Crain's Cleveland Business

VOL. 39, NO. 40

OCTOBER 1 - 7, 2018

Source Lunch

The List

Chaz Napoli, President, Saint Martin de Porres High School Page 31

Largest manufacturing companies Page 27

CLEVELAND BUSINESS

MANUFACTURING

Solving the skills gap one company at a time Bad industry PR, low unemployment and a lack of vocational education are all reasons manufacturers can’t find qualified — and motivated — workers. However, a few local manufacturers believe they’ve found the right formulas to ensure their workforces are ready to thrive in the modern economy. The report begins on Page 14

Steven Truman, 20, found work with RhinoSystems in Brooklyn Heights through the Cuyahoga Valley Career Center. (Tim Harrison for Crain’s)

REAL ESTATE

FINTECH

Labor shortage, material costs Diebold’s future lies roil outlook for building business in software, services

By STAN BULLARD sbullard@crain.com @CrainRltyWriter

Securing skilled workers remains the big concern among Northeast Ohio construction and real estate industry executives, according to a just-released

survey by the Skoda Minotti accounting and financial advisory firm.

Among respondents to the Mayfield Village-based firm’s annual survey of sentiment and conditions in the building business, securing skilled labor is cited as the biggest threat to their business by 56% of the respondents, followed by the lump sum cate-

Entire contents © 2018 by Crain Communications Inc.

gory “other” at 10%, while 9% cited either material costs or lack of work.

Asked to list the top priorities for their companies, 57% noted finding solutions for skill labor shortages as their top action, followed by strategic planning, 44%, and seeking new markets and strategic planning, both at 43%. (Respondents could list more than one priority.)

Roger Gingerich, partner-in-charge of Skoda Minotti's real estate and construction practice, said in an interview about the study, “Every year, concern about finding skilled labor continues to grow. It is at 56% this year. It was 52% last year. In 2013, it was 6%.

Meantime, lack of work has fallen as a concern as building activity has soared, to 9% of the respondents seeing it as their top worry from 81% in 2009, the first year we did the survey.”

SEE SKODA, PAGE 8

P001_CL_20181001.indd 1

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

As part of an effort to rebuild the balance sheet of an ailing business whose stock has lots nearly 80% of its value since this time last year, Diebold Nixdorf intends to revamp itself into a forward-thinking software and services company.

And the company's recently minted president and CEO, Gerrard Schmid, emphasized there are no plans to abandon Diebold’s Northeast Ohio headquarters or to sell the business. “(You’re) touching on a rumor that came out several weeks ago,” Schmid said during a roundtable with local business media at the company's

North Canton headquarters last week, responding to questions about whether the company is looking for buyers. “And I will describe it as just that: a rumor.”

Software has long been a focus of the modern-day Diebold business, which began manufacturing safes and bank vaults out of Cincinnati nearly 160 years ago. It would eventually grow to specialize in the manufacturing of ATMs, and, inevitably, the software to support and manage them.

But a heavier focus on software is what should make Diebold a viable business for the future, said Schmid, who is credited with transforming Canada's D+H Corp into a $1.7 billion global fintech company ahead of its acquisition and eventual merging into Misys in mid-2017.

SEE DIEBOLD, PAGE 28

9/28/18 3:24 PM

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CRAIN’S CLEVELAND BUSINESS

Key regains top spot in market rankings

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

In terms of local market share, KeyBank once again sits above the top of the food chain for now.

With 18.36% of the Northeast Ohio market, the Cleveland-based bank has overtaken its Columbus competitor, Huntington Bank, for the greatest share of the deposit market in Northeast Ohio (which Crain’s defines as 15 counties), according to data from the Federal Deposit Insurance Corp. as of June 30. The numbers were released in September.

Key ceded the top spot to Huntington in 2017 as the latter firm raked in new market share with its acquisition

of Akron’s FirstMerit Bank in a $3.4 billion deal finalized in summer 2016.

But it remains a tight race, to be sure.

In 2017, Key’s Northeast Ohio market share was at 17.18%. Huntington controlled 18.43% last year, but dipped ever so slightly to 18.34% this year (just two basis points below Key).

All other top 10 firms by market share in the local region retained their spots with incremental increases or decreases in total deposits — though most saw slight decreases.

PNC Bank, Citizens Bank and Third Federal Savings and Loan Association of Cleveland are among those that dipped ever so slightly. JPMorgan Chase Bank, U.S. Bank and Home Savings Bank of Youngstown — which has been enjoying some no-

A Bone-Chilling Ghost Story

The fact that most other banks in the local top 10 shrank marginally, while Key saw a decent gain of more than one percentage point, indicates the bank is likely winning local deposits from competitors.

For a list of the top 10 banks in Northeast Ohio and in the state, ranked by deposit market share in 2018, see Page 10

tably strong growth lately — saw slight increases.

Of that top 10, Key saw the biggest change overall in either direction. The fact that most other banks in that group shrank marginally, while Key saw a decent gain of more than one percentage point, indicates the bank is likely winning local deposits from competitors.

It also suggests that some retail customers eventually left Huntington in the months trailing the formal consummation of the FirstMerit merger.

Huntington had just shy of 10% of the market in 2016 before jumping to 18.43% in 2017 following its acquisition and seems to have settled around 18.34% today.

Of course, Huntington ultimately retained far more customers than it lost

A Compelling Portrait of Pride and Survival

in the shuffle, and some customer turnover was expected. It’s the No. 2 bank today, compared with being No. 4 in 2016.

Total deposit dollars in all banks in the market grew about 4% year-overyear in 2018.

Largest in Ohio Although Huntington lost a few dollars in Northeast Ohio itself, it gained ground across Ohio overall and is nipping at the heels of the top dog, which is actually based in Minnesota.

U.S. Bank still retains the top spot in Ohio with 17.41% of the market.

But that’s more than a one percentage point decrease compared to 2017, when it had a share of 18.54% Huntington grew from 14.88% in 2017 to 15.68% for all Ohio market share in 2018. That’s the largest increase for any of the top 10 banks in the state.

Comparatively, in 2015, Huntington was Ohio’s third-largest bank (behind U.S. Bank and Fifth Third Bank) with an 11.81% market share.

So just as Key gained some competitor dollars in the Akron-Cleveland region, Huntington seems to be drawing customers from competitors across the state, where total in-market deposit dollars in all banks grew just 2% year-over-year.

Key’s market share grew from 6.63% in 2017 to 7.02% in 2018. The bank retained its spot as the sixth-largest bank in Ohio.

Battling for deposits As of Sept. 26, the Federal Reserve has raised interest rates eight times since late 2015, when the benchmark rate was being held near zero as the economy stabilized in the years trailing the last recession.

Banks effectively kept deposit rates frozen despite those hikes through the spring of this year, and those rates are starting to increase as firms compete for those deposits, which offer a low-cost source of funding.

According to personal finance website Bankrate.com, the average oneyear CD at the end of September was up to 0.72%. (The best rates offered in the market today are around 2%.)

While that seems rather insignificant compared to the average 4.95% rate for a one-year CD offered 20 years ago — and even more so when considering the average one-year CD peaked at 11.27% in 1984 and has never even come close to that since — that 0.72% rate is the highest it has been in eight years.

Those rates should continue to tick upward as the Fed hikes its own benchmark interest rate and banks battle over deposit dollars.

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Industry consolidation Both year-over-year and over the past decade, the Northeast Ohio market and the state overall have seen total deposits consistently trend upward, while the total number of banks and branches has dwindled.

SEE BANKS, PAGE 10

Correction JJA Sept. 24, Page 20 article contained incorrect information on the outside firm run by Fred DiSanto, an investor in Station Check. DiSanto is the chairman and CEO of Cleveland-based Ancora, a wealth management firm with $6.8 billion in assets under management.

9/27/18 3:01 PM

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UH has 5% revenue bump in first half of year

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

University Hospitals’ finances remained strong in the first half of the year despite a high-profile crisis with its fertility clinic last spring that some industry observers believed could have led to patients to go elsewhere for their care.

In fact, the system’s patient volumes are on the rise — even at the fertility clinic. The health system’s payer mix, too, has improved, thanks to its expanded relationship with Medical Mutual of Ohio.

UH in recent years has focused on expanding the reach of its institutes across the region, bringing the services of its Harrington Heart & Vascular Institute, Seidman Cancer Center and Rainbow Babies and Children’s Hospital to its hospitals throughout Northeast Ohio. This improved access for patients has been the primary driver behind a 5% increase in revenue for the first six months of the year, compared to the like period in 2017 — growth that Michael Szubski, UH’s chief financial officer, called “very good performance in my judgment.”

“We continue to see volume growth almost across all major key volume indicators, whether it be discharges, outpatient surgical cases, outpatient procedure volumes,” Szubski said. “ED visits are up, our acuity, our case mix index, if you will, is up. So we’re taking care of certainly some more serious and acute cases particularly at our main campus.”

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UH’s financial growth is in part because of expanded access to its institutes, including Seidman Cancer Center, across the region. (Contributed photo)

“I’d like to think that every additional dollar that’s generated from our performance goes right back into the organization.”

— Michael Szubski, UH’s chief financial officer

In the first half of 2018, UH earned $77.3 million in operating income — up 27% from the like period last year — on $2 billion in operating revenue.

That represents an operating margin of about 3.8%.

“Our net operating income grew fairly robustly. That’s an indicator that our revenues are growing at a higher clip than our expenses,” Szubski said.

By comparison, the rivaling Cleveland Clinic — the region’s largest

health system — had a challenging first half of the year. As Crain’s recently reported, for the first six months of 2018, the Clinic had an operating margin of 1.7%, down from 4.5% for the like period last year. Although the Clinic’s patient revenue was up in the second quarter of 2018 from 2017, expenses in virtually every category — including salaries, wages and benefits, supplies, pharmaceuticals and more — also grew, resulting in a significantly lower operating income.

As for UH, helping to drive its growth is a major agreement made last year with Medical Mutual of Ohio to include all UH facilities in Medical Mutual’s SuperMed network. The move reversed a contractual decision made more than 20 years ago that excluded UH main campus and UH Bedford. Historically, Medical Mutual members who wanted to receive care on UH’s main campus, which

contains much of the system’s specialty programs, would have to pay out-of-network costs.

That has helped drive volumes and improve the system’s commercial payer mix, “and that’s having some benefit certainly to our net revenues,” Szubski said.

The healthy growth of these numbers come alongside news that both S&P Global and Moody’s upgraded the health system’s outlook from stable to positive.

“The industry is under some significant scrutiny by both rating agencies, so the overall industry has a stable to negative outlook,” Szubski said.

“So yes, I would have to say I was pleased that we were able to share with both agencies all the good work that’s happening and it resulted in an outlook upgrade.”

The S&P Global rating outlook upgrade reflects its view of UH’s improving balance sheet, including leverage reduction and growth of unrestricted reserves, according to the filing.

Moody’s upgrade reflects expected further cashflow growth in the next couple of years, “driven by investments in physicians and facilities, continued cost reductions, and synergies from prior acquisitions,” according to the filing.

Szubski said UH continues to recruit key physicians to support the system’s efforts to grow its reach through added access, “so our employed physician network continues to grow fairly significantly,” he said.

Earlier in the year, there was some uncertainty around the financial impact of a storage tank failure. In March, an unexpected temperature

fluctuation at UH’s fertility clinic affected about 4,000 eggs and embryos, rendering them unviable. UH faces dozens of lawsuits as a result of the failure. In general, they’re seeking compensatory and punitive damages.

Despite the flurry of pending litigation, Szubski said the system hasn’t seen an impact in volumes as a result of the storage tank failure. In fact, the volume of individuals seeking fertility services is up year over year.

At this point, he said, the system has accounted for its deductible and has the financial impact of that failure behind it.

“So we’ve recorded all of that and that’s behind us, and that’s reflected in the June financial statements,” Szubski said. “So now, to the extent we will have any direct responsibility in any costs that will be associated with the event, we’ve got that behind us and now our insurance or our reinsurers will pay for anything beyond the deductible.”

UH’s strong financial performance and overall growth puts it on a path to be able to reinvest in its employees and services.

“I’d like to think that every additional dollar that’s generated from our performance goes right back into the organization,” Szubski said. “And that allows us to enhance our capital spending, invest in our employees consistently, which we have done, consistently providing a performance increase, a wage increase, and continue to grow the organization. So you know, we continue to add FTEs, add positions within our organization, and continue to be a highgrowth organization.”

9/28/18 12:18 PM

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CRAIN’S CLEVELAND BUSINESS

Akron’s Hardy: More action, less talk will get stuff done

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“We’re moving to a different model now — coordination.”

By DAN SHINGLER

Sometimes, it takes a bold, if obvious, idea.

Like, “Getting shit done.”

That one’s from one of Akron’s young civic leaders and rising political stars: James Hardy, chief of staff to Mayor Dan Horrigan. Hardy activated muscles around eyebrows and ears in Cleveland last month when he made that the title of a talk he gave to the startup investment and support group Flashstarts’ Pitch NEON event.

He quickly became the region’s “Who is this guy?” after Scene magazine and others reported on his talk, which Hardy titled “G.S.D.” and which hammered on the need for more action and less talk by civic leaders.

“I find this hilarious,” Hardy said of the reaction he has received, talking to Crain’s from his “second office” at the Lockview restaurant in downtown Akron.

Hardy said it wasn’t his intent to shame anyone or even to tell anyone what to do. But when he was asked to give a talk explaining to Clevelanders how Akron has gotten a burst of energy and development lately, he only knew how to be his plain-spoken self.

“I was a fill-in for the mayor, because they originally wanted the mayor to do a speech, and he honestly couldn’t,” Hardy said over chips and Lawson’s dip at the Lockview.

“I was struggling (with a topic) … and basically the direction I got was, ‘We’re really excited about the stuff we hear and want to hear more about it. If you could shed some light on what you think is creating all this buzz and stir in

— James Hardy, chief of staff to Akron mayor Dan Horrigan

Akron, that would be beneficial.’ ” So, Hardy boiled it down for them — stop talking, start doing. That’s Akron’s not-so-secret strategy.

“My main message was it’s really this whole movement from collaboration, which I would say is just sort of meeting and talking about things, and moving to coordination, which is sharing budgets and sharing resources,” Hardy said.

He put it this way for his Cleveland audience: “Collaboration is the state of having shared interests and efforts. Boy, that sounds wonderful, doesn’t it? If only we had shared interests and efforts, everything would be fine, right? I can’t go to one more meeting — and we’ve been trying to stop them in Akron — where we talk about collaborating. We’re moving to a different model now: coordination.”

Coordination is different and more effective, Hardy maintained, because it requires actual effort and even sometimes sacrifice.

He touts efforts among Akron, Summit County and others in and around the city, where coordinating entities actually combine their budgets and resources to accomplish things they agree are for the greater good. That includes a current effort by the city, county and the Greater Akron Chamber of Commerce to produce an economic study and a shared strategic plan. It also includes Akron’s Civic

Commons project, he said, which has a plethora of groups combining efforts to create a 3-mile corridor connecting downtown Akron and its amenities with Summit Lake Park and neighborhoods in between.

As for his delivery, Hardy said he was indeed hoping to be a little provocative with his language. He was paraphrasing a Philadelphia Inquirer piece about cities getting “stuff” done. But he said he’s not gotten any pushback from anyone at the city of Akron, including his boss.

“I think he would wholeheartedly agree. … I believe that because he believes it,” Hardy said of Horrigan.

The mayor said he was not only on board with the message, but that he has hired millennial staffers, including Hardy, in part because they are impatient and eager for action.

“I’m perfectly fine with it … His comments weren’t meant in any negative way. It’s just, ‘Let’s get some stuff done,’ ” Horrigan said. “A little bit of impatience is not bad. We need a little impatience to get stuff done sometimes.”

Horrigan’s administration is marked by a change from past practices in Akron. The mayor is focused on urban living downtown and making other neighborhoods in the city more livable and pedestrian-friendly, all while trying to rebuild the city’s population.

SEE HARDY, PAGE 29

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Increased defense spending and revived nuclear energy efforts are prompting Lynchburg, Va.-based BWX Technologies Inc. to consider investing more than $130 million in its Northeast Ohio operations.

BWXT, a nuclear operations and services firm spun out in 2015 from Babcock & Wilcox, has received approvals for tax incentives for its operations at 24703 Euclid Ave. in Euclid and at 91 Stirling Ave. in Barberton from city councils in both cities.

If state tax incentives are approved by the Ohio Tax Creation Authority, perhaps at its next meeting in October, BWXT plans to spend $82 million in Barberton and add 88 jobs there.

In Euclid, it would invest more than $50 million and create an additional 34 full-time jobs there. The jobs are expected to pay more than $70,000 annually, on average, according to material provided to the state.

Chris Dumond, a BWXT spokesman, said the company is performing due diligence on both expansions.

He declined to discuss the proposals in more detail until the state incentives are acted upon.

Both BWXT locations are longtime suppliers of nuclear-related products to the U.S. Navy. The Barberton site manufactures heavy components for nuclear reactors, while the Euclid site produces electro-mechanical components such as control rod drive mechanisms, and products from both go into naval nuclear reactors in submarines and aircraft carriers.

The BWXT plans for Barberton were discussed by Barberton Mayor William

munity development.

“They plan some exterior improvements to make the building look more contemporary, but it’s primarily an indication of a major capital investment on the interior,” Holody said in a phone BWX Technologies is considering an $82 million interview.

“They investment in its Barberton complex. have a long history (Contributed photo) in Euclid. It’s fantasJudge in a news release he issued last tic to see that they are investing in the Monday, Sept. 24, after Babcock & Wil- community and plan to continue to cox announced plans to move the operate here.”

BWXT has not signaled the buildheadquarters for its power generation unit back to South Van Buren Avenue ing aspect — if there is any — of its in Barberton from Charlotte, N.C., and proposed investment in equipment later move and consolidate its Barber- in Barberton. Joseph Stefan, Barberton and Copley Township staff at East ton’s economic and community deEnd Akron. The East End is the remake velopment director, said BWXT has of the former Goodyear Tire & Rubber not appeared before any of the city’s headquarters near downtown that real review bodies with respect to its proestate developers Industrial Realty posed investment.

Group of Los Angeles and Industrial Although Babcock & Wilcox and Commercial Properties of Solon BWXT are now separate companies, turned into a multitenant office and both were part of the former Babcock mixed-use center. & Wilcox industrial powerhouse that Requests for state income tax in- has been in Barberton for a century.

According to BWXT’s website, the centives were on the agenda for the Ohio Tax Creation Authority’s Sept. 24 Barberton operation employs more meeting, but they were not consid- than 500 people at a facility with more ered because the authority could not than 900,000 square feet of office and muster a quorum on the BWXT re- production space on 69 acres.

The Euclid operation consists of quests. The state declined to detail the BWXT requests because they were not two buildings with a total of more submitted for final approval to the au- than 320,000 square feet of office, test and manufacturing space and more thority and remain confidential.

In Euclid, the city’s board of archi- than 250 jobs. It originally was part of tectural review approved plans by TRW Inc. and later Marine MechaniBWXT to add about 20,000 square cal Corp., as well as a unit of Housfeet to the Euclid Avenue plant, ac- ton-based McDermott International cording to Jonathan Holody, the Inc., before it was acquired in 2007 by city’s director of planning and com- Babcock & Wilcox.

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Metro to get $5.5M for Shared Savings work

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

MetroHealth accomplished what none of its peers in Northeast Ohio could do — and it’ll get a nice check for doing so.

This year, the health system has the only accountable care organization in the region that will receive a payout from the federal government for helping save money in their care for seniors in 2017.

MetroHealth will receive a payout of nearly $5.5 million for its performance in the Medicare Shared Savings Program, which is one of the most well-known of the accountable care organization (ACO) programs designed to reward organizations that provide high-quality, coordinated care at a controlled cost. It’s far different from the traditional reimbursement models across most health care programs that simply pay out based on how many services are rendered.

It’s a complex formula, but the Centers for Medicare and Medicaid Services establishes a spending benchmark for each participating ACO. For a health system to get a slice of the savings, they have to spend less than that threshold by at least a certain percentage, which is also established by CMS. Cleveland Clinic’s ACO and University Hospitals’ ACO both spent above their established benchmark by $19.7 million and $27.4 million, respectively. Summa Health’s ACO, NewHealth Collaborative, saved money — $2.2 million — but not enough to crack the threshold to achieve shared savings from the federal government.

MetroHealth’s ACO, MetroHealth Care Partners, saved money in the program at a rate of 10.2%, far above the established threshold of 2%, catapulting the system to the 18th-highest

“It’s really putting a program around quality and efficiency for this patient population.”

— Dr. Nabil Chehade, senior vice president of population health and chair of the MetroHealth Care Partners ACO governing board

savings rate in the country, among the 472 participating ACOs, and the highest in the state. This is a significant improvement upon the system’s start in the program. MetroHealth overspent in its first year of participation (2014), saved under the benchmark in its second year and then achieved savings in its third and fourth years.

“It’s really putting a program around quality and efficiency for this patient population,” said Dr. Nabil Chehade, senior vice president of population health and chair of the MetroHealth Care Partners ACO governing board. “MetroHealth has been on this journey ... but as you can see, it doesn’t take effect immediately with the results and the outcomes, because it takes a lot of time to do this, to put the building blocks.”

While MetroHealth has been able to improve its performance year over year, Summa, which achieved shared savings in the first three years it participated in the program, has been unable to pass that target in the past two years.

It saved the government money in both 2016 and 2017, but not enough to trigger savings. Summa’s interim president and CEO, Dr. Cliff Deveny, attributed this, in part, to the fact that the savings threshold is based on systems’ historical performance in the program. So as systems show they can save money, that bar becomes more difficult to pass.

Mark E. Schario, vice president of population health at UH, also pointed to the lowering benchmark as the predominant reason the system’s ACO, University Hospitals Coordi-

nated Care Organization, was unable to achieve shared savings.

Deveny also noted that Summa’s participation in other programs in which the government gives the system money to care for populations actually works against them, elevating the amount of money spent, even though those dollars came from other value-based incentive programs.

Cleveland Clinic pointed to this phenomenon as well, noting that the system in 2017 enrolled in a different Medicare program called the Comprehensive Primary Care Plus.

Dr. Nirav Vakharia, associate chief quality officer and vice chair of population management at Cleveland Clinic, said the upfront funding from that program was close to the amount of money the system overspent for the shared savings program. He also pointed to some increased utilization rates in 2017 as a reason the system didn’t save money.

A LITTLER REGIONAL E M P LOY E R

“We feel confident that our clinical model that we are putting in place is really patient-centered,” Vakharia said. “And you know, if patients need to go into the hospital for their health condition, so be it. We are happy to make sure that they get the best care they can at the best site they can.”

For care provided in 2016, the Clinic received a shared savings payout of $19.9 million. MetroHealth received a $4.3 million share of generated savings. University Hospitals overspent in 2016, and Summa didn’t save enough to trigger shared savings.

The Medicare Shared Savings Program also awards a quality score to participating ACOs. Summa’s ACO quality score was 90.4%, the same as the year before.

MetroHealth’s ACO quality score was 87%, the Clinic’s was 85.5%, and UH’s was 73.4% — all of which were a drop from the year prior. Officials, in part, attributed this to the fact that at first, points were simply awarded for reporting metrics, but over time, the process shifts to points being awarded based on the metrics themselves.

This makes the numbers not an apples-to-apples comparison.

“That number is lower than it was last year, and we’re actively working with our physician providers and our network to make improvements in

that,” Schario said. “It’s a nationally reported number. Yes, things changed. You can see there’s quality drops for a lot of organizations.”

MetroHealth this year participated in the program on a different model in which it accepted a downside risk, meaning if the system overspent, it would have to pay money to the government. The benefit, though, is that the system can get back up to 75% of the savings, Chehade said.

The other local ACOs operated on a one-sided risk model in which they don’t risk having to pay out money if they don’t achieve savings, but if they do, they can get back up to 50%.

ACOs participate in the program for three-year stints. The Clinic has re-enrolled to participate in the model with a downside risk.

“I think a lot of the national data is showing that performance improves when health systems take on the downside risk,” Vakharia said. “We still believe it’s absolutely the right thing to do and demonstrates that this is our commitment as a leading health care provider in Northeast Ohio. ... We are willing to accept that responsibility and that accountability because this is the direction that health care has to go if we’re going to control spending while keeping the health of the population as good as it can be in the long run.”

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While lack of work kept builders awake nights in 2009, now that there is plenty of work, it’s now getting the work done that engulfs them.

“It’s frustrating to have people calling you with projects and not be able to satisfy their demands or asking them to wait,” Gingerich said. “We’ve seen the pendulum swing as the construction business came back from the financial downturn.”

In the construction business, contracts for jobs that are secured for the future or delayed for some time is called “backlog.” In this year’s survey, Skoda Minotti asked respondents for the first time about their backlog, and 42% said it is higher than it was in 2017, while 37% said it’s about the same as a year ago. Only 21% made headway and reported their backlog is lower than it was in 2017. Knowing there is work ahead is a good feeling to have, however.

Worry about having skilled carpenters, plumbers and electricians when you need them is due to several factors, including the growing rate of retirement among baby boomers in the building business to people exiting the industry when work dried up during the long downturn after the 2008 financial crisis and housing bust. There’s also diminished interest in the sector among young people.

However, that does not mean the industry is not making progress filling jobs. According to statistics provided by the Associated General Contractors trade group, the number of workers in the Cleveland-Elyria-Mentor Metropolitan Statistical Area increased 4% as employment in the mining, logging and construction category climbed by 1,400 to 40,600 in August from 39,200 in the like month last year.

In the Akron MSA, the same workforce climbed 3% as 400 workers joined the industry, increasing employment in the category to 15,700 this August from 15,300 in August 2017. Even with

the gains, construction staffing is still below prior peaks. During the period since 1990, employment this August is 18% below the peak of 49,400 in 2004 in the Cleveland MSA. In Akron, staffing in August was 3% below the peak of 16,200 in 1999.

The construction industry, which is aggressively courting recruits with marketing campaigns touting good salaries in skilled trades without an expensive college education, got into the situation over a long period as the seasonality and cyclical nature of the industry winnowed staffs. But it won’t get out of it quickly, either.

Rising material costs due to increased tariffs and demand have sent a wave of alarm through the construction business this year. Asked to rank the political issue that will most impact their business this year, material price viability was ranked first by respondents. Meantime, health care reform and insurance costs ranked second, followed by income tax rates at third, credit availability fourth and environmental regulation fifth.

Construction contractors and subcontractors also are bullish about the future, both in the region and outside it.

In this year’s survey, 56% of the respondents expect to see more opportunities in Northeast Ohio, a big increase from 41% in 2017. An expectation of less opportunities in Northeast Ohio dropped to 9% this year from 19% last year, and 35% this year expect the same amount of opportunities, also down from 40% last year. Surprisingly, 56% expect to see more opportunities outside Northeast Ohio this year, down from 60% last year.

The optimism is being reflected in budgets for overhead expenses and capital improvements. Most, 61%, expect to increase that type of spending over the next 12 months, while 2% expect to decrease that budget and 37% expect it to remain flat. Last year, 55% expected to increase expenditures, 7% expected to decrease spending and 38% expected it to remain flat.

The biggest difference between the

construction and real estate respondents is in how they feel about the region compared to finding opportunities outside the area. Among property owners and real estate developers, 54% expect to see more opportunities outside Northeast Ohio over the next three years, 13% fewer opportunities and 33% the same amount of opportunities.

Within the region, 33% expect to see more opportunities in Northeast Ohio over the next three years, 25% see less opportunities in Northeast Ohio and 42% see about the same volume of opportunities.

In the most important factor for real estate owners and developers, loans are more available and have fewer restrictions, including lower cash or equity requirements by the borrowers.

Equity requirements below 20% were reported by 34% of the respondents, equity requirements of 21% to 30% were reported by 39% and equity requirements of 31% to 40% were reported by 13% of those surveyed.

Real estate owners and developers also are able to turn to lenders again in a big way. Seller financing, when the seller of a property holds a note for its value from the buyer rather than receiving cash, was cited as a source of financing by 13% of the respondents, down from 50% in 2011.

Most property borrowers, to the tune of 58%, are getting loans from regional banks and 45% are getting loans from regional banks. Private equity was cited as a source by 26% of respondents this year, down from 37% last year and from a high of 48% in 2016.

Real estate types report they are receiving increased rents across the board in commercial, industrial and residential markets, and expect more of the same.

Both construction and real estate types are happy with the first federal tax reform legislation in 30 years, according to the survey. That’s especially the case among builders — 60% said it will have a positive impact on their business, 4% see it as a negative, 6% see it as having no impact and 30% don’t yet know what impact it will have.

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Regional bank leaders

State bank leaders

The top 10 banks in Northeast Ohio ranked by deposit market share in 2018. The number of each bank's in-market branches is also listed.

The top 10 banks in Ohio ranked by deposit market share in 2018. The number of each bank's in-market branches is also listed.

KeyBank: 18.36% | 119

U.S. Bank: 17.41% | 278

Huntington Bank: 18.34% | 250

Huntington Bank: 15.68% | 485

PNC Bank: 12.96% | 123

Fifth Third Bank: 13.90% | 325

Citizens Bank: 9.14% | 84

PNC Bank: 8.85% | 328

JPMorgan Chase Bank: 8.20% | 88

JPMorgan Chase Bank: 8.55% | 263

Third Federal Savings and Loan Association of Cleveland: 5.86% | 21

KeyBank: 7.02% | 217 Citizens Bank: 3.03% | 104

Fifth Third Bank: 5.07% | 77

The Park National Bank: 1.78% | 107

U.S. Bank: 2.59% | 73 New York Community Bank/Ohio Savings Bank (NYCB operates Ohio Savings Bank): 2.10% | 28 Dollar Bank: 1.86% | 29

Banks in market: 216 (-3.1%)

MARKET SNAPSHOT, NORTHEAST OHIO Banks in market: 54 (no change)

Source: Federal Deposit Insurance Corp. data as of June 30

Total deposits: $104.4 billion (+4%)

Since 2008, the total pool of deposits in Ohio has grown more than 51% to $343 billion.

However, the market has lost nearly a quarter of all the firms since then.

There are 216 banks in Ohio today, compared with 287 in 2008 — a decrease of 24.7%.

Meanwhile, 468 branches have been closed orB:10.25” consolidated in that time. There areT:10.25” 3,598 offices in the

Total branches: 3,598 (-1.9%) Total deposits: $343.2 billion (+2%)

Total branches: 1,211 (-2.2%)

CONTINUED FROM PAGE 2

First Financial Bank: 1.43% | 67

MARKET SNAPSHOT, ALL OF OHIO

Home Savings Bank: 1.73% | 27

BANKS

Third Federal Savings and Loan Association of Cleveland: 1.78% | 21

state today, compared with 4,066 in 2008.

In the Northeast Ohio market, total deposits stand at $13 billion, a 14.2% increase in the past decade. But the total number of banks and branches has each dipped by about 11% in the same time.

As banks enjoy a friendlier corporate environment under President Donald Trump, which is buffering capital on balance sheets through new tax laws and creating a slightly less onerous regulatory environment overall, that rate of con-

solidation should slow as there are simply fewer banks struggling today, at least not to the extent they were during and in the immediate aftermath of the last economic downturn.

And while M&A will certainly continue throughout the banking sector — and maybe even feel more strategically useful to a bank with growing piles of cash to put to work in something like a major acquisition — a more profitable environment for banks may dissuade some potential targets from selling.

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October 1, 2018

ASK THE PROFESSIONAL

Ohio’s new blockchain legislation

B

Unpacking the law’s economic upside for region, state

lockchain is on its way to becoming mainstream, as more companies, organizations and governments accept the technology as the preferred mechanism for completing electronic contracts and transactions. Blockchain is a decentralized digital ledger, mainly known for its use in digital cryptocurrencies such as Bitcoin. Picture a file that has been disseminated across a network of computers. Each user has a copy of the shared document, and users can append the file simultaneously, without having to wait for another party to unlock their version first. Synching is automatic, so blockchain improves accuracy and workflow. Since the database is not stored in one centralized location, the information is harder to hack.

But there is some ambiguity around blockchain. In early August, Gov. John Kasich signed into law a bill that added Ohio to a list of U.S. states enacting blockchain legislation. On the local level, Blockland Cleveland helped to review the bill’s impacts, said Michael D. Stovsky, who is co-chair of the organization’s legislation subcommittee. Blockland Cleveland’s goal is to make Northeast Ohio an economic center for blockchain technology.

“The legislation subcommittee is charged with reviewing, analyzing and proposing legislation that will further not only the advance of blockchain in Cleveland and in Ohio generally, but also the advance of entrepreneurship in Cleveland and in Ohio,” said Stovsky, who is partner and chair of the Innovations, Information Technology & Intellectual Property (3iP) Practice Group at Benesch. In that role, Stovsky helps clients negotiate and execute high-value, intellectual property and technology transactions.

Ohio’s blockchain law takes effect Nov. 2. Stovsky elaborates on the legislation’s potential fintech and economic opportunities.

The new legislation legally recognizes records or contracts and signatures secured through blockchain technology. What does this mean?

Ohio, like every state, generally acknowledges an electronic record as a “writing” under existing law. This is important because, under the law, many types of records and contracts must actually be in writing to have legal effect. While people have speculated that an electronic record or smart contract created using blockchain-based technologies and platforms constitutes

an electronic record under the law and is therefore a writing, the prior law did not specifically state this. The business community and markets like certainty, and Ohio is at the forefront of advancing law that provides this kind of certainty for companies contemplating using blockchain in commercial transactions.

Why is this new law significant?

It puts Ohio on the map in terms of advancing the commercial viability of the use of blockchain platforms for commercial purposes. Many states are passing legislation which, on its face, seems to appeal to businesses that utilize

blockchain-based technologies or try to solve business problems with blockchain-based technologies. When we read these other legislative initiatives, we don’t see great advantages except that they have good optics. They are overly complex and do more harm than good. Our approach in Ohio is to keep it simple and to focus on real issues that we understand to be important to real people and their businesses. This differentiates Ohio from other states seeking to become receptive environments for the growth of blockchain.

What specifically does the bill address, and how does it impact businesses?

The legislation addresses a key concern among those who would use blockchain for essential business purposes. For example, highly fragmented and inefficient tasks like the transfer of title to property could be made more efficient using blockchain, but the record has to be legal. Companies can enter into business relationships with their trading partners and transmit confidential information to them in a seamless and protected manner using blockchainbased smart contracts, but the contracts must have legal effect. The legislation recently passed in Ohio codifies this legal effect so that it is not left to speculation.

not seek to set up new and unique legal entities, create fiduciary duties for blockchain business owners, or establish complicated regulatory mechanisms.

What are some of the proposed local pieces of legislation that are being discussed within Blockland Cleveland?

There are some very interesting new initiatives on the horizon, and we continue to seek the contribution of ideas from the public about ways that we can help foster not only blockchain but all forms of entrepreneurship in Ohio. We are collaborating with the local venture community on these efforts. We are working on establishing economic incentive zones within Ohio, with state incentives built in for development stage companies. We also are working on developing a new set of economic incentives and intellectual property rights with the working title “beta rights” for

Other states such as Nevada, Delaware, Tennessee and Wyoming have enacted similar laws relating to blockchain. What are some of the advantages and disadvantages between the different pieces of legislation?

The bottom line is that the legislation passed in each of these states has some merit. When we look at this legislation as a whole compared to other states, we believe the beauty of the Ohio legislation is its simplicity. It does not seek to do too much. It has a relatively simple purpose and accomplishes that purpose. It does

What other legislative changes may be on the horizon?

We know that for many people, there are privacy and data security concerns any time personal data is stored in a distributed environment — even if the distributed environment is more secure than their own local systems. We have seen this with the advent of software as a service and hosted data centers. I think that there will probably be advances in legislation at the state and/or federal level. We have already seen important new legislation passed in California and the implementation of the European Union’s General Data Protection Regulation, which sets guidelines and fines pertaining to data collection and processing of its residents. I think we can expect more of this in the coming months and years to bring U.S. law into line with that of the rest of the world.

Any leader knows the inevitable ebb and flow of the business. For North American Dental Group, that might mean closing multiple deals in some quarters and carrying on “business as usual” in others. Ken relies on Benesch throughout the cycle, dialing up when matters are pressing—acquisitions, employment matters, regulatory requirements, tax matters—and dialing back when his in-house team is taking the lead.

It’s a flexible relationship that puts the needs of the business first.

What are some of the concerns with this new state-level legislation?

One of the concerns is that states will each pass their own legislation on the subject and that the legislation will not be uniform, so people seeking to transmit records, or companies looking to enter into business transactions using blockchain-based technologies across state lines will not be certain their records or transactions pass legal muster.

companies that locate in Ohio, employ Ohio residents and wish to beta test and commercialize new technologies.

“I like that Benesch will dial up or dial down their services as we need them.

They accommodate our business seamlessly.”

KENNETH COOPER CEO & Founding Partner North American Dental Group

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Is the county giving you your money’s worth?

By JAMES M. TRUTKO

Editorial

State of equality It’s a shame that in 2018 the need for equality is still up for debate.

That back-and-forth was on full display in Cuyahoga Council chambers in recent weeks amid what was ultimately a successful push to expand the rights and protections afforded to the county’s LGBT population.

Those opposed to adding sexual orientation and gender identification to the roster of other protected classes — race, gender, age, religion, among others — offered the same misguided and bigoted reasonings we’ve come to expect in these charged times. They certainly aren’t worth repeating because they represent values so misaligned with what we should be pursuing as a county and, more importantly, a society.

Resident Madison Woods, however, characterized the issue best.

“What this vote means today — when it passes — is that I will finally have the rights that arguably, probably most of you have never had the misfortune of not having,” Woods was quoted as having said during the meeting.

The importance of what Cuyahoga County did in passing this legislation should not go overlooked. According to Equality Ohio, this move boosts the percentage of Ohioans living in areas with inclusive protections from 21.58% to 27.66% — a figure that is still embarrassingly low.

Now we should focus our attention on the Ohio Legislature, which has routinely ignored similar proposals that would have enacted LGBT protections across the state (though the Ohio House did pass a version almost a decade ago).

As it stands now, Ohio remains one of more than two dozen states without clear non-discrimination protections for the LGBT community. That means as an LGBT person, it is possible that you can be fired or denied a job in Ohio. And unlike those discriminated against based on race or age, the law isn’t there to protect you.

As such, when lawmakers return to the state’s business following November’s elections, they should move forward with House Bill 160 — The Ohio Fairness Act.

The support for the proposal is overwhelming. Ohio Business Competes — a collective of more 475 businesses — supports LGBTQ-inclusive nondiscrimination at the state level. Also, as Equality Ohio points out, regional chambers — including the Greater Cleveland Partnership — back HB160.

The modernization of Ohio’s economy has been a difficult slog, and the state’s inability to recruit and retain talent is a paramount issue.

Today’s most desirable workers want more than a good salary and health benefits. They want to feel appreciated and free to be who they are. For many, HB 160 would allow them to do just that.

Cleaning up

It shouldn’t come as much of a surprise, but a federal Great Lakes cleanup program is good for the region’s economy, according to a new analysis based on research at the University of Michigan, Central Michigan University and case studies from cities in the eight-state region.

According to the study, every dollar spent on the Great Lakes Restoration Initiative — a bipartisan effort that has proven critical to Lake Erie’s health despite the Trump administration’s open hostility toward it — between 2010-2016 will generate an additional $3.35 through 2036. Moreover, the report notes that the additional GLRI-generated tourism activity in the Great Lakes region will increase the regional economic output by $1.62 from 2010-2036 for every $1 in federal government spending. (We’d like to note that the Trump administration floated slashing the initiatives funding from $298 million to a paltry $30 million.)

As we’ve stressed before, the Great Lakes are vital to this region’s well-being as a source of drinking water, as a generator of commerce and tourism and, not insignificantly, as our face to the world. Let’s keep it that way.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

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Contact Crain’s:

216-522-1383

Cuyahoga County property owners recently received a reappraisal of their property from the county’s fiscal office. For many property owners, the reappraisal will result in a substantial property tax increase in 2019. Most of the increase will flow to the Cuyahoga County government, so it’s worth asking how the county government is spending the public’s tax dollars and whether the public is getting its money’s worth.

Most people will be surprised to hear that the county government spends about $1.7 billion, or about $3,200 for each of the 535,000 households in Cuyahoga County. That total doesn’t include the spending of other county-level entities like the Cleveland Metroparks, the Greater Cleveland Regional Transit Authority, Cleveland-Cuyahoga County Port Authority, the Northeast Ohio Regional Sewer District, Cuyahoga County Community College or the Cuyahoga County Public Library.

Last fall, Cuyahoga County Executive Armond Budish proposed a preliminary budget by department, and Cuyahoga County Council approved the 2018-19 county budgets with minor changes in December 2017. Outside of county bureaucrats and a few policy wonks, probably no one read the supporting documents, and the budget gained little news coverage.

But even if the public were interested, it would be very difficult to find and interpret the Cuyahoga County budget because the final budget has nearly 400 individual line items ranging in size from about $300 to over $125 million, organized into more than 70 departments, boards and commissions. The budget is summarized into general categories, but it’s hard to determine what is in the categories. Moreover, the recent budget is not comparable to the 2016-17 budget structure and lacks detail on the final 2017 spending and the major items of salaries and fringe benefits.

However, if one organizes the budget into the major functional groups with common sense definitions, it is possible to link the budget numbers of individual county departments to what Cuyahoga County citizens expect from their government.

Here are a few examples of how much each household is paying for the different functions of county government and a few observations to put the spending in context: JJOver 40% of the county budget is spent on Cuyahoga County health and human services. Each household spends about $1,360 ($727.8 million) on mental health and drug services and services to children and families, those with developmental disabilities, seniors and veterans, as well as subsidies to service providers and the MetroHealth System. With few exceptions, most agencies do not indicate how many persons they serve.

Neither the vague mission statements provided in the budget nor the strategic plans on the agencies’ website seem to connect to real performance indicators. Essentially, the county spends almost three-quarters of a billion dollars on human services to Cuyahoga County residents in need and it’s not possible for any citizen to determine whether the budget is sufficient or excessive, or whether any progress is being made on the basic social problems the agency is intended to address.

JJEach household also spends $712 ($381 million) on legal and safety services, including the courts, the prosecutor and public defender, the county sheriff, the medical examiner and other safety services. As with the health and social services, it’s difficult to evaluate whether county households are enjoying the safety and security they want and deserve, but a simple visit to the county courts and the Justice Center doesn’t suggest bustling efficiency.

SEE COUNTY, PAGE 13

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9/27/18 4:27 PM

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PA G E 13

At the Table

Roots Conference tackles weighty topics before a planned hiatus One of the best food conferences in the nation just concluded, and it won’t be back next year.

And if you’re enmeshed in the food industry and missed it, you missed a lot.

The sixth annual Roots Conference — under the Joe banner “Cultivate 2018” Crea and running Sept. 23-25 — drew roughly 300 chefs and restaurateurs, food and artisan producers, farmers, cultural analysts and other industry leaders from across North America to sleepy Huron, Ohio. They discussed issues facing their industry — and the mission of feeding America, today and in the future.

The conference was at the Culinary Vegetable Institute (CVI) and Chef’s Garden. Together, the properties comprise a family run agricultural mecca in Milan and Huron — an operation squarely at the center of America’s leading specialty farms.

While CVI is the educational arm of the business, the Chef’s Garden farm is the guts of the operation. The farm produces unique and hard-tofind vegetables, fruits, herbs and other products — from heirloom carrots and tomatoes to micro-greens, and proprietary varietals commissioned by chefs.

That reputation drew culinary illuminati, including Andrew Zimmern, the keynote speaker. A four-time James Beard Award winner, TV personality (host of Travel Channel’s “Bizarre Foods with Andrew Zimmern”), author, teacher and self-described social activist, Zimmern cast his eye on the future of food and its place in world culture.

Agricultural development, he said, is both an economic and cultural mission. And in America’s current quest

for individual self-improvement, our society is losing sight of a broader landscape.

“Our food system is under siege,” he said. “Do we need to lose our favorite things in order to change the way we’re doing things?”

Helping the planet, he added, helps the individual, “not the other way around.”

Observations such as those laced through the two-and-a-half-day symposium. Panels convened to delve into a range of topics.

Maneet Chauhan, an Indian-American chef known for her role on Food Network’s “Chopped,” led a panel on “Shifts in Dining Preferences.” Panelist Jill Vedaa, chef-restaurateur of Salt in Lakewood, lent her perspective.

“When you come into our restaurant, you’re coming into our own home, and you are our guest,” she said.

She added, “We built our restaurant with the ethos of bringing people together.”

Other groups discussed ways to cultivate and maintain staffing in an increasingly competitive food service industry; new facets in the buy local movement; and the role of manufacturers and chain restaurants in addressing the needs of the massive consumer industry.

Of course, food also means fun when scores of chefs convene. With mostly beautiful weather, participants gathered under bright skies and in massive tents to mingle while feasting on a remarkable smorgasbord of flavors.

A veggie-centric menu dominated.

Roasted beets, salads of grains and legumes, and luscious fire-roasted beef and lamb dishes composed the bill of

fare at one dinner. A carnival-themed luncheon brought together diners and revelers who played games of chance. Dishes included grilled heirloom tomatoes and turnips, deepfried carrot spirals and grilled pork belly-and-sweet potato kebabs with bourbon maple syrup.

At the center of everything was Lee Jones, the man who has placed his family’s mecca in the forefront of the modern farming industry.

Perennially clad in blue overalls and a red bow tie, he joined his parents — farmers Barbara and Bob Jones Sr. — in hosting the event.

Roots, Lee Jones said, was inspired by a series of annual food symposia created by Danish chef Rene Redzepi. Several years ago, Jones spoke at Redzepi’s “Mad Feed” conference, where he was impressed by the serious tone of topics.

That’s why Jones waited until the end of the Roots Conference to announce that it will go on hiatus for 2019.

“This conference allows the best in the nation’s industry to come forward and share ideas,” Jones said.

“I’d intended to put out the word at the beginning of the weekend, but I just couldn’t bring myself to do it and maybe put a damper on things. So I waited until the very end.”

His reason, he said, is that the farm will participate in production of a long-awaited book about Chef’s Garden. The 550- to 600-page book is slated for publication next fall. That will lead, the family hopes, to a return of Roots in time for the farm’s 20th anniversary in 2020.

“I think it’s healthy to take a break,” Jones said. “I don’t think growing the event and making it ‘bigger’ is important. But by pausing, we can refocus and, hopefully, make it better.”

COUNTY

dicators” — no surprise because there has been little growth in the county’s employment base. The Workforce Development Board touts its office move as a key accomplishment and promises “new target strategies” in the future.

If one digs into the county’s portfolio of development assets and debt accumulated from past years (which includes debt for Steelyard Commons, the Global Center for Health Innovation and the Huntington Convention Center of Cleveland, the airport and hotel), one can see many underperforming assets or assets that require subsidies.

JJThe county spends about $177 per household on managing infrastructure repairs, including improvements of roads and bridges by the county engineer, solid waste management projects and sanitary engineer projects. (Water and sewer projects are managed by the regional sewer board.) In addition, the county is planning to spend about $87 million more in its capital improvement budget. This is a substantial amount of money, but a million dollars doesn’t buy a lot of infrastructure. To put the spending in perspective, the total operational and capital spending on infrastructure is about the amount spent on the Board for Developmental Disabilities. It’s not surprising that many citizens are concerned about the deterioration of local roads, bridges and sewer.

So that’s how Cuyahoga County is

spending $1.7 billion.

After the county reform in 2010, many people expected better performance from county government. It would be better if county government were restructured into fewer cabinet-level departments with clearly defined missions and performance indicators linked to defined output metrics such as persons served. It would be better if there was a more transparent budget process, with online documents, updated in real time, providing comparative data on what has been spent and accomplished over the past several years. It would be better if local nonprofits analyzed the budget carefully and local news organizations reported more about the budget process so that area residents would know what they are paying for.

The county government is spending $3,200 per household. Is the county government running efficiently, creating a climate for economic growth, making the county safer and getting services to the people who need them? The budget process and documents don’t tell you, and they should.

Until citizens demand real budgetary accountability from Cuyahoga County government, you won’t be able to tell if you are getting your money’s worth.

CONTINUED FROM PAGE 12 JJThe county’s administrative functions cost each household about $50 ($27 million). However, administrative costs will grow by almost 9% from 2018 to 2019, when the overall budget is growing by 1%.

JJEach household is funding at least $280 of benefits doled out by the county’s human resource department. Based on a human resources budget of nearly $150 million and projected workforce of about 7,700, the county spends an average of nearly $20,000 per employee. The need to accommodate a 6% increase in FLEX benefits payments and a 2% cost-ofliving adjustment for county employees in departmental budgets seems to have received little public attention, but was a recurrent problem faced by many departments as shown throughout the preliminary budget documents. It may well become even more of a problem in the future, since the budget projects a slight increase in full-time employees in a county with a decreasing population.

JJEach household spends about $214 ($114.6 million) to finance development-related operations, the hotel and airport, development debt and workforce training. Economic growth is supposedly a high priority for the county, but the development department offers no “key performance in-

P013_CL_20181001.indd 13

Trutko is a local economist and market research professional. He lives in Rocky River.

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Where there’s a will, there’s a workforce John Kolesar, Engineering and Manufacturing Center supervisor, in the machine shop at Earnest Machine in Rocky River, has 26 years of experience in manufacturing. He has been with Earnest for nine months. (Tim Harrison for Crain’s)

Local manufacturers take creative approaches to tackling the much-discussed skills gap

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

There just aren’t enough skilled people to keep up with the work. We could grow much faster if we could find enough people to hire. The next generation just isn’t interested in manufacturing.

Those are common refrains in the manufacturing industry — and for good reason. In recent years, companies have simply struggled to fill openings, and there aren’t enough

people with the right skills in the pipeline to make up for all the expected retirements on the horizon.

Whether the culprit is low unemployment, a lack of vocational education or a PR problem — or all of the above and then some — the fact is, the skills gap is an issue manufacturers of all kinds face.

A recent report from Tooling U-SME, for example, drives that point home. About 99% of the manufacturers surveyed said finding skilled new workers was a workforce challenge, and another 92% said upskilling their current employees was

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an issue, too. The report itself notes that the skills gap has been talked about so much that it’s become a “nearly invisible warning.”

Crain’s explored this issue in July, and companies reached out afterward to share what they’ve done to overcome this challenge. Here are four of their stories.

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The culture shifter: Earnest Machine Products

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When Kirk Zehnder joined the family business in 2002, he knew something had to change. Coming

from the film and video production industry, Zehnder wanted to make the company feel more modern.

“It’s a 70-year-old business and we sell nuts and bolts, so right away, we’re at a huge disadvantage,” said Zehnder, who’s now CEO and president.

Earnest Machine had been based in an industrial park with “wood-paneled walls,” “old, faded, ugly orange carpeting” and “buzzing fluorescent lights,” Zehnder said.

“The place just was depressing, to be honest,” he said.

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SKILLS

CONTINUED FROM PAGE 14

Not only did the company have an old-fashioned look, but it had an old-fashioned culture, too, and Zehnder said he felt it had to change for the future.

The company moved out of the industrial park to an office setting in Rocky River in 2011 and began manufacturing short-run custom bolts at a location nearby in 2013 (prior to that, Earnest Machine was just a distributor).

Zehnder said the physical move was designed to get people thinking differently, instead of responding to the cues given by a traditional industrial park.

The company makes a point of treating all of its about 70 employees the same, whether they work in an office or on the plant floor. John Kolesar, engineering and manufacturing center supervisor, said Earnest Machine doesn’t “major on the minors,” like some employers, and the company is understanding of small missteps, like an employee being a few minutes late, as long as they’re an asset to the team overall.

And that extends to being flexible in schedules if employees have something like a family situation or a volunteer opportunity. Earnest Machine wants employees who are involved outside the company, said Elise Bastian, director of culture and talent development. That’s seen as an asset.

“We want to know more about the person, what makes them tick, what

Threaded bolts await drilling in the machine shop at Earnest Machine.

they get passionate about,” Bastian said. “There shouldn’t be any difference between a white collar and a blue collar candidate in regards to getting to know them.”

Communication and transparency has been a critical factor in changing the company’s culture. Bastian said the company hires expecting people to bring leadership qualities and innovative ideas.

“We really want them to know they’ve got that capability to bring initiatives, ideas, complaints even, to the table,” Bastian said. “Because we will look at it. And if we need to alter something, that’s our core value.

We’re going to alter it. We’re going to make it better.”

Earnest Machine isn’t exempt from workforce challenges, particularly when it comes to getting the younger generations interested and involved, but Bastian said the company has worked to strengthen its relationships with local high schools and Lorain County Community College. But ultimately, changing the culture to make it more attractive to employees could help draw in members of the next generation, Zehnder said.

“I know that sounds simple, but most places aren’t attractive,” Zehnder said.

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MANUFACTURING Kelvin Villanueva inspects SaltPod packs on the production line of RhinoSystems. Villanueva, 23, has worked at the company for three years. His first year was with Vocational Guidance Services but now works directly for Rhino.

(Photographs by Tim Harrison for Crain’s)

The lifter-upper: RhinoSystems A while back, RhinoSystems in Brooklyn Heights was looking for people to work on its line, picking and packing products off the conveyor.

RhinoSystems manufacturers a saline nasal irrigation device and makes the saline concentrate capsules that go with it locally.

Martin Hoke, president and founder of RhinoSystems, said the work is repetitive and straightforward, but it has to be done right every time. Those qualities made it a good fit for Vocational Guidance Services’ workers.

Vocational Guidance Services, a nonprofit supporting individuals with disabilities and other barriers to employment, connects employers with temporary employees and job coaches. The jobs are meant to be a last step before individuals are placed in more permanent employment, said Laura Lamb, vice president of vocational preparation for Vocational Guidance Services. For the Vocational Guidance Services workers, working with RhinoSystems gives them the opportunity to learn skills in the manufacturing industry. The contract workers at RhinoSystems are cross-trained in a variety of duties from quality checking to blister packing.

And for RhinoSystems, the partnership has meant the company has a stable employment base of temporary employees.

Vocational Guidance Services helps take recruitment efforts off RhinoSystems’ plate for this cohort of employees. The company doesn’t have to worry about whether those

employees are taking drugs or if they’re not going to show up — issues employers do often have to worry about when recruiting for entry-level positions on their own, Hoke said.

RhinoSystems has about 18 contract employees through Vocational Guidance Services, as well as four employees who finished that program and were hired on to part-time positions, Hoke said. In total, there are about 80 workers, including those contract employees, at RhinoSystems.

The people who RhinoSystems works with through Vocational Guidance Services are “focused” and “reliable,” Hoke said, and attendance rates are high. They don’t see a “stigma” in entry-level work, he said.

“There’s a joy and just a very upbeat pride in working,” Hoke said. “It’s just great for our company.”

The engagement specialist: Vallourec A big part of the skills gap is an awareness gap among younger generations who often don’t know about available opportunities, said Chris Allen, North American talent acquisition manager for Vallourec USA Corp., a global maker of steel pipe.

“I think we’ve lost multi-generations in the understanding of what we do in those big buildings with smokestacks on the top,” Allen said.

In Youngstown, Vallourec is taking on the challenge of increasing that awareness with the help of the Mahoning Valley Manufacturers Coalition, a network of manufacturing employers and educational partners in the region.

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GAP

CONTINUED FROM PAGE 17

Starting this school year, the company and the coalition will be working to create more engagement with local students. The group is putting together presentations on topics like soft skills that companies can use in the classroom, making those types of interactions as easy as possible for the employers. The goal is not to explicitly talk about the employer’s company or manufacturing, but to work that into the larger presentation.

“You’re not approaching it in way where you’re sticking it right in their face,” Allen said.

Easing into the topic is a better approach when dealing with groups of students who may not have any base knowledge of manufacturing, he said.

Many of the students in this generation don’t have parents or grandparents who worked in the industry.

Jessica Borza, executive director of the Mahoning Valley Manufacturers Coalition, said the goal will be to put together a “menu” of engagement options — for example, presenting to students in high school or middle school or working with teachers — from which partners can choose. The coalition has about 45 active manufacturing partners.

“That’s part of our plan is to make sure that it’s very clear and easy for them to engage,” Borza said.

And doing this work with the coalition was important to Vallourec. As a larger company — in Youngstown alone, it employs more than 500 — Vallourec can already draw in em-

Steven Truman loads SaltPods on the production line of RhinoSystems. Truman, 20, found work with Rhino through the Cuyahoga Valley Career Center.

(Tim Harrison for Crain’s)

ployees, Allen said. But they’re often pulling them away from their vendors. It’s important to get enough people in the industry to benefit everyone, not just Vallourec, Allen said.

Allen said it’s critical, though, that people know this is a longterm effort.

“It’s not anything that we can snap our fingers and make happen tomorrow,” Allen said. “It’s not going to be gratifying for them in the short term.”

But if the companies invest in the work and measure its outcomes, in five to 10 years, it could make a difference.

“If we stay on this direction, we

will end up seeing some benefit from it,” Allen said. “It’s just trying to get over that hurdle of not having the personnel right now.”

The (helpful) pit stop: Bowden Manufacturing Andy McCartney brought the lessons he learned in the Navy to his role as president of Bowden Manufacturing in Willoughby. Bowden serves a variety of industries, from defense to medical products, through contract manufacturing. It has about 75 to 80

part-time and full-time employees.

McCartney’s father bought the firm in the ‘70s; McCartney joined Bowden in 1998 and took over running it the next year. In recent years, McCartney has taken an unusual approach when hiring recent engineering graduates: pitching it as a learning experience and knowing most won’t stay forever.

And being OK with that.

The company started by seeking an entry-level mechanical engineer and offering a starting salary of about $40,000, which has since climbed to $50,000. So many recent graduates

have been taught to aim for a corner office designing the “next greatest widget that’s going to save the planet and make them a gazillion dollars,” McCartney said. And when he interviews them, they agree — that’s where they want to end up. What Bowden offers them is the chance to “get dirty” and learn about manufacturing, he said. And McCartney tells them that in two to five years, when they feel like they’re no longer learning at Bowden, he’ll help them find their next step elsewhere.

“I tell them, my worst case is they go somewhere else and they design some great widget and then their company’s going to go, how do you make that?

Where do you get that made? They got a phone number to call, right?” McCartney said. “I mean, my worst case is I plant customers all over the planet.”

Relatively quick turnover is something McCartney is comfortable with from his time in the Navy. There, the longest that someone would be assigned to a particular ship was six years, he said. It’s an “up or out mentality,” he said.

At Bowden, that approach has drawn in new employees who learn quickly. In just a few months, they go from knowing nothing to developing processes and running production, McCartney said. That idea would have been “preposterous” before, he said.

Bowden had been feeling the pressure of the skills gap before implementing this new program, McCartney said, and this approach helped.

And, for better or worse, he said, it has raised the company’s expectations for its entry-level workers.

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MANUFACTURING

State to aid Swagelok HQ, plant expansion

By STAN BULLARD sbullard@crain.com @CrainRltywriter

The proposed investment by Swagelok Co. in Solon includes funds for updating operations and adding as many as 1,000 jobs as well as constructing a new headquarters at the site of its current one.

As the Ohio Tax Credit Authority on Monday, Sept. 24, approved a 2.06%, 13-year tax credit for the developer and provider of fluid systems products, services and training, a briefing document that the Ohio Development Services Agency provided to board members stated that Swagelok’s plans include expanding a factory building and installing equipment to increase operating capacity in Solon as well as replacing its headquarters.

The new corporate office and innovation center would be located at the site of its current headquarters at 29500 Solon Road.

Swagelok plans to construct a new global headquarters and innovation center at its 29500 Solon Road location as part of a plan to add 1,000 jobs over the next 13 years. (COSTAR)

The state agency said in a news release that the incentives are needed to help create $50 million in new annual payroll in the suburb southeast of

Cleveland through the creation of 1,000 jobs. The state said it needed to provide the aid because Swagelok has the ability to expand in Pennsylvania

and received other efforts to land its headquarters and plant expansion.

The move also retains almost $292 million in payroll in Solon and an undisclosed number of existing jobs, the state report said. The incentive is worth about $13 million if the company creates as many jobs as promised with the investment.

In exchange, the privately held company agreed to keep its operations in Solon for 16 years.

Solon City Council previously signaled its support for the plans and OK’d incentives of its own for the project.

The company announced last Tuesday, Sept. 18, that after a review

U.S. cars in Japan face obstacles

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In trying to improve American cars’ access to Japan, President Donald Trump may be overlooking the key obstacle: Japanese consumers don’t want them.

Of the 3.2 million vehicles sold this year in Japan, only 0.3% were American brands, according to data from Japan’s auto industry associations. In contrast, Japanese brands have a market share of about 40% in the U.S. Trump announced Wednesday, Sept. 26, he had reached an agreement with Japanese Prime Minister Shinzo Abe to open trade talks between the two nations. The president had threatened a 25% tariff on cars, seeking to deter imports and encourage more production and jobs in America.

Trump, who also wants better access for U.S. cars in Japan, agreed with Abe that sanctions on auto exports won’t be applied while the talks take place.

While the U.S. currently has a 2.5% import tariff on passenger cars and 25% on trucks, Japan removed its last levies on auto imports almost four decades ago. Japan has long argued the reason for low presence of U.S. cars has nothing to do with tariffs: Japanese consumers generally perceive U.S. cars as bulky and inefficient — minicars and other locally made fuel-saving models dominate the country’s vehicle sales.

Only about 7% of Japan’s total car sales are imports, but some foreign brands are in demand. German manufacturers claimed the top five importer positions — a point Japan uses to prove its consumers don’t shun all foreign marques. Daimler AG’s Mercedes-Benz sold 42,000 units this year through August, while BMW sold 30,500 units. Fiat Chrysler Automobiles NV’s Jeep is the No. 1 American brand in Japan, selling more than 7,000 units in the first eight months this year, topping other U.S. marques combined. Ford Motor Co. said in 2016 it was pulling out of Japan, calling the country the most closed developed auto market in the world.

P019_CL_20181001.indd 19

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MANUFACTURING

Warren-based incubator showing energy

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

The Tech Belt Energy Innovation Center — a burgeoning incubator in Warren that is drawing interest beyond the Mahoning Valley — is about to greatly expand its capabilities when it opens its new energy testing lab.

The lab, tentatively called the Energy Integration Lab, is expected to open Oct. 18. It will have an area for testing batteries, including fuel cells.

The capabilities won’t be deep, but they are broad, said chief technology officer Bill Whittenberger.

“You can hand me a double A cell or you could hand me a battery that fits in an electric car, and I can test both of those things,” Whittenberger said.

The lab will also boast a grid simulator that will let companies and entrepreneurs test how their products would behave if there was an event, like a lightning strike, on the electricity grid. Whittenberger said he had already seen strong interest in that equipment already. There will be a wet lab for making fuel cells and a test station for measuring battery life and energy consumption on devices, among other capabilities.

“Before, it was an idea and a bunch of offices and now we have some very specific sets of hardware that we can use to attack different kinds of problems in the energy space,” Whittenberger said.

The Tech Belt Energy Innovation Center in Warren opened a co-working space in January. (DeShawn Scott)

The new shared resources lab was one of the draws for Rick Stockburger, who joined the Tech Belt Energy Innovation Center about a year ago.

The vice president and chief operating officer has experience as an entrepreneur and an interest in what he describes, basically, as the future of the world. He thought the center would give him the chance to share his experience with fellow entrepreneurs but also to make an impact in an important area.

“I’ve always been kind of a problem-solver, and it seems like one of the craziest problems to solve, because we are at the same time trying to figure out how to consume less en-

ergy, how to make energy prices cheaper and how to make energy better for the environment,” Stockburger said. “And those are three ideas that are super divergent.”

The innovation center has three employees and works with contractors, as well. It serves as home for 13 companies and works with about 75 to 85 companies a year.

Stockburger said he wants to create a “strong and coherent ecosystem” for energy storage in the region, from Cleveland to Columbus to Pittsburgh.

“I think we have an opportunity to have an extremely strong energy triangle between those three municipalities,” Stockburger said. “And right

here in Warren, we’re in the middle of all of it.”

With its new shared resources lab, the center plans to serve companies beyond Ohio’s borders, too. A portion of funding for the lab came from the Appalachian Regional Commission — a federal-state partnership designed to boost economic development within Appalachia, which the commission defines as the 205,000-square-mile region following the spine of the Appalachian Mountains from southern New York to northern Mississippi. That means the center will be able to serve any company in that large region, Stockburger said. (Funding for the lab also came from the Ohio Board of Regents.) In total, the center received almost $500,000 for the new lab.

There will be a general lab fee that gets members access to the lab; individuals will also be able to rent time on the larger pieces of equipment.

The lab will have a lab tech available that can run tests — that way, Stockburger said, a company in Georgia could use the lab, checking results remotely without making the trip.

Whittenberger said much of the equipment in the new lab is easily found in a university setting, but the Tech Belt Energy Innovation Center won’t have any of the “baggage,” like working out who keeps the intellectual property, that comes along with working in those settings.

Bedford Heights-based Paragon Robotics, which makes energy efficiency

products for the defense industry, is one of the companies that plans to use the new lab. The company is entering what president Julian Lamb called the resilience market, which includes large systems with high power usage, and there aren’t a lot of labs in the U.S. with the appropriate equipment to test and validate them. But the Tech Belt Energy Innovation Center’s new lab will allow the company to do that locally. It’s small, he said, but it’s “a step in the right direction.”

In addition to its energy focus, the Tech Belt Energy Innovation Center also works to support entrepreneurs in the region in general. It offers a co-working space, and it houses the Minority Business Assistance Center locally. It regularly hosts workshops and events. And a future program will help factory workers explore entrepreneurial skills and available resources, in part to help those who get laid off, like at Lordstown’s GM plant.

“We focus on energy companies, but there’s a lot of companies right here that we can be able to help innovate and grow,” Stockburger said.

“And we want them to be in our space, too, and utilize it.”

Currently, the Tech Belt Energy Innovation Center is home to companies in education technology, drones, cars, sensors and more. Stockburger said drone technology — particularly energy storage for drones — likely will be a big area of focus for the Tech Belt Energy Innovation Center going forward.

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Bob Rose has been asked many times to describe the style of the decorative metalwork put out by Rose Iron Works, his family’s forge workshop tucked away in Cleveland’s St. Clair-Superior neighborhood. Instead of offering a pat answer, the third-generation owner points to a quote from his father, Melvin, upon receiving the Cleveland Arts Prize lifetime achievement award for design in 2008.

“Somebody asked dad about our company’s style, and he smiled and said, ‘Whatever the customer wants,’” said Rose.

A simple proclamation, but one that has helped Rose Iron Works survive and thrive for 114 years, delivering high-end architectural, decorative and sculptural metalwork for homes, institutions and collections in Cleveland and beyond. Among the company’s eclectic offerings are a chandelier decorating the Ohio governor’s mansion and light fixtures for the Third District police station. Local landmarks have received Rose Iron Works’ delicate touch, including a lobby clock at the former Williamson Building on Public Square and an Ohio seal depicted on a state office building mural downtown. Since joining the company in 1970, Rose has built up its industrial base, selling thousands of lamps, small tables and similar items

to Pottery Barn and other catalog businesses. Rose Iron Works’ staff of blacksmiths also hand forge tools, tongs and skimmers for the smelting industry alongside truck and military vehicle parts. Meritor is a major client for axle system parts, while tooling and fixtures are sold to GE aircraft facilities as far as Mississippi.

“The large percentage of what we do is industrial,” said Rose. “We’re fairly diverse, which speaks to how we’ve survived. Our clients understand the difference between handcrafted work and more commercial work.”

All in the family The 7,000-square-foot blacksmith shop and office in St. Clair-Superior is supported by two production facilities on Marquette Street near East 55th and the Shoreway. Rose’s grandfather, Martin, started Rose Iron Works in his native Budapest at the turn of the 20th century. After finding success at home, Martin immigrated to Cleveland in 1903, bringing his family, a box of tools and $200 in cash.

Although Martin had relatives in New York and Cleveland, he chose the prospering North Coast for a moneyed clientele hungry for a level of decorative detail they had never before seen.

“My grandfather was trained and licensed in Europe to produce products for royalty,” said Rose. “He preferred to be a large fish in a smaller pond.”

“Muse with Violin Screen,” an art deco-infused piece designed by resident Rose Iron Works artist Paul Feher in 1930 served as the

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April 16-22, 2018

Acquisition helps keep Ramco on growth track

VOL. 39, NO. 32

gan to focus more on engineering

By DAN SHINGLER and less on producing common, low-priced parts like simple nuts. dshingler@crain.com “That’s a race to the bottom,” @DanShingler Melick said of the highly commodHudson-based Ramco Specialties itized realm of simple nuts and bolts, where foreign and domestic suppliis on an automotive roll.

VOL. 39, NO. 16 April 16-22, 2018 Sponsored Content After building and moving into a ers most often compete primarily on 185,000-square-foot headquarters and price and the cheapest part wins.

The company has found OEM more on engineering gan toitsfocus main plant a little over two years ago,

By DAN SHINGLER and less their on big producing common, the company has increased its size automaker customers,and with Ramlow-priced parts like simple nuts. with the acquisition of Michigan-based suppliers, willing to work dshingler@crain.com co’s engineers earlier in“That’s their own a race to the bottom,” Copa Tool earlier this month. @DanShingler allows Melick saidthe of the highly commodGrowth in Ramco’s automotive design processes. That to offer fastening systems itized realm of simple nuts and bolts, business, by far its largest Hudson-based end market, company Ramco Specialties can be integrated intoforeign other and domestic suppliwhere is fueling it all, Jeff Melick, Ramco’s di- thatroll. is on an automotive which can themost entireoften au- compete primarily on rector of sales and marketing, Aftersaid. building parts, and moving intomake a ers manufacturing process the cheapest part wins.

“This year, we’re up185,000-square-foot about 15%,” tomotive headquarters and price and Specialties’ 185,000-square-foot headquarters and main plant has andyears moreago, efficient.

Plus, they Ramco The company has found its focus OEM more on engineering gan to Melick said, adding that theplant compamain a littlefaster over two of warehouse room, too. (Dan Shingler for Crain’s) DAN SHINGLER notBydepend whollyautomaker on price customers, to plentyand and their less big on producing common, ny has been experiencing a similar hasdoincreased the company its size sales, Melick said.suppliers, willing to work with Ramlow-priced parts like simple nuts. growth rate since about 2008, when gain with the acquisition of Michigan-based dshingler@crain.com growing faster overall must be working, because while earlier co’s engineers in“That’s their than own a race todomestic the bottom,If ” the state’s automotive compait began focusing onCopa more Toolengiearlier thisItmonth. @DanShingler growth onlycommoddo nies as a whole can fare that well, it some other companiesdesign are alsoprocesses. find- production That allows theofrates Melick said the can highly neered products than a simple Growthnut. in Ramco’s automotive would be a good thing for Ohio, in two ways: They are either a bolts, growth inmarket, automotive, the induscompany to offersofastening systems itized realm of simple nutson and Copa Tool is a significant pickup business, by far itsing largest end Hudson-based Ramco Specialties which still has a huge automotive small where number of hotand products or asupplias is a whole has onroll. a downthat can be integrated into foreign other domestic for Ramco. Its $14 million in annual is fueling it all, Jefftry Melick, Ramco’s di-been on an automotive according to the Ohio number of where a industry, trend, said Edward “Ned” Hill, parts, which can make the entireoften au-products most compete primarily on sales will be added torector Ramco’s an-andward of sales marketing, Aftersaid. building and moving intolarger a ers Manufacturers’ Association. few are picking up market share. a well-known Ohio economist and tomotive manufacturing process price and the cheapest part wins. nual revenues of about $100 million.

“This year, we’re up185,000-square-foot about 15%,” headquarters and Specialties’ 185,000-square-foot headquarters a huge partand main plant has Seeing that the overall Ramco tide bouncprofessor public administration faster and years moreago, efficient.

Plus, they The company has is found its OEM“Auto supply remains Copa’s 40 employees bring Ramco’s Melick said, adding that theofcompamain plant a little over two warehouse room, too.

(Dan Shingler for Crain’s) enormous manufacturing ing around dead to low plenty … theyof either and city regional atits size doplanning not depend wholly on price automaker customers, and their of bigOhio’s headcount to about ny 175 haspeople, been experiencing a similar the and company has increased sector. State data has shown increasgood boatwilling or have Ohio State University’s gain sales,John Melickhave said.asuppliers, toattached work witha RamMelick said. growth rate sincethe about 2008, when with the acquisition of Michigan-based ingoverall investment among all decent boatengineers towhile a goodearlier motor.”

Glenn College ofearlier Publicthis Affairs. growing domestic If transporthe state’s automotive compaIt month. must be working, because co’s infaster theirthan own The acquisition brings things that it began focusing onCopa more engiTool tation Ramco is not at allows least Asked whether Ramco or any sinproduction growth rates equipment can only do manufacturers, nies as a whole can fare that well, it some other companies are also find-unique, design processes.

That the might be more important than just than neered products a simple nut.in Growth Ramco’s automotive and are jobeither growth been steady amongcompany Northeast supplicompany’s recent in aube a good thing for Ohio, soauto in two ways: They on ahas would ing growth inmarket, automotive, the industo Ohio offer fastening systems sales, too, such as increased CopamanuTool is agle significant pickup business, by far itsgrowth largest end transportation equipment ers.

Some report they are also other tomotive is annual due to Jeff a rising or has still has a huge automotive small number ofamong hot products or a which try as atide, whole onothers acan downthat be integrated into facturing capacity. While forRamco Ramco.traIts $14 million in is fueling it all, Melick, Ramco’s di-been manufacturers, employwell. just to a well-run boat, Hill hadtrend, a ready according to the Ohio number products wherepresently a industry, ward said Edward “Ned” Hill,canlarger parts, which make the entireofauditionally has focused sales on thewill female be added Ramco’s an- and rector of sales marketing, said.doing ing 125,000 OMA Association.

Adler, president of Cuyahoga “It’smillion. the boat.”

Manufacturers’ few are picking up over market share. Ohioans,” a well-known OhioBill economist and tomotive manufacturing process end of fasteners — nuts and related of answer: nual revenues about $100 “This year, we’re up about 15%,” Ramco Specialties’ 185,000-square-foot headquarters spokesman Augsburger Heights-based Products, Overall, domestic auto production “Autosaid. supply remains a huge partand main plant has thatPlus, the overall tide is Ryan bouncprofessor public administration faster andStripmatic more Seeing efficient. they threaded assemblies Copa’s — Copa has 40 employees bring Ramco’s Melick said, adding that theofcompafor Crain’s) plenty warehouse room, For… itsthey part,of Ramco expects itstoo. re-(Dan Shingler also sells heavily thearound automohas been in apeople, slump, Hill said.

He and notof Ohio’s enormous manufacturing dead to low either and city regional planning atintoing do not depend wholly on price high-volume screw machines headcountthat to about 175 ny has been experiencing a similar growth to continue and isState worktive industry, supplying a range data from Federal Reserve data has shown increashave a goodof boatcent or have attached a sector. the Ohio State University’s John gain sales, Melick said. can produce bolts and othersaid. small ed thatgrowth Melick ratethe since about 2008, when ing hard to earn its place supplying parts.

He, too, said Bank of Louisthat shows thaton U.S. auto- engiing overall investment among all decent boat towhile a good motor.” growing faster than domestic If transporthe state’s automotive compaGlenn College ofsmall, Public tubular Affairs.

It must be working, because precision parts Ramco does curcur The not acquisition brings things it St. began focusing more parts for up-and-coming vehicles, business is any good as of late. makersneered went from about tation equipment Ramco is not unique, at least production growth rates can only do manufacturers, nies as a whole can fare that well, it Asked whether Ramco or sinsome other companies are also findrently make, Melick said. might be more important than just making products than a simple nut.

Melick said.

Copa’s and on has “Stripmatic is at 15% over ourindus350,000 automobiles month be-pickup and are job either growth been steady among Northeast Ohiosoauto supplibe a good thing for Ohio, in two ways: presence They a would company’s recent growth in auing growth inleast automotive, the presAnd it never hurts tosales, havetoo, a pres such as increased manumanu Copa Tool is per agle significant added connections and around first-quarter and last year’s tween 2013 and tra2016 totomotive now making transportation equipment ers.been Some reportsmall they are also in still has a huge automotive number ofamong hot products or a which is to a rising or has try as tide, aforecast whole onothers a downence in the metropolitan Detroit facturing capacity.

While Ramco tra for Ramco.

Its $14 million in due annual Detroitlarger should only of help, since where it presently sales,” Adler “The short-term abouton 250,000 units month. manufacturers, employdoing well. according to the Ohio number products a industry, just atowell-run Hill hadtrend, a said. ready ward said Edward “Ned” Hill, area, where Copa is based, alongside ditionally has focused thewill female sales be per added Ramco’sboat, anputs few Ramco toshare.Ohioans,” backlog through June looks prettypresident other words, company isthe boat.” over 125,000 OMA Association.

Billeconomist Adler, of Cuyahoga Manufacturers’ are physically pickinging upcloser market “It’smillion. a well-known Ohio and domestic automakers end and ofmany of —In fasteners nuts andrevenues related ifofaanswer: nual about $100 many Seeing of itsProducts, big customers, hetide added. solid as well.” growing, they40 must be doing somespokesman Augsburger Heights-based Stripmatic “Autosaid. supply remains a huge part that the overall isRyan bouncOverall, domestic auto production professor of public administration their suppliers that arethreaded all potential assemblies — Copa has Copa’s employees bring Ramco’s “Ouring product development who said hisregional products most thingmachines right.

For … its engipart, either Ramco expects itsenormous realso sells heavily at into the automoof Ohio’s manufacturing they around dead low has been in apeople, slump,Adler, Hilland said.

He notcity and planning Ramco customers, he noted. high-volume screw thatto about headcount 175 neers have area very excited to able to theirState waytive into pickups, supplying a supplier is from a typically growth to continue and isState work-data has shown increasindustry, range ofboatcent a good orbe have attached a sector. ed that data the Federal Reserve thefind Ohio University’s John Ramco hopes to bring bear itsbolts “How cantoproduce andMelick other small performs said. offer He, domestically SUVs and heavy commercial function of not which itofisSt.things suping hard to earn its place tubular too,boat saidto amanufactured ing supplying investment among all transpordecent good motor.”

Bank Louis that shows that U.S. autoGlenn College ofsmall, Publictrucks, Affairs. parts. chief strength to Copa’sprecision existing cuscus parts Ramco does curcurvehicles The acquisition brings engineered assemblies and compothinks new taxabout laws and a reduction plying and how those important vehicles went sell,” for up-and-coming vehicles, business is good as of late. equipment manufacturers, Ramco is notparts unique, at least tation makers making Asked whether Ramco or any sintomer base, Melickrently said.make, That Melick said. might be more thanfrom just nents quickly toour our Tier 1 automoof regulations are having a big posi-in Hill to said intoo, email corresponMelick said.suppliCopa’s presence “Stripmatic is at leastamong 15% over and job and growth has been steady Northeast Ohio auto 350,000 automobiles per beglemonth company’s recent growth austrength is engineering, And he said.

AfAf hurts presit never have a an pres sales, such as increased manutive Melickadded said. connections tive impact sales. dence.facturing “An Detroit auto supplier that is 2016 and around forecast and year’s transportation equipment ers.last Some others report they are also inamong tween 2013 and totomotive now on making is duefirst-quarter to a rising tide, or customers,” ter the Great Recession, Ramco bebe metropolitan ence in the capacity.

While Ramco traDetroit should only help, since it presently employsales,” short-term manufacturers, doing well. about 250,000 units per just month. a well-run boat, HillAdler had asaid. ready“The area, where Copa is based, alongside ditionally has focused on the female puts Ramco physically to prettypresident ing closer over 125,000 Ohioans,” OMA Bill Adler, of Cuyahoga other company “It’sisthe backlog boat.” through June looks domestic automakers end and of many of —Innuts fasteners andwords, relatedif aanswer: Reprinted with permission from the Crain’s Cleveland Business. ©be 2018 CrainsomeCommunications Inc. All Rights reserved. many of itsProducts, big customers, he added. solidauto as well.” spokesman Ryan Augsburger said.

Heights-based Stripmatic growing, doing Overall, domestic production their suppliers that arethreaded all potential assemblies — they Copamust has Visit Further duplication without permission www.crainscleveland.com. #CC117 “Ourthe product development Adler, whoHe said his products For itsengipart, Ramco expects its realso sellsmost heavily into automothing right.is prohibited.

Hill said. notRamco customers, he noted. high-volume screw machines that has been in a slump, neers areavery excited to begrowth able toto continue and is work findReserve their waytive into industry, pickups, supplying workrange of cent a supplier is from a typically ed that data the Federal Ramco hopes to bring bear its bolts“How cantoproduce and other small performs offer He, domestically SUVs and commercial ing hard to earn its place supplying small, trucks, tubular parts. too, said manufactured function of which vehicles supBankitofisSt. Louis shows that heavy U.S. autochief strength to Copa’sprecision existing cuscus parts Ramco does not curand compothinksmaking new taxabout laws and a reduction for up-and-coming vehicles, business is goodengineered as of late. assembliesparts plying sell,” from makers went tomer base, Melick rently said.make, ThatMelick said.and how those vehicles nents to our our Tier 1 automoof regulations arebehaving“Stripmatic a big posi- is at Melick said. Copa’s presence and leastquickly 15% over Hill to said in aan email350,000 corresponautomobiles per month strength is engineering, he said.

AfAf hurts And it never have prestive customers,” Melickadded said. connections in and around tive impact sales. first-quarter forecast and last year’s dence. “An Detroit auto supplier is 2016 tween that 2013 and to nowon making ter the Great Recession, Ramco bebe metropolitan ence in the sales,” Adler said. “The short-term Detroit should only help, since it area, where Copa is based, alongside about 250,000 units per month.

In other words, if a company is backlog through June looks pretty puts Ramco physically closer to domestic automakers and many of Reprinted with permission from the Crain’s Cleveland Business. © 2018 Crain Communications Inc. All Rights reserved. many of its big customers, he added. their suppliers that are all potential growing, they must be doing some- solid as well.”

Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC117 “Our product development engiAdler, who said his products most thing right.

Ramco customers, he noted.

“How a supplier performs is a typically find their way into pickups, neers are very excited to be able to Ramco hopes to bring to bear its chief strength to Copa’s existing cus- function of which vehicles it is sup- SUVs and heavy commercial trucks, offer domestically manufactured tomer base, Melick said. That plying and how those vehicles sell,” thinks new tax laws and a reduction engineered assemblies and compoHill said in an email correspon- of regulations are having a big posi- nents quickly to our Tier 1 automostrength is engineering, he said. AfAf tive customers,” Melick said. ter the Great Recession, Ramco be- dence. “An auto supplier that is tive impact on sales.

Acquisition helps keep Ramco on growth track

AUGUST 6 - 12, 2018

CRAIN’S 2018

ARCHER AWARDS

HR TEAM OF THE YEAR (PUBLIC) WINNER

People Analytics, KeyBank Aware that would-be and current employees must take priority, KeyBank has simplified its recruiting process and utilized data to reduce worker turnover.

Key’s information-driven efforts were led by Amanda Cruz, digital recruiting and analytics consultant, and initiative development manager Jeannie Fanning, the nomination stated. By taking a collaborative approach backed by detailed research, Key’s HR organization cut attrition in the company’s contact center by half over the previous year, reduced the number of pages in its applications by 40%, and estimate that candidates will spend 20% to 50% less time in completing an application.

According to the nomination, the team is also nearing completion of a candidate-centric Key career site redesign, providing additional trans-

parency around the information sought by applicants and eliminateliminat ing corporate speak and complex navigation.

Meanwhile, a comprehensive approach to “human capital” decision-making is at the core of Key’s People Analytics Community of Practice, a group of HR professionals who meet biweekly to discuss best practices in driving data-based HR decisions.

“The predictive modeling approach is being adopted by other groups, from redefining onboarding for new hires, to streamlining the training modules that impact perper formance, to prioritizing workload for compensation reviews,” the nomination stated. “Candidate exex perience work will result in more quality candidates in our recruiters’ pipelines and improve our employ-

Cruz

Fanning

er brand, conveying to candidates that Key is fast, efficient and tech savvy.”

In performing this undertaking, Key’s HR division helps meet longterm company priorities in developing a talented workforce, catalyzing employee engagement, and improving organizational effectiveness, the nomination said.

— Douglas J. Guth

PROMOTE. Why not?

Reprinted with permission from the Crain’s Cleveland Business. © 2018 Crain Communications Inc. All Rights reserved.

Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC117

Reprinted with permission from the Crain’s Cleveland Business. © 2018 Crain Communications Inc. All Rights reserved.

Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC142

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P022_023_CL_20181001.indd 22

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“Somebody asked dad about our company’s style, and he smiled and said, ‘Whatever the customer wants.’ � — Bob Rose, third-generation owner of Rose Iron Works

logo for the Cleveland Museum of Art’s popular Jazz Age show. The piece, on long-term loan, is still on display. (Howard Agriesti, CMA)

Originally on Cherry Street downtown, Martin moved the shop to E. 43rd near St. Clair in the 1910s, forging pieces for various Millionaire’s Row industrialists. In the mid-1930s, Martin’s son Melvin entered the business as a designer and supervisor, running the firm full time beginning in the 1940s.

Before joining the family business himself, Bob Rose taught drafting at East Tech High School, passing along metalworking techniques gleaned from his mechanical engineering studies at Carnegie Mellon University. As the company’s industry side ballooned, Rose and his father integrated more ornamental metalwork into the pieces they created. “It became a spoken agreement that we’d do decorative work if we didn’t lose too much money doing it,�

Rose said.

Handcrafted functional artwork runs in the four or five figures — a single hand-forged deco picture frame costs $5,200 — and speaks to a foundational diversity that allowed Rose Iron Works to stay afloat amid industry fluctuations, the owner said.

EVENT DISPLAYS THAT GET RESULTS! r

BACKLIT LIGHTBOXES

An artistic tradition Through the decades, the company’s work has been displayed at museums nationwide. Four Rose Iron Works pieces appeared in the popular Jazz Age show at Cleveland Museum of Art. The show’s official logo was “Muse with Violin Screen,� an art deco-infused piece designed by resident Rose Iron Works artist Paul Feher in 1930. An image of the iconic screen appeared on outdoor banners and additional museum marketing materials. The muse piece is actually on a long-term loan to the museum and is still on display in its galleries.

Stephen Harrison, curator of decorative art and design at CMA, said the precision and beauty of “Muse� is emblematic of a specialty skill set harkening back to a vanishing tradition. “It’s very rare for a company like this to be operating in the 21st century,� said Harrison. “The standard and execution of their handmade designs is at the kind of high level we don’t see much anymore.�

Rose Iron Works made railings and other metalwork for CMA a century ago, a relationship that Harrison was happy to expand upon for the Jazz Age exhibit. “They’re an American story with the kind of national resonance that not every company like theirs has,� he said.

For Rose’s part, seeing the publicly displayed fruits of his family’s long labors holds its own bittersweet pleasure “Just walking around and looking at the images in front of the museum makes me wish my dad and grandfather could be there to see it,� he said. “It’s an incredible honor.�

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CRAIN’S CLEVELAND BUSINESS

MANUFACTURING

Contributed By

MANUFACTURING IS:

Growth that drives our economy

Contract manufacturer Alloy Bellows & Precision Welding stayed competitive with a savvy company acquisition Alloy Bellows & Precision Welding was founded company does the engineering for you, it could be in 1935. Over the decades, the contract manufacturer that they do prototyping and pre-engineering such became known for welding, brazing and soldering that it makes it easier.” bellows into valves and other component parts for O’Donnell adds that firms can also become more the aerospace, medical and petrochemical industries. powerful by being able to supply multiple crucial But just a few years ago, the fast-growing Highparts to existing customers. “Say a customer gets part land Heights-based operation found that its cusone, part two, and part three, and they get it from tomers were looking for larger bellows assembles. three different vendors,” he says. “If the contract Although Alloy Bellows & Precision Welding did manufacturer can go ahead and bring the processes some of the machining necessary to accomplish in house so they can make all three different parts this at its headquarters, the firm for different purposes, then it’s a couldn’t keep up with demand and one-stop shop. If you can provide “Particularly if you everything to them, it’s a lot more found itself having to outsource some of this work. value than just making one part.” are a job shop, As a result, Alloy Bellows & Of course, communicating these stepping back and Precision Welding acquired a small, differentiating factors is another Mentor-based machining company understanding your vital piece of the puzzle, especially value proposition to help boost sales.According to called Star Precision Products and made it a subsidiary. Along with MAGNET president and CEO — what makes this acquisition came improveEthan Karp, smaller companies are you special — ments: Alloy upgraded Star Preciincreasingly employing strategic is absolutely sion to state-of-the-art equipment, marketing activities — includadded quality certifications and ing gathering customer data and a critical step.” hired more employees at the firm. producing market-specific thought — MAGNET president “The goal now is to be poised leadership articles — to inform their and CEO Ethan Karp with all the different people, website and other online presences. process and equipment changes, “Particularly if you are a job upgrades to really grow — rapidly,” says Alloy shop,” Karp says, “stepping back and underBellows & Precision Welding president and CEO standing your value proposition — what makes Michael Canty. you special — is a critical step in then using all that For job shops and contract manufacturers, data and marketing to eventually create the digital buying vendors to speed up and have more control presence that bolsters your sales efforts.” over their processes is just one potential way to Looking for ways drive growth for your manufacfacilitate growth. Differentiating from competitors turing shop or the Ohio economy? That’s what we do. is another major solution, says MAGNET vice MAGNET’s mission is to help manufacturers grow president of operations Mike O’Donnell, who and compete in Northeast Ohio, especially the 98% explains that in today’s environment, it’s no longer of startup to medium-sized manufacturers that drive enough to be able to deliver high-quality parts at a our economy. Check out MAGNET’s Power Assesslow price and in a timely fashion. ment for ways to make an immediate impact — fast.

“You have to differentiate yourself in ways Learn more about MAGNET’s Power Assessment at that are helpful to the client,” he says. “It could be www.manufacturingsuccess.org/power-assessmentyou’re easy to do business with. It could be that the growth, or call Linda Barita at (216) 391-7766.

This advertising-supported feature is produced by Crain Content StudioCleveland, the marketing storytelling arm of Crain’s Cleveland Business.

The Crain’s Cleveland Business newsroom is not involved in creating Crain Content Studio-Cleveland content.

P024_025_CL_20181001.indd 24

Q&A: Roy Hardy President, Precision Metalforming Association The Precision Metalforming Association — an Independencebased trade group serving North America’s $137 billion metalforming industry — had long offered training resources in print, VCR tapes and DVDs, but it recognized that it was time to update its approach and offer interactive training online. That approach will allow the coursework to be updated regularly, said association president Roy Hardy. In fact, the traditional training materials hadn’t been updated in 15 or 20 years.

“The Precision Metalforming Association recognized, like all manufacturing a couple years ago, that there’s just not enough folks to go around and the people that we currently employ could use a little upskilling, as well,” Hardy said.

The training, known as METALFORM EDU, will be available to Precision Metalforming Association members and nonmembers, but members will be able to purchase training by the course or the full catalogue for shortened time periods at a discounted rate. Non-members will only be able to buy year-long access to the full catalogue at a higher cost. This interview has been edited for length and clarity. — Rachel Abbey McCafferty When did you launch?

We did what we called a soft launch a couple months ago. Just like opening a restaurant, we wanted a few people in there kicking around to see if there’s anything we missed.

We did a full launch to our membership at the start of September. And we will be launching it then to the known universe in October.

Tell me a little bit about the courses that are going to be offered.

There’s metalforming-specific courses that are available. Again, those are materials that were developed by us, for us, by our subject matter experts. There’s several modules related to press operation. There’s several modules that are available for die-setter

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CRAIN’S CLEVELAND BUSINESS

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MANUFACTURING

ation

nd

s

and ment ide. the nts, and For ces, hus. mber

training. There’s safety classes, supervisory classes. And then, also quite a few classes on just how to read a blueprint, manufacturing math, conflict resolution. And so, there’s over 500 courses in total. ... Our intent is to continue to invest in all of the processes that we represent in the marketplace.

Why is this something that is important for PMA to do right now?

Our member companies are facing the same problems that most manufacturers have where skilled workforce is almost impossible to find. Most of our members are hiring entry-level people and now they need to bring them up to speed — so they are safe when operating the equipment and also so they can properly operate the equipment. It’s very important that the operators are qualified and trained and yet how do you deliver training to literally thousands of companies across the country in very specialized ways? It was important that we as an association try to meet that member’s need. Taking advantage of the new technology, we made the decision — at no small cost — to invest in this to deliver the training where they need it and when they need it. Our member companies are no different than anyone else. Their longest tenured and — in a lot of ways — their best employees are retiring out of the system. So, how can you get people that you already have employed upskilled? And then especially focused on as you’re bringing new people in. You can’t run an ad in the paper and look for press operators and think you’re going to get a lot of resumes. Our members have to grow their own. We’re going to be able to deliver them a lot of material they can use for what I’ll call classroom training. They’re still going to need to go out and get on the specific equipment training, but we can provide a lot of the basic training online.

That’s an important point — the need to grow their own. Is that something that’s changed over time Unfortunately, this has been going on for a while. It’s just getting worse. I’ll get on my soapbox for a minute. We got out of the shop at even a middle school or high school level a generation or two ago. A lot of young people are graduating from high school now who literally don’t know which end of a screwdriver to hold onto if they were going to try to use it. So there’s a fair amount of very entry-level training. I believe that a lot of people have negative things to say about millennials. I have great hope for the millennials, but we haven’t prepared them for this kind of work. I think there’s a movement among young people to say, “Well, geez, why do I want $100,000 of student loan debt?

Maybe something like this is a wonderful career I can start with no debt.” And again, we’re trying to help our members deliver that message and the training they need for their employees of the future.

Where did the funding come from to create this program?

The initial cost of all this development, purchasing the learning

P024_025_CL_20181001.indd 25

“Our member companies are facing the same problems that most manufacturers have where skilled workforce is almost impossible to find. Most of our members are hiring entry-level people and now they need to bring them up to speed — so they are safe when operating the equipment and also so they can properly operate the equipment.” management system and the software was a huge investment.

The Precision Metalforming Association has an educational foundation that was founded over

30 years ago with foresight by what I’ll call some of the industry lions 30 years ago. They started a foundation. They invested heavily in it.

Through the years, the foundation

has made some very prudent investments and so that fund has grown. And through the years, they have awarded grants to different districts of PMA in the country and

for various projects through the years. But the foundation recognized a couple years ago, there is this huge need. The association, working with them, did a little cost analysis and determined it was going to be a lot of money. At that point, the foundation, through very generous leadership, said we want to invest in the industry. They were gracious and granted us the money and we’ve put in some of our own, as well as in-kind and man hours.

When we’re all done, it will probably be close to $2 million that’s been invested in this.

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CRAIN’S CLEVELAND BUSINESS

MANUFACTURING LIST ANALYSIS

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Manufacturing survey results

If you’ve read any of the other stories in this week’s Manufacturing section, you probably got the sense that manufacturers are having a tough time finding good help these days.

The stats back up that assertion.

We asked the 50 companies on the full digital version of our Largest Manufacturing Companies list this question: Over the past 12 months, has it become easier or harder to hire new employees?

Exactly zero of the 24 respondents said hiring has gotten easier. No one even picked “slightly easier.”

Granted, six companies did pick “little or no change.” But just as many companies picked “significantly harder” — the most dire of the seven choices offered. The only answer that was more popular was “somewhat harder.”

This year’s respondents were more concerned about hiring challenges than the 21 companies that responded last year — the first time we asked the question. Only two of those companies picked “significantly harder.”

And one of them did actually say hiring had gotten “slightly easier.”

We didn’t ask them why they chose those answers, but stories in this week’s Manufacturing section (starting on Page 14) and previous stories

Over the past 12 months, has it become easier or harder to hire new employees?

Significantly harder: 6 Somewhat harder: 7 Slightly harder: 5 Little or no change: 6 No respondents answered Slightly easier, Somewhat easier or Significantly easier.

There were 24 respondents.

about the issue suggest that it could be caused by falling unemployment and a decreased interest in manufacturing as a career path (some companies quoted in this section are trying to change that). Those stories also talk about how companies are addressing the problem.

But we did ask this question: What are the largest hiring challenges the company has faced over the last 12 months? (choose all that apply) Like last year, the most popular answer was “Applicants lacking technical skills.” Fifteen of the 21 companies that answered the question checked that box, up from 11 out of 21 last year.

Thirteen companies picked “Too few applicants,” up from eight last

year. Seven picked “Applicants not passing drug tests,” down from 10 in 2017.

Six chose “Applicants lacking soft skills,” up from two last year, and just two companies checked the “Other” box, down from six in 2017.

Note: The respondents were more generous with their box checking this year (they clicked a total of 43 boxes, up from 37 last year). So that might make it seem like these problems have become bigger (that could be the case, or maybe people weren’t as picky when checking boxes).

And the companies in this survey don’t speak for all manufacturers.

Like last year, the largest companies were less likely to answer these questions, so they’re underrepresented. And the smallest manufacturers aren’t represented at all because they aren’t included on the list.

As for the list ...

The largest company on the list by local employment is Sherwin-Williams, which had 4,940 full-time equivalent employees in Northeast Ohio as of June 30.

General Motors had held the top spot for several years, but it slipped to No. 6 after eliminating the second shift at its Lordstown plant in June.

And a fairly large company joined the list for the first time this year: Flooring products maker Tarkett shows up at No. 19 with 1,160 fulltime equivalent local employees. The number could grow: Tarkett recently bought a building in Geauga County and plans to add about 75 new jobs.

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THE LIST

Largest Manufacturing Companies Ranked by full-time equivalent local employees FTE EMPLOYEES THIS YEAR COMPANY

LOCAL

OHIO

PARENT COMPANY, HEADQUARTERS

MANUFACTURING FACILITIES

PRODUCTS MADE LOCALLY

TOP LOCAL EXECUTIVE

1

Sherwin-Williams Co., Cleveland (216) 566-2000/sherwin.com

4,940

6,081

Sherwin-Williams Co., Cleveland

Bedford Heights

Paint

John G. Morikis, president, CEO, chairman

2

Swagelok Co., Solon (440) 248-4600/swagelok.com

4,671

4,692

Swagelok Co., Solon

Solon, Highland Heights, Strongsville

Tube fittings, valves, hoses, regulators, fluid systems components, assemblies

Arthur F. Anton, chairman, CEO

3

Ford Motor Co., Dearborn (800) 392-3673/ford.com

3,377

5,388

Ford Motor Co., Dearborn, Mich.

Avon Lake, Brook Park

E-Series strip chassis, F-650/750 trucks, 3.5L EcoBoost and 3.7L Duratec engine

Kevin Heck, plant manager, Cleveland Engine Plant Jason Moore, plant manager, Ohio Assembly Plant

4

Goodyear Tire & Rubber Co., Akron (330) 796-2121/goodyear.com

3,000

NA

Goodyear Tire & Rubber Co., Akron

Akron

Race tires

Richard J. Kramer, chairman, CEO, president

5

Lincoln Electric, Euclid (216) 481-8100/lincolnelectric.com

2,975

3,015

Lincoln Electric Holdings Inc., Euclid

Euclid, Mentor

Welding and cutting systems

Christopher L. Mapes, chairman, president, CEO

6

General Motors Co., Detroit (313) 556-5000/gm.com

2,700

2,700

General Motors Co., Detroit

Lordstown Complex, Parma Metal Center

Chevrolet Cruze and vehicle parts

Rick Demuynck, plant manager, Lordstown Complex Lamar Rucker, plant manager, Parma Metal Center

7

TimkenSteel Corp., Canton (330) 471-7000/timkensteel.com

2,648

2,754

TimkenSteel Corp., Canton

Canton

Special bar quality steel and seamless mechanical tubing

Tim J. Timken Jr., chairman, CEO, president

8

Nestle (1), Solon (440) 349-5757/nestleusa.com

2,510

3,600

Nestle S.A., Vevey, Switzerland

Solon

Stouffer's and Lean Cuisine frozen entrees

Steve Presley, market head and CEO of Nestle USA

9

The Lubrizol Corp., Wickliffe (440) 943-4200/lubrizol.com

2,330

2,330

Berkshire Hathaway Inc., Omaha, Neb.

Avon Lake, Painesville

Lubricant additives for engine oils and other transportation fluids; industrial lubricants

Eric R. Schnur, chairman, president, CEO

10

ArcelorMittal, Cleveland (216) 429-6000/usa.arcelormittal.com

2,121

3,114

ArcelorMittal, Luxembourg

Cleveland, Warren

Steel

Mike Madar, vice president, general manager

11

The J.M. Smucker Co., Orrville (330) 682-3000/jmsmucker.com

1,941

2,430

The J.M. Smucker Co., Orrville, Ohio

Orrville

Fruit spreads, ice cream toppings, syrups and foodservice items

Mark T. Smucker, president, CEO

12

Parker Hannifin Corp., Mayfield Heights (216) 896-3000/parker.com

1,800

2,800

Parker Hannifin Corp., Mayfield Heights

Akron, Avon, Elyria, Fairlawn, Kent, Mentor, Ravenna

Motion and control technologies

Thomas L. Williams, chairman, CEO

13

Rockwell Automation Inc., Mayfield Heights (440) 646-5000/rockwellautomation.com

1,792

1,881

Rockwell Automation Inc., Milwaukee

Twinsburg

Automation products

Frank Kulaszewicz, senior vice president, architecture and software

Schaeffler Group USA, Wooster (330) 264-4383/schaeffler.us

1,725

NA

Schaeffler Group, Herzogenaurach, Germany

Wooster

Transmission systems and components; emobility components such as torque converters, hybrid modules, e-axles

Marc L. McGrath, president, Automotive Americas

1,549

2,066

Avery Dennison Corp., Pasadena, Calif.

Painesville, Mentor, Concord, Painesville Township

Pressure-sensitive adhesive label, packaging, graphic materials and tape; reflective sheeting

Nick Tucci, vice president and general manager, Label and Graphic Materials North America

14

Dennison, Mentor 15 Avery (440) 534-6000/averydennison.com THE LIST

Largest Manufacturing Companies LET OUR EXPERIENCE BE AN ASSET TO Ranked by full-time equivalent local employees YOUR BUSINESS FTE EMPLOYEES

THIS YEAR COMPANY

Contact Jon Ruple + jruple@maloneynovotny.com + 216.363.0100 MANUFACTURING FACILITIES

PRODUCTS MADE LOCALLY

TOP LOCAL EXECUTIVE

Eaton Corp., Dublin, Ireland

Brooklyn, Parma, Euclid

Aerospace, electrical and hydraulic products

Craig Arnold, chairman, CEO

1,820

Berkshire Hathaway Inc., Omaha, Neb.

Avon Lake, Bedford Heights, Chagrin Falls, Cleveland, Westlake, Wooster

Diversified manufacturer of products for the home, family and industry

Bob McBride, president, CEO

1,197

NA

Ontario Teachers' Pension Plan, Ontario

Brewster, Massillon

Snack foods: potato chips, tortillas, extruded products (i.e. cheese curls)

Bill Nictakis, chairman, CEO

Tarkett North America, Solon (800) 899-8916/tarkettna.com

1,160

1,160

Tarkett, Paris, France

Chagrin Falls, Middlefield

Vinyl resilient wall base and finishing borders; rubber flooring

Andrew Bonham, president & CEO, Tarkett North America

Bridgestone Americas Inc., Akron (330) 379-7000/bridgestoneamericas.com

1,140

1,941

Bridgestone Americas Inc., Nashville, Tenn.

Akron

Racing tires

Nizar Trigui, chief technology officer

BWX Technologies Inc., Euclid (216) 912-3000/bwxt.com

1,100

1,130

BWX Technologies Inc., Lynchburg, Va.

Barberton, Euclid

Pressure vessels, steam generators, electromechanical components

Jim Bittner, GM, BWXT Nuclear Operations Group Barberton, Chris Rhodes, GM, BWXT Nuclear Operations Group Euclid

22

The Timken Co., North Canton (234) 262-3000/timken.com

1,088

1,848

The Timken Co., Canton

Canton

Bearings

Richard G. Kyle, president, CEO

23

Associated Materials Inc., Cuyahoga Falls (330) 929-1811/associatedmaterials.com

1,083

2,010

Associated Materials Inc., Cuyahoga Falls

Cuyahoga Falls

Vinyl windows for replacement and new construction

Brian C. Strauss, president, CEO

24

PPG, Cleveland (412) 434-3131/ppg.com

1,079

1,474

PPG Industries Inc., Pittsburgh

Cleveland, Strongsville

Automotive OEM coatings

James Priddy, plant manager

RPM International Inc., Medina (330) 273-5090/rpminc.com

1,032

1,263

RPM International Inc., Medina

Cleveland, Medina, Euclid, Twinsburg

Roofing materials, sealants, adhesives, concrete admixtures and coatings, fluorescent colorants

Frank C. Sullivan, chairman, CEO

26

Saint-Gobain Corp., Solon (440) 836-6900/saint-gobainnorthamerica.com

966

1,030

Saint-Gobain, Paris, France

NA

High performance plastics

Tom Kinisky, president, CEO

27

Nordson Corp., Westlake (440) 892-1580/nordson.com

947

947

Nordson Corp., Westlake

Amherst

Precision dispensing equipment for coatings and sealants

Michael F. Hilton, president, CEO

28

PolyOne Corp., Avon Lake (440) 930-1000/polyone.com

817

847

PolyOne Corp., Avon Lake

Avon Lake, Massillon, Norwalk, Berea, Barberton

Specialized polymer materials, services and solutions

Robert M. Patterson, chairman, president, CEO

29

Automated Packaging Systems, Streetsboro (330) 342-2000/autobag.com

728

NA

Automated Packaging Systems, Streetsboro

Streetsboro (3), Garfield Heights, Bedford Heights

Autobag, SidePouch, AirPouch and AutoSleeve packaging equipment and supplies

Hershey Lerner, chairman; Bernie Lerner, CEO; Cliff Brehm, president, CMO

30

Pepperidge Farm, Willard (419) 933-2611/pepperidgefarm.com

700

NA

Campbell Soup Co., Camden, N.J.

Willard

Biscuits and crackers, Milano and Goldfish brands

Jeremy Jones, director, Human Resources

30

Sandridge Food Corp., Medina (330) 725-2348/sandridge.com

700

NA

Sandridge Food Corp., Medina

Medina

Grandma's deli salads, refrigerated entrees, soups, sauces and side dishes

Mark D. Sandridge, chairman, CEO

LOCAL

OHIO

Eaton, Beachwood (440) 523-5000/eaton.com

1,377

NA

Scott Fetzer Co., Westlake (440) 892-3000/scottfetzer.com

1,318

18

Shearer's Foods LLC, Massillon (330) 834-4030/shearers.com

19 20

16 17

21

25

PARENT COMPANY, HEADQUARTERS

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Want the full Excel version of this list — and every Crain's list? Become a Data Member: CrainsCleveland.com/data

The full digital list includes 50 companies and additional. Employment numbers are as of June 30, 2018. Information is supplied by the companies unless footnoted. (1) Nestle did not respond in time for this list's deadline.

Employment data and most other information for Nestle comes from our 100 Largest Northeast Ohio Employers list published on Aug. 13. Information on products made locally is from last year's Manufacturing Companies list.

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AKRON

DIEBOLD

“I think there will be a rebalancing over the long haul in the mix of our employees, but I don’t know there will be a substantial shrinking of the employee base.”

CONTINUED FROM PAGE 1

When Schmid joined D+H subsidiary Filogix in 2007 (he became president and COO of D+H itself two years later), its revenues were just 15% in software, Schmid said. That had grown to 85% by the time of the acquisition.

Diebold — which had revenues of $4.6 billion in 2017, despite posting losses of a combined $266 million in the past two fiscal years — has about 12% of its business in software today.

The balance is in hardware and services.

“I would love to see software grow to, let’s say 80%-plus of revenues,” said Schmid, who joined the company about six months ago.

But Diebold — which ranks sixth among the top 100 financial technology companies on the 2018 IDC Financial Insights FinTech Rankings — is in a rough spot right now financially and with its size and scale, while a benefit in many ways, naturally prevents it from pivoting that quickly. Revamping its hardware business, where core products include not just ATMs but point-ofsales terminals and self-checkout kiosks, has proved challenging (although the company appears to have contracts for providing self-service machines for some undisclosed fast-food companies). And a balance sheet bogged down with debt — due to the 2015 acquisition of Germany’s Wincor Nixdorf that many analysts say was ill-conceived from the get-go — and reduced cash flow is inhibit-

— Gerrard Schmid, president and CEO of Diebold Nixdorf

ing the firm’s options for taking its software business to the next level.

Acquisitions, right now, just aren’t on the table, meaning any new development has to come internally. The financial woes were exacerbated as shareholders of Wincor Nixdorf, who didn’t tender the offer in Diebold’s acquisition, asked to be paid what amounted to $255 million. With some forgiving debt holders behind it, the firm secured $650 million in financing in August to alleviate its liquidity pains.

Asked whether that deal is more helpful or hurtful today, Schmid quickly said “both.” The scale is helpful, he said, and it helps diversify the revenue stream.

“On the flip side, we are a much more complex organization. We have big pools of employees in other markets with culturally different styles and a much more complex product portfolio than we had in the past,” Schmid said. “So I think it’s fair to say it’s brought some strengths and some issues.”

However, the most acute “complication” it’s brought, Schmid acknowledged, is the debt load that deal created.

‘Rebalancing’ on the way That talk of software doesn’t mean Diebold is giving up on its core hardware business, though. Efforts are underway to create newer, modern machines — like ones that handle card-less transactions by working with smartphones — while simultaneously consolidating a hardware portfolio with hundreds of models.

“However, when you look at the lens of our customers, the banks, the banks globally spend 10 times more on software than they do on hardware. Software is the future of how banks will operating going forward.

And therefore, we will be in a better position over the long haul having more growth and focus on the software business than having a historical focus on our legacy hardware business,” Schmid said. “That’s just

the reality of where our customers are going as they focus more on digitization and things of that nature.”

Schmid’s first six months on the job have focused more on quicker changes geared toward operational efficiency. “We are in a race against time” to make that core business more efficient while growing the other businesses, he said.

Schmid outlined a plan for Diebold that involves transitioning its mix of 23,000 global employees (about 1,100 work in Canton) with fewer service technicians and more like software engineers. About 15,000 of its jobs are service technicians today.

Across the global footprint, there are six employees reporting to every manager at Diebold. And Schmid wants to trim middle management.

“High-performing companies have eight to nine people per manager,” he said.

So there’s a clear strategy to gradually replace technician jobs with ones in tech and eliminate some redundant positions. How far the employee base could shrink is unclear.

“I think there will be a rebalancing over the long haul in the mix of our employees,” Schmid said, “but I don’t know there will be a substantial shrinking of the employee base.”

Efforts in place today are designed to streamline disparate business models and cultures between the Americas, Europe and the Asia-Pacific region (which is the most dubious for Diebold to do business in). Aligning management is part of that. Those discussions also led to Diebold reaffirming that it’s committed to keeping its corporate headquarters in

Northeast Ohio.

The firm intends to exit 2018 with 30% fewer ATM configurations and revamp the global service organization — which Schmid describes as the “crown jewel” of the company — with common practices to help weaker markets become more effective.

Other options are to divest some businesses, like those with only small roles in revenue generation. That hasn’t happened yet. But Schmid cited Europe as an example in which the firm provides IT outsourcing to some customers. He said the company would be better off investing in its core business than that entity.

“We are bottling up a bunch of those activities and divesting them,” with plans to spend the proceeds on paying down debt and increasing margins, he said.

All combined, Schmid said those efforts should reduce the cost base by $200 million. About half of that will be realized in 2019, with the balance achieved through several quarters following that.

“I would like to be able to say that in one to two years time we are a company with meaningful momentum in everything we do with our customers,” Schmid said.

Schmid is optimistic, but building Diebold’s lost momentum back up — along with its balance sheet and stock price — may take a bit more time than that.

“It’s going to take a long, long time for this to be fixed,” said a Diebold analyst at a U.S. firm who asked not to be identified because the person was not cleared to talk about the company publicly.

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AKRON

HARDY

CONTINUED FROM PAGE 4

Horrigan needs change agents, and Hardy seems to have been born to be one.

Hardy said he has wanted a political career since he was a kid growing up in West Akron with then-Akron chief of staff Joel Bailey as his neighbor. Hardy, whose parents were both school administrators, wanted to affect change and saw Bailey’s world as his means to do it.

“I went to Joel and said, ‘I want to get involved in politics like you. How do I do it?’ He said, ‘You should call up your ward councilperson, who’s running.’ He put me in touch with Dan (Horrigan), and that’s how we first met,” Hardy recalled.

Bailey remains a mentor and guidepost, as does former Akron chief of staff David Lieberth, whom Hardy also routinely turns to for advice, he said.

Hardy already has a varied background. In addition to a bachelor’s degree from UA in political science, he earned a master’s degree from Kent State University in public health — he said he’s constantly concerned with providing a healthy place for people to live. He has helped Horrigan on city council and mayoral campaigns and was a special assistant to the president and board of trustees at Kent State. All of those things prepared him for his current role, he said.

Bailey and Lieberth said they’re continually impressed by Hardy’s drive, abilities and interest in their sport.

“He was always interested in politics. He ran for the school board at like 21 — and won,” Bailey said.

Bailey also recalled an even younger Hardy, dating back to when he moved next door and Hardy was only 6.

“He was the little red-headed kid next door, and his father was the (interim) superintendent of Akron schools … He would come over many days after school and just watch TV or whatever,” Bailey said. “Now I think he probably soaked up more than we realized when his father and I would talk.”

Lieberth, who has only known

Hardy since he was in college at the University of Akron, said he has been impressed with many things the young civic leader has done — but taking over as chief of staff at 31 is at the top of his list.

“When I did it, I was much older. I had already spent 10 years as a reporter and 25 years as a lawyer,” Lieberth said.

He describes the job of chief of staff as “swimming through peanut butter,” or “being in a batting cage — but without a bat.”

He said it takes a deft touch, but it’s also a job where you can turn the right ideas into reality, he said.

“Part of the art of being chief of staff is figuring out how to make the system work for you and the people you want to help. … And by and large, James has done that … but the one quality I would assign to him that is critical in that job, but lacking in so many other people, is imagination,” Lieberth said.

Lieberth and Bailey also have something else in common — a belief that Hardy will, if he wants to, hold a higher elected office himself at some point.

Hardy said he’s not sure if he’ll do that or not. He has run for the Akron Public Schools board and won, but lost a bid for Akron City Council.

He now he thinks he “may have gotten the better end of the deal” by losing that election, because he can now focus on getting stuff done rather than things like campaigning and raising election funds.

Bailey thinks he should run someday.

“You end up doing a lot of that stuff anyway (as chief of staff ), so at some point you may as well be the elected official,” Bailey said. “I hope he chooses to run, because he has a lot to offer. … He would be wonderful in an elected office.”

Even Horrigan, who is not eager to lose his valued chief of staff, thinks Hardy would be a good candidate.

“It’s always impossible to tell what the future holds. … But James’ future is very bright, and it’s kind of just what he wants to do. It’s all about how you want to manage your time, your life and your family. … But I have no doubt he’ll be successful in whatever he does,” Horrigan said.

THE TIME IS NOW TO INVEST IN TOMORROW’S WORKFORCE Competitive businesses need talented employees. The College and Career Academies of Akron give students learning pathways tailored to meet the needs of the local economy. Through United Way, you can invest in programs that helps kids grow into the skilled employees and business leaders our community needs.

Find out more at uwsummit.org/academies UNITED WAY BOLD GOALS by 2025 GOAL 2: 90% of Akron Public Schools high-schoolers graduating in 4 years, with 60% college/career ready. uwsummit.org/boldgoals

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CRAIN’S CLEVELAND BUSINESS

ADVERTISING SECTION

www.crainscleveland.com/people-on-the-move To place your listing, visit www.crainscleveland.com/people-on-the-move or for more information, contact Debora Stein at (917) 226-5470 or email dstein@crain.com.

ACCOUNTING

FINANCIAL SERVICES

Ancora welcomes Mr. Connor Cloetingh to the firm as an Assistant Vice President, Equity Analyst. Connor will join the equity team and provide research and analysis for the Ancora/Thelen suite of products stationed out of Ancora’s Detroit office. Connor brings industry experience to Ancora from a prior research position along with various internship positions while receiving a Bachelor of Arts degree in Finance with a minor in Economics from Michigan State University.

weatherhead.case.edu

FINANCIAL SERVICES

Connor Cloetingh Ancora

Steve Ansberry RSM US LLP We are pleased to announce that Steve Ansberry has been promoted to Assurance Senior Manager. Steve has approximately twelve years of experience in public accounting, providing professional services and business advice to a diversified base of clientele, primarily in the not-for-profit and healthcare groups in Ohio.

MBA

WEATHERHEAD SCHOOL OF MANAGEMENT

Tricia Cunningham Ancora Ancora is happy to announce the hire of Ms. Tricia Cunningham as an Assistant Vice President, Compliance & Risk Analyst.

We welcome Tricia to the compliance team where she will evaluate compliance risks, administer vendor risk assessments, assist with document preparation and ensure the adherence to regulatory agency guidelines. Tricia joins Ancora with financial compliance, law and quality control experience. We wish her success in her new role.

LAW Ellesha M. LeCluyse Ulmer & Berne LLP Ellesha is a health care attorney who counsels clients including medical practices, long-term care facilities, and other health care entities. She navigates complex health care compliance laws, structures business transactions, drafts employment and contractor agreements, and represents providers in licensure and medical staff disciplinary actions. She received her law degree from Case Western Reserve University School of Law, where she graduated cum laude with a concentration in Health Law.

LAW Raymond D. Seiler Ulmer & Berne LLP Raymond is a real estate attorney with special understanding of oil, gas, and mineral issues. He has wide-ranging experience representing individuals, small and midsize businesses, private equity firms, developers, and financial institutions in all phases of commercial real estate leasing, acquisition, disposition, management, development, and financing. He received his law degree from The Ohio State University Moritz College of Law.

FINANCIAL SERVICES Leigh Carter Glenmede Leigh Carter has joined Glenmede’s Ohio office as a Relationship Manager and Wealth Advisor. In partnership with investment, tax and wealth planning colleagues, he provides thoughtful wealth management advice, planning solutions, and trust and account administration. Mr. Carter earned a JD from Case Western Reserve University and has over 20 years of industry experience. Active in the charitable community, he serves as Trustee of the Cleveland Museum of Art and the Nature Center at Shaker Lakes.

REAL ESTATE

REAL ESTATE Steve Spithas Frangos Group/ USA Parking

Lynne Winings President

GBX Group GBX Group is pleased to announce that Lynne Winings has been appointed its new President.

Lynne joined GBX in 2011 as Director of Finance and was later promoted to CFO. She has played a vital role in developing and driving the company’s business model and established herself as a trusted leader. As President, Lynne will be responsible for general operations, investor relations and financial reporting and will share responsibilities for strategic finance and originations with CEO Drew Sparacia.

The Frangos Group & USA Parking is pleased to announce the appointment of Steve Spithas as the new Vice-President.

In the role of Vice-President, Steve will be second in command in charge of business operations, and assist in the growth and development of the Company. He will also continue to oversee the property management and leasing departments of the company and use his expertise to assist in future real estate development projects and planning. Steve is a graduate of Cleveland State.

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LAW Steven P. Larson Ulmer & Berne LLP Steven is a real estate attorney and certified public accountant. He provides strategic counsel to clients on complex real estate, financing, and tax issues. His prior experience working as a CPA helped him to gain experience in tax compliance and partnership tax, giving him unusual insight into structuring operating agreements as well as avoiding negative tax implications for his clients. He received his law degree from the Cleveland-Marshall College of Law.

LAW Sandra Becher Sommers McMahon DeGulis LLP Sandra Becher Sommers has joined McMahon DeGulis LLP as a partner.

Sandra will continue her complex civil litigation and workers’ compensation practice, with a focus on defending employers, manufacturers, and suppliers in toxic torts, occupational disease matters, asbestos exposure claims, and workplace injury claims.

LAW Emmanuel Sanders Ulmer & Berne LLP Emmanuel’s practice focuses on product liability. He has experience in many aspects of litigation, having served as a Judicial Clerk to Justice Neal Hendel of the Supreme Court of Israel. He is fluent in Hebrew, including modern legal Hebrew. Emmanuel received his law degree from New York University School of Law, where he served as executive editor of the Journal of Legislation and Public Policy and as a fellow in the law school’s Program on Corporate Compliance and Enforcement.

TECHNOLOGY Ron Coill OEC Ron Coill has been named President & Chief Operating Officer for North America at OEC. He is responsible for product, HR and Customer Success in North America. Coill had served as Chief Financial Officer since joining the company in 2001. Under his financial leadership, OEC has realized a profitable transformation from an early start-up to a thriving technology organization.

9/27/18 11:39 AM

CRAIN’S CLEVELAND BUSINESS

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Chaz Napoli

President, Saint Martin de Porres High School Chaz Napoli doesn’t have a background in education, but he has a passion for it. Before joining Saint Martin de Porres High School — a Catholic high school in Cleveland’s St. Clair-Superior neighborhood — as president in late spring 2018, he was an entrepreneur with an interest in business and technology. He also had a career in consulting, software and professional services. His résumé includes stints with Datavantage, Micros-Retail, BrandMuscle and Insight2Profit. But education had long held a special place for him. He said he moved around a lot as a child and it was a tumultuous time. But he said his high school years at St. Ignatius in Cleveland’s Ohio City neighborhood were “transformative.” “When you think about those years — 14 to 18 — they really make or break you,” Napoli said. — Rachel Abbey McCafferty

Five things Quality time with the family “We love going to see the sun,” Napoli said. He said he loves Cleveland, but the “battleship gray skies” aren’t why, so they travel to the beach.

All kinds of classics Napoli’s a fan of both classic rock (especially prog rock) and classical music.

What he wanted to be when he grew up A teacher

Favorite class in high school History. “I am a big history buff,” Napoli said. He said he thinks there’s “wisdom” to be found in the successes and failures of the past.

What inspires him The New Testament and the strength he sees in the Saint Martin students

How is secondary education different than the business world you came from?

There’s a lot of similarities in terms of, we have to produce revenue in order to run the institution. We have to understand what’s happening with expenses. We’re a nonprofit, but we still have to be financially viable.

Every organization needs strategic leadership and prioritization and talent development and talent acquisition.

How do you view the role and importance of secondary education?

My spouse and I have five children of our own, and we speak to them about not so much about what they might do with their lives, because everyone has different passions and interests, but try to put yourself in the position where you have options.

And secondary education is really that transition from childhood to adulthood where you set that foundation of what are some of the options you’re going to have as you enter adulthood and try to have a productive and successful life.

Secondary education’s getting a lot of attention lately because of workforce development concerns.

Where does that fit into your overall goals and plans for the school?

Well, one of the main reasons that I thought Saint Martin was such a good fit for my background is Saint Martin is part of a network of schools around the country called Cristo Rey Network, Christ the King.

There’s 35 schools around the United States. Founded in Chicago over 20 years ago. Saint Martin was the fifth school in the network, so one of the early schools from the day this school was founded 15 years ago.

Lunch spot Landmark Restaurant 5380 St. Clair Ave., Cleveland

The meal One cheeseburger deluxe with fries, coleslaw and a Pepsi; and one grilled cheese on rye with fries and water

The vibe A busy neighborhood diner with a menu full of classic options.

The bill $11.61, plus tip

P031_CL_20181001.indd 31

We have 130 corporate or organizational, for-profit and nonprofit, partners throughout Northeast Ohio where every day, about 100 of our students are out in the community, because every day we send out a different grade level. So, freshmen one day, sophomore, junior, senior, then a fifth day they rotate. We started this program to help fund the school, because we’re not a tuition-focused school. We’re a nonprofit. We don’t really focus on tuition, we focus more on serving the community. So how do you fund a school without tuition?

Is there some tuition?

There’s some. It’s, I think, on average roughly $400 a year. But we’re not tuition-focused. So think about a private, college-prep education without a tuition focus. It’s a remarkable vehicle for the urban communities that Cristo Ray operates in. So it started as just a way to help fund. The corporate sponsor will pay a part of the tuition of the students that are out working in their businesses. But what we learned very quickly is it really was a lot more than funding. It becomes transformative for our students.

We routinely survey them. They rank the corporate work-study as a major reason that their experience at Saint Martin is so unique. Because they build a whole different set of skills outside of their academics. Skills such as, trying to be, say, softer skills that get developed, like time management. Project management.

Collaborative workforce development. Project-based work. Being supervised. Building relationships in the community with adult professionals, who then become sponsors.

They get college recommendation letters written. They get summer jobs, paid summer internships when they’re not working for the school tuition. Some of the supervisors will come to their graduation or check out one of their sporting events. It becomes this transformative event for students that we view as important as their academics.

What’s the reaction like when you go out in the community and you’re talking to either the current partners or the potential partners?

These are high school students, so once in a while, they’ll get a student that we need to help partner to help with their training, but for the most part, the feedback is exceptional, that it’s just a win-win for everyone involved. If there’s anything we need to work on even more is the work has changed. Not as much administrative work as there was maybe 10 or 15 years ago. So part of the grant we’re working on improving the training not only on the soft skills but maybe some more hard skill training. ... So our job is to do as much as we can to kind of prepare the students and our partners. They just need to be welcoming and supportive and get our students involved. They are capable of doing a lot.

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9/28/18 10:43 AM

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