$1.50/JULY 12 - 18, 2010
Vol. 31, No. 27
LeBron’s tattered image needs mending As free agency wore on, the star’s brand took on more water. Can he regain control post-‘Decision’? By JOEL HAMMOND firstname.lastname@example.org
eventy-two days ago, LeBron James was the King of the world: Awarded his second straight NBA Most Valuable Player award, Mr. James’ Cavaliers — whom he’d led to the league’s best record for the second straight year — led the Boston Celtics 1-0 in the Eastern Conference semifinals and showed no signs of slowing down. He also was on the verge of entering sports’ most anticipated free agency INSIDE: A sample of the increasingly period ever. And wherever he signed, negative opinions written by memhe’d add a sum approaching $100 bers of national media. Page 8 million to his already vast financial storehouse, secured through a long and almost universally applauded “global icon” marketing effort. To be sure, he’s still a rich man after announcing last Thursday night his plan to sign with the Miami Heat, a decision met with scorn locally. But after a humiliating exit from those playoffs and a free agency dance that took a turn to the remarkably absurd — culminating in Thursday’s hour-long announcement on ESPN — Mr. James may have work to do on his carefully crafted brand. See LEBRON Page 8
Area manufacturers dubious of double dip If economy’s headed back down, they can’t tell By DAN SHINGLER email@example.com
Ask local manufacturers whether they think we’ll have a double-dip recession and the answer might depend on whether they’ve been watching the news or talking to their customers. Though they hear pundits talk of a possible resumption of the downturn, their own sources of information say the recovery, though ridden with angst, is plugging along. “If it weren’t for the doom and gloom in the headlines, I’d say things are going pretty well,” said
Bob Patterson, chief financial officer of PolyOne Corp., the polymer producer in Avon Lake that last week reported its cash was piling up because its bottom line is rebounding. Mr. Patterson sums up the thoughts of several area manufacturers who spoke to Crain’s. They worry that mounting government debt here and worldwide, coupled with sustained unemployment and a still-depressed housing market in the United States, indicate the economy is not out of the woods yet. But when they talk to their customers and look at their order
KRISTEN WILSON ILLUSTRATION
INSIDE More docs pushed to electronic records The federal government is using stimulus money to urge more small, private practice doctors to embrace electronic medical records by giving those doctors higher Medicare and Medicaid payments. The plan is to incentivize doctors to make the move, as Medicaid and Medicare cuts will come in 2015 for those who haven’t. Read Chuck Soder’s story on Page 3.
See DOUBLE Page 22
Construction work up, but contractors wary of future Next year could offer lift if big projects proceed By STAN BULLARD firstname.lastname@example.org
Jeff Gliebe, CEO of Krill Co. in Cleveland, considers the nearly 80-year-old general contractor a small fish among Northeast Ohio’s commercial construction companies. But for this small fish, 2010 has been a pretty good year so far, though Mr. Gliebe worries about what work will fill Krill’s plate in 2011. Mr. Gliebe’s view reflects the outlook of the bulk of the region’s construction industry. Business has picked up from the desperate climate of 2009 as clients finally started projects they had put off,
but prospects for more work remain thin amid scarce financing for real estate development and a lackluster economy. At Krill, projects the contractor expected to start last year finally got under way this year. A big one consists of two components — an office building and a home for homeless veterans — that are part of the $370 million in investments under way at the Louis Stokes Cleveland Veterans Administration Medical Center in Cleveland. The only game-changer on the horizon for the construction field will be if some long-awaited big proSee CONSTRUCTION Page 6
SMALL BUSINESS Working parents juggle extra responsibilities with kids home from school for summer ■ Page 15 PLUS: GRAND OPENINGS ■ TAX TIPS ■ SOCIAL MEDIA ■ & MORE
CRAINâ€™S CLEVELAND BUSINESS
COMING NEXT WEEK In a class of their own
JULY 12-18, 2010
IT COULD BE WORSE Ohioâ€™s unemployment rate of 10.7% in May is way too high, but itâ€™s well below the level of discomfort felt in some other states, according to U.S. Bureau of Labor Statistics data. The government says Nevada, at 14%, had the countryâ€™s worst jobless rate in May, which was the first month since April 2006 that a state other than Michigan posted the highest rate. (Thatâ€™s a four-year run no one wants to replicate.) Here are the states with the highest and lowest unemployment rates:
We honor in our annual Women of Note section 12 distinguished female business leaders for their outstanding achievements and positive impact within Northeast Ohio.
REGULAR FEATURES Best of the Blogs .........23 Classified ...............21-22 Editorial ......................10 Going Places ...............14 Letters ........................11
List: Highest paid non-CEOs ............20-21 Personal View..............10 Reportersâ€™ Notebook....23 The Week ....................23
Ohio (No. 10)
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
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G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year, $59; 2 years, $102. Outside of Ohio: 1 year, $102; 2 years, $180. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crainâ€™s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136
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JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS
Strained state of real estate hits home Nonperforming residential mortgages now showing up on online auction sites By STAN BULLARD email@example.com
Buying distressed real estate mortgages as investments, a practice long familiar in the commercial real estate market, is starting to crop up in the foreclosure-riddled residential sector.
THE WEEK IN QUOTES
That’s what is happening to a Painesville family’s 2004-vintage, four-bedroom Colonial. The couple with three kids recently was surprised to learn from Crain’s that their 30year, $248,676 loan was up for bid — with bidding starting at just $50,000 — on www.auction.com. The auction site operated by REDC Commercial,
a company in Orange Beach, Calif., that just has started selling nonperforming notes on its site, is a joint venture with the Jones Lang LaSalle real estate brokerage. “I’m surprised they’re doing this,” said the homeowner, who asked that she not be identified to spare her embarrassment. “My asset manager knows I’m in the middle of a refinance. We want to stay in the house.” The family of five went through bankruptcy in hopes of keeping its home and is pursuing a loan modification program. The couple fell three
months behind in 2008 when the woman’s commission-based income dropped to $25,000 from $150,000 yearly. Their original lender, American Home Mortgage Corp., closed in 2006 and Quantum Servicing of New Haven, Conn., now has her loan. The Painesville family is swept up in a new phenomenon: the rise of eBay-style auctions of nonperforming loans, a wrinkle in the way some lenders are trying to deal with nonperforming loans. Ads in local newspapers teased the online auction of the family’s loan along with 40 other
“If you’re a small business with employees, not all people are welcoming of (kids). And if your kids aren’t wellbehaved, it can be distracting to the business.” — Lori Long, a professor at Baldwin-Wallace College and author of “The Parent’s Guide to Family-Friendly Work.” Page 15
See AUCTIONS Page 7
By CHUCK SODER firstname.lastname@example.org
“This is unlike other recoveries from a recession. Normally it gradually builds up steam until things get busy. (This time) work has been a roller coaster ride. I am trying to be optimistic the worst is behind us.”
— Bernie Moreno, owner of several high-end automotive dealerships in Northeast Ohio. Page 12
Offering nonperforming home mortgages on a single basis comes as a surprise to hard-bitten local foreclosure
Space agency aims to build prototype here
— Mark Szczepanik, director of brand voice at Liggett Stashower and @THE_DANNY_FAIRY on Twitter. Page One
“This new acquisition is just doubling down on Cleveland. The reason we’re doing these acquisitions is to stay in Cleveland longer.”
Brave new (digital) world
NASA Glenn mobilizes moon power grid plans
“He has gotten a prima donna tag, but he’s still a 25-year-old holding the NBA and ESPN hostage. This is doing wonders for the LeBron brand. If he can swing it, why not do it?”
— James Drabik, owner of Drabik Manufacturing in Brook Park. Page One
nonperforming loans and more than 40 foreclosed commercial properties. The experience of the Painesville family isn’t an isolated incident. RealtyNoteBid.com of Newport Beach, Calif., at www.realtynotebid .com, lists for auction six Ohio real estate loans, including one on Cleveland’s East Side and another in Oberlin.
UNLOCKING BARRIERS OF ENTRY Federal, state agencies entice private practice docs to sign on to e-record systems, but initial costs vex some physicians By CHUCK SODER email@example.com
f Dr. Mark Rood wasn’t so good with computers, the electronic health record system that he and the other two doctors at South Russell Family Practice use would have been out of their price range. Many private practice doctors in small offices don’t use electronic record systems, often because they feel they can’t afford such systems or don’t have the technical expertise to implement them and keep them running. The federal government is trying to change that situation by using stimulus money to give bigger Medicare and Medicaid payments to doctors who install electronic record systems See RECORDS Page 9
To figure out the best way to build a power grid on the moon, Jim Soeder and Joe Shaw want to build a similar one that will help power the western portion of NASA Glenn Research Center in Brook Park. The two NASA Glenn officials are helping plan a project that would involve dispersing several alternative energy sources and storage technologies throughout the campus’s West Area. Mr. Soeder, senior technologist for power at NASA Glenn, said the project, should it receive the money it needs, could go on for decades, incorporating new energy and grid technologies as they are developed. “You’re going to see technologies evolve, especially in the area of storage,” Mr. Soeder said. NASA Glenn already has a few alternative energy sources in place. A solar concentrator developed by GreenField Solar Corp. of Oberlin is located outside a building along West Area Road, which runs through the western portion of the campus, and in a field across the street is a group of more traditional solar panels. The project also would incorporate a few small wind turbines that NASA Glenn already is using to help power one of its buildings. The power system could include fuel cells, batteries and flywheels, which are spinning wheels used to store energy in kinetic form, as well as “smart grid” technologies, such as meters that would help the research center track and control how the system uses energy. In addition, the project could simulate contributions from a nuclear reactor using electricity from the grid. “What you have to do is bring them together and get them to work in concert,” Mr. Soeder said. It would be important for NASA to test such technologies extensively should it ever establish a base on the moon, Mars or an asteroid, given See NASA Page 7
CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
Call center sub boosts suburb Middleburg Hts. receives assistance from shuttered Ariz. firm to replace operation By JAY MILLER firstname.lastname@example.org
When an Arizona call center operator closed its doors last May after less than 10 months in Middleburg Heights, it put 38 people out of work. Middleburg Heights had given the company, CollectCorp Corp. of Phoenix, a $41,000 job creation grant — a partial match to a five-year, $115,600 state tax credit — in exchange for a pledge to stay for 10 years and build to a $3.1 million
annual payroll. But the leaders of Middleburg Heights didn’t get angry when the company left. Instead, they found a replacement company, Professional Recovery Services Inc. of Voorhees, N.J. Professional Recovery has taken over the same 8,000 square feet of office space on Engle Road that CollectCorp briefly occupied and hired many of the former CollectCorp employees who still were looking for work. It also is looking to grow the office to at least
It starts with
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match CollectCorp’s original plan. Professional Recovery Services, like CollectCorp, is a debt collection and accounts receivables management company. Its web site describes it as a 20-year-old, woman-owned business with 300 employees in offices in Voorhees and Vinland, N.J., Las Vegas and now Middleburg Heights. “How unique is it that when one company moves out, the city comes up with a similar company to (come in) and fill those same jobs?” said a proud Gary Starr, mayor of Middleburg Heights. The mayor credited his economic development director Charles Bichara with making it happening. “‘No’ is never an option with him,” the mayor said. In turn, Mr. Bichara credits Vincent Lorenzo, who had managed the CollectCorp office. Like his employees, Mr. Lorenzo was losing his job, though he would be staying on the payroll for two weeks after the CollectCorp announcement to wrap up operations. So he offered to help the city find a company that might be attracted to office space already outfitted for a call center and a group of workers with telephone collection skills. Northeast Ohio has built a solid base of call center operations. Team NEO, the business attraction nonprofit, has counted 195 call centers in the region, employing about 18,000 people. When contacted, Mr. Lorenzo acknowledged his role in finding Professional Recovery, but he referred further questions to the company’s owner, Irene Kelso. Ms. Kelso did not return two phone calls last week. One key to the transition was that Middleburg Heights maintained a good relationship with CollectCorp. “They liked the city,” Mr. Bichara said. “It was just (business issues) that transpired that made it necessary to close the office.” It also helped that the city moved quickly. The day employees were let go, May 3, Mr. Bichara got a call from another tenant in the building, confirming reports he’d heard that CollectCorp was shutting the office. He was there almost immediately. “I had a good relationship with Mr. Lorenzo, so we put our heads together and I said, ‘Look, this is a pretty big hole for Middleburg Heights and we’ve got 38 people wandering around the parking lot with no place to go,” Mr. Bichara recalled. Mr. Bichara and Mr. Lorenzo started hunting for a company to fill the void. Mr. Lorenzo had contacts in the industry and Mr. Bichara knew of a Texas site selection firm that specializes in finding homes for call centers. Soon, Mr. Lorenzo found Professional Recovery, Mr. Bichara said. The city offered Professional Recovery the same job creation grant CollectCorp would have gotten had it stuck around. Within a month, the replacement firm was ready to open. “The story is, we didn’t just sit back and take it on the chin,” Mr. Bichara said. ■
Volume 31, Number 27 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS
E!CLEVELAND Every Thursday, Crain’s sends to more than 20,000 readers an arts and leisure e-mail called e!Cleveland. The e-mail highlights at least 10 events, and often more, that might be worth your time outside work. We’re fortunate in Northeast Ohio to have a vibrant arts community, and each edition of the e-mail features a mix of local music, theater, dance, film and other activities. To sign up for this and all our e-mails, visit www.CrainsCleveland .com and click the “Register for Crain’s alerts” icon at the top left of the home page. Like just about everything else on the Internet, it’s free. If you have events you’d like us to consider for inclusion in future editions of the e-mail, send information to managing editor Scott Suttell at email@example.com. Here’s a taste of what makes it into the e-mail each week:
Coming ashore Event: “The Foreigner” Venue: Porthouse Theatre, Cuyahoga Falls When: Now through July 17 Why you might be interested: If you’re in the mood for some lighthearted summer fun. Playwright Larry Shue’s farce won two Obie Awards (for off-Broadway and off-off-Broadway productions) and two Outer Critics Circle Awards in 1983. Its main character is Charlie,
ON THE WEB a shy Englishman who visits a Georgia lodge during a hunting trip. To avoid speaking to others, he poses as a mysterious foreigner who speaks no English. The plan works well, at first, until Charlie finds himself at the center of attention. Mr. Shue had a promising career going with “The Foreigner” and another farce, “The Nerd,” but he died in a commuter plane crash in 1985, at age 39. Tickets for this show are $27-$30 for adults, $24-$30 for seniors and $15 and $16 for students. The Porthouse, on the grounds of Blossom Music Center, is a delightful setting for a show. On the web: www.Kent.edu
Nature’s call Event: “Edward Beyer: In the Country” Venue: BAYarts, Bay Village When: Friday, July 9, through Friday, Aug. 6 Why you might be interested: If you appreciate paintings and drawings inspired by wonders of the countryside and the natural world. Mr. Beyer’s work features “a strong sense of design, shape, line and color,” according to BAYarts. His work is in the permanent collections of the Butler Museum of American Art in Youngstown as well as in the headquarters of American Greetings (a former employer) and B.F. Goodrich Co., plus many private collections. The
BAYarts gallery is at 28795 Lake Road. On the web: www.BayArts.net; http://edwardbeyer.com
World tour Event: “From Asia to the Middle East” Venue: Various sites in Chagrin Falls When: Tuesday, July 13 Why you might be interested: If you’re a man or woman of the world. The program, part of the Chautauqua-in-Chagrin series, features two speakers from the Chautauqua Institution in western New York as well as two free concerts by regional musicians. The lectures are “A Rabbi Speaks to the Importance of Israel,” a 6 p.m. presentation by Dr. Samuel M. Stahl, rabbi emeritus, Temple Beth-El in San Antonio and theologian-inresidence, Chautauqua Institution; and “The Gender Gap: Educating Girls in Afghanistan,” an 8 p.m. presentation by Sakena Yacoobi, executive director of the Afghan Institute of Learning. Events are held in venues in downtown Chagrin Falls. Free shuttle buses will move guests between sites. On the web: www.Chagrin Foundation.org
Trifecta Event: “Motion in Three Parts: Sound, Body, Image” Venue: MOCA Cleveland, 8501 Carnegie Ave. When: Wednesday, July 14, at 8 p.m. (light refreshments served at 7 p.m.)
Why you might be interested: If you appreciate the intricacies of music, dance and image. Those disciplines coalesce in a one-nightonly improvisational performance at MOCA Cleveland by winners of the Cleveland Arts Prize. During this event, Nusha Martynuk (winner of a 1999 Cleveland Arts Prize) will create new choreography as Ernie Krivda (a 2009 winner) improvises jazz solos inspired by fleet footsteps. Carter McAdams will capture both performances on video, mediate the images and project them in real time throughout the space. The performance is free and open to the public. On the web: www.MocaCleveland .org
Higher and higher Event: Opening of the Terminal Tower Observation Deck Venue: Terminal Tower, downtown Cleveland When: Saturday, July 17, and Sunday, July 18 (and two more weekends this summer) Why you might be interested: If you want to see for miles and miles. The Terminal Tower’s 42nd-floor observation deck has been closed to visitors since the terrorist attacks of Sept. 11, 2001. Its glass-enclosed room can hold 50 people and will be open this weekend and the next two weekends from noon to 4 p.m. Tickets are $5 and can be bought at Tower City’s guest services desk. Kids 5 and younger are free. On the web: www.Downtown Cleveland.com.
Story from www.CrainsCleveland.com.
Summa app a useful tool for patients Want to know how long you’ll have to wait in the emergency room? Summa now has an app for that. Summa’s iTriage smart phone application enables users to find hospitals and urgent care centers, obtain information on physician specialties and health care, and find out how long the wait currently is at Summa’s Akron City, St. Thomas and Western Reserve hospitals. Wait times are updated every 10 minutes and soon will be available for WadsworthRittman and Barberton hospitals’ emergency rooms. People also can look up basic information about illnesses by searching for a symptom, disease, procedure or health care provider. But Summa cautions patients not to overuse the app. “Knowing wait times in our ERs will be helpful when deciding where to go if you need to come in for reasons that are not lifethreatening,” said Brant Russell, Summa’s system director of emergency and trauma services. “But if it’s for something more serious, like chest pain.”
CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
Construction: Government programs keep contractors busy continued from PAGE 1
the end of May totaled $767 million, up 29% from $563 million during the like period in 2009. However, that spike is due to tough times in 2009, as construction orders through May this year were 66% lower than the comparable period in 2008. Nonresidential contracts for future construction — commercial, manufacturing, educational and religious properties — climbed 25% in the first five months of 2010 to $465 million from $371 million in the like period last year. Residential construction — buoyed by the federal tax credit for homebuyers that boosted construc-
jects start to move next year. They include the planned convention center and medical merchandise mart in Cleveland, the new Cleveland casino and the Ernst & Young office tower and hotel in the Flats. If those megaprojects go, Mr. Gliebe said, larger fish would focus on that fare while smaller firms such as Krill would find other work available to them. Figures produced by McGrawHill Construction for contracts for future construction in Northeast Ohio illustrate the pickup so far this year. Construction orders through
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tion of starter homes put under contract by April 30 — jumped 36% to $262 million through May from $192 million in the year-earlier period, but that market already is trending down.
Feds to the rescue Despite the increase in construction spending, the job prospects of construction workers aren’t brightening, in part because smaller job sites are employing fewer workers. Estimates from the Ohio Department of Job and Family Services for the combined Cleveland and Akron metropolitan statistical areas show employment in the construction, mining and logging category fell 14% to 40,000 jobs as of May this year from 46,500 in May 2009. Although commercial and residential contractors generally benefit less from the federal government’s stimulus programs than do builders of highways, roads and sewers, money for favored government programs such as low-income or affordable housing and energy improvements are crucial in this downturn. Jane Snavely, president of Snavely Construction Inc. in Willoughby, said she sees this year as better than last, thanks to Washington, D.C. “We do a lot in the affordable housing programs when there is not a lot of private lending going on,” Ms. Snavely said. “I don’t have anything now that doesn’t have some sort of help either from the state or federal government, although I have a fair amount of that.” One such project is the conversion of 40 units in the Portage Trail Village senior citizens apartment complex in Cuyahoga Falls to 32 units of
“I don’t have anything now that doesn’t have some sort of help either from the state or federal government.” – Jane Snavely, president, Snavely Construction Inc. represents more than 17,000 union workers in the region, said workers are not seeing much of a spike in jobs, and unemployment ranges from 20% in some trades to 40% in hard-hit trades, such as electricians. “So far, 2010 mirrors 2009 with just a slight increase in work. We’d be in a world of hurt without the school construction work,” Mr. Soggs said. However, Mr. Soggs is excited about early next year when the convention center, casino and perhaps the Flats East Bank Neighborhood projects may break. “These are three-year jobs that will employ large numbers of people,” he said. Northeast Ohio has plenty of company in the construction downturn. Ken Simonson, chief economist for the Associated General Contractors trade group in Washington, D.C., estimates 294 out of 337 Metropolitan Statistical Areas reported construction employment trending downward through May, the most recent reporting period available. He estimates construction unemployment nationwide at 20% — twice the national average of the work force in general. While Krill’s Mr. Gliebe does not believe the market has bottomed yet, Krill is optimistic enough to be preparing to add two workers to its full-time staff of 24. “We need the resources,” Mr. Gliebe said. ■
assisted living. Portage Trail’s owner, National Church Residences, received a U.S. Department of Housing and Urban Development grant to reconfigure three floors of the building to assisted living with a community kitchen and other services. At the subcontractor level — those companies that hire people who swing hammers or shove electrical wires through walls — business has been mildly better for the subs left standing. “It’s slow, but I’m not hanging black crepe paper on the walls,” said Tim Lavelle, president of mechanical contractor Gorman-Lavelle Corp. in Cleveland. Education work is sustaining some subcontractors, Mr. Lavelle said; Gorman-Lavelle recently won a $3 million job for the mechanical work going into a new, $47 million high school and community center in Wadsworth. Health care construction also remains a staple, Mr. Lavelle said, though it is changing as proposed projects are smaller than those under way. “I don’t see the future being as cheery as before 2008,” Mr. Lavelle said. “It was never giddy to begin with in Cleveland. We’re always waiting for work just over the horizon.”
Better times ahead? Loree Soggs, executive secretary of the Cleveland Building and Construction Trades Council, which
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Awards competition conducted by the Alliance of Area Business Publications, the industry group for regional business publications. Editor Mark Dodosh received two gold, or firstplace, awards. In the cate- Dodosh gory of Best Commentary, Mr. Dodosh won for his commentary exposing the business interests behind the push for a ClevelandColumbus-Cincinnati rail corridor. In the category of Best Editorial, he won for an editorial that urged Gov. Ted Strickland to deal aggressively with Ohio’s budget deficit rather than rely on revenue from an ill-conceived plan to allow video slot machines at the state’s horse race tracks. In the category of Best Daily E-
Mail, Crain’s received a silver, or second-place, award for its daily afternoon e-mail. The judges said the daily e-mail’s “well-written headlines and introductory text to stories provide just the right balance to help users quickly skim through the day’s top business stories.” And in the category of Best Use of Photography/Illustrations, Crain’s won a bronze, or third-place, award for a sampling of its work. The judges said the publication “does a very good job with creative illustrations on its covers.” The awards were judged by members of the faculty of the University of Missouri’s School of Journalism. They were presented at the alliance’s summer meeting in Indianapolis. ■
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Auctions: NASA: Project has positive environmental aspects Lenders cut costs in web sales continued from PAGE 3
continued from PAGE 3
experts who thought they had seen everything. Frank Ford, acting president of Neighborhood Progress Inc., which works to improve city neighborhoods, said individual loan sales to average investors â€œis something we have not seen a lot of.â€? But, he added, â€œWe have been hearing about it.â€? Mr. Ford said the foreclosure debacle is a moving target, so itâ€™s possible individual loan sales could be a developing trend â€” especially as lenders have started to initiate foreclosure proceedings on homes and then drop them before a sheriffâ€™s sale so they do not gain title and therefore can avoid demolition or repair expenses. â€œIt could be a threat and it could be a benefit,â€? Mr. Ford said. The benefit is that community improvement groups such as his, as well as Cuyahoga County Treasurer Jim Rokakis and anti-foreclosure groups, are readying a plan for the Cuyahoga County Land Bank to buy distressed loans at a discount in order to work out new terms for homeowners or to gain control of the properties before they fall into decline. Gordon Greene, a partner at the Chartwell Group brokerage who has decades of experience in real estate auctions, said he only recently has seen packages of residential notes or individual distressed mortgages offered online. â€œWith major lenders finding it difficult to foreclose, with some court systems believing lending is a oneway street â€” lend money without the expectation of getting it back â€” theyâ€™ll have to deal with it as necessary, including selling to entrepreneurial individuals who will take the risk,â€? Mr. Greene said. Internet technology makes such offerings possible, he noted. â€œPreviously, you had to do ads and mailers,â€? Mr. Greene said. â€œNow the world has gone digital.â€?
how difficult it would be to repair such remote power systems. The project could lead to discoveries that impact energy use on Earth, said Mr. Shaw, chief of the business development partnership office at NASA Glenn. Figuring out how to integrate various alternative energy sources into the grid is a huge challenge, one the federal government has shown increasing willingness to fund, Mr. Shaw said. â€œWe think that this addresses national needs,â€? he said. The project also would help NASA Glenn operate in a more environmentally friendly way. It could generate 10% to 15% of the electricity needed in the West Area, and maybe
â€œWe think that this addresses national needs.â€?
â€“ Joe Shaw, chief of the business development partnership office, NASA Glenn Research Center
more if a large amount of energy storage capacity is incorporated, Mr. Soeder said. Once the project plan is finished in a few months, NASA Glenn expects to start formally marketing the project to potential financing partners. Researchers could begin modeling and simulation studies with a few hundred thousand dollars, but the project would need millions of dollars as it grows, Mr. Soeder said.
Potential partners cited
Messrs. Soeder and Shaw were hesitant to say how big it would become, especially considering how Congress has yet to approve the Obama administrationâ€™s plan to scrap NASAâ€™s Constellation program, a project focused on building a new rocket to replace the Space Shuttle with the intention of returning astronauts to the moon. The project likely would be a higher priority under the Obama plan, which has a stronger focus on longterm technology development and sustainability, Mr. Soeder said. NASA Glenn officials already have talked with several organizations about the possibility of forming part-
nerships related to the project. Among them are utilities such as FirstEnergy Corp. of Akron and American Electric Power Co. of Columbus and research organizations such as the National Energy Technology Laboratory, which has labs in Pittsburgh and Morgantown, W.Va., and the Electric Power Research Institute of Palo Alto, Calif. A Minnesota-based flywheel technology startup that is thinking about locating a few engineers close to NASA Glenn for other reasons has expressed interest in the project, as have startup wind technology companies, Mr. Shaw said. â€œWe could see other external organizations wanting to deploy people close to Glenn,â€? he said. â–
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Misery loves company Jeff Frieden, CEO of REDC Commercial, was surprised when asked about the auction of the Painesville residential loan because his company is not geared to residential loans but focuses on multimillion-dollar commercial properties. However, RealtyNoteBid.comâ€™s web site was launched last year to do residential note sales in order to speed up the process of disposing of nonperforming loans. CEO Rudy Baldoni said he estimates that by selling loans, lenders can cut foreclosure and property maintenance costs by as much as 30% of the loan value. He expects more business to come its way as foreclosures rise with the sour economy. Others hope to capitalize on the trend as well. Just last week, the Marcus & Millichap investment brokerage and the Keller Williams residential brokerage separately announced joint ventures with technology companies to market distressed loans as well as bank-owned properties through their national brokerage networks. Both are signs of greater efforts to sell distressed loans even to the average Joe in the virtual marketplace. â–
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LeBron: Humility may ease pain continued from PAGE 1
“He’s very savvy, but his brand has been based on loyalty and unselfishness,” said Barb Paynter, a partner at Hennes Paynter Communications in Cleveland Heights, which specializes in crisis communications and media training. “Now, it’s all about LeBron. He has tainted the ‘team player’ brand, and it could backfire on him.”The loss of that luster began with the loss in Game 5 to the Celtics, where Mr. James seemed disinterested — he shot 3-of-14 while the Cavs were outscored 10065 over the final three quarters — and said afterward, “I spoil a lot of people with my play. When you have three bad games in seven years, it’s easy to point them out.” Then came the interview with Larry King during the NBA Finals. The free-agent “summit” with fellow stars Dwyane Wade and Chris Bosh. The parade of suitors into Cleveland. Finally, the ESPN show, “The Decision.” “I’m a big fan of LeBron James but really, a one-hour special for a guy that hasn’t really done anything?” wrote Boston Globe columnist Jackie MacMullan. “Truly, it’s just unbelievable. It’s unfathomable, yet we’re all part of feeding the beast. We created this monster, and he’s just playing along.”
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A backlash was inevitable toward Mr. James because of his constant presence in the spotlight, according to Jim Andrews, editorial director of IEG LLC, a Chicago sports marketing consultancy whose clients include soccer governing body FIFA, the NFL, Major League Soccer and multiple teams. “There’s a natural ebb and flow of consumer response,” Mr. Andrews said. “Once ... the intense scrutiny is over, he’ll get back to his past standing. I don’t think there’s a long-term impact on his image, his brand, his marketability.” Rather, the opposite may be true: Both Mr. Andrews and Mark Szczepanik, director of brand voice at Cleveland advertising and public relations agency Liggett Stashower, said Mr. James has taken perfect advantage of the constant appetite for news in this closely watched chase. The ESPN arrangement could be another example of Mr. James as a trend-setter: It’s the first of its kind dedicated to a single athlete, and Mr. Andrews said he’ll watch closely whether other stars follow suit. Mr. Szczepanik — he’s @THE_DANNY_FAIRY on Twitter, a play on former Cavs general manager Danny Ferry — goes so far as to say the ESPN show illustrates Mr. James’ brand and image never have been stronger. “He has gotten a prima donna tag, but he’s still a 25-year-old holding the NBA and ESPN hostage,” Mr. Szczepanik said. “This is doing wonders for the LeBron brand. If he can swing it, why not do it?” Some, though, don’t buy the argument that Mr. James is innocent. They say he’s just as culpable as the
Big names not shy about disdain As LeBron James’ free agency decision dragged on (and on and on), there was a significant shift in attitudes toward him among national media and other prominent figures. A sampling from across the country leading up to last Thursday night’s one-hour special, some of the advertising revenues from which were donated to the Boys and Girls Clubs of America: ■ Stan Van Gundy, Orlando Magic coach: “It takes 15 seconds to say, ‘I’ve decided to stay in Cleveland,’ but we’ve got another 59 minutes and 45 seconds to, what? Promote LeBron James? As if we don’t do that enough.” ■ Adrian Wojnarowski, Yahoo! Sports columnist: “The Championship of Me comes crashing into a primetime cable infomercial that LeBron James and his cronies have been working to make happen for months, a slow, cynical churning of manufactured drama that sports has never witnessed. As historic monuments go, this is the Rushmore of basketball hubris and
media in the frenzy that’s been raging for weeks. “Sports and mainstream media are going wild, and people are tired of it,” said Kristen Kaleal, a Cleveland image consultant who admits to a pro-Cleveland bias and counts a few local pro athletes as clients. “Someone told me, ‘LeBron doesn’t have anything to do with it because he hasn’t said anything.’ That’s exactly where the problem lies. “This isn’t just a kid from Akron. This is someone who is all too aware of the commodity he has become and he’s developed an ego to match.”
The next step Oklahoma City star Kevin Durant — who won the NBA scoring title in his second season and finished second to Mr. James in the MVP voting — last Wednesday quietly signed a fiveyear, $86 million extension to stay with the Thunder, a small-market team. “I just told everybody I wasn’t talking about it, really,” Mr. Durant told The New York Times. “I just kept it to myself. That’s just the type of person I am. I don’t like the attention around me.” Displaying a similar sense of humility should be No. 1 on LeBron’s agenda, according to a near-unanimous vote among analysts contacted for this story. “Our advice is always, ‘Be humble. Reach out to people you want to attract,’” said Jeff Allard, founder and CEO of Cedar Rapids, Iowa, sports and entertainment consulting firm Jeffrey Raymond Agency, which also works with pro athletes — though
narcissism. The vacuous star for our vacuous times. All about ’Bron and all about nothing.” ■ Buzz Bissinger, co-author of James’ 2009 biography, “Shooting Stars”: “I’m disappointed because I think he’s handled this terribly. I hate the idea that he is the king and that all these grown men have had to go grovel in front of him. It’s a side of him I didn’t see before. … What I saw is that he’s not a prima donna.” ■ Jason Whitlock, Kansas City Star and FoxSports.com columnist: “If he orchestrated this whole free-agent circus for the gratification of his ego and a longing to relive the college-recruiting process he rejected as a teenager, then he’s going to receive an across-thecountry spanking that will make him wish he was Tiger Woods stretched out on a driveway with Elin hovering over him with a nine iron.” ■ SI.com’s Jimmy Traina, via Twitter: “Stop Tweeting me about the charity angle. LeBron’s worth $9 billion. He doesn’t need to create a circus in order to donate his money.”
no NBA players. “He’s going to have to reach out to people to try to make them understand.” Mr. James could do so, Mr. Allard said, by acknowledging that he perhaps could have conducted the free agency process better and by reiterating his ties to his hometown and the success he had in Cleveland before leaving. In addition, Mr. Allard said, Mr. James could use a marketing or communications veteran on his “team,” which the player referred to on multiple occasions as the season ended. His marketing company, LRMR, is run by his hometown friends, including chief executive Maverick Carter; and while Mr. James is represented by veteran agent Leon Rose, someone willing to tell him ‘no’ may be valuable. “He needs to understand that people are trying to help him,” Mr. Allard said. “He has young people around him, which is good for enthusiasm. But he has to be careful to have someone around him that will stand up and say, ‘This might not be the right decision; maybe we should consider something else.’” Hennes Paynter’s Ms. Paynter and image consultant Ms. Kaleal said they’d also advise a heaping pile of humility, even if Ms. Paynter sentenced Mr. James to a cruel fate. “If he does all this and then leaves, he’s worse than Art Modell,” she said last week. It should be fun when the Heat play at Quicken Loans Arena this season. ■
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Records: Payments an incentive continued from PAGE 3
over the next few years. In 2015, the feds will start cutting payments for doctors who don’t have approved systems in place. However, Dr. Rood is unsure whether those incentives will work because they don’t help doctors jump what he says is the biggest hurdle to installation: upfront costs. The only reason his practice, located just east of Chagrin Falls, was able to afford the hardware to run its record system was because Dr. Rood shopped online for cheap computer parts and assembled them himself, spending just $5,000 to build many of the 20 workstations on which the system runs. He estimates the same hardware would have cost the practice $44,000 to buy new. Dr. Rood said his practice also pays less to access the Cleveland Clinic’s web-based My Practice Community record system than those practices that signed up to use it more recently because South Russell Family Practice was one of the first physician groups to start using it. He said the system has helped the practice improve the quality of care it provides patients and its efficiency, but he understands why many small doctors’ offices don’t use electronic records. “It’s an expensive proposition,” he said.
Ready to ramp up In Cuyahoga, Lake and Lorain counties, 38% of private practice doctors use some aspect of an electronic records system, according to an unscientific online survey conducted last month by the Ohio Health Information Partnership. That figure falls to 33% for an area that includes Summit, Stark and several surrounding counties, and 37% for all of Ohio. By comparison, most of Greater Cleveland’s major hospitals have at least some portion of an electronic record system in place. The Ohio Health Information Partnership is working to raise those figures using $43 million in stimulus money it received in February. The group was one of many organizations across the nation that received money to help doctors and hospitals install electronic records systems. The organization is in the process of vetting system vendors in an effort to help health care providers pick good products, and it is requiring those vendors to provide substantial discounts, said chairman Amy Andres.
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The partnership also has established Regional Extension Centers in various parts of the state that will help primary care providers install and learn to use the systems for free, while helping specialists for a fee. Case Western Reserve University’s School of Medicine is serving Greater Cleveland, while the Akron Regional Hospital Association is targeting Greater Akron. Ms. Andres noted that the costs of installing electronic record systems can be prohibitive for small doctors’ offices. She estimated the average physician might spend $30,000 to $60,000 to install a system. The lower, negotiated rate that the partnership plans to make available should help bring that amount down, she said. Ms. Anders said she believes the rate at which doctors adopt record systems is about to rise sharply because they must have systems in place by the end of 2011 to get the largest possible bonus payments from Medicare and Medicaid, and because of groups such as the Ohio Health Information Partnership will be providing assistance soon. The group believes it has enough money to help 6,000 physicians and expects to find them fast, Ms. Andres said. “We’re going to have our hands full helping the people who want help,” she said.
The paper trail Such incentives will help catalyze what Dr. Anthony Bacevice described as a “quantum change” in how medicine is delivered. The past president of the Academy of Medicine of Cleveland & Northern Ohio said he expects the vast majority of private practice physicians to be using electronic records before government penalties kick in. For now, however, the smaller the office, the more likely it is still using paper, said Dr. Bacevice, who is employed by EMH Regional Healthcare System. “The one- or two-doctor practices have not completely gone that route yet because of the cost,” Dr. Bacevice said. Dr. Kevin Chartrand is among them. The solo practitioner, whose office is near University Hospitals’ Geauga Medical Center, says he’d love to have an electronic health record system but can’t justify what he calls a “huge” cost. He has no faith that the government will live up to its intention of providing Medicare and Medicaid bonus payments for the systems given its interest in cutting the cost of those programs. And the projected cuts in
COMINGUP Emerald Awards nominations open
Nominations also open for CFO of the Year
On Sept. 6, Crain’s will publish its Emerald Awards section honoring companies that have undertaken initiatives that help the environment while also boosting their business. Is your company or organization a champion of sustainability? Do you know an individual whose leadership is making a difference in our region? Tell Crain’s how their commitment to the triple bottom line is building a better and brighter Northeast Ohio. Download entry forms and additional program details at www. CrainsCleveland.com/emerald.
On Oct. 18, Crain’s will recognize the region’s top financial officers for their strategic leadership and outstanding fiscal management during the deepest recession in a generation. How has your CFO’s direction positively impacted your operation’s viability? New for 2010 is the Lifetime Achievement Award, which will recognize a current or former senior financial executive who has represented his or her organization with exemplary performance and leadership. Visit www.CrainsCleveland.com /cfonominate.
payments wouldn’t be enough to push him to implement a system. “The disincentive isn’t enough,” Dr. Chartrand said.
Talk about payback Allan Fentner, practice administrator for Westlake-based Orthopedic Associates, said he feels lucky the practice’s electronic record system implementation went so well back in 2005, after hearing “horror stories” of implementations gone wrong. Getting buy-in from all of the practice’s 12 physicians, some of whom work in Lakewood and Avon, was essential, he said. The software, hardware and training for the system cost the group about $225,000, which comes to about $19,000 per physician. It paid for itself because it allowed the group to eliminate seven full-time positions through attrition. “I had the payback projected at three and a half, four years, and we did it in two,” Mr. Fentner said. Dr. Jay Noreika also is a big supporter of electronic records, as someone who toyed with rudimentary systems years before implementing in 2004 a full system at his two-doctor practice, Excellence in Eye Care of Medina. He recognizes that electronic record systems are expensive, but private practice physicians are going to need them to remain competitive, he said. Small practices don’t need a computer specialist to use the systems, but at least one doctor needs to learn the system well and ensure others in the practice use it to its fullest, Dr. Noreika said. “I don’t see why any physician who masters the art of today’s medicine can’t come to speed on the electronic medical record,” he said. ■
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Bad job II
ight after Labor Day last year, we ran an editorial, headlined “Bad job,” that urged the state Legislature to wait no longer to take the steps necessary to replenish Ohio’s drained unemployment compensation fund. We’ve now seen the Fourth of July come and go, and the headline of this latest editorial should tip you off as to whether our elected officials addressed the problem in the intervening 10 months. There is no excuse for their inaction. It is negligence in the first degree, and the longer they sit idle, the greater the fund’s deficit will grow. It isn’t as though this problem wasn’t predictable. As we noted last September, Ohio’s fund for providing unemployment benefits to laid-off workers took in less in employer unemployment taxes than it paid out annually in benefits for most years of the last decade. For the last 15 years, the unemployment tax has been applied on the first $9,000 an employee earns. Legislators could have enacted a modest increase in employer payments into the fund while times were good to stop the mismatch between the dollars coming into and flowing out of the unemployment kitty. They stuck their heads in the sand instead. Once the economy tanked in the fall of 2008 and job losses piled up, it didn’t take long to deplete the fund. The state has been borrowing money from the federal government since January 2009 to keep its unemployment checks coming. It’s a debt that could total $3 billion come January, and it will start accruing interest next year. Ohio’s unemployment rate has run above 10% since April 2009 and won’t recede dramatically anytime soon. The situation cries out for lawmakers to raise the amount of employer taxes paid into the fund and to reduce the unemployment benefits it pays out so that the fund can become solvent again. By lacking the courage to make needed adjustments before the recession began, elected officials have left themselves with no choice but to take action now. And if we’re writing about this topic again next year, members of the Legislature will deserve to be put on unemployment for the bad job they have done.
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entertaining while getting passersby (and hameless plug aside, there isn’t a drivers) to notice the message on the sign. single e-mail news product that Check out the Dispatch’s web site, and be we send out that I don’t learn entertained. something valuable, or at least be That same day, we linked to a story by entertained. Recently, it was a little of The Dayton Daily News about the latest both in our Morning Roundup of the top attempt by the Republican Governors stories from across Ohio. Association to put heat on Ohio Gov. First, there was an interesting tidbit Ted Strickland, who’s battling from The Columbus Dispatch, against former congressman complete with video on the BRIAN John Kasich. paper’s web site, of a Columbus- TUCKER The newspaper reported that area man who had started a signthe latest television commercial spinning business, which I can from the RGA blamed Gov. only compare to a sandwich Strickland for losing NCR Corp., board on steroids. a longtime Dayton corporate For those of you too young to mainstay. The company chose recall, a sandwich board was the to move its headquarters out of two-sided sign people were paid Ohio, despite Gov. Strickland’s to wear and walk a city street, pledge to create thousands of calling attention to a business or new jobs in Ohio, the commercial said. an issue. The sign-spinners take that to the Now, Gov. Strickland deserves some extreme and combine the elements of a criticism for what did and didn’t happen hand-held sign with performance art. during his first term, but losing NCR probStarted in San Diego, sign-spinning, ably isn’t among them. Even Jon Husted, according to the Columbus entrepreneur, who might be the state’s most well-recoghas its own national competition, chalnized Republican officeholder, didn’t agree lenging these spinners to show off their with that, saying after the move was best moves. The key is to be athletic and
announced that “I don’t think anything would have changed the outcome.” That said, however, Gov. Strickland, like all incumbents wrestling with the lingering effects of the Great Recession and facing budget crises, is in for a tough road this fall as Ohioans cope with lack of jobs and a stagnant economy. The state unemployment rate was a shade lower in May (10.7%) than March, when the 11% figure was the highest it’s been since 1983. Remember the mantra scrawled on the war room of Bill Clinton’s first presidential campaign: “It’s the economy, stupid.” **** AND AT A TIME when so many of our residents are in need, it was refreshing to hear the message last week from our local United Way that none of its funds to local human services organizations will be cut. The most recent United Way campaign exceeded its goal in the last days, and remains committed to supporting the many local organizations that are helping our friends and families. If your business ran a campaign, take a moment again to thank your employees who donated. ■
Carp crapshoot Grassroots effort can drive energy changes
peaking of waiting until it’s too late to address a problem, federal authorities continue to put the Great Lakes ecosystem at risk by failing to head off the threat posed by the voracious Asian carp. The DNA of Asian carp already has been found beyond an electrical barrier 25 miles south of Lake Michigan that is intended to keep a fish that can grow to 100 pounds out of the Great Lakes. And late last month, a nearly 20-pounder was caught just six miles from Lake Michigan. The devastation the invasive carp could inflict on resident aquatic life is clear, yet federal officials refuse to close two locks in the Chicago waterway that connects Lake Michigan to the Mississippi River system, where the carp lurk. We beg them not to engage in a carp crapshoot and to shut those locks.
By STEFANIE PENN SPEAR
ou don’t have to look far to understand the importance of transitioning U.S. energy generation to cleaner, renewable sources of power. More than 50,000 gallons of oil a day are spewing into the Gulf of Mexico from a BP-created oil rig disaster and are reaching marshlands and shorelines along the Gulf Coast with 11 oil rig workers dead. In West Virginia, 29 coal miners died after a huge explosion at a Massey Energy mine in April. The human, environmental and economic impact of the current forms of energy is devastating communities, livelihoods, the environment and economy. There is no doubt that a comprehensive energy bill is critical for the future of our
Ms. Spear is president of Expedite Renewable Energy and founder and executive director of EcoWatch. nation. The U.S. House of Representatives passed the American Clean Energy and Security Act (H.R. 2454), a comprehensive energy and climate bill, in June 2009. The American Clean Energy and Security Act includes the following: ■ Requires electric utilities to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020. ■ Subsidizes new clean energy technologies and energy efficiency, including renewable energy ($90 billion in new subsidies by 2025), carbon capture and sequestration ($60 billion), electric and other advanced technology vehicles ($20
billion), and basic scientific research and development ($20 billion). ■ Protects consumers from energy price increases. According to estimates from the U.S. Environmental Protection Agency, the reductions in carbon pollution required by the legislation will cost American families less than a postage stamp per day. ■ Sets a target for reductions in emissions of carbon dioxide, methane and other greenhouse gases. The bill requires a 17% emissions reduction from 2005 levels by 2020, decreasing U.S. emissions by about 80% by 2050. Complementary measures in the legislation, such as efforts to prevent tropical deforestation, will achieve significant additional reductions in carbon emissions. See VIEW Page 11
JULY 12-18, 2010
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THE BIG ISSUE How do you feel about LeBron James jumping from the Cavaliers to the Miami Heat?
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I wish he’d stayed, obviously. The NBA is allowing this by allowing the stacking of teams. I don’t think he did it as gracefully as he could have. As our mayor said, “We will survive.” Survival — is that the goal?
Honestly, my opinion is that it’s pretty stupid. He goes to Miami and he has that. It shows Cleveland what it is. They pay someone a lot of money and expect him to do it alone. It’s not his responsibility.
As far as a business decision, wanting to win a championship ... is attractive. As far as the city of Cleveland goes, it’s a poor thing on him. Hopefully the Cavs will win a championship before Miami.
He’s a free agent. He can do what he wants to do. That’s the life of pro sports these days. As for Cleveland, it’s time to move on.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
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■ Includes a renewable electricity standard requiring each electricity provider which supplies more than 4 million megawatts to produce 20% of its electricity from renewable sources (such as wind, solar and geothermal) by 2020. There is a provision whereby 5% of this standard can be met through energy-efficiency savings, as well as an additional 3% with certification of the governor of the state in which the provider operates. ■ Provides for modernization of the electrical grid. ■ Provides for expanded production of electric vehicles. ■ Mandates significant increases in energy efficiency in buildings, home appliances and electricity generation. Unfortunately the energy bill has been stalled in the Senate for nearly a year, with renewed interest over the past few weeks. The newly revised American Power Act (the official name of the Senate energy and climate bill), in the wake of the oil disaster, recently added provisions giving states the right to veto
offshore oil drilling in a neighboring state and requires the U.S. Interior Department to conduct a study to determine which states could be economically and environmentally affected by an oil spill. The Senate version also places more limits on carbon trading than the climate bill passed by the House and virtually eliminates the chance of a secondary carbon market. With millions of gallons of escaping oil in the Gulf destroying wildlife, blackening beaches and threatening livelihoods, the time to muster the necessary public and political will for real change might never be better. With a shrinking window to pass climate legislation this year, it is critical that the Senate act now and pass a strong climate bill that will encourage the transition to a cleaner, renewable source of energy generation. Contact your senators and make your voice heard. In addition to contacting your senators, now is the time for major deployment of energy efficiency at every home and business.
Energy efficiency and renewable energy are the twin pillars of sustainable energy policy. Both must be developed aggressively if we are to reduce carbon dioxide and rely on safer forms of power. Efficiency is essential to slowing the energy demand growth so that rising clean energy supplies can make deep cuts in fossil fuel use. There are many simple and affordable ways to reduce your energy usage. But to get started you first need to know exactly how much energy you’re using. For example, take a moment to pull out your most recent electric bill and see how many kilowatt hours you use per month. Once you know how much you are using, you can begin to implement ways to reduce your usage and monitor it every month when you get your new bill. Imagine if everyone on your street reduced electricity usage by 300 kilowatt hours per month. We could really have a major impact on the amount of electricity needed and the viability of renewable energy generation. ■
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Realign port board for better results ■ Professor Edward Herdendorf’s June 14 Personal View in Crain’s offering an innovative method for dredging the Cuyahoga River should be acclaimed, but the fact the idea was generated here and not by the Cleveland-Cuyahoga County Port Authority speaks once again of that body’s ineffectiveness. Considerable space has been devoted to the county corruption scandal and not enough to the corrosive politics and sheer incompetence that for decades has prevented any serious lakefront development. Millions of dollars have been wasted on plans that are promoted and publicized, but never come to fruition. This creates a public so cast in cynicism that it feels disenfranchised and suspicious of the public process. This atmosphere drives dedicated and intelligent people away from involvement with the issues that
would propel Cleveland forward. Civic and business groups that promote the city like to speak of its assets, the institutions of higher learning, its burgeoning medical community and the remarkable capabilities of the laboratories at NASA Glenn. How many of those who populate those centers of excellence are on the port authority board? None. The board is made of up nine people, all with an agenda or a loyalty to political figures. These board members did not have the capability to understand port relocation plans, let alone intelligently vote on them. The truth is that a capable and thoughtful engineer could have looked at the port authority’s plans and told authorities that not only is the project too expensive for this community to shoulder, but it simply will not generate 50,000 jobs and
$2 billion in economic development. People knowledgeable about the lakefront say that unless the existing political atmosphere is exorcised from the planning process, chances of a stunning and dynamic waterfront are next to zero. The clutter that is the lakefront is symbolic of the kind of thinking and inaction that this community has embraced for decades. My point, though, is that we as a community are better than this. We do have a large reservoir of untapped intellectual and scientific capability here. The right nine people on the port authority board could make a wonder out of the waterfront and revitalize the city. There is a glimmer of hope. With a new county government to be elected later this year there is a chance for new beginnings, and one of the first See LETTERS Page 12
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CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
Luxury brands fuel dealership owner’s reinvestment strategy By DAN SHINGLER firstname.lastname@example.org
Those Boston entrepreneurs — always coming to places such as Cleveland to invest millions so they can sell luxury items to the locals. OK, maybe that’s not all that common. But Bernie Moreno thinks Northeast Ohio is a good enough place to sell Mercedes-Benz, Lexus, Porsche and other high-end auto brands to warrant spending tens of millions of dollars acquiring and revamping local dealerships. Since coming here from a Boston Mercedes dealership in 2005, Mr. Moreno has acquired dealerships representing all those brands listed, as well as Infiniti, Saab and Lotus. He’s setting up new ones and soon will be selling Fiskers — high-end sports hybrids — and Mercedesbuilt Sprinter light-duty commercial vehicles. Why Northeast Ohio? Because when he was offered a chance to buy a hard-to-come-by Mercedes dealership by the manufacturer, the available dealership was in North
Olmsted and Mr. Moreno jumped on it. He and his family didn’t know much about the area before that, Mr. Moreno said. They’ve been happily surprised. “We had an image” of Northeast Ohio, he said. The reality, he added, is “dramatically better.” Mr. Moreno doesn’t disclose what he’s paid for the dealerships, but it’s been in the millions. He also has spent millions more renovating them, including $10 million just on the Mercedes dealership. His confidence is apparently contagious. “I moved 12 guys — 12 families — with me here from Boston,” he said. As for Mr. Moreno, he said his confidence is far from waning now that he’s had a chance to explore the local market fully. That’s why he’s still buying. His latest purchase came in midJune, when Mr. Moreno bought the former Boyland Acura and Infiniti dealerships in Brook Park for an undisclosed sum.
“This new acquisition is just doubling down on Cleveland,” he said. “The reason we’re doing these acquisitions is to stay in Cleveland longer.” Mr. Moreno said his dealerships remained profitable through the soft auto market in 2009 and have come back strong. He predicts sales will be up 30% this year over 2009 and will top $140 million. While he doesn’t disclose actual revenues, the math would indicate he sold roughly $110 million of cars in 2009. He might be doing exactly the right thing in terms of spending money when some others might not be able or willing to do so. High-end automobile buyers expect high levels of service, said Lou Vitantonio, president of the Greater Cleveland Automobile Dealers Association. They also expect a dealership that exudes the same quality and luxury as the cars it sells, Mr. Moreno said. He has not seemed to cut corners. For instance, when Mr. Moreno bought the Acura and Infiniti dealerships recently, he not only kept the 36
Bernie Moreno is spending tens of millions of dollars acquiring and revamping local automotive dealerships. employees he inherited with the deal, but added 11. He now has more than 120 employees — with 46 in Brook Park and roughly 80 at his North Olmsted dealerships. Mr. Moreno said he’s not done. He has bought two former carpet company facilities in Brook Park, near his new Lexus/Infiniti dealer-
ship on Brookpark Road. Each has about 21,000 square feet of interior space and enough acreage to support outside lots. One likely will house the Fisker dealership, which Mr. Moreno hopes to launch this year. The other will play host to another brand that Mr. Moreno said he’s not ready to disclose. ■
LETTERS continued from PAGE 11
things that the county executive and council should consider is how to realign the board. As long as Cleveland City Hall controls the port authority board there can be little hope for progress. In fact, with the loss of population and political clout, the city no longer is the dominating force it once was in the county. Under these circumstances, a change in the manner in which the port authority board is selected is not only reasonable, but necessary. We have allowed government here to stagnate to the point that we’ve learned to react to every negative event with a refrain that indicts us all when we say: “What do you expect? It’s Cleveland.” We need to abandon our weakness, the politics, and play to our strength, smart people. And want to bet someone on the port authority board will point to Dr. Herdendorf’s idea and say that the dredging companies will complain that his plan is bad for their business? Dominic LoGalbo Sagamore Hills
Not a good deal ■ I agree with your June 28 editorial, “Big deal,” that the medical mart project now has momentum. However, it is a shame the Cuyahoga County commissioners wasted additional millions of dollars in May when finally gaining control over the last parcel of land needed for the complex. The commissioners vastly overpaid for the properties involved, even by their own estimates from just last November. The commissioners are spending an outrageous $18.3 million for properties that were available for around $6 million, according to a person who inquired about buying the properties prior to talk of their use as a medical mart site. The county auditor assessments for the properties were also low, under $8 million, I believe. Everyone knows when you have
two sites in the running for a project (Tower City being the other) you must always get options on both sites in advance, to get a fair price while the sites are still in competition. This is so fundamental a principle as to be hardly worth stating. But our commissioners did not option the properties in advance. Instead they announced where the building was going to go, then started negotiations with the owners of the land. A colossal and costly mistake. The commissioners will pay $15.2 million for the parking garage and office building adjacent to the restaurant, roughly double the auditor’s assessed value. The commissioners will pay $3.1 million for a Sportsman’s Restaurant that the county auditor says is worth only $375,000. By the way, I’m in favor of the medical mart. What infuriates me is the serial incompetence of the commissioners. You had published my op-ed piece a few years ago explaining why the AmeriTrust Tower should not be purchased by the commissioners. They proceeded to lose $40 million on that fiasco, not to mention the ongoing property taxes the vacant tower had been generating. Also, I worry that MMPI Inc., the private company partnering with the county, refuses to put any funds into the project. Is it because MMPI knows it’s not a good project or because they know they are dealing with such chumps in the commissioners’ office that they can operate, control and benefit from a $500 million project for 20 years without putting up a dime? Jim Schaefer Shaker Heights
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: email@example.com
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FF&H ENGINEERS INC.: David A. Demagall and Leonard D. Hendrix to principals and stockholders.
FINANCIAL SERVICE DEAN BARRY WEALTH MANAGEMENT: Jeffrey A. Lucas to vice president. SKODA MINOTTI: Shelley Morgan to human resource generalist.
HEALTH CARE MERCY MEDICAL CENTER: Vicki Merrick to administrative director of surgical services; Melissa Lingle to manager of surgical services. PARMA COMMUNITY GENERAL HOSPITAL: Terry Deis to president, CEO.
REAL ESTATE REALTY CORPORATION OF AMERICA: Marco Marinucci to apprentice auctioneer. TRANSACTION REALTY: Pamela J. Johnson, Josh Kaplovitz and Deonte J. Smith to sales associates.
CHELKO CONSULTING GROUP: Jim Hrivnak to consulting associate. ENTRYPOINT CONSULTING LLC: Ken Wainscott to engagement director, manufacturing; John DuBois to client executive; Joe Kerekes to inside account executive, SAP Staffing Services. FREEDONIA CUSTOM RESEARCH INC.: Jeff Resnick to business development manager; Eric Weingart to senior analyst.
SKYCASTERS: Jaclyn Russo to marketing coordinator.
UNIVERSITY HOSPITALS AHUJA MEDICAL CENTER: Dawn GubancAnderson to director of nursing and clinical operations.
MANUFACTURING WEATHERCHEM CORP.: Kevin Stevens to vice president of sales.
secretary; Jennie Zamberlan to treasurer; Stacy Sadar to membership chair; Larry Cuy to education chair; Troy Thomas to SIM national liaison. WOMEN’S CENTER OF GREATER CLEVELAND: Robert J. Hanna (Tucker Ellis & West) to president.
PREMIER PHYSICIANS CENTERS: David Appel to CEO.
BENESCH: Steven M. Moss to partner.
WEST SIDE CATHOLIC CENTER: Marc Nathanson to executive director.
LUTHERAN METROPOLITAN MINISTRY: Heather McGinness to director of development.
PHYSICIANS FIRST/GALLUCCI CHIROPRACTIC CLINIC: Dr. Steven M. Mavissakalian to medical staff.
VISITING NURSE ASSOCIATION OF OHIO: Dr. Daniel R. Kendis to medical director.
CLEVELAND FOUNDATION: Shilpa Kedar to program director for economic development.
MIDTOWN CLEVELAND INC.: Kenneth J. Coleman (Fairport Asset Management LLC) to chairman; John R. Melchiorre and Jerome Rothenberg to vice chairmen; Richard Pace to treasurer; Robin Griggs to secretary. NORTHEAST OHIO SOCIETY FOR INFORMATION MANAGEMENT: Tom Wojnarowski (Regional Income Tax Agency) to president; Chuck Mackey to first vice president; Laura Pettit Rusick to second vice president; Steve Hammond to
AWARDS AMERICAN COLLEGE OF HEALTHCARE EXECUTIVES: Jan Murphy (Fairview Hospital and Lakewood Hospital) received the Senior-Level Healthcare Executive Regent’s Award. ASSOCIATION FOR CORPORATE GROWTH CLEVELAND: M. Joan McCarthy (MJM Services) received the President’s Award for Excellence and Achievement by an ACG Chapter Executive. CLEVELAND METROPOLITAN BAR ASSOCIATION: Carter E. Strang (Tucker Ellis & West LLP) received the Justice for All Volunteer of the Year Award for Public Service. ROSE-MARY CENTER: Anthony Pilla (Bishop Emeritus of Cleveland) received the 2010 Angel Award.
RETIREMENT BEAUMONT SCHOOL: Margaret Connell, principal, after 28 years of service. PARMA COMMUNITY GENERAL HOSPITAL: Patricia A. Ruflin, president, CEO, after 17 years of service.
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As a famous man once said, ‘Only in America’ Boxing promoter Don King in Cleveland over bankruptcy fight By ARIELLE KASS firstname.lastname@example.org
Famed boxing promoter Don King was in Cleveland July 1. Unlike Jay-Z and the owners of multiple basketball teams, he wasn’t here to convince basketball star LeBron James to leave the Cavs. Mr. King was in Judge Pat E. Morgenstern-Clarren’s courtroom in U.S. Bankruptcy Court as part of a matter involving boxer Raymon Austin, who filed for bankruptcy last February. Mr. Austin, a Beachwood resident, filed for Chapter 7 bankruptcy over $6,402 in debt, according to his original filing. He listed furniture, clothing and his 2007 Chevrolet Impala among his $7,350 in assets. His attorney, Gilbert E. Blomgren,
said he could not discuss why his client filed for bankruptcy, claiming attorney-client privilege. Mr. Austin said in court filings that he was the No. 1 ranked heavyweight in the world according to the World Boxing Council at the time he filed his petition and was “closing in on the opportunity to compete for the WBC’s world heavyweight championship” when negotiations for the final elimination bout were halted and the WBC stopped returning calls. The promoter of the WBC’s second-ranked boxer told Mr. Austin that Mr. King was “very angry” with Mr. Austin, a court filing stated, and another boxer who was under contract to Mr. King would be used. Mr. Austin was then stripped of his ranking, precluding him from participating in WBC bouts, the filing said. Mr. Austin said in the filing that he had no intention of retiring from boxing, but wanted to be free of his obligations to Mr. King and others. He later tried to have the bankruptcy case dismissed, saying in another filing, “I never intended to sue anyone
nor have I made any allegations against anyone to cause them to be sued, and I need to keep my car.” Christopher Meyer, an attorney with Squire, Sanders & Dempsey who represented Mr. Austin’s manager in the bankruptcy case, said the bankruptcy “did not appear to be very well thought through.” He speculated that Mr. Austin thought he would be able to schedule his bouts more effectively on his own, before realizing that was not the case. The bankruptcy case was dismissed, he said, once Mr. King agreed to loan Mr. Austin the money to pay off his creditors and the trustee’s fee. Mr. Austin will repay the loan, without interest, from the next purse he wins. He is now available to be ranked again. Mr. Meyer said he had no previous experience in such cases, but that Mr. Austin’s manager had called and asked him to represent him, saying that he had read about him and he “sounded like a good lawyer.” “It was a very peculiar case from the beginning,” Mr. Meyer said. ■
CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
19 TAX TIPS: ‘CARRYBACK’ OPENS DOOR FOR PAST SCRUTINY.
THE SUMMER STRUGGLE Extra child-care demands force parents to juggle work, other responsibilities, but engaging kids can provide mutual benefits By JENNIFER KEIRN email@example.com
hen time came for Diane Helbig to broadcast her hourlong Internet radio program “Accelerate Your Business Growth” last month, she took her computer to a quiet spot in her house and instructed her home-for-the-summer kids not to disturb her. Twenty minutes into her live interview, Ms. Helbig’s children tried to log on to the laptop downstairs, causing her to lose her Internet connection and bringing her radio show to a grinding halt. “Now I realize I have to say, ‘stay off the laptop,’ (in addition to) ‘stay away from me,’” said Ms. Helbig, a work-at-home small business coach in Lakewood and owner of Seize This Day Coaching. “One of the biggest lessons (of working with kids around) is to over-communicate.” With kids region-wide home from school this summer, plenty of small business owners and work-at-home parents are juggling extra child care demands with work responsibilities. Successfully blending the two takes planning and a little creativity, said Ms. See SUMMER Page 18
Diane Helbig works from home in running her business coaching outfit, Seize This Day Coaching. There, she contends with home-for-summer children Aaron, 13, and Macey, 11. “Try to create some structure for them ... so they’re not sitting around staring at each other all day,” Ms. Helbig says.
Local company heads tell SBA ombudsman of regulatory concerns By ARIELLE KASS firstname.lastname@example.org
n a series of roundtable discussions with the national ombudsman for the U.S. Small Business Administration, the owners of local companies spoke their minds recently about how health care reform will affect small businesses and why even the SBA must sometimes reconsider its definition of small. Esther Vassar, the ombudsman and assistant administrator for regulatory enforcement fairness at the SBA, said she continues to hear from small business owners who are worried about the impact increased regulation will have on their ability to operate.
“I’ve heard people say that recovery rests on the back of small businesses,” Ms. Vassar said. “We can’t put more burdens on those backs. We have to lighten the burden.” Because the SBA’s definition of a small business Vassar can include a company with as many as 499 employees, Brynn Allio, director of government relations for the Council of Smaller Enterprises, said some owners of significantly smaller businesses are worried that their concerns won’t be considered by the group. Ms. Allio said 85% of COSE’s members have fewer than 20 employees and many are worried about whether they will be able to
afford to comply with new regulations, while still staying in business. That’s particularly the case, Ms. Allio said, when it comes to health care reform. Ms. Vassar said for the most part, these smaller companies are not the ones causing problems that government agencies are trying to correct, be it the Department of Labor or the Environmental Protection Agency. “To impose the same regulations on them is a bit unfair,” she said. “The enforcement costs are enormous.” Ms. Vassar said her role at the SBA is to help protect small businesses from “unfair and excessive regulatory actions;” she heard
only complaints that related to regulation and not to the economy in general. But she would like to come back with the ombudsmen of other government agencies to determine how they could work together to make things easier for businesses. She also said regulations need to be streamlined so individuals who are running their own businesses do not need to spend a lot of time outside their often-long working hours updating themselves on changing rules and requirements. Often, Ms. Allio said, small business owners don’t know that they’ve done something wrong until they’re told they’re noncompliant with one rule or another. “The smallest are hit harder,” she said.
Ms. Vassar said the roundtables have been beneficial because they allow her to see how various regulations are actually affecting business owners. She has traveled to cities that were hard-hit by the recession, including Las Vegas and Toledo, in addition to Cleveland. Drawing on her own history as a waitress and the owner of both an imports business and a consulting business, Ms. Vassar said she understands the headaches that could be involved in running a business. Ms. Vassar said while she and other agencies are not doing everything small business owners want, they are listening to the issues they face. “They just want to be heard,” she said. ■
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Social media profiles can lead employers to too much information
ost employers have heard the proverb, “What you don’t know can’t hurt you.” But when it comes to human resources, and specifically hiring, employers may not buy into that adage. Why not? Employers want to know as much as possible about an applicant before extending a job offer. Conducting background checks on applicants for employment has become commonplace, and an employer’s failure to do so practically borders on negligence. Indeed, Ohio courts even recognize the tort of “negligent hiring,” in which an employer may be found liable for bringing an employee into its workplace despite actual or constructive knowledge of the individual’s “incompetence.” So what’s not tempting about using social media as a no-cost, easily accessible recruiting tool? With millions of active users on Facebook, LinkedIn and Twitter, chances are good that a hiring manager can find recent job applicants in one forum or another and need not employ an in-house human resources/recruiting professional or third-party search firm. Employers can learn about candidates’ weekend exploits, their political views, what they think about their current employers and more. Using social networking sites to research applicants, however, may expose the employer to protected class status (age, race, national origin, etc.) and personal information (disabilities, genetic information, religious affiliation, etc.) that ordinarily would not and legally should not come to the attention of the hiring manager or enter into any employer’s decision-making. It can happen all too easily. Perhaps an applicant’s social networking site reflects that she just
celebrated her 50th birthday or attended her 25th college reunion; she is pictured in a wheelchair; she has a photo posted from a church retreat; or it includes a link to the Alcoholics Anonymous web site or the personal web site of a family member dying of cancer. This is too much information. By law, employers are not to be considering applicants’ race, color, religion, gender, national origin, age, disability or veteran status. Add to that laundry list the fact that an applicant’s genetics and family medical history now is protected by the recently enacted Genetic Information Nondiscrimination Act. So while employers rightfully and dutifully want to learn as much as they can about job applicants, the social media venue may expose employers to more than they need (or want) to know. Employers can be subject to defending against applicant “refusal to hire” claims at any time. Consequently, the employer exposed to an applicant’s protected or personal information has the added burden of demonstrating that a hiring decision was not discriminatory — that the information did not influence its hiring decision. Consistency is key to defending against any such claim, as well; the employer should not selectively pick only certain applicants to research online or else risks being accused of discriminatory hiring practices. Additional legal transgressions may come into play, as well. The National Labor Relations Act prohibits employers from monitoring or conducting surveillance of protected, concerted activities or rendering adverse hiring decisions based on an applicant’s unionleaning tendencies. While a nonunion employer
ADVISER might find it helpful to glean from a job applicant’s social networking site that he favors unions, rejection of the applicant on that basis would violate the NLRA. Privacy issues also should give employers some pause. Depending on the privacy settings an individual uses, as well as the different communication tools offered through a single web site, an employer’s unauthorized access into stored electronic postings may violate the little known Stored Communications Act or common law privacy rights. Employers act at their peril when seeking out background information that is not truly “public.” Conducting background checks through social networking sites also raises the risk that an employer may render a hiring decision based on inaccurate or incomplete information. Pitfalls include researching the wrong person (with the same applicant name), relying on postings or profiles attributed to the applicant that, in actuality, were placed by others or that might be untrue. Making assumptions based on such social networking profiles may not be illegal, but may be unfair to the applicant, as well as the employer itself, which may have just eliminated a qualified candidate based on unverified information. In the end, employers really need to seek accurate and relevant information as to whether a job applicant has the qualifications and experience necessary for a particular job opening. While it might sound like a good idea, in-house background checks through social networking web sites might hurt more than help. ■ Mr. McKenzie is a shareholder at Kastner Westman & Wilkins LLC of Akron.
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material used by Distinctive Roofing is manufactured in Piqua, Ohio, and is 100% U.S.steel, 30% of which is recycled. The Avon-based company, owned by Bruce Hicks, serves all of northern Ohio. 1-800-243-5091 email@example.com
HAZEL TREE INTERIORS 143 W. Market St. Akron 44303 www.hazeltreeinteriors.com The husband-and-wife team of Jon Haidet and Karen Starr are behind the new Akron studio and gallery, Hazel Tree Interiors, located in the former Norka Futon building. Hazel Tree will offer interior design and redesign services, custom picture framing, home furnishings, local art and a place for Akron’s creative community to share ideas and resources. Hazel Tree will be the third generation of home furnishing businesses to occupy the 135-yearold building overlooking downtown
Akron. The new venture will bring together Mr. Haidet’s 20-year professional framing business, and Ms. Starr’s interior “redesign” business, which emphasizes the use and repurposing of existing pieces as a first approach to all design projects. Mr. Haidet and Ms. Starr will use the majority of the building’s 2,400 square feet of showroom space to feature American and locally made furnishings, redesigned or repurposed pieces, architectural salvage, examples of custom redesign work and local art. 330-761-3100 firstname.lastname@example.org To submit a new business, send the following information by e-mail to Amy Ann Stoessel at astoessel@ crain.com: business name; address; city and ZIP; web site; brief description of business; business phone number; business fax number; business e-mail address; and date that business opened. Call 216-771-5155 with questions.
18 JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS 17
As home building dries up, supplier dips toe into appliance waters Edelman diversifies with lineup of luxury items By STAN BULLARD email@example.com
heldon Edelman, president of Edelman Plumbing & Supply Inc. of Bedford Heights, likes to recall how the family-owned company evolved into a supplier of decorative hardware, luxury kitchen and bathroom plumbing fixtures to contractors from its 1953 start as a materials supplier to hardware stores. From once supplying 100 stores, it now supplies five as big-box retailers overwhelmed independent hardware stores, and plumbing contractors and about 80 designers became Edelman’s clientele. Confronted by the decimation of the home-building business that made up 40% of its business just three years ago, Edelman has embarked on a new direction: adding top-end household appliances to its offerings. The company has just started offering the big-ticket luxury items to its contractors and their clients to ease their remodeling or new-home shopping chore — and hopefully yield Edelman more sales. He hopes appliance sales someday make up half the company’s sales, although the appliance push, just launched in May, is too new to produce results. Moreover, Mr. Edelman did not go into the effort halfway. That is no surprise, given the colorful showroom for sinks, faucets and cabinets that resembles a high-end furniture store rather than a trade showroom at Edelman’s corporate office and warehouse at 26201 Richmond Road. Edelman displays the appliances in a new 4,000-square-foot interactive addition to its showroom, which includes kitchen displays of various manufacturers. There is even an operating kitchen designed for chef demonstrations. It’s to “show customers how things work and make some coffee,” Mr. Edelman said. “I didn’t want to line them up so they look like little soldiers,” Mr. Edelman said. “It’s a word-of-mouth business, so I wanted everyone to have a good experience when they come here. I wanted it to look nice.” He rebuffed requests from women to rent the central kitchen for wedding and maternity showers since it opened in March, noting, “I don’t want to be in that business.” Nor should the approach be low-key. This is the world of $900 to $1,900 cooktops, $600 to $1,300 dishwashers, $3,800 to $6,500 outdoor grills, and $4,000 to $15,000 refrigerators. This is a showroom suited to display wares from more than a dozen renowned manufacturers, from Bosch to Dacor, DCS, Fisher Paykel, Miele, Sub-Zero, Thermador, Wolf and Viking. Mr. Edelman said he considered several directions to replace business he lost when the last of the newhousing business dried up in 2008. However, a friend in Florida who ordered all the plumbing to remodel his condominium tipped Mr. Edelman toward appliances by saying he would have ordered the kitchen appliances from him if he had offered them. An appliance
salesman also approached Edelman about adding his line to the company’s offerings. The salesman was surprised by the answer he eventually got. “I think that to be in the business you have to be all the way into the business,” Mr. Edelman said. “I got all the high-end appliance manufacturers. When we were arranging this last year, some of the manufacturers’ reps nearly fell out of their chairs because everyone else was cutting back.”
Cooking up new business Putting the showroom together
was a team effort at the 28-person company, which also has a Westlake showroom. Workers from Edelman’s Bedford Heights warehouse, with time on their hands due to the slowdown, pitched in to paint the appliance show- Edelman room. “It was fun for us to put the plumbing into the central kitchen,” Mr. Edelman added. Edelman also took a different tack from many in adding appliances to its mix. Rather than hire people with appliance experience, the company cross-trained its plumbing
salespeople to sell appliances. Many are attending three-day training schools at appliance manufacturers to learn the equipment inside and out. Because it was entering appliance sales, Mr. Edelman kept his sales force intact through the downturn. “The hardest thing in this business is having good sales personnel,” he said. “I did not want to let them go and then staff up again when the business came back.” Mr. Edelman also takes the long view because his is a family business.
His father, Alan, launched the company in the basement of his home in 1953. Although retired at 86, he still putters around the showroom and office complex. Dan and David Edelman, Sheldon Edelman’s sons, also work in the business. Jack Dever, a Kirtland-based design-build contractor, said he has not seen a plumbing contractor embrace appliances — a brutal business on its own — the way Edelman has. “It makes sense to provide one-stop shopping,” Mr. Dever said, “but only time will tell how it works out.” ■
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18 CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
Summer: Give kids jobs to engage them continued from PAGE 15
Helbig and others, but can bring big payoffs for your business and your kids. “It’s a tremendous benefit to the child,” said Carla Moquin, founder and president of the Parenting in the Workplace Institute, a nonprofit devoted to encouraging acceptance of children in the workplace. “They get to see what their parent does all day … and the value of what the parent does (for others).”
Engagement = Entertainment Even the most well-behaved
school-age child isn’t likely to sit quietly in an office for eight hours on a gorgeous summer day. To minimize complaining and squirming, Ms. Moquin recommends engaging them in small, age-appropriate tasks that help them feel included. “They’ll learn the value of being part of a community working toward a goal,” Ms. Moquin said. “Older kids like that other people find their contributions valuable. It helps their self-esteem.” It’s a strategy that Lori Long’s found valuable. A professor at Baldwin-Wallace College and
author of “The Parent’s Guide to Family-Friendly Work,” Ms. Long periodically must bring her 5- and 7-year-old children to her B-W office in the summer, where she keeps them occupied with cleaning and alphabetizing her files. “They actually get a kick out of it,” Ms. Long said. “They know where my snack drawer is and ask me what we’re working on today.” Think it’s any easier for a workat-home parent? “They will hover when I’m on the phone,” said Ms. Helbig, the mother of an 11- and 13-year-old. When she’s out at client meetings, “they’ll call me
wanting to know when I’m coming home.” She often opts to work at COSE Spaces — the open office spaces designated for Council of Smaller Enterprises members — and at times takes along her youngest child, who enjoys making creative PowerPoint presentations. “Try to create some structure for them … so they’re not sitting around staring at each other all day,” advised Ms. Helbig.
Rules in writing “If you’re a small business with employees, not all people are welcoming of (kids),” said Ms. Long. “And if your kids aren’t well-behaved, it can be distracting to the business.”
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That’s why Ms. Moquin recommends that any business allowing children periodically — even if you’re the boss — establish clear rules and policies to govern children’s office behavior, where they’ll spend their time and who will be designated to keep an eye on Junior if Dad must take a meeting. The types of workplaces where such arrangements can work vary widely but require a parent who’s present all day and the absence of hazardous materials or equipment. Ms. Moquin counts PR agencies, retail stores, doctors’ offices and more in her national database of kid-friendly workplaces, and her web site lists 141 “baby-friendly organizations,” four of which are in Ohio: Ashtabula, Beavercreek, Columbus and Cincinnati. Despite such snafus as Ms. Helbig’s interrupted radio show, she said benefits to blending parenting with her work outweigh the negatives. “There’s definitely more upsides,” she said. “My level of stress is reduced, even with the challenges.” ■
IN BRIEF ■ BULKING UP: Slim & FIT, founded in 2008 by Jaime Brenkus with a facility in Concord, has expanded to 20 locations through franchising. Mr. Brenkus, a native Northeast Ohioan best known for the fitness video series “8 Minute Abs,” late last year began to franchise his concept, which incorporates fitness training and nutrition consultations into a single location. Out-of-state franchises now are located in Pennsylvania, Tennessee, Arizona, Indiana and Alabama. In addition to Concord, other Ohio Slim & FIT facilities are in Mayfield Heights, Westlake, Bath and Bainbridge. Mr. Brenkus said six of the 20 location are owned by physicians. ■ ROLL OUT THE BARREL: Cleveland-based Great Lakes Brewing Co. currently is investing in several major capital improvements to meet increased demand: a new centrifuge, which removes particulate matter from the beer before bottling and kegging; brewhouse additions for increased production speed; filler and packaging efficiency upgrades; and the installation of four additional storage and fermentation tanks that will increase capacity by a combined total of 1,200 barrels at any given time. The company, which recently climbed three spots to No. 23 in a ranking of the largest craft breweries in the United States, also added 10 fulltime positions in the past year. ■ MATCHMAKER, MATCHMAKER: Small businesses looking for a piece of a $204 million pie recently attended an event billed as a “contractor connection” by the Northeast Ohio Regional Sewer District. In all, 74 companies from Cuyahoga, Lake, Lorain and Summit counties that have been certified as Small Business Enterprises attended the event, which also included about 30 local and out-of-state contractors interested in bidding on the Euclid Creek Storage Tunnel project. Contracts for the project will be awarded in early December. Prime contractors on the project will be required to complete some of the work using businesses certified as Small Business Enterprises by the sewer district.
JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS 19
‘Carryback’ change may bring fresh scrutiny of past filings
ompanies with losses in recent years may be rejoicing over tax relief that allows them to carry losses back as far as five years, but there’s a catch that’s important to consider before taking the bait. Congress enacted some important legislation in 2009 that gave many companies the ability to carry current losses back as far as five years in their tax returns. Small business owners were the first beneficiaries, with the American Recovery and Reinvestment Act in February. Then larger companies won the same benefit in the Worker, Homeownership and Business Assistance Act later in the same year.
an amended return (Forms 1040X or 1120X) or an application for tentative refund (Forms 1139 or 1045)? That heightens the importance of considering all the possibilities when determining if and how to carry back a loss to a prior tax year. Consider the possible effects. Assume a company wants to carry a net operating loss from 2009
back to its 2004 tax year, claiming a refund of $100,000. The company could receive the $100,000 refund, but the IRS also might notice a problem with the 2004 return that would cost the company $120,000. If not for the carryback, the statute of limitations would have expired and the IRS would have no action. But because the taxpayer
opened the return to claim the carryback, depending on the circumstances and which form was used to claim the refund, the company could end up owing the IRS $20,000. The implications of opening a given tax year to re-examination could be significant. With the Obama administration and the
economic climate of the past few years, the IRS has taken an increasingly dim view of maneuvers that seem driven by a goal of avoiding or minimizing tax. ■ Mr. DeMarco is vice president and director of the tax services group at accounting and consulting firm Meaden & Moore in Cleveland.
TAX TIPS Those measures gave business owners the option to carry losses incurred in 2008 and 2009 back into previous tax years much further than usual. The U.S. Tax Code already allows losses to be carried back up to two tax years, but the legislative measures allowed companies to carry losses back as far as three, four or five tax years. That means losses in 2008 and 2009 can be used to offset taxes paid as long ago as 2003 and 2004. That sweetens the refund and puts new cash into business owners’ coffers at a time when many companies sorely need it. As companies and tax practitioners are digging deeper into their tax plans for the coming filing season, they’re finding a catch to the carryback provision that must be taken into account before the tax benefit is claimed. If a company opens a tax return to claim a refund under the carryback allowance, it could reopen the entire tax return to a fresh examination from the Internal Revenue Service, even if the statute of limitations already had expired. Tax rules hold that any tax return is subject to a three-year statute of limitations from the date the return is due, or the extended due date if there was an extension granted. The only blanket exception is a return on which the IRS finds evidence of fraud. In that case, the statute of limitations never expires. Depending on how a carryback is handled, it’s possible to negate the statute of limitations for a tax year that otherwise was closed and reopen that entire tax year to examination. That can give any taxpayer, even the most conservative ones, reason to pause and think about whether there may be a skeleton or two in a given tax return that would be best left in the past. It’s also possible that a carryback could open only a given tax position in an earlier tax year to re-examination. It depends heavily on how the carryback is claimed. The actual tax form used in claiming the refund is critical. For example, should the taxpayer use
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CRAINâ€™S CLEVELAND BUSINESS
JULY 12-18, 2010
HIGHEST PAID NON-CEOS RANKED BY 2009 COMPENSATION
Name Company Rank Title
Total compensation 2009 % 2008 change
Nonequity incentive plan
Change to pension value
Company net Company net income income % All other 2009 change from compensation (millions) 2008
Gary R. Leidich/FirstEnergy Corp. exec. vice president and president, FirstEnergy Generation
Timothy K. Pistell/Parker Hannifin Corp. exec. vice president, finance and administration, CFO
Thomas S Gross/Eaton Corp. vice chairman and COO, Electrical Sector
Mark T. Clark/FirstEnergy Corp. executive vice president, CFO
Craig Arnold/Eaton Corp. vice chairman, COO, Industrial Sector
Richard H. Fearon/Eaton Corp. vice chairman, chief financial and planning officer
John G. Morikis/Sherwin-Williams Co. president, COO
Arthur de Bok/Goodyear Tire & Rubber Co. president, Europe, Middle East and Africa Tire
Leila L. Vespoli/FirstEnergy Corp. executive vice president, general counsel
David L. Bialosky(1)/Goodyear Tire & Rubber Co. senior vice president, general counsel, secretary
Richard R. Grigg/FirstEnergy Corp. executive vice president and president, FirstEnergy Utilities
Sean P. Hennessy/Sherwin-Williams Co. senior vice president, finance, CFO
Ward J. Timken/Timken Co. chairman
Gerald B. Blouch/Invacare Corp. president, COO
Jeffrey M. Weiss(2)/American Greetings Corp. president, COO
Stephen F. Kirk/The Lubrizol Corp. senior vice president, COO
Darren Wells/Goodyear Tire & Rubber Co. executive vice president, CFO
Joseph P. Palchak/Eaton Corp. president, Vehicle Group
Thomas C. Stevens/KeyCorp vice chair, chief administrative officer
David J. Oakes/Developers Diversified Realty Corp. senior executive vice president, finance, CFO
Marwan M. Kashkoush/Parker Hannifin Corp. exec. vice president, sales, marketing and operations support
Beth E. Mooney/KeyCorp vice chair
Charles P. Cooley/The Lubrizol Corp. senior vice president, CFO
Jeffrey B. Weeden/KeyCorp CFO
Steven J. Oberfeld/Sherwin-Williams Co. president, Paint Stores Group
Thomas W. Seitz/Sherwin-Williams Co. senior vice president, strategic excellence initiatives
Lee C. Banks/Parker Hannifin Corp. executive vice president and operating officer
Travis Smith(3)/Jo-Ann Stores Inc. president, COO
Raymond F. Laubenthal/TransDigm Group Inc. president, COO
Michael C. Arnold/Timken Co. exec. vp and president, bearings and power transmission
Michael J. Lombardi/TravelCenters of America LLC executive vice president
Vincent C. Byrd/The J.M. Smucker Co. president, U.S. Retail, coffee
John W. Beeder(2)/American Greetings Corp. senior vice president, executive sales and marketing officer
Paul W. Freddo(4)/Developers Diversified Realty Corp. sr. exec. vice president, leasing and development
Glenn A. Eisenberg/Timken Co. executive vice president, finance and administration
Robert L. Benson/Nacco Industries Inc. president, CEO, North American Coal
Salvatore J. Miraglia Jr. /Timken Co. president, Steel Group
James L.M. Chen/Diebold Inc. executive vice president, international operations
William M. Cody/Progressive Corp. chief investment officer
Brian C. Domeck/Progressive Corp. vice president, CFO
John P. Sauerland/Progressive Corp. Personal Lines Group president
Susan Patricia Griffith/Progressive Corp. Claims Group president
JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS
Total compensation 2009 % 2008 change
Name Company Rank Title
Nonequity incentive plan
Change to pension value
Company net Company net income income % All other 2009 change from compensation (millions) 2008
Joseph W. Bauer/The Lubrizol Corp. vice president, general counsel
David M. LeBlanc/Lincoln Electric Holdings Inc. sr. vice president; president, Lincoln Electric International
Jerome P. Grisko Jr./CBiz Inc. president, COO
Donald D. Hurrle Sr. /The J.M. Smucker Co. vice president, sales, grocery market
Frederick G. Stueber/Lincoln Electric Holdings Inc. senior vice president, general counsel, secretary
Robert G. O'Brien/Forest City Enterprises Inc. executive vice president, CFO
Pieter J. Barnard/GrafTech International Ltd. president, Industrial Materials; vp, Graftech International Ltd.
Vincent K. Petrella/Lincoln Electric Holdings Inc. senior vice president, CFO, treasurer
Donald J. Gallagher/Cliffs Natural Resources Inc. president, North American Business Unit
Peter J. Crage/Cedar Fair LP corporate vice president, finance and CFO
Stephen J. Smith(2)/American Greetings Corp. senior vice president, CFO
Terrence E. Bichsel/FirstMerit Corp. executive vice president, CFO
Kenneth Haverkost/Jo-Ann Stores Inc. executive vice president, store operations
Kevin J. Krakora/Diebold Inc. executive vice president, corporate development
Robert K. Gudbranson(5)/Invacare Corp. CFO
Source: Company proxy statements. 2009 net income and net income % change provided by Capital IQ, a Standard & Poor's business, www.capitaliq.com. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Elected senior vice president, general counsel and secretary on Sept. 23, 2009. (2) Fiscal year end is Feb. 28, 2010. (3) Promoted to president, COO as of Jan. 31, 2010. (4) Mr. Freddo joined as senior vice president of development-Western Region in August 2008. (5) Hired as CFO, April 1, 2008.
Contact: Phone: Fax: E-mail:
Genny Donley (216) 771-5172 (216) 694-4264 firstname.lastname@example.org
REAL ESTATE INDUSTRIAL SPACE
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FORMER AUTO DEALERSHIP - 25,495 sf former auto dealership for sale - masonry construction - 4,120 sf office - excellent visibility - Rico Pietro, SIOR or Joe Barna, SIOR WESTLAKE OFFICE BUILDING FOR SALE - investor/user opportunity - attractive medical/general office - 9,436 sf - convenient to I-90 - John Glasstetter, SIOR 4,500 SF 2 STORY COMMERCIAL BUILDING AT FLEET & I-77 - divisible with separate entrances - perfect live/work layout - sale or lease - Tom West, SIOR SUBLEASE OPPORTUNITY - close to Belden Village Mall - great space - Patrick Reardon, SIOR
Available Industrial Space TWINSBURG - 6,750 sf office to 18,000 sf total for lease or 54,000 sf for sale owner/user/investor - high image flex building built in 1998 - Simon Caplan, SIOR, Eliot Kijewski or Joe Barna, SIOR 2 BUILDINGS - SALE/LEASE - 32,000 and 59,800 sf - 1 story - docks - up to 27’ clear - manufacturing/warehouse - easy access to I-71 and I-480 - Armand Aghajanian 31,800 SF AVAILABLE IN BEDFORD HEIGHTS - 11,800 sf of remodeled office space and 20,000 sf of sprinklered warehouse space - 2 drive-in doors - excellent access to I-480/I-271 - Matt Beesley, SIOR or Ryan Burrows
FOR LEASE Restaurant Space For Lease 7,300 square foot facility inside established natural foods retailer in eastern suburb of Cleveland, OH. Includes expansive dining area and full bar. Kitchen equipment included. Available for natural or organic foods restaurant only. Contact email@example.com for details.
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31,603 SF INDUSTRIAL/WAREHOUSE FACILITY - 3 docks - 1 drive-in - possible multitenant opportunity - ideal for owner/user - George Pofok, SIOR or Joe Barna, SIOR PRICE REDUCED - user/investor opportunity - 23,600 sf - 4 building complex avail for sale 1,500 to 10,200 sf - currently vacant - easy I-90 access - Moore Rd, Avon Lake - Kevin Kelly 18,900 SF ON 1.21 ACRES - 9,900 sf of “Class A” office - well maintained - 16’ clear - 3 DI’s - divisible - central location with excellent highway access - Joe Barna, SIOR or George Pofok, SIOR WESTERN CLEVELAND - 13,359 sf assembly/manufacturing facility - for sale - 5 yr. old roof new doors & asphalt - priced to sell with potential owner financing available - Kevin Kelly AIRPORT AREA - units available from 2,464 sf to 11,737 sf - competitive rates - docks/drive-ins - 16’ clear - Pamela Bertovich WESTLAKE LEASE - office/warehouse or all office from 150 to 7,525 sf on I-90 in Westlake - Ken Anderson 1-77/I-480 - freestanding 6,000 sf building - for sale with 1,300 sf office on .63 acres Fred Christie, SIOR OFFICE/WAREHOUSE CONDO - for sale/lease - 4,000 sf with 400 sf of office - large drive-in door - freshly painted interior - Bob Garber, SIOR
FOR SALE INCOME PRODUCING PROPERTIES IN LAKE COUNTY, OHIO
7.5% CAP RATE 108,500 SF INDUSTRIAL PROPERTY --$4,990,960.00 45,600 SF INDUSTRIAL PROPERTY--$3,040,000.00 3,114 RETAIL PROPERTY WITH SHEETZ LAND LEASE--$1,538,240.00
FOR SALE 15,000 SF INDUSTRIAL FLEX BUILDING--$850,000.00 LIKE NEW! 9000 TYLER BOULEVARD, MENTOR, OHIO BROKERS WELCOME! CALL RICK JR. FOR INFORMATION
AUCTIONS REAL ESTATE AUCTION /AUG. 19
MOSLEY SELECT SUITES HOTEL
Wickliffe, OH | 10 Miles East of Downtown Cleveland at I-90 & Euclid Ave. (Exit 186) OUT-OF-STATE OWNER ORDERS IMMEDIATE SALE! 196-Room Hotel, Restaurant & Banquet Center
AUCTION: 1:00 PM, Aug. 19 — On Site PUBLISHED RESERVE PRICE: $3,385,000 Bidding to Commence at: $2,750,000 SELLER FINANCING WITH 35% DOWN, 6.5% INTEREST WITH A BALLOON PAYMENT IN 24 MONTHS MOSLEY SELECT SUITES HOTEL: Former Sheraton Four Points Hotel, this ﬁne Hotel Property was built in 1979 w/many recent capital improvements, now to be sold due to out-of-state ownership. Located in Wickliffe, Ohio, one of Cleveland’s east suburbs with great access to I-90, RT. 2, & I-271, the Hotel is in an ideal location, right at For Brochure, Bid Packet & Terms of Sale Call:
exit 186 off I-90, and has a large highway sign for great exposure & advertising. Minutes from Downtown, east suburbs, Cuyahoga & Lake Counties. PROPERTY DESCRIPTION: 28500 Euclid Ave., Wickliffe, OH. 196 Well Appointed Hotel Rooms (Kings, Queens, and Deluxe Suites), Indoor Swimming Pool, Fitness Center, 6,000 sq. ft. Ballroom/Conference Center, 4-Story Atrium, Restaurant, Bar, Game Room, Updated Lobby with Flat Screen TV and Leather Couch & Chairs. Recent upgrades include New Roof, Roof-Top HVAC Units, New Onity Door Lock System, High Efﬁciency Boiler, Sprinkler System, Roof-Top Generator, Rebuilt Elevators, T-270 Extended Stay License, Wireless Internet Service, & Digital Cable TV. BUSINESS OPPORTUNITY: Gross Income from 1/1/10 thru 6/30/10 is $465,000. Built-In Seller Financing w/35% cash down, and interest rate as low as 6.5%. Closing in 35 days, free & clear of liens. An opportunity to own a fully operating Hotel at your Price at Auction! There is plenty of opportunity for upside potential w/this terriﬁc property. Opportunity to afﬁliate with National Hotel Chain. ON-SITE INSPECTIONS: July 22, 29; Aug. 12 & 18 from Noon - 2:30 PM See Web Site at www.chartwellgroup.com
216-360-0009 / Mike Berland or Mark Abood
Gordon Greene, OH R.E. Broker & Auctioneer / CHARTWELL GROUP, LLC
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AUCTION MULTIPLE COMMERCIAL PROPERTIES 8/12/2010 - Columbus, Ohio 19+ Office, Medical & Industrial Some 100% Occupied Investments For further information contact:
Bradford L. Kitchen, SIOR - Broker (614) 545-2155 www.AlterraRE.com/REauction
Fred J. Graft Auctioneer - Broker (614) 989-3030
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CRAIN’S CLEVELAND BUSINESS
JULY 12-18, 2010
Double: Economy’s wild swings frustrate some manufacturers continued from PAGE 1
volumes, it’s a more comforting picture for many. “There seems to be two things going on. There are definitely these large macroeconomic clouds — for lack of a better word — that are just hanging over the global economy,” Mr. Patterson said. “But, with the exception of the lack of housing starts, we’re not seeing an immediate impact from any of those things.” Others agree. “Things are still OK. I’m not seeing any signs of a double dip,” said Mike Gordon, owner of Tendon Manufacturing, a metal fabricating company in Bedford. And when businesses such as Tendon do well, so do outfits such as Cleveland’s WSM Technology, which sells machine tools and other equipment to local manufacturers. “We have seen a significant increase in business in the second quarter,” said WSM co-owner Blaise Buholzer. “Based on inquiries and quotes, we foresee the next quarter to be better,” Mr. Buholzer added — even though it’s a time of the year when business normally slows down in machine tool sales.
‘Crazy busy’ time Chris DiSantis, president of
“There is no rhyme or reason. ... One week we are busy, the next we are dead in the water.” – Gil Martello, sales engineer, Path Technologies Cleveland-based Hawk Corp., said his company’s view about six months out “is usually pretty good, 2009 not withstanding, and it looks pretty good.” “We are crazy busy,” he said. Hawk sells brake and clutch materials to other companies, such as Caterpillar, and those companies are busy selling capital goods such as mining equipment into a world economy still hungry for commodities, Mr. DiSantis said. Plus, the aerospace, alternative energy and transportation sectors are still showing strength as well, he said. Rich Peterson, vice president of Astro Manufacturing and Design, a contract machine shop selling into many of the same industries as Hawk, likewise remains upbeat. “I can barely keep up with the inquiries,” Mr. Peterson said. Not that business is going gangbusters for everyone — but it’s improving for most. Cleveland Vibrator Co. in Ohio City makes machines that shake the machines made by others — ensuring that powders, pellets and other dry goods flow uniformly through industrial processes. The company’s customers represent a
diverse mix of industries and the outlook of its president, Glen Roberts, is like that of many manufacturers here. Ask him how business is and he will tell you it’s good. Ask him if he’s back to pre-recession volume levels and he will chuckle, “No.” “We’re probably about halfway back,” said Mr. Roberts, who like other local exporters has seen his business boosted a bit lately by the decline in the euro. “But I don’t think we’re going to get back to where we were for awhile.”
Fragile optimism While most company officials contacted by Crain’s maintain that they don’t see a second leg to the recession, many in the next breath said they still were frustrated that they could not reliably forecast their future orders, with a few manufacturers noting that no one predicted the recession in the first place until it was too late. A couple of local manufacturers did say they were seeing a slight slowdown in business, particularly since the end of June. In the current choppy economic environment,
they’re not calling it a trend — though it isn’t a reason to rejoice, either. “I don’t think we are going to see a double-dip recession, but it looks like it’s going to be a tough go for the rest of the year,” said James Drabik, owner of Drabik Manufacturing in Brook Park, a maker of specialized metal parts. “The reason I say that is because this is unlike other recoveries from a recession,” Mr. Drabik said. “Normally it gradually builds up steam until things get busy. (This time) work has been a roller coaster ride — up and down for the last two years. I am trying to be optimistic the worst is behind us. “ But Mr. Drabik’s optimism might be as fragile as the recovery. “If quoting activity does not pick up, then I will be concerned and change my mind about a double dip,” he said. “For now it’s just another low we are going through.”
A stock index, of sorts Economists can’t agree on whether Mr. Drabik should change his mind. Economists such as Nobel Prize
winner Paul Krugman and Harvard professor Niall Ferguson argue about whether too little stimulus will lead to a relapse or whether too much government borrowing will do the same thing. Locally, experts such as economist Ken Mayland and Ned Hill, dean of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs, continue much the same debate. There seems to be no clear path through the fog to many businesses looking for answers — and their own volumes often are fluctuating too much for many to interpret. “There is no rhyme or reason to the business cycles anymore. One week we are busy, the next we are dead in the water,” said Gil Martello, sales engineer at Path Technologies, an electrical-discharge machine shop in Painesville where parts are cut with electrically charged wires. “The highs and lows we experience seem to track along the current stock market conditions,” Mr. Martello said. “If the market is up, seven or eight days later more orders flow in. Conversely, when the market goes down by an appreciable amount, things dry up pretty quickly.” Unfortunately, the stock market can’t seem to sustain a trend either way. ■
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Faculty Non-Tenure Track 9-mo (Goodyear Executive Professor) (Term) [No. 998675] Opportunity for a Goodyear Executive Professor to serve as a full-time, term faculty member teaching two sections per semester of the undergraduate Exploring Business Course (a “Large Section” class); obtaining appropriate distinguished business speakers for the 2010-2011 Pilliod Lecture Series; serving as a guest lecturer and representing the college at major academic and professional events. The successful candidate must have gained significant recognition as a successful executive with multi-discipline responsibilities in a major corporation; have an understanding of higher education for business, gained through advanced management programs, membership on advisory bodies of a College of Business Administration, or through an advanced or undergraduate degree from a business school; possess the ability to teach in a college environment, demonstrated by involvement in corporate training, adjunct teaching, or major corporate presentations; have a well-developed global perspective of business; demonstrate a strong interest in business ethics; and have enthusiasm for linking business and education and a passion for teaching. Application Deadline: Open Until Filled. For a complete description of this position and to apply online, visit our jobsite at: http://jobs.kent.edu, complete an academic data form, and attach a letter of application, current resume or curriculum vitae. In addition, please submit a statement of teaching philosophy to: Dr. Frederick W. Schroath, Associate Dean, College of Business and Graduate School of Management, Kent State University, P.O. Box 5190, Kent, OH 44242-0001. Email: firstname.lastname@example.org Equal Opportunity/Affirmative Action Employer
Crain's Cleveland Business is seeking a reporter to cover our finance beat. Candidates should have at least one year of reporting experience, with a financial reporting background a plus. Candidates should not be afraid of numbers or financial documents. They also should be adept at developing a source network and at generating their own story ideas. Send resume and clips/work samples to editor Mark Dodosh via e-mail at email@example.com or via regular mail to 700 St. Clair Ave., suite 310, Cleveland 44113.
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JULY 12-18, 2010
CRAIN’S CLEVELAND BUSINESS
THEWEEK JULY 5 – 11 The big story: If the Cleveland Cavaliers are going to win an NBA championship, they’ll need to do it without LeBron James. The two-time league MVP announced last Thursday night on ESPN that he’s leaving the Cavs for the Miami Heat, where he’ll try to atone for past playoff flameouts by teaming with a star who actually has won something, Dwyane Wade, and the Heat’s other big free-agent signing, Chris Bosh. Cavs owner Dan Gilbert promised in an over-the-top letter to fans that Cleveland will win an NBA title before the Heat win another one. See more, Page One. Buying spree: Cliffs Natural Resources announced nearly $900 million in acquisitions as it prevailed in its efforts to buy Canada’s Spider Resources for $125 million (Canadian), while unveiling a $757 million acquisition of INR Energy, a coal company with mining operations in West Virginia. The Canadian acquisition increases Cliffs’ ownership and control of major chromite deposits in Ontario. The mineral is an important ingredient in high-end steel made by many of Cliffs’ existing ore and coal customers. The INR deal will boost Cliffs’ already considerable coal-mining holdings, which include mines in West Virginia, Alabama and Australia. New opportunity:
AT&T said it plans to make an investment of $120 million in Akron to build a data center that will process information sent via mobile phones. The center will be in an existing AT&T data center on Opportunity Parkway. The company eventually may make additional investments at the data center, which will serve Ohio and states to the east. The state’s passage of the Ohio Telecom Modernization Act helped AT&T make the decision to build the facility. The law, which Gov. Ted Strickland signed in June, deregulated some aspects of the landline telephone business in Ohio.
Clean slate: The long-delayed audits of Cuyahoga County government should be released soon, freeing the county to issue new debt, including a $325 million bond issue for the planned convention center and medical merchandise mart in Cleveland. Cuyahoga County administrator James McCafferty announced at last Thursday’s county commissioners meeting that the audits of county finances for 2007 and 2008, held up because of the federal corruption probe into county government, should be released within the next week. “They are clean, and we are able to move forward,” Mr. McCafferty said. Judgment day: Goodyear Tire & Rubber Co. said it is considering its options after the Nevada Supreme Court upheld a $32.2 wrongful death verdict against the company. A jury before the Clark County (Nev.) Circuit Court granted the verdict in February 2007 in the case of 10 people who were traveling from Nevada to Kansas in a 15passenger Ford van in August 2004. A Goodyear Load Range E tire on the vehicle blew out, causing the vehicle to roll over. Three people in the vehicle were killed, and the other seven were injured. This and that: Venture development group JumpStart Inc. made two more investments, bringing its total for fiscal 2010 to 13 — the most it has made in any fiscal year. The nonprofit invested $250,000 in CoverMyMeds LLC of Twinsburg, which will use the money to continue developing a technology to help physicians submit various forms to insurers after coverage of a patient’s prescription has been denied. JumpStart also invested $100,000 in Echogen Power Systems, which already had received $400,000 from the organization’s investment arm. Akron-based Echogen is developing an engine meant to convert waste heat to electricity.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Grad students jump at an opportunity ■ Every journey begins with a single hop. A group of graduate students at the University of Akron have raised the first chunk of capital for the new Hop-On Student Venture Fund, which will invest in technology companies in Northeast Ohio, focusing mainly on the biomedical, polymer and green technology industries. The group earlier this year received a $10,000 donation from Richard Pogue, senior adviser at Cleveland law firm Jones Day. It now aims to raise a total of $100,000 for the nonprofit fund, the name of which plays off the university’s kangaroo mascot. The fund plans to make investments of $10,000 to $25,000 and aims to finance two companies before the end of the year. Any gains from investments would go back into the fund, which plans to give special attention to proposals Kirsanow from university students. The Hop-On Student Venture Fund has been in the works for two years, ever since John Myers, an executive-in-residence with the foundation, heard about a similar program at Miami University. The original student managers who helped design the fund have graduated, but now four new managing partners oversee the fund. The 12 students playing a role with the fund are studying different subjects; that includes the four managers. Al Neighorn is working to earn his doctorate in urban studies and public affairs, Ashish Jagtiani is
WHAT’S NEW COMPANY: Nutek LLC, Chagrin Falls PRODUCTS: Simply Soy and Simply Soy Grill Cleaning Wipes Everyone loves grilling in the summer. And nobody loves cleaning the grill. In response to that simple fact, Nutek, a maker of environmentally friendly cleaning products, has introduced Simply Soy, a biodegradable degreaser, and Simply Soy Grill Cleaning Wipes. The company says users can spray interior grills and grates with the Simply Soy foaming spray and watch grease and grime start to bubble. Simply Soy wipes are made from soy grown in the United States. The grill wipes are 100% biodegradable and feature recyclable packaging. They feature an extra-large, cloth-like wipe that will not shred during use, the company says. Nutek’s products are on the shelves of retailers including Home Depot and Ace Hardware. They’re also available for purchase on the company’s web site. Nutek says it has developed its proprietary soy formulations after testing nearly 40 blends. The company claims the forumulations “outperform the competition on friction and lubricity, while providind excellent rust inhibition.” For information about the company, visit www.nutekgreen.com. Send information about new products to managing editor Scott Suttell at email@example.com.
a doctoral student in mechanical engineering, and Beth Harry and Meredith May are going for master’s degrees in business administration. — Chuck Soder
The ultimate bench player ■ Peter Kirsanow testified before Congress at the Supreme Court nomination of solicitor general Elena Kagan, the fourth time the attorney at Cleveland law firm Benesch, Friedlander, Coplan & Aronoff has made an appearance when a nominee for the high court was under consideration. Mr. Kirsanow, a Republican appointee to the U.S. Commission on Civil Rights, testified about Ms. Kagan’s record regarding employment and civil rights issues. Mr. Kirsanow, who has written for the conservative publication National Review, said he was concerned about Ms. Kagan’s “significant dearth of experience” on the bench, but he described the nominee as “very bright.” “She’s smart; I think she’ll do a decent job on the court,” he said. “Hers is the most low-key (hearing) of the four in which I’ve participated.” Mr. Kirsanow also testified in the hearings for Justices Samuel Alito and Sonia Sotomayor and Chief Justice John Roberts. — Arielle Kass
Want to know what the survey says? Participate ■ Here’s a survey where you can help your-
self while also helping the survey takers — but you need to act fast. Team NEO and The Corporate University at Kent State University’s Stark campus jointly are conducting their bi-annual Northeast Ohio Starting Wage and Benefits Survey. Besides gleaning data on starting wage rates (rather than the feds’ typical average wage data) for nine industry sectors, the current installment of the online survey also asks questions about the current and expected work force needs of Northeast Ohio employers. Team NEO is asking companies and organizations in the region with 25 or more employees to respond to the survey by July 21. Employers fitting that profile can visit http://www.surveymk.com//s/neowagesurvey to complete the survey. The inducement to help? Only firms that respond will have access to survey data early this fall. — Mark Dodosh
Bet he’s finished audits faster than this dollhouse ■ For Pat Mullin, who is leaving his job as longtime managing partner of the Cleveland office of Deloitte & Touche, retirement finally will give him a chance to get out of the doghouse. Err, make that the dollhouse. For 31 years — since his daughter was born, if you must know — Mr. Mullin has been building a dollhouse for her. While the house is 90% finished, and he receives compliments from friends who see it, Mr. Mullin said he long has known that it wouldn’t be completed while he held a job. “I always said it would be my first project in retirement,” he said. That comes May 31, 2011. — Arielle Kass
BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.
Your best bet for a double dip is at the ice cream parlor ■ U.S. government bond yields “are signaling almost no chance of the economy slipping into another recession even as stocks and commodities tumble,” according to a Bloomberg story that cited research from the Federal Reserve Bank of Cleveland. “The 2.34 percentage point gap between yields on two-year and 10-year Treasuries is more than double the 20-year average and about the same as in 2003, just before gross domestic product rose 3.6%,” Bloomberg reported. “The so-called yield curve suggests growth won’t slow to less than 1% and about a 12% chance of a recession in the next year,” according to the report by Joseph G. Haubrich, head of the banking and financial institutions group at the Cleveland Fed, and Kent Cherny, a researcher. In their report, Messrs. Haubrich and Cherny wrote that the expected chance of the economy being in a recession next year, though still small, has risen in each of the last two months. But they say it “might not be advisable to take these numbers quite so literally, for two reasons. … First, this probability is itself subject to error, as is the case with all statistical estimates. Second, other researchers have postulated that the underlying determinants of the yield spread today are materially different from the determinants that generated yield spreads during prior decades.”
Take note: Orchestras are operating with job openings ■ Not that it will help the millions of people
who are unemployed, but it turns out there’s a sector of the economy with lots of job openings: major orchestras. The New York Times reported July 6 that ensembles including the Cleveland Orchestra, the New York Philharmonic, the Boston Symphony Orchestra and several others are looking for players. Cleveland, The Times said, has four full-time job openings and one parttime position. “These posts, naturally, are rarefied and have little to do with the normal job picture nationwide,” the newspaper reported. “But the number of openings prompts the question of why so many spots stand vacant in a market glutted with talented musicians looking to move up to better orchestras or just to find jobs.” The economy clearly has had an effect, as it’s “cheaper to leave jobs unfilled and to pay substitutes, who usually receive close to the minimum base pay and fewer benefits,” The Times said.
When parties throw parties, the sites don’t really matter ■ It would seem the main reason Cleveland is among the four finalists for the 2012 Democratic National Convention is because the party wants to do everything possible to keep Ohio in the Democratic column. But a piece in The Washington Independent said there’s no real correlation between a convention site and a host state’s eventual vote in a presidential election. “Indeed, after examining several decades’ worth of conventions and elections, Michael Berry and Kenneth Bickers — political scientists at the University of Colorado, Denver, and Boulder — found ‘no evidence that hosting a national nominating convention has any discernible effect on the ultimate vote in that state.’”
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