www.crainsdetroit.com Vol. 30, No. 7
FEBRUARY 17 – 23, 2014
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Health Care Heroes
Honorees helped solve a mystery disease – and more, Page 11 Page 3 Change is good? Opinions vary on minimum-wage hike
OCC chancellor, faculty at odds New demands of job market erupt in clash over over control BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
A power struggle between the chancellor and instructors at Oakland Community College flared up in a public way Friday, but it actually has been in a slow burn for some time over staffing and control of
college academics to reflect the demands of the job market. Long before a no-confidence vote Friday on Chancellor Timothy Meyer, the administration and leaders of the Oakland Community College Faculty Association have clashed on broad strategic matters, like how OCC defines its mission and perfor-
mance targets, and seemingly picayune business, like how many faculty positions the college keeps in ceramics. Meyer, OCC’s chancellor since 2008, said the Meyer college is making administrative changes to adapt to the latest needs of local employers and universities that
accept OCC transfer students, while coping with new budget realities amid reduced enrollment, property values and per-pupil state aid. Meyer said he was a “little surprised” by the faculty’s action, which cited “lack of leadership and absence of vision for student success.” “Most of the constituents of the college are reasonably satisfied with the direction we’re taking,” See OCC, Page 17
Obamacare mandate on hold: Flexibility – and confusion
Seeing the forest for the trees
Ctrl-Alt-weekly: A new direction for Metro Times
This Just In Midtown Development Group files for Ch. 11 again Detroit-based Midtown Development Group Inc. has filed for Chapter 11 bankruptcy protection for the second time in three years. According to filings in U.S. Bankruptcy Court, Eastern District of Michigan, Midtown Development, whose principal is longtime developer Bob Slattery, has between $1 million and $10 million in assets. Midtown Development’s largest unsecured creditor claims are for the Geoffry Silverman Trust Account ($154,000); the Detroit-based Woodward Fund ($20,000); Lowe’s Cos. Inc., for a $3,891 credit card balance; Grosse Pointe-based Boyle Burdett PC, for $3,750 in legal fees; and Home Depot Inc., for a $3,281 credit card balance, according to the bankruptcy petition, filed Wednesday. Michael Lieberman, the partner at Farmington Hillsbased Lieberman, Gies & Cohen PLLC who is representing Midtown Development, declined to comment. According to CoStar Group Inc., a court order is forcing the sale of the Kresge Lofts on Cass Avenue south of West Willis Street, a building that Slattery owns and operates. The list price is $3 million. — Kirk Pinho
After years of cutting through government red tape, John Hantz is ready for his idea of a tree farm on Detroit’s east side to take root | P A G E 1 8
LARRY PEPLIN 1
Loveland’s passion: Battle blight Map tech – aka ‘blexting’ – charts growth BY AMY HAIMERL CRAIN’S DETROIT BUSINESS
Two years ago, Mary Lorene Carter and Jerry Paffendorf were eating ramen and sweating the cost of drinks at PJs Lager House. They were getting by — and funding their company, Loveland Technologies LLC — on Kickstarter campaigns, the occasional microgrant and the generosity of a few small investors. Their signature website, Why
Don’t We Own This?, which maps property ownership and tax data, was just blossoming, and they were knocking on doors, trying to persuade anyone who would listen to let them make public data public. “We spent a lot of time banging our head against the wall trying to get city departments to loosen up with their data,” said Paffendorf, 32. This year, they project revenue of $25 million. They’ve expanded Why
Don’t We Own This? into New Orleans and New York, with Chicago in development. And they’ve developed a technology that is the backbone of a $1.5 million city effort to fight blight. What a difference 24 months can make. For the past nine weeks, 50 crews of two — one driver, one surveyor — have been spotted around
Advanced Manufacturing COMING
Video: See what John Hantz is trying to grow in the heart of Detroit, www.crainsdetroit.com/video
See Loveland, Page 21
Loveland Technologies founders Mary Lorene Carter, Jerry Paffendorf and Larry Sheradon, with Carter’s dog, Pasta Batman.
ISSUE FOCUS: Companies leading the way in the use of new materials and manufacturing technology.
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February 17, 2014
CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS Kellogg to employ up to 600 at service center in Grand Rapids Battle Creek-based Kellogg Co. says it will open its North America Global Business Services Service Center in Grand Rapids with a staff of 300-600, MiBiz reported. The center will house employees from the finance, information technology, supply chain and human resources departments. Kellogg CEO John Bryant told The Grand Rapids Press that the cereal company chose Grand Rapids after looking at nine possible locations around the U.S., because 40 other corporations have created similar service centers in the area, creating a labor pool from which Kellogg hopes to draw. Some employees will be transferred from other offices, including Battle Creek, while other employees will be new hires, Bryant said.
Dow on suggestion that company break up: That would hurt value Midland-based Dow Chemical Co., facing pressure from investor Dan Loeb’s Third Point LLC to split itself in two, said an internal strategic review concluded that such a move would reduce the value of the largest U.S. chemical company, Bloomberg reported last week. The review by the board, management team and external advisers found that creating separate
More small firms toss landlines for Net-based phones When Grand Rapids-based Buys Chiropractic PLLC switched from traditional landline phones to a voice over Internet protocol system, commonly known as VoIP, Aaron Buys and his staff were a bit hesitant. But “traditional telephone service was getting more and more expensive and offering nothing new to show for it,” Buys said. Buys is not alone in opting for new phone technologies such as VoIP or smartphones. Nearly 79 percent of U.S. businesses use VoIP phones at one location, according to the market research firm InStat. That’s up from 42 percent in 2009. But while many Michigan small businesses have started to wrestle with switching to VoIP, that decision soon could be accelerated. The state Legislature is considering a bill that would pave the way for phone companies to phase out offering tradition-
petrochemical and specialty-chemical businesses would hurt Dow’s “value proposition,” the company said in a regulatory filing. A breakup also wouldn’t improve productivity or capital allocation, Dow said. Third Point contends that Dow — its top holding — could add billions of dollars to earnings by spinning off its commodity businesses.
MICH-CELLANEOUS 䡲 Amtrak said last week that free Wi-Fi service is now available on its three Michigan routes. The Michigan Department of Transporta-
al landline phone services by 2017 and replace them with VoIP and other alternatives. For the uninitiated, VoIP is a method of making phone calls that uses the Internet instead of typical landlines. While apps such as Skype or Google Voice allow users to place calls from their computers, most small businesses opt for services that integrate IP phones, which look like traditional office phones except they plug into an Internet connection with an ethernet cable. They offer a variety of pluses, including cost savings, mobility and scalability. On the minus side: The quality of calls is only as good as your Internet connection, and some services like 911 and international calling may not be available. — MiBiz
tion spent about $1 million to install Wi-Fi on the trains, The Associated Press reported. 䡲 The Grand Rapids Area Chamber of Commerce endorsed a proposal to extend a city income tax increase that will appear on the May ballot, MLive.com reported. The city, in turn, promised to spend at least $13 million on street repairs. 䡲 Kent County Commissioner Michael Wawee Jr. said he will resign at the end of the month after having been arrested on charges that he overcharged families for the engraving of grave markers while working as a salesman for the Roman Catholic Diocese of Grand Rapids, The Associated Press re-
ported. 䡲 Galesburg-based Bell’s Brewery Inc. has been rated the world’s No. 5 brewery by RateBeer.com for the second year in a row, the Grand Rapids Business Journal reported. Other Michigan breweries on the list: B. Nektar Meadery, Ferndale; Dark Horse Brewing Co., Marshall; Founders Brewing Co., Grand Rapids; Jolly Pumpkin Artisan Ales, Dexter; Kuhnhenn Brewing, Warren; and Shorts Brewing Co., Bellaire. 䡲 The owners of Grand Rapidsbased Schuler Books & Music said it will close its Walker store in several weeks, MLive.com reported. Bill Fehsenfeld, who owns the fourstore chain with wife Cecile, called
traffic at the location “a real barrier.” An upcoming lease renewal forced the decision to close. 䡲 Enrollment at Ferris State University is at an all-time high this semester even though fewer students are taking classes on the Big Rapids campus, MLive.com reported. When students at Ferris’ satellite campuses, in online courses and at Kendall College of Art and Design are included, enrollment totals 14,003, up 1.4 percent from the same time last year. 䡲 Pennock Health Services plans to build a 49-bed, $70 million hospital and physician offices near the Southwest Michigan town of Hastings, MiBiz reported. The project would require state certificate of need approval. 䡲 Provost Donald Bachand will become the new president of Saginaw Valley State University, The Saginaw News reported. He succeeds Eric Gilbertson, who has been president since 1989 and plans to return to teaching. Saginaw Valley has about 10,500 students. 䡲 Grand Rapids-based Open Systems Technologies Inc., which has an office in Detroit, has appointed Meredith Bronk president, effective April 1. Dan Behm, the current president, will remain CEO of the company. Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for Crain's Michigan Business e-newsletter at crains detroit.com/emailsignup.
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CRAIN’S DETROIT BUSINESS
February 17, 2014
Two cents’ worth
f a proposal to raise the state’s minimum wage makes it on the ballot and is approved by voters this fall, workers will begin in January down a path that eventually leads to a pay rate of $9.50 an hour from the current $7.40. That’s led business groups to raise the prospect of fewer available low-wage jobs generally, but the biggest impact is likely to be in the restaurant industry and others where compensation is based on tips, and the minimum wage for tipped workers is $2.65. Under the proposal, the state’s “tipped” minimum wage would rise to $3.50 per hour on Jan. 1 and increase by 85 cents each year until it hits $9.50 an hour. The minimum wage for everyone else will bump to $7.90 an hour on Jan. 1, $8.40 on July 1, 2015, and $9.50 on Jan. 1, 2016. The rate could then be raised annually based on inflation. If approved, Michigan would become just the eighth state in the country to equalize the tipped and non-tipped minimum wage and would be the only state east of the Mississippi to have done so. “A voter would see it as a modest proposal,” said Justin Winslow,
Delay in employer mandate offers flexibility, but creates confusion
BY JAY GREENE CRAIN’S DETROIT BUSINESS
Opinions are generous on the effect of raising the minimum wage for tipped workers BY CHRIS GAUTZ
HIGHER AND IRE
vice president of government affairs for the Michigan Restaurant Association. “But it’s really radical as to what it would do to the restaurant industry.” Frank Houston, chairman of the Oakland County Democratic Party and treasurer of Raise Michigan, which is working to put the proposal on the ballot, said the tipped minimum wage is an important piece that needs to be fixed. Raise Michigan is a coalition whose steering committee includes members from Mothering Justice, Center for Progressive Leadership, Metropolitan Organizing Strategy Enabling Strength, the Building Movement Project, National Employment Law Project, American Federation of Teachers, American Association of University Professors and Michigan United, a coalition of unions, churches and nonprofits. Houston said waiters and waitresses are subject to volatility in the amount they receive in tips, which makes it hard to budget. He also said it’s a system that puts the onus on low-wage workers to go to their employers and
Proposed changes to state’s minimum wage: 䡲 Minimum for workers who get tips Now: $2.65 an hour Jan. 1, 2015: $3.50 Subsequent years: Increase 85 cents a year until reaching $9.50 an hour
䡲 Minimum wage
for everyone else Now: $7.40 an hour Jan. 1, 2015: $7.90 July 1, 2015: $8.40 Jan. 1, 2016: $9.50
Southeast Michigan companies seeking to comply with the Affordable Care Act’s employer mandate to offer health insurance were thrown for a loop last week when the Obama administration announced another delay in enforcement of the financial penalties for noncompliance in the 4year-old law. But the announcement is creating more confusion than relief among affected employers, said Elaine Coffman, account director with Troy-based McGraw Wentworth. “Initial media coverage has been very misleading. Large Coffman employers (with 100 or more employees) are still subject to a $3,000 penalty (in 2015) if an employee receives subsidized coverage in the public market plan,” Coffman said. In a 59-page final rule published last week in the Federal Register by the Internal Revenue Service, See Mandate, Page 20
Medicaid enrollment: Headaches expected, Page 4
Company index These companies have significant mention in this week’s Crain’s Detroit Business: Andiamo Restaurant Group . . . . . . . . . . . . . . . . . . 19 Automation Alley . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Beaumont Health System . . . . . . . . . . . . . 13, 14, 16 The Big Salad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Blight Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Brooks Wilkins Sharkey & Turco . . . . . . . . . . . . . . . 5 Conway Mackenzie . . . . . . . . . . . . . . . . . . . . . . . . . 5 Data Driven Detroit . . . . . . . . . . . . . . . . . . . . . . . . 21 Detroit Blight Control Task Force . . . . . . . . . . . . . . 21 Detroit Metro Times . . . . . . . . . . . . . . . . . . . . . . . . 3 Detroit Public Schools Foundation . . . . . . . . . . . . 21 Evangelical Homes of Michigan . . . . . . . . . . . . . . . 12 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Giarmarco Mullins & Horton . . . . . . . . . . . . . . . . . 17 Hantz Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Hantz Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Henry Ford Hospital . . . . . . . . . . . . . . . . . . . . . . . 13 Infectious Disease Consultants . . . . . . . . . . . . . . . 11 JKL Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Local Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Loveland Technologies . . . . . . . . . . . . . . . . . . . . . . 1 Massage Green Spa . . . . . . . . . . . . . . . . . . . . . . . . 7
See Wage, Page 19
IRS DETAILS FOR EMPLOYERS
McGraw Wentworth . . . . . . . . . . . . . . . . . . . . . . . . 3
Some other details in the IRS rules that employers should know: 䡲 Employers with 100 or more employees are not allowed to reduce their workforce to qualify for the additional year of delayed penalties. 䡲 Employers that do not extend coverage to dependent children are not required to extend coverage to dependent children until 2016. This is provided that the employer is taking steps to provide this coverage during 2014/2015.
Michigan Community College Association . . . . . . . 17
Michigan Chamber of Commerce . . . . . . . . . . . . . 19 Michigan Consumers for Healthcare . . . . . . . . . . . . 4 Michigan Historic Preservation Network . . . . . . . . 21 Michigan Pain Specialists . . . . . . . . . . . . . . . . . . . 13 Michigan Restaurant Association . . . . . . . . . . . . . . 3 Michigan State University . . . . . . . . . . . . . . . . . . . 19 Moo Cluck Moo . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Oakland Community College . . . . . . . . . . . . . . . . . . 1 Original Equipment Suppliers Association . . . . . . . . 5 Planning Perspectives . . . . . . . . . . . . . . . . . . . . . . 5 Raise Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 St. John Providence Health System . . . . . . . . . . . . 16 St. Joseph Mercy Medical Center . . . . . . . . . . . . . 11 Secure-24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Skillman Foundation . . . . . . . . . . . . . . . . . . . . . . . 21 Small Business Association of Michigan . . . . . . . . 19
Metro Times new owner: Grow online presence, add staff BY BILL SHEA CRAIN’S DETROIT BUSINESS
New Metro Times owner Andrew Zelman plans to establish a stronger online output, add new branded events and re-emphasize investigative news coverage. JANET CENTURY
After months of tumult, local altweekly Detroit Metro Times is under new ownership, seeking to hire staff writers and looking for a new home in Detroit. The strategic plan also is to increase revenue at the money-losing newspaper by bolstering its online presence and possibly adding new Metro Times-branded events, said new owner Andrew Zelman. “We know you have to add additional revenue streams, and we will do that,” he said. He’s the majority owner of Metro Times after buying it, along
with three other alt-weeklies, in December for an undisclosed sum from Scranton, Pa.-based publisher Times-Shamrock Communications, which was shedding its non-daily nontraditional newspapers. The other major strategy for Metro Times is to refocus the Ferndale-based newspaper’s editorial content on what readers came to expect: investigative news, both long-form and short pieces, told from an edgy, progressive viewpoint, said interim Editor Vince Grzegorek. The alt-weekly had drifted away from that in recent years, he said. Hence, the decision to add two See Metro Times, Page 20
University of Michigan . . . . . . . . . . . . . . . . . . . . . 19 Wayne State University . . . . . . . . . . . . . . . . . . . . . 15
Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 10 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 10 RUMBLINGS . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22
THIS WEEK @ WWW.CRAINSDETROIT.COM
Nate Skid: Visibly shaken – not stirred Crain’s food reporter went searching for Detroit’s best gin. Watch him mix it up on “This Week in Crain’s” at crainsdetroit.com/video. And read his and other staffers’ blogs at crainsdetroit.com/blogs. DAVID HALL/CDB
February 17, 2014
CRAIN’S DETROIT BUSINESS
State unsure on Medicaid enrollment launch; headaches expected of the federal poverty level are covered either through the state or county health plans. Community Health officials clearly don’t want to experience the same problems as the federal government did last October when the healthcare.gov website, which processes private health plan applications in Michigan and 23 other states, faced massive computer glitches. “While we completely understand that people want information regarding enrollment, the last thing we want to do is rush to get a program up that will only cause delays and issues for residents,” Minicuci said. “We are committed to doing this right and ensuring our systems are ready.” Access to Healthy Michigan applications eventually will be available online, on paper and by phone, she said. Dizzy Warren, project director for Enroll Michigan, said whenever Medicaid enrollment begins, an estimated 55 percent of Michigan’s 1.2 million uninsured people will need assistance in either enrolling
BY JAY GREENE CRAIN’S DETROIT BUSINESS
Officials don’t know when applications will be ready for Healthy Michigan — the state’s new Medicaid program for people at or below 133 percent of the federal poverty level. Medicaid enrollment and coverage officially begins April 1, according to legislation approved last year. Eligibility covers a single adult with annual income of $15,000 or less and families of four with annual income below $34,000. But the Michigan Department of Community Health cannot give a firm date when applications will be available and enrollment begins because the state’s information technology system isn’t ready, said Angela Minicuci, the department’s public information officer, in a statement to Crain’s. Minicuci said current beneficiaries of the Michigan adult benefit waivers program will be automatically transferred before April 1 into the state Medicaid program. Adults with incomes of 35 percent
F INANCIAL S OLUTIONS ON G ENERATIONS OF T RUST
in Medicaid or in a private health plan on healthcare.gov. “We are telling people if they don’t know if they are eligible for Medicaid to call Enroll Michigan (517-367-7293) or one of the 500 (enrollment) assisters in Southeast Michigan,” Warren said. So far, 52,000 in Southeast Michigan have purchased health insurance through healthcare.gov in Southeast Michigan, said Warren, citing numbers from the Centers for Medicare and Medicaid Services. An estimated 320,000 uninsured people in Warren Michigan will be enrolled in Medicaid this year. By 2021, 470,000 will be covered, said Community Health. But Warren acknowledged that several thousand people in Michigan might think they are eligible for Medicaid, wait to enroll in April and then find out they earn too much to qualify. Under the Affordable Care Act, most individuals must either enroll in Medicaid or purchase a private health insurance plan by March 31. Failure to prove health insurance coverage by the deadline can lead to a $95 fine. “We can help them determine if they are eligible for Medicaid on April 1 or if they are eligible for a subsidy on healthcare.gov,” said Warren, who also is the statewide community outreach manager with Michigan Consumers for Health-
WHO FUNDS HEALTHY MICHIGAN? The Affordable Care Act mandates that federal funds cover 100 percent of the cost of Medicaid expansion from 2014 to 2016. The amount drifts to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and beyond. Under Medicaid expansion, the federal government will cover expenses Michigan pays for today. This saves the state $206 million in general fund costs in 2014. The state’s 2014-15 budget deposits $103 million of those savings into a new health savings fund to cover Michigan’s future health care liabilities over the next 21 years. Michigan estimates it will save $320 million in uncompensated care costs by 2022. care, which received $1.3 million in federal funds to educate hundreds of trained Obamacare navigators to assist with enrollment. But Warren said the biggest problem for people with the April 1 deadline is they have to wait for health insurance coverage. Still, Warren said she agreed with Community Health’s decision to delay Medicaid enrollment until the computer system is tested. “We don’t want to have folks ready to sign up and not able to do so because the computer isn’t ready,” she said. Community Health also hasn’t announced how long it will take to process a Medicaid application once submitted. Once approved, recipients have 30 days to select a Medicaid health plan or they are auto-assigned based on their county. Conrad Mallett Jr., chief administrative officer with Detroit Medical Center, also said he believes the state is working diligently to make sure its computer systems talk to
each other and with federal agencies for income and citizenship verification. “They want this process to be as seamless as possible,” he said. “I was told the Healthy Michigan application will be no more than four or five pages, maybe two or three. The process won’t take 45 minutes, maybe 10 to 20 minutes.” Mallett said DMC has been collaborating with dozens of nonprofit groups on events to sign people up for private health insurance and educate them on the Medicaid expansion. For more information about events, visit www.dmc.org/pathtohealth. Several other health systems — including St. John Providence Health System, St. Joseph Mercy Health System and Oakwood Healthcare — are also providing health insurance education and enrollment assistance, said hospital officials. Jay Greene: (313) 446-0325, firstname.lastname@example.org. Twitter: @jaybgreene
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Crain’s website a finalist for national award The website of Crain’s Detroit Business has been honored by The Association of Business Information & Media Cos. as a finalist in the 60th annual Jesse H. Neal Awards competition for editorial excellence. Crainsdetroit.com is one of four finalists in the competition’s Best Website category for publications with the largest advertising and circulation revenue. Other finalists for the award are sister publication CrainsNewYork.com and AmericanBanker.com and dtn.com, the website for The Progressive Farmer. Crain Communications Inc., which owns 25 business-to-business publications, has 28 finalist entries in categories that include Best Single Article, Best Blog and Best Use of Video. The winners will be announced March 14 during ABM’s annual Neal Awards ceremony in New York City. The Neal Awards, named after ABM’s first managing director, were established in 1955 as a way to recognize and reward editorial excellence in business media.
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February 17, 2014
CRAIN’S DETROIT BUSINESS
Suppliers curb ‘revolt,’ breathe easier after GM ends controversial pact terms BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS
Supplier executives are breathing easier after General Motors Co. announced last week it was terminating controversial parts of its terms and conditions, according to local experts. GM rolled out new terms and conditions in July, to a roar of malcontent suppliers and their attorneys. Suppliers interpreted the conditions as giving GM far broader authority to recover warranty and safety-recall costs, take over suppliers’ intellectual property rights and access their financial information. Several suppliers, including TRW Automotive Inc., Inergy Automotive Inc. and American Axle & Manufacturing Inc., declined to comment or didn’t respond to inquiries on the subject. The automaker struck most of the contentious parts from its contracts after consulting with its 11member supplier advisory council, said John Henke, president of Birmingham-based Planning Perspectives Inc., which measures the relationship between automakers and its suppliers. GM is a client of Henke. GM was “very, very surprised by the reaction because they had no idea how suppliers were going to interpret the changes; it was a big revolt,” Henke said. “GM, historically, has never Henke looked to suppliers before they did anything, but they realized quickly this was not consistent with what sort of relationship they want with suppliers.” In Henke’s annual supplier relationship index study of 441 suppliers, published in May, GM achieved its highest score ever in the study’s 13 years. However, Henke boiled that down to a letter grade of a C-minus. Henke, also a professor of marketing at Oakland University, told Crain’s in May that many automakers were returning to “the same old ways” of poor communication with their supply base. GM global purchasing chief Grace Lieblein told Automotive News last week that the overhaul of the supplier contract framework was a misstep by the OEM. Julie Fream, president and CEO of the Troy-based Original Equipment Suppliers Association, said the organization rallied GM’s unhappy supply base and delivered a list of the contended portions of the conditions to the automaker. By the time Lieblein took the stage at the OESA 2013 Outlook Conference and 15th Annual Meeting of Members on Nov. 12, GM recognized changes needed to be made, Fream said. “They recognized they would rather spend time on innovation and technology rather than specific terms and conditions or negotiations,” she said. GM implemented the following changes to appease suppliers, as
told to Automotive News: 䡲 Eliminating a sentence that said suppliers’ parts will “not, at any time (including after expiration or termination of this contract), pose an unreasonable risk to consumer or vehicle safety.” Many suppliers and their attorneys interpreted that as creating an open-ended liability, beyond the usual warranty on supplier parts, which generally expires at the same time as GM’s consumer product warranty. 䡲 Clarifying that GM’s audit rights — the automaker’s right to access a supplier’s books — are limited to business between GM and the supplier. The 2013 contract language had left the impression that GM wanted broad access to suppliers’ income statements, balance sheets and other proprietary information. Some suppliers feared GM could use that information to demand price cuts. 䡲 Deleting a provision that required suppliers to ensure uninterrupted supply during “any foreseeable or anticipated event,” whereas the old contract applied only to labor disruptions. Some suppliers worried that this language would leave them responsible for flagging problems at an upstream supplier, for example. 䡲 Clarifying a provision that grants GM license to a supplier’s
intellectual property only during limited periods when the supplier isn’t able to ship products. Suppliers said that the terms enacted last summer posed a broader risk to their IP rights. Matthew Stover, an analyst at Boston-based Guggenheim Securities LLC, said GM miscalculated how fresh the wounds of the 2009 industry fallout were for suppliers He said the July terms would have crippled the supply base’s willingness to expand with GM as sales rise. Fred Hubacker, managing director of Birmingham-based consulting firm Conway Mackenzie Inc., said GM realized it couldn’t operate with an unruly supply base. “They need their suppliers as much as they need them, and clearly this was a major problem,” Hubacker said. Dan Sharkey, a partner at Birmingham-based law firm Brooks Wilkins Sharkey & Turco PLLC, helped his supplier clients contest the GM terms. He said the suppliers’ win is part of a cyclical power shift. “I thought GM was going to stick with the terms and duke it out, but to their credit, they did the right thing,” Sharkey said. “But they still moved the ball a long way; these are still tough terms.” Dustin Walsh: (313) 446-6042, email@example.com. Twitter: @dustinpwalsh
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CRAIN’S DETROIT BUSINESS
24 firms to share $1M Alley training fund BY AMY HAIMERL CRAIN’S DETROIT BUSINESS
Sam Rassam is a certified ethical hacker. That’s right, he’s officially certified to use his skills for good, not evil. “That certification is key,” said Caleb Mitchell, director of quality and process integrations for Southfield-based Secure-24 Inc. “Security and quality are key in our day-to-day operations. So for him to receive that kind of certification gives us clout in the industry.” Secure-24, a provider of cloudbased software services, was able to put Rassam — and others — through certification and training programs with a grant it won last year from Automation Alley. Now, 24 more area businesses will share $1 million from the Troy-based technology business association’s Technical Talent Development Program Challenge Fund. That money is expected to train 472 local employees. Automation Alley launched the program in 2012 with a $5 million federal grant, with the goal of helping local businesses ease their struggles to find good employees. The money can be used to train current employees or new hires. This year’s winners are: Ace Controls Inc., Farmington Hills Applied Manufacturing Technologies LLC, Lake Orion Baker College, Auburn Hills campus Compuware Corp., Detroit DASI Solutions LLC, Pontiac Detroit Labs LLC, Detroit ESG Automotive Inc., Troy Future Help Designs, Pontiac General Motors Co., Warren Hirotec America Inc., Auburn Hills Logic Solutions Inc., Ann Arbor Mobile Comply LLC, Pontiac MOBIS North America LLC, Farmington Hills Oakland Schools, Waterford Township Pixo Group, Southfield Plastipak Packaging Inc., Plymouth R & E Automated, Macomb Township Research Into Internet Systems, Troy Saline Lectronics Inc., Saline Softura Inc., Farmington Hills Stout Systems Development Inc., Ann Arbor Total Solutions Inc., Brighton W3R Consulting, Southfield ZenaComp Inc., Farmington Hills Last year, Automation Alley gave $750,000 to 13 local companies, which resulted in training
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February 17, 2014
BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Feb. 7-14. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Autolines Inc. and Champs Fast Lube #29, 18156 Outer Drive, Dearborn. Both voluntary Chapter 7. Autolines Inc. assets: $50,000; liabilities: $101,178.19. Champs Fast Lube #29 assets: $0.01; liabilities: $101,178.19. Midtown Development Group Inc., 627 W. Alexandrine St., Unit 10, Detroit. Voluntary Chapter 11. Assets and liabilities not available. (See This Just In, Page 1.) — Bridget Vis
for 287 employees. “In the auto capital of the world, with engineers making the shift to technology, it gives us the opportunity to take that experience and education and help give them certification paths and become more marketable,” said Mitchell. His company used the grant to not only help Rassam but to bolster its internal training program.
“To get the kind of talent we all need, you have one of two approaches,” he said. “You can go to the market and hire somebody with all of that experience, which means they may be out of state. Or you can grow it internally. Secure24 grows our own talent.” Amy Haimerl: (313) 446-0416, firstname.lastname@example.org. Twitter: @haimerlad
STARTS HERE. A business degree from Wayne State University does more than provide an academic foundation for success — it helps open doors. Our graduates join a strong network of more than 31,000 successful alumni across Metro Detroit and worldwide. Whether you’re landing that ﬁrst job or making your way to the executive suite, there’s likely a Wayne State alum nearby, ready to help.
Sandy Pierce, BA ’80 MBA ’87 Vice Chairman, FirstMerit Corporation Chairman and CEO, FirstMerit Bank Michigan
School of Business Administration business.wayne.edu
CRAIN’S DETROIT BUSINESS
February 17, 2014
Putting finger on potential good worker a tricky skill, biz owners say BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS
Allie Mallad knows a few things about starting a business. He should, since he’s done it a few hundred times. Mallad’s current enterprise is Massage Green Spa, a Southfieldbased therapeutic massage franchising business. Since its launch in 2008, the chain has grown to 50 stores, half of them corporateowned. He expects the number to double by the end of this year. The jump to becoming a franchisor followed a big run as a franchisee — Mallad owned 171 stores under seven national franchises at one point in the 1990s. His base was his Little Caesars operation, for which he owned 159 stores at its peak in 1995. Operating out of Southern California at the time, he also owned stores for chains such as Bruegger’s Bagels, Applebee’s, Baskin-Robbins and Jiffy Lube. He’s been the franchisee and the franchisor, the startup guy and the guy helping the startups. One of the biggest mistakes he’s seen, and experienced, stems from personnel management. New business owners better get ready to work on this for a long time to come. “I’d rather have someone with a great attitude than great skill. I can teach skill; I can’t teach attitude,” he said. “The biggest mistake I’ve made is choosing the wrong people.”
Chicken or beef? It all got started when Mallad was working as a flight attendant for Delta Air Lines in the 1980s. A former basketball player at Central Michigan University, Mallad still had dreams of playing professionally and wanted to be close to superstar athletes. He got himself promoted to working the firstclass end of the planes but ended up talking more with businesspeople than athletes. Mallad would ask them why they wasted their money just to get a few rows ahead of everyone else. They’d tell him that after attaining a level of success, a need for a certain quality of life kicks in. “Well, I want to be part of that,” Mallad thought, and he was off and running. He used his savings of $50,000 and another $30,000 borrowed from his mother to open a convenience store in Lincoln Park in 1984. A year later, he had two more stores under his wing. He began approaching chains like McDonald’s, Burger King and Domino’s for franchise opportunities, but they either wanted too much money or had onerous rules. Eventually, it was Mike Ilitch at Little Caesars who told him, “If you want opportunity, go west and I’ll give you all the opportunity you can handle.” Six years later, Mallad owned 159 Little Caesars stores in California. An entrepreneur with an itchy trigger finger, he soon added a dozen other stores under different brands. But he had ideas for being a franchisor, and eventually he decided he needed to give it a try.
Seeing the success of Little Caesars’ $5 “Hot-N-Ready” pizza deal, and also having been an avid fan of therapeutic massage since his days as an athlete, he saw an opening for a strong consumer value proposition in the world of massage. He came back to Michigan and opened Massage Green Spa with the idea that he could build a business through volume — lower the price, and more people would be willing to commit to a membership plan. Massage Green Spa’s business works by having more people make commitments to monthly payments. Mallad’s first store opened in Dearborn’s Fairlane Plaza — a small retail strip he owns — in 2008. Members pay $39.95 a month and for that they get one massage visit. If they don’t use it, it rolls over into the next month. Subsequent visits within a month cost $34.95. Combined revenue for all 42 stores that were open last year was $13.4 million. About 15 stores opened in the last quarter of the year and more continue to be added to the chain, leading Mallad to expect revenue to double this year. Total revenue in 2012 was $5.5 million, which was more than double 2011 revenue. The cost to open a Massage Green Spa store, according to the company’s franchise disclosure document, ranges from $98,500 to $172,000, including a $45,000 franchise fee. The franchising entity is Southfield-based Massage Green International Franchise Corp.
The right questions When asked what lessons he’s learned from running so many stores, Mallad always returns to personnel management. The tricky answer is that recognizing talent is a talent, and a necessary one for growing a business. He found it easier to operate 100 stores than 25, because at the higher levels he had the money to justify hiring people to run departments — as long as he was able to find the right people. Honest compensation is key to that, but so is a careful interviewing skill, something he’s learned over the course of hiring 10,000 workers throughout his career. He pays as much attention to tone and body language as to what interviewees are saying. And when it comes to senior managers, he checks on them in the months following their hiring to see if they’re living up to the great things they said in the interview. Spotting and retaining talent is an intangible skill and the source of frustration for many business owners, and it doesn’t necessarily get easier with experience, as one example Mallad relayed shows. At Massage Green, complaints started coming in from store managers about a district manager not long after this person was hired. The manager “was different in the interview than in the field,” Mallad said. The problem? The district manager was nowhere to be found much of the time. Requests from stores would go unanswered for
Allie Mallad, founder of Massage Green Spa, says, “I’d rather have someone with a great attitude than great skill. I can teach skill; I can’t teach attitude.” COURTESY MASSAGE GREEN SPA
nine days. “A manager might have an incident and need advice from the district manager, and the district manager doesn’t respond,” Mallad said. The district manager didn’t last much longer. He’s learned to cut his losses. “Even now we make mistakes. There’s no proven formula for hiring the right person. However, we can create a much better probability of hiring the right person if we ask the right questions and listen to the answers,” Mallad said.
Staying prepared John Bornoty, owner of small Grosse Pointe Woods-based restaurant chain The Big Salad LLC, is newer to the business. But he’s
faced the same issues Mallad has and said anyone in any business almost certainly will. “Our frustration is just finding good people — good managers, good salad chefs, people who just care,” Bornoty said. “I have friends in the corporate world who can pay six figures, and they have the same frustrations.” The issues dropped significantly when he began giving ethics assessments to prospective employees. The tests are not 100 percent accurate, and sometimes people who do poorly on the assessment but do well in the interview will be hired anyway, but it’s a useful starting point, Bornoty said. Lousy employees have a direct effect on sales in the retail business, and the wrong person can
“infect your entire staff. It will make your better people quit,” he said. Larry Klimek runs Grosse Pointe Farms-based consultancy JKL Associates and is the guy who provides those assessments for Bornoty. People who start businesses tend to overlook the people side of the business in the beginning, as they come to the table thinking more about their concept and vision than finding the talent to manage it. Personnel management requires constant attention through the life of a business, Klimek said. “The reality is that it’s not any different than sales. If you stop building a pipeline for sales, revenue dries up. The same mentality is needed for talent,” he said.
February 17, 2014
CRAIN’S DETROIT BUSINESS
Wring politics out of water authority plan or decades, Southeast Michigan communities have grown — homes and businesses — in part because of a ready infrastructure of water and sewage services. Also for decades, suburban political leaders have chafed that ownership and control of that system rested with the city of Detroit. Detroit’s bankruptcy offers a historic opportunity to make the system truly regional. Under a proposed deal, Detroit would be a retail customer of the new Great Lakes Water Authority — just like any other municipal customer in the region. But the political rhetoric surfacing in negotiations seems to drag up every conceivable reason not to do a deal that could help create a foundation for regional growth for decades to come. This idea needs some strong champions. So far, the only truly public champion has been Wayne County Executive Robert Ficano — a damaged advocate for political scandals and budget problems dogging his administration. Would the new authority hold the suburbs liable for deadbeat customers in the city? A revenue reserve account could shield a new authority from such delinquencies. This is a complicated issue. But smart people who share a common goal of securing a strong future for the metro Detroit region can make this work. Mediators are working to help resolve the authority issue before Detroit hits a March 1 deadline to file a restructuring plan in its bankruptcy case. News reports indicate suburbs are balking at a lease payment from the authority to the city at $47 million. Historically, city water was a reason to build and develop within the city limits. But decades ago, state law changed to allow municipal systems to serve customers outside their boundaries. Hence, the Detroit system serves almost 4 million residents in eight counties comprising more than 1,000 square miles. The system’s complicated history shouldn’t be allowed to get in the way of a regional solution. However, that same complexity requires a lot of transparency in the decisionmaking. It’s important that all parties understand the implications of the plan. It’s equally important political parties don’t overlook economic benefits in favor of the cheap-shot political benefits of complaining about Detroit.
Find biz bashes on our calendar How many times have you planned a charitable or business event only to learn three other events — aimed at exactly the same audience as yours — are the same night? It happens. For years, we’ve heard people ask for a central calendar of major business and charity black-tie events. We hope our new Crain’s Executive Calendar will help. It’s a digital, sharable list of important events, from black-tie charity fundraisers to Tigers’ Opening Day to the Detroit Regional Chamber’s Mackinac Policy Conference. It links directly to registration and ticket information, and allows you to save events to your own calendar. Though we are adding events to the list as we learn of them, the utility of the calendar depends on organizations submitting them, too, by visiting crains detroit.com/section/executive_cal endar. We envision the calendar to be both a clearinghouse and a resource for charities and business
associations. We are in the soft launch, and need to get as many black-tie, major business events and charitable events submitted as possible to boost the utility of the feature. So if you are involved in nonprofit fundraisers that have a ticket price of at least $75, make sure your charity submits the information online. Meanwhile, another digital offering also launched this month. Ixiti is the new cultural clearinghouse created by the Culture Source, a nonprofit arts support organization with nearly 120 members in seven counties in Southeast Michigan. Members pay annual dues, but listing events by for-profit or nonprofit groups and venues at Ixiti.com is free. That means you can find everything from theater at the Fisher to area comedy clubs to classical and pop music. Maud Lyon, executive director of Culture Source, says Ixiti (a kind of fun and made-up word she hopes will catch on) will curate offerings and organize them by the
type of experience (“Loud and Fun,” “For the Kids,” “A Great Date,” etc.) . This region is teeming with terrific music, theater, dance and other cultural events. But I sometimes have the urge to get my “fix” of a New York staple: a cabaret show in an intimate, club-like setting like the Algonquin or 54 Below. There may be a cheaper option than flying to New York. Two lovers of that art form, Sandi Reitelman and Allan Nachman, created Cabaret 313, a nonprofit that over the past 18 months has brought singers from both coasts to perform in venues ranging from private homes to the Music Hall’s lower level. Next up on March 14: baritone Norm Lewis, nominated for his lead role in Gershwin’s “Porgy & Bess,” at the Chrysler Black Box Theatre in the Detroit Opera House. For more details: www.cabaret313.org. Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer. E-mail her at email@example.com.
LETTERS Invest in our neighborhoods Editor: I want to applaud Keith Crain’s column “Which came first, the chicken or the egg?” (Feb. 10, Page 8) for its optimism about the revival of Detroit neighborhoods. It has been inspiring to witness the revitalization of downtown and Midtown and to assist with projects like the M-1 Rail that will further transform Woodward Avenue into a vibrant, pedestrian-friendly commercial corridor. The surge of development in the city’s core provides a great opportunity to bolster physical development in and reinvigorate neighborhoods adjacent to Woodward and throughout the city. It also complements LISC’s comprehensive community development strategy, Building Sustainable Communities, to develop stability
Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: firstname.lastname@example.org and economic opportunities in Detroit neighborhoods. Detroit LISC is a community development financial institution dedicated to helping residents transform distressed neighborhoods into healthy and sustainable communities — good places to work, do business and raise chil-
dren. LISC is also committed to keeping affordable housing available in the central business district through investment in affordable housing and transit-oriented development that is economically integrated. Since 1990, LISC has invested more than $175 million and leveraged more than $738 million in Detroit’s neighborhoods and helped create more than 3,750 units of affordable housing and more than 1.8 million square feet of commercial and community space. More neighborhood investment is needed, and the column did a great job of elevating the opportunity and need to invest in Detroit neighborhoods. Tahirih Ziegler Executive director Detroit LISC
See Letters, Page 9
KEITH CRAIN: Maybe we can give lessons on winter It’s been a very tough winter for most Michiganders. However, the historians will tell us that it hasn’t been the worst winter, just a bad one. But I must admit I am amazed at how some winter weather can absolutely paralyze cities that haven’t experienced snow and ice very often. If nothing else, we are creating a bunch of citizens who understand how to prepare and cope with bad winter weather. Unless you sell salt, snowplows and snowmobiles, you’re probably not really excited about the weath-
er we’ve had the last couple of months. Like any community that has big changes in the weather, there always are businesses that thrive on seasonal changes. I have no doubt that the guy selling motorcycles has put most of them in the basement and his showroom is filled with snowmobiles. My guess is that four-wheel drives are a lot more popular in the winter than in any other time of the year. I can’t imag-
ine anyone selling snowplows for trucks any other season. Over the decades, Detroiters have learned to cope with harsh weather. There was a time for service stations and car dealerships when people would visit in the fall to winterize their cars and put snow tires on for the season. With the advent of front-wheel drive, most cars seem fairly capable of plowing through the snow without any special preparation.
It can’t be too long before the basketball and hockey playoffs begin. It’s just a matter of days until the first spring training baseball game takes place for the Detroit Tigers. The biggest challenge the city and state have is fixing the roads to become immune to the weather. We’ve got some of the worst roads in the country, and that can’t help but discourage economic development in our state. It might make sense for the governor to use a great deal of the state’s surplus to improve roads. I can’t imagine any citizen who dri-
ves on our roads objecting to using that money to improve our infrastructure. It won’t be long before we will have seen the worst winter weather, and we will discover that the Great Lakes might just have a little higher level. And it won’t be too long before the motorcycle dealers have the final sale on snowmobiles and bring out the motorcycles for the summer season. Meanwhile, we can enjoy the winter Olympics knowing full well that when the Olympics are over, spring can’t be far behind.
CRAIN’S DETROIT BUSINESS
February 17, 2014
OTHER VOICES: Transit needs to be everyone’s business 2014 is poised to be the transit advocate who will year of transit in metro Deinspire others to become troit. M-1 Rail will begin champions for their conconstruction, and the Restituencies so that we get gional Transit Authority the transit system we will develop a transit plan want and will pay for. voters can support. The At least this is what I new plan will include the believe will happen. best the industry has develBut transit in metro oped in terms of return on Detroit will only succeed investment, innovation Marie Donigan when it becomes everyand effectiveness; the plan one’s business — when will focus primarily on the deliv- it’s written into every business ery of service and offer the kind of plan, promotional activity and adtransit that makes modern cities vertising campaign; is used to thrive. market Detroit’s sports teams, culOur two bus systems will co- tural institutions, housing opexist and collaborate on routes, schedules and maps; they will be restructured to respond to emerging travel trends among current and potential customers, and to bolster the system’s usability and relevance. The restructured systems will support new rapid transit along several regional corridors and the proposed commuter rail line between Detroit and Ann Arbor. Mayor Mike Duggan, with stable leadership installed at the Detroit Department of Transportation and with the support of City Council and transit employees, will reorganize DDOT to lead regional transit development; the mayor will become a dynamic
tions, hotels and conventions, and considered an essential city service that’s vital to our economic well-being. When transit is a part of our culture and not an afterthought, we will begin to see significant and recognizable progress. What if we were offered transit passes with our Lions season tickets? What if taking the bus to a Tiger game wasn’t a special event but a viable option? And what if the Ford and Ilitch families became transit champions who worked with Suburban Mobility Authority for Regional Trans-
portation, DDOT and the RTA to make sure reliable transit is available to their fans across the region? If that happened, our transit systems would experience increased ridership and revenue, and our collective mindset about transit would begin to change. When I chaired the subcommittee on public transit in the state House, I flew Northwest Airlines. The on-flight magazine featured an ad for the Mall of America that read, “10 minutes by light rail from the Minneapolis/St. Paul Airport.” I tore it out and carried it in my wallet to remind me that mod-
ern transit is possible in Midwestern cities. We don’t have good transit to the airport, but we’re getting closer. In 2014 we have to work faster and smarter by putting transit professionals in leadership positions, intensifying our advocacy efforts, and identifying champions who will push policymakers and inspire people across the region to make transit everyone’s business. Marie Donigan is a principal consultant with Donigan McLogan Consultants LLC and a former state representative.
First Place Now proud Bank. to be Talmer Bank and Trust. While our name may be different, the
names of the people who take care of
you, and the personalized service they
■ From Page 8
provide, are still the same. So is our
Detroit City Council members out of touch
strong commitment to this community.
Editor: Just when it appeared that the city of Detroit was making a comeback with an emergency manager, a new mayor and an infusion of funding from several nonprofit organizations, the City Council announced its new leadership team and all of a sudden an albatross has made its appearance. While it may be premature to assess their effectiveness, early indications are that the president, Brenda Jones, and president pro-tem, George Cushingberry Jr., will assume the roles of obstructionists. As such, let’s hope Emergency Manager Kevyn Orr and Mayor Mike Duggan assert their authority and voice their displeasure with the manner in which the council is proceeding. In the meantime, I think the Hall & Oates song “Out of Touch” would be a suitable theme song to be played each time the council enters its chambers. They are certainly out of touch with reality, and the city is running out of time to right the ship. City Council — can you say irrelevant? Bill Kalmar
by the Bank’s two principals to their
In fact, the name “Talmer” is a tribute grandfathers (named Talmage and Merzon), who both dedicated their lives to community service. What’s more, Talmer Bank, just like First Place, is a Midwest-based community bank—and one with demonstrated ﬁnancial strength. So you can count on us to take care of your business needs for many years to come. Please stop by soon. You’ll quickly discover that we’re now an even greater asset to your community.
www.talmerbank.com | 855-882-8824
February 17, 2014
CRAINâ€™S DETROIT BUSINESS
BUSINESS DIARY CONTRACTS Harrington
Grosse Pointe Woods, designed and developed custom digitally animated holiday greetings for Dechert LLP, Philadelphia; Littler Mendelson PC, Detroit; Baker Tilly Virchow Krause LLP, Chicago, with an office in Southfield; Cambridge Consulting Group, Troy; Goldberg Kohn Ltd., Chicago; and Grant McCarthy Group LLC, White Plains, N.Y. Website: hcommunications.biz. Human Capital LLC, Rochester Hills, a provider of payroll processing, em-
ployee benefits, human resources and workersâ€™ compensation insurance, announced that Giarmarco Mullins & Horton PC, Troy, will provide legal counsel to Human Capitalâ€™s clients. Websites: human-capital.com, gmhlaw.com. Johnson Controls Inc., Milwaukee, will work with Lawrence Technological University, Southfield, to identify and validate new energy storage technologies within the vehicle system to improve fuel efficiency. Websites are johnsoncontrols.com, ltu.edu.
The Cueny Corp. , Auburn Hills, was contracted to market in North America for Diegel Creative Coatings , a division of Ernst Diegel GmbH , Alsfed, Germany, producer of automotive paints and coatings for the plastics and glass industries. (248) 373-9600. Websites: cuenycorp.com, diegel.de.
NAME CHANGES ProQuest LLC, Ann Arbor, announced that products and services from its Seattle-based technologies business unit will carry the ProQuest brand as
the name Serials Solutions is retired. Website: proquest.com. FEV Inc., Auburn Hills, the U.S. division of FEV GmbH (FEV Group), Aachen, Germany, changed its name to FEV North America Inc. Website: fev.com.
sional movies, gaming and streamed television shows. Website: avegant.com. LifeSecure Insurance Co., Brighton, launched LTC II with Shareability Option, an updated version of its original long-term care insurance product. Website: yourlifesecure.com.
Avegant, Ann Arbor, and Mountain View, Calif., released the consumer concept of a virtual retinal display called Glyph, which uses a low-powered LED, custom optics and micromirrors to produce three-dimen-
Law Offices of Joumana Kayrouz PLLC, Southfield, is expanding around the country and has a new website, yourrights.com, replacing joumanakayrouz.com.
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Brenda Meller to assistant vice president, marketing, Walsh College, Troy, from director of marketing. Also, Andrea Richards to assistant director, annual giving and stewardship, from manager, special events and donor relations.
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Grosse Pointe Farms, from vice president and equity portfolio manager, Loomis Sayles & Co. LP, Bloomfield Hills. Peggy Richard to senior corporate communications specialist, DFCU Federal Financial Credit Union, Dearborn, from event director, Dearborn Area Chamber of Commerce, Dearborn.
Schechter Wealth is expanding its investment advisory services and weâ€™re happy to welcome Bernie Kent and John Stein to lead our team. Nationally renowned ďŹ nancial planner Bernie Kent spent 32 years at PricewaterhouseCoopers, where he was the Midwest regional partner in charge of the personal ďŹ nancial services group. John Stein has over 17 years of investment advisory experience including as the director of PwCâ€™s Detroit investment advisory practice.
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Angela Johnson to vice present of account management, Channel Net, Dearborn, from senior director of account management and client services, Acxiom Corp., Southfield. Sara Faircloth to sales manager, National Door Systems LLC, Pontiac, from corporate sales manager, Mission Point Resort, Mackinac Island. Christopher Nevens to ambassador and director, new business development, Safety King Inc., Utica, from field service supervisor.
SUPPLIERS Bill Foy to senior vice president, sales and marketing, Denso International America Inc., Southfield, from vice president, sales and marketing.
CRAIN’S DETROIT BUSINESS
February 17, 2014
Crain’s 13th annual Health Care Heroes awards honor people in area health care roles in five categories. Stories on the winners and honorablemention recipients begin here and continue through Page 16.
People Dizzy Warren, community outreach
manager for Michigan Consumers for Healthcare, received the Consumer Health Advocate of the Year Award from Families USA at the organization’s annual Health Action Conference in January for her work in bringing together diverse groups across Michigan to Warren fight for quality, affordable health coverage in the state. Aparna Joshi, M.D., has been named chief of pediatric imaging at Children’s Hospital of Michigan. Also, Henry Walters III, M.D., chief of the Department of Cardiovascular Surgery at Children’s, was appointed associate editor for surgery for Cardiology in the Young, a publication of Cambridge University Press. Walters Nancy Schlichting, CEO of Henry Ford Health System in Detroit, was selected by the Health Research & Educational Trust of the American Hospital Association as the recipient of the 2014 Trust Award, which honors individuals who have exhibited visionary leadership in the health care field, for her commitment to create clinical excellence, an extraordinary patient experience and a great environment for all health care professionals. Also, Gail Warden, president emeritus of Henry Ford Health System, received a John M. Eisenberg Patient Safety and Quality Award for individual achievement, established by the National Quality Forum, for his continued work to improve and assure the well-being of hospitalized patients. Warden was president and CEO from 1988 to 2003. And Emanuel Rivers, M.D., vice chairman and research director of Henry Ford Hospital’s Department of Emergency Medicine, received a presidential citation Rivers from the Society of Critical Care Medicine for his contributions to its organization. Jennifer Nycz, former senior director of clinical operations at Madison Heightsbased Seasons Hospice & Palliative Care, has been named chief administrative officer of Oakwood Hospital & Medical Center in Dearborn. Also, Eric Widner, division president of Oakwood Annapolis Nycz Hospital in Wayne, recently became a Fellow of the American College of Healthcare Executives and was elected to the board of the organization’s Midwest chapter.
Varsha Moudgal, M.D. Anurag Malani, M.D.
Honors a physician whose performance is considered exemplary. Winners: Drs. Varsha Moudgal and Anurag Malani, St. Joseph Mercy Medical Center, this page Honorable Mention: Adam Greenbaum, M.D., Henry Ford Hospital, Page 12
St. Joseph Mercy Medical Center Ann Arbor
WINNERS | PHYSICIAN
Honors a company that has created an innovative health benefits plan or solved a problem in health care administration. Winner: Denise Rabidoux, Evangelical Homes of Michigan, Page 13
Trustee Honors leadership and distinguished service on a health care board. Winner: Eugene Applebaum, Beaumont Health System, Page 14
Advancements in Health Care
Varsha Moudgal, M.D., (left) and Anurag Malani, M.D., saved lives with their response to a fungal meningitis outbreak.
Mystery-busters St. Joseph doctors at forefront of meningitis treatment BY JAY GREENE CRAIN’S DETROIT BUSINESS
uring September 2012, Drs. Varsha Moudgal and Anurag Malani and their two infectious disease physician partners at St. Joseph Mercy Medical Center in Ann Arbor began to see and treat a growing number of patients who had unusual symptoms of what they thought was bacterial meningitis. Malani practices with Moudgal in the now five-member Infectious Disease Consultants, and they have been credited for being crucial in helping identify and solve the medical crisis — which turned out to have originated from tainted steroid drugs from Massachusetts. “We couldn’t determine the type of meningitis. Some had bad headaches and a few had fevers, but most did not,” Moudgal said. “The white blood count in their spinal fluid was very high, which indicated bacterial meningitis, but their cultures were negative and these patients
weren’t very sick (at the time) as is characteristic” of that type of infection. The first six patients were treated by several different doctors. “Some felt better with hydration or steroids. They had initial improvements and went home,” Malani said. “They came back a week or two later because their symptoms didn’t improve and they still felt very sick.” What Moudgal, 39, and Malani, 41, didn’t know at the time was that from May through September 2012, more than 14,000 patients had been given steroid injections that were suspected of being unintentionally tainted by a fungus that causes meningitis at a Massachusetts compounding pharmacy. Over the next several months, more than 751 people in 19 states were infected by contaminated steroid injections, including 264 treated in Michigan hospitals, according to the Centers for Disease Control and Prevention. See Heroes, Page 12
Honors a company or individual responsible for a discovery or for developing a procedure, device or service that can save lives or improve quality of life. Winner: Sonia Hassan, M.D., Wayne State University School of Medicine, Page 15
Allied Health Honors an individual from nursing or allied health fields whom patients and peers deem exemplary. Winner: Michael Rolnick, Beaumont Health System, Page 16 Honorable Mention: Jennifer Valenti, St. John Providence Health System, Page 16
THE JUDGES Mahir Elder, M.D., director of the cardiac care unit at the Detroit Medical Center Robert Hoban, president of the care continuum and a senior vice president of St. John Providence Health System, Warren Lisa McDowell, manager of clinical nutrition, pharmacy department, St. Joseph Mercy Health System, Ann Arbor Robert Naftaly, board member, UAW Retiree Medical Benefits Trust, Detroit
February 17, 2014
CRAIN’S DETROIT BUSINESS
Heroes: 2 doctors at the forefront of meningitis treatment ■ From Page 11
St. Joseph became the epicenter of the fungal meningitis outbreak with 195 fungal meningitis patients — 74 percent of Michigan’s total. At the height of the outbreak, St. Joseph had 87 of its 537 beds filled with patients with fungal meningitis, abscesses or related infections. To date, 64 people nationally have died — 19 in Michigan, including 12 at St. Joseph Mercy, said the Michigan Department of Community Health. In the first few days of October
2012, Moudgal and Malani were still sorting out the medical reasons and treatment options for a variety of patients trickling in with meningitis-like symptoms. By Oct. 3, the hospital began an internal investigation of the infection’s cause. The next day, Moudgal said she watched a news report that said people might be contaminated by fungal meningitis given to them through contaminated steroid injections. “We started to look at that,” she said. “I checked on our patients and
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we found out everybody on the list had received spinal injections for pain at (Michigan Pain Specialists PLLC in Brighton). We were able to put two and two together and realized it was fungal meningitis.” Moudgal said the six original patients treated in September had either already been rehospitalized or they were asked to return for admission and treatment. “We began anti-fungal therapy. We were pretty sure what we were dealing with,” Moudgal said. “We had no idea the extent of the problem. We just wanted them in and on treatment.” By the time the CDC issued a statement about the problem on Oct. 4, Moudgal said physicians were well on their way in treating the six patients and others who were beginning to arrive in the emergency department with similar complaints. Moudgal said Michigan Pain Specialists, a physician-owned pain clinic not affiliated with the hospital some 26 miles away, already had made phone calls to all its patients, asking them to go to St. Joseph’s emergency department for evaluation. Michigan Pain Specialists was one of four clinics in Michigan to receive contaminated shipments of steroids from Framingham, Mass.based New England Compounding Center, which was shut down in October 2012 and has since filed for bankruptcy protection as more than 400 lawsuits have been filed against it. Only two of the four clinics, however, including Michigan Pain and
Congratulations Denise Rabidoux Evangelical Homes of Michigan’s Parent Board of Directors would like to congratulate Denise Rabidoux on winning Crain’s Health Care Heroes 2014 Corporate Achievement in Health Care Award.
and “ (Moudgal Malani) went above and beyond what the CDC had recommended.
Jeffrey Band, Beaumont Health System
Neuromuscular and Rehabilitation Associates in Traverse City, had injected patients who developed a related infection, said Jennie Finks, health care infection coordinator with Community Health. The other two clinics were Southeast Michigan Surgical Hospital in Warren and Michigan Neurosurgical Institutes in Grand Blanc. “Once we found out what we were dealing with, we were probably the quickest hospital to respond,” Moudgal said. “We started developing protocols as more and more patients started to come in.” For example, St. Joseph physicians developed a protocol on how to collect spinal fluid, how to deliver treatment, instructions on the two main antifungal medication’s side effects and when to perform an MRI to check for hidden abscesses. By the end of October, St. Joseph Mercy had opened a specialized Fungal Outbreak Clinic at St. Joseph to treat discharged patients, to deal with follow-up issues. In November and December, orthopedic and neurosurgeons at St. Joseph Mercy performed more than 100 surgeries to address the injection-site infections and some rare cases when joints were infected, Malani said. Now, some 17 months after the initial outbreak, Malani said 20 patients have lingering health issues that are treated with medications at St. Joseph’s outpatient clinic. Symptoms of meningitis, which is an inflammation of the membranes that cover the brain and spinal cord, include fever, new or worsening headaches, nausea, and numbness and slurred speech similar to a stroke. The response by St. Joseph Mercy physicians was a textbook example of how clinicians should work with public health officials in responding to infectious disease outbreaks, said Jeffrey Band, M.D., health system chairman of epidemiology and international medicine at Beaumont Health System in Royal Oak. Moudgal and Malani “thought more like clinicians than epidemiologists,” said Band, former head of special pathogens branch at the CDC. “They went above and beyond what the CDC had recommended (to wait on treatment until more symptoms developed) because they knew once the infection develops it can cause high morbidity and mortality.”
Band said the St. Joseph doctors decided they not only would identify all patients who received the tainted steroid shots and bring them in for tests, but they would order MRIs for everyone as a preventive measure. “Because of that approach, they identified many more patients had active problems but were asymptomatic and were able to intervene more quickly,” he said. In addition, the St. Joseph physicians determined the incubation period for the fungus infection was not just six weeks as the CDC originally advised, but several months, Band said. “Another contribution was that patients treated for meningitis needed to be given medication for longer periods of time … at a minimum of three months and probably up to six months,” Band said. Moudgal said the CDC learned a lot about treatment protocols from St. Joseph Mercy. “A lot of their alerts came from us,” she said. “We took all the knowledge we could get and then adjusted their recommendations. It was a very rapid transfer of information, done on a weekly basis.” Finks said Community Health worked very closely with St. Joseph Mercy’s infection control department to coordinate collection and release of information. “We shared information with the CDC and others in Michigan,” Finks said. “It was very helpful they were taking the lead because they had so many cases.” Jay Greene: (313) 446-0325, email@example.com. Twitter: @jaybgreene
HONORABLE MENTION PHYSICIAN Adam Greenbaum, M.D. Director, cardiac catheterization lab Henry Ford Hospital Detroit Adam Greenbaum, M.D., director of the cardiac catheterization lab at Henry Ford Hospital, successfully deployed a new catheterization path to the heart, using a leg vein and connecting to an artery of a 79year-old woman. Greenbaum The procedure had never been performed on a human, only tested on animals. It temporarily connects two blood vessels as a new, third way to replace a heart valve. It’s for people who cannot have such a procedure via the two traditional methods (chest incision or directly via a leg artery). Greenbaum’s team has done 20 such connections. Only Henry Ford is doing this procedure, but it’s expected that up to 50,000 U.S. patients annually could be helped by it. — Bill Shea
CRAIN’S DETROIT BUSINESS
February 17, 2014
Health Care W I N N E R : C O R P O R A T E A C H I E V E M E N T I N H E A LT H C A R E
CEO expands services of Evangelical Homes Denise Rabidoux President and CEO Evangelical Homes of Michigan Saline When Denise Rabidoux began her nursing career more than three decades ago, the home health care landscape looked much different. “In the 1970s, the only answer for older adults was to stay at home until you couldn’t manage anymore and then look at longterm care placement,” said Rabidoux, president and CEO of Saline-based Evangelical Homes of Michigan. “Now, there are a variety of services. We’ve been able to meet those needs, no matter where the client calls home.” Evangelical Homes is a nonprofit health and human service organization that provides health care, housing and community service to seniors and their families in Wayne, Oakland, Macomb and Washtenaw counties. Rabidoux, 59, led Evangelical Homes’ transition from a traditional nursing home with 660 beds to a provider of various services, especially home health care, to more than 3,200 people.
Rabidoux led Evangelical Homes’ transition from a traditional nursing home to a provider of various services. She also launched two subsidiaries — LifeChoices and LifeChoice Solutions — that have boosted revenue and diversified the company. The former provides for home care; the latter specializes in home-based technology products. “There are multiple ways to touch an older adult,” she said. “And it doesn’t mean taking away their control or moving them out of their home.” Change didn’t come overnight for Evangelical Homes, founded 134 years ago. In 1999, with Evangelical Homes still primarily a nursing home organization, Rabidoux became the first woman and non-minister to lead it. She took over the top spot after serving as the nonprofit’s COO. Initially, the organization was looking to fill the CEO position with someone from within the United Church of Christ, to which it is tied. “Somewhere along the way, I put my hat into the ring,” she said. “I asked, ‘Are you sure that with the changes health care is going to face in the next 20 years we shouldn’t be thinking about the delivery of services?’ So I be-
Denise Rabidoux of Evangelical Homes of Michigan: “There are multiple ways to touch an older adult. And it doesn’t mean taking away their control or moving them out of their home.”
came a viable candidate.” In her first few years, Rabidoux said, she spent a lot of time talking to older adults, visiting libraries and holding focus groups in churches and congregations to ask what senior adults needed or wanted. — Shawn Wright
Gene Applebaum has been our hero for the last 10 years. A business leader, philanthropist and humanitarian. His unique combination of talents, along with his boundless generosity, has impacted everyone at Beaumont. He provided the impetus to create a leading edge simulation facility where doctors could develop advanced procedures using simulators, instead of patients. And where surgeons at Beaumont could share their surgical innovations with doctors from around the globe. The Marcia & Eugene Applebaum Surgical Learning Center and Simulation Learning Institute are a tribute to our profound belief that patient safety is as important as medical progress. All of us at Beaumont congratulate Mr. Applebaum for his recognition as this year’s Trustee winner of Crain’s Health Care Hero Award. He reminds us that it doesn’t take a medical degree to save lives. All it takes is a heart.
The Marcia & Eugene Applebaum Surgical Learning Center is a 5,500 square-foot facility that is one of the ﬁrst of its kind. Surgical teams from around the world learn advanced robotic and minimally invasive techniques at the center.
February 17, 2014
CRAIN’S DETROIT BUSINESS
Health Care WINNER: TRUSTEE
Applebaum gives back through philanthropy ethic Eugene Applebaum Beaumont Health System Royal Oak
Eugene Applebaum: “I’m most proud that my philanthropy helps further the discovery of cures for diseases.”
From opening his first Arbor Drugs Inc. store to performing decades’ worth of humanitarian and philanthropic efforts, Eugene Applebaum carries a passion to help others through sickness and in health. “I have a strong belief in philanthropy and a desire to give back to
my community,” said Applebaum, who spoke to Crain’s through his daughter, Pamela, from Florida. “I’m most proud that my philanthropy helps further the discovery of cures for diseases. I want to continue upon that path.” Applebaum, 77, served as trustee at Beaumont Health System from 2006-08 and has been a director on the nonprofit Beaumont Foundation board since 2007. He was one of the main architects of
the foundation’s strategic plan. In addition, Applebaum and his wife, Marcia, gave $7.5 million for the hospital’s surgical learning center that opened in 2006. The center was renamed the Marcia and Eugene Applebaum Simulation Learning Institute. He said it’s gratifying to be appreciated by Beaumont, an organization that has benefited from his generosity. But having his name on an edifice wasn’t the reason for
THE RIGHT PLAN FOR HEALTHIER EMPLOYEES Graham Smith, HealthPlus Senior Director, Business Development and Federal Programs
the donation. “I’m attracted to the desire to better help train the physicians through the simulation center because of the great work of the Beaumont Health System as a community hospital staffed with excellent physicians,” Applebaum said. “My entire philanthropic mission is reflected by these gifts to give back to the state of Michigan, in particular, the southeastern greater-Detroit area.” Applebaum founded the successful Troy-based Arbor Drugs drugstore chain in the 1970s, beginning his journey through the health care sector. Arbor Drugs eventually grew into 208 stores before he sold the chain to CVS Corp. in 1998 for $1.5 billion. He received $400 million from the deal. Applebaum’s support extends to a multitude of causes and organizations such as the United Jewish Foundation of Metropolitan Detroit and Wayne State University. WSU’s College of Pharmacy and Health Sciences is named for him. The university also created the Chairman of Community Engagement position after a $2.1 million donation. Applebaum’s interest in healthrelated causes is a personal one, too. In the late 1980s, he was diagnosed with multiple sclerosis. He has been a strong supporter of MS causes ever since: His most notable was a gift of $15 million to the Rochester, Minn.-based Mayo Clinic in 2005 to create the Eugene and Marcia Applebaum Fund for Translational Research in Neuroscience Therapeutics. Despite having the money to fund charitable causes, for Applebaum there’s one more important key to being a good humanitarian. “Heart,” he said. — Shawn Wright
Help your employees avoid the cost and confusion of the healthcare exchange. If you have employees purchasing individual insurance who don’t qualify for subsidies you can be a resource to help them ﬁnd the best options available to them. Graham Smith, Senior Director, Business Development and Federal Programs: “Our Signature plans provide our members with something other plans don’t: relief. They get the relief of knowing that their plan comes with a large provider network. They get the relief of buying directly from HealthPlus instead of through the Exchange, saving them time, stress and money, with rates signiﬁcantly lower than plans offered on the Exchange. And they get the relief of a health plan that offers both HMO and PPO options that are 100% compliant with the Affordable Care Act requirements. So make sure your employees know about HealthPlus individual plans.”
The deadline for individuals to enroll is March 31, 2014. Learn more about our plans at www.HealthPlus.org/individualplans. Call 1-877-562-0907 or talk to your independent agent.
The Right Plan for a Healthier You™ ©2014 HealthPlus of Michigan, Inc.
CRAIN’S AMERICAN DREAMERS: IMMIGRATION SUCCESS STORIES In many ways, metro Detroit was built by the hopes and dreams of people from other countries. And foreign-born entrepreneurs will be vital to the region’s future. Crain’s Detroit Business wants to tell their stories. We are seeking nominations for first-generation immigrants who have had business success for an American Dreamers feature to be published in the June 2 issue of Crain’s Detroit Business. Nominations — either for yourself or someone else — are due March 3. Visit crainsdetroit.com/nominate for details. For questions, contact Senior Reporter Sherri Welch at firstname.lastname@example.org or (313) 446-1694. For technical questions about the form, contact Ashley Henderson at email@example.com or (313) 446-1685.
CRAIN’S DETROIT BUSINESS
February 17, 2014
Health Care W I N N E R : A D V A N C E M E N T S I N H E A LT H C A R E
Doctor’s mission: Lower premature birth rates Sonia Hassan, M.D. Associate dean Wayne State University School of Medicine Detroit Sonia Hassan, M.D., knows the stark numbers about premature births. One out of every eight babies born in Michigan — 295 delivered in an average week — is born prematurely. The state’s rate of preterm births exceeds the national average and is the leading cause of infant mortality in Michigan. In Detroit alone, the infant mortality rate is 14 deaths per 1,000. Hassan, 45, made it her mission to help combat the staggering premature birth rates that affect not only those in Michigan, but everywhere. It’s the reason she took the reins as the lead author of a worldwide clinical study on a new method for preventing premature birth and the problems and costs that can follow. Those born too early who do survive can suffer from health complications, such as bowel abnormalities, infection, sepsis and mental disabilities. “It hits you most when you see the effects when they get a little older — cerebral palsy or other effects that are more evident,” said Hassan, associate dean for maternal, perinatal and child health care at Wayne State University’s School of Medicine. “You see it, and it really makes a difference.” Her study showed that the preterm delivery rate can be reduced among at-risk women (those with a short cervix) by 45 percent with the self-application, once-daily dose of a natural gel called progesterone from mid-trimester until term. The treatment is expected to result in 30,000 fewer preterm births per year and save $500 million in U.S. health care costs. The Michigan Department of Community Health in August 2012 deployed a plan based on her study. “I was lucky to have the opportunity to help others clinically with patient care,” Hassan said. “But now I consider myself even luckier to have the chance to change the practice of medicine with interventions that can reduce the rate of preterm birth. It is critical to implement this research.” The study of 465 women was done globally at 44 centers, coordinated by Wayne State. Funding came from the Perinatology Research Branch of the Eunice Kennedy Shriver National Institute of Child Health and Human Development of the National Institutes of Health. Going forward, Hassan said, she hopes to make these guidelines worldwide. In addition to fellow Wayne State researchers, staff and others in the medical community, she credits her family as a big in-
fluence for her success. “My role models and mentors were my parents — both allergists, both medical doctors still in practice, each with Ph.D.s as well,” Hassan said. “They demonstrated how healing and helping others can be so rewarding and fulfilling. They still show this each day.” — Shawn Wright
Sonia Hassan, M.D., credits her family as a major influence for her success in helping others, particularly in combating the high rates of premature birth. GLENN TRIEST
The only thing missing is a cape and a mask. Meet a real super hero. Michael Rolnick, Ph.D., has been a pioneer in speech and language pathology for the last 45 years. He has been the voice for children and adults who could not speak for themselves. Building a program that was the ﬁrst of its kind to achieve accreditation in Michigan. And now it’s a national model. His compassion for children resulted in the establishment of the Silent Children’s Fund. Working with area Lions Clubs and other community groups he has raised more than $2 million to help provide speech and language scholarships to care for young patients. That’s why Dr. Rolnick has always been our hero.
February 17, 2014
CRAIN’S DETROIT BUSINESS
Health Care W I N N E R : A L L I E D H E A LT H
Interview put WSU student on path to heading Beaumont’s speech unit Michael Rolnick Director of speech-language pathology Beaumont Health System Royal Oak With one interview assignment, Michael Rolnick’s life changed forever.
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Beaumont Health System’s director of speech-language pathology credits an encounter during his undergraduate days in the 1960s that put him on a different career path. “I was originally in radio and television at Wayne State University,” Rolnick said. “I interviewed for the Wayne State radio station a gentleman who turned out to be my mentor. He was the director of speech pathology at the university.” The future mentor, Anthony Holbrook, had invited the young mass communications major to come meet children and adults who had speech and language problems. It was supposed to be a routine interview. Instead, it left a lasting impression. “My original training was in communications,” Rolnick said. “When I realized that a person’s ability to communicate could be taken from them … it moved me enough so that I wanted to be part of helping them get the ability to communicate.”
Michael Rolnick turned away from a future in mass communications to help people whose ability to communicate has been compromised.
For more than 45 years, Rolnick, 71, has spent his life helping others find their voice: He founded Beaumont’s speech-language program in 1968, which now has 80 clinicians. Under his leadership, Beaumont’s speech-language pathology program was one of the first in Michigan to achieve full accreditation from the American Speech-Lan-
guage and Hearing Association. It has since become a regional referral center for communication disorders. “When I came to Beaumont, there was no program,” he said. “I was able to start because of tremendous administrative, as well as physician, support. The physician support here for these services has been wonderful, and the administration has always tried to let us reach out to children and adults with these communication problems.” Rolnick’s program provides speech and language rehabilitation services for 2,000 children and adults annually at all three Beaumont hospitals as well as outpatient locations in Royal Oak and West Bloomfield. Throughout his career, Rolnick has expanded the program to include pediatric rehab, consultations and added various specialties. He also creates and runs charity events to cover children’s speech treatment, which usually isn’t covered by insurance. Coming are enhanced programs for stroke and aphasia rehabilitation, as well as Parkinson’s rehabilitation. In addition, Rolnick works with local Lions and Lioness clubs to create a fund that has raised $2.1 million since 1979. — Shawn Wright
H O N O R A B L E M E N T I O N | A L L I E D H E A LT H Jennifer Valenti Manager of breast imaging St. John Providence Health System Warren Jennifer Valenti is manager of breast imaging at the five-hospital St. John Providence Health System. She coordinated creation of a systemwide breast care program, begun in 2006, that integrates appointments, follow-ups and inte-
gration of care. In 2009, she led a team that found grant funding for a high-risk group without insurance — women under age 40 with pre-existing risk factors — Valenti that didn’t have any low-cost or free options for care.
The program now has private funding and revised its mission to provide free office visits, breast ultrasounds and biopsies for all women. Since 2010, Valenti has created and led a variety of “Go Pink” fundraising programs in the St. John Providence system, and expanded it to the city of Southfield in 2013, where residents, schools and businesses decorated their front doors in pink. — Bill Shea
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The following are selected filings for a certificate of need from Jan. 10 through Feb. 10: Letters of Intent 䡲 Select Specialty Hospital-Ann Arbor West, Ann Arbor: Begin operation of a 30-bed long-term acute care hospital in the University of Michigan Hospital; $9.7 million. 䡲 Mission Point of Detroit, Detroit: Acquire the assets of Cadillac Nursing Home Inc. dba St. Francis Nursing Center, including nursing home bed licenses; $2.8 million. 䡲 Holly Convalescent Center, Holly: Renovation of the existing facility and construction of new improvements attached to the existing facil-
ity; $5.8 million. 䡲 St. Joseph Mercy Oakland, Pontiac: Convert an operating room into a hybrid operating room/cardiac catheterization lab, which will increase the number of cardiac catheterization labs from four to five; $3.8 million. Applications received 䡲 Harper University Hospital, Detroit: Replace and relocate five operating rooms to new space within the hospital; $250,000. Decisions 䡲 Vibra Hospital of Southeast Michigan-Taylor Campus: Begin operation of a 40-bed long-term acute care hospital in about 20,000 square feet of space at Oakwood Hospital-Taylor;
$5 million. Conditionally approved. 䡲 William Beaumont Hospital, Troy: Renovate and replace 14 operating rooms and one procedure room at the hospital; $36.6 million. Approved. 䡲 Roseville Rehabilitation Center, Roseville: A five-year lease of the 172-bed nursing home known as Henry Ford Continuing Care CenterRoseville from a related entity; $2.4 million. Approved. 䡲 Woods Pointe Rehabilitation Center, Harper Woods: A five-year lease of the 153-bed nursing home known as Henry Ford Continuing Care Center-Belmont from a related entity; $2.4 million. Approved. — Bridget Vis
CRAINâ€™S DETROIT BUSINESS
February 17, 2014
OCC: Chancellor-faculty tensions heat up from simmer to boil â– From Page 1
Meyer said. â€œBut a group of individuals are sometimes very threatened with change. In any group, some will be early adopters and some will resist it all the way.â€? OCC, the stateâ€™s largest community college with nearly 27,000 students, is not the first to lock horns with faculty or get a vote of no-confidence for its top executive. The Jackson College faculty voted no confidence in President Daniel Phelan in January, as did the faculty of Centreville-based Glen Oaks Community College in President Gary Wheeler in late 2012 and Scottvillebased West Shore Community College against President Charles Dillon in 2009. Tussles over control have taken place at others. â€œCommunity colleges are known for being nimble and quick to change, and sometimes it happens quicker than the pace that faculty is comfortable with,â€? said Michael Hansen, president of the Michigan Community College Association.
Points of dispute At OCC, there isnâ€™t agreement on the core issues of the dispute, but they include faculty complaints about lack of communication, staffing decisions and disagreements about an Education Master Plan OCC adopted last May. The master plan was developed in the wake of a two-year, $500,000 contract for Sacramento, Calif.based College Brain Trust to review and evaluate college programs and practices and furnish reports with recommendations on performance. The plan set forth 12 objectives for the college to achieve. (See box, this page.) Meyer has performance objectives tied to the plan. Mary Ann McGee, president of the faculty association, said the faculty has no formal position on the master plan, but had some issues about the cost of the College Brain Trust contract and that faculty members got short notice whenever the consultant was planning to visit the campus. In June, the faculty sued OCC over declining to provide a complete report from College Brain Trust and associated expenses under a Freedom of Information request â€” but
EDUCATIONAL MASTER PLAN A strategic plan approved by Oakland Community Collegeâ€™s board of trustees in May includes 12 overall objectives for the college. They are: Provide a developmental education program to cultivate the knowledge and skills necessary to succeed in college. Review and revise academic offerings to ensure appropriate student learning and academic quality as directed by federal, state and accrediting agencies. Set the direction for all curricula to meet community needs and student interest. Develop an honors program to enhance transferability and employability for eligible students. Provide quality service learning and volunteerism opportunities to enhance student success and serve the community. Improve assessment practices to enhance student learning and success. Develop common course outcomes to provide consistency in learning outcomes regardless of location or delivery. Create benchmarks for general education outcomes to clarify institutional learning expectations. Assess student learning in relation to the benchmarks established for general education outcomes to determine student competency. Evaluate the impact of pedagogical and curricular changes resulting from program assessment to determine efficacy of these changes. Develop an enrollment management plan through the effective integration of administrative processes, student services, curriculum planning and market analysis to ensure student success. Develop student retention plans to improve the quality of student life and learning through comprehensive, accessible and affordable higher education initiatives. Enhance early college and dual enrollment programs to ensure the ability of high school students to acquire college credit at OCC. Develop strategic program of distance learning to increase access for our students. Obtain approval from the Higher Learning Commission of the North Central Association of Colleges and Schools to offer online programming to ensure quality accredited distance learning opportunities. settled the case in November. â€œWeâ€™re always a little standoffish when we feel that someone who is not an expert in our particular field tells us what we should be doing (for instruction),â€? McGee said. â€œNow Iâ€™ve read the master plan, word for word, and itâ€™s pretty vague and has a lot of mother and apple pie in it. And thereâ€™s nothing wrong with that, but the devilâ€™s in the details, and it doesnâ€™t have a lot of details.â€? The college contends that the litany of concerns the faculty raised in its no-confidence vote are rooted in union leadersâ€™ unwillingness to embrace structural changes the college is making â€” including curriculum changes in carrying out the master plan. Those include establishing a developmental education program to make OCC students from various educational backgrounds proficient in basic subjects at a college level and also being able to set curriculum direction to meet community
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needs and interest. Developmental education, in particular, spurred a blowback from union leadership last fall when the program affected other departments, said Vice Chancellor of External Affairs Sharon Miller. The program itself began quietly during the 2012-13 academic year, and OCC took seven voluntary faculty transfers to staff it. But when it transferred in more vacant positions, including some from the collegeâ€™s ceramics program, union members turned out in force to oppose the move before the board, said Miller and Daniel Kelly, chairman of the OCC trustees and partner at Troy-based Giarmarco Mullins & Horton PC. Ceramics has a large following but produces relatively few degrees compared with other schools. Two remaining faculty positions in ceramics were re-categorized in fall 2013 as full-time temporary positions, which are subject to review every six
months and do not count toward the unionâ€™s 290 members. Michael Vollbach, former faculty association chairman at the Royal Oak and Southfield campuses, said the faculty wanted to maintain contract positions in ceramics. But after hearing comments from students who take recurring classes in ceramics without a clear career focus, it became harder to gather support for the program. A board decision to increase the tuition for English as a Second Language for non-county residents also met faculty resistance, Kelly said, although Vollbach said the instructors were mostly concerned the move would hurt diversity at OCC. Hansen, of the Michigan Community College Association, said community colleges are facing tough decisions now that reduced property values in Michigan have cut into their tax revenue, which was offset for a while by a recession-driven enrollment bump that has since abated as people return to work. Oakland Community College has current-year property tax revenue of about $74 million, Meyer said. That compares to a peak of $98.9 million in 2007-08, according to data from the Michigan Community College Network. OCC had a college-wide student headcount last fall of 26,618, down 3.2 percent from 2012 and a recent peak of 29,262 in 2011, according to its Office of Institutional Research.
Cut channels McGee said faculty leaders also have been concerned with a number of organizational changes Meyer has made that cut lines of communication between the administration and faculty. Those moves, McGee said, include an email directing administrators who attend meetings of the facultyâ€™s Academic Senate not to participate. Two other organizations, the College Planning Council and its Council for Academic and Student Services that make some operational decisions, she said, have not met in more than 2Â˝ years. â€œWeâ€™re starting to be very worried about this pattern of dismantling these various structures,â€?
she said. â€œAnd weâ€™ve had conversations with (Meyer), or tried to, about what kind of structure he envisions that could exist instead. So weâ€™re willing to say, look, tell us what sort of structures you want to have. But weâ€™ve had no response.â€? Vollbach, a history and geography instructor, said Meyer has a history of not attending some faculty relations meetings and that union leadership feels that Meyer didnâ€™t involve the faculty enough in developing the master plan. But, he adds, Meyer has generally been offering a vision for leadership that not all of his predecessors had and the College Brain Trust evaluation process was fairly sound. Meyer acknowledged that he hasnâ€™t attended faculty relations meetings recently and sends a human resource executive in his place, in part because meetings became rancorous when he did attend. â€œI hope if anything the chancellor does a couple of mea culpas, and if he said he hasnâ€™t done some things that could go a long way with some of the rank and file,â€? Vollbach said. â€œBecause I think that rank-and-file faculty is thinking, look, we have otherwise pretty good leadership.â€? Still the faculty passed the vote of no confidence by about a 93 percent vote among the 256 faculty members present, McGee said. â€œItâ€™s very much this individualâ€™s management style that we think is autocratic and not inclusive,â€? she said. â€œAnd our belief is you canâ€™t serve as the leader of just one group of people. You need to be the leader of the entire campus community.â€? Trustees issued an immediate statement of support for Meyer. â€œThe board of trustees absolutely supports Dr. Meyer and his vision to shepherd the college through these times of change,â€? Kelly said in a statement issued on behalf of the board. â€œWhen faced with challenging decisions, itâ€™s natural to want to resist them. As stewards of the community, the board will make and support the difficult decisions needed to improve the college.â€? Chad Halcom: (313) 446-6796, firstname.lastname@example.org. Twitter: @chadhalcom
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February 17, 2014
CRAIN’S DETROIT BUSINESS
Hantz ready for tree farm to take root After years of red tape delays, Hantz Farms nears sprouting
Hantz and Mike Score, president of Hantz Farms, said it will take no more than four months for the 44 homes to be demolished and the saplings to be planted. The majority of the trees will be in the area bounded by Crane Street, Pennsylvania, Mack and Vernor. “What I’m hoping that you’ll see by the time spring arrives, and before you head into summer, is that you’re like, ‘Holy cow, they’re done. Not only did they say they were going to do that, but they’re actually done,’ ” Hantz said. Hantz signed a purchase agreement for about 1,550 blighted cityowned parcels in the area last year, and Emergency Manager Kevyn Orr and Gov. Rick Snyder signed off on the agreement in October. The agreement allowed area residents to purchase parcels adjacent to their homes from the city for $200. They purchased 100. Hantz paid $300 a parcel for 1,350 of the remainder, all vacant, and took ownership of those in January. The remaining 100 parcels have blighted homes, 44 of which are the parcels Hantz hopes to buy. What happens to the remainder hasn’t been determined. Shelby Township-based DeBuck Construction Inc. has been hired to demolish the homes, Score said. Hantz now owns a total of 1,700 parcels in the area. Those not purchased from the city were acquired over the past few years from private owners, Wayne County property tax foreclosure auctions, the Michigan Land Bank or Detroit Public Schools, Score said.
The family has watched more homes go vacant, more land go wild, and more properties become blighted as the years rolled by. The family’s experience is like those of many other families that have seen the decline of Detroit neighSmith borhoods, a subject increasingly talked about in academic and media circles. But for Smith and her husband, 37-year-year-old Richard, it’s not an academic exercise. It’s their neighborhood. Now, Smith is starting to see progress there, which will be where Hantz Woodlands LLC is closer to creating the nation’s largest urban tree farm, Hantz Farms LLC. The farm will be situated on 15 acres within about 150 Hantz-owned acres in the square mile bounded by Mack and Jefferson avenues and St. Jean and Van Dyke streets. Other trees or crops could be planted in the remaining 135 acres over time. “I’ve heard stories of what the neighborhood was and what it is today, and something needed to be done,” said Smith, who bought her home five years ago, rehabbed it for two and a half years, and has lived there since. “There is so much land in the area. There are so many abandoned and blighted homes.” The Hantz tree farm and efforts to clean up blight in the area are helping, Smith said. “They literally put their money where their mouth is,” she said. Behind the tree farm is John Hantz, CEO of Southfield-based Hantz Group LLC, who has led a plan to create a farm consisting of 15,000 hardwoods that were ordered from Fennville, Mich.-based Engels Nursery Inc. earlier this month after city officials from the planning, assessing, finance and law departments signed off on the deeds to 1,350 vacant city-owned properties. Now, almost five years after Hantz first floated the idea for Hantz Farms in 2009, it will be ready to become a reality once Hantz has final city approval for the purchase of 44 vacant buildings within the 150 noncontiguous acres. The buildings will be scheduled for demolition in upcoming weeks. “It took me five years and $1 million to get the right to mow the
arla Smith’s family has lived on Pennsylvania Street between Vernor Highway and Kercheval Avenue on Detroit’s lower east side for more than six decades. Smith, a 30-year-old communications planner for Blue Cross Blue Shield of Michigan, lives next door to her mother.
lawns that hadn’t been mowed in 15 years,” Hantz said. The tree farm project hasn’t been an easy harvest for Hantz. It’s taken much longer than he thought and it’s been very expensive, but a number of things are starting to come together in his Detroit economic development experiment — and for another new Hantz initiative to launch a low-cost Detroit home improvement loan program. The reasons for the delay include city bureaucracy and criticisms from some who argue that the effort is nothing more than a land grab by a wealthy businessman. Hantz, who has lived in Indian Village next to the Hantz Farms area for more than two decades, said that if he didn’t live in Detroit, he probably wouldn’t have started it in the first place. “There would have been just too many hurdles,” he said. Hantz said he hopes the project’s legacy might be to spark other types of economic development and investment in Detroit neighborhoods. “I hope it gets as many people of any economic class helping in whatever way they can,” Hantz said. “I think this can be another avenue to show people how they can help be part of the process” of revitalizing Detroit’s neighborhoods.
BY KIRK PINHO CRAIN’S DETROIT BUSINESS
Majority of saplings are to be planted in this area
n erso Jeff
Maples – and even mushrooms Tree farms like Hantz’s — in which hardwoods are harvested instead of Christmas trees, for example — are typically long-term commercial investments that can take decades to turn a profit because of how long it takes the trees to mature. In this case, Hantz and Score realize that and said profit is not a primary concern. How exactly revenue will be earned is yet to be determined, but there are plenty of options, Score said. For example, the company could sell the trees to buyers like nurseries, landscapers and homeowners interested in doing landscaping around their homes. “Before I even put the trees in the ground, I could sell them,” said Score, who came to Hantz Farms from the Michigan State University Extension office in Washtenaw County in 2009. In addition, revenue could be earned selling hardwoods — which grow at a rate of 6 to 12 inches per year — that are more fully grown, Score said. “I start off with a 2-foot tree that’s worth 50 cents. Then in five years, I’ve got a 4- or 5-foot tree that’s worth $10, so I can dig it up and sell it as nursery stock. As trees get bigger, they become more valuable. If you go and buy a 12-foot tree, it’s $150.” Maple trees could also be tapped for sap, and there could be maple syrup festivals that could bring in revenue. In addition to the maples,
Hantz Woodlands Project area
Score also purchased white birch and flowering dogwood saplings. The saplings will be delivered in April or May. In addition, hostas and ferns will provide shade for edible mushrooms such as morels to grow at the foot of the trees — yet another possible revenue source. “There are a lot of different avenues to generate revenue,” Score said. “In 60 years, if you’ve done a good job managing the property, you have a timber stand that’s worth quite a bit of money.” Score said there is typically a 5 percent to 10 percent rate of return on equity on a mature timber stand, which will take about 50 or 60 years to form. In addition, the land Hantz owns will appreciate in value as blighted buildings and debris are removed, Score said. Score said Hantz’s urban farming experience could expand to other hard-hit parts of the city some day. “When other neighborhoods see the outcome of our investment on quality of life in neglected areas within the city, we believe they will ask the city to work with us to make expansion to their parts possible,” he said.
The financials Hantz Farms has been an expensive investment. The per-parcel cost doesn’t fully illustrate the total project cost. “When we pay $300 a parcel, we also have to tear down 50 danger-
Mike Score, president of Hantz Farms, helps clear away dead trees and brush near Goethe and Crane streets.
ous structures,” Score said. “That’s $500,000; and we have to plant 15,000 trees and we have to cut the grass at least every three weeks, although we cut it every seven to 10 days. That’s a couple hundred thousand dollars a year. Just keeping the lots cleaned and mowed, it’s somewhere between $100,000 and $200,000 per year.” Hantz said it is costing between $11,000 and $12,000 per acre for the project. The total investment so far is more than $1 million. “It’s a nice buzzword, but it’s a lie when people talk about $300 per acre,” Hantz said. “Trash doesn’t pick itself up. Grass doesn’t get retamed when it’s this high cheaply. Rotted trees don’t get shredded by themselves. Quality of life issues cost money.” Hantz faced long delays garnering City Council approval responding to these concerns, but his personal passion for the area kept him at it. In fact, he said he’d like to see the momentum created by his project spur other businesspeople to similarly adopt other parts of Detroit and make it their mission to help those neighborhoods improve. “Anytime we can get more capital investment in improving the communities, I don’t know how one could think that’s a bad thing,” he said.
Hurdles and bureaucracy The current iteration of Hantz Farms is different than what Hantz originally envisioned for the site. Initially proposed as a commercial farming operation, Hantz scaled back his plans of planting apple orchards and vegetable patches at Hantz Farms after concerns from residents about pesticides and vermin prompted the tree farm instead. Since then, Hantz Farms has had to navigate everything from delays in getting permits for utility shut-offs to a new city urban farming ordinance adopted in March 2013. In addition, there’s been time-consuming work like securing development and purchase agreements from the city and the deeds to the parcels. Hantz said he was told by city officials in 2009 when the project was unveiled that it would be expeditSee Next Page
CRAIN’S DETROIT BUSINESS
February 17, 2014
Wage: Two cents’ worth
From Previous Page
ed through the approval process. Nearly five years later, he has questions. “This is supposed to be the fast track. I was the guy on the fast track,” he said. “That, in of itself, should make us think, ‘What does the slow track look like?’ If the fast track is five or six years, OK, then the slow track, by definition, would imply that it’s worse, right?” Messages seeking comment left with Detroit City Council member Andre Spivey on Thursday and Friday were not returned. A city planning department official could also not be reached.
■ From Page 3
prove tips did not meet the minimum wage. (If tips don’t bring compensation to the minimum wage, employers are required to make up the difference.) “We think that’s a big part of what is broken,” he said.
Low-cost loans Hantz said he recognizes that a tree farm alone isn’t going to help clean up Detroit neighborhoods. Seeing a DIY spirit among residents of the Hantz Farms project area that need access to funds, his next effort is providing low-cost loans to residents to use for home improvement projects such as new windows, masonry, porch and roof repairs, and new fences. The loans are offered through the affiliated Hantz Bank owned by Hantz Group. The bank is offering the unsecured loans to residents who have had a clean credit history for a year and the income to repay. Residents within the one-squaremile Hantz Farms project area are primarily low- to moderate-income, according to Score. Hantz said many don’t have access to funds for home improvements due to poor credit histories. That’s where Hantz Bank — which was created when Hantz Group bought Davison State Bank from the struggling Fentura Financial Inc. of Fenton in April 2010 — comes in. “We said, ‘We are hitting it pretty good on the cleanup. Now let’s see if we can be part of the solution on the fix-up,’ ” Hantz said. “The city needs people to stay, and that’s the part nobody’s talking about. At the end of the day, if we don’t have anybody staying, you’re literally going to be tearing down every house.” According to Dave Lamb, president and CEO of Hantz Bank, there are 1,600 households in the area of the farm that could qualify for the loans, which have a cap of $5,000 and a 3 percent interest rate. “What makes it new is access to capital and the ability to borrow as an unsecured borrower,” Lamb said. “Largely before that, (loans to some of the homeowners) wouldn’t happen.”
Nearly five years after John Hantz introduced his idea of an urban tree farm in Detroit, Hantz Farms is nearing reality. He is just waiting for final city approval for the purchase of 44 vacant buildings within the 150 noncontiguous acres.
The bank started notifying the residents of the availability of the loans in mid-December, Lamb said. Three applications have been received so far, and another mailing is expected by the end of the month, he said. Because Hantz Bank doesn’t have a location in the neighborhood, loan applications are being accepted by the Warren/Conner Development Coalition on Conner Street north of Mack, Lamb said. Hantz said he understands the risk involved with the loans. “We have to be prepared to take total losses,” he said.
Part of a portfolio Hantz branching out into urban farming expands a diversified group of companies under the Hantz umbrella. He has been a serial entrepreneur of sorts, amassing an array of service, sports and product companies, while keeping most of his focus on financial services. He said nearly all of Hantz Group’s core business remains in financial services and insurance products. Hantz founded Hantz Financial Services Inc. in 1998 after leaving his job as head of the Detroit region of Minneapolis-based American Express Financial Advisors Inc. along with 185 other employees to start his company. He once owned a lemonade company, New South Lemonade. Among his other endeavors are Hantz Golf Clubs of Tecumseh and Hantz Golf LLC. Then there is bowling. Hantz
owns DiLaura Brothers LLC in Sterling Heights, a bowling equipment distributor, and also Bowling IQ LLC, a bowling instruction company that is no longer operational. Then there was soccer. Hantz owns the Detroit Ignition, an indoor soccer team that played in the Xtreme Soccer League but has not played since the 2008-09 season. The team had played two seasons before that in the Major Indoor Soccer League, but that league folded in 2008. He previously owned a trucking company, and a stock car racing company, Hantz Group Racing LLC. Active companies include Hantz Software LLC; a computer technology company, Hantz Technology LLC; and two accounting firms, Hantz, Rhoades & Doehrer LLC and Hantz Titus Urbanski LLC. There’s also Romulus-based Hantz Air, a charter flight company. “A lot of it had this serial entrepreneurship to it,” Hantz said. “To understand us, if you look at what the common thread is rather than the diverse sectors, it’s that we’re not afraid to deal with startups.” When Hantz is looking for business opportunities, he looks to fill a void. “If I look at anything that I don’t find a lot of players in, that seems to be the space I go with my companies,” he said. Stewart Thornhill, executive director of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies and a professor of entrepreneurship at the University of Michigan, said serial entrepreneurs enjoy the excitement of creating startup businesses. “Almost irrespective of industry, it’s the thrill of the hunt — seeing an industry and trying to do it differently than other people,” Thornhill said. “Then you have to go through the creative process of bringing it to life. It’s almost a hybrid of the hunter and the artist.” The tree farm, Hantz said, is in line with what he has attempted to do with his other businesses, which is provide a better product. It’s just that in this case, the better product is a neighborhood. “That’s what you see in the farm. We are saying you can make quality neighborhoods. The theory is the same.” Kirk Pinho: (313) 446-0412, kpin firstname.lastname@example.org. Twitter: @kirkpin hoCDB
Joe Vicari, CEO of Warrenbased Andiamo Restaurant Group, says a raise in the minimum wage for servers would be expensive. On average, each Andiamo restaurant has 35 servers working an average of 30 hours a week. If the hourly wage were to climb to $3.50, Vicari said it would cost an additional $892 in labor a week at each one of his 10 restaurants, or about $3,568 a month — or more than $35,000 monthly across the company. “If I am on thin margins, then I would have to raise prices and cut staff,” he said. “I have to do something to manufacture $3,500 more in sales at each restaurant because that’s the difference between making money and not making money.” But Vicari said he understands why some servers need to make a higher wage than $2.65 an hour. “If a restaurant is really slow and they aren’t making tips, I can understand the need to make more,” he said. “But if someone is making $1,000 a week in tips, they don’t care about the $2.65. It’s usually all eaten up in taxes anyway.” Vicari said the reality is that rising costs are passed on. “The consumer is going to end up paying for it because the cost of doing business just went up,” he said. “... Unfortunately, that’s the only way I can see it.” For Brian Parker, co-founder of Moo Cluck Moo, which has two restaurants in Canton Township and Dearborn Heights, the potential minimum wage increase is not a concern. That’s because the 12 employees he has start out at $12 an hour, and after 90 days of training and working, bump up to $15 an hour. He said the concerns other restaurant owners have about layoffs and price increases are probably real, but he said he often notices that many restaurants have more people than they seem to need. “Instead of having a dozen people standing around during down time, we have three or four. And during that time they are cleaning Parker and prepping food,” he said. “We have designed our restaurants to run efficiently and pay people more.” He said he supports the minimum wage increase proposal if it’s affordable for businesses. But Parker said, even though he wants people to make a living wage, he would prefer if that came without a legal mandate.
Not just teenagers According to data last fall from the National Employment Law Pro-
ject, more than 53,000 people work at fast-food restaurants in metro Detroit. And they’re not just teenagers flipping burgers at their first job, said Yannet Lathrop, policy analyst at the Michigan League for Public Policy, a nonprofit advocacy group for low-income workers. It’s more often the case the individual is an adult using that wage to help support a family. In Michigan, according to a study her organization conducted, more than 85 percent of minimum-wage workers are over the age of 20 and have earned a high school diploma. But Wendy Block, director of health policy and human resources for the Michigan Chamber of Commerce, said for many, a minimum wage job is their entry into the workforce, and if the minimum wage is increased it will lead to fewer of those job opportunities, hurting the economy in the short and long term. It’s not just the cost of the minimum wage itself, she said. Employers will also have the added expense of paying higher state and federal unemployment taxes, higher workers’ compensation costs and higher Federal Insurance Contributions Act taxes, because they are based on wages.
War of studies Charles Ballard, an economics professor at Michigan State University, said the number of employees making the minimum wage is not large for most businesses. “The wages that go to this group of workers is a small fraction of the total labor costs,” he said. But if the rate were increased, Ballard said, some people will lose jobs and prices could rise, as well as a potential squeeze on profits, but it’s hard to tell if that’s what happened in 2006 when the minimum wage was last raised here. “The only way economists can squeeze the truth is if there is variation in some source of data,” Ballard said. And so Michigan moving from $7.15 an hour to $7.40 an hour was not a large enough increase to isolate the effect. The largest increase occurred in 1950, Ballard said, when the rate went from 40 to 75 cents. And after that, the unemployment rate dropped, but he said that was because of the Korean War, making it difficult to say what impact the wage increase had. Lathrop said employers will have time to make arrangements and plan for the wage increases, due to the staggered increase designed into the proposal. “This will not be a direct hit to employers right away,” she said. Block said studies she has seen, and discussions with chamber members, have proven the negative effects to her, but she knows there will always be disagreements over it. “You can have a war of studies all day long on this issue,” Block said. “This isn’t a black-andwhite issue.” Chris Gautz: 1-517-403-4403, email@example.com. Twitter: @chrisgautz
CRAIN’S DETROIT BUSINESS
February 17, 2014
Metro Times: New owners, new plan Mandate: Confusion? ■ From Page 3
■ From Page 3
or three more staff writers. “In each market, the paper plays an important role in having that alternative viewpoint covering the news and politics and stories that are not being covered by the mainstream press,” Zelman said. “We see there’s a lot of opportunity to cover what’s going on in Detroit.” That’s in addition to the paper’s local arts, music, food and culture coverage, and pages of show and event listings. A new full-page question-andanswer feature has been added, and the long-time “News Hits” column has been brought back. Grzegorek is interviewing staff writer and permanent editor candidates, and the goal is to have a top editor hired in the next couple of months, he said. The strategy comes down to investing cash into Metro Times to try to make it profitable rather than slashing jobs and spending, which has been a common approach since newspapers began to bleed cash in the Internet era.
Business risk Zelman, 30, declined to discuss how the December deal was financed other than to say it’s a family investment of less than $10 million. Also investing as minority owners in the deal, and bringing editorial leadership to the effort, are Chris Keating, publisher of Cleveland Scene, and Michael Wagner, publisher of the San Antonio Current. “I came into the business to learn from them,” Zelman said. “They have the experience. I have the passion for it.” Zelman was a sales and marketing executive at Royal Chemical Co., a Twinsburg, Ohio, contract chemical blender and maker of cleaning products owned by his family and led by his father, President and CEO Daniel Zelman. The Metro Times deal also included the Cleveland Scene, Orlando Weekly and San Antonio Current, and the four newspapers are part of a new company, Cleveland-based Euclid Media Group LLC, that’s based at Cleveland Scene. Euclid Media has about 25 employees at the Metro Times and another 60 across the other three. One strategy is to centralize as many financial, advertising and editorial functions as possible while ensuring the newspapers remain very local, Zelman said. “We can design a cover in one city that can be used in another city,” he said. “We’re looking at cost savings as one company. We need only one CFO. There are some ways that all four can work together.”
Falling figures Metro Times and Cleveland Scene are not profitable, Zelman said, but the Florida and Texas weeklies are.
THE TIMES A-CHANGIN’ Here’s a look at some of the major changes for Detroit Metro Times in the past year: The newspaper was put up for sale in August by Scranton, Pa.-based publisher Times-Shamrock Communications. It was bought in December by a Cleveland group, along with alt-weeklies in Cleveland, San Antonio and Orlando, Fla. Former publisher Chris Sexson, who had been with Metro Times since June 2008 after four years with the sister weekly in San Antonio, made a bid for the Detroit paper, but he decided to leave after Times-Shamrock went with Andrew Zelman’s group. Sexson left to join Nashville-based SouthComm Inc., a rival alt-weekly chain, as director of business development. Sexson in late August reportedly fired Metro Times editor and reporter Curt Guyette, who had written for the paper for 18 years. DeadlineDetroit.com reported that he was fired for talking about the sale. Interim Editor Vince Grzegorek said Guyette, now writing for the ACLU in Detroit, is writing a piece for a March edition of Metro Times. In October, the newspaper left its downtown Detroit space, at 733 St. Antoine St. near Greektown Casino-Hotel, after 33 years and moved into temporary office space in Ferndale. It left downtown because TimesShamrock didn’t want to renew the lease because of the sale. Bryan Gottlieb was fired by the new owners in January. Gottlieb was hired as editor-in-chief in March 2012. He replaced W. Kim Heron, who had been editor since 2006 and left Metro Times in December to work for the Troy-based Kresge Foundation. When Metro Times changed hands in 1999, it was estimated by industry trade group reports at the time to be taking in about $8 million annually in revenue. Zelman declined to say what Metro Times’ revenue was last year, but did say it was less than half what it was in 1999. Times-Shamrock bought the Metro Times and its downtown Detroit building in February 1999, along with the Orlando Weekly and San Antonio Current, for a reported $21 million from Detroit-based Alternative Media Inc. That entity was owned by Metro Times cofounders Laura Markham and Ron Williams. Times-Shamrock put them up for sale in August, with Bozeman, Mont.-based newspaper brokers Cribb, Greene & Associates hired to handle the sale. In addition to competing withthe Internet, the Metro Times also has to compete for alt-weekly advertising dollars. Royal Oak-based Real Detroit Weekly was launched in 1999 as primarily a nightlife entertainment guide — stories, listings and ads about concerts, bars, bands, eateries, art, fashion, etc. — rather than a traditional largely left-leaning alternative news outlet. Newspaper industry watchers are interested in the Euclid Media effort. “I think it’s really encouraging news from the point of view of more enterprising journalism happening in Detroit,” Bill Mitchell, former head of a newspaper economics program at the St. Petersburg, Fla.-based Poynter Institute for Media Studies, a journalism school and think tank. Whether the new company can make it work financially remains to be seen, said Mitchell, a former Detroit Free Press reporter. “It’s hard to know what the economic prospects of this move are,” he said. “If they proceed smartly by investing in a strong editorial product, with strong growth on the digital side, it can be good not only for the journalism side but for the company.”
Digital dollars One of the immediate efforts by the new ownership group has been the digital push. Previously, after the print edition’s weekly content was added to the website, there was little else for another week. Metro Times is generating fresh daily content, having regular online engagement with readers, and is launching a new website later this year. The effort is showing an immediate payoff, Zelman said. “We were at 500,000 page views two months ago; last month, we hit 2 million with an increase in our efforts to generate more digital content, increase social media following and drive page views,” Zelman said. Digital advertising rates are tied to a website’s popularity. If more people visit MetroTimes.com, the more the news outlet can charge advertisers. Euclid Media also is looking at adding more events in its markets. Locally, Metro Times generates revenue from its annual Blowout and “Pig & Whiskey” festivals.
Re-circulating The free tabloid, published every Wednesday, has steadily reduced the number of editions it puts on the streets. Currently, it’s about 50,000 weekly, Zelman said. In March 2012, it was just under 60,000. In 2010, the paper’s weekly print run was 72,840, according to the State of the News Media 2011 annual report from the Pew Research Center’s Project for Excellence in Journalism. In 1999, it was about 110,000 copies. In the past four years, Metro Times reduced its geographical circulation area — halting distribution in Windsor, Toledo and north of New Baltimore. Zelman said the intent is to eventually recover some of that circulation, but he doesn’t expect it to reach 80,000. Bill Shea: (313) 446-1626, firstname.lastname@example.org. Twitter: @bill_shea19
Coffman listed four categories in which rule changes and clarifications could impact companies. Employers with 50-99 employees. Due to criticisms by business groups, the Obama administration gave employers one more year to comply and avoid the tax penalties, also known as the employer-shared responsibility payments. These employers, which the IRS says account for 7 percent of the workforce, now have until Jan. 1, 2016, to comply with Obamacare’s employer insurance mandate. Employers with 100 or more qualified full-time employees who don’t offer coverage to some segments of employees still must comply with the law by Jan. 1, 2015. These employers, which the IRS says account for 66 percent of the workforce, have more flexibility in how many employees are offered coverage. For example, only 70 percent must be offered coverage to avoid penalties next year; 95 percent must be offered coverage in 2016 and beyond. Employers who have nontraditional types of employees, including seasonal, volunteer and educational workforces, have new information on how to identify full-time employees. Employers who have plan years that don’t renew on Jan. 1 also have transitional relief, making it much easier to comply on their renewal date later in the year. Kirk Roy, vice president of health reform with Blue Cross Blue Shield of Michigan, said the clarification on the plan start date is new. He said school systems are most affected because their plans usually start in September. Roy “The original rule was (Jan. 1) 2015, but if your plan year starts Sept. 1, the IRS will give you about a half year until the plan year starts,” Roy said. “This is an important clarification.” Coffman said employers can look at compliance with the 70 percent coverage rule this way: Company “A” has 1,000 employees in five divisions with 200 workers in each division. But it offers health insurance to only three divisions, or 600 employees (60 percent). To comply, a company could offer coverage to a fourth division, which would increase its coverage offering to 80 percent. Roy said the percentage of employees offered health insurance is intended to help employers with large numbers of part-time workers. “What is still not clear is how employers document and report this to the IRS,” he said. But penalties still could be assessed if the employer has one or more full-time employee who is a premium tax credit, Roy said. The shared responsibility payment is computed separately for each employee. Companies still have to offer plans to employees that can’t exceed more than 9.5 percent of the taxpayer’s household income, Roy said.
To calculate the potential shared responsibility payment for workers seeking coverage though the public marketplace, payments owed the IRS for the month equals the numbers of FTEs who receive a premium tax credit for that month multiplied by 1/12 of $3,000. Coffman said large employers of more than 100 FTEs still face penalties if any of their employees receive health insurance through the exchange and garner federal subsidies. For example, if at least one fulltime employee receives a premium tax credit because coverage is either unaffordable or does not cover 60 percent of total costs, the employer must pay the lesser of $3,000 for each of those employees receiving a credit or $2,000 for each of their full-time employees in total. A full-time employee is defined as averaging 30 or more hours per week over a minimum of three month. The first 30 employees are excluded from the penalty. For example, an employer with 75 employees would pay the penalty for 45 workers, or $90,000. Another major change in the shared responsibility rules is a clarification on how to identify part-time, nontraditional or seasonal employees. “A lot of employers don’t offer (health insurance) to seasonal workers, so these rules have significant financial and administrative impact on them,” Coffman said. Seasonal employees are determined to be full-time employees based on the measurement period the employer uses for variablehour employees. They perform labor or services on a temporary basis, including retail workers employed only during holiday seasons or manufacturing companies during peak times. Coffman said the law shortened the break in service period from 26 weeks to 13 weeks, which allows employers to restart the measurement period like they would a new hire if the employee has a break in service of more than 13 weeks. Here are other clarifications to help employers identify nontraditional or seasonal full-time workers: Volunteer hours worked by bona fide volunteers for a government or tax-exempt entity, including volunteer firefighters, will not cause them to be considered fulltime employees. Education employees cannot be treated as part-time for the year simply because their school operates on a limited schedule in the summer. Student work study or co-op programs offered as part of a federal or state-sponsored work study program will not be counted to determine if they are full-time employees. Adjunct faculty must be credited with 2.25 hours of service per week for each hour of teaching or classroom time. The IRS has requested additional comments for this provision. Jay Greene: (313) 446-0325, email@example.com. Twitter: @jaybgreene
CRAIN’S DETROIT BUSINESS
February 17, 2014
Loveland: Company’s passion is to battle blight ■ From Page 1
the city armed with Google Nexus 7 tablets “blexting” every property within Detroit’s 139 square miles. From their cars, they point the tablet at the property, snap a photo and fill out a short questionnaire. Is the building vacant or inhabited? Is there a structure? Is the condition “good,” “fair,” “poor” or “recommend demolition”? When the surveyors hit send, the information is beamed back to Mission Control at TechTown Detroit’s New Center campus. A property has just been blexted. “Blight” + “texting” = “blexting.” This is Loveland’s technology. It built the back-end system and smartphone app that makes it possible for the Detroit Blight Removal Task Force to map and catalogue 385,000 properties in less than nine weeks. Back at headquarters, the Loveland staff and a quality control team watch the live feed of blexted properties coming in, checking for errors or glitches. They can tell, for example, if a smudged lens is making an image unreadable. They then can call the surveyor immediately to ask questions. The team is completing the final “mosquito bite” surveying, as Carter calls it, zeroing in on precise properties it wants to double check. But by late this week, the Motor City Mapping Project should be complete. The task force expects to make its recommendations, based on the survey data, to Mayor Mike Duggan and Emergency Manager Kevyn Orr by the end of March. “This has been done in a really extraordinary period of time,” said Glenda Price, president of the Detroit Public Schools Foundation.
First impression Price discovered Paffendorf, Carter and Loveland co-founder Larry Sheradon last fall at a meeting of the Blight Removal Task Force, which she co-chairs. The task force was formed in September, when the Obama administration announced that it would target more than $300 million in grants and private-sector money to Price help Detroit. Half of that total was set aside for fighting blight, and a task force was created to develop a plan. Tapped to lead it were Price; Dan Gilbert, founder and chairman of Rock Ventures LLC; and Linda Smith, executive director of U-SNAP-BAC Inc., a nonprofit housing corporation. Few people on the committee had heard of Loveland, let alone the founders’ $67,436 Kickstarter campaign to make and install a 10-foottall bronze statue of Robocop. But the Loveland crew wowed them when they presented their blexting technology and recommended a full-scale mapping project as a way to answer some of the questions vexing the committee: How many properties are blighted? How many are abandoned? “We knew that whatever we said had to have some legitimacy to it, and that we had to back it up with some real data, some real hard
numbers,” Price said. The task force quickly commissioned a $1.5 million survey of the city’s parcels, paid for by the Michigan State Housing Development Authority, the Kresge Foundation, the Skillman Foundation and Rock Ventures. The money would cover the cost of 150 tablets, quality assurance teams, surveyors, overhead and the services of Loveland Technologies. Loveland would collaborate with Data Driven Detroit, a nonprofit funded by the Kresge and Skillman foundations, to execute the survey. Loveland would handle the property data collection while D3 would be responsible for scrubbing and delivering the info. D3 would also pull in other sources of information — like a database from the U.S. Postal Service that shows whether mail has been successfully delivered to a property in the past 90 days — to overlay on Loveland’s property survey. “Bringing all of that information together will allow us to develop a blight removal plan for the entire city,” said Erica Raleigh, director of Data Driven Detroit.
Money for a model Chris Uhl had admired Loveland Technologies since he joined the Skillman Foundation in 2012 as vice president of social innovation. He saw the power of the blexting and data-visualization tools and wanted to get them into wider use. He got his chance last year. The Skillman Foundation and the nonprofit Blight Authority, which is separate from the Blight Removal Task Force, were looking at blight removal in the Brightmoor neighborhood. However, selecting which buildings to demolish proved to be challenging. “There were four of us driving around in a car eyeballing the neighborhood,” said Uhl. “We went back to the community center and unfurled a map and then tried to remember where the hell we were. What we were trying to do was build a system that we could scale across the city (to show blighted properties). We couldn’t do it relying on maps like that.” He knew if he brought Loveland together with Data Driven Detroit, they could create a better map. So he asked two groups to execute a parcel survey of Brightmoor using the then-beta blexting technology. To get Loveland the financial resources to scale, Skillman made a $100,000 grant. “They had a great technology and a great little company, but they were in search of a revenue model,” Uhl said. “Their initial model was opening Why Don’t We Own This? to community groups, but that’s hard to monetize in any way they can scale. They can take this technology nationwide.” And Skillman wants a piece of Loveland’s future: It is contemplating taking an equity stake in the company. It would join Loveland’s three other angel investors, who have put in about $300,000. The Skillman board of directors is still debating the investment, but if it agrees, it would be the first deal of its kind for the foundation. “Detroit is on the cutting edge of these types of things,” Uhl said. “We have the problems here that are of a
scale that don’t exist in other places. So it’s a great place to pair two great companies like this with some capital and get them solving.” That Brightmoor pilot survey formed the basis of what Loveland and D3 would eventually show the blight task force as a proof-of-concept of what could be done citywide. It also taught everyone a few things. Primary lesson learned: Technologists have the latest and greatest things; regular humans do not. The blexting software worked on the latest smartphones, but when the Brightmoor volunteers used it on their older devices, it kept crashing the system. For the citywide mapping project, the task force invested in 150 Google tablets.
Strength in numbers Fast Company magazine recently named Loveland one of the world’s most innovative companies. Another Rust Belt city has approached the company about doing a similar survey. To handle the interest, the company has been slowly growing. This month, it added two new employees, bringing the total team to seven. “It’s been great finally having some resources to work with,” said Carter, 31. “When we brought on our fourth employee last year, it was a big gamble, it was nailbiting.” One of the newest hires is a “chief parcel officer” who can execute their vision of bringing every property in the country online. They are also planning a new Why Don’t We Own This?-style website for the entire country. The company also has hired Lauren Hood to be the community engagement director, someone who can act as a liaison between the technologists and the people who actually use and need the data. Loveland will also have to differentiate itself in a market that has Seattle-based Socrata Inc., which raised $18 million last year and calls the United Nations a client. Locally, Loveland has a potential competitor in startup Local Data, founded in 2012 by Detroit Code for America fellows Matt Hampel, Alicia Rouault and Prashant Singh. Local Data managed a small companion survey to the Motor City Mapping Project for the Michigan Historic Preservation Network. That group needed to survey 18,000 properties in potential historic districts, giving them historic preservation scores and have the data included in the report to the task force. “It was an opportunity to provide a perspective that isn’t always included,” said Emilie Evans, preservation specialist with the network. Initially the network hoped to work with Loveland, but the team didn’t have the capacity, Evans said. So she selected Local Data, which was able to perform the survey for free as a vendor of Data Driven Detroit.
More mapping Loveland is in talks with the blight task force for phase two of the Motor City Mapping Project, which would make the data publicly accessible and updatable. “There is too much time, energy and money that has been invested to
allow this to simply be a one-time thing,” said task force co-chair Price. Where the database will be housed and how it will be maintained is still being negotiated. Loveland is also making the rounds of Detroit’s city departments in hopes that its technology can be used to layer on many data sets, not just property information. “We are at the heart of the conversations about how to get on top of the data problem, how to involve residents with solutions and how we can upgrade systems,” Paffendorf said. Those conversations are far different than two years ago. “I think we started to notice a difference, honestly, with the emergency manager,” Paffendorf said. “A lot more departments are displaying the thinking where it’s like, OK, maybe we’re not playing protect-the-bacon any more. We’re going to start playing the game of being the best in the world.” They have an ally in the Wayne County treasurer’s office. Chief Deputy Treasurer David Szymanski waives all fees for the property data that power Why Don’t We Own This? “There was a lot of reluctance to share information with groups like this, but we identified them as good actors,” Syzmanski said. “We took a look at the model, what they had put together without our cooperation. These guys were out there trying to use county data and make it available to everybody. They were leveling the playing field.”
Starting by inches When Paffendorf, Carter and Sheradon bought their first vacant lot in Corktown, they didn’t anticipate where that would lead. At the time, they were just playing around with selling square inches of their land for $1, making the buyers “inchvestors” in Detroit. “We relatively quickly learned the bigger picture at play wasn’t this one lot.” Paffendorf said. “We’d kind of stumbled into this whole system of property in the city that really needed to be understood better.” To launch, he turned to a new crowdfunding site called Kickstarter. The inches project was one of the first dozen campaigns listed. Since its first successful fundraiser, Loveland has raised more than $91,000 for a variety of projects. “There have now been more than 56,000 successful projects on Kickstarter, and it’s safe to assume that at least a few of those ideas were inspired by Loveland and the cool things they’ve done.” said Kickstarter spokeswoman Julie Wood. That first campaign for just $1,582 led to a passion for property data that Loveland sees as key to solving so many city problems, from vacant homes to services. “There is a real opportunity to address these problems, not just muddle along and come out OK,” said Alex Alsup, Loveland’s chief product officer. “But we can really set a national standard for how these kinds of issues are approached. And it started in Detroit.”
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February 17, 2014
CRAIN’S DETROIT BUSINESS
WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF FEB. 8-14
D:hive rebrands, expands tour :hive has rebranded its experiential tours program as the “Detroit Experience Factory” and expanded offerings to support talent attraction and retention efforts. The shift is because most of the 10,000 people for whom the nonprofit business and cultural development center provided with tours last year were potential employees and students hosted by area employers and universities, according to Jeanette Pierce, D:hive’s director of community relations. The group will focus its efforts on customized group tours for 20 to 2,000 people, she said, giving them a taste of Detroit’s residential developments, neighborhoods, shops and services, fun stuff, cultural attractions, restaurants and bars. The Detroit Experience Factory this past weekend planned to launch a dedicated website at WeKnowDetroit.com. D:hive will celebrate the rebranded tour focus beginning March 1 with a weeklong series of special events for the public, offering a taste of the customized tours for half price. Typically, group tours range from $10 to $20 per person. The events will include strolling suppers, bar tours and scavenger hunts, and culminate with a public launch party March 7 at Exodus Lounge’s rooftop in Greektown. While the Detroit Experience Factory’s focus will be groups, it plans to continue to schedule individual events, such as free walking tours, every Saturday and twice-monthly bus tours for individuals, Pierce said.
Nixon resignation sparks state job shuffle Beginning March 1, the state will have a new budget director and a new head of the Department of Technology, Management and Budget, with the announcement of the resignation of John Nixon, who held both of those titles in Gov. Rick Snyder’s administration. Nixon will leave at the end of the month to return to his home state of Utah, where he will take a job as the chief business officer at
the University of Utah. Nixon said he loved his job here, but the chance to move back to Utah and be closer to family, and also to work at the university, was too much to pass up. ReplacNixon ing Nixon, 41, as budget director will be Snyder’s deputy chief of staff, John Roberts. Roberts, 32, is the son of former state Treasurer Doug Roberts. The state’s chief information officer, David Behen, 44, will replace Nixon as the head of the management and budget department. In 2012, Behen was honored by Crain’s in the government category of its CIO awards. Behen, who will retain his role as CIO, will receive an annual salary of $165,000. Roberts will be paid $149,350. Roberts will be replaced as Snyder’s deputy chief of staff by Beth Clement, 36, who is the deputy legal counsel in the executive office. She also will begin her new role March 1.
Businesses honored in Macomb County A gluten-free bakery startup and an automotive supplier that makes plastic molded components are among the organizations that took top honors at the second annual Macomb Business Awards, presented last week by the Macomb County Department of Planning & Economic Development to a sold-out audience of nearly 400 in Warren that included Gov. Rick Snyder and former Chrysler CEO Tom LaSorda. The winners: Champion of Workforce Development: Proper Group International Inc., Warren, for offering employees opportunities to advance their training, including being one of the first to participate in the Michigan Advanced Technician Training Program. Corporate Citizen Award: First State Bank, St. Clair Shores, for investing in the community through sponsoring many local events, being involved with area chambers and donating to
the East Detroit Public Schools scholarship program. Diversification Leader: Omega Plastics Inc., Clinton Township, for expanding services to mold-making for clients across industries. Energy Efficiency Expert: New Haven Community Schools, for incorporating new technologies to optimize energy efficiency when building a new campus for Endeavour Elementary School and Endeavour Middle School, teaching students about careers in energy efficiency, and maintaining a garden of native species to create habitat for wildlife. Startup Business of the Year: Ethel’s Edibles LLC, St. Clair Shores, for producing high-quality gluten-free goods for a growing target market, beginning to ship to retailers across the country and projecting to increase its run rate by more than 300 percent next year. Stephen Cassin, executive director of the county’s Planning and Economic Development Department, named Troy-based Automation Alley the Economic Development Partner of the Year, and honored Don Morandini, who recently retired from the department as deputy director after 41 years, as the first recipient of the Beacon of Economic Development award.
State seeks Belle Isle contractors The state lease on Belle Isle officially went into effect last week, and now the Michigan Department of Natural Resources is looking for a few good small businesses to do work on the 982-acre park. Already, the state has been cutting down dying trees and clearing paths. But this spring, the DNR will need contractors to bid for mowing services, and recycling and waste removal. There also will be a need for small repair and trades jobs — such as roofs and in bathrooms — followed by more significant projects in the future. Interested in bidding? On Feb. 21, a free seminar is scheduled on how to contract with the state. The morning session will be from 8:30 a.m. to noon; the afternoon session runs 14:30 p.m. Both will be at the Belle Isle Casino.
BITS & PIECES Carl Roehling, president
and CEO of Detroit architectural firm SmithGroupJJR, has been appointed to serve on the joint committee of The American Institute of Architects and The Associated General Contractors of America.
McLaren-DMC suit: Judge won’t dismiss, asks McLaren for info n Oakland County Circuit Court judge denied Detroit Medical Center’s motion for summary judgment on whether Flint-based McLaren Health Care Inc. can jointly market services with Barbara Ann Karmanos Cancer Institute in Oakland County. However, Judge Wendy Potts told McLaren it could have until Feb. 27 to show why the 2005 affiliation agreement between DMC and Karmanos is anticompetitive. Potts seemed to suggest in her order that without additional information from McLaren, she could dismiss McLaren’s complaint against DMC.
ON THE MOVE Erica Raleigh was
named permanent director of Data Driven Detroit. Raleigh, 31, had been acting director of the data center since last July, when founding director Kurt Metzger retired. Cheryl Elliott, president and CEO of the Ann Arbor Area Community Foundation, is stepping down at year’s end. A successor for Elliott, 62, has not been named. The Grosse Pointe War Memorial Association named Charles Burke as president and CEO. Burke, 41, was senior director of education and artistic director for the Civic Youth Ensembles at the Detroit Symphony Orchestra. He succeeds Mark Weber, who retired. Farmington Hillsbased marketing firm J.R. Thompson Co. appointed former Chrysler Group LLC executive Jim Yetter, 58, to the newly created position of chief marketing officer. Alexander Klatt, former Fisker Automotive Inc. vice president of global design, was named MFA chairman of Transportation Design at the College for Creative Studies. David Meline, 56, senior vice president and CFO of 3M Co., was elected to Livonia-based TRW Automotive Holdings Corp.’s board as an independent director.
COMPANY NEWS Troy-based Talmer Ban-
corp Inc. officially opened for trading on the Nasdaq Stock Market at $13.75. With more than 15.5 million shares, the initial public offering raised about $202 million.
California-based Industrial Realty Group LLC closed on the purchase of most of Detroit-based American Axle & Manufacturing Holdings Inc.’s 2.5 millionsquare-foot former Detroit Manufacturing Complex. The price was not disclosed. E.W. Scripps Co., parent company of Detroit’s WXYZChannel 7, said it will buy local MyNetworkTV affiliate WMYD Channel 20. The $110 million deal includes WKBW, Buffalo’s ABC affiliate. Cincinnati-based Scripps is buying the stations from New York Citybased Granite Broadcasting Corp. Clinton Township developer Aragona Properties LLC expects to begin construction in the spring on a five-story, 48-unit apartment building in downtown Royal Oak, with completion by first-quarter 2015. Dearborn-based Oakwood Healthcare and Mechanicsburg, Pa.-based Vibra Healthcare signed an agreement to jointly operate a 40-bed long-term acute care unit at Oakwood Hospital-Taylor and a similar 52bed facility operated by Vibra in Lincoln Park. Five Michigan health systems and 24 of their hospitals signed performancebased managed care contracts with Detroit-based Blue Cross Blue Shield of Michigan. Alaska Airlines will begin offering daily nonstop service between Detroit Metropolitan Airport and Seattle Tacoma International Airport on Sept. 4. Also, Spirit Airlines said it will offer a daily nonstop to Minneapolis-St. Paul International Airport from May 22 to Nov. 1. Commerce Township’s FlowerDeliveryExpress.com made its first drone delivery. The flight tested the use of drones as another means of flower delivery.
OTHER NEWS Detroit expects this week to file the debt-adjustment plan it has been negotiating with creditors, allowing the city bankruptcy case to enter its final phase, Bloomberg reported. In his 20th State of the County address, Oakland County Executive L. Brooks Patterson announced an effort to create a connectedcar “ecosystem” to improve road safety and criticized a New Yorker article portraying him as a Detroit basher. A controversial plan to replace the Ambassador Bridge with a new, larger span gained clearance from Transport Canada and the Windsor Port Authority. Gov. Rick Snyder appointed a team to review the finances of Lincoln Park and report back in 60 days, part of the process that could lead to the appointment of an emergency manager, the AP reported. Southeast Michigan online job postings more than doubled in the fourth quarter of 2013 compared with fourth-quarter 2012, said a report by the Workforce Intelligence Network. Anonymous donors pushed a Lawrence Technological University campaign past the $100 million mark with a $20 million contribution to be paid over three years. Curt Clawson, CEO of Northville Township-based Hayes Lemmerz International Inc. from 2001-12, is seeking Florida’s 19th District seat vacated by U.S. Rep. Trey Radel, who quit Congress after being busted last month for buying cocaine.
OBITUARIES William Wolok, founder
and former chairman and CEO of Romulus-based rolloff trailer manufacturer Benlee Inc., died Feb. 5. He was 84.
CHINESE BUSINESS ASSOCIATION HOSTS NEW YEAR GALA Join the Detroit Chinese Business Association — and a roster of government and industry leaders headed by Gov. Rick Snyder — in the 18th annual Chinese New Year Gala, 6-11 p.m. Feb. 27 at Cobo Center. The gala, ushering in the Chinese Year of the Horse, will include a reception, drinks, dinner, entertainment and networking, as well as live music, dancing and cultural performances produced by Confucius Institutes and others. A silent auction will benefit the Detroit Public Schools Foundation, and a special-edition Wright Bros. Shinola watch will be a raffle prize. Speakers will include Snyder, who will keynote; Jacques Panis, Shinola president; Heather Paquette, office managing partner, Detroit, KPMG LLP; Kenneth Barrett, chief diversity officer, General Motors Co.; Weidong Lu, mayor of Hai’an, China; and Jerry Xu, DCBA president. The U.S. Green Building Council Detroit Chapter will showcase sustainable projects. The DCBA is a nonprofit that has been operating since 1995, primarily to foster beneficial relationships between Chinese and American businesses. Tickets to the gala are $250 each; seating is limited. Sponsorships range from $2,500 to $25,000. Register online at www.dcba.com or call (248) 918-0391. For more information, email Milan Stevanovich at firstname.lastname@example.org or Jerry Xu at email@example.com.
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Limited time offer!
SAVE $100 ON ALL TABLETS. Get the tablets that keep your business running and connected on America’s Largest and Most Reliable 4G LTE Network.
NOW $ JUST WAS $599.99
New 2-yr. activation required. Offer valid through 2/28.
Nokia Lumia 2520 • Share documents and collaborate on projects with colleagues with Evernote Touch • Enjoy built-in apps like Microsoft® Word and Excel • Work inside or out with the bright, 10.1” display
GET UP TO SMARTPHONE SALE
PLUS, GET A $100 VERIZON WIRELESS TRADE-IN GIFT CARD. Enhanced-camera smartphone
For a limited time, trade in any smartphone and get $100, $200 OR EVEN $300 OFF a new smartphone for your business, depending on the value of your trade-in. Trade-in must be in good working condition. Savings provided through Verizon Wireless gift card for telesales and online orders. New 2-yr. activation required.
Nokia Lumia 928 $50 2-yr. price - $50 mail-in rebate debit card. New 2-yr. activation required. Offer valid through 2/28.
Visit any Verizon Wireless store today to talk about our Small Business solutions. 1.800.VZW.4BIZ
Activation/upgrade fee/line: Up to $35. IMPORTANT CONSUMER INFORMATION: Subject to Cust Agmt, Calling Plan, rebate form & credit approval. Up to $350 early termination fee/line. Offers & coverage, varying by svc, not available everywhere; see vzw.com. While supplies last. Restocking fee may apply. In CA: Sales tax based on full retail price of phone. Add’l CA eWaste fee may apply. In MA: Sales tax based on Verizon Wireless’ cost of a device purchased at a discount with service. Rebate debit card takes up to 6 wks & expires in 12 months. © 2014 Verizon Wireless. H2004
Published on Feb 18, 2014
Crain's Detroit Business issue dated Feb. 17, 2014. Crain's is the premier source of business news and information in Southeast Michigan.