Crain's Cleveland Business

FOCUS | MIDDLE MARKET: It’s time for manufacturers to stop hiding from cyber threats. PAGE 12

LOOK BACK | FIRSTENERGY

Regulated energy giant is the result of a subsidiary’s 2018 bankruptcy. PAGE 23

CRAINSCLEVELAND.COM I DECEMBER 7, 2020

HEALTH CARE

FLAGGING RESERVES As COVID-19 cases surge and patients fill their beds, hospitals are looking at their options Facing a devastating surge of COVID-19 patients and a concerning number of caregivers out sick, hospitals are aggressively working to manage their capacity and ensure sufficient staffing.

With well over 1,000 health care workers out sick due to COVID-19 (positive cases or quarantined), hospitals in the region are implementing or considering postponement of nonessential procedures or consolidation of ambulatory clinics and outpatient surgery facilities in order to shuffle staff.

Hospitals cross-trained many staff in the spring and are now refreshing that training and redeploying workers in different areas of the hospital.

“The initial concern at the beginning of the pandemic early in the year was over the availability of beds and supplies, but now the concern seriously is staffing those beds,” said Beth Gatlin, Northeast Ohio regional health care coordinator for the Center for Health Affairs, the nonprofit advocate for Northeast Ohio hospitals. BY LYDIA COUTRÉ |

See HOSPITALS on Page 21

ALI ÇOBANOĞLU VIA ISTOCK

“THE INITIAL CONCERN AT THE BEGINNING OF THE PANDEMIC EARLY IN THE YEAR WAS OVER THE AVAILABILITY OF BEDS AND SUPPLIES, BUT NOW THE CONCERN SERIOUSLY IS STAFFING THOSE BEDS.” — Beth Gatlin, Northeast Ohio regional health care coordinator for the Center for Health Affairs

FINANCE

After a lull in 2020, will Ohio bank M&A pick up in 2021?

Industry seems ripe for additional consolidation after a downturn caused by the pandemic

NEWSPAPER

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BY JEREMY NOBILE

Cortland Bank was having regular conversations about M&A opportunities as both a potential buyer and seller prior to the onset of the coronavirus pandemic.

Before the health crisis plunged the country into recession, the Trumbull County-based community bank of about $808 million in assets was trading well above book value. But as

the stock market reeled in March, Cortland shares sank 44% in price from the previous month.

Cortland shares still are down about 30% from a high set in February. Now trading below tangible book value, there’s less value in the stock to make a bid, said Cortland CEO Jim Gasior.

Cortland also was hearing from no less than five or six interested buyers pre-pandemic looking for more scale in Northeast Ohio or a new foothold

here, including interested parties in Pennsylvania, Michigan and West Virginia.

But those talks have stalled amid a tumultuous economy that prompted the business ecosystem to pump the brakes on deals, financial services included.

Many companies are in a similar situation as Cortland.

See BANK M&A on Page 21

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REAL ESTATE

Fathom finds a new home in an old building in the Flats Digital marketing agency is moving from Valley View, plans to double in size in next five years BBY MICHELLE JARBOE

A growing digital marketing agency plans to shed its suburban address next year, trading leased offices in Valley View for a newly renovated home on the west bank of the Flats.

That company, Fathom, employs just over 80 people and aims to double in size over the next five years. And its executives are confident there’s still unmatched value in bringing clients and employees together, face-to-face, despite a pandemic that has kept them apart since March.

“I am a big believer in the power of human connection. … I also believe that there will be another day, that there will be another side of this pandemic,” CEO Steve Kessen said.

In June, a Fathom affiliate paid $1.35 million for a distinctive, two-story brick building in the Flats, just north of the Superior Viaduct.

Attached to the Stonebridge Plaza condominiums at 2020 Center St., the 19th-century structure started its life as industrial space and has served as everything from a Mexican eatery to offices for an energy consultant.

Fathom’s 15,500-square-foot offices will be complete in February, after what Jim Kohl, the company’s executive vice president of sales and marketing, described as a “seven-figure investment in making the building our own.” But amid a surge in COVID-19 cases, with some major employers delaying office reopenings, it’s unclear when Fathom will fully move in.

“What’s certain is that we will not be all in right away, as soon as the building is available,” Kohl said. “But again, as Steve mentioned, the longterm view is more important.”

The company’s suburban lease ends in March. Fathom started looking for new space more than a year ago and scoured locations east, west and south of the city before homing in on the Center Street building, which features an expansive skylight and exposed brick and beams.

The property sits in an area of the Flats that has seen heightened interest from investors and developers.

The historic building at 2020 Center St. in the Flats, just north of the Superior Viaduct, is being renovated as the future home of Fathom, a digital marketing company moving into the city from the suburbs. In this photo, the Stonebridge Plaza condominium building is visible in the background. | FATHOM PHOTOGRAPHS

The building features a floating second floor and cobblestone-stamped concrete. The unusual space previously housed TPI Efficiency, an energy consulting company that relocated within the neighborhood.

Along the viaduct, developers are planning a slim apartment tower that will rise between a pair of modest, historic buildings. At West 25th Street and Detroit Avenue, where Ohio City begins to slope down toward the Flats, the proposed Bridgeworks project could add mixed-income apartments and a boutique hotel to a site currently owned by Cuyahoga County.

In March, Jacobs Entertainment Inc. put 5.6 acres of its waterfront parking lots on the market, across from Fathom’s future home. And there’s been chatter about a possible hospitality makeover of the nearby Left Bank Building, at 1250 Riverbed St., which went up for sale in late November at an asking price of $3.25 million.

“The west bank of the Flats hit a note for us that was just lacking in other areas of Cleveland,” Kessen said. “I think it’s a really unique opportunity to invest in this area at this

time, and with this building offering the features and the sort of blank canvas that it does.”

Fathom hopes to make use of the viaduct, with its skyline views, for outdoor meetings, happy hours and client events. Executives also think the location, which is near trails, the Cuyahoga River, dining and entertainment, will help the company attract and keep employees.

The city of Cleveland approved a $180,000 loan for Fathom’s project through a program focused on vacant and underused properties. That debt will be forgiven after five years if Fathom brings 93 jobs to the city.

The company also is eligible for a city job-creation grant of up to $114,000 over three years, based on new payroll.

The CEO and founder of TPI Efficiency, the former occupant of 2020 Center St., put the property on the market after moving his consulting company into a nearby tech hub called the Hive. A handful of potential users looked at the quirky space before Fathom consummated its deal, said Rico Pietro of Cushman & Wakefield/Cresco Real Estate, who handled the listing.

“It wasn’t the easiest to transact,” he said. “The property, with all of its cool factor, does have some limitations. It has sort of a floating second floor and cobblestone-style stamped concrete. … It took somebody that either wanted to make a sincere investment or somebody that loved the way it looked.”

Julie Sabroff, a vice president at Hanna Commercial Real Estate, represented Fathom in its real estate search. She was struck by the way that the company brought employees into the process from the start, with the goal of finding and fine-tuning a space designed for growth and collaboration.

“I deal in brick and mortar, but I also can recognize really great businesses and leadership teams,” she said. “And I just thought they were terrific.”

Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe

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Program doesn’t just focus on students heading to college

BY RACHEL ABBEY MCCAFFERTY

Eric Gordon, superintendent and CEO of the Cleveland Metropolitan School District, doesn’t think of post-secondary options as college or career anymore.

Everyone’s preparing for a career; it’s just about the path they take to get there.

“It is career, period. And college is one pathway to career, but the end goal is career,” Gordon said.

That idea has led the district to adjust its approach to post-secondary preparation, offering students who don’t plan to attend college just as much counseling and support as those who do through its new Linking CMSD Students to Career Pathways and Living Wage Jobs program.

The program, known as career pathways for short, was first launched in September 2019.

But this work has been a long time in the making. More than a decade ago, the district reorganized its high schools to put a focus on exploring career pathways. That laid the groundwork for stronger industry partnerships, as the district created advisory boards for the schools.

Despite this foundation, Gordon said there was a gap between the in-demand jobs in the community and the jobs students were pursuing.

Students weren’t being seen as “future employees,” he said.

In January 2019, the Cleveland Metropolitan School District became part of the Say Yes to Education initiative, which provides support for students, as well as scholarships for those who want to pursue traditional post-secondary education. But when it comes to preparing students for life after high school, that’s just one option, and it didn’t account for micro-credentials or other direct-tothe-workforce options, Gordon said.

The district needed a way to support students taking that path to work, too.

Gordon views the district as the convener in the career pathways work, bringing the necessary parties together. It’s an “ecosystem,” he said, one that includes everyone from industry partners to employer-serving agencies to foundations.

Take Cleveland State University, for example. The university partners with the Cleveland Metropolitan School District on its college pathway work, obviously, but it’s involved in the career-focused pathways, too.

One of the newest ways the university is working with the district is through the Cleveland Tech Talent Pipeline project, which aims to strengthen pathways for computer science and IT careers.

Cleveland State president Harlan Sands thinks bachelor’s degrees are still one of the best ways to change wealth disparities — and he wants to make those pathways easier and faster — but the university wants to be involved at different levels for the district. Cleveland State offers some professional development and credential programs, and there are always students who will opt for post-secondary education at a later date.

Currently, there are three working

United Airlines started working with students at Davis Aerospace and Maritime High School earlier this year. | CONTRIBUTED PHOTO

groups in the district’s career pathways program. One group is creating a career exploration program for students in grades 6 to 12. Gordon said that program will start to be implemented next fall. Another group is working to create programs that directly connect employers and students. That group will work to incorporate existing internship and apprenticeship programs in the district, as well as create new ones in high-demand sectors. And the third group is focused on supporting graduating seniors.

“AND YET, EMPLOYERS HAVE NOT LOST ENTHUSIASM. THEY’RE STILL ENGAGED. THEY’RE STILL WORKING WITH US.” — Eric Gordon, superintendent and CEO of the Cleveland Metropolitan School District

As the district grows its career preparation supports, it also wanted to support students who would graduate before those new programs were put in place. That work started last spring.

The timing of the program meant that it has been complicated by the pandemic, as schooling went virtual.

And when the work started, the economy was in a place of strength. Employers needed employees, so there was a clear benefit to them working with the district. That’s no longer the case.

“And yet, employers have not lost enthusiasm,” Gordon said. “They’re still engaged. They’re still working with us.”

One example is the district’s work with United Airlines Inc., which started getting involved with Cleveland’s Davis Aerospace and Maritime High School earlier this year.

Phil Griffith, vice president of supply chain, technical operations, said he came across a video of a young woman studying at Davis who was taking her first solo flight. He thought she was just the kind of student the airline wanted to help in a city that it served, and he reached out to the school.

The airline has been working to increase diversity and improve career

opportunities for underrepresented groups, Griffith said. And that work has continued despite the pandemic.

A company’s core values need to be there during good times and bad, Griffith said.

“Doing good work happens all the time. If you wait for every crisis to go away, that means you’ll never do anything,” he said.

The airline has committed to free flight lessons for students, and it will expose students to all kinds of jobs with the airline at nearby Cleveland Hopkins International Airport, Gordon said. It’s even working to have students build products like commemorative gifts for employees in the school’s industrial lab.

Griffith said Davis is the first school that United has had such a strong partnership with, but the airline hopes to see that expand in other communities.

Another quickly growing partnership is with MAGNET, the Manufacturing Advocacy and Growth Network in Cleveland.

MAGNET has been working with the district to connect students to careers in a variety of ways over the years, from its Early College, Early Career youth apprenticeship program to the region’s workforce-focused manufacturing sector partnership. The career pathways program just expands those efforts.

And, in a couple of years, MAGNET plans to relocate to an old district school building, an idea that president and CEO Ethan Karp said came up during a career pathways meeting. As part of the move and renovation, MAGNET will offer manufacturing experiences to more Cleveland students, including those in the earlier grades.

Ultimately, all of this work benefits students by exposing them to high-paying jobs, Karp said. And it benefits manufacturers who are struggling to find the workers they need.

And for MAGNET, picking a new building in Hough and using it to work with Cleveland Metropolitan School District students sends an intentional message: “This is the future of manufacturing,” Karp said.

“The folks that live in Hough, the folks that are coming out of CMSD: This is where you should be looking for future talent,” he said.

4 | CRAIN’S CLEVELAND BUSINESS | DECEMBER 7, 2020

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TECHNOLOGY

EY, Nottingham Spirk team up to be hot spot for innovation Hub will be located at Nottingham Spirk’s Cleveland headquarters after $4 million renovation

BY KIM PALMER

It might seem odd pairing Nottingham Spirk, a small product design and commercialization firm, with the global tax and consulting firm Ernst & Young in a project to build a state-of-the art innovation hub for smart design and manufacturing on the East Side of Cleveland.

But with all eyes on playing a part in advancing the fourth Industrial Revolution — or Industry 4.0, the digital transformation of manufacturing by incorporating technologies such as artificial intelligence, machine-to-machine learning and the Internet of Things — John Nottingham jumped at the opportunity to create a space where manufacturing companies can try out new technologies and, as he put it, “crawl before they run.”

“I think we were born to do this,” said Nottingham, one of the two co-founders of Nottingham Spirk, the nearly 50-year-old company responsible for design and production of the Crest Spinbrush, the Swiffer Sweep + Vac and Sherwin-Williams’ Twist & Pour paint container, among many others.

“This was something that was obvious we had to do,” he said. “We have to do this because this is how manufacturers are going to trans-

Nottingham Spirk’s Cleveland facility will be home to an innovation hub for smart manufacturing. | CONTRIBUTED

“I THINK WE WERE BORN TO DO THIS.” — John Nottingham, co-founder of Nottingham Spirk

form themselves. There’s no other way to do it. ... We are not just going to talk about augmented reality or mixed reality and digital inspection.

We have something where you can roll up your sleeve and put on a face shield and actually do it.”

Catching the wave The EY-Nottingham Spirk Innovation Hub, which will be housed at Nottingham Spirk’s 60,000-square-foot headquarters after a $4 million renovation, is set

to open in spring 2021. It’s a collaboration born out of discussions dating back to 2017, when EY gave Nottingham Spirk an Entrepreneur of the Year award.

The hub couples Nottingham Spirk’s innovation, design and com-

mercialization competencies with EY’s Wavespace initiative, comprising 21 immersive spaces worldwide that are designed to help clients try out new technology when solving problems, or working on new products or projects.

“We’re going to build a similar Wavespace facility where you bring your team and you spend a day or two and just immerse yourself into all the possibilities,” Nottingham said. “It will include demonstrations and showcase the most advanced equipment in the industry, including state-of-the-art augmented reality and projection equipment.”

Innovation hubs and programs are in high demand, said Michael Goldberg, an associate professor of design and innovation at the Weatherhead School of Management at Case Western Reserve University, which is just down the hill from Nottingham Spirk.

“Innovation is very difficult, and it’s very difficult for large companies,” Goldberg said. Still, he added, “Large companies are willing to, at least, think creatively around things like new product development, although recently the only way they have been doing it is by acquiring startups.”

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REAL ESTATE

Bevcorp plans to consolidate operations in Eastlake

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Beverage packaging company making move from four Willoughy buildings

BY STAN BULLARD

Plans by Bevcorp LLC of Willoughby to consolidate from four buildings to one has prompted the sale of the industrial building at 37200 Research Center Drive in Eastlake to an investor group for $4.5 million.

Eileen Bewley, Bevcorp president, wrote in an email statement to Crain’s Cleveland Business that the company has expanded over the years to multiple locations in Willoughby and wanted to bring its teams together physically so they can more easily collaborate and be successful. Most of the staff is in three buildings in Willoughby, but the company, which operates highspeed food and beverage filling lines for its customers, also has a warehouse in Willoughby that will be consolidated with the move.

“Operating out of three buildings requires lots of walking and moving between buildings,” Bewley wrote.

“We knew that as we expanded, having all functions under one roof would help us optimize our processes.”

She added that the new structure also will create better product movement, but the big bonus will be in putting all the staff in one location.

The new building also will have room for expansion, as it has a footprint of 105,000 square feet, compared with Bevcorp’s current operation, which has a total of 62,000 square feet. The Eastlake location filled the bill for the company because it is near its current offices and will not cause much employee disruption.

However, Bevcorp won’t own the new building. It was acquired by CLE37200RESEARCH LLC, an investor group led by Jason Laver, a senior vice president at Cushman & Wakefield Cresco’s Independence office.

Laver said in a phone interview that Bevcorp signed a long-term lease for the building, and described his group’s role as a “financial partner for Bevcorp” because the transaction allows Bevcorp to keep its cash in operations rather than tying it up in real estate.

“This is the classic story of an underused building with good bones that will need a lot of updating for the tenant,” Laver said. He noted the plan

will return the structure to its original use as a manufacturing building that dates from 2001. He said the property investment is a complementary activity to his brokerage business.

The seller was Lake Business Solutions LLC, according to land records.

Lake Business Products, an Eastlake-based office products supplier with a notable radio jingle, is its longtime occupant. The company, which has locations throughout Northeast Ohio, declined comment as Terri Cain, president and CEO, was out of the office at Crain’s deadline on Thursday, Dec. 3.

Eastlake Mayor Dennis Morley said in an interview it was not publicly known that the Lake Business Products structure was available, and he does not know the company’s plans.

“We don’t want to lose Lake Business Products, but there will be no lapse in tenancy there,” Morley said, noting the city actually will wind up with more employees at the property.

He said Bevcorp plans to move 75 jobs to the property. In exchange, Eastlake City Council approved a seven-year, 50% job incentive grant for the company. That means the city will issue the company a check for half of its 2% income tax for that period, based on its prior year’s payroll beginning in 2021.

Morley said he and Willoughby Mayor Bob Fiala have discussed Bevcorp’s plan.

“We understand the business side of this and feel that we are ahead any time we keep a company in Lake County,” Morley said. “I’m interested in seeing their operation after they are in place.”

Bevcorp and its sister company, Enprotech, are wholly owned subsidiaries of Tokyo-based Itochu International Inc. Enprotech’s operations will remain headquartered in Cleveland.

Bevcorp was founded in 1992 and acquired by Enprotech in 2002. Its expansion into three buildings came step by step as the company grew organically and through acquisitions, the company said. Bevcorp declined to discuss sales figures.

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Chicago developer has apartments planned for West 25th Street site

Mavrek pays $1.3M for former SASS Automotive & Wrecking spot

BY STAN BULLARD

Mavrek Development, a Chicago real estate developer, has purchased the SASS Automotive & Wrecking Co. property at 2487 W. 25th St. near the West Side Market, and it plans to develop an apartment building on the site.

If your first thought is, “What site is that?,” you wouldn’t be alone.

While SASS has a street-level address, the bulk of the nearly acre site is several feet lower and currently serving as a repository for junked cars. The site’s size is clearer from the West 20th Street side, which dead-ends nearby.

That Mavrek, through Treo Development LLC, paid $1.3 million to the seller, a local investor group named Cle Vue LLC, is the other break from Cleveland development past. It reflects the run-up of Ohio City and Tremont land values: The site carried a fair market value of just $330,000 for property tax purposes.

A developer buying such a site is not typical of Northeast Ohio development in the past, especially when there are parking lots aplenty downtown crying out for redevelopment.

Alex Pesta, planning principal at City Architecture of Cleveland, said in an interview that it is a switch for real estate developers to tackle such constrained sites with topographical challenges in Cleveland.

“On Cleveland’s West Side, this is what’s available now,” Pesta said. “In other cities with population growth, it’s just another site for development.

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Visitors to Cleveland’s innovation hub will benefit from Nottingham Spirk’s ability to workshop everything from product creation, design, engineering, prototyping and commercialization, and EY’s global client base and vast business expertise, said Glenn Richardson, managing director of advanced manufacturing in aerospace at JobsOhio, the state’s private nonprofit economic development corporation.

“You have that product ideation process going on,” he said. “Then you lay out a structure on top of that with advanced manufacturing, with connected machines, connected factories, connected supply chains and the EY Wavespace solution methodology.

They know how to immerse the client

West Side Market and separated from the SASS site for the most part by below-grade railroad tracks; the Dexter on Franklin Circle; the Quarter at West 25th and Detroit Avenue; and four other apartment buildings on lower Detroit.

And that’s not including conversions of old commercial buildings to apartments along West 25th both north and south of the homes of craft brewers such

“ON CLEVELAND’S WEST SIDE, THIS IS WHAT’S AVAILABLE NOW. IN OTHER CITIES WITH POPULATION GROWTH, IT’S JUST ANOTHER SITE FOR DEVELOPMENT.” — Alex Pesta, planning principal at City Architecture of Cleveland

as Great Lakes Brewing Co., Market Garden Brewery and others.

Even more on point, look at other recent sites. Stoneleigh Development of Chicago is planning to start constructing an apartment complex on land facing Lorain Avenue that stretches down the slope to Columbus Road. And Electric Gardens is going in on Literary Road in Cleveland on a site formerly owned by the railroad.

Mavrek was prepared to go to city planning panels for review last month but pulled them back for revision.

Khalid Hawthorne, housing and economic development director for Tremont West Development Corp., said he expects to see updated plans from Mavrek within weeks. Since the project is in flux, he declined to discuss it in detail. He said the site can accommodate a project of perhaps 200 suites and would be the four- or five-story height typical of many recent apartment developments.

Although Mavrek is based in Chiin problem-solving and utilize their digital tools to simulate all of that and give the client a confidence in moving forward with any investment.”

JobsOhio awarded a $1.5 million Research and Development Center grant to the innovation hub. Richardson hopes that investment might help Ohio’s 14,000-plus manufacturers adapt technology, improve profitability and grow market share — with Cleveland at the forefront in all those categories.

Ethan Karp, president and CEO of the Manufacturing Advocacy and Growth Network (MAGNET), said the innovation hub connects with other strategic plans, including the Cleveland Innovation Project and a new MAGNET training facility in Midtown. He said he has been meeting with Nottingham Spirk officials for months to talk about creating what he calls a continuum between the region’s manufacturing assets.

“Their innovation hub is going to be a big deal. ... It is an asset that we all can leverage and sell the community,” Karp said. “Big companies will come and they can see all the amazing innovative assets of the region, including what MAGNET is doing to help the supply chain and future workforce.”

Bringing in new business opportu-

cago, it has a strong Cleveland connection. One of Mavrek’s founding principals is Robert E. Krueger III, who also serves as president of Cleveland-based Krueger Construction Group, which is led by his father.

Calls to Krueger in Cleveland and Chicago were returned by Mavrek acquisition and development manager Adam Friedberg. He declined to discuss the company’s plans until mid-December because they are under substantial revision. He also declined to say how many units or how tall the company’s proposed project might be.

However, photos of the proposed development site under the name Treo Cleveland are posted on Krueger Group’s website as a joint venture of Krueger and Mavrek.

City Architecture’s Pesta said it’s a distinctly West Side phenomenon.

He said he’s not seeing such secondary sites being viewed for redevelopment on the city’s East Side, which he partially blames on systemic racism and long-held planning practices.

“This shows the value that has been created by the vision of local development corporations in Ohio City, Tremont and Detroit-Shoreway, who worked for years to foster local development,” Pesta said. He noted it’s the same kind of role that East Side LDCs such as Burton Bell Carr Development and Famicos are working to foster development. The plethora of projects on the East Side are the first brush strokes of that picture.

Pesta noted that the use of a site such as Treo’s can result from years of planning initiatives in an area, but it’s likely too granular to expect planning to produce them. Instead, that’s what developers find as they pursue sites close to areas with proven leasing and rent rolls that lenders may fund.

Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter nities is one of the reasons that Bill Koehler, the CEO of Team NEO, the nonprofit economic development organization for Northeast Ohio and regional network partner of JobsOhio, thinks this project has the potential to be transformational for the region.

“I see it as creating an opportunity for us to almost re-establish our manufacturing global strength,” Koehler said. “Ohio is a place where we make things, and we make them well, and we make them efficiently. With this, now, we can make things better.”

Koehler said the innovation center will be another big asset for the region.

“When people come and experience Northeast Ohio, they leave with a much more positive impression than the one they brought,” and that bodes well for outside investment, he said.

“They are going be exposed to the supply chains here,” Koehler said.

“The hub is right next to Case, so they are going to see our higher education institutions and our workforce potential. They are going to see and be exposed to the core attributes of what they would require to build, and it is a really good business case for making an investment here.”

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

8 | CRAIN’S CLEVELAND BUSINESS | DECEMBER 7, 2020

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SMALL BUSINESS

Growth prompts Fleet Response’s planned move to Hudson Fleet Response’s new Hudson headquarters, at 43,000 square feet, will double the size of the company’s current location in Independence.

Relocation from Independence comes amid firm’s push into third-party claims

BY JUDY STRINGER

By this time next year, Fleet Response will be among Summit County’s newest corporate residents.

The 34-year-old, family-owned company recently broke ground on the western edge of Hudson for a two-story, 43,000-square-foot headquarters with plans to relocate from Independence as early as October 2021, according to executive vice president Allison Lanzilotta.

In addition to quick access to state Route 8 and the Ohio Turnpike, the Boston Mills Road property gives Fleet Response more leg room than it could find in other areas, Lanzilotta said.

“We were looking for a site where we could grow, but also something with acreage,” she said. “We wanted some surrounding land to have outdoor options for employees with both outdoor workspace areas and walking trails along with the scenery that could bring.”

Fleet Response provides accident, maintenance and safety programs to corporate clients. Its core focus, Lanzilotta said, is claims management for businesses that self-insure their fleets, which range from hundreds to thousands of vehicles. In the role, she explained, the company oversees physical repairs to corporate vehicles after an accident in addition to nego-

tiating and collecting compensation on behalf of clients for damages caused by other drivers.

In recent years, Fleet Response also has built out its third party administrator (TPA) offering by adding services such as bodily injury and property claims management. That strategy, Lanzilotta said, “has opened new doors,” particularly when it comes to landing claims processing contracts with insurance companies.

“Just rounding into that TPA space fully has given us the opportunity with a new buyer group, which is an exciting part of our growth,” she said.

It is somewhat difficult to define Fleet Response’s market potential or competition. Similar claims service providers, Lanzilotta said, are typically companies that own and lease fleets to businesses.

They offer maintenance, safety and claims management as add-ons.

And big hitters in the TPA space, like multibillion-dollar Gallagher Bassett Services Inc., operate in a much broader liability universe. (Although as Fleet Response positions itself as a full TPA, she said, it does compete in some niche spaces with “the Gallagher Bassetts” of the world.)

There is also evidence to suggest companies are not rapidly expanding their fleets. Data compiled by auto marketing consultancy Hedges & Co.

CONTRIBUTED RENDERING

of Hudson finds there were 661,000 new vehicles registered to businesses in the U.S. in 2019, down from 706,800 in 2018 and 779,000 in 2017.

Companies are, however, increasingly focused on the bottom line, Lanzilotta said. For those who self-insure, outsourcing back office work, including claims processing, can be a way to cut costs and/or redirect company resources to revenue-generating activities.

“So, there is a significant amount of opportunity as a result of more desire to save money,” she said.

Fleet Response’s growth is reflected in earnings and employment. The company has leased its Independence office space off Rockside Road since 2006 — when it had about 75 employees — and has twice increased the size of the space as it added employees.

Lanzilotta expects to move more than 200 employees to Hudson next fall.

On the revenue side, Fleet Response anticipates bringing in $185 million in 2020, and despite COVID, it plans to meet a 2021 target of being a $200 million company, she said.

While business with some clients —

housebound sales forces, for instance — has slowed considerably during the pandemic, others companies — think food or lab specimen delivery — have increased their fleet activity.

“So even though there are fewer vehicles on the road since March, we’ve actually stayed quite busy,” she said.

Lanzilotta added that as organizations seek to speed financial recovery from COVID-fueled losses, “large insurance companies and self-insured businesses will look even more to outsourcing and see the value of having experts do the work.”

Design shuffle The Hudson headquarters will be double the size of Fleet Response’s current digs, but don’t expect the extra space to be cluttered with desks and cubicles.

Lanzilotta said the company is “changing its workspace model” from a one-desk-per-employee format to more mobile workstations and large, multipurpose rooms as it settles into a flexible work program.

“We will be allowing people to have

a partial work-from-home schedule moving forward,” she said, “so we are building out more collaborative spaces with things like big training rooms that could also be used for company events or other times that we all need to gather as a company. But a lot of days, only about half the workforce will be in the Hudson location.”

Fleet Response was in the midst of a modest work-from-home pilot program when the pandemic hit, which, Lanzilotta said, provided a framework to transition all employees to full-time telecommuting during the lockdown. Many have remained at home or partially at home, “where they have been able to fully function and operate,” she said.

“That did cause us to take a step back on our design of the new building to ask how we can utilize a more flexible work policy from both (an employee) satisfaction and productivity standpoint.”

Rather than developing a headquarters with the mindset that every employee will be in the office every day, the company focused on making spaces more open and collaborative to encourage interaction and relationship-building on days when teams are in the building together.

Lanzilotta said her leadership team also thinks flexible scheduling serves as a perk to employees who may have to travel farther when it moves south next fall.

Contact Judy Stringer: clbfreelancer@crain.com

Crain’s Cleveland Business will honor eight individuals in their 80s or older who are still working tirelessly to advance Northeast Ohio and its residents.

Do you know someone 80 or older who has seemingly tossed the word “retirement” from his or her vocabulary and continues to make an impact in Northeast Ohio’s business, civic and philanthropic circles?

NOMINATION DEADLINE: Jan. 18 | Issue Date: April 19

NOMINATE TODAY: CrainsCleveland.com/nominate DECEMBER 7, 2020 | CRAIN’S CLEVELAND BUSINESS | 9

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PERSONAL VIEW

Helping Ohioans find sustainable new careers

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BBY J.P. NAUSEEF

When Ohio To Work launched in Greater Cleveland in mid-September, the pilot initiative brought Ohioans together in a true partnership with the goal of helping workers displaced by the pandemic to reskill and restart their careers.

The partnership is extraordinary in the way it coordinates the energy of employers, nonprofits, training providers, the latest artificial intelligence tools and the support of government. The idea is to help someone out of work to identify a new career opportunity, train for it and then be placed with an employer. We are now about midway through the pilot, so let’s review how we got here, how it’s going and what we hope is coming next.

How we got here

EDITORIAL

Start leading M

embers of a Girl Scout troop from Cincinnati could see, more clearly than the (now former) CEO of FirstEnergy Corp., the (now former) head of the Public Utilities Commission of Ohio and the (now former) Speaker of the Ohio House, that nothing good has come of House Bill 6.

Troop 45239 was among those submitting testimony last week in support of repealing HB 6, the wide-ranging energy bailout legislation at the heart of the largest bribery scandal in Ohio history, in which then-Speaker Larry Householder and four associates were arrested in July, accused of illegally using FirstEnergy money to help pass the bill.

“HB 6 was passed by cheating. ... That’s not how democracy is supposed to work,” seven troop members wrote in the letter. “Please repeal the law to restore trust in Ohio’s government.” They called for the Legislature to “pass a better, fairer law that supports clean energy.”

Repealing the law isn’t simple, but the troop members are onto something, and they displayed a keener sense of leadership than many involved in this terrible affair — and in other parts of the state, where our leaders are failing us.

FORTUNATELY, AND Fortunately, and finally, FINALLY, THERE ARE SOME there are some signs of progress on the HB 6 front in SIGNS OF PROGRESS ON the Legislature’s lame duck THE HB 6 FRONT IN THE session. Lawmakers in both LEGISLATURE’S LAME chambers are discussing bills that would either repeal DUCK SESSION. or make significant changes to HB 6, which, as it stands now, would fund $1.6 billion in utility subsidies starting Jan. 1 through a new customer surcharge, offset by the elimination of some charges that pay for renewable energy projects and energy efficiency programs.

One piece of legislation, House Bill 798, would delay the subsidies for a year. Importantly, Cleveland.com reported, it would end a provision of the bill known as “decoupling,” which “ensures a guaranteed level of income for FirstEnergy and (theoretically) other utilities.” That provision, according to Cleveland.com, “allows FirstEnergy to charge ratepayers a total of $355 million more through 2024 to guarantee the

company a yearly revenue of $978 million.” This bill may have the juice to make it, since it was introduced by the chair of the Ohio House’s special HB 6 study committee and has the support of Bob Cupp, the new House Speaker.

An alternative, Senate Bill 346, is a full-on repeal, which might be more satisfying, but at this late hour in the legislative session is considerably dicier.

We’re in better-late-than-never territory now, and a delay of the subsidies would give the Legislature another chance to get things right. But it’s still a pretty dispiriting statement on leadership in the state that we’re cutting it so close in trying to right an obvious wrong.

And the disappointments don’t stop there.

Several members of city councils in Toledo and Cincinnati have been arrested and charged with taking bribes. On a different scale, but still disturbing, was the city of Cleveland’s decision to let its moratorium on water and power shutoffs end on Dec. 1. Councilman Brian Kazy, chair of Cleveland City Council’s Utilities committee, subsequently issued a statement indicating council and the Jackson administration are working “to ensure that no resident loses electricity or water during the pandemic or during winter months,” but it never should have gotten to this point.

These are, at the very least, breakdowns in citizens’ trust in their leaders at a time the public most needs to know government can help. More than ever, our leaders need to step up and offer a clear vision of ethical, thoughtful government focused on meeting the needs of all its citizens. We’re not getting that in 2020. Newly elected leaders should take note for 2021.

Speaking of leaders ...

N

ortheast Ohio lost three last week with the deaths of A. Malachi Mixon III, the former CEO of Invacare Corp.; Pat McCartan, former managing partner of Jones Day; and Thomas Sullivan, former CEO of RPM International.

Their resumes and accomplishments in full would more than fill this page. All were all-in on Northeast Ohio and offered the kind of civic commitment for corporate leaders to emulate.

Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

Nauseef is president and CEO of JobsOhio, the state’s private nonprofit economic development corporation.

Earlier this year, faced with record-level unemployment caused by COVID-19, Gov. Mike DeWine asked JobsOhio, the state’s private nonprofit economic development corporation, as well as the Ohio Department of Job and Family Services, to come THE IDEA OF OHIO together with the Governor’s Of- TO WORK IS TO HELP fice of Workforce Transformation and the Ohio Development Ser- SOMEONE OUT OF WORK vices Agency, with a mandate to TO IDENTIFY A NEW do something bold to put people CAREER OPPORTUNITY, back to work. And do it quickly.

TRAIN FOR IT AND THEN While it was outside the traditional scope of economic develop- BE PLACED WITH AN ment, JobsOhio embraced the op- EMPLOYER. portunity because, at a critical time like this, there is nothing more important than leveraging every resource Ohio has to help Ohioans, support Ohio businesses and grow the economy. When he announced the launch of Ohio To Work in September, the governor acknowledged that it can be a challenge to find a job now, but he added what we all know to be true: that Ohio’s economy is diverse and resilient.

We also know that, despite the pandemic, many of Ohio’s employers are hiring, particularly in health care, technology and advanced manufacturing. And these employers need skilled talent. Answering the governor’s call, the idea of Ohio To Work is to help Ohioans become equipped to get through the door and begin new, sustainable careers.

When our partnership designed the Ohio To Work initiative, the goal was to complement efforts in our state that were already helping job seekers. We did not want to unnecessarily add layers of complexity. We understood that Ohio had a robust collection of organizations engaging with displaced workers. And we knew they offered an array of programs that, among other things, identified someone’s career potential, provided coaching and re-training, and that they sought to connect candidates with businesses looking to hire.

What we realized, however, was that while each of those elements operated well in and of themselves, they were not coordinated in a way that made the whole greater than the sum of the parts. So we concluded that a force-multiplier was required to combat the urgent need caused by COVID-19. We needed something that would pull all of Ohio’s job-seeking resources together. And like the governor requested, we needed to do it fast. That something is Ohio To Work.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

See NAUSEEF on Page 19

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

10 | CRAIN’S CLEVELAND BUSINESS | December 7, 2020

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OPINION

LETTERS TO THE EDITOR

Reasons for optimism for downtown Cleveland In Crain’s Nov. 16 issue, there was a letter to the editor advocating for downtown development in Cleveland to essentially hit the “pause” button for fear of overbuilding apartments. There is no doubt that Cleveland is at an inflection point — as are many other Midwest cities that have experienced a similar downtown revitalization and development boom over the last decade and are now suffering during the pandemic. But with a vaccine within arm’s reach, existing buildings and sites ripe for development or redevelopment, and still untapped demand downtown, I respectfully disagree with the suggestion for developers to be “cautious and patient.” Rather, now is the time to hit the gas, not the brakes.

The building blocks for successful development in Cleveland over the last 10 years have been low interest rates, increasing population downtown creating demand, tax credit programs to tap into, and available real estate. Those building blocks haven’t changed. Sure, the pandemic has forced many businesses into tough decisions, and forced some retailers into closing their doors for good. My clients are mostly owners of office buildings and office tenants throughout Northeast Ohio. The conversations we were having in April about office space needs are very different than the conversations that took place in November.

For the companies I advise, owners of businesses are anxious to get back into the office. It’s difficult to build a culture and work collaboratively when everyone is working from home. Work from home may end up being significantly more prevalent than it was pre-COVID, but office space is still a necessity for many, if not most, businesses. A declining population in the metro area was referenced in the letter, which is true. But the neighborhoods that are growing significantly in population (Gordon Square, Ohio City, downtown) are the very areas that developers are focusing on. These areas can support more thoughtful and appropriately scaled development. You ask if 20,000 residents and 105,000 daytime office workers can hold up. With dozens of development projects currently underway, the pending relocation of the Sherwin-Williams headquarters to Public Square, the massive investment going to public parks such as Irishtown Bend, the Towpath Trail and Canal Basin Park (to name a few) and all the economic building blocks still in place for the continuation of Cleveland’s continued renaissance, and I think Cleveland is poised for an even brighter future. Full speed ahead!

David Leb, senior sales associate Cushman & Wakefield | CRESCO Real Estate

along to renters, and better schools usually mean a long-term appreciation in property value.

Other likely suspects in “no” votes on school levies are those living on fixed income, for whom property tax increases mean less disposable income and, in many cases, less food on their plates. While they may have comprised the bulk of the no vote in the election, they are also unlikely to contribute to an opposition effort at the scale we saw.

From my perspective, the flood of money this fall into outside districts and geographies to influence election outcomes provides a clue to solving the riddle posed: If Cleveland schools get better, who loses? If one looks at Ohio’s report card on the state’s 608 school districts from 2019, Euclid, Garfield Heights, Maple Heights, Warrensville Heights, Richmond Heights and Bedford are all ranked within 22 spots of CMSD, with four of them showing declining performance. If Cleveland schools are better than Euclid schools, for example, would anyone with kids choose to live in Euclid?

Ask anyone who lives in Solon or Rocky River about how top-ranked schools contribute to their housing valuation — for most Americans, their principal financial investment — and one can see this is a substantial motive. If Cleveland schools were better than those in neighboring communities, this could have a devastating impact on property values and tax receipts in those communities.

I hope that Crain’s will continue to investigate this issue, and explore this motive, as you strive to build deeper understanding of the economic issues facing our community.

Grant Goodrich Cleveland

THE BUILDING BLOCKS FOR SUCCESSFUL DEVELOPMENT IN CLEVELAND OVER THE LAST 10 YEARS HAVE BEEN LOW INTEREST RATES, INCREASING POPULATION DOWNTOWN CREATING DEMAND, TAX CREDIT PROGRAMS TO TAP INTO, AND AVAILABLE REAL ESTATE. THOSE BUILDING BLOCKS HAVEN’T CHANGED.

Cleveland schools levy: Who really loses?

I was disappointed by Crain’s reporting on the opposition to Issue 68, the renewal and increase levy for the Cleveland Metropolitan School District. While I appreciate the additional information that did come to light in the article, the article failed to ask the fundamental question, “Who has the most to lose if this levy passes?” Or, put another way, if Cleveland schools get better, who loses?

The “usual suspects” were rounded up: downtown developers and real estate investors. And while some of them may have contributed, that argument always felt a little weak. While the impact of the tax may dampen growth, these individuals were unlikely to lose: In the short term, increases would be passed

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Repeal nuclear bailout bill Judge Alan Koschik of the U.S. Bankruptcy Court Northern District is asking important questions of FirstEnergy Solutions/Energy Harbor’s Washington, D.C., lobbyists: “Bankruptcy judge halts $2.8Grimm million Winter mix 2x4.33.indd payment to Akin Gump”.

But I’m equally interested to find out how two Wall Street vulture fund executives, John Kianni (formerly of Cove Key Management LP), now Energy Harbor executive chairman, and Stephen Burzanian (formerly of Avenue Capital Corp.), now the company’s chief strategy officer, ended up running two of the country’s most outdated and potentially dangerous nuclear power plants, both located in Ohio.

Their former funds bought hundreds of millions of dollars of FirstEnergy Solutions bonds, helped steer its reorganization and became shareholders upon its emergence from bankruptcy.

Then they looted the newly reorganized company and spent $850 million buying back stock that they and their fellow vulture investors had accrued for pennies on the dollar, giving their investors windfall profits and leaving the company once again loaded with debt.

Why the Ohio Assembly would want to give $1 billion in House Bill 6 state subsidies so out-of-state gamers can play high-stakes poker with these dangerous assets begs belief. It’s not like they’re potato chip plants — they’re nuclear reactors!

It’s time for HB 6 to be repealed.

Jeff Barge Cleveland

1

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OVERCOMING PANDEMIC ODDS Some tech areas are proving to be resilient in the COVID-19 era. PAGE 14

MIDDLE MARKET

CYBERTHREATS: HIDING WON’T HELP

BY DOUGLAS J. GUTH | Manufacturers and distributors often ignore key

cybersecurity concerns, a situation exacerbated by homebound staff working on susceptible private networks during the pandemic, according to a new report from professional services firm Sikich.

In a survey of about 50 manufacturing executives nationwide, more than half reported an increase in cybersecurity risk. However, only 35% of respondents said they conducted crucial data-breach prevention activities this year — be it training employees through phishing exercises or performing penetration tests to determine network vulnerability.

Manufacturers are far from safe when it comes to cyber-related risk — nearly half of survey participants said their companies suffered data breaches in the past 12 months. Brad Lutgen, partner-in-charge of Sikich’s cybersecurity team, frequently encounters a “security through obscurity” attitude among manufacturing executives, who believe the average hacker isn’t focused on the industry.

“THEY SAY I MAKE A WIDGET, AND NOBODY CARES ABOUT MY WIDGET, SO I CAN PUT MY HEAD IN THE SAND. BUT RANSOMWARE ATTACKS ARE NONDISCRIMINATORY.” — Brad Lutgen, partner-in-charge of Sikich’s cybersecurity team

NASTCO VIA ISTOCK

Manufacturers of all sizes need to get real about cybersecurity “They say I make a widget, and nobody cares about my widget, so I can put my head in the sand,” Lutgen said. “But ransomware attacks are nondiscriminatory. Hackers are attacking huge blocks of IP addresses or conducting giant phishing campaigns. They’re attacking businesses without even knowing what they are.”

Ransomware, in particular, has become a major threat to the manufacturing industry from cybercriminals targeting the industrial control systems (ICS) that manage operations. As manufacturers can’t afford long shutdowns, they are more likely to acquiesce to hacker demands and pay large sums of bitcoin in exchange for getting their networks back. Lack of robust cybersecurity protections makes the industry even more of a tempting mark for opportunistic wrongdoers.

See CYBERSECURITY on Page 16

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TAX TIPS

How to take advantage of CARES Act NOL deductions BBY JONATHAN CICCOTELLI

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Donald Trump on March 27. The legislation was enacted primarily to Ciccotelli is provide needed partner-infunds to individu- charge for als who would lose Meaden & their jobs during Moore’s Tax the lockdown and Services Group. for businesses that expected to be impacted by the pandemic.

An important change under the CARES Act temporarily reduces the restrictions on the net operating loss (NOL) deduction under IRC 172, which allows some businesses to obtain refunds or credits by filing an application for a tentative carryback adjustment under IRC 6411. As a result of COVID shutdowns, many businesses will sustain losses this year, thus creating a NOL. Therefore, it is important for businesses in a NOL position to determine how to best take advantage of these losses under the CARES Act provisions.

PRIOR TO CARES: Prior to the Tax Cuts and Jobs Act (TCJA), a NOL deduction generally could be carried back two years and forward 20 years. In addition, generally the only dollar limitations that existed on the amount of the NOL was the amount of taxable income.

AFTER THE TCJA: Under the TCJA, the carryback rule was eliminated for most NOLs arising in tax years beginning after Dec. 31, 2017. However, NOLs arising in a tax year beginning after that date could be carried forward indefinitely.

The TCJA also limited the amount of a NOL deduction that can be used in a given year. For tax years beginning after Dec. 31, 2017, the NOL deduction was limited to the lesser of: 1. The aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, or 2. 80% of taxable income computed without regard to the deduction allowable under pre-CARES Act IRC §172(a).

CARES ACT: The CARES Act temporarily reinstates a carryback period for all NOLs generated in years beginning after Dec. 31, 2017, and before Jan. 1, 2021. The carryback period for those tax years is five years. Therefore, a NOL generated in the 2018 tax year can be carried back to the 2013 tax year, assuming there was taxable income in 2013. Since the top corporate tax rate was 35% prior to its reduction by the TCJA to 21% for tax years after 2017, carrying back a NOL from 2018, 2019 or 2020 may potentially result in a greater benefit than carrying the NOL forward.

For example: Corporation ABC incurs a $1,000,000 tax loss in 2018. In addition, Corporation ABC had taxable income over $1,000,000 in 2013. The present value of tax savings from the NOL carryback to 2013 would be approximately $350,000, while if Corporation ABC carried the loss forward, the present value of the NOL would most likely be less than $210,000 based on the top corporate tax rate of 21%.

The CARES Act IRC 6411 allows a taxpayer to file an application for a tentative carryback adjustment of tax liability for a prior year into which the

NOL can be used. To apply for this carryback adjustment, corporate taxpayers are required file Form 1139, Corporation Application for Tentative Refund. Individual taxpayers are required to file Form 1045, Application for Tentative Refund. The taxpayer has 12 months from the end of the NOL tax year to file the application. IRC 6411(b) states that within 90 days of filing the application, the IRS will credit, apply or refund any overpayment.

Under the post CARES Act rules, NOL taxpayers should consider how they treated NOLs in those years and whether and how to revise that treatment.

80% LIMITATION RULE: The TCJA’s limita-

come computed without regard to the NOL deduction and the qualified business income, and foreign-derived intangible income and global intangible low-taxed income deductions.

For example: Corporation XYZ’s 2021 tax year begins after Dec. 31, 2020, the 80% rule applies. The 2017 NOL can be fully applied to reduce the 2021 taxable income of $180,000 ($200,000 taxable income, less the $20,000 2017 NOL). In addition, Corporation XYZ can deduct the lesser of 1. The aggregate amount of the NOLs incurred after Dec. 31, 2017, or $300,000 ($100,000 + $50,000 + $150,000); or 2. 80% of taxable income before an IRC 172 deduction, which is $160,000

($200,000 times 80%). Since $160,000 is less than the $300,000 aggregate carryovers from the tax years 2018, 2019 and 2020, the maximum NOL deduction is $180,000 ($20,000 from the 2017 NOL, plus $160,000, or 80% of taxable income).

TAKING ADVANTAGE OF NOLS: The CARES Act temporarily restores the NOL deduction by reinstating the carryback and removing the limitations on the amount of the NOL deduction. However, NOL rule changes under the CARES Act only apply to tax years 2018, 2019 and 2020. Taxpayers that incurred a NOL during these three years should be aware of these rule changes so that they can maximize the value of their NOLs.

THE POWER OF

TRASH. A

t first glance, the expansive greenspace in Brooklyn, Ohio looked like a lush piece of land ripe for development. But beneath it sat thousands of tons of rotting trash. It was a capped landfill, and the city didn’t know what to do with it.

Regulations prohibited development, and some of the waste materials below meant it couldn’t be used as a park. The options were limited.

But Katie Gallagher, Brooklyn’s mayor, worked with Cuyahoga County to turn the otherwise unproductive landfill site into a solar farm, producing an estimated 5 million kilowatthours of electricity per year.

“AN INTERNSHIP DURING MY TIME AT JOHN CARROLL TAUGHT ME ABOUT BROWNFIELDS. AND THAT BECAME EXTREMELY RELEVANT TO THE WORK WE DID ON THE LANDFILL. NOW, IT’S A REVENUE SOURCE FOR US, AND AN OPPORTUNITY TO HAVE GREEN INFRASTRUCTURE WITHIN THE COMMUNITY,” Gallagher said.

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P013_CL_20201207.indd 13

tion of 80% of taxable income applied to all NOLs incurred in tax years beginning after Dec. 31, 2017. The CARES Act temporarily suspends this 80% taxable income limitation. This in-turn allows a NOL carryforward to fully offset taxable income in tax years beginning before Jan. 1, 2021.

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Katie Gallagher, a first-generation college student, graduated from John Carroll in 2003 with a degree in political science and business management.

“IT WAS AT JCU WHERE I DEVELOPED THAT LOVE OF LEARNING AND SERVICE,” Gallagher said.

Now, elected to a second term, Gallagher has even bigger plans for the city. And if she can turn trash into energy, who knows what she’ll do next.

Find her story and others at jcu.edu/humanimpact

Shortly after graduation she earned a master’s and law degree—and took her passion for service into her work as a city council member and later, the mayor of Brooklyn.

BRAVE YOUR QUEST

December 7, 2020 | CRAIN’S CLEVELAND BUSINESS | 13 9/8/20 3:05 PM

12/3/2020 1:36:42 PM

FOCUS | MIDDLE MARKET

While other industries struggle, COVID-19 brings tech to forefront Remote work is helping to boost cloud services, IT infrastrucuture and software needed for business

BY DOUGLAS J. GUTH

The coronavirus pandemic is putting a stranglehold on numerous industry sectors with no clear path to recovery evident. Technology markets haven’t escaped the virus, thanks to raw materials and electronics value chain disruptions resulting in downstream effects on products and services.

Though the lasting impact of COVID-19 remains unknown, some technology subsectors have proven to be more resilient. The hastening of remote working, in particular, has speeded the adoption of cloud services, IT infrastructure and business-critical software, according to industry observers interviewed by Crain’s.

“We know companies are hurting, including our customers,” said Ed McQuiston, executive vice president and chief commercial officer at content services provider Hyland Software. “But businesses had been accelerating their digital transitions before the coronavirus. Slower decision-making processes got set aside out of necessity once this hit.”

Hyland had tools in place to quickly adapt to state stay-at-home orders.

Areas like higher education haven’t been so fortunate, with higher-ed chief information officers reaching out for digital credential solutions to

“WE KNOW COMPANIES ARE HURTING, INCLUDING OUR CUSTOMERS. BUT BUSINESSES HAD BEEN ACCELERATING THEIR DIGITAL TRANSITIONS BEFORE THE CORONAVIRUS. SLOWER DECISION-MAKING PROCESSES GOT SET ASIDE OUT OF NECESSITY ONCE THIS HIT.” — Ed McQuiston, executive vice president and chief commercial officer, Hyland Software

get students their diplomas in a timely manner. Additional Hyland offerings connect all institutional data within the student record, eliminating silos in different departments.

The Westlake-based company’s five other core verticals — health care, government, insurance, commercial services and financial services — are adjusting to pandem-

ic-wrought change as clients plan for permanent modifications to consumer behavior.

COVID-19 has had an unprecedented impact on health care, giving providers worldwide a crash course in emergency preparedness, McQuiston said. Web-based image viewers designed by Hyland use advanced visualization features for remote interpretation of X-rays and ultrasounds.

Hyland also is busy in the robotic process automation (RPA) space, in August acquiring German-based RPA software developer Another Monday. Designed to reduce the burden of repetitive tasks, the highly configurable RPA market will be a major facet of operations in need of social distancing.

“I talk to our customers about differentiating between ‘new normal’ and ‘next normal,’” McQuiston said.

“Businesses are embracing technology to thrive in the new normal, but they need to prepare for the next normal, because consumer behavior has changed forever.”

Digital adjustments Shutdowns of offices, schools and enterprises have increased demand for cloud services. According to Research and Markets, the global cloud computing space is expected to bal-

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6

Sec ma adv

ghts,

ERHUI1979 VIA ISTOCK

President and CEO Chris Adams said a new service category — Discovery, Monitor, Support, Optimize, or DMSO — has been further emphasized in 2020 due to the pandemic.

“It drove the lack of need for person-to-person interaction,” said Adams, whose company will generate $600 million in revenue this year, a figure that includes revenue from the Curvature acquisition. “Like a data center customer that had employees walking the floor to look for issues.

Now we can deploy those monitoring solutions rather than having physical monitoring.”

Stress on networks has increased as digital traffic transitions to the

loon from $371.4 billion this year to $832.1 billion by 2025.

Global giants and middle-market firms alike are offering cost-effective digital solutions as customers recalibrate their business around the COVID-19 pandemic. Park Place Technologies, a Mayfield Heights data center hardware-maintenance company, has hastened its shift from in-person upkeep to remote monitoring in light of the virus crisis.

Park Place, which doubled its size in November with the acquisition of data center equipment supplier Curvature Inc., already had been moving from manual processes to automated detection of digital infrastructure.

cloud from internal firewalls. Automated network discovery tools, which include network mapping software to rapidly unearth data center problems, came to market during a time that pre-dates the current remote-focused environment.

The pandemic quickened that pace, increasing by 35% the amount of digital assets Park Place monitors remotely.

“Large companies don’t know what kind of equipment they have in terms of servers and storage arrays, so we brought market tools for them to take inventory,” Adams said. “Now we can do that digitally. It’s a big win.”

“LARGE COMPANIES DON’T KNOW WHAT KIND OF EQUIPMENT THEY HAVE IN TERMS OF SERVERS AND STORAGE ARRAYS, SO WE BROUGHT MARKET TOOLS FOR THEM TO TAKE INVENTORY. NOW WE CAN DO THAT DIGITALLY. IT’S A BIG WIN.” — Chris Adams, president and CEO, Park Place Technologies

Youngjin Yoo, a professor of design and innovation at Case Western Reserve University’s Weatherhead School of Management, said cloud services and network device companies will flourish post-pan-

demic as the way we collaborate continues to evolve.

“I see a rebalance of where we work and how we work,” Yoo said.

“We may not need to be 100% faceto-face in the future. People know they can get things done and create different types of interaction in virtual reality. Mindfulness about health will be the cost of doing business and part of the technology infrastructure.”

Yoo also wonders how retailers will stay in front of audiences even as consumers remain sheltered in place. Pointing to millennial shoppers rejecting national brands, Yoo envisions platforms like Etsy having an even bigger role in connecting small businesses to the global marketplace.

“I hope we see a concerted effort to create this ecosystem that helps local businesses revive,” Yoo said.

McQuiston of Hyland said a coordinated cloud modernization strategy is the watchword for 2021 and beyond, with a special focus on clients’ customers. For example, people buying insurance 20 years ago would simply seek out the biggest company, while today’s consumer favors the simplest online application where claims can be easily paid.

“How do we meet those needs in an agile way, with a focus on configurability?” McQuiston said. “We understand those realities, and that’s been a meaningful thing for customers.”

Contact Douglas J. Guth: clbfreelancer@crain.com

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DECEMBER 7, 2020 | CRAIN’S CLEVELAND BUSINESS | 15

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FOCUS | MIDDLE MARKET

CYBERSECURITY

Digital combat

From Page 12

Companies utilizing ICS over traditional IT are prime targets, considering it’s more common for ICS to have missing patches, default passwords and overall weak configurations, Lutgen said. Some breaches leverage the vulnerabilities of networked manufacturing machines defended by outmoded systems, he added.

“A manufacturer may have a specifically designed piece of equipment that’s running Windows 98 to run a single task,” he said. “If it’s running on an outdated system, it has to be segmented from other things on the network.”

No one’s safe Lumitex CEO and president Peter Broer knows too well the stress caused by an online attack. In February 2019, the Strongsville midmarket lighting solutions provider had its operations shut down by a Romanian cybercriminal gang. The GandCrab ransomware strike held Lumitex’s system hostage, with hackers demanding a sum before the malicious software would be lifted.

“PCs, servers, email files and our MRP (a computer-based inventory management system) were all locked up,” Broer said. “I would describe it as a nightmare I’d never want to relive.

Someone is controlling your life.”

Broer brought in a team of consultants, security people and forensic investigators, who, along with Lumitex IT system support specialist Drew Maniglia, labored for two weeks to regain system access. The company’s managed IT services provider (MSP) paid the ransom — an amount Broer declined to ask about — freeing up the network without Lumitex missing a customer order.

The hackers exploited remote mon-

Strongsville midmarket lighting maker Lumitex was a target of a cyberattack. The company, which makes things like lights that go inside MRI machines, worked for two weeks to regain its network, though it never missed a customer order. | CONTRIBUTED

“PCS, SERVERS, EMAIL FILES AND OUR MRP (A COMPUTERBASED INVENTORY MANAGEMENT SYSTEM) WERE ALL LOCKED UP. I WOULD DESCRIBE IT AS A NIGHTMARE I’D NEVER WANT TO RELIVE. SOMEONE IS CONTROLLING YOUR LIFE.” ——Peter Broer, Lumitex CEO and president

itoring software that Lumitex’s MSP had yet to patch against GandCrab. In response, the 160-employee enterprise replaced its MSP, further bolstering its system via a new firewall, isolated backups, better defensive software and an updated patch schedule.

Upgraded virtual private network (VPN) procedures and credentialing are now protecting employees during remote work. Not only should manufacturers take cybersecurity seriously, Broer said, they must put numerous barriers between potentially infected systems and copies of important files.

“Backups are key, and they have to be remote,” he said. “Also be comfortable with your MSP. Do they have the sophistication and tools you need, or are they stretched too thin?”

The coronavirus pandemic, which has sent many office workers to insecure remote environments, has only elevated the risk companies like Bro-

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“THEY RECOGNIZE CYBERSECURITY AS A PROBLEM. WHAT THEY DON’T RECOGNIZE IS THAT IN THE WORLD OF CYBERSECURITY, THE SLOWEST GAZELLE GETS EATEN. THERE’S NO ‘I’M SAFE,’ THERE’S ONLY, ‘I’M SAFER THAN OTHER PEOPLE.’” ——Ethan Karp, president and CEO of MAGNET

er’s face, said Lutgen of Sikich.

Work-from-home situations at Sikich are secured by long-standing encrypted VPNs. But some manufacturers accustomed to traditional office settings are telling their homebased workers to connect to networks via a private PC or laptop, leaving both parties open to attack.

Thieves know that hefty ransomware payouts are preferable to networkwide shutdowns, said Ethan Karp, president and CEO of the Manufacturing Advocacy & Growth Network, or MAGNET. Gaining enough control of a network also can allow hackers to access intellectual property and other sensitive data residing within the system.

While the sector makes use of basic security tools, it too often uses technology as a shield against implementation of other safeguards, Karp said.

The National Institute of Standards and Technology (NIST) offers cybersecurity guidelines for private-sector companies to follow, but there is no real enforcement behind regulations.

“Businesses will say their IT company told them their firewall is good, so they don’t need an audit,” Karp said. “They recognize cybersecurity as a problem. What they don’t recognize is that in the world of cybersecurity, the slowest gazelle gets eaten.

There’s no ‘I’m safe,’ there’s only, ‘I’m safer than other people.’”

Contact Douglas J. Guth: clbfreelancer@crain.com

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MAGNET “hacks” into client networks to identify vulnerabilities, ideally future-proofing companies from a genuine attack. Even so, too many manufacturers overlook human error when protecting their systems, Karp said. Though MAGNET has received extremely detailed spoofed emails asking for passwords and additional data, the organization has protocol in place to ensure threats don’t go beyond the phishing stage. Clients haven’t always been so fortunate, including one that paid out a $60,000 invoice in response to a spoofed vendor email.

“These are super accurate emails with a one-letter difference in the email address,” Karp said. “It’s hand-to-hand combat against a human being who spends all their time doing this.”

Spending money on the technical aspects of cybersecurity does not preclude what Karp calls “paranoid common sense” — a kind of staffwide social engineering where caution becomes second nature. Companies may send out quarterly missives citing the consequences of common online scams, while proactive firms circulate phishing emails to unsuspecting employees, requiring additional training for individuals who click on mocked-up links.

Lutgen said regular architecture reviews can help businesses identify important assets and keep devices up to date. As for employee training, opening a phishing email likely won’t cause damage. But opening a link or attachment can cost a company hundreds of thousands of dollars in “ransom” or significant downtime that can be costly itself.

A comprehensive cybersecurity strategy begins with manufacturing execs recognizing the potential for disaster, Karp said.

“It’s embarrassing to have to spend money to fix a cybersecurity problem, so companies often don’t talk to one another about it,” he said. “There’s no stigma in being attacked — if someone wants to get into your company, they will. Don’t be ashamed if you’ve been hacked. Tell others so they don’t have these problems. Let’s protect the entire industry.”

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16 | CRAIN’S CLEVELAND BUSINESS | December 7, 2020

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12/3/2020 1:41:05 PM

FOCUS | MIDDLE MARKET

Sight screening tool shines light on Volk Optical’s expansion

New portable retinal camera helps Mentor manufacturer transform into full-fledged optic imaging company BBY JUDY STRINGER

Volk Optical Inc. recently took a big leap forward in its 4-year-old evolution from a lens-only supplier for the ophthalmic industry to a fullfledged optic imaging company.

In August, the Mentor manufacturer, which is owned by British holding company Halma PLC, announced the release of VistaView, a portable retinal camera used to photograph the back of the eye.

“We are a leader in ophthalmic lenses used for diagnosis and treatment of eye disease. We have been designing and developing lenses for almost 50 years,” said Volk president Dr. Jyoti Gupta. “What we are doing now is taking this further by building enabling solutions that leverage our core strength in optics and our deep understanding of our customer needs.”

Gupta said portable retinal cameras have emerged over the past couple of years as handheld alternatives to traditional bulky tabletop technologies. Providing eye doctors with handheld screening devices allows them to perform sight-saving diagnostic tests “wherever they are,” she said.

VistaView is not the first portable retinal camera that Volk markets or that uses its optics, but it is the company’s first end-to-end retinal screening device. In addition to the hardware — the optics and smartphone technologies — the device integrates software to allow physicians to capture, view, assess and share images.

“The innovation is really around digitizing the exam and miniaturizing the device without compromising quality,” said Gupta, who joined the company in her leadership role in 2016 and has been the driving force behind Volk’s expansion into portable camera systems.

She said Volk also focused on making VistaView affordable and easy to use.

“The objective is that any lay person can eventually pick up a retinal camera and figure out how to use it,” she said.

Portable devices like VistaView enable screening tests to be done outside of provider settings in community centers, for example, or office buildings. Gupta thinks these devices can play a lead role in delivering quality eye care to underserved communities in the U.S. and abroad, especially as more areas get wired with internet connections that support telemedicine.

Her team has already seen that happen, most recently traveling with doctors who used their device in clinics in rural Pennsylvania and inner-city Houston, as well as Nigeria and India.

“We are seeing that door opening here and there, but it will take some time for the impact to be widespread,” she said.

In the meantime, Gupta said, the company continues to innovate within its core competency, ophthalmic lens. Volk makes more than 100 different lenses, the vast majority of which it sells directly to eye doctors or ophthalmic distributors.

Its most recent development on that front was the release of Rapid SLT, a lens designed to reduce treat-

ment times and increase patient comfort for glaucoma laser procedures.

“That lens has been very well received globally,” she said. “We are actively working on additional surgical lenses and laser lenses, because we are seeing a lot of growth in those areas.”

Gupta declined to provide a financial snapshot of the company, although she said the company saw “double-digital sales growth” in 2018 and 2019.

Parent company Halma reported

“WE ARE ACTIVELY WORKING ON ADDITIONAL SURGICAL LENSES AND LASER LENSES, BECAUSE WE ARE SEEING A LOT OF GROWTH IN THOSE AREAS.” ——Dr. Jyoti Gupta, Volk president

a 9% bounce in revenue in its 2020 annual report, released in March.

Volk is part of Halma’s 14-company medical group, which represented

26% of its 2020 overall earnings, according to the report, and saw a 7% revenue increase to $463 million between March 2019 and March 2020.

As for Volk’s 2020, Gupta said sales “have been picking up in the U.S. and internationally.” COVID-fueled lockdowns shuttered offices of nonessential health providers and, in many cases, delayed scheduled equipment purchases, resulting in a bumpy first half for suppliers.

The company, she added, “will continue to invest in our future and our growth,” whatever path the current pandemic wave takes.

Contact Judy Stringer: clbfreelancer@crain.com

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December 7, 2020 | CRAIN’S CLEVELAND BUSINESS | 17

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CRAIN'S LIST | HOSPITALS Ranked by 2019 net patient revenue NET PATIENT REVENUE (MILLIONS) RANK

HOSPITAL

2019

2018

% CHANGE

FTE STAFF 9-1-2020

STAFFED BEDS

YEAR FOUNDED

PARENT ORGANIZATION

TOP EXECUTIVE

1

CLEVELAND CLINIC — MAIN CAMPUS 9500 Euclid Ave., Cleveland 44195 216-444-2200/clevelandclinic.org

$5,566.4

$5,164.4

7.78

32,661

1,298

1921

Cleveland Clinic Health System

Tomislav "Tom" Mihaljevic president, CEO

2

UNIVERSITY HOSPITALS CLEVELAND MEDICAL CENTER 11100 Euclid Ave., Cleveland 44106 216-844-1000/uhhospitals.org

$2,677.4

$2,544.8

5.21

17,013

890

1866

University Hospitals

Daniel I. Simon president

3

VA NORTHEAST OHIO HEALTHCARE SYSTEM 10701 East Blvd., Cleveland 44106 216-791-3800/cleveland.va.gov

$1,261.9 1

$1,113.0 1

13.38

4,889

674

1946

Department of Veterans Affairs

Jill K. Dietrich executive director, CEO

4

THE METROHEALTH SYSTEM 2500 MetroHealth Drive, Cleveland 44109 216-778-7800/metrohealth.org

$1,064.1

$1,022.4

4.08

7,087

426

1837

The MetroHealth System

Akram Boutros president, CEO

5

AKRON CHILDREN'S HOSPITAL One Perkins Square, Akron 44308 330-543-1000/akronchildrens.org

$915.3

$813.6

12.49

5,402

462

1890

Children's Hospital Medical Center of Akron

Grace Wakulchik president, CEO

6

SUMMA HEALTH SYSTEM — AKRON AND ST. THOMAS CAMPUSES 141 N. Forge St., Akron 44304 330-375-3000/summahealth.org

$708.0

$646.4

9.54

3,572

583

1892

Summa Health System

Cliff Deveny president and CEO - Summa Health System

7

CLEVELAND CLINIC AKRON GENERAL HOSPITAL One Akron General Ave., Akron 44307 330-344-6000/akrongeneral.org

$634.6

$609.8

4.07

4,347

524

1914

Cleveland Clinic Health System

Brian Harte president

8

FAIRVIEW HOSPITAL 18101 Lorain Ave., Cleveland 44111 216-476-7000/fairviewhospital.org

$507.0

$482.0

5.18

2,329

509

1892

Cleveland Clinic Health System

Neil P. Smith president

9

HILLCREST HOSPITAL 6780 Mayfield Road, Mayfield Heights 44124 440-312-4500/hillcresthospital.org

$494.5

$467.1

5.87

2,127

490

1968

Cleveland Clinic Health System

Richard D. Parker president

10

AULTMAN HOSPITAL 2600 Sixth St. S.W., Canton 44710 330-452-9911/aultman.org

$470.4

$511.2

-7.99

2,722

516

1892

Aultman Health Foundation

Christopher E. Remark CEO

11

SOUTHWEST GENERAL 18697 Bagley Road, Middleburg Heights 44130 440-816-8000/swgeneral.com

$395.0

$370.9

6.5

1,887

273

1920

Southwest General, partnering with University Hospitals

William A. Young Jr. president, CEO

12

MERCY HEALTH — ST. ELIZABETH YOUNGSTOWN HOSPITAL 1044 Belmont Ave., Youngstown 44501 330-746-7211/mercy.com/youngstown

$388.6

$371.4

4.63

2,000

377

1911

Bon Secours Mercy Health

John Luellen market president

13

MERCY MEDICAL CENTER 1320 Mercy Drive N.W., Canton 44708 330-489-1000/cantonmercy.org

$351.2 2

$330.1 2

6.39

2,220 2

338 2

1908

Sisters of Charity Health System

Thomas J. Strauss interim CEO

14

FIRELANDS REGIONAL MEDICAL CENTER 1111 Hayes Ave., Sandusky 44870 419-557-7400/firelands.com

$265.7

$280.8

-5.38

1,719

287

1876

Firelands Regional Health System

Jeremy Normington-Slay president, CEO

15

MERCY HEALTH — ST. ELIZABETH BOARDMAN HOSPITAL 8401 Market St., Boardman 44512 330-729-2929/mercy.com/youngstown

$223.1

$197.7

12.81

842

217

2007

Bon Secours Mercy Health

Eugenia "Genie" Aubel president

16

UNIVERSITY HOSPITALS AHUJA MEDICAL CENTER 3999 Richmond Road, Beachwood 44122 216-593-5500/uhahuja.org

$220.9

$222.2

-0.57

906

147

2010

University Hospitals

Alan J. Papa president

17

UNIVERSITY HOSPITALS ELYRIA MEDICAL CENTER 630 E. River St., Elyria 44035 440-329-7500/uhelyria.org

$203.3

$221.6

-8.26

1,071

234

1908

University Hospitals

Kristi M. Sink president

18

MERCY HEALTH — LORAIN HOSPITAL 3700 Kolbe Road, Lorain 44053 440-960-4000/mercy.com

$199.2

$203.9

-2.27

1,038

125

1892

Bon Secours Mercy Health

Edwin M. Oley market president

19

WEST MEDICAL CENTER 36000 Euclid Ave., Willoughby 44094 440-953-9600/lakehealth.org

$193.2 3

$191.7 3

0.81

2,147 4

267

1961

Lake Health

Cynthia Moore-Hardy president, CEO

20

TRIPOINT MEDICAL CENTER 7590 Auburn Road, Concord Township 44077 440-375-8100/lakehealth.org

$190.5 3

$189.0 3

0.81

2,147 4

135

2009

Lake Health

Cynthia Moore-Hardy president, CEO

21

UNIVERSITY HOSPITALS PARMA MEDICAL CENTER 7007 Powers Blvd., Parma 44129 440-743-3000/uhparma.org

$183.2

$175.1

4.6

929

216

1961

University Hospitals

Brian S. Monter president

22

UNIVERSITY HOSPITALS GEAUGA MEDICAL CENTER 13207 Ravenna Road, Chardon 44024 440-285-6000/uhgeauga.org

$182.5

$171.9

6.16

726

158

1952

University Hospitals

Donald P. DeCarlo president

23

MERCY HEALTH — ST. JOSEPH WARREN HOSPITAL 667 Eastland Ave. S.W., Warren 44484 330-841-4000/mercy.com/youngstown

$171.1

$163.2

4.84

791

132

1924

Bon Secours Mercy Health

Kathy Cook president

24

SUMMA HEALTH SYSTEM — BARBERTON CAMPUS 155 Fifth St. N.E., Barberton 44203 330-615-3000/summahealth.org

$168.7

$196.1

-14

698

144

1915

Summa Health System

Michael Hughes president

25

UNIVERSITY HOSPITALS ST. JOHN MEDICAL CENTER 29000 Center Ridge Road, Westlake 44145 440-835-8000/uhstjohn.org

$158.1

$158.2

-0.04

806

170

1981

University Hospitals

Robert G. David president

Researched by Chuck Soder: csoder@crain.com | Revenue and employment figures often include outpatient clinics and other offsite locations affiliated with the hospital. Information is from the hospitals unless footnoted. NOTES: 1. Total operating budget for all locations in Northeast Ohio; includes flat annual per patient payments 2. Information is from the American Hospital Directory, www.ahd.com. Employee numbers represent total employees, not FTEs, and are accurate as of the hospital's most recent Medicare Cost Report. Staffed beds equals the number of total complex beds. 3. Estimate calculated from Lake Health's overall net patient revenue; TriPoint Medical Center's estimate also includes revenue from all offsite locations. 4. Includes all Lake Health employees

Get all 52 hospitals and more executives in Excel format. Become a Data Member: CrainsCleveland.com/data 18 | CRAIN’S CLEVELAND BUSINESS | December 7, 2020

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DATA SCOOP

Hospitals continued to grow pre-pandemic BBY LYDIA COUTRÉ

The years-long trend of growth among Northeast Ohio’s hospitals continued in 2019.

Though 2020 has delivered a blow to hospital finances here and across the country, many in Northeast Ohio began the year strong.

Net income of the 20 largest hospitals in the region grew by 237% between 2018 and 2019.

Cleveland Clinic’s main campus net income rebounded last year from a huge drop in 2018, which accounts for much of that growth, but even factoring out the Clinic’s main campus, net income among the largest 20 hospitals grew by 61.6%.

This is much closer to the 69.3% growth seen among the rest of the region’s hospitals.

Combining all hospitals, the median percent change in net income between 2019 and 2020 was 31.7%.

Employment for all of the hospitals combined dropped by 0.2% for the 12-month period ending Sept. 1 of this year.

Separating the hospitals by size shows that the 20 largest hospitals’ employment grew ever so slightly (0.1%), while employment at the other hospitals fell 2%.

Looking at the last two years com-

bined, the overall drop in employment is 1.1% for all hospitals combined.

The total number of staffed beds remained relatively flat, with a 0.3% decrease between 2019 and 2020.

Net patient revenue increased by 5.6% between 2018 and 2019, with two-thirds of the region’s hospitals experiencing growth. Between 2017 and 2019, net patient revenue growth was 11.2%.

Among the 20 largest hospitals, five saw declines in net patient revenue from 2018 to 2019: Aultman Hospital, Firelands Regional Medical Center, University Hospitals Ahuja Medical Center, UH Elyria Medical Center and Mercy Health — Lorain Hospital.

How the pandemic will change the numbers is yet to be seen, especially as cases, hospitalizations and deaths continue to climb.

The Ohio Hospital Association has estimated that hospitals in the state are losing roughly $6 million in revenue each day. And though CARES Act funds and other supports have offset this, the remaining loss is substantial. As of late November, the OHA calculated a $1.84 billion funding gap.

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

NAUSEEF

From Page 10

How and where it’s going Since its September launch, more than 1,700 Ohioans have received career coaching from an Ohio To Work service provider partner, including the Urban League of Greater Cleveland, Goodwill of Greater Cleveland and East Central Ohio, and Ohio Means Jobs. So far, 46 employers have committed to support Ohio To Work, with more expressing interest. Collectively, these companies would like to hire more than 2,000 workers in the Cleveland/ Cuyahoga County area. We have also partnered with six training providers who know how to prepare candidates for the types of jobs that are now in demand. And funding is being made available to help candidates as they go through the reskilling process. JobsOhio’s industry sector partners — MAGNET, Team NEO, Cuyahoga Community College and the Greater Cleveland Partnership — continue to provide critical support across the Ohio To Work pilot initiative, including when we held a virtual career fair in October that touched more than 700 job seekers and connected them with coaches and employers. More career fairs are planned, and the next one, focused on diversity and inclusion, is set for Thursday, Dec. 10. Interested job seekers can visit OhioToWork.com for details.

There are real people behind those numbers. One career coach from our Goodwill partner told us about a job

seeker who interviewed for a position in manufacturing, which was not her background, and happily discovered that the employer would be willing to train her. Another coach at Ohio Means Jobs shared a story about a client who had only ever thought about truck driving as an option, and now, thanks to discovering potential new career paths through an Ohio To Work artificial intelligence tool, they were going to a career fair to explore a wider range of job possibilities. And at the Urban League, a coach was helping someone with a bachelor’s degree in nonprofit management who had been working in childcare, but now realized they had an aptitude for accounting and could look into a job in banking among other areas.

Central to the entire effort is our long-standing commitment to advance equity. One of the reasons we selected Greater Cleveland for the pilot initiative is that minority job seekers and minority-owned businesses there have been disproportionately impacted by the pandemic. Our partners have deep experience serving minority communities. The planned diversityand inclusion-focused career fair on Dec. 10 is a key element of Ohio To Work. And among other things, we are emphasizing expanded access to reskilling, including partnering with programs such as We Can Code IT, which is dedicated to promoting tech in minority communities.

By better connecting our Ohio To Work partners, we are in effect supercharging the existing workforce ecosystem. Through this collaboration, we have hosted virtual sessions to in-

troduce employers and career coaches, allowing them to share insights with each other, as well as provide coaches a more direct line to employers. We are able to deliver the latest business intelligence, about employer needs and in-demand training programs, to our service provider partners and coaches. Ohio To Work is also leading by delivering cutting-edge solutions and data for job seekers, piloting the latest in workforce tech — artificial intelligence tools — to help job seekers discover new career paths. And we are doing our best to ensure those paths involve in-demand skills to make careers as future-proof as possible.

No matter where you might be in your career journey — whether you’re ready to find your next opportunity or just starting to consider your options — the Ohio To Work partners want you to know there are resources to support you. A lot of it can be done remotely, like building digital skills, or enrolling in a fully virtual bootcamp to become a software developer. We hope you will visit OhioToWork.com to explore ways you can immediately start investing in your future.

The Ohio To Work pilot is still running, and the idea is for all of this to be just the beginning. We are learning what works and what needs to be improved, with a plan to expand the Ohio To Work initiative to other areas of the state. JobsOhio is proud that we can pivot quickly, and in this case, innovate at the speed of crisis.

We could not accomplish it without the support of our partners. Why are all of us doing it? Because we can. It’s what Ohioans deserve.

The value of visionary leadership.

In his nearly two decades as CEO of University Hospitals, Tom Zenty has been committed to advancing the science of health and the art of compassion, enabling UH to evolve into an academic health system with a national reputation for providing the highest quality of care.

Expanding our system to bring more hospitals and more physicians to more communities Recruiting, retaining, and supporting top talent Building a research program that has generated breakthrough treatments In celebration of your retirement from UH, we’d like to say thank you, Tom. Your leadership, dedication and humanity have enriched our community’s health and well-being for generations to come.

The science of health.

The art of compassion.

“UH’s past, present and future are not defined by any one person – they are a collective effort, a shared pursuit.

Community is in our DNA.”

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AKRON HEALTH CARE

Apex Dermatology expands with new office in North Canton Center is the 10th location for Mayfield Heights-based practice BBY DAN SHINGLER

The Canton area is getting a new dermatology provider, thanks to the relentless expansion of Apex Dermatology & Skin Surgery Center.

The Mayfield Heights-based practice, started in Concord in 2011 by Dr. Jorge Garcia-Zuazaga, has been steadily expanding since its inception. Its newest office opens on Munson Street in North Canton on Monday, Dec. 7.

“Canton’s going to be our 10th office. We see over 6,000 patients per month now,” Garcia-Zuazaga, president of Apex, said as he was preparing to open the new office in late November. He confirmed on Thursday, Dec. 3, that the opening was on schedule for Dec. 7.

Dr. Patrick Killian has been hired as the North Canton office’s first fulltime physician, and certified physician’s assistant Jackie Hollcraft has been brought on to run the office, Garcia-Zuazaga said.

The 5,000-square-foot office will start with a staff of five, plus Garcia-Zuazaga, who will also do some surgery and procedures there, he said.

The new hires bring the total number of physicians working at Apex, which has all of its offices in Northeast Ohio, to 20, Garcia-Zuazaga said.

Based on what he’s seen at his other offices, he thinks the Canton-area location will expand quickly.

“I bet within a year or two we’re doubling in size there, just because of the need,” he said.

Demand for dermatology services, especially with regard to skin cancer, is increasing, Garcia-Zuazaga said, adding that has been the rationale behind his previous expansions. He said he looks for places where demand has outpaced supply and wait times are long. He thinks he's found one in North Canton.

“Canton has a huge need for dermatology access. We’re going to start

Garcia-Zuazaga Drs. Alexa Stecker (left), Jorge Garcia-Zuazaga and Kristina Petkovic are part of Apex Dermatology’s burgeoning practice in Northeast Ohio. | APEX DERMATOLOGY

from Day One providing Mohs micrographic surgery services,” Garcia-Zuazaga said.

Mohs surgery, according to the Skin Cancer Foundation, “is considered the most effective technique for treating many basal cell carcinomas and squamous cell carcinomas,” the two most common types of skin cancer.

The procedure entails removing tissue and testing it on-site. Patients wait for results to ensure their cancer is gone before they leave, which “allows the removal of all cancerous cells for the highest cure rate while sparing healthy tissue and leaving the smallest possible scar,” according to the foundation.

Garcia-Zuazaga, a skin cancer specialist, said Mohs surgery is the most effective treatment he can offer to skin cancer patients and one that can be difficult for them to get.

“In an hour, or an hour-and-a-half, the patient comes in with cancer and leaves without cancer … but many patients have to travel to Cleveland for it,” Garcia-Zuazaga said.

There’s no shortage of patients. The Skin Cancer Foundation reports that 1 in 5 Americans will develop skin cancer by the time they reach 70, and that more than two people die of skin cancer every hour in the U.S. But, with early detection, the foundation says, the five-year survival rate is 99%.

Garcia-Zuazaga said his goal is to ensure people have early detection through dermatological exams to avoid having their cancer become further developed and potentially life-threatening.

An aging population of former sun worshipers is one of the reasons cited for the increase. But while the number of cases is expected to go up slightly this year, the number of deaths from melanoma is expected to drop by more than 5%, the foundation says on its website.

That’s due in large part to early detection, the foundation and Garcia-Zuazaga say.

Apex is determined to help in Stark County by assisting with detection, Garcia-Zuazaga said.

“People need to be seen right away for skin cancer. … Right now it’s really hard to get an appointment with any dermatologist in town, and if you do get one, you often wait two or three months to be seen,” Garcia-Zuazaga said.

Not that skin cancer is the only thing driving Apex’s growth.

“We do medical dermatology, which is acne, warts, you name it. We do surgical dermatology for moles and melanoma. … And we also do aesthetic dermatology, which is lasers and cosmetic services,” he said. “We see the kid for acne, Mom for rosacea and then we see Grandpa for skin cancer.”

Apex also offers special services to wounded veterans. Its Purple Heart Project provides free laser scar revisions to veterans, Garcia-Zuazaga said.

A former Marine Corps flight surgeon who did his surgery fellowship at Harvard University and who holds an MBA from Case Western Reserve University, Garcia-Zuazaga said he is a physician and an entrepreneur. He said he’s been happy to apply business principals of gauging demand

and then investing to meet it.

He might be right about there being an unmet need for dermatology services in and around Canton, too.

Dr. Eliot Mostow, who heads up Akron Dermatology and is head of the dermatology section at Northeast Ohio Medical University, said he also sees a need for more dermatologists.

“I just brought on two more dermatologists to the practice, so I obviously think there’s room for more people,” said Mostow, who now has three physicians at his practice, including himself.

Mostow said he sees patients who suspect they have skin cancer quickly — they get in line in front of patients who might have a less-threatening condition.

Like Garcia-Zuazaga, he sees the need for increased services, especially for cancer diagnosis and treatment.

“No matter how you parse the data, more people are getting skin cancer,” Mostow said.

Mostow said wait times are sometimes exaggerated, but also said he’s noticed that in Canton in particular, there seems to be an acute shortage of dermatologists.

“In Canton, for whatever reason, the dermatologists there are busy.

They are all booked up,” Mostow said, adding that he knows of several Canton dermatologists who have retired and not been replaced in the past several years.

Mostow said he knows Garcia-Zuazaga fairly well, and that his peer is a respected doctor and a canny businessman.

“Jorge is data-driven,” Mostow said. “He’s always looking for where to go and where to be … and he’s certainly an entrepreneur.”

The strategy seems to be working for Apex.

What started as a four-person operation in Concord less than 10 years ago is now a sizable regional practice with more than 100 employees and plans for still more offices, Garcia-Zuazaga said.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

MANUFACTURING

Akron Rubber Development Laboratory grows as it manages move BBY ERIN PUSTAY BEAVEN RUBBER & PLASTICS NEWS

It was just last year that Akron Rubber Development Laboratory Inc. began packing its things in Akron and moving into a more spacious home in Barberton. It’s a good thing, too, because the ARDL family continues to grow.

In October, ARDL acquired Experimental Services Inc., an Akron-based testing services laboratory that provides static, dynamic, fatigue and vibration testing for rubber industry manufacturers around the world.

The acquisition was a natural one for ARDL and ESI, companies that have worked together for years.

Moreover, ARDL CEO Tim Samples said, the experience the ESI team brings to the ARDL family further strengthens testing capabilities.

“Their specialty in engineering testing has made them unique and a natural to fit into ARDL’s engineering testing group,” Samples said in a

statement. “The best part is that ARDL will continue to gain from the input of both Greg Schilling and Karl Winkler, who developed and grew this business and have cultivated trusted relationships with manufacturers over the past three decades.”

Eventually, all of ESI’s services will move to ARDL’s 136,000-square-foot building in Barberton. For now, however, the operations will continue without delay from ESI’s current facility.

Meanwhile, ARDL continues to consolidate operations in Barberton, bringing together all aspects of the business, which is spread across three facilities in Akron. The process is slow and methodical, but it remains on track for completion by 2026. The company has about 100 employees.

According to Bonnie Stuck, ARDL president and senior technical adviser, the company is renovating its new home to accommodate all the testing and custom mixing services. ARDL also wants to take time transporting and

hooking up the large, heavy pieces of equipment.

Once that’s complete, many of the operations need to be recertified.

All of that, Stuck said, takes time.

“We don’t want Stuck to be overextended,” Stuck said. “We are doing it in stages for two reasons. First, we can’t shut down all of the business at the same time. This is a massive move; you have to do it in stages from a financial and physical standpoint.”

For now, the focus is on moving the mixing, compounding and molding laboratory. Renovations are underway at the Barberton site, and the space should be ready for full implementation of the lab within the next six to seven months.

When that move is complete, roughly half of the ARDL team will be working

out of the new Barberton facility. At that time, it will house the engineering, microbiology, quality, accounting, human resources and payroll departments. Development technical advisers also will be located at the Barberton facility.

The executive administration, as well as the physical testing, microscopy, chemical services, pharmaceutical and plastics operations will continue to operate in Akron as the company gears up for the next phase of the move.

Stronger together Don’t let the fact that ARDL operates out of multiple facilities fool you. The company is one team. And it’s a team that’s stronger today than ever before, Stuck said, despite the challenges brought by the COVID-19 pandemic.

It could be argued that the company is stronger because of the challenges brought by COVID-19.

For ARDL, the first major pandemic hurdle was learning to operate

safely during the outbreak.

“We were pretty sure that we were an essential business,” Stuck said, noting that in March, Ohio Gov. Mike DeWine had set some specific guidelines for businesses deemed essential. “We had to make sure that we weren’t violating the law.”

Ensuring the safety of employees throughout the pandemic requires daily, thorough cleaning of the facilities, temperature checks and mask mandates for employees working in the buildings. Social distancing is implemented where possible, Stuck said, but sometimes the lab spaces don’t allow for 6-foot distancing.

Employees exhibiting COVID-19 symptoms are not permitted to work in the buildings, and ARDL has done its best to accommodate all employees with work-from-home opportunities.

Stuck said she helped to move and set up desktop computers for several employees, especially for those who were in high-risk categories for the virus.

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BANK M&A

From Page 1

M&A activity broadly picked up in the third quarter. And with progress being made on a COVID-19 vaccine, there’s hope the economy could further recover in 2021, which would seemingly inspire some deal flow.

Historically, bank consolidation typically ramps up after a downturn as companies begin to improve. In a fragmented market like Ohio, where there are more than 200 active financial services companies and a number of potentially attractive community banks, the industry seems to be ripe for additional consolidation.

Do these factors mean Ohio could see a pickup in deal activity in 2021?

The jury is out on that.

From unsatisfied shareholders to a lack of succession planning to a board’s intrinsic interest to remain independent, any number of competing forces could compel a company to consider buying or selling at any given time.

Those motivations combine with an uncertain economic period, however, creating a murky outlook for deal flow.

“If you go into the M&A market, you better be sure of what you’re acquiring on the risk side, and you better be in pretty darn good financial shape yourself. This is not the time to be caught in an acquisition where you don’t know what you’re buying,” said Patricia Oliver, a banking consultant with Tucker Ellis. “I wouldn’t be surprised if we see a good amount of M&A activity going forward. But if banks become conservative and we see a quiet year, that wouldn’t surprise me, either.”

Over the past five years, there has been an average of about seven com-

Cortland Bank was involved in M&A talks as both a potential buyer and seller before the COVID-19 pandemic. Shown is a new Cortland branch in Hudson. | CONTRIBUTED

binations annually in Ohio, which is a consolidation rate of roughly 4%.

However, there’s been just one new Ohio-centric bank deal announced in 2020, and it came prior to shutdowns: SB Financial, parent of State Bank and Trust, in February announced an acquisition of Edon Bancorp in a deal worth $15.5 million.

Even if the economy improves in 2021, deal flow is likely to stay muted in a low-interest-rate environment that hinders profitability and squeezes margins, said Christopher Cole, executive vice president with Independent Community Bankers of America.

“I think the economy and loan demand will help M&A activity next year, and it will go up from where it is now,” Cole said. “But will it get back to pre-pandemic stages? Probably not right away because of the interest rate environment.”

Across the U.S., bank M&A has continued but at a much slower clip.

Deal flow this year is down about 40%, or about 30 deals a quarter.

There are pros and cons to this. For the communities these banks serve,

HOSPITALS

From Page 1

In mid-November, more than 1,000 hospitals across the country were critically short on staff, according to an NPR analysis of data from the U.S. Department of Health and Human Services. The hospitals account for nearly 1 in 5 hospitals that report their staffing status to the department.

COVID-19 cases and hospitalizations have continued to rise since.

Even before COVID-19 sidelined health care workers, hospitals have faced impending and current shortages in various positions: nurses, physicians, allied health professionals.

“Really, the pandemic has exacerbated the hospital workforce pressures,” Gatlin said.

The Center for Health Affairs has studied shortages over the years. In 2018, it projected that by this year, the region would face a shortage of 2,850 nurses. Gatlin said those numbers have pretty much stayed the same. Allied health care workers (such as medical assistants, respiratory therapists, surgical technicians and pharmacy technicians) also are a continued need — a shortage the center identified in a study last year.

“We face a broad health care workforce shortage in Northeast Ohio — everything from pathology technicians to radiology technicians to pharmacy technicians all the way to nurses,” said Dr. Daniel Simon, University Hospitals’ chief clinical and scientific officer and president of UH Cleveland Medical Center.

UH, like many other systems, has a series of pipeline programs in place and relationships with academic partners to offer places for training during students’ schooling, as well as tuition reimbursement options. A

Jhaveri

Simon

nationwide physician shortage forecast for the next decade in primary and specialty care means the industry has to look at that workforce differently as well, Simon said.

Of course, these are long-term potential solutions. And the needs are urgent and critical.

“At this point in the pandemic, the need for health care workers is basically extreme all over the entire country,” Gatlin said.

And many of the ways hospitals have to bring in more workers have been limited. In the spring, health systems were able to send workers to support key hotspots, but COVID-19 cases and hospitalizations are now more widespread.

An official at Lake Health wrote in an email that the system normally would be able to hire travel nurses to supplement its workforce, but competition is fierce, sending costs through the roof.

Hyr Medical, a health care technology company in Highland Heights, offers an online platform for physician freelancing to help connect doctors to places to practice.

Seeing the growing and shifting needs during the pandemic, Hyr worked to diversify the pool of providers on its network, said Manoj Jhaveri, co-founder and CEO of Hyr. In total, the company increased the number of physicians and advanced practice providers signed up on its network by 40% this year. It

losing a local bank can be detrimental to the local economy.

“We hate to see communities in some instances lose their only community bank in the area,” Cole said. “But on the other hand, if scaling up means coming out with a healthier bank, better technological proficiency and better products, then that’s a good thing.”

In today’s COVID world, which has spurred an acceleratation of digital banking, the technology play will be key for small and midsize banks. This could inspire some banks to band together.

But there are myriad factors at play. Some banks are sitting on capital that was built up in large part to some clients parking Paycheck Protection Program funds in their bank. This can artificially inflate deposit levels. So putting that capital to work by buying another bank becomes dicey.

M&A deal values often are crafted based on a multiple of a bank’s deposits, but the dynamic has gone out the window when it’s unclear how much of those deposits are actually sticky. In this economic downturn, where some borrowers are being propped up by

government stimulus, it also remains to be seen how stressed some bank loan portfolios could really be.

“Who’s going to pay for multiples of deposits when you don’t know if they’re even going to keep them? You don’t want to overpay for capital you don’t need, or when you’re unsure of the asset quality,” said Robert Palmer, president and CEO of the Community Bankers Association of Ohio.

However, when profitability is harder to come by during a period of low interest rates, cost management becomes all the more important.

Combine this with more customers opting for digital banking, and it’s apparent why the industry is picking up the pace in overall branch closures.

A merger can be an option for reducing costs, which is one reason Fred Cummings, a bank hedge fund manager with Elizabeth Park Capital Management, says “a lot” of banks are talking about pursuing acquisitions that could materialize next year between more community-oriented institutions (community banks are typically smaller than $10 billion in assets, with many having less than $1 billion).

“It is not unreasonable to expect that M&A activity will pick up in an economic recovery once some of the COVID issues are less prevalent,” said Charlie Crowley, a managing director with Boenning and Scattergood who follows Ohio banks. “However, it never seems to us like it is prudent to predict a boom.”

He said some investment bankers and hedge fund managers saying otherwise tend to have a hint of wishful thinking behind their comments.

That said, there have been some developments that could lead to banks considering M&A. Crowley noted how loan deferrals

have come down sharply, which means some banks may be less apprehensive about loan quality, both their own and that of a potential partner. Favorable vaccine news has led to some modest rebounds in stock prices, which improves the mood in board rooms when a firm is considering selling.

And then there’s the parent company of PNC Bank announcing an $11.6 billion deal to acquire the U.S. operations of BBVA. Crowley said market observers feel if those companies could complete due diligence on a deal of that magnitude amid a pandemic, there’s a sense smaller and simpler banks can do it.

Brian Rhonemus, CEO of Rhonemus Group, a Columbus-founded talent management firm for banks, suspects activist investors and unsatisfied investors could drive some deal flow next year. He noted how he recently had talked with executives who are communicating to shareholders about possibly lighter dividends in coming quarters due to pressure on margins and a need to shift capital to loan loss reserves. It will be “difficult” talking with shareholders about how double-digit dividends might not make sense, he said.

If stocks remain underpriced, activists could swoop in, buy up shares and try to secure a place on the board where they could press for a sale.

Rhonemus suspects some banks will be at risk of this.

Cole is skeptical about activists becoming that active. It’s unlikely to happen right away at least, he said.

But it’s yet another example of the various factors at play with M&A. Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

fill in, seeing colleagues out and staffnow has about 1,000 providers on the gets their flu shots. platform and more than 30 major “Each day these safety measures ing short is stressful, he said.

UH has pretty much everything on hospitals and medical groups, rough- aren’t practiced is another day we’ve lost in flattening the curve and get- the table to be able to expand and ly 10 of which are new this year.

The moves helped the company’s ting control of the virus and also in- add staff as needed. Administrators revenue grow 300% in 2020. creases the risk of putting undue who remained partially on clinical “I would say, the way I would char- stress on caregivers throughout the staff are now full staff; managers with clinical backgrounds are jumping in, acterize the beginning of the pan- community,” he said.

Caregiver stress and burnout is a Simon said. demic is despite the pandemic, we Hospitals create staffing plans as were able to grow the company. Now top concern for hospitals after exI would say what’s happening is be- hausting months battling the pan- part of their accreditation process and have long had them in place, said Gatcause of the pandemic, we’re grow- demic and caring for patients.

“The sheer numbers of the pa- lin of the Center for Health Affairs. ing the company,” Jhaveri said.

The number of jobs on the Hyr net- tients, and the requirement still for “But the length of this response and donning and doffing PPE, and the the depth that this virus has affected work has doubled this year.

In the first couple of days of De- stress of going home and taking your staffing in all types of health care facilicember, hospitals reported various clothes off in the garage and running ties is really unfounded, and everyone is C R A I N ’ S C L E V E L A N D B U S I N E S S | S E P T E M B E R 3 - 9 , 2 018 | PA G E 17 before and| Sdoing levels of patients out due to C Rin their best to find creative options A Ito N ’the S Cshower LEVELA N D BMommy USINESS E P T E M B E R 3 - 9 , 2 018 | PA G E 17 COVID-19: 1,100 caregivers were out Daddy can hug their kids — it weighs to augment their workforce,” she said. at Cleveland Clinic (roughly four on you,” UH’s Simon said.

Although UH is bringing people Lydia Coutré: lcoutre@crain.com, times as many as the system saw out at any time during the last peak in from elsewhere in the enterprise to (216) 771-5479, @LydiaCoutre July); UH has plateaued to around 220 to 240 employees out sick on any Advertising Section given day; MetroHealth had about Advertising Section 100 out; and Summa reports that it continues to have “ a small amount” off due to illness and quarantine.

Beginning Monday, Dec. 7, the Clinic is postponing all nonessential inpatient surgeries requiring a hospital bed or an intensive care unit (ICU) bed in its Ohio locations, except for To place your listing in Crain’s Cleveland Classifieds, Lutheran Hospital.

To place your listing in Crain’s Cleveland Classifieds, Tom Strauss, president and CEO of contact Suzanne Janik at 313-446-0455 Sisters of Charity Health System, in a contact Suzanne Janik at 313-446-0455 statement said, “We have reached a or email sjanik@crain.com defining moment in this pandemic.” or email sjanik@crain.com He called health care workers and their expertise the “most precious reBUSINESS OPPORTUNITY BUSINESS OPPORTUNITY source” that health systems have in BUSINESS OPPORTUNITY BUSINESS OPPORTUNITY the struggle against COVID-19.

Dr. David E. Custodio, president of Selling Your Business?

Summa Health System – Akron CamSelling Your Business?

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The 100 largest PPP loans in Northeast Ohio BBY JEREMY NOBILE

Following an order by a Washington, D.C., court, the U.S. Small Business Administration released additional details on recipients of potentially forgivable loans provided through the Paycheck Protection Program.

The order follows what has been a trickle of partial information released since the PPP concluded in August and pressure ramped up to provide greater transparency in the unprecedented taxpayer-funded relief program. Previously, details for loans between $150,000 and $10 million were provided only in rang-

Company 1. Middough Consulting Inc. (Cleveland) 2. Mazzella Holding Co. Inc. (Cleveland) 3. Invacare Corp. (Elyria) 4. USA Millwork LLC (Orange Village) 5. Foundations Health Solutions LLC (North Olmsted) 6. Alfred Nickles Bakery Inc. (Navarre) 7. The Reserves Network Inc. (Fairview Park) 8. Alliance Solutions Group LLC (Independence) 9. Continuing Healthcare Solutions Inc. (Middleburg Heights) 10. Champlain Enterprises LLC (North Olmsted) 11. Constant Aviation LLC (Cleveland) 12. Independence Excavating Inc. (Independence) 13. The Schroer Group Inc. (North Canton) 14. AVI Foodsystems Inc. (Warren) 15. Schwebel Baking Co. (Youngstown) 16. Stein Holdings Inc. (Broadview Heights) 17. Benesch, Friedlander, Coplan & Aronoff LLP (Cleveland) 18. Stevens Engineers & Constructors Inc. (Cleveland) 19. Empowering People Management Inc. (Warren) 20. Hilscher-Clarke Enterprises LLC (Canton) 21. Americhem Inc. (Cuyahoga Falls) 22. Simon Roofing And Sheet Metal Corp. (Boardman) 23. Cohen & Co. Ltd. (Cleveland) 24. Tucker Ellis & West LLP (Cleveland) 25. Component Repair Technologies Inc. (Mentor) 26. American Bread Co. LLC (Cleveland) 27. The Mennel Milling Co. (Fostoria) 28. The James B. Oswald Co. (Cleveland) 29. Sandridge Food Corp. (Medina) 30. Weltman, Weinberg & Reis Co. LPA (Independence) 31. Reminger Co. LPA (Cleveland) 32. The Great Lakes Construction Co. (Hinckley) 33. Cad Capital LLC (Warren) 34. Roppe Holding Co. (Fostoria)

Loan

Jobs

$10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $10 million $9.9 million $9.86 million $9.6 million $8.46 million $8.46 million $8.46 million $8.38 million $8.25 million $8.1 million $8.07 million $8.04 million $7.74 million $7.61 million $7.54 million $7.3 million $7.2 million $7.12 million $7.05 million $7 million

389 jobs 500 jobs 500 jobs 500 jobs 500 jobs 500 jobs 200 jobs 500 jobs 500 jobs 500 jobs 500 jobs 469 jobs 500 jobs 500 jobs 500 jobs 500 jobs 470 jobs 392 jobs 500 jobs 365 jobs 500 jobs 464 jobs 474 jobs 421 jobs 250 jobs 500 jobs 185 jobs 394 jobs Unspecified 500 jobs 391 jobs 250 jobs 500 jobs 500 jobs

es — the top category grouped together loans between $5 million and $10 million, for instance — but included names of recipients. Even fewer details were disclosed on loans of less than $150,000.

The court order required the SBA to disclose all company names and loan amounts Dec. 1. It’s unclear how

Company

Loan

35. National Machine Co. (Cuyahoga Falls) 36. North Coast Pizza Inc. (Stow) 37. DBM Holding Co. (Brunswick) 38. Gunton Corp. (Bedford) 39. 50 X 20 Holding Co. (Canton) 40. Dalcan LLC (Warren) 41. Allied Machine & Engineering Corp. (Dover) 42. Embassy Healthcare Holdings Inc. (Beachwood) 43. Mid-West Forge Corp. (Willoughby) 44. Thompson Electric Inc. (Munroe Falls) 45. Cadle LLC (Warren) 46. Bear Diversified Inc. (Cuyahoga Heights) 47. Presrite Corp. (Cleveland) 48. The Smithers Group Inc. (Akron) 49. HBK Professional LLC (Canfield) 50. ForTec Medical Inc. (Hudson) 51. ZIN Technologies Inc. (Cleveland) 52. Ulmer & Berne LLP (Cleveland) 53. Jergens Inc. (Cleveland) 54. The Original Mattress Factory Inc. (Cleveland) 55. Pepperl & Fuchs Inc. (Twinsburg) 56. Calfee, Halter & Griswold LLP (Cleveland) 57. Great Day Improvements LLC (Macedonia) 58. Brewster Cheese Co. (Brewster) 59. Towlift Inc. (Brooklyn Heights) 60. Rea & Associates Inc. (New Philadelphia) 61. Roetzel & Andress (Akron) 62. The Musical Arts Association (Cleveland) 63. Dutchman Hospitality Group (Walnut Creek) 64. Robin Industries Inc. (Independence) 65. Marous Brothers Construction Inc. (Wickliffe) 66. Morrison Products Inc. (Cleveland) 67. The Belden Brick Co. LLC (Canton) 68. Howley Bread Group Ltd. (Westlake)

PEOPLE ON THE MOVE

$6.97 million $6.74 million $6.7 million $6.59 million $6.57 million $6.49 million $6.46 million $6.41 million $6.41 million $6.31 million $6.3 million $6.28 million $6.25 million $6.14 million $6.1 million $6.07 million $6.03 million $5.96 million $5.94 million $5.93 million $5.83 million $5.72 million $5.67 million $5.63 million $5.59 million $5.58 million $5.56 million $5.55 million $5.5 million $5.5 million $5.48 million $5.4 million $5.36 million $5.35 million

many loans qualify for forgiveness.

According to an analysis by The New York Times, just 1% of the program’s 5.2 million borrowers collectively received more than one-quarter of the $523 billion provided through the PPP. In Ohio, the PPP provided 149,144 loans totaling about $18.5 billion,

according to the SBA. Here are the 100 largest PPP loans provided in Northeast Ohio listed by the company receiving the loan and how many jobs that loan reportedly protects.

Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

Jobs

Company

475 jobs 500 jobs 500 jobs 417 jobs 250 jobs 500 jobs 434 jobs 500 jobs Unspecified 250 jobs 500 jobs 500 jobs 387 jobs Unspecified 392 jobs 460 jobs 359 jobs 311 jobs 416 jobs 450 jobs 385 jobs 206 jobs 430 jobs Unspecified 378 jobs 365 jobs Unspecified 279 jobs 500 jobs 465 jobs 291 jobs 500 jobs 90 jobs 472 jobs

69. Majestic Steel USA Inc. (Cleveland) 70. Redwood Living Inc. (Independence) 71. Interdesign Inc. (Solon) 72. East Manufacturing Corp. (Randolph) 73. Ohio Gratings Inc. (Canton) 74. The Bellevue Hospital (Bellevue) 75. Conrad’s Tire Service Inc. (Cleveland) 76. Hose Masters Inc. (Euclid) 77. Butech Bliss (Salem) 78. Covelli Family Limited Partnership II (Warren) 79. McDonald Hopkins LLC (Cleveland) 80. Sifco Industries Inc. (Cleveland) 81. Keim Lumber Co. (Charm) 82. Hawken School (Chesterland) 83. Hahn Loeser & Parks LLP (Cleveland) 84. Continuum of Care Inc. (Cleveland) 85. Seaman Corp. (Wooster) 86. Soprema Inc. (Wadsworth) 87. Thermal Product Solutions Holdings Inc. (Beachwood) 88. Cosmax Usa Inc. (Solon) 89. MCPC Inc. (Cleveland) 90. Northern Frozen Foods Inc. (Bedford) 91. PK Management LLC (Richmond Heights) 92. J Rayl Transport Inc. & Affiliates (Akron) 93. Biery Cheese Co. (Louisville) 94. A.J. Rose Manufacturing Co. (Avon) 95. Fry Foods Inc. (Tiffin) 96. Group Management Services Inc. (Richfield) 97. The Village Network (Wooster) 98. CT Consultants Inc. (Mentor) 99. Jay Industries Inc. (Mansfield) 100. One Source Technology LLC (Cleveland)

Loan $5.31 million $5.28 million $5.25 million $5.21 million $5.17 million $5.14 million $5.12 million $5.1 million $5.08 million $5.07 million $5.04 million $5.02 million $5 million $4.99 million $4.9 million $4.88 million $4.87 million $4.79 million $4.77 million $4.77 million $4.75 million $4.72 million $4.68 million $4.67 million $4.66 million $4.65 million $4.63 million $4.62 million $4.57 million $4.56 million $4.55 million $4.53 million

Jobs 329 jobs 200 jobs 211 jobs 490 jobs 450 jobs 392 jobs 431 jobs 438 jobs 317 jobs 500 jobs 250 jobs 401 jobs 492 jobs 400 jobs 190 jobs 500 jobs 350 jobs 262 jobs 364 jobs 215 jobs 369 jobs 288 jobs Unspecified 469 jobs 500 jobs 335 jobs 500 jobs 274 jobs 250 jobs 257 jobs 380 jobs 348 jobs

SOURCE: U.S. SMALL BUSINESS ADMINISTRATION CRAIN’S CLEVELAND BUSINESS GRAPHIC

Advertising Section To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ADVERTISING / MARKETING

ADVERTISING / MARKETING

NONPROFITS

SERVICES

Falls

Falls

The McGregor Foundation

Leaf Home Solutions

Scott Westergren joins Falls as Associate Media Director, bringing more than 25 years of media experience. Through his various leadership roles as media planner, director, strategist and vice president of account services, he has worked with numerous national brands including Valvoline, Carrier, Circle K and Maker’s Mark. Born and raised in Buffalo, N.Y., Scott earned his bachelor’s degree from Kent State University. www.

WeAreFalls.com

Lisa Wilke joins Falls as Senior Director, Analytics bringing a wealth of knowledge in data analytics, brand and media strategy.

With experience including the Metzenbaum Center and Huntington Bank, she spent the past decade working at Progressive consulting on customer marketing strategy, as well as a variety of roles applying her expertise in data and analytics. She holds a B.B.A. in Economics from The Ohio State University and an M.A. in Economics from the University of Akron. www.WeAreFalls.com

The McGregor Foundation, whose mission is to Support Seniors In Need and Those Who Serve Them (https:// Kuhel mcgregoramasa.org), today announced the appointment of Tony Kuhel, Partner, Thompson Hine, as Chair of its Board of Directors.

Kuhel, who joined the McGregor Board in McNamara 2012, succeeds Roberta McNamara, who served as Chair since 2017.

Leaf Home Solutions is pleased to announce the promotion of Amanda Venditti to Vice President of Communications. In this newly created role, Amanda Venditti will be responsible for leading corporate communications, brand reputation, social media, SEO, and content marketing. Joining LHS nearly 7 years ago, Amanda has a proven track record of leadership and strategic thinking. Amanda looks forward to building the Communications Department for Leaf Home Solutions and to supporting the company’s continued growth in 2021 and beyond.

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Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

22 | CRAIN’S CLEVELAND BUSINESS | December 7, 2020

P022_CL_20201207.indd 22

12/4/2020 9:56:04 AM

CRAIN’S CLEVELAND LOOK BACK | 1997

The FirstEnergy saga ... or there and back again

crainscleveland.com

It has been a long, circular road for FirstEnergy Corp. since it was created in 1997. Here we are in Northeast Ohio today with our electricity being delivered by a regulated utility in the form of Akron’s FirstEnergy Corp.

Call it deja voltage, because, for nearly 80 years, we were served by utilities regulated by the Public Utilities Commission of Ohio, just as we are now. FirstEnergy and its predecessor, Ohio Edison, had been regulated up until 2008, when FirstEnergy argued to become deregulated and thought its coal-fired power plants could rely on their cheap fuel to win in the marketplace.

Now the company has returned to its regulated roots, but getting here has produced a lot of baggage for it to tow. — Dan Shingler

``THE HISTORY The regulated FirstEnergy Corp. that exists today is largely the result of the 2018 Chapter 11 bankruptcy of its former subsidiary, FirstEnergy Solutions.

That’s the subsidiary that owned the company’s power plants, including the Davis-Besse and Perry nuclear plants in Ohio. When FirstEnergy shed itself of FirstEnergy Solutions via the latter’s Chapter 11 case in early 2020, the parent company no longer owned any regulated power generation plants, making it a regulated utility, as it had sought to become again since 2015.

Before 2008, FirstEnergy and its predecessor, Ohio Edison, were regulated and had been since Ohio Edison was founded in 1930.

It only became FirstEnergy Corp. in 1997, when Ohio Edison acquired Independence-based Centerior Energy for $1.6 billion and a corporate powerhouse was born.

By 2008, the company wanted out from under the regulatory yoke its leadership believed was holding it back. FirstEnergy saw dollar signs in the margins between what it could get selling its cheap coal power in a competitive market and what it cost to generate that power with plants that represented decades-old investments.

It got its wish, but its optimism was short-lived. Almost as soon as the company was deregulated, cleaner-burning natural gas became cheaper than coal. That, combined with shrinking costs for renewable power, led to FirstEnergy Solutions’ money problems and bankruptcy, and allowed FirstEnergy Corp. to become re-regulated.

The process might also have contributed to FirstEnergy’s involvement in the biggest bribery scheme in Ohio’s history, which federal prosecutors say was used to pass subsidies for FirstEnergy Solution’s power plants that helped facilitate its bankruptcy and FirstEnergy Corp.’s transformation.

``IN THEIR OWN WORDS “I would do it in a heartbeat. … I think it makes sense.

I am trying to save a company.”

——Former FirstEnergy CEO Charles Jones, to The Plain Dealer on becoming re-regulated in 2015

The Perry Nuclear Power Plant was one of two in Ohio slated to receive subsidies under House Bill 6. | CRAIN’S FILE PHOTOGRAPHS

``WHY IT MATTERS TODAY After all the machinations to get FirstEnergy where it is today, the company and state have been left with a storm of controversy. Three huge players in Ohio — the Ohio House, the PUCO and FirstEnergy Corp. — have lost their leadership to the tempest.

Things were going according to plan until July. Then federal officials arrested former Ohio House Speaker Larry Householder for allegedly orchestrating a $60 million bribery scheme to pass House Bill 6 — the law enacted during the FirstEnergy Solutions bankruptcy to shore up that company’s aging generating fleet with ratepayer-backed subsidies.

While FirstEnergy itself was not named in the case, it was widely assumed to be the “Company A” that prosecutors said paid the bribes.

And things only escalated.

The scandal and an internal investigation engulfed the company’s management, leading to the ouster of former FirstEnergy CEO Charles Jones at the end of October and, in November, prompted the resignation of former PUCO chairman Sam Randazzo. Randazzo had been closely associated

“This afternoon, FirstEnergy Corp. received subpoenas in connection with the investigation surrounding Ohio House Bill 6. We are reviewing the details of the investigation and we intend to fully cooperate.”

——FirstEnergy announcement after Larry Householder’s arrest in July

FirstEnergy’s headquarters is a major employer in downtown Akron.

with FirstEnergy and resigned after the FBI searched his house as part of the HB 6 investigation.

Over the long journey, FirstEnergy has become a shadow of its former self. Its strategy — to align its structure and regulation with the prices of energy and the fuels used to generate it — failed miserably. The company, which after Jones’ firing saw its debt reduced to junk-bond status, was trading at $80 per share in 2008. Recently, its shares were selling for less than $27.

Meanwhile, its future and the future of Ohio’s energy landscape seem less stable than ever.

“During the course of the company’s previously disclosed internal review related to the government investigations, the Independent Review Committee of the board determined that these executives violated certain FirstEnergy policies and its code of conduct.”

——FirstEnergy announcement upon firing CEO Charles Jones in October

MAKING PROGRESS: CVS Health Corp. will administer Eli Lilly & Co.’s COVID-19 treatment in patients’ homes and in long-term care facili-

ties through a program with the U.S. government’s Operation Warp Speed. Lilly’s monoclonal antibody therapy, bamlanivimab, has been found to keep patients in the early

stages of COVID-19 from developing more severe disease that requires hospitalization. CVS’ Coram infusion business will receive 1,000 doses of the therapy in the pro-

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Lydia Coutré, Health care/nonprofits.

(216) 771-5479 or lcoutre@crain.com Michelle Jarboe, Enterprise reporter.

(216) 771-5437 or michelle.jarboe@crain.com Amy Morona, Higher education.

(216) 771-5229 or amy.morona@crain.com Rachel Abbey McCafferty, Manufacturing, K-12 education/ technology. (216) 771-5379 or rmccafferty@crain.com Jay Miller, Government.

(216) 771-5362 or jmiller@crain.com Jeremy Nobile, Finance/legal/beer/cannabis.

(216) 771-5255 or jnobile@crain.com Kim Palmer, Government.

(216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron.

(216) 771-5290 or dshingler@crain.com

GET MASTHEAD FROM LIBRARY

ADVERTISING

Local sales manager Megan Norman, (216) 771-5182 or mnorman@crain.com Events manager Erin Bechler, (216) 771-5388 or ebechler@crain.com Integrated marketing manager Michelle Sustar, (216) 771-5371 or msustar@crain.com Managing editor custom/special projects Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Senior account executive John Petty Account executives Laura Kulber Mintz, Loren Breen, Mara Broderick People on the Move manager Debora Stein, (917) 226-5470, dstein@crain.com Pre-press and digital production Craig L. Mackey Office coordinator Karen Friedman Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Customer service and subscriptions: (877) 824-9373 or customerservice@crainscleveland.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com

——Ohio Gov. Mike DeWine

gram’s initial phase, which started Dec. 3, in seven markets, including Cleveland, Chicago and Tampa, Fla.

JoAnn and Bob Glick have given MetroHealth a $42 million gift to help reverse health inequities and improve community health in Greater Cleveland. | CONTRIBUTED

REPORTERS

CUSTOMER SERVICE

“(HB 6) needs to be repealed because the process was so flawed that it has cast a light on this bill that it can never recover from.”

THE WEEK MAKING HISTORY: MetroHealth is receiving a $42 million gift — by far the largest in its history — from JoAnn and Bob Glick to support programs that aim to reverse health inequities and improve community health in Greater Cleveland. MetroHealth believes the investment is the third-largest gift from individuals to a public hospital in the country. The gift will establish two funds: The JoAnn and Bob Glick Fund for Healthy Communities, for programs supporting the health and well-being of the underserved, and the JoAnn Zlotnick Glick Endowed Fund in Community Health Nursing.

Publisher Mike Schoenbrun (216) 771-5174 or mike.schoenbrun@crain.com Executive editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Assistant managing editor Sue Walton (330) 802-4615 or swalton@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams

READY TO BUY: Zanite Acquisition Corp., a special purpose acquisition company (SPAC), collected a total of $232.3 million following its initial public offering. Zanite is led by co-CEOs Steven Rosen, who founded Cleveland private equity firm Resilience Capital Partners in 2001, and Kenneth Ricci, a principal of Directional Aviation Capital of Cleveland that owns several companies. Zanite is targeting companies in the aviation, aerospace and defense, urban mobility and emerging technology sectors with an enterprise value of at least $750 million.

Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain CEO KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 41, Number 44 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the first issue in January, July and September, the last issue in May and the fourth issue in November, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230.

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December 7, 2020 | CRAIN’S CLEVELAND BUSINESS | 23

GREAT PLACE TO WORK?

BRAG ABOUT IT. Is your company a top-notch place to work? Tell us about what makes you stand out! The Best Employers in Ohio awards program recognizes and honors the state’s top employers who show a dedication to their employees’ growth and quality of life. Don’t miss out – this is your opportunity to join the ranks of Ohio’s most outstanding companies! Selected companies will be featured in a Crain’s Cleveland Business special feature published in June 2021.

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EMPLOYERS IN OHIO 2021 Reasons to participate: 1) Company Pride: Securing a spot on the list can improve employee morale and retention.

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Offer expires 1/29/21

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877-518-2849

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