increase in demand for boxes is a leading economic indicator. “Absolutely,” says Ken Mayland, president of ClearView Economics in Pepper Pike. “More goods to move requires more packaging and freighthandling material. This is also a case where inventories were drawn way down, so there is a virtuous doublewhammy effect: product needed for current shipping needs plus product needed in anticipation of future demands.” It’s been such a broad trend that Longbow Research, a boutique institutional research firm in Independence, put out a broad-based buy recommendation on a number of publicly traded box and cardboard companies. Recent price increases for cardboard had been instituted and accepted, and demand continued to increase, noted Longbow analyst Joshua Zaret in a June 11 report. Longbow predicts U.S. box shipments will increase by 3.5% in 2010, and then rise again by 1.5% in 2011, after falling for five consecutive years. But will the increase in business hold up over the long run? “I just don’t know whether it’s sustainable or if it’s just a blip,” Lefco Worthington’s Mr. Fulton said. “I suspect these are long-term (trends) and sustainable, and that’s what all our customer are indicating, but they don’t really know either.” At Ms. Hecht-Remer’s shop, they have similar worries. “You might get a whopping order now for August or September, but can you count on it? No,” said Paul Rotman, a 30-year employee and top sales producer at Midwest Box. ■

incentives, some companies have at least a little experience. In 2008, Parker Hannifin Corp. won tax incentives offered by the canton of Vaud in Switzerland to companies that are developing new businesses there. Parker Hannifin agreed to build a 57,000-squarefoot European headquarters in the city of Etoy on Lake Geneva that would employ 150, according to a news release from the company at the time. A Parker spokesperson had not responded to a request for more information at press time. The growing Europe incentive opportunities have caught the attention of two local consulting firms. The LNE Group, a Cleveland

– Steven Weitzner, president, Silverlode Consulting Corp.

government relations firm, last year opened an office in Berlin and has begun to help its clients, including RPM and Ferro Corp., a maker of specialty materials and chemicals based in Cleveland, find government incentive programs in Europe. “What we’ve done is find projects that already exist with our clients and then try to find money for those projects,” said Lee Weingart, LNE’s president. “In Europe, we’re starting to know all the players and agencies.” Mr. Weingart said many Euro-

pean government financial incentive programs are similar to the Ohio Third Frontier program, which provides grants to fund the development of high-tech products. Cleveland-based Silverlode Consulting Corp., an economic development consultancy, earlier this year formed a partnership with PM & Partner Marketing Consulting GmbH of Frankfurt, Germany, to pursue European economic development opportunities for its U.S. clients. Silverlode president Steven

Weitzner said because of restrictions by the European Commission, which administers the grant programs authorized by the European Union, many of the incentives are limited geographically. “The focus is on less-developed areas with high unemployment and higher poverty rates,” Mr. Weitzner said. “There’s quite a bit of money available in those areas to make investments.” Both Mr. Weitzner and Mr. Weingart said the incentives available in European countries tend to be cash grants for research and product development, though Mr. Weitzner said some countries do offer wage subsidies and grants for training. ■

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Featured attorneys (left-right): James M. Hill, Joseph G. Tegreene, David W. Mellott, David R. Mayo, Richard F. Tracanna, Jessica N. Angney and Tamara L. Karel © 2009 Benesch Friedlander Coplan & Aronoff LLP

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Condos: Sales outdo single-family figures continued from PAGE 1

Doing our part to keep our Great Lake great. The Northeast Ohio Regional Sewer District is proud to protect public health and our environment.

Mr. Lurie said his investor group booked a small profit on nine Bluestone units it sold this year. However, he credits price cuts of as much as $80,000 per unit for the uptick. While other price cuts are less draconian, reduced prices and the recently ended federal tax credits finally buoyed the condo market, which had suffered more than the single-family market since 2005. Statistics from the Northern Ohio Regional Multiple Listing Service, which covers northern Ohio from Lorain to Ashtabula counties as far south as Columbiana County, illustrate the situation. Sales of condominium listings for the year through May climbed 85%, to 1,063 from 575 in the like period of 2009. A 55% hike in sales of single-family listings in the like period pales by comparison. Bill Sanderson, vice president of joint ventures for Forest City Enterprises Inc.’s land group who oversees land sales to builders in the region, said empty-nester housing “really picked up.”

much cash” from operations through the year. By the time 2010 came around, Lubrizol had $1 billion and an appetite to invest it. So far, the acquisitions have been of its own shares. Mr. Cooley said the company bought back $60 million of its stock in the first quarter of 2010 and has continued to buy more in the second quarter. But it hasn’t been for a lack of trying that Lubrizol hasn’t bought

Concrete Results During Turbulent Times June 2010

June 2010

The Ready-Mix Assets and Eastern Cement Corporation of

The Assets of Schwab Materials, Inc.

have been acquired by

have been acquired by

a division of

CRH plc The undersigned acted as the exclusive investment banker to the Bankruptcy Estate of Schwab Industries, Inc. in this transaction

Price cuts spur action Developer Peter Rubin said his company, Coral Co., has slashed prices by 5% to 10% on units from Cleveland Heights to Westlake that cost in a range of $250,000 to $500,000. Those price cuts allowed Coral to stop waiting for buyers and to sell 24 units so far this year. Mr. Rubin credits the approach with enabling Coral to sell out its Westhampton units at Westlake’s Crocker Park — though plenty of empty land remains there. “Condominium sales are better now because it is less expensive housing,” Mr. Rubin said. “For housing now, it’s a question of what people can afford and why.” Mary Spenthoff, Ohio general sales manager at Pulte Group, the national builder with operations throughout Northeast Ohio, said the company’s single-family and

townhouse products usually perform in tandem. But, she noted, “While the tax credit was going, our townhomes were outperforming our single family.” Thanks to a mix of empty nesters joining first-time buyers, she said, Pulte sold out its freestanding, limited maintenance cluster homes in Schneider Reserve in Strongsville three months before forecast. “A year ago, we would see empty nesters, but no one would buy without their home being sold,” Ms. Spenthoff said. “Now, people who are in a position (financially) to do so will buy. Or they have reached the point they want to downsize and get on with their lives.” However, the condo market is not out of the woods. David Sharkey, vice president of Progressive Urban Real Estate in Cleveland, said challenges still dog condo sales, such as the unwillingness of some lenders to finance them. He suspects some of the condo sales boom came from the willingness of existing condo owners to slash prices to move on. ■

Cash: Advanced materials segment can grow continued from PAGE 3

Learn more at wheredoesitgo.org

“It was dead for a while,” he said. “Existing owners could not sell their homes or feel there was enough value to sell. ... Now, we’re seeing those buyers come into the market again.”

The undersigned acted as the exclusive investment banker to the Bankruptcy Estate of Schwab Industries, Inc. in this transaction

something more.

Mid-size sweet spot Lubrizol reportedly offered $4 billion to buy German specialty chemical company Cognis, but was spurned last week in favor of a rival offer from Cognis’ German peer, BASF. That deal would have been the largest Lubrizol had ever done — much larger than its 2004 acquisition of Noveon Corp. for $1.8 billion. It also would have been a bigger deal than most observers expect. “I wouldn’t expect them to spend more than $3 billion on something that transformational,” Standard & Poor’s analyst Richard O’Reilly said. Mr. Cooley wouldn’t comment on Cognis, but he did describe the type of deals Lubrizol might pursue next — and his description makes the Cognis deal sound like the exception. “The size acquisition that we’re primarily focused on is in the $100 to $500 million range in terms of revenues,’” he said, adding that there were few, larger exceptions that could be considered. The more modest, mid-size deals would do two things, Mr. Cooley said. “They’re big enough to make a difference and they’re not so big that too much of their portfolio doesn’t match with our portfolio” of products, he said. Bill Ridenour, president of Polymer Transactions, a company in Newbury that helps chemical companies with mergers and acquisitions, said Lubrizol “has a history of buying high-quality, middle-

market companies — things that fit well, and they’re very good at it.

Here’s why they’d buy Lubrizol also has some internal uses for its cash, said Mr. Cooley, including putting $200 million into a new additives plant in China and expanding some of its U.S. plants. Growth will come largely from Lubrizol’s advanced materials segment, which Mr. Cooley said is the result of its Noveon buy. The segment makes products ranging from ingredients for moisturizers and consumer goods to advanced coatings and polymers. Lubrizol’s additives business — which accounts for about 70% of its sales — is more mature, grows slowly, but is largely recession proof. The advanced materials business has more opportunities to develop new products that will grow sales and boost margins, Mr. Cooley said. The key will be to sustain margins in its additives business along the way, and KeyBanc Capital Markets analysts Michael Sison and Eric Swanson think the company can do just that — and said as much when they reiterated their “buy” recommendation on Lubrizol’s stock June 9. “While Lubrizol has only one year under its belt with operating margins in the high teens vs. 10% on average for most of the last decade, we believe the consolidation of the lube additives industry into a national oligopoly, coupled with similar actions by its customers, can keep Lubrizol’s profitability at current levels,” the analysts wrote. ■

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Tech: Agencies like collaborative projects continued from PAGE 1

grant in two or three months, said NorTech vice president Dave Karpinski. The money would go to fund research-and-development projects that could lead to major breakthroughs in green building technology over the next five years, said Mr. Karpinski, who leads NorTech’s Energy Enterprise initiative. The U.S. Department of Energy, which is providing the vast majority of the money, wants to see commercialized products at the end of that period. “The whole goal is to get transformative, game-changing solutions into the marketplace,” Mr. Karpinski said. He noted that companies such as coatings and specialty products maker PPG Industries of Pittsburgh, aluminum producer Alcoa Inc. of Pittsburgh, which has a plant in Cleveland, and paintmaker SherwinWilliams Co. of Cleveland have technology and expertise related to the construction market. Universities in both regions have knowledge of material sciences, architecture and other construction-related subjects. The grant, if awarded to the TechBelt Initiative, also would involve the U.S. Department of Energy’s National Energy Technology Laboratory (NETL), which has labs in Pittsburgh and nearby Morgantown, W.Va. Participants in the TechBelt Initiative aim to bring that organization, as well as other groups in the Morgantown area, into additional projects in the future.

But wait, there’s more Other TechBelt projects are under way, some less formal than others. For instance, Case Western Reserve University will include a letter of support from the broader TechBelt group — which is comprised of colleges, economic development groups, foundations and nonprofits — when it applies for a $1 million Small Business Innovation Research grant. CWRU would use the money to help companies that receive grants from the National Science Foundation and the National Institutes of Health to commercialize technologies, said NorTech president Rebecca Bagley. “Sometimes it’s a very soft partnership, and sometimes it’s very concrete,” Ms. Bagley said. It makes sense for the two regions to work together not only because their economies are similar and their workers can move or commute more easily across state lines than across the country, but also because federal agencies like to fund projects that involve multiple states, Ms. Bagley said. “When it makes sense, they really like to see it,” Ms. Bagley said. BioEnterprise Corp., a nonprofit

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that assists health care companies in Northeast Ohio, spurred the creation of the TechBelt Initiative three years ago by forming a partnership with a similar organization in Pittsburgh called the Life Sciences Greenhouse. BioEnterprise president Baiju Shah said that, when trying to convince out-of-state investors to finance area companies, it helps to show them that there also are good young companies in nearby Pittsburgh.

True believer The venture fund Pete DeComo is forming is an example of the synergies that can be created when the regions work together. The Pittsburgh entrepreneur and a venture capital investor from that

region, Gary Glausser, have raised $5 million from the state of Pennsylvania for the “Corridor Ventures” fund, which would invest in bioscience companies along the TechBelt corridor. The fund, which aims to raise $50 million, expects to learn about interesting bioscience companies in Ohio from groups such as BioEnterprise and eventually may open an office in the state. Mr. DeComo is a believer in the TechBelt effort. The two regions, in his view, have a lot of resources, particularly in the biosciences, and are close enough to share them. “There’s a tremendous amount of (National Institutes of Health) funding and innovation going on in these two regions,” he said. ■

TUESDAY, JULY 13, 2010 11:30 am Registration • 12 Noon Lunch & Program

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JUNE 28-JULY 11, 2010

GOING PLACES JOB CHANGES EDUCATION KENT STATE UNIVERSITY: Wanda Thomas to dean, Regional College. SPRING GARDEN WALDORF SCHOOL: John Patrick Bailey to administrator.

Achieve.

ELLIS YAN PRESIDENT, CEO & CHAIRMAN, TECHNICAL CONSUMER PRODUCTS CLASS OF ‘82

Learn how our alumni engage at: www.csuohio.edu/alumni

ENGINEERING INTEGRATED ENGINEERING CONSULTANTS INC.: Matthew Setzekorn to principal; Jacob Hilston to junior mechanical engineer.

FINANCE FEDERAL RESERVE BANK OF CLEVELAND: Timothy Dunne to vice president. FIRSTMERIT CORP.: Janice E. Focke to senior vice president, manager of commercial banking, Cleveland region; Gary Habeeb to vice president, business development officer, wealth management services.

Johnson to executive assistant. MIDWEST INVESTMENT MANAGEMENT LLC: William C. Grimberg to managing director.

INSURANCE

Thomas

Grimberg

Dillabaugh

Iwanski

Simmerman Sheridan

H.C. MURRAY CORP.: F.D. McLaughlin to vice president; Joyce Nesbitt Rogers to account manager. HYLANT GROUP: Scott Dillabaugh to senior vice president, sales leader; Jackie Iwanski to corporate health and wellness specialist. UNITEDHEALTHCARE OF NORTHERN OHIO: Bill Mechling to executive director.

LEGAL WESTON HURD LLP: Todd G. Jackson to partner.

LOGISTICS

Dan Reisinger to assistant account executive.

NONPROFIT GOODWILL INDUSTRIES OF AKRON: Michael R. Kisha to CFO.

ALL PRO FREIGHT SYSTEMS: Susan Secrest to vice president, national account sales.

NORTH COAST COMMUNITY HOMES: Gretchen A. Greissing to director of major gifts.

FINANCIAL SERVICE

MARKETING

ANCORA ADVISORS LLC: Susan

ADCOM COMMUNICATIONS INC.:

SOUTHWEST COMMUNITY HEALTH FOUNDATION: Bobbie Simmerman to executive director.

REAL ESTATE ALLEGRO REALTY ADVISORS: Jacob M. Sheridan to associate, tenant representation services.

SPORTS CAVALIERS HOLDINGS CO. LLC: Antony Bonavita to vice president, facility operations; Mozelle Jackson to chief financial officer.

TECHNOLOGY ATNETPLUS INC.: Jared Wesley to IT specialist. SKYCASTERS: Matt Vasko to sales engineer.

BOARDS BEACHWOOD CHAMBER OF COMMERCE: Bill Mann (Joseph Mann & Creed) to president; Jonathan Berns, Seth Briskin, Michael Gray and Richard Markwardt to vice presidents; Ingrid Halpert to treasurer; Heathyr Ullmo to secretary; David Cunix to immediate past president. CLEVELAND HEARING AND SPEECH CENTER: Grover C. Gilmore (Case Western Reserve University) to president; Maria O’Neil Ruddock and Terry Fox Stoller to vice presidents; David J. Abood to secretary; Jimmy A. Forbes to treasurer.

CLEVELAND JEWISH NEWS: Marc W. Freimuth (Kurant Wachter Co.) to president; Gayle I. Horwitz, David R. Hertz II and Dr. Paul D. Tolchinsky to vice presidents; Barry R. Chesler to secretary; Gena Cohen to treasurer; Larry Goodman to assistant treasurer. CLEVELAND METROPOLITAN BAR FOUNDATION: Frank R. DeSantis (Thompson Hine) to president; Raymond M. Malone to vice president; Ginger F. Mlakar to treasurer; David R. Watson to secretary.

AWARDS CLEVELAND METROPOLITAN BAR ASSOCIATION: Melissa L. Zujkowski (Ulmer & Berne LLP) received the 2010 Justice for All Volunteer of the Year Award. CLEVELAND RAPE CRISIS CENTER: Richard W. Pogue (Jones Day) and Joanna Connors (The Plain Dealer) received 2010 Sing! Out Honoree Awards.

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

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Crain’s again named Ohio’s top business publication Crain’s Cleveland Business has been honored with eight awards, including best business publication in Ohio, in the annual Ohio Excellence in Journalism Awards competition conducted by the Press Club of Cleveland. It is the second straight year, and fourth time in the last six years, that Crain’s has won recognition as the best business publication in the state. In the competition among business publications, manufacturing reporter Dan Shingler swept the general news category. Mr. Shingler won first place for “An eye on spying,� a story on industrial espionage in Northeast Ohio, and received second place for a story on how the prospects for more jobs at a local Ford plant were at risk because of the unwillingness of Ford’s U.S. workers elsewhere to accept revised contract terms. In the general feature category, assistant editor Joel Hammond won first place for “Can’t bear to watch,� a story on how various Cleveland Browns season ticket holders were considering the drastic step of not renewing their seat commitments with the struggling team. Mr. Hammond and assistant editor Kathy Ames Carr also swept the category of best multiple page design among tabloid publications. Mr. Hammond won first place for Crain’s “Forty Under 40� section, and Ms. Carr received second place for the paper’s “Twenty in their 20s� section. Editorial cartoonist Rich Williams

CRAIN’S CLEVELAND BUSINESS

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Carr

Hammond

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won first place in the best single cartoon category for a cartoon on the impact of special interests on campaigns for election of justices to the Ohio Williams Supreme Court. And finance reporter Arielle Kass won second place in the category of business trends for “Going through withdrawal,� a story on how the deep and lasting recession was forcing people to dip prematurely into their retirement savings plans. The awards were presented June 18 at the Cleveland Marriott Downtown.

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JUNE 28-JULY 11, 2010

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Big deal

E

xcuse us if we shed briefly the pessimism for which Clevelanders are famous, but we’re starting to get excited about the prospects for the planned convention center and medical merchandise mart in downtown Cleveland. Our skepticism over whether this project ever would come to pass began fading in late May with word that Cuyahoga County finally had gained control over the last parcel of land it needed to make room for the complex. Our pulse quickened with the unveiling of a smart architectural design that rests the medical mart in a glass-encased structure directly above a leg of the convention hall. Then Crain’s reporter Jay Miller learned on a trip two weeks ago to Chicago that the project’s developer, MMPI Inc., was busy leveraging its considerable connections in the trade show business to line up prospects for both the convention center and medical mart. MMPI owns the mammoth Merchandise Mart in Chicago, and that week was using a big gathering of contract manufacturers to pitch a group of 40 exhibitors of furniture for hospitals, doctors’ offices and other medical facilities on taking showroom space in the Cleveland medical mart. As Jay reported, it wasn’t a casual sales job. MMPI was offering the exhibitors a year of free space in the medical mart for every year of paid leased space. MMPI senior vice president Mark Falanga said the company has signed letters of intent for 12 conventions and 24 showroom spaces in the planned complex. Letters of intent admittedly are far from firm commitments, but they provide evidence of outside interest in the project and of MMPI’s efforts to make the meeting venue a success. Potential competition for the Cleveland medical mart still lurks in Nashville and New York, both of which have announced their own med mart plans. However, the tens of millions of tax dollars already squirreled away by Cuyahoga County for the meeting complex plus its expected groundbreaking in October should give Cleveland a jump on its would-be rivals. Add an attractive yet functional design and an aggressive marketing effort, and there’s reason to believe Cleveland’s meeting hall could be the draw its promoters have envisioned.

Nice jobs

W

hile we’re in a cheery mood, we’ll make note of the e-mail we got last week from Chris Thompson, a former Crain-ite and director of marketing, communications and civic outreach with The Fund for Our Economic Future. His subject line: “Man Bites Dog: Cleveland #2 in Job Growth.” Sure enough, a chart attached to the e-mail showed Cleveland was second only to Indianapolis among the nation’s 40 largest cities in the percentage of private-sector job growth from January to May. As Chris noted: “I’m not sure if these numbers will hold up over the long haul, but I doubt there was ever a time coming out of the last few recessions that Ohio and/or Cleveland were at the top of any such lists.” Amen to that.

FROM THE PUBLISHER

Obama misses opportunity in spill

W

hen will our presidents start of the Sept. 11 attacks on America. to get it? “Bush stood on that rubble in New I know, that’s a loaded York and had the chance to change question. But really, why can’t history by rallying Americans to a new President Barack Obama seize the BP oil energy policy,” he said, with the disapplatform tragedy in the Gulf of Mexico pointment clear in his voice. “Instead, as his chance at history? Why does he we got a senseless war in Iraq that’s instead cling to politics as usual, ignoring costing us billions and billions of dollars. the opportunity to make lasting “And now Obama is spending change for America, much like his time beating up on BP execBRIAN his predecessor? utives and waging this crazy TUCKER But as long as we’re asking war in Afghanistan instead of uncomfortable questions, why tackling the tough problem of doesn’t Congress respond energy.” to what America wants, and Let’s face it. We haven’t had a put regulatory teeth where it’s president serious about energy needed? policy since Jimmy Carter, and Back to our presidents. too many people write him off Recently, I spent a few days with as a policy wonk/nuclear engian old friend (well, actually, a neer who couldn’t get anything longtime friend who’s years my junior). done. And Americans are their own He’s a conservative, thoughtful Republican worst enemy in this as well, forgetting and an insightful watcher of current about energy conservation as soon as events of all sorts, from global to local. As gasoline prices come down. we rode in the car, we discussed politics Our country is still struggling with the a bit and he compared the current preseffects of a recession the likes of which ident’s mishandling of this oil crisis to most Americans only knew about in President Bush’s botching the aftermath history books and stories from their

parents or grandparents. The Great Depression changed a generation; the Great Recession is hurting a generation, but the worst thing might be that it doesn’t change it. I might be wrong (it happens from time to time — just ask my kids), but it seems that much of the economic troubles we’ve faced over the past two years were caused by a toxic combination of regulatory laxity and human greed. Oversight didn’t work, and now generations of Americans will be burdened by the enormous debt America has taken on to pay for this massive recovery plan. But has Congress done anything meaningful to enact the kind of regulation necessary to avoid a sequel? Nope. Similarly, the stories are horrifying about the cozy connection between the oil drillers and oil companies and the federal regulators that were supposed to be overseeing their actions off our shores. What are the chances that our government — administration and lawmakers — will do anything critical to avoid a future mega-spill? ■

LETTERS

Inner Belt should have walk/bike access

I

am writing to urge Gov. Ted Strickland to insist that the design and construction of the new Cleveland I-90 Inner Belt bridge, which is being managed by Ohio Department of Transportation, serve the needs of customers (taxpayers) for at least the next 50 years. The $450 million bridge replacement project is being mostly funded with federal money, but ODOT is making the design decisions and building the bridge. Many of us in Northeast Ohio feel strongly that the bridge should be built not only for cars and trucks — like the existing 50-year-old bridge it replaces — but also should include safe access for people who walk and bicycle to school, work and entertainment. We see a shift occurring in transportation needs and habits and think our infrastructure should accommodate

healthy, friendly, efficient active transportation. There are many reasons to consider this shift as we replace older bridges in Ohio. Access for active transportation benefits economic development, public health and the environment. It also benefits national security by reducing our dependence on fossil fuels. ODOT has not taken a business approach to evaluating the cost benefit of accommodating active transportation as part of our new bridge. Early in the project, it did a cursory estimate of the cost of a bike/pedestrian path. The design criteria used were not optimized and resulted in a number that equals about 4% added to the cost of this project. ODOT also has not rigorously estimated how much active transportation will grow over the next several generations. In short, ODOT has failed to do an

appropriately thorough needs and cost-benefit analysis for this project. ODOT has given many reasons why a bike/pedestrian path should not be considered. Some of the reasons on ODOT’s list are just plain silly, but many need to be seriously discussed. Design-build teams are now completing preliminary designs and costs and a final plan will be selected in the fall. The governor should direct ODOT District 12 to request that each design-build team bidding include a conceptual design and budget cost estimate for a separated bike/pedestrian multiuse path on the new bridge. Although unlikely, these design teams could discover design synergies that could add this path without added cost. ODOT has not accommodated active transportation on any of its interstate See LETTERS Page 11

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CRAIN’S CLEVELAND BUSINESS

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THE BIG ISSUE

11

Congratulations

Are you watching the World Cup?

Michael “Mickey” Kapostasy

Ohio Title Corp Thanks you for leading our company through 8000 Title, Closing, Judicial and REO transactions this past year. Mickey now serves third generation developers and lenders with billions of dollars in commercial and multi-family transactions closed.

LEE WAY

JESSICA BERES

TIM SCHULTZ

SCOTT DILYARD

Cleveland

North Royalton

Middleburg Heights

Cleveland

I’m from Japan, so I was pulling for Japan. We lost, which kind of sucks, but that’s about it. ... Your friends and everyone will be talking about it, so you have to catch up.

No, not at all. I’m busy, I work and go to school, so I don’t have time. I watch regular sports — I watched the Cavs season, I admit that.

I have. I’m not a huge soccer fan, but when it comes around, the World Cup, I definitely follow it. ... I actually watched (the Americans’ comeback) like 10 or 15 times.

I am watching the World Cup, significantly more than the last time around. ... Yesterday I was at work, with my Blackberry, announcing to everybody the play by play.

Michael Kapostasy President

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LETTERS continued from PAGE 10

bridges. However, there are more than 30 bridges in the U.S. that do accommodate active transportation. Many of them are interstate highway bridges, and some have been designed by the very people who are bidding on our Inner Belt bridge project. I further urge that ODOT have an expert agency create a report about traffic projections — including active transportation — for the estimated life of the bridge. Only with good information can we make an informed business decision about the cost benefit of investing in a bike/pedestrian path for our new bridge. It appears that ODOT has prematurely made up its mind on this issue without due diligence regarding design and cost information. ODOT seems to be relying on outdated information used during the past 50 years of highway and bridge design. Relying on old data likely will not result in the best bridge for the next 50 years. The governor should hold ODOT accountable for making a business decision about the investment value of a bike/pedestrian path for us, the customers, after obtaining appropriate design and cost information. ODOT works for Gov. Strickland, and we are the customers. This is

too important and long-lasting to mess up. Mike Neundorfer Founder and chairman Neundorfer Inc.

Max Hayes needs support ■ Thank you for your June 21 story, “Area manufacturers have their say on new Max Hayes,” about the project to redesign the educational program at Max Hayes High School, one of the Cleveland Metropolitan School District’s career-tech high schools. This project began late last year and has involved hundreds of volunteer hours, site visits and discussions to create a modern, innovative approach to career tech education in transportation, construction and construction management, manufacturing technology and IT. For this approach to work, the new school also will need integrated social and community services to support students’ needs and the capacity to ensure that partnerships with industry and business create real-world learning and the formation of adult relationships that can help students succeed. In addition to the manufacturers whom you noted participated in

our June meeting, business leaders from three other clusters, as noted above, also participated. Nearly 100 joined us for our kickoff meeting in March, and we had over 50 people return for our June meeting. IT, transportation and construction officials, as well as community organizations joined with manufacturers to create a framework for 21stcentury education at Max Hayes. In addition, students and Max Hayes’ teachers have weighed in on the critical success factors needed at the new school. The project would not succeed without the business and community partnerships that are forming around the new Max Hayes learning agenda. John Colm President and executive director Wire-Net Cleveland

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: mdodosh@crain.com

Congratulations to our NAIOP Award Winners! The National Association of Industrial and Of¿ce Properties (NAIOP) recognized best projects, real estate transactions, and individual performances for the commercial real estate industry in Northern Ohio in 2009.

Robert J. Roe, SIOR Managing Director “2009 Of¿ce Broker of the Year” rob.roe@am.jll.com

AJ Magner Senior Vice President “2009 Industrial Transaction of the Year”

Andrew G. Coleman Vice President “2009 NAIOP Member of the Year”

Joseph A. Messina Vice President “2009 Industrial Transaction of the Year”

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United Way agency offers budget help With state officials collaboration in ON THE WEB Story from facing what could be www.CrainsCleveland.com. common cause” an $8 billion budget to come up with gap in their next two-year budget, a fresh solutions and to make cuts in United Way agency in Cleveland that “cherished programs.” focuses on policy matters in health Among the tax increase options and human services is taking the the center recommends are unusual step of recommending a restoring income tax rates on the variety of tax increases and wealthiest taxpayers to the levels of spending cuts as a way to deal with the early 1990s, raising the rate of the expected shortfall. the commercial activities tax on The recommendations are found business and temporarily increasing in “Thinking the Unthinkable: Finding the sales tax. Few areas of the Common Ground for Resolving budget are exempted from spending Ohio’s Fiscal Crisis,” a report from cuts, which the study says could the Center for Community Solutions. run 15% to 20% across the board. The center’s executive director and The center recommends report author John A. Begala said increased cost controls on Medicaid the study “seeks an analytical tone spending and gradually reducing and unapologetically strays into a the state’s prison population by call for action.” expanding the use of community Mr. Begala said solving the corrections alternatives for nonviobudget crisis will take a “spirit of lent offenders.

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Crain’s 2010 Investing Guide Our yearly look at how the region’s public companies are faring and any trends and issues about which you should know.

H

INSIDE

indsight is always 20/20, and for many investors the past two years have driven home some important lessons when it comes to managing money. Cleveland-based Spero-Smith Investment Advisers senior vice president Jeff Malbasa said the biggest thing he’s seeing from investors is the realization that they miscalculated risk. “It’s the realization that risk exists and that they need to be careful with what risk they have in their portfolio,” he said. While Mr. Malbasa’s clients recognize that they need equities to grow their portfolios, he

■ Our annual Superstar 10 list shows that investors hardly shied away from the Northeast Ohio companies that were able to drastically improve their bottom lines. Fairlawn-based Omnova Solutions, for example, saw its oneyear return rise 220%. PAGE I-2

■ Health care investors say the overall impact of the Patient Protection and Affordable Care Act, also known as health care reform, will likely be a wash: The extra number of insured people will provide companies a bigger market, but a tax on medical device sales included in the act will hurt those companies. PAGE I-3

said, many are more averse to nontraditional investments and many are increasing their holdings in bonds. Mr. Malbasa said he did not expect the current aversion to risky investing to last as long as it did after the Depression, but he thinks the “risk appetite has certainly cooled for some people, and will for a while.” “They’ve been burned,” he said. “They certainly remember that feeling.” Looking back, many have re-examined their financial strategies. Following are five profiles of investors, and their takes on the market today.

■ Led by this year’s biggest gainer, Beachwood shopping centerfocused real estate investment trust Developers Diversified Realty Corp., 45 of the 61 companies on this year’s market cap list posted increases. PAGE I-4

■ The collectibles market is not what it once was, so if you’re looking for a jackpot, you might be plum out of luck. Some dealers are scrambling to keep their businesses alive, though those who handle a broad array of merchandise are making money. PAGE I-5

■ Our annual largest public companies list, compiled by research editor Deborah Hillyer. PAGES I-6, I-8

■ Advisers: Just as the United States economy was turning around, fears and misunderstanding around the European economic crisis have stifled some optimism. PAGE I-7

APPROACHING RETIREMENT AGE: TOM BOLE

ECONOMIST: NED HILL

I

ou’d think an economist, professor and college dean would’ve seen the stock market crash coming. You’d be right, at least if you were thinking of Ned Hill, dean of the Maxine Levin College of Urban Affairs at Cleveland State University. “We pulled completely out of the market three or four months before it crashed. My wife thinks it was dumb luck, but I attribute it to sheer genius on my part,” he said with his usual sarcastic wit. But, to be sure, there was some economic insight, combined with a startling observation behind the Hills’ smart money move. “I attribute it to a trip to Borders bookstore. There was a whole wall of books about how to make money in real estate with no money down — I said, ‘The market’s about to burst, let’s get out,’” Dr. Hill recalls. “That was my holy-*&@% moment. My jaw literally dropped, and I said, ‘Oh my god, the market is going to crash.’” So Dr. Hill took his money out of the market and put it in … real estate, of course. He and his wife

n October 2008, when the stock market crashed, Tom Bole got out. Months earlier, Mr. Bole was “downsized” from the job he had held for 30 years at a French oil company. He had retirement money to invest, funds from his 401(k) and a pension. So with the help of financial adviser Les Szarka, CEO of Szarka Financial Management in North Olmsted, Mr. Bole put it all into a diversification plan he had “100% faith in.” And then Mr. Bole lost hundreds of thousands of dollars. Mr. Szarka asked Mr. Bole if he was a long-term investor. If so, he should keep his money in the market and wait it out, Mr. Bole said he was told. “If you need to sleep at night, bail,” Mr. Bole said Mr. Szarka told him. “We bailed.” While he missed some of the run up as a result of his move from equities into bond funds, Mr. Bole said he got out of the stock market before it dropped too precipitously. An increase in the bond funds — though not as high as stocks — means he is “very satisfied” with

the move, Mr. Bole said. “It became very apparent that our risk appetite changed significantly,” he said. “The lesson in all of this is more personal responsibility. We’re paying closer attention to what’s going on.” For him, Mr. Bole said that means more time researching investment options and reading. He is considering investing some of his money on his own, though he said he is glad to be fully invested with someone he trusts. A chemist by trade, Mr. Bole, 58, now is the managing partner of Canterbury Chemicals International, a Westlake company he formed that represents chemical companies. He said while he does still have some stock exposure and expects to get back into the stock market, he still has “serious concerns” about the health of global economies and is none too eager to reinvest until other countries improve. “The issue of put it there, leave it alone, everything will work out fine, I don’t have any faith in that concept anymore,” Mr. Bole said. “I can’t stomach any more catastrophes.” — Arielle Kass

Y

built the house in Maine they’d been planning for years. But Dr. Hill points out that wasn’t his long-term retirement money — and that he doesn’t view the new home as an investment, but a purchase that might decline in value over the years like a car. When it comes to his real nest egg — retirement savings that are socked away in pension funds and other retirement accounts — he says he invests about like everyone else does, or should. “I don’t have enough time in my life to pay attention to individual stocks. Anyone who does that, and is not a pro, is a hobbyist who likes the stock market more than the casino,” Dr. Hill said. “Hire professionals, be in broadly diversified funds — because you aren’t smarter than the market — and if you really think there are going to be huge structural changes in the economy, react to that,” he suggests. “Go into a fund where they don’t charge you huge fees, make sure the fund doesn’t churn you and adjust the fund to where you are in life.” — Dan Shingler

MORE CHANGING INVESTMENTS: Portfolio manager Brent Luce/Page I-2 ■ Small business owner Roger Sustar/Page I-9 ■ Young investor Paul Noble/Page I-9

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INVESTINGGUIDE

CRAIN’S CLEVELAND BUSINESS

JUNE 28-JULY 11, 2010

Trip back to black helps 2010’s superstars

CHANGING INVESTMENTS

One-year returns jump as investors take note of better balance sheets

MANAGER: BRENT LUCE CRAIN’S SUPERSTAR 10 COMPOSITE SCORE

RK COMPANY

1-YR. TOTAL 1-YR. NET NET INCOME RETURN RETURN TOTAL RETURN INCOME % CHANGE ON ON EQUITY RETURN* RANK % CHANGE RANK EQUITY RANK

By MARK DODOSH mdodosh@crain.com

1

Omnova Solutions Inc.

8

219.92

2

PolyOne Corp.

20

231.89

T

3

Lubrizol Corp.

25

101.93

4

American Greetings Corp.

27

253.31

3

5

Nacco Industries Inc.

33

149.85

8

6

Jo-Ann Stores Inc.

35

111.38

13

7

Park Ohio Holdings Corp.

38

334.72

1

8

Associated Estates Realty Corp.

52

148.10

9

9

Progressive Corp.

53

22.61

10 RPM International Inc.

54

35.10

he Great Recession had a great — make that a gigantic — impact on which companies made the Crain’s Superstar 10 Class of 2010. Companies that lost money in their abysmal 12-month reporting periods that ended on or around March 31, 2009, began to see their bottom lines improve dramatically over the next 12 months thanks to a combination of cost cuts and rising levels of business. The result is that investors who were heartened by the sales and earnings gains recorded at many publicly traded companies in Northeast Ohio sent their stock prices upward, and so pushed those companies’ one-year returns on investment to solid double- and triple-digit percentage gains. Many of the companies that are part of this year’s Superstar 10 are among those that went from red ink to black. They include four of the top five Superstars — No. 2 PolyOne Corp., No. 3 Lubrizol Corp., No. 4 American Greetings Corp. and No. 5 Nacco Industries Inc. (The percentage changes in net income found for these companies in the accompanying chart were calculated by our friends at Capital IQ, a unit of Standard & Poor’s, based on an equation using absolute values — ask a math major if you want details.) Our No. 1 Superstar, Omnova

6

4,771.43

1

156.42

1

4

132.14

10

25.73

6

15

893.25

5

28.38

5

135.82

9

12.83

15

111.46

13

13.35

12

177.09

8

13.14

14

101.80

16

10.02

21

181.71

7

2.13

36

43

1,557.22

3

18.04

7

39

2,289.47

2

13.15

13

SOURCE: CAPITAL IQ, A STANDARD & POOR'S BUSINESS/WWW.CAPITALIQ.COM

Solutions Inc. in Fairlawn, almost fit into that group. But rather than report a loss in the 12 months that ended in February 2009, the maker of specialty chemicals, emulsion polymers and wallcoverings eked out a small profit of $700,000, according to Capital IQ’s figures. So, when Omnova’s earnings surged over the next 12 months to $34 million, its percentage change in net income would register a gaudy 4,771% — the biggest increase by far of any public company in Northeast Ohio. It isn’t surprising, then, that investors would notice the rebound and would send Omnova’s oneyear return on investment skyward by nearly 220% — thus cementing its place as this year’s superstar among Superstars. A trio of performance indicators determines which companies make up the Superstar 10. A

composite score for each public company in the 15 counties Crain’s tracks was obtained by adding its rank on three different lists — 12-month total return to shareholders, percentage change in profits in the trailing 12-month period reported before May 28 versus the like period a year earlier, and return on equity during the latest 12 months reported by the company. As in golf, the lower the composite score, the better a company’s overall performance is considered to be. Take Jo-Ann Stores Inc. in Hudson. The fabric and craft retailer ranked 13th in one-year return to shareholders, eighth in percentage change in profits and 14th in return on equity. Adding 13, eight and 14 gives Jo-Ann a total score of 35, which is good for sixth place on the Superstar list. The 2010 Superstar roster shares

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HOW STARS ARE MADE Crain’s determines its Superstar 10 list by obtaining a composite score for each publicly traded company in the 15-county coverage area. The composite score is the total of three rankings: ■ 12-month total return to shareholders ■ 2009 percentage growth in profits ■ 2009 return on equity little in common with the Class of 2009. For one thing, Associated Estates Realty Corp. is the only repeat performer from last year. The real estate investment trust that specializes in apartment properties was No. 2 last year and checked in at No. 8 this year. Also, because the severe economic slump beat down stock prices in late 2008 and early 2009, a number of last year’s Superstars recorded negative 12-month returns to shareholders when that list was put together. Even the No. 1 Superstar of 2009, aircraft supplier TransDigm Group Inc., saw a modest dip in its stock price back then. By contrast, the weakest return to shareholders among this year’s group of Superstars was the nearly 23% increase recorded by Flo’s employer, auto insurer Progressive Corp., which sits at No. 9 on the latest list. Indeed, only Progressive and the No. 10 Superstar, coatings and sealant maker RPM International Inc., had one-year returns to shareholders that were below 100%. The Superstar that best rewarded investors was No. 7 Park-Ohio Holdings Inc. The one-year return to shareholders of the diversified manufacturing and logistics company was an impressive 334.7%. Honorable mentions go to American Greetings (up 253.3%) and PolyOne (up 231.9%). ■

B

rent Luce spends nearly all his time thinking about investments as a portfolio manager for Lakefront Partners, a Cleveland investmentmanagement firm. He and his firm pride themselves on outperforming the market whether it’s up or down, believing investments should be monitored and changed, if needed, on a constant basis — an alternative to the buy-and-hold approach many investors have used for decades now. “The next 25 years or so is unlikely to be like the last 25 years. With this in mind, I do not believe that traditionally successful investment models like ‘buy and hold’ will work going forward,” Mr. Luce says. “We believe that an adaptive and flexible strategy that does not depend on a specific market direction will best serve investors going forward.” He thinks it will take close attention to both fundamentals, like an individual company’s performance, as well as technical factors that drive broad market moves to succeed going forward. He also thinks diversification will be more important than ever — and require more attention to achieve. “We have argued that diversification is not about diversifying assets, but diversifying risks,” Mr. Luce said. To do that, he said, investors must realize that many investments are closely linked, and do not offer real diversification. In other words, it doesn’t do any good to invest in both a small cap and a large cap company if their fates and fortunes are bound together. Such thinking allowed many investors to be too heavily weighted toward equities before the markets crashed, he said. He advises that investors and their advisers look closely at individual stocks — and to always be adaptive and responsive to whatever factors affect each individual investment. But if those messages were hard to sell in previous years, when it seemed anyone could make money in the stock market, investors today are willing to listen. “In the past two years, as a result of the volatility and failure of traditional strategies, it appears that more investors are questioning traditional methodologies and that we are not as much a minority in this approach as we once were,” Mr. Luce said. — Dan Shingler

MORE CHANGING INVESTMENTS: Page I-9

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JUNE 28-JULY 11, 2010

CRAIN’S CLEVELAND BUSINESS

Health care reform’s local impact leaning neutral Expansive legislation may hurt med device makers, but more insured a plus By CHUCK SODER csoder@crain.com

R

eading the headlines, it seemed like the world shook in March when President Barack Obama signed what has been called the biggest change in the United States health care system since the creation of Medicare and Medicaid. Judging by the reaction from investors in Northeast Ohio, however, the quake wouldn’t rate all that high on the Richter scale. Several local health care investors said that, while they are concerned about certain aspects of the Patient Protection and Affordable Care Act, the overall impact of the bill on their investments would be a wash. That’s not to say it won’t have any impact. Some said they believe that having millions more people insured means a bigger market for the health care companies that they’re financing. Other aspects of the bill, such as the 2.3% tax on medical device sales, may hurt some of the companies in which they invest. The law likely will have a neutral impact on Lakefront Partners LP, said Ed Matuszak, senior vice president and portfolio manager of the Cleveland private equity firm. The intricacies of the expansive law will have positive effects

on some companies and negative effects on others, Mr. Matuszak said. It’s hard to “positively spin” the medical device tax, said Dr. Brian Duncan, a Cleveland-based venture partner for life sciences venture firm Arboretum Ventures of Ann Arbor, Mich. Regardless, Dr. Duncan noted that the increased size of the insured population will be a plus for investors. On top of that, he said that his venture firm puts an emphasis on backing companies developing devices that lower the cost of health care. “There’s going to be an even greater premium placed on those simple solutions that decrease costs,” he said.

‘Still a very good sector’ B.J. Lehmann, president and chief operating officer of Athersys Inc., said the government’s ongoing push to reduce health care costs could have a positive impact on the publicly traded Cleveland company, assuming the products it is developing and testing — which include stem cell therapies for various conditions and an obesity drug — work as well as the company expects. The recently passed health care bill shouldn’t have an impact on Athersys’ ability to raise more capital and has had little overall impact on the company, Mr.

Lehmann said. Companies with products on the market are more likely to feel the effects of the law, he said. “My sense is those folks in the longer term will be more affected by health care reform,” he said. Not all biomedical companies without a product on the market will be immune to the impact of health reform, said Baiju Shah, president of BioEnterprise Corp., a nonprofit that assists health care companies in Northeast Ohio. Health reform in the broadest sense — including the new law, pending Medicare and Medicaid cuts and anticipated changes in how the U.S. Food and Drug Administration approves new drugs — has made some investors more risk averse, Mr. Shah said. The overall impact of those changes will drive more companies to repurpose existing drugs and to make modifications to devices instead of inventing new ones, he said. He noted, however, that many pieces of the broader health reform effort still are in flux, and that the health care market presents too many opportunities for investors to turn away. “Health care is still a very good sector for investment,” Mr. Shah said. Stocks for a handful of local health care companies, like the

broader stock market, didn’t move much after President Obama signed the health care bill. Even Invacare Corp.’s stock price remained steady, despite the world’s largest maker of wheelchairs vocally opposing the issue. The firm has softened its stance because the implementation of the medical device tax was pushed to 2013 from 2010, said Lara Mahoney, Invacare manager for corporate communications.

Some feeling ill effects Individual stock market investors haven’t made big moves into or out of health care stocks because of health reform efforts, said Charles Rotblut, vice president with the American Association of Individual Investors in Chicago. The health reform bill might lead to greater demand for tax-free municipal bonds in the future, he said: It included two new federal taxes on individuals earning more than $200,000 per year and couples making more than $250,000. The two taxes combined would apply to about 4.7% of earnings over those amounts starting in 2013. Mr. Rotblut added that the health care sectors that should benefit the most from health reform are health care-focused information technology companies, pharmacy benefits management companies and urgent care clinics. The “losers” most likely will be insurance companies, he added. “They have very few friends in Washington right now,” Mr. Rotblut said. ■

IN BRIEF Large pensions improve The funded status of the 100 largest U.S. corporate pension plans improved slightly in 2009, according to a review by Pensions & Investments, a sister publication of Crain’s Cleveland Business. The aggregate funded ratio of the top 100 plans rose to 83.9% in 2009 from 81.2% in 2008. The plans had an aggregate funding deficit of $180 billion in 2009, based on projected benefit obligations. Ten firms reported a funding surplus. FPL Group, Juno Beach, Fla., reported the highest funding ratio, 162%. The utility had $3.03 billion in plan assets compared with $1.87 billion in projected obligations. The rest of the top five were MeadWestvaco Corp., Richmond, Va., with a funded ratio of 138%; JPMorgan Chase & Co., New York, 128%; Bank of New York Mellon Corp., New York, 118%; and SunTrust Banks Inc., Atlanta, 116%. Airlines were at the bottom of the rankings. Delta Air Lines Inc., Atlanta, reported plan assets of $7.62 billion compared with $17.03 billion in projected benefit obligations, for a funded ratio of 44.8%, the lowest of the top 100. Rounding out the bottom five were American Airlines Inc., Fort Worth, Texas, with a funded ratio of 58.7%; ConocoPhillips, Houston, 62.4%; Whirlpool Corp., Benton Harbor, Mich., 62.5%; and Goodyear Tire & Rubber Co., Akron, 63.9%. — Pensions & Investments

Can you handle the truth? The truth is most investors’ portfolios did not handle the past years’ market volatility well. A more alarming truth is that most plans have not been changed to mitigate future risks or capture opportunities. We have helped many investors with an honest assessment of their current portfolio and plan. May we help you?

Bill Caster (216) 464-4244 bnymellon.com/truth

©2010 The Bank of New York Mellon Corporation. All rights reserved. Products and services may be provided by various subsidiaries of The Bank of New York Mellon Corporation.

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CRAIN’S CLEVELAND BUSINESS

Surge fuels DDR’s market cap gain Of public companies with values above $10M, 74% post increases By SCOTT SUTTELL ssuttell@crain.com

S

orry, Ferro Corp. Your 582.6% increase — no, that’s not a typo — in market capitalization since the publication of Crain’s 2009 Investing Guide wasn’t quite good enough to lead the list of Northeast Ohio’s market value gainers. For that honor, you have to look to Beachwood-based Developers Diversified Realty Corp. The shopping center-focused real estate investment trust saw its market cap rise 758.3% — again, no typo — to $2.854 billion as of May 28, 2010, from $332.6 million on April 30, 2009, the 13-month period covered in the 2010 Investing Guide. The numbers mark a huge comeback for Developers Diversified, which posted the worst market cap plunge of Northeast Ohio public companies listed in Crain’s 2009 Investing Guide. Last year’s guide covered a period from April 30, 2008, to April 20, 2009. In that period, Developers Diversified had lost a stunning 93.6% of its market value, falling to the 26th largest public company in the region. With the comeback of the last 13 months, Developers Diversified has climbed back to 12th on the 2010 list of Northeast Ohio’s largest companies ranked by market cap. However, the company still has much ground to make up to get back to its $5.23 billion market cap recorded as of April 30, 2008. The massive market cap increases for Developers Diversified,

Ferro and many other Northeast Ohio companies are, of course, the result of the stock market comeback from the depths of the deep, painful recession of 2008-2009. Indeed, of 61 companies on this year’s list with market caps above $10 million, 45 posted increases in market values while just five posted decreases. (Eleven companies on this year’s list were not included in the 2009 Investing Guide.) By contrast, in the 2009 Investing Guide, only one of 53 companies in the region posted an increase in market cap for the recessionplagued period from April 30, 2008, to April 20, 2009. And that company, TravelCenters of America LLC, posted a miniscule market cap increase of 1.3% during that period. The market cap hikes by companies in this year’s Investing Guide are eye-popping. Seventeen of the 46 gainers saw their market values rise more than 100% in the 13-month period ending May 28. That includes nine companies with market value gains exceeding 200%, and four of those posted gains of more than 300%. It’s one thing to post a big market cap increase from a relatively small base, as Developers Diversified did. But it’s especially noteworthy that two of the companies with market cap hikes above 100% — iron ore company Cliffs Natural Resources Inc. of Cleveland and specialty chemical company Lubrizol Corp. of Wickliffe — are among the 10 largest companies in Northeast Ohio. The market value of Cliffs,

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Let’s be clear about one thing, though: Even with these big gains in market value, few Northeast Ohio public companies have yet to shake off the full impact of the recession. Economic recovery still is in the early stages, and the market value gains don’t necessarily reflect better bottom-line results. Developers Diversified is a case in point. The company occupies space in two heavily battered industries — commercial real estate and retail — and in 2009 posted a loss of $468.2 million. Developers Diversified last year issued 32.9 million shares to German investor Alexander Otto and certain members of his family as it looked to bolster its finances. The REIT also issued warrants for the Otto family to buy up to 10 million common shares at an exercise price of $6 a share. Results at Ferro, a Clevelandbased manufacturer of specialty performance materials, improved in 2009, but the company still posted a loss of $22.6 million last year as manufacturers cut back

TOP MARKET CAPITALIZATION GAINERS* MARKET CAP MARKET CAP PERCENT 5/28/10 4/20/09 CHANGE

RK COMPANY 1

Developers Diversified Realty Corp. $2,854.8

$332.6

758.3%

2

Ferro Corp.

776.0

113.7

582.6

3

Omnova Solutions Inc.

358.9

77.5

363.0

4

Park Ohio Holdings Corp.

172.5

41.8

312.9

5

PVF Capital Corp.

55.4

14.0

295.7

6

PolyOne Corp.

926.6

237.1

290.7

7

Athersys Inc.

52.5

14.6

260.4

8

Cliffs Natural Resources Inc.

7,565.2

2,101.1

260.1

9

Associated Estates Realty Corp.

10 Forest City Enterprises Inc.

306.4

92.4

231.7

2,059.6

694.4

196.6

11 Keithley Instruments Inc.

147.7

50.4

193.2

12 Jo-Ann Stores Inc.

1,197.5

422.2

183.7

13 Morgan’s Foods Inc.

11.7

4.1

183.0

14 American Greetings Corp.

930.9

332.4

180.1

15 Nacco Industries Inc.

704.5

274.0

157.1

SOURCE: CAPITAL IQ, A STANDARD & POOR'S BUSINESS/WWW.CAPITALIQ.COM

their spending in the recession. Of the 45 companies with market value increases, 25 had favorable net income comparisons in 2009 vs. 2008 — that is, their earnings improved, they swung to a profit from a loss or they reduced the amount of their loss — but 20 saw results that were worse.

Signs of life Even so, the market capitalization rebound is a welcome development for Northeast Ohio companies fighting their way out of the severe economic downturn and seeking to regain investors’ confidence. Joining Developers Diversified and Ferro in the 300%-plus club were two industrial businesses: Omnova Solutions Inc. of Fairlawn, a producer of emulsion polymers, specialty chemicals and wallcoverings, which saw its market value rise 363% to $358.9 million, and ParkOhio Holdings Corp. of Cleveland, a diversified manufacturing and logistics business that saw its market value increase 312.9% to $172.5 million. Omnova in March announced its fifth consecutive quarter of earnings improvement and the second consecutive quarter of volume improvement. Park-Ohio in May reported a first-quarter profit compared with a year-ago

* — VALUES IN MILLIONS

loss on a modest increase in sales, and chairman and CEO Edward F. Crawford said most of the company’s business units “performed ahead of our expectations and continue to build momentum for the balance of the year.” Two other companies were within striking distance of a 300% market capitalization increase. Bank holding company PVF Capital Corp. of Solon saw market cap rise 295.7%. In April, PVF announced it has raised its capital levels above regulators’ requirements on its way toward earning a profit in its fiscal third quarter. And polymer company PolyOne Corp. of Avon Lake posted a market cap increase of 290.7%. There was a bit of a shuffle at the top of the list, as Northeast Ohio’s largest public company based on market value now is Mayfield Village-based auto insurer Progressive Corp. Its market cap rose 26.6% to $13.135 billion. (Good job, Flo!) The previous No. 1, Akron-based electric utility FirstEnergy Corp., fell to the third position as its market cap dropped 9.7% to $10.733 billion. Moving up to the No. 2 spot from No. 3 a year ago was Cleveland-based diversified manufacturer Eaton Corp., which saw its market value rise 75.8% to $11.723 billion. ■

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which has benefited from rebounding demand for steelmaking raw materials, rose 260.1% to $7.565 billion. Lubrizol’s market cap, meanwhile, increased 140.5% to $6.037 billion. The company in February projected steady earnings growth during the next several years and said it established a 2012 goal for earnings of $10 per share, which would be an increase of 32% compared with 2009 results as adjusted for various charges.

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CRAIN’S CLEVELAND BUSINESS

I-5

Banking on antique payday? These days, it’d better be really rare By JAY MILLER jmiller@crain.com

I

f you’ve been holding on to that cute Hummel limited-edition, “Come Back Soon” plate — trimmed in 23-karat gold — planning to cash in when you have to send your daughter’s first tuition payment to Ohio State or Harvard, start looking at scholarships. One sat unsold on eBay recently, no one making an opening bid of $9.99. Beanie Babies? Sorry. But if you’ve got a painting by a well-known artist, grandma’s gold locket or a cache of old silver dollars, maybe you’ve got at least the first payment. It’s the economy, of course, and it’s got antique and collectibles dealers scrambling to keep their businesses going. “House sales are down; decorators aren’t decorating,” said Terry Kovel of Shaker Heights, explaining the sluggishness she sees in some sectors of the antiques and collectibles markets she’s been watching for nearly 60 years. “It was really bad last year. Some shows weren’t held, antique malls closed.” Mrs. Kovel continues to write a syndicated newspaper antiques column, and she publishes “Kovels’ Antiques and Collectibles Price Guide,” which she and her late husband, Ralph, began publishing more than 40 years ago. “The dealer community may have shrunk a little, but I’m not sure of that,” Mrs. Kovel said. “There’s a lot of them that are retiring. “The malls, most of them that went out of business deserved it because they weren’t run by antique people, they were run by people with a lot of empty real estate and they didn’t know how to do it,” she said. Dealers who handle a broad spectrum of merchandise, though, still are making money since some market segments remain strong. “If you have an absolutely fabulous rare piece, it will go for a record price today,” Mrs. Kovel said. “Mechanical banks are setting records.” She added that in her latest price guide, due out in August, she reports on 20 bottles that sold for record prices in the past year. “Old ones, flasks, that sort of thing from the 19th century,” she said. “On the other hand, brown furniture, as they call it, wooden furniture, is dying.” Whimsy also is holding its own, according to Robin Sweeney, who has owned and operated Cosmic Collectibles on Detroit Avenue in Lakewood for 12 years. Her small, 1,000-square-foot shop is filled with furnishings and bric-a-brac from the late 1940s, the 1950s and the 1960s. Ms. Sweeney thinks part of her eclectic collection’s attraction is that it’s catching the trend toward recycling and all things green. “That’s what buying used is,” she said. She says business may not be booming, but she intends to stick with it. “I have some $8 days, and I have some $800 days,” she said.

Jewelry shop sits across from the posh Eton Place shopping center on Chagrin Boulevard. “(Avid collectors) are 1% of my business; most people collect for investment.” He no longer has coins out in display cases for collectors to pore over, instead he waits on customers who dump out their old jewelry or the jewelry boxes of their mothers and fathers on black velvet. The pace of his business, he said, is tied to the price of gold. “People are selling their jewelry that is no longer in vogue,” Mr. Irwin said. “You can get something for it because gold is so high. “You never got anything for it when gold was $300 an ounce; now it’s $1,200 or more,” he said.

While he buys old jewelry, he’s buying for the value of the metal, not for resale. “People now don’t collect or spend $500, $1,000 or $2,000 on jewelry,” he said, remembering wistfully the days of Mr. T and his display of bling. “People say, ‘You know, I’d rather take the money (they get selling jewelry) and buy an iPad or an Apple computer.’” The only coins he deals in are the rare gold and silver dollars. Even the half dollars are no longer moving. “There’s still a market for currency but it’s got to be rare items — big bills from the early 1900s,” he said. He does have a case up front with porcelain and glass figurines but he despairs about ever selling

Swing and a miss Another area of the collectibles market that is struggling is sports

memorabilia, particularly sports cards. Jerry Katz, who, with Greg Ward, co-owns Mezzanine Sportscards on Mayfield Road in Mayfield Heights, said his business has declined as children have moved away from card collecting to video games and other hobbies. Card collecting took off in the 1980s as new companies started issuing an avalanche of cards. With so much product, the market was glutted and prices collapsed. He said the country had 20,000 card stores in the early 1990s, now that number is down to 400. “In the ’90s sports cards were collected by adults and children,” he said. “Now it’s just adults.” ■

A SECOND OPINION SAVED US *

TIMES ARE TOUGH, BUT WE’RE STILL GOING, and a Citizens Bank Second Opinion helped us get there. After examining every aspect of our business, a Citizens Banker found ways we could save more money, be more efficient – for our business and personal accounts. Make time to meet with a Citizens Banker. To schedule your Citizens Bank Second Opinion, CALL 800-946-2264 or go online to CITIZENSBANKING.COM/OPINION.

Some bling keeps its shine If there is one segment of dealers doing especially well right now it may be those buying coins and jewelry, though their brisk business has more to do with the prices of gold and silver than the allure of collecting. “Nobody collects for collecting’s sake anymore,” said Jim Irwin, whose modest Shaker Coin &

the Hummels, Lladros and Laliques he has. Pointing to a couple of Hummel figurines, he said, “I can’t give them away. They’re $100 in the (price) book, I’m selling them for 20 cents on the dollar. “If you look on eBay, 100 people are selling them and only one person is buying,” he said. EBay is a serious competitor to local dealers in some categories but it serves mostly to set prices. “EBay makes the market tighter,” Mr. Irwin said. “It makes people more knowledgeable.”

* Results may vary depending on your business situation.

20100628-NEWS--18-NAT-CCI-CL_--

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1:51 PM

Page 1

INVESTINGGUIDE

CRAIN’S CLEVELAND BUSINESS

JUNE 28-JULY 11, 2010

LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE

Company/Ticker symbol This Last Headquarters year year Phone/Web site

Market value (millions) 5-28-2010

4-30-2009

Percent change

Net income (millions) 2009

2008

Percent change

2009 return on equity

Lines of business

Top local executive Title

1

2

Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com

$13,135.1

$10,373.9

26.6%

$1,120.6

($76.9)

NM

18.0

Insurance and financial company

Glenn M. Renwick president, CEO

2

3

Eaton Corp./ETN 1111 Superior Ave., Cleveland 44114 (216) 523-5000/www.eaton.com

$11,723.6

$6,669.3

75.8%

$588.0

$761.0

-22.7

8.8

Electrical, hydraulic, aerospace, truck and automotive products

Alexander M. Cutler chairman, president, CEO

3

1

FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 646-0400/www.firstenergycorp.com

$10,733.2

$11,888.6

-9.7%

$1,042.0

$1,185.0

-12.1

12.2

Electric utility holding company

Anthony J. Alexander president, CEO

4

5

Parker Hannifin Corp./PH 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com

$9,897.3

$6,129.4

61.5%

$381.4

$711.6

-46.4

8.3

Fluid power systems, electromechanical controls

Donald E. Washkewicz chairman, president, CEO

5

4

Sherwin-Williams Co./SHW 101 Prospect Ave., NW, Cleveland 44115 (216) 566-2000/www.sherwin-williams.com

$8,409.0

$6,493.9

29.5%

$431.2

$436.2

-1.2

28.8

Coatings and related products

Christopher M. Connor chairman, CEO

6 10

Cliffs Natural Resources Inc./CLF 1100 Superior Ave., Cleveland 44114 (216) 694-5700/www.cleveland-cliffs.com

$7,565.2

$2,101.1

260.1%

$306.0

$491.7

-37.8

10.8

Full-service iron ore company

Joseph A. Carrabba chairman, president, CEO

7

KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com

$7,050.0

$3,689.4

91.1%

($902.0)

($2,174.0)

NM

NM

Bank holding company

Henry L. Meyer III chairman, CEO

The J.M. Smucker Co./SJM 1 Strawberry Lane, Orrville 44667 330-682-3000/www.smuckers.com

$6,577.9

NA

NA

$467.8

$208.7

124.1

8.9

Manufacturer of branded food products

Timothy P. Smucker, chmn., co-CEO; Richard K. Smucker, exec. chmn., president, coCEO

8

The Lubrizol Corp./LZ 29400 Lakeland Blvd., Wickliffe 44092 (440) 943-4200/www.lubrizol.com

$6,037.3

$2,510.7

140.5%

$598.9

($75.5)

NM

28.4

Specialty chemical company

James L. Hambrick chairman, president, CEO

10 7

TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com

$4,082.1

$3,563.8

14.5%

$9.0

$38.1

-76.4

0.5

Bank holding company

Marc A. Stefanski president, CEO

11 9

Goodyear Tire & Rubber Co./GT 1144 E. Market St., Akron 44316 (330) 796-2121/www.goodyear.com

$2,890.7

$2,181.3

32.5%

($89.0)

($557.0)

NM

NM

Tire manufacturer

Richard J. Kramer president, CEO

12 26

Developers Diversified Realty Corp./DDR 3300 Enterprise Parkway, Beachwood 44122 (216) 755-5500/www.ddr.com

$2,854.8

$332.6

758.3%

($468.2)

($24.7)

NM

NM

Real estate investment trust

Daniel B. Hurwitz president, CEO

13 17

Timken Co./TKR 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com

$2,787.5

$1,434.7

94.3%

($106.2)

$184.1

NM

NM

Friction management and James W. Griffith power transmission president, CEO products and services

14 14

TransDigm Group Inc./TDG 1301 E. Ninth St., Suite 37120, Cleveland 44114 (216) 706-2939/www.transdigm.com

$2,597.0

$1,578.5

64.5%

$151.8

$153.9

-1.4

31.2

Designer and producer of W. Nicholas Howley highly engineered aircraft chairman, CEO components

15 11

RPM International Inc./RPM P.O. Box 777, Medina 44258 (330) 273-5090/www.rpminc.com

$2,567.4

$1,686.0

52.3%

$158.8

($7.3)

NM

13.2

Specialty coatings for industrial and consumer markets

Frank C. Sullivan chairman, CEO

16 13

Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com

$2,376.4

$1,592.4

49.2%

$75.9

$155.2

-51.1

7.0

Designs and manufactures welding products

John M. Stropki chairman, president, CEO

17 18

Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com

$2,273.5

$1,098.7

106.9%

($125.9)

$88.1

NM

NM

Adhesives, coating and sealant applicators

Michael F. Hilton president, CEO

18 22

Forest City Enterprises Inc./FCE-A 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.fceinc.com

$2,059.6

$694.4

196.6%

($30.7)

($113.2)

NM

NM

Owner and developer of real estate

Charles A. Ratner president, CEO

19 19

GrafTech International Ltd. /GTI 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com

$1,998.1

$1,022.4

95.4%

$37.6

$172.3

-78.2

6.3

Manufacturer of graphite electrodes and cathodes

Craig S. Shular chairman, president, CEO

20 12

Diebold Inc./DBD 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com

$1,915.1

$1,632.4

17.3%

$48.3

$76.4

-36.8

4.7

Integrated self-service delivery systems and services

Thomas W. Swidarski president, CEO

21 16

Steris Corp./STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com

$1,885.2

$1,446.1

30.4%

$128.5

$110.7

16.1

17.1

Maker of sterile processing and infection prevention systems

Walter M. Rosebrough Jr. president, CEO

22 15

FirstMerit Corp./FMER III Cascade Plaza, Akron 44308 (330) 996-6300/www.firstmerit.com

$1,692.7

$1,490.5

13.6%

$70.8

$117.5

-39.8

6.1

Bank holding company

Paul G. Greig chairman, president, CEO

23 25

Jo-Ann Stores Inc./JAS 5555 Darrow Road, Hudson 44236 (330) 656-2600/www.joann.com

$1,197.5

$422.2

183.7%

$76.2

$27.5

177.1

13.1

Fabric and craft retailer

Darrell Webb chairman, CEO

24 20

Applied Industrial Technologies Inc./AIT 3301 Euclid Ave., Cleveland 44115 (216) 426-4000/www.appliedindustrial.com

$1,167.0

$793.8

47.0%

$30.2

$74.7

-59.6

5.7

Distributor and provider of industrial parts and service

David L. Pugh chairman, CEO

25 27

American Greetings Corp./AM One American Road, Cleveland 44144 (216) 252-7300/www.americangreetings.com

$930.9

$332.4

180.1%

$81.6

($227.8)

NM

12.8

Greeting cards; character Zev Weiss licensing CEO

26 34

PolyOne Corp./POL 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com

$926.6

$237.1

290.7%

$95.5

($297.1)

NM

25.7

Provider of specialized polymer materials, services and solutions

Stephen D. Newlin chairman, president, CEO

27 21

OM Group Inc./OMG 127 Public Square, Suite 1500, Cleveland 44114 (216) 781-0083/www.omgi.com

$910.6

$779.9

16.8%

$13.0

$71.5

-81.8

1.1

Producer/marketer of metal-based specialty chemicals

Joseph M. Scaminace chairman, CEO

28 37

Ferro Corp./FOE 1000 Lakeside Ave., Cleveland 44114 (216) 641-8580/www.ferro.com

$776.0

$113.7

582.6%

($22.6)

($69.9)

NM

NM

Manufacturer of specialty performance materials

James F. Kirsch chairman, president, CEO

29 23

Invacare Corp./IVC One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com

$773.7

$524.1

47.6%

$41.9

$35.0

19.5

6.4

Home health care equipment

A. Malachi Mixon III chairman, CEO

30 31

Nacco Industries Inc./NC 5875 Landerbrook Drive, Cleveland 44124 (440) 449-9600/www.nacco.com

$704.5

$274.0

157.1%

$51.8

($452.1)

NM

13.4

Coal mining, lift trucks, Alfred M. Rankin Jr. small electrical appliances chairman, president, CEO

31

Cedar Fair LP/FUN One Cedar Point Drive, Sandusky 44870-5259 419-626-0830/www.cedarfair.com

$701.5

NA

NA

$48.8

($3.8)

NM

47.7

Amusement and water L. Kinzel parks in the United States Richard chairman, president, CEO and Canada

6

8 9

continued on PAGE I-8

20100628-NEWS--19-NAT-CCI-CL_--

6/24/2010

9:45 AM

Page 1

INVESTINGGUIDE

JUNE 28-JULY 11, 2010

European crisis tames optimism

J

ust when the U.S. economy was appearing to turn around with modest job creation, increasing corporate profits and a recovering car manufacturing sector, investors now have to deal with new fears surrounding the current European financial crisis. Adding to the apprehension is a lack of understanding of the link between European financial markets and U.S. investor results. In addition to normal concerns such as economic growth, unemployment and consumer spending, additional factors such as currency movement, exports, cultural differences and regulatory oversight are causing uncertainty. Because these factors can move in opposite directions (even in response to the same piece of information) it is incredibly difficult to identify the opportunities and challenges that exist as a result of Europe’s financial struggles. Armed with clear information and historical relationships, however, investors can find success and avoid the traps presented by the European financial crisis. Let’s take a look at the potential impact of the crisis on investments such as cash, bonds and stocks, as well as foreign currencies and commodities. By looking at each type of investment individually, it may be easier to find opportunities and avoid obstacles. Cash investors will see little direct effect from Europe’s financial trouble. Even if the crisis in Europe spreads dramatically, it is extremely unlikely that investors’ cash balances would be affected. However, most cash held in banks currently earns less than 1% interest annually, and cash holders can see their purchasing power drop dramatically during inflationary environments. The risk with bailout packages (in any country) is that they can generate inflation if managed improperly. U.S. government and highly rated U.S.-based corporate bonds also are not likely to see much of an effect from the European crisis. As

BRETTD’ARCY BRIANDEAN

ADVISERS long as the issuer does not have a significant European presence, the bonds should remain relatively stable. Although bonds typically perform poorly during periods of inflation, they can offer slightly higher yields than cash. By contrast, European government and corporate bonds generally are not a good opportunity at this time because they are directly reliant on their respective economies to distribute interest and repay principal. Additionally, even good European bonds can lose money as currency exchange rates fluctuate. Keeping in mind that past performance doesn’t guarantee future results, history suggests U.S. stocks may offer the best opportunity for investors suited for this type of investing. Subsequent to recent comparable foreign currency crises, U.S. stocks (as represented by the Standard and Poor’s 500 Index) have performed quite well. After the Mexican peso crisis of 1994, the S&P 500 gained 38.92% in the next 12 months; after the Thai baht crisis of 1997, it gained 23.52%; and after the Russian ruble crisis of 1998, it advanced by 25.76%. This relationship may be explained by investor demand increasing for U.S. stocks as foreign trouble increases. With the slide in the euro, this correlation may be repeated in 2010. In the current global environment, commodities such as gold and oil could present more of an investing obstacle than an opportunity. These markets are driven by global demand, and even a moderate

TOP ONE-YEAR RETURNS RANK

COMPANY

1

Park Ohio Holdings Corp.

AS OF MAY 28, 2010 334.72

2

Shiloh Industries Inc.

315.06

3

American Greetings Corp.

253.31

4

PolyOne Corp.

231.89

5

Athersys Inc.

230.24

6

Omnova Solutions Inc.

219.92

7

Stoneridge Inc.

199.69

8

Nacco Industries Inc.

149.85

9

Associated Estates Realty Corp.

148.10

10

Ferro Corp.

144.17

11

Developers Diversified Realty Corp.

142.73

12

Keithley Instruments Inc.

120.20

13

Jo-Ann Stores Inc.

111.38

14

Cliffs Natural Resources Inc.

106.60

15

Lubrizol Corp.

101.93

16

Energy Focus Inc.

98.46

economic slowdown in Europe can have a profound negative effect. These investments also can be difficult to value, are subject to speculation and can experience short-term price volatility. Currency investing may provide an additional method for benefiting from Europe’s troubles, as the European crisis has eroded the value of the euro relative to the U.S. dollar. There are now securities that perform based on the relationships between currencies. For example, the PowerShares DB Dollar Index Bullish (NYSE: UUP) replicates the dollar’s movement against a basket of foreign currencies including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. This investment was up more than 9.5% from Jan. 1 through May 31 of this year (up 1.64% since inception in February 2007 and up 2.74% for the trailing 12 months). There is no certainty on how the European financial crisis will be resolved. However, history does not support the dire predictions that suggest it will create major financial problems for global investors. Many investors believe turmoil presents opportunity, and for those investors obstacles appear manageable. Investing always is a forwardlooking proposition, and the current economic uncertainty makes investing a challenge. Motivated investors who are up for a challenge should go forward in search of opportunities with prudence and care. ■ Mr. D’Arcy is the chief investment officer and Mr. Dean is a Clevelandbased executive vice president for CBiz Financial Solutions Inc. CBiz Financial Solutions Inc. is an SEC registered investment adviser.

CRAIN’S CLEVELAND BUSINESS

I-7

REVENUE CHANGE RANK

COMPANY

1

J.M. Smucker Co.

PERCENT CHANGE 40.42

2

Athersys Inc.

31.53

3

PVF Capital Corp.

20.35

4

Progressive Corp.

16.02

5

Brush Engineered Materials Inc.

6.86

6

First Place Financial Corp.

6.03

7

Jo-Ann Stores Inc.

5.01

8

Middlefield Banc Corp.

4.71

9

TransDigm Group Inc.

3.73

10

National Interstate Corp.

3.66

11

CBiz Inc.

3.38

12

Lubrizol Corp.

1.59

13

Energy Focus Inc.

-0.35

14

Preformed Line Products Co.

-0.43

15

Associated Estates Realty Corp.

-0.86

16

Forest City Enterprises Inc.

-1.82

17

Shiloh Industries Inc.

-2.13

18

LNB Bancorp Inc.

-2.23

19

KeyCorp

-2.26

20

Invacare Corp.

-2.30

SOURCE: CAPITAL IQ, A STANDARD & POOR'S BUSINESS/WWW.CAPITALIQ.COM

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210 attorneys • 40 areas of practice • 12 offices ralaw.com/cleveland

A

L E G A L

P R O F E S S I O N A L

A S S O C I A T I O N

17

Forest City Enterprises Inc.

87.02

One Cleveland Center, Ninth Floor • 1375 East Ninth Street • Cleveland, OH 44114 • 216.623.0150

18

Nordson Corp.

75.71

222 South Main Street • Akron, OH 44308 • 330.376.2700

19

Timken Co.

72.96

20

Hawk Corp.

71.46

SOURCE: CAPITAL IQ, A STANDARD & POOR'S BUSINESS/WWW.CAPITALIQ.COM

Akron Cincinnati C l e v e l a n d Columbus Fort Lauderdale Fort Myers Naples New York Orlando Tallahassee Toledo Washington, D.C.

20100628-NEWS--20-NAT-CCI-CL_--

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INVESTINGGUIDE

CRAIN’S CLEVELAND BUSINESS

JUNE 28-JULY 11, 2010

LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE

Company/Ticker symbol This Last Headquarters year year Phone/Web site

Market value (millions) 5-28-2010

4-30-2009

Percent change

Net income (millions) 2009

2008

Percent change

2009 return on equity

Lines of business

Top local executive Title

32 28

A. Schulman Inc./SHLM 3550 W. Market St., Akron 44333 (330) 666-3751/www.aschulman.com

$582.9

$315.2

84.9%

$9.8

$9.5

3.9

2.8

High-performance plastic compounds and resins

33 32

Chart Industries Inc./GTLS One Infinity Corporate Centre Dr., Suite 300, Garfield Heights 44125 (440) 753-1490/www.chart-ind.com

$528.2

$273.2

93.4%

$42.9

$83.7

-48.7

9.1

Maker of cryogenic Samuel F. Thomas processes and equipment chairman, president, CEO

34 29

Brush Engineered Materials Inc./BW 6070 Parkland Blvd., Mayfield Heights 44124 (216) 486-4200/www.beminc.com

$512.2

$298.7

71.5%

$2.5

$5.6

-55.3

0.7

High-performance engineered materials

Richard J. Hipple chairman, president, CEO

35 24

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

$411.7

$448.5

-8.2%

$29.2

$32.3

-9.7

10.1

Provides outsourced business services

Steven L. Gerard chairman, CEO

36 33

National Interstate Corp./NATL 3250 Interstate Drive, Richfield 44286 (330) 659-8900/www.nationalinterstate.com

$397.9

$270.3

47.2%

$44.4

$13.7

223.2

15.6

Specialty property and casualty insurance

David W. Michelson president, CEO

37 40

Omnova Solutions Inc./OMN 175 Ghent Road, Fairlawn 44333 (330) 869-4200/www.omnova.com

$358.9

$77.5

363.0%

$34.1

$0.7

4,771.4

156.4

Decorative and functional interior surfaces

Kevin M. McMullen chairman, president, CEO

38 30

Myers Industries Inc./MYE 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com

$316.9

$281.9

12.4%

($0.3)

($49.8)

NM

NM

Polymer and metal products; equipment for tire service

John C. Orr president, CEO

39 39

Associated Estates Realty Corp./AEC 1 AEC Parkway, Richmond Heights 44143 (216) 261-5000/www.associatedestates.com

$306.4

$92.4

231.7%

$3.2

($3.9)

NM

2.1

Real estate investment trust

Jeffrey I. Friedman chairman, president, CEO

40 35

Olympic Steel Inc./ZEUS 5096 Richmond Road, Bedford Heights 44146 (216) 292-3800/www.olysteel.com

$299.9

$223.1

34.5%

($34.1)

$29.1

NM

NM

Steel service center

Michael D. Siegal chairman, CEO

41

Stoneridge Inc./SRI 9400 E. Market St., Warren 44484 (330) 856-2443/www.stoneridge.com

$246.6

NA

NA

($19.3)

($115.7)

NM

NM

Highly engineered electrical and electronic components

John C. Corey president, CEO

42 38

Hawk Corp./HWK 200 Public Square, Suite 1500, Cleveland 44114 (216) 861-3553/www.hawkcorp.com

$181.1

$106.1

70.7%

$8.6

$19.3

-55.5

11.2

Supplier of friction products and powder metal components

Ronald E. Weinberg chairman, CEO

43 44

Park-Ohio Holdings Corp./PKOH 6065 Parkland Blvd., Cleveland 44124 (440) 947-2000/www.pkoh.com

$172.5

$41.8

312.9%

$2.3

($128.7)

NM

10.0

Diversified manufacturer

Edward F. Crawford chairman, CEO

44 36

Preformed Line Products Co./PLPC 660 Beta Drive, Mayfield Village 44143 (440) 461-5200/www.preformed.com

$164.5

$188.0

-12.5%

$21.8

$17.4

25.1

12.7

Wire and cable products

Robert G. Ruhlman chairman, president, CEO

45

Shiloh Industries Inc./SHLO 880 Steel Drive, Valley City 44280 (330) 558-2600/www.shiloh.com

$164.0

NA

NA

($2.9)

($9.1)

NM

NM

Steel processing

Theodore K. Zampetis president, CEO

46

Agilysys Inc./AGYS 28925 Fountain Parkway, Solon 44139 (877) 374-4783/www.agilysys.com

$155.7

NA

NA

($109.7)

($174.7)

NM

NM

Electronic components and industrial products

Martin Ellis president, CEO

47 43

Keithley Instruments Inc./KEI 28775 Aurora Road, Solon 44139 (440) 248-0400/www.keithley.com

$147.7

$50.4

193.2%

$2.3

($47.3)

NM

5.0

Precision electrical measuring equipment

Joseph P. Keithley chairman, president, CEO

48

First Place Financial Corp./FPFC 185 E. Market St., Warren 44481 (330) 373-1221/www.firstplacebank.com

$81.0

NA

NA

($31.1)

($94.8)

NM

NM

Bank holding company

Steven R. Lewis CEO

49 47

Sifco Industries Inc./SIF 970 E. 64th St., Cleveland 44103 (216) 881-8600/www.sifco.com

$59.8

$35.7

67.7%

$7.0

$6.9

2.1

14.8

Production, repair, plating, machining and marketing of jet engines

Michael S. Lipscomb president, CEO

50 51

PVF Capital Corp./PVFC 30000 Aurora Road, Solon 44139 (440) 914-3900/www.parkviewfederal.com

$55.4

$14.0

295.7%

($3.7)

($14.9)

NM

NM

Bank holding company

Robert J. King Jr. president, CEO

51 42

United Community Financial Corp./UCFC 275 Federal Plaza West, Youngstown 44503 (330) 742-0500/www.ucfconline.com

$54.7

$60.9

-10.2%

($25.2)

($36.1)

NM

NM

Bank holding company

Douglas M. McKay chairman, CEO

52 50

Athersys Inc./ATHX 3201 Carnegie Ave., Cleveland 44115 (216) 431-9900/www.athersys.com

$52.5

$14.6

260.4%

($14.3)

($17.0)

NM

NM

Biopharmaceutical company

Gil Van Bokkelen chairman, CEO

53 45

TravelCenters of America LLC/TA 24601 Center Ridge Road, Suite 200, Westlake 44145 (440) 808-9100/www.tatravelcenters.com

$50.3

$39.6

27.0%

($113.1)

($9.8)

NM

NM

Interstate travel plazas; fuel, food, convenience stores and truck repairs

Thomas M. O'Brien managing director, president, CEO

54

Ohio Legacy Corp./OLCB 600 S. Main St., North Canton 44720 (330) 263-1955/www.ohiolegacycorp.com

$48.7

NA

NA

($8.5)

($5.5)

NM

NM

Bank holding company

Rick L. Hull president, CEO

55

First Citizens Banc Corp./FCZA 100 E. Water St., Sandusky 44870 (419) 625-4121/www.fcza.com

$40.0

NA

NA

$0.9

($39.5)

NM

0.9

Bank holding company

James O. Miller president, CEO

56 46

LNB Bancorp Inc./LNBB 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com

$36.8

$37.6

-2.0%

($2.0)

$3.3

NM

NM

Bank holding company

Daniel E. Klimas president, CEO

57 48

Middlefield Banc Corp./MBCN.PK 15985 E. High St., Middlefield 44062 440-632-1666/www.middlefieldbank.com

$29.4

NA

NA

$1.8

$2.5

-26.5

4.8

Bank holding company

Thomas G. Caldwell president, CEO

58

Wayne Savings Bancshares Inc. /WAYN 151 N. Market St., Wooster 44691 (330) 264-5767/www.waynesavings.com

$24.8

NA

NA

$2.2

$1.9

20.1

6.0

Bank holding company

Phillip E. Becker president, CEO

59 52

Energy Focus Inc./EFOI 32000 Aurora Road, Solon 44139 (800) 327-7877/www.energyfocusinc.com

$23.5

$13.8

70.4%

($11.5)

($14.0)

NM

NM

Fiber optic lighting systems

Joseph G. Kaveski CEO

60 54

Morgan's Foods Inc./MRFD.OB 4829 Galaxy Parkway, Suite S, Cleveland 44128 (216) 359-9000/www.morgansfoods.com

$11.7

$4.1

183.0%

$0.3

($2.1)

NM

13.9

Restaurants

Leonard R. Stein-Sapir chairman, CEO

61

Avalon Holdings Corp./AWX One American Way, Warren 44484 (330) 856-8800/www.avalonholdings.com

$11.2

NA

NA

($1.0)

$0.4

NM

NM

Hazardous and nonhazardous waste brokerage and management services

Steven M. Berry president, CEO

Numerical information provided by Capital IQ, a Standard & Poor’s business, www.capitaliq.com. The Market Cap and Total Return data used the May 28, 2010 close price for each company and have switched from annual data to trailing 12-month data through the quarter ending February, March or April. NA=Not available. NM=Not meaningful. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and other specialized business lists are available to purchase at www.crainscleveland.com.

Joseph M. Gingo chairman, president, CEO

RESEARCHED BY Deborah W. Hillyer

20100628-NEWS--21-NAT-CCI-CL_--

6/24/2010

3:09 PM

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INVESTINGGUIDE

JUNE 28-JULY 11, 2010

CHANGING INVESTMENTS YOUNG INVESTOR: PAUL NOBLE

T

he recession has made Paul Noble a much more conservative investor — for now. The 28-year-old national account manager at SherwinWilliams had been starting to invest in real estate, buying a plot

of land on which to buy a house, with an eye on perhaps owning more property in the future. He had put money into a portfolio of startup businesses in the area. He was investing a lot in his 401(k) and was starting to play the stock market.

But Mr. Noble, who said he had “a lot of good momentum” before the recession began, has pulled back. “My strategy’s changed,” he said. “It’s just not being able to take as much risk as I would have.” Mr. Noble said he’s taken a more passive role in investing in some startups, for

CRAIN’S CLEVELAND BUSINESS example, has been more conservative in his plans and less willing to take risks with his money. He decreased his 401(k) investment to 5% of his salary, from more than 10%. He said, though, that this is a short-term strategy. He hopes to become more aggressive in the next year or so and thinks “a lucky break” with one or more of

the early-stage companies he invested in could lead to an increased number of opportunities. Still, Mr. Noble said he expects to continue doing due diligence, even once he is more comfortable investing again. “I’d like to think I get back to that point here soon,” he said. “I’m not super-deep in the game.” — Arielle Kass

SMALL BUSINESS OWNER: ROGER SUSTAR

A

lot of guys would be retired, or at least thinking about it at age 67, but Roger Sustar has no such plans. That’s not because the markets took a nosedive with his money — though he says that certainly didn’t speed him off into the sunset. The owner of Mentor-based Fredon Corp., a contract machining shop, likes going to work. But his age and the market’s recent contortions have nonetheless made Mr. Sustar a more cautious investor. When the markets tanked through the fall and winter of 2008 and 2009, stock prices plunged by half in many cases — and investors such as Mr. Sustar saw losses they’d never encountered before. It scared many away from investments in stocks and into more conservative instruments like bonds. Mr. Sustar said his money is largely in bonds and other safehaven investments now. He feels

much safer, but figures he’ll be able to tap less of his savings if he ever does retire or if his children take over the business. “We were thinking we could take about 5% out a year and use it, without affecting the principal — now we’re down to 4 (%), and someone said, ‘You should start thinking about 3 ½,’” he said. But Mr. Sustar says he’s one of the lucky ones. He didn’t own much real estate — a small condo in Florida that he says has lost value, but not enough to really affect him. His business survived the downturn and is doing well, and he’s done a good job of saving money. “I’m not even caring that much about it,” he said. “But I worry about my kids and grandkids.” He worries whether he’ll be able to leave them what he had hoped to — and whether they’ll have the same opportunities he did throughout his economic lifetime. — Dan Shingler

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 28-JULY 11, 2010

Judges: Business community has interest in improving system’s quality continued from PAGE 1

candidates raise money. Both Mr. Robenalt and Mr. Ungar said they hope to work with the political parties on ways to ensure the candidates they are putting forward are qualified for their jobs.

Jim Robenalt, a business litigation partner at Thompson Hine and co-chair of the task force, said he’s interested in determining what the bar can do to convince potential candidates that, if they ran, they would have a chance at winning. Mr. Robenalt said candidates at present can be felled if they don’t have popular last names that voters often see on the ballots. While some of those names have been connected to good judges, Mr. Robenalt said, a name alone shouldn’t qualify someone to rule from the bench. Some ideas the task force may consider for improving the judicial candidate pool are identifying young lawyers who have the characteristics to be good judges and mentoring them as to what direction to take their careers to ascend to the bench; reviewing the candidates that political parties are considering before their names are on the ballot to encourage the selection of qualified individuals; and helping underfunded

Contact: Phone: Fax: E-mail:

Sharpening the competition While Mr. Robenalt said he has a certain amount of admiration for anyone who goes through the process of getting elected, he also noted that some people run for judgeships because they view them as cushy jobs, while others look to be on the bench because they’re not good lawyers. Worse still, voters often aren’t given a choice of candidates for judicial seats. For example, in the coming general election in November, only seven of the 25 judicial races in Cuyahoga County are contested, Mr. Robenalt said. Barbara J. Howard, president of the Ohio State Bar Association and a family law attorney in Cincinnati, said she applauds the efforts of the

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Quality matters to business Taras Szmagala, senior vice president and chief counsel in the industrial sector at diversified manufacturer Eaton Corp. and a member of the task force, said his primary interest in improving the judiciary is to do a better job of disseminating the ratings of judicial candidates in Cuyahoga County that the bar association posts online at judge4yourself.com. The web site has been receiving

increased attention; it had 14,072 unique visitors in the May 2010 primary, as compared to 7,780 unique visitors for the May primary in 2008. Mr. Szmagala contends that if more people knew about the rating system and studied the recommendations, better candidates would be drawn to the races. The election of quality judges is important for the business community, he said, because businesses want a fair judicial system. Businesses in this area would “certainly say the quality of the judiciary in the region could be improved,” Mr. Szmagala said. Mr. Ungar expects the process to take time. The next two people in line for the bar association’s presidency are on board with the task force’s work, he said, though Mr. Robenalt said he hoped the process would conclude within the year, with recommendations.

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Cleveland metropolitan bar to engender more competition in the races. “I think the effort to increase the pool of candidates, to have a deeper pool, is a good thing,” Ms. Howard said. “I’m very interested to see how it works. If you can increase your pool, you probably increase the likelihood of good, better talent in the long run.” Ms. Howard cautioned, though, that simply producing more candidates would not be enough — the bar also must improve voter education.

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Cuyahoga County Court of Common Pleas is the other task force co-chair. He said the group’s goal is to “level the playing field” so that the best candidates are able to mount a campaign and win. Judge McMonagle said he favors mid-term evaluations of sitting judges and would like to see more diversity of background on the bench. Now, he said, the biggest pipeline is from the prosecutor’s office, though judges who come from there — or any other area — may only have experience in one specific area of the law. Judge McMonagle, who is retiring this year, also said he would like to find a way to increase the financial support for highly qualified candidates, so they do not have to raise as much money on their own. “It’s a very important job; it shouldn’t be a name game,” he said, noting the popularity of his own judicial name. “This is not about individual judges. This is about the system.” ■

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20100628-NEWS--23-NAT-CCI-CL_--

6/25/2010

JUNE 28-JULY 11, 2010

3:57 PM

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

23

THEINSIDER

THEWEEK JUNE 21 - 27 What’s shakin’? We were: We always knew that Cleveland rocks, but an earthquake last Wednesday afternoon took things to a new level. Buildings throughout Northeast Ohio swayed for several seconds as the 5.0-magnitude quake with origins along the Ontario-Quebec border sent shock waves through the region. There were no reports of structural damage to buildings. However, crowds of office workers in downtown Cleveland exited their buildings when the structures they were occupying began to sway. Weighing anchor: The Cleveland-Cuyahoga County Port Authority is starting to look beyond East 55th Street for a place to rebuild the maritime agency’s shipping operations. The port board voted unanimously to send a letter to the U.S. Army Corps of Engineers requesting that the corps “no longer invest time, effort and resources” into planning for the use of 200 acres in Lake Erie at East 55th as a site for dumping dredge material from the Cuyahoga River. The port had intended to build new docks on top of the filled-in acreage. The port instead is hiring a team of consultants to conduct a review of Cleveland’s competitive position as a port and to examine alternative locations for the Port of Cleveland’s docks and terminals.

Huntington hunted down: The hulking but vacancy-riddled Huntington Building in Cleveland is in new hands with fresh plans for the structure. Cuyahoga County land records indicate Optima International LLC of Miami Beach, Fla., bought the property for $18.5 million from investor groups led by Cleveland financier and real estate owner Carl Glickman. That figure is well below the building’s market value of $42 million for tax purposes. Optima is considering putting a FILE PHOTO/RUGGERO FATICA hotel in a portion of the 21-story building, downtown’s second-largest office property by square footage.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Calling all lawyers with a heart for giving back ■ Lawyers willing to serve as mentors are in high demand. The Supreme Court of Ohio is searching for attorneys for its Lawyer to Lawyer Mentoring Program, a one-year program that helps new attorneys transition from law school to practicing. More than 600 attorneys serve as mentors in the state, but more are needed in Akron, Cincinnati, Cleveland and Columbus. The program is seeking to pair attorneys in midJuly for a session that starts at the beginning of August. Those not matched this summer will be available for a February term. Mentor lawyers receive continuing legal education credit for participating, and mentees can use the program to help complete their New Lawyers Training requirement. The topics in six in-person meetings over the course of nine hours include law office management, client communication, working with support staff, and balancing work and personal life. The registration deadline for new attorneys is July 9. For more information or to submit an application, see www.sc.ohio.gov/ mentoring or contact Lori Keating at (614) 387-9317 or lawyer2lawyer@sc.ohio.gov. — Arielle Kass

Dig it: Food and industrial giant Cargill said its Cargill Deicing Technology unit will invest $13.8 million to increase the capacity of its rock salt mine near the mouth of the Cuyahoga River in Cleveland. Cargill cited competitive reasons for not disclosing the mine’s current capacity or the size of the expansion. However, Cargill Deicing did say the investment will add about 20 jobs, which would bring total employment at the mine in Cleveland and its headquarters in North Olmsted to about 270. Best of the rest: The giant Jones Day law firm has eliminated an undisclosed number of staff positions in Cleveland. No lawyers were affected, the firm said. ... Testa Cos. of Cuyahoga Falls plans to develop a $16 million Marriott Courtyard hotel in downtown Akron.

Our man at the EPA

■ A local agency wanted to make sure its ad campaign for pesticide client Black Flag was

■ Cleveland has a connection at the U.S. Environmental Protection Agency: Its new inspector general got his law degree at Cleveland State University. Arthur Elkins Jr. was a 1993 graduate of Cleveland-Marshall College of Law, the school reports. Mr. Elkins, who was nominated for the post by President Barack Obama

WHAT’S NEW

BEST OF THE BLOGS

And you thought you had an insect problem ...

Excerpts from blog entries on CrainsCleveland.com.

China’s yuan pledge could bolster industrial companies

Planning ahead: FirstEnergy Corp. plans to move up by more than two years the replacement of the reactor head at its still-idle DavisBesse Nuclear Power Station in Oak Harbor, near Toledo. The electric company plans to shut down the 908-megawatt unit in the fall of 2011 to install the new reactor head. The project originally was slated for 2014. Problems within the current reactor cap were discovered after the plant was idled in late February for a scheduled refueling. FirstEnergy found cracks in 24 of the plant’s 69 reactor head nozzles. It has wrapped up repairs to those nozzles and plans to resume output at the plant next month.

a real killer of an experience. So, Marcus Thomas on June 4 in Houston launched what it says is one of the first 3-D mapping projections to be done commercially in the United States. The projection featured gigantic ants crawling out of and overtaking a building following a Houston Astros game at night. Then the Black Flag bug spray can emerged, spraying and killing the creepy crawlers, which cascaded down the multistory structure. The agency said it chose Houston because of its notorious bug problem. To view the 56-second video, visit http://tiny.cc/obpim. — Kathy Ames Carr

COMPANY: GLT Products, Solon PRODUCT: IV-7 Ultimate Germ Defense The company says its non-toxic, hard-surface disinfectant “kills 99.999% of bacteria, viruses and fungi, fast and safely.” It boasts the lowest EPA toxicity rating possible — a 4 (“practically nontoxic”) on a scale of 1 to 4. IV-7 “contains no alcohol, no bleach or other toxic ingredients,” GLT Products says. As such, it’s designed for use in public venues including day care centers, gyms, hotels, restaurants and schools. At the core of IV-7 are silver dihydrogen citrate-based antimicrobials (SDC), a patented, electrolytically generated source of stabilized ionic silver, the company says. Its active ingredient has been approved for use by the U.S. Environmental Protection Agency. SDC “enters the microorganism, binds to the DNA and destroys the microbe’s DNA and protein structure,” according to the company. It also destroys the microbe’s outer membrane. “This dual attack (from the inside out and the outside in) makes SDC a powerful weapon against germs,” GLT Products says. For information, visit www.IV7GermDefense .com. Send new product information to managing editor Scott Suttell at ssuttell@crain.com.

■ Cleveland-based Cliffs Natural Resources Inc. was among the companies cited in a Reuters piece about U.S.-based multinational companies with large exposure to China’s economy that could receive a boost after Beijing pledged over the weekend to allow the yuan to rise in value. “A higher yuan would help temper inflation in China by pushing down import prices, which in turn could mean Beijing would have less need to aggressively tighten monetary policy,” Reuters said. A chart with the piece looked at the revenue exposure in China for companies in the S&P 500. Cliffs was listed with 30% revenue exposure there, the sixthhighest among S&P companies.

Think the Gulf’s bad? Take a trip back to the Dust Bowl ■ The New York Times tried to assess whether the oil leak in the Gulf of Mexico really is the worst environmental disaster in American history, as President Barack Obama has said, and a Case Western Reserve University professor is among the experts weighing in with a different possibility. For sheer disruption to human lives, The Times said, several scholars of environmental history “could think of no environmental problem in American history quite equaling the calamity known as the Dust Bowl.” Ted Steinberg, an historian and professor of law at CWRU, told the newspaper, “The Dust Bowl is arguably one of the worst ecological

last November, was confirmed by the U.S. Senate last week. Mr. Elkins will have a tough job. The EPA last December ruled that greenhouse gases are dangerous and subject to future EPA regulations. The Supreme Court cleared the way for EPA regulation of greenhouse gases in 2007, and the Senate this month voted not to block such regulations. Oh, and we also expect him to put an end to those burning-river jokes once and for all. — Dan Shingler

Message to young people: We want YOU for NE Ohio ■ Young professionals have a target on their backs and the hunter is Northeast Ohio. With so much talk about young professionals leaving the region, those young professionals who call Greater Cleveland home recently teamed up with seasoned leaders to figure out how they can work together to retain and attract young professionals to Northeast Ohio. The “intergenerational summit” was hosted by Cleveland+, which hired market research firm Next Generation Consulting of Madison, Wis., to moderate the meeting. The group decided to focus on 10 areas such as public education reform, government reform and connecting students to local opportunities — and they will support candidates for office who share those priorities. Professionals from employers such as the Cleveland Clinic and FirstEnergy Corp. participated. More meetings are planned for the future. — Shannon Mortland

blunders in world history.” Prof. Steinberg and others made a compelling case. The Times noted that across the High Plains, stretching from the Texas Panhandle to the Dakotas, “poor farming practices in the early part of the 20th century stripped away the native grasses that held moisture and soil in place. A drought that began in 1930 exposed the folly.” Boiling clouds of dust “whipped up by harsh winds buried homes and cars, destroyed crops, choked farm animals to death and sent children to the hospital with pneumonia,” The Times said. By the mid-1930s, “People started to give up on the region in droves. … By 1940, more than two million people had left the Great Plains States.” In short, it might be decades before we know the true cost of what has happened in the Gulf.

Come for the science, stay for fun in the sun ■ Christopher M. Coburn, the Cleveland Clinic’s chief of technology commercialization and executive director of Cleveland Clinic Innovations, is one of the featured attractions in a November cruise with geek chic. TravelAgencyCentral.com reports an “Experiences of Discovery” voyage by Crystal Cruises, “will focus on science and technology, from space travel to the latest in medical technology, while cruising the Mexican Riviera.” In addition to Mr. Coburn, the roster of experts includes Captain Robert Gibson, an 18-year NASA astronaut, and Rhea Seddon, one of the first six women to enter NASA’s astronaut program. Sailing round-trip from Los Angeles, the voyage visits Cabo San Lucas, Mazatlán and Puerto Vallarta, Mexico — all while talking science, of course.

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3G not available in all areas. BlackBerry® Bold™ 9700 Offer: Offer valid only for new Corporate Responsibility Users (CRU). Subject to credit approval. Price before AT&T Promotion Card and 2-year contract is $199.99. Allow 60 days for debit card fulfillment. Card may be used only in the U.S. Is valid for 120 days after issuance date but is not redeemable for cash and cannot be used for cash withdrawal at ATMs or automated gasoline pumps. Card request must be postmarked by 9/10/10 and you must be a customer for 30 consecutive days to receive card. While supplies last. Offer ends 7/31/10. CRU Data Plan Requirement: Smartphones require a DataPro (2GB) plan. If you exceed your initial data allowance, you will automatically be charged an additional $10 for each additional 1GB provided. All data allowances, including overages, must be used in the billing period in which the allowance is provided or they will be forfeited. A DataPro Enterprise Plan is required for Corporate email, Intranet sites and business applications. For more details on Data Plans, go to att.com/dataplans. Phone Return Policy/Early Termination Fee: No Early Termination Fee (ETF) if service cancelled within 30 days of purchase, but up to $35 Restocking Fee may apply for returned devices; Thereafter, up to $325. Independent agents may impose additional equipment-related charges. Sales tax calculated on un-activated price of handset. Early Termination Fee subject to change. Coverage not available in all areas. See map at www.wireless.att.com or visit store for details. © 2010 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other AT&T marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. BlackBerry,® RIM,® Research In Motion,® SureType,® SurePress™ and related trademarks, names and logos are the property of Research In Motion Limited and are registered and/or used in the U.S. and countries around the world.

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