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www.crainsdetroit.com Vol. 30, No. 23

JUNE 9 – 15, 2014

$2 a copy; $59 a year

©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved

Page 3 Mt. Pleasant electronics recycler seeks space

Golf grip maker gets ahold of one, as sales take flight Survey finds biz bracing for 7% jump in health care costs CRAIN’S MICHIGAN BUSINESS

Vapor chase: Firms take up the growing e-inhaler habit

Second Stage Salute to Entrepreneurs: The many faces of success, Page 21

This Just In

Three outlet mall plans in battle over anchors

It only takes two signatures to pay out $1 million in state business incentives. Is that ...

Developers take to land, sea, air to woo retailers

Efficient or too little oversight?

Birmingham-based Center Management Services Inc. and CincinCRAIN’S DETROIT BUSINESS nati-based Jeffrey R. Anderson Real There’s not just one new outlet Estate Inc. are developing the Outshopping center planned for metro lets of Southeast Michigan in Detroit — there are three. Chesterfield Township on the east And the race is on to see which side of I-94, north of M-59, on land project will be able to land the retail they purchased four years ago. anchors needed to launch construcAnd Baltimore-based Paragon tion first. COURTESY OF NEW ENGLAND DEVELOPMENT Outlet Partners LLC is under conLast week, Newton, Mass.-based New England Development plans to tract to purchase about 50 acres of New England Development made news build an outlet center near Detroit land in Canton Township at I-275 when it announced plans to con- Metropolitan Airport. and Ford Road for a center totaling struct a 325,000-square-foot outlet 375,000 square feet of retail space. This project is scheduled to open in summer 2016. center in Romulus near Detroit Metropolitan Airport. Although one of the project developers — the airBut outlet center projects are also quietly coming together in two other metro Detroit communities, Canton Township and Chesterfield Township. See Outlets, Page 30

BY SHERRI WELCH

From zero to 20,000 How one man’s vision is bringing thousands to the streets of Detroit. Story on Page 32

Hilfinger leaves MEDC post, returns to Foley & Lardner Michigan Economic Development Corp. COO and Executive Vice President Steve Hilfinger is leaving Friday to return to Foley & Lardner LLP, the law firm he left for an appointment by Gov. Rick Snyder in 2011. Hilfinger, 52, of Beverly Hills, will be in the firm’s Detroit office, where he was managing partHilfinger ner before becoming director of the Department of Licensing and Regulatory Affairs. He moved to the MEDC in December 2012. Hilfinger helped found the Detroit office in 2000, and will be a partner in Foley’s transactional and securities practice. — Chad Halcom

BY CHRIS GAUTZ CAPITOL CORRESPONDENT

S

ince 2011, more than $65 million in state funds have been awarded to businesses around the state with the signatures of just two individuals — in fact, most business incentives are approved that way. An expedited approval process dubbed “delegated authority” allows Michael Finney, president and CEO of the Michigan Economic Development Corp.; state Treasurer Kevin Clinton or his designee; and Mark Morante, the interim strategic fund manager, to approve incentives Finney of $1 million or less, as long as two of them sign off. A database of Businesses MEDC incentives have been award- approved ed 129 projects since 2011, under delegated crainsdetroit. authority since com/medcdata 2011, compared with 89 projects approved in public meetings by the Michigan Strategic Fund board. “The whole idea is to keep projects moving as efficiently as possible,” Finney said. Delegated authority can shave off a few days to a month of approval time, depending on where it falls between the Strategic Fund board’s monthly meetings. Delegated authority is similar to policies in companies that require fewer signoffs on relatively small-

ON THE WEB

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Grand Rapids transit system ponders quicker bus line to GVSU As the Grand Rapids area’s transit system nears completion of the Silver Line (Crain’s, May 12) through the heart of the city, The Rapid is now pursuing a similar bus rapid transit system connecting downtown Grand Rapids and the Grand Valley State University campus in Allendale, the Grand Rapids Business Journal reported. “Once we have the study completed and have that analysis done, then that will determine how things move forward,” Rapid CEO Peter Varga said. The so-called Laker Line is being sold as a better and faster connection between the two areas.

Schuette: Chesapeake Energy lied to landowners on leases Oklahoma City-based Chesapeake Energy Corp., already facing antitrust claims in Michigan over bids on gas exploration rights, was charged with racketeering and fraud for allegedly lying to landowners about leases it took out on their property, Bloomberg News reported. The allegations announced by Michigan Attorney General Bill Schuette follow earlier accusations that the company colluded with a unit of Calgary, Albertabased Encana Corp. to divide the Michigan counties in which they’d

Dow helps remove unwelcome abstract expressionism What would you think if you heard that Dow Chemical Co. was going to help restore a coveted painting? Scrubbing Bubbles? It turns out that research from the Midland-based company had a hand — and a delicate one at that — in the restoration of a Mark Rothko painting, which has been returned to public display at London’s Tate Modern museum. In 2012, Rothko “Black on Maroon” was damaged by graffiti. It took 18 months of conservation work that relied on analytical information from Dow coating material experts to successfully restore it, MLive reported.

Dow experts analyzed ink from the graffiti, then identified possible solvents to clean it. Dow scientists spent two days testing solvents on dried samples of the graffiti ink. “We were able to narrow it down to a small list of solvents and microemulsions for consideration in the Rothko restoration,” Dow scientist Melinda Keefe said in a statement. “We sent this list of solvents to Tate, and their conservation experts added these to the range of options they were testing in order to determine the best possible solution: a blend of benzyl alcohol and ethyl lactate.”

bid for exploration rights in 2010, driving down prices at auction.

ice melted later than usual, delaying work by about two weeks.

Boaters still trying to get their sea legs as winter delays season

MICH-CELLANEOUS

That winter we thought would never end apparently left boaters with a hangover. The Grand Rapids Press reported that orders are stacking up for seasonal dock and lift installations. Some plans to put boats in the water at marinas also have been delayed. Kevin Zoodsma of Action Water Sports in Hudsonville said more people waited longer to prepare for the boating season. Zoodsma said some pushed back plans until after Memorial Day weekend, typically the start of boating season. At River Haven Marina in Grand Haven, owner Dave Lenger said snow and

䡲 DTE Energy Co. is buying one of two Pheasant Run wind parks in Huron County in the Thumb from a subsidiary of NextEra Energy Resources LLC and will rename it Brookfield Wind Park, The Associated Press reported. The park has 44 wind turbines. 䡲 Grand Rapids-based Mercantile Bank Corp. and Alma-based Firstbank Corp. have completed their merger, creating the thirdlargest bank based in Michigan. The merged bank has $2.9 billion in assets and 53 offices in the state. 䡲 Borgess Health President and CEO Paul Spaude plans to retire in September, MiBiz reported.

Spaude, who joined the Kalamazoo-based health system in 2005, said he wants to spend time with his father, who is critically ill. 䡲 Mary Kay VanDriel was named president of the Big Rapids and Reed City hospitals that are part of Grand Rapids-based Spectrum Health System. VanDriel will

䡲 An incorrect date for the Walsh College commencement was given in

the June 2 edition. It is June 21. Also, an incorrect date was given for the retirement of the keynote speaker, Jeffrey Bergeron. He will retire from the Detroit office of Ernst & Young LLP at the end of this month. A past managing partner of the firm, he is currently senior advisory partner. 䡲 A story on Page M28 of the June 2 issue mistakenly reported that Osama Siblani, publisher of The Arab American News, has daughters who were harassed because of political views expressed in that newspaper. Siblani has been harassed for those views, but he does not have daughters.

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replace President Sam Daugherty when he retires June 30. 䡲 Atlanta-based Newell Rubbermaid said it has opened a 40,000square-foot design center in Kalamazoo, which will be staffed by about 100 design professionals when at full capacity, the Grand Rapids Business Journal reported. 䡲 Flint Community Schools plans to lay off 250 employees as part of a $10.4 deficit elimination plan, The Flint Journal reported. No teachers are included in the list. 䡲 Grand Rapids Community College and Grand Valley State University signed an agreement to make it easier for students to transfer between the two institutions, The Associated Press reported.

Muskegon gon n


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Electronics recycler seeks space Plant could create 20-50 local jobs BY KIRK PINHO CRAIN’S DETROIT BUSINESS

An electronics recycling company owned by a former Mt. Pleasant mayor and members of the politically well-known Yob family is trying to open its first recycling plant

in Southeast Michigan. Mt. Pleasant-based 3S International LLC, founded in March 2013, has plans to open a total of six more recycling centers in metropolitan areas in the next 3½ years years after opening a 60,000-square-foot plant in Tinley Park, Ill., about 30 miles southwest of Chicago, according to Gina Yob, vice president of sales and marketing. Yob said 3S — whose name stands for “safe, secure and sustainable” — is considering locations in the tri-county area. It expects to occupy 40,000 to 80,000 square feet and create between 20 and 50 mostly

full-time jobs by the end of the year. She declined to say how large of an investment the local plant would be. The company does not plan new construcYob tion. Finding an existing building for the plant has proven difficult because 3S needs ceilings at least 21 feet high, Yob said. The company has considered for-

mer General Motors Co. buildings now being marketed by the RACER Trust, but their square footages are “way beyond what we need,” she said. In the Michigan plant, there could be two recycling machines, each of which could recycle about 14 million pounds of electronics, which is the current electronics consumption rate of about 6 million people, Yob said. Cellphones, flat-screen TVs, laptop and desktop computers, DVD players, video game consoles and others are among the items 3S can recycle. See Recycler, Page 29

Inside

Atwater wanted to, so now it can — in cans, Page 6 Company index These companies have significant mention in this week’s Crain’s Detroit Business: 3S International . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ACLU of Michigan . . . . . . . . . . . . . . . . . . . . . . . . . 11

SuperStroke owner Dean Dingman paid $750,000 for the brand in 2009. The business is forecast to post $30 million in revenue this year.

Survey: Biz sees 7% jump in costs for health care

AGS Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . 31 American Iron and Steel Institute . . . . . . . . . . . . . 16 Atlas Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Atwater Brewing . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Avomeen Analytical Services . . . . . . . . . . . . . . . . . 25 Belfor USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Beyond Gaming of Michigan . . . . . . . . . . . . . . . . . 23 Brewery Vivant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cascade Engineering . . . . . . . . . . . . . . . . . . . . . . 17 Center Management Services . . . . . . . . . . . . . . . . . 1 Children’s Hospital of Michigan Foundation . . . . . 10 Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 24 Detroit Lions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

BY JAY GREENE

DiverseNote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CRAIN’S DETROIT BUSINESS

Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Employers in Southeast Michigan project an acceleration of health care cost increases this year — a 7 percent jump, up from 4 percent in 2013 — as taxes and fees from the Patient Protection and Affordable Care Act add to typical annual inflationary increases in health costs, according to McGraw Wentworth’s Projected increases in 2014 Southeast Michi- employer health care gan Mid-Market costs Group Benefits sur- 2014: 7 percent vey. 2013: 4 percent The cost increases for Southeast Michi- Family gan employers also monthly 11% are higher than na- PPO costs tional projections of 2014: $391 5.2 percent. “We knew that Family changes related to monthly 5% health reform (taxes HMO costs and fees) would add 1 2014: $308 percent to 5 percent” to employer costs this Percentage of premium year, said Becky costs paid by employee McLaughlan, manag- for family PPO coverage ing director at Troy- 2014: 27 percent based McGraw Went2013: 26 percent worth. The Obamacare fees, which began in Percentage of premium small doses last year, costs paid by employee for family HMO coverage were imposed on health insurers and 2014: 25 percent employers to pay for 2013: 27 percent

Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

subsidies for expanded coverage and create a special fund to protect insurers from losses for covering sicker patients with higher costs in the individual market. Insurance companies passed on these costs to their insured clients and self-insured employers paid the pass-through costs. But McLaughlan said she is surprised that employers, in turn, haven’t passed along the federally mandated fees to employees as much as they

BANKRUPTCIES . . . . . . . . . . . . . . . . . 10

SURVEYING COSTS

JOHN SOBCZAK

Growth takes hold for golf club grip maker SuperStroke sales soar from $700,000 to $15M BY BILL SHEA CRAIN’S DETROIT BUSINESS

G

olfers, as a breed, are sometimes known to buy the latest gadgets in desperation to shave strokes from their game, while equipment makers come and go. If the weekend duffer sees a PGA Tour pro using something new to win tournaments, odds are that equipment manufacturer will see a payday. That’s held true for Wixom-based SuperStroke, a maker of patented oversized rubber grips for putters. A quarter of PGA players in a given week’s tournament are using SuperStroke grips. Several high-profile PGA Tour victories

and strong finishes by pros using SuperStroke grips have turned owner Dean Dingman’s $750,000 purchase of the brand in 2009 into a business forecast to post revenue of $30 million this year. In 2009, SuperStroke sold 5,000 grips for $700,000. Last year, it sold 1.5 million grips for $15 million. The success has Dingman, the company’s co-owner and president, planning to move into grips for other clubs. SuperStroke isn’t Dingman’s first foray into golf equipment. In the late 1990s, Dingman and his brother, Darin, launched a line of low-priced golf clubs See Grips, Page 33

佢 佢

Dragonmead Microbrewery . . . . . . . . . . . . . . . . . . . 6 Driven Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . 33 EOS Worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Fairpoint Solutions . . . . . . . . . . . . . . . . . . . . . . . . 17 Fresh Corner Café . . . . . . . . . . . . . . . . . . . . . . . . 25 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 17 George Matick Chevrolet . . . . . . . . . . . . . . . . . . . 21 GolfWRX.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Hatch Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Impact Management Services . . . . . . . . . . . . . . . . 26 Karp & Associates . . . . . . . . . . . . . . . . . . . . . . . . . 7 LorAnn Oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Mackinac Center for Public Policy . . . . . . . . . . . . . 31 Mango Languages . . . . . . . . . . . . . . . . . . . . . . . . 25 Mayser Polymer . . . . . . . . . . . . . . . . . . . . . . . . . . 31 McGraw Wentworth . . . . . . . . . . . . . . . . . . . . . . . . 3 Michigan Economic Development . . . . . . . . . . . . . . 1 Michigan Muslim Community Council . . . . . . . . . . 32 Mister-E-Liquid . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Motus Integrated Technologies . . . . . . . . . . . . . . . 15 Perrigo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Plasan Carbon Composites . . . . . . . . . . . . . . . . . . 17 Prolim Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Revolve Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 RGIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SuperStroke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Tomcor North America . . . . . . . . . . . . . . . . . . . . . 17 Victory Electronic Cigarettes . . . . . . . . . . . . . . . . . 11 Wild Bill’s Tobacco . . . . . . . . . . . . . . . . . . . . . . . . 12

Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 28 CALENDAR . . . . . . . . . . . . . . . . . . . . 27 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . 11 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28

See Survey, Page 30

RUMBLINGS . . . . . . . . . . . . . . . . . . . 34 STAGE TWO STRATEGIES . . . . . . . . . . 26

THIS WEEK @ WWW.CRAINSDETROIT.COM

Just like mother used to make (Yeah, right) Lime poached shrimp on avocado mousse and cilantro, topped with tomato relish is just one of the dishes at four restaurants new to downtown Detroit. View a photo gallery accompanying “Salad, kabobs and small plates” at crainsdetroit.com. ANJANA SCHROEDER/CDB

WEEK ON THE WEB . . . . . . . . . . . . . . 34


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Port Authority eyes Jamian successor by early 2015; jobs will be key priority BY BILL SHEA CRAIN’S DETROIT BUSINESS

The Detroit/Wayne County Port Authority likely won’t have a new executive director in place until Jan. 1, the organization’s board chairman said. Until then, the authority will spend its time concentrating on the summer shipping and tourism season, bringing the five-member board’s two newest members up to speed, and working out what it wants in a new top executive, said Tom Orzechowski, who was elected chairman in May. “We’re kind of a blank slate, and we can craft it,” he said. The authority must replace John Jamian, whose three-year contract ended May 31. Orzechowski said he expected the search to fill the position to begin later this year and wrap up with a hire in place at the start of 2015.

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The port authority’s Public Dock and Passenger Terminal opened in 2011.

by Congress in 1921, has oversight of seaports, airports, bridges, tunnels, trains and bus lines. Orzechowski also said he’d like to start talks with Chevrolet Detroit Belle Isle Grand Prix organizers to re-establish the water taxi service to the island during the race.

Infrastructure New priorities Boosting the authority’s economic development ability so that it creates jobs will be a priority under the next executive director, said Orzechowski, the Algonac-based vice president of the Seafarers International Union’s Lakes and InOrzechowski land Waters District. The union represents U.S. merchant mariners. “We want to develop (the authority) more as an economic engine,” he said. Orzechowski said he wants to see the authority continue its effort to seek legislative permission to finance bond projects away from the riverfront, an issue that has drawn political opposition as a confusing and unnecessary replication of services already available in the city. Such a move would require talks to ensure understanding and cooperation from agencies that have expressed opposition, such as the Detroit Economic Growth Corp., Orzechowski said. The port authority currently is permitted to finance projects related to the port facilities or development along the riverfront. For example, it was the conduit for $43 million in bonds issued in 2004 to aid construction of the Beaubien Place parking garage adjacent to the Renaissance Center. Jamian had said fees generated by bonds would help offset reliance on tax dollars. The nonprofit port lost $643,000 in 2012. Regional transportation cooperation has been an ongoing topic in metro Detroit, and having the authority become part of a transportation hub is something Orzechowski said he wants to explore. “Are we set up for that right now? The answer is probably no, but I think we can get there,” he said. He cited The Port Authority of New York and New Jersey as a successful example of a regional transportation effort. That organization, authorized

Ferry service to Windsor is also

on Orzechowski’s list of topics for the future. So are increasing the number of passenger ships stopping at the authority’s passenger terminal, and attracting more vessels that people come to visit. The authority in recent years completed construction of a $15 million, 21,000-square-foot ship terminal and $7.1 million offshore See Next Page


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From Previous Page

Jamian’s departure

wharf to serve cruise ships and other deep-draft vessels in the Detroit River bringing tourists — and their money — to the city. One local logistics insider said a hard, realistic look at authority must be taken by all stakeholders. “There needs to be a major reassessment of the role, if any, that this authority has. What can it do? What should it do? What shouldn’t it do?” said John Taylor, associate professor of supply chain management and chairman of the department of marketing and supply chain management at Wayne State University. “It’s unclear what role it plays in facilitating effective logistics in the region, with the exception of the foreign trade zone activities.” Taylor noted that the actual port facilities are almost all privately owned and operated in Detroit, and that the city isn’t a container port like Los Angeles or New Orleans — meaning it’s going to be limited to largely inland bulk raw materials. New port authority board member Lorron James, vice president of Detroit-based logistics firm James Group International, was appointed by Duggan in April. He said the pending construction of a second Detroit River bridge could be a catalyst for increasing raw material shipping to the city’s ports, and new riverfront development. “With the new bridge, we can finally talk about bringing in more material to our ports,” said James, a 2011 Crain’s 20 in their 20s honoree. “There is a lot of waterfront property that we can revitalize.” Helping to get a long-discussed $400 million modern rail tunnel built between Detroit and Windsor James also should be a future port authority goal, James said. Another ongoing issue for the authority that James said is a concern of his is getting Michigan environmental law governing ballasts for oceangoing cargo ships relaxed to match the rules in Ontario and other Great Lakes states. The rule prompts vessels to unload in Toledo and Windsor rather than Detroit, in an attempt to limit any waterborne invasive species in Michigan waters. Easing the law would mean 40 or 50 additional ships would ply Michigan’s ports, Jamian has long said. Changing the law to match other ports would mean more steel delivered in Detroit, and more farm products exported by ship, James said. “More steel in and more grain out,” he said. The other new board member is Jonathan Kinloch, appointed by Mayor Mike Duggan in April. Kinloch is an at-large Detroit Public Schools Board of Education member and serves on the executive committees for the Detroit branch of the NAACP and the Michigan Democratic Party. The port authority board comprises two members appointed by the mayor of Detroit, two appointed by the Wayne County Commission and one by the governor. The board hires the executive director.

Jamian, a former state legislator and state and federal official, said he’s leaving to work in maritime education. His 2011-14 stint running the authority, which is charged with economic development on the Detroit River waterfront and oversight of the city’s commercial trade port, was his second. Jamian was paid $145,000/year for each year of the contract. “John’s departure is almost mutual in a sense. He was moving on to some other things. We as a board can’t force him to stay. If anything, it was mutual,” Orzechowski said. Deputy Director Kyle Burleson, the acting director in the interim, deferred questions to Orzechowski. The authority bills itself as “the primary public conduit between

private sector businesses in the Port of Detroit and the public sector. In this role, the Port Authority offers assistance in capital finance, development, applications and disbursement of public sector and foundation grant programs.” According to port authority statistics, companies contractually use its privately managed port facilities and terminals to manage 17 million tons of cargo annually. The authority’s fiscal year 2014 budget is about $1 million. Thirty-one companies operate at the 29 terminals overseen by the authority. The authority owns the city’s only general cargo terminal. The port stores about one-sixth of the nation’s aluminum supply in 1,000-pound ingot bars housed in bonded warehouses — taking advantage of the port being the

Page 5

DETROIT/WAYNE COUNTY PORT AUTHORITY BOARD MEMBERS The Detroit/Wayne County Port Authority board is composed of two members appointed by the mayor of Detroit, two appointed by the Wayne County Commission and one by the governor. The members are: 䡲 Tom Orzechowski, the chairman of the authority board and Algonacbased vice president of the Seafarers International Union’s Lakes and Inland Waters District. He was appointed by the county. 䡲 Alisha Bell, a Wayne County commissioner since 2002. Appointed by the county. 䡲 Lorron James, vice president of Detroit-based logistics firm James Group International. Appointed by Mayor Mike Duggan. 䡲 Jonathan Kinloch, an at-large Detroit Public Schools’ Board of Education member. Appointed by Duggan. 䡲 Frederick Hoffman, a former Chrysler executive and state official now of counsel in Clark Hill PLC’s Detroit office. Appointed by Gov. Rick Snyder.

largest U.S. free-trade zone. The port authority was created by the Legislature in 1978 to replace the Detroit Wayne County Port District. The authority’s next meet-

ing is 9 a.m. Monday at its offices at 130 E. Atwater St. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19


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When Mark Rieth took over Atwater Brewing Co. in 2005, one of his main goals was to get the company’s beer into cans. Now, just less than a decade later, that goal has come to fruition. A month ago, Atwater began canning its Dirty Blonde, Grand Circus IPA and Atwater Lager at the contract brewery Brew Detroit LLC at 1401 Abbott St. in Corktown. Within the next week, those cans were being shipped to retailers, bars and restaurants by Atwater’s distributor, Imperial Beverage Co. The cans have been on shelves in selected stores for three weeks. The story of how the beer got into the cans goes further back. Three years ago, Rieth began canning and selling Atwater out of City Brewing Co. LLC in Wisconsin. He wanted to see how the cans fared in the market and was persuaded by their success to bring the canning here to Atwater’s home. While the company rolls out the canned beer, it is also working on the rollout of distilled spirits made in Detroit, starting with Dirty Blonde Vodka. The canned beer production marks a major milestone for Atwater, and Detroit, Rieth said.

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A month ago, Atwater began canning its Dirty Blonde, Grand Circus IPA and Atwater Lager at the contract-brewery Brew Detroit LLC in Corktown.

This is the first time since 1985, when Stroh Brewery closed its 135year-old location, that beer is being packaged in cans in Detroit, according to Rieth. “You miss out on 30 percent of the market when you only sell bottle or draft,” he said. While not fully embraced by all, cans have advantages such as better portability and fewer restrictions (such as parks or other venues that do not allow glass.) While consumer demand was a major reason, another motivator is a longer-term goal to bring the culture of Detroit across the country. “For us, from a can standpoint, our ad says: ‘It’s a craft beer you can totally shotgun,’ ” Rieth said. Atwater plans to add three more

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beers to the can family in the first quarter of 2015. Final decisions have not yet been made, but Rieth said there’s a strong chance the Vanilla Java Porter will be released in a 16-ounce four-pack, and the DLight, a beer with qualities both of ale and lager, in 19-ounce cans. But not everyone is convinced. Larry Channell, co-owner of Dragonmead Microbrewery LC in Warren, said although cans are more portable and may protect your beer, they have a stigma in the industry. “When I see a can, my brain tells me, ‘Well, that’s cheap,’ ” Channell said. “It tastes wrong to me.” Brewery Vivant LLC in Grand Rapids would disagree. Ben Darcie, brewery representative and sales manager, said there are two enemies to beer — oxygen and light — and cans eliminate both. Darcie said it’s also one-third cheaper to can products than to bottle them, and Vivant has enough flexibility with canning to release 14 different brands of beer this year. He said he believes canning is the future for Michigan and Detroit beer, now that big players like Founders Brewing Co. and Bell’s Brewery Inc. are releasing their top sellers in cans. “It’s inevitable,” Darcie said. Atwater is being sold in 18 states, with plans for breweries to be built in Texas and North Carolina in the next five years. Rieth said he doesn’t want Atwater to be everywhere, though. “We just want to be everywhere that makes sense for us. Areas that are thriving,” he said. “But Detroit is priority.” International market growth is another focus area: A bar in Munich carries Atwater on tap, and Rieth has been in talks to get Atwater into Canada and Australia. Rieth said he would like sales to be 20-25 percent exports. In about 60 days, Rieth expects to be granted a license to produce spirits in a micro-distillery at Atwater’s 237 Jos. Campau location. First on the still list is Dirty Blonde Vodka. Rieth said he wants to start with clear spirits first and then move on to darker, more aged spirits. By early October, patrons will be able to buy Atwater spirits at the Detroit distillery; Rieth said the company hopes to add store distribution in the future. Atwater is in its 10th consecutive year of record sales, and is on track to gross $10 million this year with 60,000 barrels of beer, Rieth said. The company reported 2013 revenue of $4 million.


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IS YOUR CURRENT F A B R I C AT O R

Financing secured; former United Way building to be offices, lofts by 2015 BY KIRK PINHO CRAIN’S DETROIT BUSINESS

The redevelopment of the former United Way building in Capitol Park is expected to be completed by the end of the year now that the developer secured $38.5 million in federal, state and private financing. The 126,000-square-foot building at 1212 Griswold St. will be turned into new office space for 185 Archdiocese of Detroit employees and 56 loft-style apartment units. Financing for the project came from federal New Markets and historic tax credits; state historic and brownfield tax credits; Beechwood, Ohio-based Liberty Bank NA; Chase Bank; J.P. Morgan Chase; the Chicago-based Urban Partnership Bank; the Chicago-based National Community Investment Fund; Invest Detroit; and Lansing-based Develop Michigan Inc., said Richard Karp, principal of Lansing-based Karp and Associates LLC, one of the developers of the project. Karp said units will range from 500 to 1,300 square feet. Rental rates won’t be known until the fall, but he expects them to rent for about $1.95 per square foot. Most of the units will have one bedroom, but there will also be two- and three-bedroom units, he said. The development group for the project, Capitol Park Partnership, includes Karp; Kevin Prater, owner of Lansing-based Prater Development Ltd.; and Richard Hosey III, a former senior vice president for Bank of America who is now the owner of Detroit-based Hosey Development LLC. Lansing-based Buildtech Ltd., owned by Karp, is the general contractor on the project. The Downtown Detroit Partnership’s Live Downtown Program will provide financial incentives to employees of several companies to move into the former United Way building, according to the release. The Downtown Development Authority purchased the former United Way building for $1.75 million and the 72,000-square-foot Capitol Park Building at 1145 Griswold, according to Washington, D.C.-based real estate information service CoStar Group Inc. Capitol Park Partnership owns the former United Way building, Karp said. The DDA still owns the Capitol Park Building, but Capitol Park Partnership has development agreements on that building and the 110,000-square-foot Farwell Building at 1249 Griswold, which was purchased by the Michigan Land Bank in 2009 for $3.3 million. The DDA approved the development agreement for the three buildings in 2012. “This is probably the fastest public/private partnership development in Detroit in the last 40 years,� Karp said. Demolition and abatement began this month at the Capitol Park Building to turn it into retail/office space and 63 loft-style apartments. The Farwell Building will be redeveloped to feature first-

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The former United Way building, at 1212 Griswold St. in Capitol Park, will be turned into office space for the Archdiocese of Detroit and 56 loft-style apartments.

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year that it is moving into the former United Way building from the Gabriel Richard Building at 305 Michigan Ave. and the Chancery Building at 1234 Washington Blvd. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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CRAIN’S DETROIT BUSINESS

LETTERS

OPINION

Port future needs careful planning T

he Detroit/Wayne County Port Authority is taking a few months before choosing a successor to Executive Director John Jamian, who left when his contract expired last month, and maybe that’s wise. (See story, Page 4.) The port wants to be an economic engine for the region, but it faces obstacles, primarily lack of funding, that require consideration and definition before launching a search for a new executive director. One source of funding the port has sought in the past is legislation that would have given it added bonding authority — along with the ability to collect developer fees on bond issues — in competition with the Detroit Economic Growth Corp. That bonding authority would have included bonds for projects away from the waterfront. The goal was worthy: Jamian was seeking financial selfsufficiency for the nonprofit port, which lost $643,000 in 2012, according to its Form 990 filed with the IRS. But the move came as a surprise to the DEGC and others, and seemed destined to be moving money from one local pocket to another rather than create more economic value. New board Chairman Tom Orzechowski still hopes for such legislation to be passed and says he understands that talks are needed before proceeding. We applaud that thought, but remain unconvinced such legislation is a good idea. Although we’re not in favor of fiefdoms for their own sake, there’s nothing to be gained from duplicative efforts or situations that potentially could have a developer pitting the port against the DEGC. Strong, responsive, coordinated economic development efforts are what we need.

Persistence brings conference It’s easy to think a single person can’t make a difference, but, as Senior Reporter Sherri Welch reports on Page 32, that’s not always true. The Islamic Society of North America’s national convention, which draws around 20,000 people, is coming to Detroit this year because med student Syed Mohiuddin looked out his window and thought the streets were too empty. That led to a four-year personal journey of false starts, volunteering and community building that led to the merger of the two major local Islamic organizations. That merger, along with improving conditions in the city, created the infrastructure to win a bid for the 2014 convention last year. Mohiuddin allows that he had no idea the effort would take this long or that he would become so involved. But he kept pushing, and in so doing, has left his mark.

Top execs’ high pay not deserved Editor: When I saw the May 19 headline “Highest-paid execs earned their keep,” I had to double-check the date of the issue; I thought it might be April 1. What a joke! It would be interesting to see the compensation figures for midlevel executives and nonexecutives employed at these same companies. How much did their compensation increase in the past year — if at all? A generous 3 percent? This article only confirms that senior executives’ compensation has spiraled out of control. The fact that a company’s stock price increased from Dec. 31, 2012, to Dec. 31 2013, is only significant to shareholders who sold their stock that day. Stock prices reflect the market’s perception of value at a particular moment in time — which often is based on the general economy, world events and emotions like the so-called “irrational exuberance.” It bears little correlation to CEO and seniorexecutive performance. What shareholders really value are dividends. However, dividends and lower-level employees are usually the first things cut when a company fails to perform. Meanwhile, the CEO flies away on the platinum parachute given by the board when he or she first took the job. The opinions of so-called executive compensation experts are hardly a proper gauge. Their opinions are bought and paid for by corporate boards made up entirely of C-suite club members who all pledge “I’ll vote for your package if you’ll vote for mine.” These compensation experts are well paid to slice and dice data collected from other companies who overpay their senior executives to conclude that these multimillion-dollar compensation packages are somehow appropriate. If the executive compensation company actually told a CEO the

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: cgoodaker@crain.com truth, that he or she was grossly overpaid, it would be fired immediately. And, by the way, has anyone noticed that board members’ compensation has risen dramatically as well? This is not a coincidence. If the folks who really mattered — shareholders and customers — decided senior executive compensation, the numbers would look very different. Suggesting that such extravagant compensation is necessary to attract the best and the brightest is ridiculous. Most of these companies already employ the best and the brightest — the midlevel executives and nonexecutive employees who actually run the companies day to day. I’ll bet every one of the listed executives is whining that an increase in the minimum wage will destroy jobs and complaining about the cost of having to provide decent health insurance under the Affordable Care Act. Rather than increasing the minimum hourly wage to $10.10, perhaps the law should be that the lowest-paid worker must make at least 10 percent of what the CEO makes. What disease did any of these execs cure last year? What lifesaving technology did any of them personally invent? What major money-saving or moneymaking idea did they alone come up with and implement at their company? Arianna Huffington said it best

If the folks who “really mattered –

shareholders and customers – decided senior executive compensation, the numbers would look very different.

when she wrote Pigs at the Trough. Maureen Thomas White Lake

Don’t overlook Armenians’ role Editor: I read with great delight Bill Shea’s article “Built by immigrants: Foreign-born workers integral part of Detroit’s history, economy” in the June 2 issue. Many ethnicities were mentioned in Bill’s article, but I would like to bring attention to one important ethnic group that made some valuable contributions to Detroit — the Armenians. One of the most well-known and diverse communities in southwestern Detroit from approximately 1900-1960 was Delray. This community was a bit of a melting pot for many ethnic groups; probably most prominent were the Hungarians and Armenians. Before 1900, there were fewer than 60 Armenians living in Detroit, but after the Armenian genocide of 1915, in which more than 1.5 million Armenians were massacred by the Turkish Ottoman Empire government, this number rose to more than 2,000. The number of Armenians living in Detroit grew with each passing year. The Armenians spread into other neighborhoods, such as Highland Park, Dearborn and Pontiac, and, in the process, played an important role in the growth of the Detroit community contributing a great deal to the small-business community. As Mr. Shea’s article mentioned, the $5 work day created by Henry Ford was also a major attraction to the Armenians. They settled on streets such as Solvay Street, where rail cars would stop and the conductor would announce its arrival to “Armenian Boulevard.” Eventually, the Armenian population rose to more than 30,00040,000 dispersed throughout Detroit and the suburbs. Bravo to Crain’s and Bill Shea for recognizing the importance of the many ethnic groups that helped shape the metro Detroit area. Ara Topouzian Farmington Hills

KEITH CRAIN: Let’s keep the momentum going in Detroit Kudos to Roger Penske, Bud Denker and the entire Penske organization for putting on the Chevrolet Belle Isle Grand Prix. It was great if you were there, but more importantly, it looked magnificent to the millions of viewers who saw Detroit on television. Once again, an automotive event generated Super Bowl-like economic development for the city and region. Last week, the Detroit City Council voted unanimously in favor of the Detroit Institute of Arts to agree to create a trust for the jewels of our city, the art of the

DIA. There is a lot going on in our city and our community. There is a lot more optimism going on in our city. Some of it is deserved; some of it is simply hope for the future. The stock market usually performs based on future expectations. All of us who live and work in Southeast Michigan have that same optimism for our city and our region. There are still plenty of prob-

lems. There are still plenty of hurdles, but there is a real feeling that we’re going to get this done. The leaders of our state and community are getting it done and done right. There is, regardless of the political affiliation, lots of cooperation among politicians to do the right thing. In an era of political bickering, that is a very remarkable occurrence. Cooperation. Optimism.

Those are two words that we haven’t heard in a very long time. But it’s real and it is happening. Sure, it is very fragile. But it exists and it’s real. Now it’s up to all of us to make sure it grows. The next time you hear a naysayer, just tell them that they are wrong. There is a silver lining. We are attacking the blight, and we are lighting up the city, one light at a time. We are seeing new businesses, big and small, opening in our city. People, young people mainly, are moving into the center of the city, and you can’t find an

apartment or a loft to rent or buy. It is just a beginning, but it is a beginning. Every journey starts with a step and Detroit is making big steps forward. Building blocks that will turn this city back into the thriving metropolis it once was. We need more jobs. We need more public safety. But we have a beginning. That’s truly quite remarkable. Detroit is on a roll. Let’s all do whatever it takes to keep it on that roll. It is all very exciting.


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OTHER VOICES: Age diversity makes for better workplaces Throughout my caoverlap, and we must encourage Those in today’s reer, it has never ocall ages to cross paths in the workyounger generation bring curred to me to expect place, share skill sets and apprecito the workplace a permy superiors to be older ate what each generation offers, spective that they want than I am, and those that rather than butting heads just bewhat they do every day to I manage to be younger. cause we do things differently. mean something to them. Apparently, I’m unique All the skills and talents and They don’t want to go to in that regard because years of experience we bring to work and punch a clock many people expect the each position can truly be for and stay at a desk for workplace hierarchy to everyone’s benefit — and boost the eight hours and not care reflect years of hard-won bottom line. Let’s capitalize on the what they’re doing all for the wisdom they can get from ceived generational gaps. Tara Miceli seniority, with the eldest day. They want to make colleagues and superiors. They Our workplaces today are a mix strengths of this new working parstaff members in top positions an impact. want knowledge; they want men- of generations, with more retirees adigm, for the sake of corporate and their younger counterparts One of the biggest myths is that tors. Yes, they may bring ad- realizing they might want to start America and so we can build a betfuriously climbing the corpopeople in this generation doesn’t vanced technological skills and a new career or may have to stay ter economic future for all. rate ladder beneath them. Tara Miceli is director of the respect generations that came be- wisdom, but they are eager to in the workplace longer than I’ve been in my current posifore them. Actually, they hunger learn and want to bridge any per- planned. Generations are going to Walsh Institute at Walsh College. tion for nearly three years, working alongside (and managing) employees who are older than I am. We work well together — despite the fact that they are all more than a decade my senior. It just doesn’t occur to me that this is exceptional because I’ve always been in positions where employees are older and it just never seemed to matter. We’re seeing that more and more nowadays, with a workplace that looks a lot different than workplaces of yore. In many companies, you’ll see up to four different generations on the clock at the same time. When I was 21 and managing a loan department and investment programs for a credit union, I had to learn that age shouldn’t matter — and really it doesn’t. When you sit in front of a woman in her 50s and tell her she’s denied a loan, you quickly learn the art of corporate finesse. Business is person to person, not one age over another. Over time, I’ve learned the most important workplace lesson: how to deal with people, understanding their needs in the business world and what they require from their work. I’ve also learned that workplace needs don’t overshadow personal desires, and that the art of managing others comes from seeing the whole person and bringing the appropriate compassion to the task at hand. It’s never about coming in When John talked to FirstMerit Bank’s Treasury Management team, his goal and telling people what to do. I don’t care what age you are, or was to increase his company’s working capital. Together, they came up with a what position, you’ll never be successful if that’s your applan to help John effectively manage receivables, control payments, and improve proach. his company’s overall cash flow. Now John has all the tools he needs to keep his I was never intimidated by the fact that my entire team is business moving in the right direction — forward. older than I am. And I hope the team doesn’t see immaturity in my younger age. How we perform on the job has more to do with who we are as people than what age we project. Throughout many different leadership and management experiences, I’ve learned that the manager’s top job is realizing what somebody’s talents are, what they’re good at, and havTO L E A R N MOR E, C O N T A C T : ing the right people in the right PJ Danhoff, Treasury Management Sales Officer, seats, regardless of age. at 248-228-1706 or pj.danhoff@firstmerit.com. It’s also imperative to learn about what’s important to each Follow the latest market trends firstmerit.com generation. They’re all differ@firstmerit_mkt ent, and so are the mentalities Member FDIC shaped by what people have 2411_FM14 lived through.

Let’s capitalize on the strengths of this “new working paradigm, for the sake of

corporate America and so we can build a better economic future for all.

Keep your business heading in the right direction.

Treasury Management from FirstMerit Bank


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Children’s Hospital foundation seeks input to broaden impact BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

Children’s Hospital of Michigan Foundation’s roots go back a decade, but in a way, the foundation is still in startup mode. Since beginning fully independent operation in 2011, following the 2010 sale of Detroit Medical Center to what was then Vanguard Health Systems Inc., the foundation has launched a formal biannual grant-making program and a campaign to support new areas of pediatric health care and research, hiring new fundraisers to help re-establish connections with donors after losing many amid the DMC sale. The foundation inherited $90 million in charitable assets raised for DMC Children’s Hospital of Michigan following the sale of DMC and its conversion to a for-profit health system. It made $16.3 million in grants between 2011 and 2013 in three pediatric focus areas stemming from the original donor intent behind those assets: research, community benefit and education on things such as new pediatric procedures. The grants have gone primarily to researchers and physicians associated with Children’s Hospital and Wayne State University. But the foundation is also looking to carve out a new identity in order to have the greatest impact, said Chairman David Page, partner at Honigman Miller Schwartz and Cohn LLP in Detroit. “We felt if we were simply to steward the assets we were given, it would be good,” he said. “But getting contributions from the community for other things benefiting children would be even better.” “We have to figure out where’s the best place to put our next $100 million,” Page said. To that end, the foundation is seeking input from physicians, researchers and administration at DMC Children’s Hospital of Michigan, which remains its home base, and others in the community such as foundations making grants in health care and school-based health centers, said

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit May 30-June 6. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Marty M. Powell DDS PC, 14356 E. Jefferson Ave., Detroit, voluntary Chapter 7. Assets: $271,524; liabilities: $442,724.47. Palushi Inc, 12033 Grand River Ave., Detroit, voluntary Chapter 11. Assets: $12,348.65; liabilities: $151,524.72. Summit Mobility Products Inc, 24711 Sherwood Ave., Center Line, voluntary Chapter 7. Assets: $0; liabilities not available. — Natalie Broda

In my mind, the foundation “ has to be relevant to community needs as well as donors’ wishes.

Tony Werner, Children’s Hospital of Michigan Foundation

foundation President and CEO Tony Werner. “In my mind, the foundation has to be relevant to community needs as well as donors’ wishes,” he said. Werner joined the foundation in early 2013 after spending a decade as president of three foundations that benefited Toledo, Ohio, hospitals: Mercy Children’s Hospital Foundation, Mercy St. Vincent Foundation and St. Marguerite d’Youville Foundation II. Much of the $90 million in assets the foundation inherited were restricted or designated for specific programs. Securing new, unrestricted support will give the foundation’s board the flexibility to make grants in new pediatric areas where the needs are greatest, Werner said. To rebuild its fundraising team,

which was largely depleted amid the DMC sale, the foundation has hired four fundraisers, giving it about a dozen, among 19 total employees. As of the end of May, the foundation had $108 million in assets, Werner said. It’s taking grant solicitations only from pediatric physicians and researchers at Children’s Hospital or community organizations that work collaboratively with the hospital. The foundation considered changing its name, but the Children’s Hospital of Michigan Foundation name is so well known that the board decided against it, Page said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch


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PUBLISHER’S NOTEBOOK Contact Mary Kramer at mkramer @crain.com.

CRAIN’S MICHIGAN BUSINESS Mary Kramer

Biz leads way to strike down discrimination

Retail sales of e-cigarettes reached about $3.5 billion worldwide last year — barely a puff of the total $756 billion market still dominated by tobacco.

Companies take in revenue as e-inhalers gain in popularity BY MATTHEW GRYCZAN CRAIN’S MICHIGAN BUSINESS

Daniel Lawitzke, a Grand Rapids entrepreneur who pioneered the retail market in vaping liquids and devices in West Michigan, likens it to the rush to the marketplace by dietary supplements in the 1990s, when “antioxidants” became a household word — followed by the need for the U.S. Food and

Drug Administration to step in with regulations. Instead of smoking “analog” cigarettes that contain hundreds of chemicals resulting from the combustion of tobacco, people are inhaling a vapor of vegetable glycerin and propylene glycol, flavorings and nicotine. To produce the vapor as they inhale, users activate a device that generally has a battery-powered heating element surrounding a wick saturated with the e-liquid. O OT PH

C

hances are good that by this time next year you will have firsthand contact with someone who vapes — uses an electronic inhaler that simulates the act of smoking. And when you observe the thick cloud of vapor emanating from that person’s mouth instead of smoke, you may be witnessing the biggest single play in consumable products that some industry executives say is a once-in-alifetime opportunity. “In my career, there has not been a

sector that has so much potential and is so untapped in terms of value and global reach,” said Jim McCormick, CFO of Victory Electronic Cigarettes Corp. (OTCQB: ECIG), a West Michigan company that aims to be the nation’s largest independent producer of vaping products.

CK TO IS

When advocates for ending discrimination based on sexual preference plotted strategy, they knew they needed powerful business allies. They found them in politically conservative West Michigan. Office furniture makers Steelcase Inc. of Grand Rapids and Zeeland-based Herman Miller Inc., Battle Creek-based Kellogg Co. and Holland-based Padnos, a scrap metal processing and recycling company, are among those that signed on early to the Michigan Competitive Workforce Coalition. The group, formed by the Michigan chapter of the American Civil Liberties Union, is lobbying the Legislature to amend Michigan’s 1976 Elliott-Larsen Civil Rights Act to include protections for lesbian, gay, bisexual and transgender residents, commonly known as LGBT. The Legislature, prodded by Gov. Rick Snyder, may take up the issue this year. Elliott-Larsen protects residents from discrimination in employment, housing, education or “public accommodations” based on religion, race, color, national origin, age, sex or marital status. The Michigan ACLU opened an office in Grand Rapids nearly five years ago. “We wondered: Would ACLU be welcome? What issues were on people’s minds?” Executive Director Kary Moss recalled last week. To her surprise, in interviews with community and business leaders, three issues arose: LGBT rights, racial profiling and religious freedom. Ironically, some base opposition to LGBT rights on religious freedom. If Elliott-Larsen is amended, it means a restaurateur whose religion doesn’t condone homosexuality can’t refuse to serve gay customers or fire a waitress because he discovers she is a lesbian. Employers see LGBT rights as a talent issue. If they want the best, they need to be open to all. Coalition members include Blue Cross Blue Shield of Michigan, Chrysler Group LLC, Consumers Energy, Dow Chemical Co. and Strategic Staffing Solutions. So is this the first step toward legislative action to legalize gay marriage in Michigan? The two are not connected, Moss said. But it’s hard to see how they aren’t linked. In 2004, Michigan voters approved a constitutional amendment banning same-sex marriage and civil unions. But a federal judge struck that down in March, briefly opening the door to more than 300 gay marriages before an injunction was filed. Opponents of gay marriage say Michigan voters’ preferences should be protected. But public attitudes on gay issues have evolved. National polling shows a 70 percent approval rating of gay marriage among people ages 18-39. It will be interesting to see whether employers support gay marriage as strongly as the LGBT protections.

Rising with the vapors

See Vapor, Page 12

Nunica, Mich.-based Victory Electronic Cigarettes has grown through acquisition and now plans to raise $149.5 million in a public sale of stock. JON BROUWER


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CRAIN’S MICHIGAN BUSINESS

Vapor: Where there’s smoke, there’s fired-up entrepreneurs ■ From Page 11

Lawitzke, who launched MisterE-Liquid LLC in the summer of 2010 after he was able to quit smoking through vaping, now employs 43 full- and part-time people at a 16,000-square-foot laboratory and two retail outlets in Grand Rapids, with plans to open a third store in Lansing this month. Brick-and-mortar outlets such as Lawitzke’s that are springing up throughout Michigan are only a wisp of the industry’s vapor cloud. More than a thousand businesses worldwide hope to strike it rich as

suppliers to people who vape, ranging from gargantuan corporations such as Altria Group Inc. and Lorillard Inc. to tiny operations with whimsical names such as Planet of the Vapes that sell e-liquids online. Some mom-and-pop operations literally whip up their e-liquid formulas in kitchens, garages and basements. Wild Bill’s Tobacco, a Clawsonbased owner of 21 tobacco specialty stores and franchiser or business partner in an additional 29 such stores throughout Michigan,

is shifting gears to capture market share in vaping. The company, founded in 1994 as the Smoker’s Outlet, has launched two stores called Mr. Vapor that cater specifically to the vaping consumer, said Wild Bill’s chief marketing officer, Justin Samona. Over the next year, Wild Bill’s hopes to open 10 additional Mr. Vapor stores, mostly in the Detroit area. In addition, all Wild Bill’s stores now have Mr. Vapor sections, which offer a variety of products and “gourmet juice bars”

that allow store personnel to mix customized e-liquid blends for customers. “Every day, customers are switching over from tobacco cigarettes to electronic cigaSamona rettes because they see it as a healthier alternative — also a cheaper and cleaner alternative,” Samona said. “In-

Trust.

stead of having to go outside to smoke a cigarette — especially when it is cold — it is something they can do inside their homes and maybe even their workplaces.” One website lists more than 180 retail outlets in metro Detroit as selling vaping products. Samona said his company is slowing down expansion of the Wild Bill’s concept and focusing more on Mr. Vapor, a move that also serves to protect existing Wild Bill’s locations from losing customers to other vape shops. A Mr. Vapor shop may carry three times the selection of e-cigarettes, disposables, starter kits and e-liquids that a Wild Bill’s carries, he said. The company employs about 120 people throughout its chain of stores and at its 15,000-square-foot distribution center in Clawson. Other companies such as LorAnn Oils Inc. in Lansing are being swept up unintentionally by the vaping revolution. LorAnn, established in 1962, is an old-line manufacturer and distributor of flavorings and essential oils used by home crafters and professionals who make candy, baked goods, frozen desserts and soaps. But several vaping websites recommend LorAnn Oils flavorings for e-liquids, even offering a color-coded list of those best for inhalation. “We are in a bit of a quandary,” said John Grettenberger Jr., grandson of LorAnn Oils founder O.K. Grettenberger. “Our flavoring products are FDA-approved for ingestion, and no one knows the result of them being used for inhalation. We would never suggest that our products be used this way, and we wouldn’t even think about going after this market.”

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Victory Electronic Cigarettes has embarked on a go-big-or-gohome strategy that its president, Brent Willis, likens to a military campaign. The West Point graduate even invokes the name of the legendary war strategist Carl von Clausewitz when he talks about growing share in the vaping market. “In his study of war, Clausewitz talked about the ability of maneuver — for us, that means speed, moving faster than the competition,” Willis said. “You have to do the right thing — and you have to do the right thing at the right time.” Doing the right thing at the right time has placed Victory Electronic on a tear when it comes to acquiring other businesses. It has concluded three acquisitions of companies this year, and Willis said the company has agreed on terms to purchase seven more companies or distribution platforms in 2014 to further consolidate its sales and distribution channels. Last month, Victory Electronic filed its federal S-1 registration for the public sale of stock to raise up to $149.5 million. “So we have gone from zero in mid-2013 to about $75 million in revenues on a pro forma basis, and we See Next Page


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expect to be well over $200 million in revenues by the end of this year,” Willis said in an interview before the company filed its S-1 registration. Pro forma statements filed in the S-1 showed a net loss from operations of about $12.7 million. The company intends to change its name to Electronic Cigarettes International Group Ltd. to match its ticker symbol, but the new moniker also reflects its worldwide sales strategy. Victory Electronic purchased Atlanta-based FIN Electronic Cigarette Corp. Inc. in February, United Kingdom-based Vapestick Holdings Ltd. in January and Must Have Limited in April. Willis intends to put his international experience as a former executive for the Coca Cola Co., Kraft Foods Inc., Cott Corp. and InBev to work opening the international markets for Victory Electronic Cigarettes.

Big plans from a small space To say that Victory Electronic is flying below the radar is an understatement: The company shares space with a woodworking business owned by Willis’ father-inlaw in rural Nunica, about 26 miles east of Grand Rapids. A towering grain elevator and parked semis of a nearby business overshadow the parking lot of Versatile Wood Solutions, a manufacturer of

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Brent Willis, president of Victory Electronic Cigarettes, has big ambitions — more than $200 million in revenue by year’s end — for a company that currently operates out of space it shares with a woodworking business.

store displays and architectural millwork. No sign marks the fact that Victory Electronic Cigarettes is operating in about 3,000 square feet at the plant.

“Every penny counts,” Willis said with a grin when asked about the humble surroundings that serve as the nerve center for Victory Electronic. The company employs more than 100 people locally

and at offices and distribution centers in Atlanta and the United Kingdom. What is quickly thinning the crowd among vaping competitors is access to distribution through convenience stores and mass merchandisers such as Wal-Mart Stores Inc. and Rite Aid Corp., which serve a majority of the 1.3 billion people who the American Cancer Society estimates smoke worldwide. “Retailers are already making (vaping) space for the big tobacco guys — Lorillard, Reynolds and Altria,” Willis said. “But the big tobacco companies have some real weaknesses that we can exploit.” Brand, price and flavor selection aren’t the biggest factors when it comes to consumers making purchasing decisions at this point, he said. “Right now, 65 percent of all brand choice today is made on what’s there, what’s available, what’s on display,” Willis said. With the recent acquisitions, Victory Electronic sells its products through more than 50,000 retail outlets in the United States and Europe, which together make up an estimated 70 percent of e-cigarette sales worldwide, according to estimates from Euromonitor International, a London-based provider of global business intelligence. Euromonitor estimated that retail sales of e-cigarettes reached about $3.5 billion worldwide last year, less than one-half percent of the total $756 billion retail tobacco

market globally. Sales of e-cigarettes grew more than 180 percent in the United States in 2013 from the prior year, the firm said, and the sector is expected to continue to take more market share from combustible cigarettes. Willis and McCormick hope to capture more shelf space by cutting lucrative deals with distributors and retailers that large tobacco companies will find hard to match. Tobacco companies typically offer distributors a 3 percent markup off of cost, while Victory Electronic Cigarettes can offer up to 25 percent markup off of cost, Willis said. “That changes the economics for distributors in a very significant way,” he said. “We offer 30-day payment terms to distributors, and the tobacco companies offer net minus five — you pay for your product on Monday and you receive it on Friday. “We also offer very favorable profit margins for retailers like Meijer. The tobacco companies are at about 8 percent, while we can offer profit margins up to 50 percent.” In a study of 25 state laws that set minimum prices for cigarette wholesaling and retailing operations, the Centers for Disease Control and Prevention in Atlanta found in 2010 that the median wholesale markup was 4 percent and the median retail markup 8 percent. See Vapor, Page 14

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Vapor: Alternative to tobacco’s taste ■ From Page 13

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With such high stakes, the world’s largest tobacco companies have acquired or launched e-cigarette brands themselves. Since buying Blu Ecigs in 2012, Lorillard has built Blu into a leading e-cigarette brand with heavy promotion that tapped celebrity Jenny McCarthy. Reynolds American Inc. launched its own Vuse brand in July last year, and Altria Group introduced its MarkTen brand in August.

Blueberry? Cotton candy? Aside from elbowing for space on cigarette shelves, companies that make vaping products also are struggling to understand what their customers want. A bewildering array of delivery devices have flooded the market — such as “cig-a-likes” that are the size and shape of ordinary cigarettes with rechargeable batteries, refillable atomizers about the size of a cigar and hundreds of formulas of e-liquids that are flavored to simulate blueberries, chocolate or even

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COURTESY OF WILL BILL’S TOBACCO

Clawson-based Wild Bill’s Tobacco has added in all its stores Mr. Vapor sections, which offer products and “gourmet juice bars” that let store personnel mix e-liquid blends for customers.

cotton candy. “We don’t know how the product is going to evolve — e-liquids, vaporizers, disposables, rechargeables,” Willis said. “Anyone who says they know exactly where the market is headed is lying. So do it all. … Take the best ideas and bring them to market very quickly.” For example, Victory Electronic is introducing at Walgreen Co. stores this month a disposable clearomiser system discovered in Europe that lets customers see the level of e-liquids left in the unit. Lawitzke of Mister-E-Liquid has built a business on anticipating the market with a variety of ready-touse, refillable and disposable delivery systems along with separate components such as batteries, coils and tips so customers can assemble their own personal vaping equipment. More than half of Mister-ELiquid’s revenue comes from wholesale and retail sales of more than 100 flavors of custom-mixed e-liquids, which range from GranE’s Apple Pie to Maniac Mint Chocolate. The company sells products in 47 countries and supplies liquids to more than 300 vape shops nationally. Instead of competition, Lawitzke views companies such as Victory Electronic and Blu as portals for smokers-turned-vapers to find his business online. “They think that people want a device that looks like a cigarette, but what we’ve learned is that people who are vaping really don’t want to be associated with smokers,” he said. Soon after they try e-cigarettes, people often search out delivery devices that are higher-powered and refillable, Lawitzke said. “When they get them home and see $20 for a five-pack of cartridges, their first instinct is to say: ‘I’m going to search Google and find them cheaper. And that’s where we come in.’ ” Another misconception is that adults don’t like a variety of flavors. “The majority of our client base started with tobacco-flavored e-liquid, and they wanted it to taste like a cigarette when they first started,” Lawitzke said. “What we found is after a month or

so, our customers don’t want to taste tobacco anymore — it’s gross. “After their taste buds regain their sense of taste, tobacco doesn’t taste as good as strawberries or blueberries. The thing that gets people off analog cigarettes in the long term is the flavoring — the fact that you can taste apple pie if you want to taste apple pie.” Willis and Lawitzke were adamant about enforcing age restrictions on the sale of their products and the need for FDA regulations. In April, the federal agency proposed rules that would require vaping product companies to register, list ingredients in e-liquids and impose minimum age and identification restrictions to prevent sales to those under age 18. At the end of a 75-day public comment period, the agency will enact the rules that it deems necessary. In the manufacture of e-liquids, “people are just picking up what looks good, and they are mixing it in their kitchens or, God forbid, their garages or bathrooms,” Lawitzke said. “That’s part of the problem. There’s no accountability.” Mister-E-Liquid purchases its base materials, flavorings and nicotine from suppliers that document the concentrations and purity of their products and mixes the ingredients in its ISO-certified Class 6 clean room in Grand Rapids. The company, a founding member of the American E-Liquid Manufacturing Standards Association, does regular testing of final product, Lawitzke said. Willis said Victory Electronic Cigarettes imports its products from China, but it has plans to move manufacturing to the United States during the next year. “It’s our intention to be the leading independent electronic cigarette company in the world, fully in control of our own destiny, right here in West Michigan,” he said. “Frankly, the thing that keeps me up at night is the money that big tobacco — and big pharma, for that matter — can throw around because we are eating into the smoking cessation business.” Matthew Gryczan: (616) 916-8158, mgryczan@crain.com. Twitter: @mattgryczan


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Dow’s Liveris answers criticism with numbers BY FRANK ESPOSITO CRAIN NEWS SERVICE

It’s barely June and Dow Chemical Co. CEO Andrew Liveris already has had one heck of a year. Things got rolling for Liveris on Jan. 21 when activist investor Daniel Loeb and his Third Point LLC hedge fund blasted Midland-based Dow in a letter to investors for what was described as “a poor operational track record across Liveris multiple business segments.” Loeb and Third Point also called for Dow — one of the world’s largest plastics and chemicals makers — to be split into two companies, with its petrochemicals business in one. Within days, Liveris — a 38-year Dow veteran who has occupied the corner office since 2004 — had met with American business guru Warren Buffett, whose Berkshire Hathaway firm is a Dow shareholder. Buffett assured Liveris that Dow was heading in the right direction. Liveris, naturally, didn’t keep Buffett’s assurances to himself. He took to the airwaves Jan. 29 on CNBC’s “Squawk Box” program to share that info with viewers. On the show, Liveris said Buffett had told him that “we’re an owner and we like being an owner,” adding that “we think (Liveris) has been running the company for the investors who will stay vs. investors who will leave.” Somewhere in New York, Loeb had to wince at those words. Liveris had to feel like a happy pastor who just had the Pope show up at his church’s bake sale. CNBC’s website wrote about Liveris’ appearance under the headline, “Hey Loeb, Buffett has my back.” On that same date, Dow announced that full-year profit for 2013 grew more than four times to

$4.8 billion. Part of that increase was a $2.5 billion settlement from a Kuwaiti firm over a failed business deal in 2008. In a Q&A session with analysts, Liveris didn’t mention Loeb or Third Point by name, but he did say he “agreed with the investor that there is an upside” to Dow’s strategy. And Liveris pointed out that Dow already had sold off $10 billion of assets in recent years and in late 2013 announced plans to sell off $5 billion more. Dow’s plans to increase its share buyback program and to sell off other small businesses was seen by some as a response to Loeb’s criticism. Company officials said these moves were part of an existing strategy. And like other companies in the region, Dow has announced plans to add polyethylene and ethylene capacity to take advantage of newfound supplies of shale-based natural gas. Liveris was able to deliver more good news for Dow on April 23 when the company announced that firstquarter 2014 profit was up more than 60 percent to just under $1.1 billion, even though sales essentially were flat at almost $14.5 billion. What has Dow’s per-share stock price been doing amid all this hubbub? Well, it was around $43 before being goosed by the Loeb letter in late January. It proceeded to shoot up above $50 in late March before settling down a bit to close near $49.30 on May 19. So do the higher profits and stock price mean that Liveris can relax a little? Maybe not. On April 30, Loeb and Third Point fired another shot across Dow’s bow. According to a letter to investors that was obtained by Reuters, Loeb said that Dow’s integrated strategy is costing shareholders billions and that executives should work harder to boost results and transparency. To date, Dow has declined to comment on Loeb’s recent comments. From Plastics News

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A new tier-one auto supplier has been formed to operate a headliner and sun visor business acquired from Johnson Controls Inc. Motus Integrated Technologies, backed by the private equity firm Atlas Holdings LLC, will have its North American headquarters in Holland. JCI announced the planned sale, which left the auto supplier with a portion of its interiors unit, in February. Terms of the deal were not disclosed. It later announced a deal to spin off the remainder of its interiors group into a joint venture with Yanfeng Automotive Trim Systems Co. Ltd. “Motus is being built from solid automotive manufacturing busi-

nesses with outstanding products that are burdened by circumstances where their true value and potential are constrained,” Motus Chairman Tim Lee said in a statement. “Our focus at Motus is to remove the barriers and provide the capital required to enable our company to flourish.” Besides its Holland location, Motus will continue operations in Ramos Arizpe, Mexico; Uberherrn, Germany; and Creutzwald, France, and will have production capabilities in Cottondale, Ala. Lee is a former longtime General Motors Co. executive who retired in April as chairman of GM China. Shannon White, a former executive with United Plastics Group Inc., is president and CEO. From Plastics News

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Analysts consider impact of CO2 regulations on state The Obama adminisdon’t use electricity to tration’s plan to reduce fuel their operations. carbon dioxide emissions They use … you guessed Gears from existing U.S. coalit … coal. The proposed fired power plants by 30 regulations are limited to percent by 2030 is creatcoal-fired power plants, ing the expected maelnot coal-fired steel plants. strom of backlash. The So the effects could be proposal is being labeled minimal, said John Ana jobs killer and a detriton, Washington, D.C.ment to American manubased director of steel facturing. service for analysis firm The proposal, released IHS Inc. Dustin Walsh last week by the U.S. EnviAnton said the inronmental Protection Agency, is de- creased use of natural gas in the signed to battle global warming, U.S., thanks to the oft-debated but at what cost? What is its effect fracking in parts of the country, is on Michigan industry? Will the pro- actually offsetting much of the proposed cuts save polar bears but kill posed emissions cuts anyway. manufacturing? Analysts are start“The natural gas boom really ing to weigh in. made this easier to take and mitiThe plan, which sets different tar- gates a lot of the pain of this progets in each state, would require posal,” Anton said. Michigan to reduce CO2 output by Anton said increasing natural 31.5 percent from 2012 levels, The gas production will likely offset a Associated Press reported. Nearly large portion of CO2 emissions. half, 49 percent, of electricity in the Michigan gets approximately 20 state is produced from coal, above percent of its electricity from natthe 39 percent national average. ural gas. Michigan is the 11th-highest carbon dioxide producer in the country. President Barack Obama has The automotive industry has so asked the EPA, which has the authority to go around Congress under far remained silent on the EPA prothe Clean Air Act, to finalize the posal. The industry is already facing new rules by June 2015. States have until 2016 to submit their plans — or 2017, if they choose to work in a joint effort with another state. The National Association of Manufacturers has taken a strong stance against the EPA proposal. Jay Timmons, president of the Washington, D.C.-based NAM, said stricter regulations would force manufacturers to move manufacturing to lowercost, less-regulated countries.

Shifting

OEMs yet to weigh in

steep challenges in meeting the federal Corporate Average Fuel Economy (CAFE) standards, which require automaker fleets to reach 54.5 mpg by 2025. For the new EPA standards rollout, the auto industry feels a stateby-state set of deadlines would be challenging, said Julie Fream, president and CEO of Troy-based Original Equipment Suppliers Association. “OESA is concerned what the new emissions proposal will do relative to energy costs for all manufacturers, including our members,” Fream said in an emailed statement. “Additionally, the proposal allows state-by-state implementation of the requirements, increasing the complexity for manufacturers.” New regulations and extreme weather, whether global warmingrelated or not, affects automotive production and will cost Michigan industry. How much? That’s going to be debated in the months and years ahead as much as climate change. This column originally appeared as a blog post on crainsdetroit.com. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter : @dustinpwalsh

Cold reaction from steel The steel industry, ground zero for automotive production, is often cited as a major producer of pollutants, including carbon dioxide. Experts predict the industry contributes roughly 5 percent of global carbon emissions. Thomas Gibson, president and CEO of the American Iron and Steel Institute, which has an office in Southfield, said the proposal would cripple the steel industry and raise costs for manufacturers and consumers. “Energy, in particular electricity, is one of the most significant cost drivers for the production of steel,” Gibson said in an emailed statement to Crain’s. “This proposal will result in increased electricity costs for industrial consumers, who ultimately have the compliance costs and risks passed on to them. A regulation from EPA that will disproportionately impact coal-generated electricity will have a detrimental effect on steelmaking.” Dearborn-based Severstal North America Inc., which the Michigan Department of Environmental Quality approved for a controversial emissions plan last month, declined to comment directly on this story. However, most steelmakers in Michigan, including Severstal,

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Israel

WHERE MICHIGAN DOES BUSINESS Belfor USA Based: Birmingham Operations: Belfor has a main base in Tel Aviv and a branch in Haifa, part of a network of more than 300 offices in 31 countries. Employees: 50 Products/Services: Commercial and residential services, with special emphasis on local needs for disaster recovery, including water and fire damage, asbestos removal and other services. Top executive: Nimrod Vered, CEO

I

srael has a growing high-tech sector, including companies focused on aviation, communications, computer-aided design and medical electronics, in addition to traditional manufacturing. Israel’s GDP for 2013 was $272.7 billion, up $29.8 billion since 2011. According to the CIA World Factbook, services comprise 66.4 percent of Israel’s economy, with 80.3 percent of the workforce working in that sector. High-tech equipment, cut diamonds and pharmaceuticals are some of Israel’s leading exports, worth $60.67 billion in 2013. Israel’s most common imports include raw materials, military equipment, fuels and consumer goods. Its largest trading partner is the U.S. Natural gas fields were discovered off Israel’s coast in 2009 and are expected to give the country’s energy sector a boost in the coming years.

Haifa Bnei Brak Herzliya Holon Rishon LeZion Tel Aviv Yad Eliyahu Jerusalem

Cascade employs 25 in a joint venture.

Cascade Engineering Inc. Based: Grand Rapids Operations: Cascade has a 50-50 joint venture with Beersheba-based Dolav Plastic Products called Decade Products, which manufactures plastic products for Israeli markets and for export to Europe, Asia, Africa and the Middle East. Employees: 25 Products: Plastic pallets and large containers Top executive: Ralph Harris, president and CEO, Decade Products

Beersheba Yeruham

ISRAEL

COMING UP July: United Kingdom August: Thailand/Malaysia

Israel and the West Bank. This is located at importer UMI’s headquarters in Rishon LeZion. There is also an advanced technology center in Herzliya. Employees: Approximately 50 people work at the GM Advanced Technology Centre. About 400 people work at UMI, though they are not GM employees. Products: A range of Chevrolet and Cadillac vehicles is sold in Israel (via importer UMI). Additionally, Opel vehicles are imported into Israel (direct from Opel in Germany) via another importer. Top executive: Ray Schmit, country manager More information: In 2013, Chevrolet sales in Israel totaled 7,897 units. Chevrolet market share is 3.5 percent. So far in 2014, Chevrolet sales have already reached 5,304 units, with market share growing to 5.6 percent.

Perrigo Corp.

Chrysler Group LLC Based: Auburn Hills Operations: Fiat Chrysler operates in Israel through the importers Mediterranean Car Agency Ltd. and Automotive Equipment & Vehicles Ltd. These entities distribute and sell Fiat Chrysler vehicles. MCA has its headquarters in Tel Aviv. AEV sells Chrysler Jeep Dodge and Ram brands through eight showrooms in Israel. Employees: MCA: 300; AEV: 450 Products: MCA: Romeo, Fiat, Abarth, and Fiat LCV; AEV: Jeep Grand Cherokee, Jeep Wrangler, Jeep Compass and the new Jeep Cherokee, Chrysler Grand Voyager, Chrysler 300, Dodge Journey, Ram 3500 Top executives: Ori Lahav, CEO of MCA; Ittamar Givton, managing director, Automotive Equipment Group; Tzvi Neta, chairman of AEG

Crain’s World Watch Monthly report showcases companies leading the way in international business, as well as those expanding their global operations. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

Fusepoint Solutions Based: Ann Arbor Operations: Research and development center in Holon Employees: 5 Products: Internet of Things/Connected Vehicles software, which connects the Internet to objects to transfer data wirelessly Top executive: Ehud Naamani, CEO

Based: Allegan Operations: Perrigo Israel has four business units, in Ramat Hovav, Yad Eliyahu, Bnei Brak and Yeruham. Employees: 1,300 Products: Develops and manufactures generic oral prescription drugs, mainly focusing on active pharmaceutical ingredients. Also produces generic and OTC pharmaceuticals, branded OTC, vitamins and mineral supplement products. Perrigo also sells diagnostic and other medical pharmaceutical products in Israel. Top executives: Joseph Papa, chairman, president and CEO; Sharon Kochan, vice president and general manager international

Clients: Israeli, European and U.S. markets

Plasan Carbon Composites Inc. Based: Wixom Operations: A subsidiary of Israeli defense company Plasan Sasa, Plasan Carbon Composities has a headquarters, R&D center, and engineering and production facilities in Kibbutz Sasa, in northern Israel. Employees: 330 Products: Vehicle armor Top executive: Dani Ziv, CEO Clients: Oshkosh, AM General, Lockheed Martin, General Dynamics Land Systems Canada

RGIS LLC Based: Auburn Hills Israel operations: An office in Rishon LeZion services the entire country. Employees: 300 Services: Physical inventory, store mapping, fixed asset inventories, equipment rental, seasonal staffing Top executive: Guy Ratzenberg, country manager Clients: Alon Blue Square Israel Ltd., SuperPharm, Shufersal, Rami Levi Hashikma Marketing, Ace, Osher Ad, Dor Alon, idigital

Tomcar North America makes off-road vehicles.

Tomcar North America Based: Rochester Hills Operations: Development and manufacturing operations located near Tel Aviv Employees: 9 Products: Tomcar, a military grade offroad vehicle Top executive: Yoram Zarchi, managing director Clients: Tomcar NA, Tomcar Australia, South Sudan Ministry of Interior — Compiled by Bridget Vis and Natalie Broda Michigan Israel Business Bridge assisted in the research for this report.

General Motors Co. Based: Detroit Operations: Has a regional marketing office focused on providing sales support for

Domino’s Pizza Inc. Based: Ann Arbor Operations: 49 Domino’s Pizza stores throughout the country; Israel’s operation is based in Jerusalem. Employees: 100 Products: Pizza, beverages, side items Top executive: Yossi Elbaz, CEO of Domino’s Pizza Israel Clients: Retail pizza customers

Domino’s Pizza operates 49 stores in Israel.

Perrigo’s four business units in Israel include this one in Yeruham.


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Indratech

BorgWarner Inc.

John Lowery

Kevin Choksi

Jason Teshuba

Surendra Khambete

James Verrier

John Lowery brings a “yes-it-canbe-done” vision to Applied Imaging. He has attracted a strong group of professionals and challenged them to remain ahead of the technology curve. His leadership style allows him to be approachable, present and available, and unify his team behind his vision.

In 1999, Kevin Choksi and his co-founders created WorkForce Software to address an unmet need among large employers. Since then the Õrm is in new global markets, with hundreds of clients in the U.S., Canada, the U.K. and Australia.

L: Michael Kulka R: Pete Bosanic

As a lifelong lover of language and culture, Jason Teshuba has always been frustrated by the poor quality of the options in the languagelearning market. It was this unmet need that led to Mango Languages, a product line now used for 60 languages.

In founding Indratech, Surendra Khambete brought technology together with manufacturing. The end result is a technology-based company offering an effective and sustainable replacement for cushioning products that reduces problems associated with recycling or disposal.

celebrations in 25 U.S. cities to

our community and to toast their vision. Their energy and strategic vision have turned their dreams into reality. We applaud them all for taking the road less traveled to launch new companies, open new

passion, innovation and unwavering commitment

Zoup! Fresh Soup Company

Eric Ersher Zoup has grown from one location in 1998 to its current roster of 62 in 15 states and Ontario. Eric Ersher’s focus has always been on quality and an “everything matters” philosophy that is one of the pillars of the company’s deliberate culture.

The combination of a career as a professional boxer followed by 10 years in the stafÕng industry led Jeffrey Styers to start his own company, Arrow Strategies. It started with one ofÕce and is now providing contract stafÕng services in IT, engineering, health care and professional services across seven ofÕces in the U.S.

Chris McCuiston

Nanua Singh

Chris McCuiston has grown his business from one location and 2,800 students per week to 13 locations and 18,000 students. He developed a proprietary swim curriculum, uses an efÕcient computer based scheduling system, invested in his building infrastructure and established an intense customer focus—which is the families.

As head of an engineering services, workforce management and software development Õrm, Nanua Singh recognized the need to diversify out of doing mostly automotive work in 2006. Now in the aerospace, locomotive and medical equipment industries, the Õrm has been consistently recognized as a fast-growing company.

RETAIL & CONSUMER PRODUCTS

Summit Health Inc.

Richard Penington

WINNER Richard Penington built Summit Health from the ground up. He took strategic risks along the way, such as reinvesting heavily in the IT infrastructure at a time when others weren’t. These risks have pushed the organization toward new goals and innovation, and instilled a culture of creativity.

Flatout Inc.

Bridget Lemberg

Stacey and Mike Marsh

WINNER Stacey and Mike Marsh recognized a void in the marketplace for a Öatbread that could become a premier carrier for many food applications. Flatout is now a full line of artisan Öatbreads sold in retail stores across the United States, Canada, Puerto Rico and Mexico.

Bridget Lorenz Lemberg turned a simple and innovative vision—a quick, precise drug test using saliva —into a growing startup, and one of the few female-led technology companies in the nation. Her recipe for success is her determination to succeed and her commitment to stafÕng FFL with the very best innovative employees.

Shiloh Industries

When Tel Ganesan left Chrysler in 2005, his goal was to chase his entrepreneurial dreams. His risk paid off with the creation of Kyyba, which offers engineering and IT stafÕng services and software development.

Patrick Fehring created Level One Bank in 2007 because, after 26 years in the industry, he thought he could build a better bank. Starting with card tables in a rented ofÕce, the bank has gone from zero assets to $600 million under management.

John Roggow

Ramzi Hermiz

When Marshall Plastic Film went into bankruptcy, John Roggow took the opportunity to buy the company for which he had been working. Together with three investors, they started the company from scratch in 2003, working to bring back former customers and grow the business.

Ramzi Hermiz took over as CEO of Shiloh Industries in 2012 when it was a quiet, steady public company. Within three months of his arrival, Hermiz made his Õrst acquisition, adding two more within a year. He brings not only a vision for transforming a company, but the determination and skills to bring that goal to fruition.

Alliance Franchise Brands LLC

Goodwill Industries of Greater Detroit

In 10 years, Donald Hicks grew LLamasoft from one person (himself) to a 100-person Õrm. He created LLamasoft because the industry needed a solution, and he felt that, “if I didn’t make this happen, maybe no one would.”

Computerized Facility Integration LLC

Robert Verdun

WINNER Surviving the Tech Bubble of 2001 and the Great Recession of 2008 and 2009 has brought lessons and a more solid business model to Robert Verdun. It taught him to keep high standards and diversify his business base.

Todd Sachse has built his company by exceeding in many niches: renovating historical buildings; constructing ofÕce buildings, hotels, schools and shopping centers; and completing build-outs in retail centers, airports, medical ofÕces and general ofÕce buildings.

Grand Rapids Plastics Inc.

Arthur Bott Arthur Bott sold his company in 2001 to retire, but wound up buying the company back in 2006. Since then, he’s been able to reduce costs and grow the company. He’s brought in new clients like Magna International, Johnson Controls Inc. and Chrysler Group LLC and grown from 45 employees to 300.

Lorna Utley

MachineTools.com

In the six years that Lorna Utley has led Goodwill Industries, she not only helped the nonproÕt survive the recession, but also grow. A crucial piece was re-entering the retail market; in the last three years, Goodwill has opened three stores that created 75 new jobs.

CONSUMER SERVICES

Stuart Carlin

MVC Holdings LLC When Linda Torakis and her husband Mike co-founded MVC Holdings LLC in 2008, it was bleeding $1.5 million per month. They were able to turn the company around in less than six months and save over 300 manufacturing jobs. Additionally, they found capital to fund future growth.

FAMILY BUSINESS

Jeffrey Farber Alta Equipment Company

Rich Beckman

Steven Greenawalt

WINNER

WINNER

Steven Greenawalt articulates a vision to his employees and stresses the importance of creating “customers for life.” Alta has been on a growth path after a bold move in 2009 when the company made four acquisitions in one month that grew both the territory and the product portfolio.

As CEO, Rich Beckman identiÕed acquisitions as the critical growth driver for the company and strengthened the existing infrastructure. Under his leadership, Great Expressions became proÕtable in 2000 and has seen both top- and bottom-line growth every year since.

Detroit Venture Partners

Linda Torakis

Stuart Carlin founded MachineTools.com on a simple idea: Bring buyers and sellers of industrial equipment to one online marketplace. With a user-friendly interface and transparent pricing, the site now has a presence in 200 countries.

DISTRIBUTION & MANUFACTURING

Great Expressions Dental Centers

SPIRIT OF ENTREPRENEURSHIP

Josh Linkner

Auburn Pharmaceutical

WINNER

Õnalists!

MPF Acquisitions Inc. dba Marshall Plastic Film

Michael Marcantonio started as an investor in 2000 and became CEO by 2011. As CEO he has been instrumental in planning the future of the company and positioning it as a driving force in the marketing and visual communications industry.

Todd Sachse

Forensic Fluids Laboratories

Patrick Fehring

Tel Ganesan

Michael Marcantonio

DIVERSIFIED SERVICES

WINNER Shortly after James Verrier was named BorgWarner’s president and CEO, he introduced himself to employees, saying, “I never forget where I came from, how I got here and how that made me who I am.” Humility, respect and trust are core to his value system, and he has implemented those values to the company.

Level One Bank Kyyba Inc.

Donald Hicks

Sachse Construction

Congratulations to all of our

Partner, EY Entrepreneur Of The Year Michigan & Northwest Ohio Program Director

Luther Elliott started Information Systems Resources Inc. out of his Farmington Hills home 16 years ago. The company has grown not by selling computer systems, but by recycling those no longer being used. Each year, the company processes 2 million pounds of electronic hardware.

Starting in 1992 with a single truck and some business cards, Michael Kulka and Pete Bosanic have grown PM Environmental to a company that works with banks, government agencies and numerous other businesses throughout the U.S. as an environmental risk expert.

TECHNOLOGY

to win in the marketplace.

Angie Kelly

Luther Elliott

LLamasoft Inc. Rapid Global Business Solutions Inc.

GoldÕsh Swim School Franchising LLC

markets and fuel job growth. Join us in celebrating their

Jeffrey Styers

BUSINESS SERVICES

Each June, we host

who are regional Õnalists into

AUTOMOTIVE

P.M. Environmental Inc.

Arrow Strategies

Reliable Aftermarket Parts Inc.

innovative entrepreneurs.

welcome the men and women

DISTRIBUTION & MANUFACTURING Continued

WorkForce Software

Information Systems Resources Inc.

passion, vision and persistence

Twenty-eight years ago, EY

CONSUMER SERVICES Continued

Applied Imaging

to their communities. Their

dedication.

DIVERSIFIED SERVICES Continued

LIFETIME ACHIEVEMENT

businesses and giving back

stand as a testament to their

TECHNOLOGY Continued

Kar’s Nuts Inc. When Jeffrey Farber worked for the company his father owned, he learned the values, as well as the missteps, of running a drug distribution company. With those lessons learned, he started his own company when the demographics, government regulation and insurance mandates were driving the consumer to generics.

Nick Nicolay

WINNER When Nick Nicolay took over Kar’s Nuts in 1995, he became the third generation of his family to run the company. But changes had to be made. The company diversiÕed into vending channels, leading to a strategic focus on trail mix. Now the Sweet ‘n Salty Mix is the top selling trail mix in America.

L: Dan Gilbert R: Brian Hermelin Three people with years of entrepreneurial experience wanted to help others looking to start their own enterprises. The work isn’t just capital needs, but also the serious hands-on work it takes to realize something out of thin air. Dan Gilbert, Josh Linkner and Brian Hermelin founded Detroit Venture Partners with the mission to rebuild Detroit through entrepreneurial Õre. Since creating DVP, they have made 23 investments in early and seed stage digital technology companies. In turn, those companies have each grown, hiring hundreds of people, creating technological and entrepreneurial density in the central business district.

2014 JUDGING PANEL Andy Appleby Chairman General Sports and Entertainment 2002 award winner

David Cole Chairman AutoHarvest Chairman Emeritus Center for Automotive Research

Arvind Pradhan Chief Executive OfÕcer Camaco, LLC 2005 award winner

Brian Demkowicz Managing Partner Huron Capital Partners 2008 award winner

Ron Shahani President and Chief Executive OfÕcer Acro Services 2003 award winner

Willie Geiser Chief Executive OfÕcer Allshred Services 2005 award winner

Michelle Sherman Vice President and Chief Financial OfÕcer Barden Companies

Jeff Ishbia Chief Executive OfÕcer United Shore Financial Service 2013 award winner Vince Thomas Chairman and founder Billhighway 2011 award winner


DBspreadAD_DBspreadAD.qxd 6/4/2014 3:09 PM Page 1

ADVERTISEMENT

ADVERTISEMENT

EMERGING

Honoring those who drive growth and innovation … Since 1986, EY has celebrated the entrepreneurial spirit of men and women who have followed and achieved their dreams. These leaders have changed the lives of countless others by building their

RETAIL & CONSUMER PRODUCTS Continued

BUSINESS SERVICES Continued

Choon’s Design

Choon Ng

WINNER Inventor and entrepreneur Choon Ng created a way to weave rubber bands into brightly colored bracelets, rings, Õgures and other items kids wear and share with their friends. It is the winner of four Toy Industry of America awards, including the coveted Toy of the Year award.

Biggby Coffee L: Michael McFall R: Bob Fish Equal partners Mike McFall and Bob Fish have always had clear roles. Bob is the strategist and the face of Biggby while Mike focuses on sales, Õnances and legal matters. While each hold very different roles in the business, one thing they both agree on is their focus. Their Õve simple cultural values are imbedded in everything they do and every decision made.

founded the EY Entrepreneur Of The Year™ Program to recognize these dynamic leaders and to build an inÖuential community of

Thomas Salisbury Professional dedication and competitiveness are a few of the qualities that helped Thomas Salisbury take a company from startup to multimillion dollars in just Õve years. He’s been able to use multiple e-commerce platforms to provide aftermarket agriculture and construction equipment parts.

Mango Languages

Indratech

BorgWarner Inc.

John Lowery

Kevin Choksi

Jason Teshuba

Surendra Khambete

James Verrier

John Lowery brings a “yes-it-canbe-done” vision to Applied Imaging. He has attracted a strong group of professionals and challenged them to remain ahead of the technology curve. His leadership style allows him to be approachable, present and available, and unify his team behind his vision.

In 1999, Kevin Choksi and his co-founders created WorkForce Software to address an unmet need among large employers. Since then the Õrm is in new global markets, with hundreds of clients in the U.S., Canada, the U.K. and Australia.

L: Michael Kulka R: Pete Bosanic

As a lifelong lover of language and culture, Jason Teshuba has always been frustrated by the poor quality of the options in the languagelearning market. It was this unmet need that led to Mango Languages, a product line now used for 60 languages.

In founding Indratech, Surendra Khambete brought technology together with manufacturing. The end result is a technology-based company offering an effective and sustainable replacement for cushioning products that reduces problems associated with recycling or disposal.

celebrations in 25 U.S. cities to

our community and to toast their vision. Their energy and strategic vision have turned their dreams into reality. We applaud them all for taking the road less traveled to launch new companies, open new

passion, innovation and unwavering commitment

Zoup! Fresh Soup Company

Eric Ersher Zoup has grown from one location in 1998 to its current roster of 62 in 15 states and Ontario. Eric Ersher’s focus has always been on quality and an “everything matters” philosophy that is one of the pillars of the company’s deliberate culture.

The combination of a career as a professional boxer followed by 10 years in the stafÕng industry led Jeffrey Styers to start his own company, Arrow Strategies. It started with one ofÕce and is now providing contract stafÕng services in IT, engineering, health care and professional services across seven ofÕces in the U.S.

Chris McCuiston

Nanua Singh

Chris McCuiston has grown his business from one location and 2,800 students per week to 13 locations and 18,000 students. He developed a proprietary swim curriculum, uses an efÕcient computer based scheduling system, invested in his building infrastructure and established an intense customer focus—which is the families.

As head of an engineering services, workforce management and software development Õrm, Nanua Singh recognized the need to diversify out of doing mostly automotive work in 2006. Now in the aerospace, locomotive and medical equipment industries, the Õrm has been consistently recognized as a fast-growing company.

RETAIL & CONSUMER PRODUCTS

Summit Health Inc.

Richard Penington

WINNER Richard Penington built Summit Health from the ground up. He took strategic risks along the way, such as reinvesting heavily in the IT infrastructure at a time when others weren’t. These risks have pushed the organization toward new goals and innovation, and instilled a culture of creativity.

Flatout Inc.

Bridget Lemberg

Stacey and Mike Marsh

WINNER Stacey and Mike Marsh recognized a void in the marketplace for a Öatbread that could become a premier carrier for many food applications. Flatout is now a full line of artisan Öatbreads sold in retail stores across the United States, Canada, Puerto Rico and Mexico.

Bridget Lorenz Lemberg turned a simple and innovative vision—a quick, precise drug test using saliva —into a growing startup, and one of the few female-led technology companies in the nation. Her recipe for success is her determination to succeed and her commitment to stafÕng FFL with the very best innovative employees.

Shiloh Industries

When Tel Ganesan left Chrysler in 2005, his goal was to chase his entrepreneurial dreams. His risk paid off with the creation of Kyyba, which offers engineering and IT stafÕng services and software development.

Patrick Fehring created Level One Bank in 2007 because, after 26 years in the industry, he thought he could build a better bank. Starting with card tables in a rented ofÕce, the bank has gone from zero assets to $600 million under management.

John Roggow

Ramzi Hermiz

When Marshall Plastic Film went into bankruptcy, John Roggow took the opportunity to buy the company for which he had been working. Together with three investors, they started the company from scratch in 2003, working to bring back former customers and grow the business.

Ramzi Hermiz took over as CEO of Shiloh Industries in 2012 when it was a quiet, steady public company. Within three months of his arrival, Hermiz made his Õrst acquisition, adding two more within a year. He brings not only a vision for transforming a company, but the determination and skills to bring that goal to fruition.

Alliance Franchise Brands LLC

Goodwill Industries of Greater Detroit

In 10 years, Donald Hicks grew LLamasoft from one person (himself) to a 100-person Õrm. He created LLamasoft because the industry needed a solution, and he felt that, “if I didn’t make this happen, maybe no one would.”

Computerized Facility Integration LLC

Robert Verdun

WINNER Surviving the Tech Bubble of 2001 and the Great Recession of 2008 and 2009 has brought lessons and a more solid business model to Robert Verdun. It taught him to keep high standards and diversify his business base.

Todd Sachse has built his company by exceeding in many niches: renovating historical buildings; constructing ofÕce buildings, hotels, schools and shopping centers; and completing build-outs in retail centers, airports, medical ofÕces and general ofÕce buildings.

Grand Rapids Plastics Inc.

Arthur Bott Arthur Bott sold his company in 2001 to retire, but wound up buying the company back in 2006. Since then, he’s been able to reduce costs and grow the company. He’s brought in new clients like Magna International, Johnson Controls Inc. and Chrysler Group LLC and grown from 45 employees to 300.

Lorna Utley

MachineTools.com

In the six years that Lorna Utley has led Goodwill Industries, she not only helped the nonproÕt survive the recession, but also grow. A crucial piece was re-entering the retail market; in the last three years, Goodwill has opened three stores that created 75 new jobs.

CONSUMER SERVICES

Stuart Carlin

MVC Holdings LLC When Linda Torakis and her husband Mike co-founded MVC Holdings LLC in 2008, it was bleeding $1.5 million per month. They were able to turn the company around in less than six months and save over 300 manufacturing jobs. Additionally, they found capital to fund future growth.

FAMILY BUSINESS

Jeffrey Farber Alta Equipment Company

Rich Beckman

Steven Greenawalt

WINNER

WINNER

Steven Greenawalt articulates a vision to his employees and stresses the importance of creating “customers for life.” Alta has been on a growth path after a bold move in 2009 when the company made four acquisitions in one month that grew both the territory and the product portfolio.

As CEO, Rich Beckman identiÕed acquisitions as the critical growth driver for the company and strengthened the existing infrastructure. Under his leadership, Great Expressions became proÕtable in 2000 and has seen both top- and bottom-line growth every year since.

Detroit Venture Partners

Linda Torakis

Stuart Carlin founded MachineTools.com on a simple idea: Bring buyers and sellers of industrial equipment to one online marketplace. With a user-friendly interface and transparent pricing, the site now has a presence in 200 countries.

DISTRIBUTION & MANUFACTURING

Great Expressions Dental Centers

SPIRIT OF ENTREPRENEURSHIP

Josh Linkner

Auburn Pharmaceutical

WINNER

Õnalists!

MPF Acquisitions Inc. dba Marshall Plastic Film

Michael Marcantonio started as an investor in 2000 and became CEO by 2011. As CEO he has been instrumental in planning the future of the company and positioning it as a driving force in the marketing and visual communications industry.

Todd Sachse

Forensic Fluids Laboratories

Patrick Fehring

Tel Ganesan

Michael Marcantonio

DIVERSIFIED SERVICES

WINNER Shortly after James Verrier was named BorgWarner’s president and CEO, he introduced himself to employees, saying, “I never forget where I came from, how I got here and how that made me who I am.” Humility, respect and trust are core to his value system, and he has implemented those values to the company.

Level One Bank Kyyba Inc.

Donald Hicks

Sachse Construction

Congratulations to all of our

Partner, EY Entrepreneur Of The Year Michigan & Northwest Ohio Program Director

Luther Elliott started Information Systems Resources Inc. out of his Farmington Hills home 16 years ago. The company has grown not by selling computer systems, but by recycling those no longer being used. Each year, the company processes 2 million pounds of electronic hardware.

Starting in 1992 with a single truck and some business cards, Michael Kulka and Pete Bosanic have grown PM Environmental to a company that works with banks, government agencies and numerous other businesses throughout the U.S. as an environmental risk expert.

TECHNOLOGY

to win in the marketplace.

Angie Kelly

Luther Elliott

LLamasoft Inc. Rapid Global Business Solutions Inc.

GoldÕsh Swim School Franchising LLC

markets and fuel job growth. Join us in celebrating their

Jeffrey Styers

BUSINESS SERVICES

Each June, we host

who are regional Õnalists into

AUTOMOTIVE

P.M. Environmental Inc.

Arrow Strategies

Reliable Aftermarket Parts Inc.

innovative entrepreneurs.

welcome the men and women

DISTRIBUTION & MANUFACTURING Continued

WorkForce Software

Information Systems Resources Inc.

passion, vision and persistence

Twenty-eight years ago, EY

CONSUMER SERVICES Continued

Applied Imaging

to their communities. Their

dedication.

DIVERSIFIED SERVICES Continued

LIFETIME ACHIEVEMENT

businesses and giving back

stand as a testament to their

TECHNOLOGY Continued

Kar’s Nuts Inc. When Jeffrey Farber worked for the company his father owned, he learned the values, as well as the missteps, of running a drug distribution company. With those lessons learned, he started his own company when the demographics, government regulation and insurance mandates were driving the consumer to generics.

Nick Nicolay

WINNER When Nick Nicolay took over Kar’s Nuts in 1995, he became the third generation of his family to run the company. But changes had to be made. The company diversiÕed into vending channels, leading to a strategic focus on trail mix. Now the Sweet ‘n Salty Mix is the top selling trail mix in America.

L: Dan Gilbert R: Brian Hermelin Three people with years of entrepreneurial experience wanted to help others looking to start their own enterprises. The work isn’t just capital needs, but also the serious hands-on work it takes to realize something out of thin air. Dan Gilbert, Josh Linkner and Brian Hermelin founded Detroit Venture Partners with the mission to rebuild Detroit through entrepreneurial Õre. Since creating DVP, they have made 23 investments in early and seed stage digital technology companies. In turn, those companies have each grown, hiring hundreds of people, creating technological and entrepreneurial density in the central business district.

2014 JUDGING PANEL Andy Appleby Chairman General Sports and Entertainment 2002 award winner

David Cole Chairman AutoHarvest Chairman Emeritus Center for Automotive Research

Arvind Pradhan Chief Executive OfÕcer Camaco, LLC 2005 award winner

Brian Demkowicz Managing Partner Huron Capital Partners 2008 award winner

Ron Shahani President and Chief Executive OfÕcer Acro Services 2003 award winner

Willie Geiser Chief Executive OfÕcer Allshred Services 2005 award winner

Michelle Sherman Vice President and Chief Financial OfÕcer Barden Companies

Jeff Ishbia Chief Executive OfÕcer United Shore Financial Service 2013 award winner Vince Thomas Chairman and founder Billhighway 2011 award winner


20140609-NEWS--0020-NAT-CCI-CD_--

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5:04 PM

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Page 20

June 9, 2014

CRAIN’S DETROIT BUSINESS

CRAIN'S LIST: LARGEST MICHIGAN BIOTECH COMPANIES Ranked by 2013 revenue Rank

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Company Address Phone; website

Stryker Corp. 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.com

Perrigo North America B 515 Eastern Ave., Allegan 49010 (269) 673-8451; www.perrigo.com

Neogen Corp. 620 Lesher Place, Lansing 48912 (517) 372-9200; www.neogen.com

InfuSystem Holdings Inc. 31700 Research Park Drive, Madison Heights 48071-4627 (800) 962-9656; www.infusystem.com

Rockwell Medical Inc. 30142 Wixom Road, Wixom 48393 (248) 960-9009; www.rockwellmed.com

Medcart Specialty Pharmacy 32131 Industrial Road, Livonia 48150 (877) 770-4633; www.medcartpharmacy.com

Ash Stevens Inc. 18655 Krause St., Riverview 48193 (734) 282-3370; www.ashstevens.com

Aastrom Biosciences Inc. 24 Frank Lloyd Wright Drive, Lobby K, Ann Arbor 48105 (800) 556-0311; www.aastrom.com

Xoran Technologies Inc. 5210 S. State Road, Ann Arbor 48108 (800) 709-6726; www.xorantech.com

Custom Biogenic Systems Inc. 74100 Van Dyke Road, Bruce Township 48065 (586) 331-2600; www.custombiogenics.com

Revenue ($000,000) 2013

Revenue ($000,000) 2012

Percent change

Full-time local employees January 2014

Kevin Lobo president and CEO

$9,021.0

$8,657.0

4.2%

0

Manufactures medical devices and medical equipment, including reconstructive, medical and surgical, and neurotechnology and spine products

Joseph Papa chairman, president and CEO, Perrigo Co. plc

3,539.8 C

3,173.2

11.6

0

Pharmaceuticals

106.2 C

91.1

16.6

NA

Develops and markets products dedicated to food and animal safety. Revenue is for food safety only.

Eric Steen CEO

62.3

58.8

5.9

NA

Supplier of infusion services to oncologists and other outpatient treatment settings

Rob Chioini founder, chairman, president and CEO

52.4

49.8

5.1

110

Hemodialysis products and specialty pharmaceuticals for the treatment of iron deficiency and secondary hyperparathyroidism

Eddie Abueida and Ed Saleh co-CEOs

52.0

35.0

48.6

70

Specialty pharmacy services

Stephen Munk president and CEO

22.7

21.5

5.6

79

Makes active pharmaceutical ingredients; develops processes and analytical methods, and manufactures such ingredients as pre- and post-FDA approval

Nick Colangelo president and CEO

19.0

21.0

-9.5

NA

Regenerative medicine company and developer of expanded, autologous cellular therapies for the treatment of severe, chronic cardiovascular diseases

Ronald Doria president

12.0

NA

NA

NA

Medical device: Compact, low-dose radiation specialty CT scanners

John Brothers president and CEO

7.0

8.0

-12.5

32

Life science equipment manufacturer

Top local executive

James Herbert chairman and CEO

Type of business

This list of Michigan biotech companies is an approximate compilation of the largest companies involved in the research and development or manufacture of products designed to improve the health and well-being of humans. It is not a complete listing but the most comprehensive available. Accuri Cytometers, No. 4 on last year's list and which Crain's believes would make the list, was unable to provide figures, and a reliable estimate could not be made. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. Actual revenue figures may vary. NA = not available. B Perrigo Co. acquired Elan Corp. plc Dec. 18, 2013. They operate under the global name Perrigo Co. plc, incorporated in Ireland. C Fiscal year end 6/29/13 LIST RESEARCHED BY SONYA HILL

WE’RE LOOKING

FORWARD TO HEARING NOTHING BUT PRAISE. – TIMOTHY MCCARTHY

CHAIRMAN, SOAVE ENTERPRISES TRANSPORTATION GROUP BOARD EXECUTIVE COMMITTEE, DMCVB

Like the General Assembly of the Presbyterian Church (U.S.A.), Detroit celebrates diversity and all its possibilities. This June, along with 8,000 of their conference attendees, we’re ready to celebrate the newly renovated Cobo Center. Our city is filled with fabulous eateries, amazing attractions and much more. Such variety promises that their estimated spending of almost $14 million will be worth every penny — and garner Detroit plenty of praise.

Be part of America’s great comeback city. For more comeback stories, visit meetdetroit.com/comeback-stories.


20140609-NEWS--0021,0022-NAT-CCI-CD_--

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CRAIN’S DETROIT BUSINESS

June 9, 2014

Page 21

growing small businesses EDITOR’S NOTEBOOK Amy Haimerl is entrepreneurship editor and covers the city of Detroit. She can be reached at (313) 446-0416 or at ahaimerl@crain.com

Amy Haimerl

Time to Hatch new biz ideas Every year, I look forward to the Comerica Hatch Detroit business competition. Every year, I wonder what new retail ideas local entrepreneurs will dream up to open in the city of Detroit. Every year, I hope a shoe store will be among the finalists. Nobody has yet fulfilled my dream of cowboy boots and whimsical heels, but that’s OK because the past winners have already woven themselves into the fabric of our community. Hugh, the bachelorlifestyle store, has become a mainstay in Midtown. La Feria, the Spanish tapas restaurant, took way longer than expected to open, but it’s now a favorite dining destination. And I look forward to the day that last year’s big winner, Batch Brewing Co., opens in Corktown. Even more exciting, though, is the network of finalists that the competition fosters. While there can be only one $50,000 prize winner each year, many small-business owners use the competition to build a customer base before ever opening their doors. Take Busted!, for example: The bra shop was a top 10 finalist last year and used the momentum to open in Midtown’s Park Shelton. Owner Lee Padgett was told that a bra shop would never work in the city of Detroit, but she had to order more — twice! — before her doors ever opened last December. And now there is some extra help for entrepreneurs such as Padgett. This year, the Detroit Lions signed on as a sponsor, agreeing to provide financial assistance to the competition’s previous finalists. “This furthers our commitment to Detroit’s neighborhoods and broadens our collaboration with Hatch Detroit,” said Tom Lewand, Lions president. “The growth of small business in Detroit continues to be a significant part of the city’s resurgence and is an important part of the Lions community engagement strategy.” The 2014 competition kicked off on June 1, and submissions are due by July 16. After that, Hatch Detroit executive director Vittoria Katanski and a team of judges will narrow down the submissions to their top 10 and then push them out for public voting. To submit your idea, visit hatchdetroit.com.

The faces of success C

rain’s annually recognizes entrepreneurs who are noteworthy for their innovation, problemsolving ability or sheer relentlessness. Winners are divided into revenue categories, with another for social entrepreneurs and intrapreneurs. This year’s winners and runners-up range from a team redeveloping Detroit’s neighborhoods to a business that connects diverse candidates with employers desperate for top talent.

Crain’s will honor the winners at a breakfast July 24 at The Henry in Dearborn. Join us to celebrate these entrepreneurs and hear first-hand David-vs.Goliath stories as small companies talk about succeeding against their larger rivals. Additionally, roundtables will discuss everything from how to manage growth to how your banker sees your business. For more information, go to crainsdetroit.com/events.

THE HONOREES $30.1 million to $100 million Winner: George Matick Chevrolet Karl Zimmermann, (left)

$5.1 million to $30 million Winner: Prolim Global Corp. Prabhu Patil, Page 22 Finalist: Mango Languages, Page 25

Under $5 million Winner: Beyond Gaming Gabe Rubin and Noah Krugel, Page 23 Finalist: Avomeen Analytical Services, Page 25

Intrapreneur Winners: Michael Forsyth and Lori Allan Revolve Detroit, Page 24

Social entrepreneur Winner: Tekisha Lee DiverseNote, Page 25 Finalist: Noam Kimelman, Page 25 LARRY PEPLIN

Karl Zimmermann wanted to renovate George Matick Chevrolet back in 2008. But his GMAC representative told him to save his cash for a recession that was just around the corner.

George Matick Chevrolet Karl Zimmermann Redford Township It’s not the 100-car showroom, high-volume Corvettes or massive new collision shop that have made George Matick Chevrolet one of the top 1 percent of U.S. Chevy dealers based on sales volume. Rather, it is employees’ obsessive approach to customer service, owner Karl Zimmermann said of the Redford Township dealership. For starters, Matick Chevrolet works on greetings. Walk in the front door and head to the counter in the back corner. You’ll pass several employees who make eye contact and greet you, but they wait for you to initiate further conversation. That’s the norm throughout the building.

“Our rule of thumb is to greet anybody within 10 feet of you,” General Manager Molly Williams $30.1 MILLION said. “We’re big on trainto $100 MILLION ing.” Top to bottom, employees recognize that a good customer experience is the dealership’s edge, she said. George Matick Jr. founded the company in 1967 when he purchased and renamed Paul McGlone Chevrolet on Joy and Evergreen roads in Detroit. In 1977, he converted a department store and a connected Farmer Jack grocery store at I-96 and Telegraph Road into a rambling dealership with 107,500 square feet under one roof — and a massive showroom as his centerpiece and competitive advantage. New-car sales have almost tripled since 2009. Last year, the dealership sold 2,022 new

WINNER

vehicles and generated revenue of $99 million. Sales Manager Paul Zimmermann, Karl’s younger brother, credits his experienced 19-member sales staff. “One’s been here 34 years, another 20, and we have eight to 10 with at Paul Zimmermann least eight years,” he said. The Zimmermanns will improvise to gain an edge. A decade ago, a survey found that customers considered the dealership’s service expertise ordinary. So the store made Corvettes a priority, betting the required investment in service equipment and certification would boost the dealership’s technology cred. See Matick, Page 22


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Second Stage Prolim Global Corp. Prabhu Patil Farmington Hills As a scientist in the early 1990s, Prabhu Patil built surface-to-air missiles for India’s Ministry of Defense. But while working on that project, he became increasingly interested in product lifecycle management, which deals with the product from its beginning, through engineering design and manufacture to service and, finally, disposal. “Customers want more functional features, faster and at a lower cost,” said Patil, president and CEO of Farmington $5.1 MILLION Hills-based to $30 MILLION Prolim Global Corp. “PLM technology enables this.” Prolim, founded in 2010, makes Web-based tools that track work flow processes within organizations. The company has developed software that allows customers to find qualified people and hire them within 48-56 hours. The company’s consulting services include PLM software and services, program management and IT architecture. Prolim employs more than 200 and provides IT consulting to companies such as Siemens Corp., IBM and Cisco Systems Inc. The company posted revenue of $5.1 million in 2013, up from $1 million in 2012. Prolim has been recognized by Inc. magazine as one of the country’s fastest-growing private companies and was named one of Michigan’s 50 companies to watch by the Cassopolis-based Edward Lowe Foundation. Patil came to the U.S. in 1997, working for IBM in Charlotte, N.C., as a project manager in IT consulting. While there, his fascination with product lifecycle management grew. Two years later, Patil moved to Detroit — “the hub of PLM in the

WINNER

COURTESY OF PROLIM GLOBAL CORP.

Prabhu Patil’s interest in product lifecycle management led to the creation of Prolim Global, which makes Web-based tools that track work flow processes.

Quitting that “ kind of a job, where everything is established, ... it’s like jumping into ice cold water.

Prabhu Patil, Prolim Global Corp.

automotive industry,” he said — to work as a senior manager for Siemens PLM Software, a business unit of the company’s Industry Automation Division. Patil worked on the Ford Motor Co. account, handling PLM consulting in 13 countries. “PLM technology usage is highly matured in automotive and aerospace OEMs and their suppliers,” Patil said. “But there are still

many small and midsized customers who are not aware or are not leveraging this technology.” Patil could’ve stayed in the sixfigure salary position at Siemens, but he had wanted to run his own businesses since he was a child. “That’s the biggest challenge,” said Patil, who has an MBA in corporate strategy and marketing from the University of Michigan. “Quitting that kind of a job, where everything is established, and knowing that there will be no office, no set salary and no person to work for you … it’s like jumping into ice cold water.” Prolim is working with Lawrence Technological University to create a lab to train students in product lifecycle management. “There is a huge shortage of PLM engineers,” Patil said. “We are focused on building these engineers by working with universities and engineering colleges to impart PLM technology in their curriculum.” — Shawn Wright

Matick: Love blossomed into a career ■ From Page 21

It did. And as ’Vette sales jumped from single digits annually to triple digits, the specialization also boosted overall volume and helped make Matick Chevy a buyer’s destination. Since last summer, the original building has been stripped to the bones, reconfigured and rebuilt to the latest green standards. It culminates a plan first drawn up in 1997. One that almost didn’t happen. When he sat down in George Matick’s spacious, wood-paneled office in 1992, Karl Zimmermann was a frequent-flying young executive for Andersen Consulting. “I came to ask for his daughter Sarah’s hand in marriage,” said Karl, now 49. Matick was 65 and looking to sell his dealership. “He was old school,” Zimmermann recalled. “I was young and a little full of myself.” Matick saw enough to offer his prospective son-in-law a job and a

shot at becoming a dealer. “The lure was a chance to own something,” said Zimmermann, who started in 1993 as a car-ordering planner. The two often bumped heads. Four years later, as general manager, he wasn’t certain his fatherin-law would sell to him. But late that year, after Karl’s team completed the dealership update plan, Matick sold him 15 percent, with a 10-year buyout plan. With three daughters, Matick wanted to create a liquid estate. Matick died in February this year. “I thought I knew a lot when I got here,” Zimmermann said. “Now I realize how much he taught me.” The next challenge was timing. Zimmermann took full ownership in January 2008 as the recession was brewing. “In August, my GMAC guy called to raise my floor plan (inter-

est) rate 50 basis points and warn me to conserve cash,” Zimmermann recalled. “He said, ‘If your roof leaks, don’t fix it.’ ” The makeover plan went back in the drawer. But this year, Zimmermann has covered every horizontal surface in Matick’s former elegant office with construction blueprints, both for the dealership makeover and a new 38,000-square-foot body shop about a mile southwest. The biggest change is the showroom. “It’s still Michigan’s largest showroom,” Zimmermann said. “But instead of cramming 162 cars in there, we’re adding other features like a seven-car new-vehicle delivery area that lets customers drive straight out the front. We can still get 100 cars on the floor if we need to.” — Jesse Snyder


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Second Stage Beyond Gaming of Michigan LLC

against his brother on a Sony PlayStation 2 in 2006 that Gabe Rubin came up with the idea of creating an online video game tournament service.

Gabe Rubin and Noah Krugel Birmingham It was during an online crosscountry game of “NHL Hockey ’95”

Not long after, Beyond Gaming of Michigan LLC was born. Rubin, 34, co-founded the compa-

GLENN TRIEST

Gabe Rubin (left) came up with the idea for Beyond Gaming of Michigan, which he co-founded with friend and Web designer Noah Krugel.

ny with friend and Web designer Noah Krugel, 42, UNDER $5 MILLION who is chief creative officer. Beyond Gaming is the parent of GamerSaloon.com, which allows players to enter tournaments for cash prizes in states that allow games of skill for money. Players compete in bracket-style head-to-head competition on console game systems such as Xbox and PlayStation. They play mostly sports games — soccer is popular right now because of the World Cup, Rubin said — while first-person shooter games such as “Call of Duty” and the “Battlefield” series are growing in popularity on the system. “That’s what spurred the idea, my passion for video games,” Rubin said. The system attracts about 5,000 unique players a month, and they pay either a fee for each tournament or $7.98 for a monthly subscription. More than 1 million tournaments have been played and about $19 million paid out in prize money. Player winnings total about $500,000 a month. Revenue last year was $4.9 million, up from $3.7 million in 2012. Rubin credits Beyond Gaming’s success to its internal system, which can quickly adapt to

WINNER

next-gen game consoles as they arrive on the market, as well as an emphasis on customer service. He also said they were careful not to overspend on frivolous marketing. The company, which is preparing for a Series A funding round, recently relocated to a Birmingham office that overlooks Woodward Avenue. Expansion plans in-

clude launching a social mobile game this summer and a fantasy sports game linked to charity fundraising in the fall. That will necessitate a handful of new hires, including at least four developers. “We consider ourselves to be a pioneer of this industry,” said Rubin, who previously worked in real estate. — Bill Shea

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Second Stage Michael Forsyth and Lori Allan Revolve Detroit Detroit When Michael Forsyth joined the Detroit Economic Growth Corp. as business development manager nearly three years ago, he was given the task of increasing the number of small businesses outside the

immediate downtown Detroit area. “The sheer scope and amount of challenges of that was daunting at first,” Forsyth said. “It really took a year of listening, understanding relationships and the problems.” Forsyth used the DEGC’s skills of arranging and securing real estate, completing complex deals and making connections to create Revolve Detroit. But he also had to be a bit of an intraprenuer, creating something

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entirely new inside the city’s economic development INTRAPRENEUR arm. Revolve, launched in October 2012, joins with community leaders, building owners, entrepreneurs and artists to fill vacant storefronts with businesses and art installations. The goal is to foster the evolution and vibrancy of Detroit’s neighborhood business districts. “Being an intrapreneur is about understanding the mission of your organization and staying true to that, but taking a different path to get there,” said Forsyth, director of Revolve. “When you’re able to deliver good results in a relatively short period of time, it’s easy to make the case to do more.” One of the program’s most recent successes has been the city’s West Village neighborhood, with new stores and restaurants such as Craft Work, The Red Hook, Tarot & Tea and Detroit Vegan Soul operating in what was once a vacant block. Currently, Revolve seeks entrepreneurs to create two pop-up shops on Grand River Avenue in the city’s Grandmont Rosedale community. Forsyth is quick to point out that Revolve couldn’t have been accomplished without his righthand woman, Lori Allan. Allan joined Revolve last year as an intern while attending the University of Detroit Mercy, where she earned a bachelor of arts in digital

WINNER

KENNY CORBIN

Michael Forsyth and Lori Allan have made “a pretty good team of two” in developing Revolve Detroit projects, Forsyth says.

media studies and minors in architecture and creative writing. During her time at Revolve, Allan managed and launched the program’s website, headed all communications and graphic design, led an international call for artists and entrepreneurs, and grew Revolve’s social media following by nearly eightfold. “It was completely new and different than anything I’ve ever done,” Allan said of Revolve. “It was different learning about business development and everything that goes into a pop-up” business. Currently, Allan is the marketing and communications manager at the DEGC. This fall, she plans to pursue

a master’s degree in design at Howard University in Washington, D.C. Allan also served as a reliable, do-anything team member during a four-month project to revitalize Detroit’s historic Avenue of Fashion, Forsyth said, and played an essential role in the selection and execution of more than 30 art and retail projects and production of a regional design festival. “Lori wouldn’t brag about it, but she’s been such an integral part of our program,” Forsyth said. “We both, respectively, have to play ‘MacGyver’ once in a while and do whatever it takes. … We’ve made a pretty good team of two.” — Shawn Wright

Auguri! Συγχαρητήρια! Felicitaciones! Gratulujem!

Congratulations to the fearless leaders of Mango Languages: Jason Teshuba, Mike Goulas, Mike Teshuba, and Ryan Whalen – Crain’s 2014 Salute to Entrepreneurs Award-winners.

For enriching lives worldwide with language and culture, for creating jobs with meaning, and for inspiring us all, thank you! Love, Your Mango family mangolanguages.com


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Second Stage Tekisha Lee

graphically categorized. This helps recruiters find specific candidates DiverseNote that are needed. Ypsilanti About 85 percent of the members are college For Tekisha Lee, connectgraduates, Lee said, with ing minority job candidates candidates and recruits with prospective employers coming from all indusisn’t just a career. It’s her passion. tries, with qualifications That’s why she founded Ypat all career levels. silanti-based DiverseNote, a caRevenue last year was reer man$1.2 million, and Lee proagement jects this year’s revenue social netto be $2.3 million. The work for majority of revenue SOCIAL profescomes from employers ENTREPRENEUR sionals who sign up. To date, 112 within recruiters use Dithe diversity community. She verseNote, representing connects them with organizacorporations and federal tions seeking top talent by creorganizations. Clients ating partnerships with reinclude Warren-based DAVID HALL cruiters, Fortune 500 MSX International, DetroitTekisha Lee was inspired to create companies and mentors. DiverseNote after an experience at the based Bedrock Real Estate “Diversity is a broad as- former Campbell Ewald. Services LLC and the U.S. pect; it’s not just ethnicity or Department of the Interior. race. There are several different facets,” said DiverseNote also has partnerships and Lee, CEO. “Our goal has been to focus on all working relationships with more than 200 of them … veterans, gender, and the lesbian, colleges, universities and alumni associagay, bisexual and transgender community.” The idea for DiverseNote came while Lee tions across the U.S. While employee candiwas working at Campbell Ewald (now Lowe dates continue to grow, Lee said she would Campbell Ewald). She was working on an ac- like to see more involvement and registracount that had a big problem finding diverse, tion from the business side. “In the first year, career candidates really minority candidates. She knew there had to jumped at the opportunity to sign up,” Lee be a better way. Founded in 2012, DiverseNote now has said. “But in reference to corporate clients, more than 100,000 members nationwide. we are working diligently to get them aware Membership is free for employee candidates. of DiverseNote and to use us as a source for Through DiverseNote’s social network, job diversity recruitment and training.” candidates self-identify, opt-in and are demo— Shawn Wright

WINNER

UP TO $5 MILLION IN REVENUE

Avomeen Analytical Services LLC Shri Thanedar, a longtime chemist and entrepreneur, retired at age 55, then decided the quiet life wasn’t for him. In December 2010, he launched Avomeen Analytical Services LLC, an Ann Arbor-based chemical testing facility. Avomeen provides analytical chemistry and drug testing to a wide spectrum of industries, including researchers, manufacturers, laboratories and entrepreneurs. For example, Doggyarchy LLC, a pet supply company in Vail, Colo., hired Avomeen to develop a nonpetroleum-based coating to protect dogs’ paws during the snowy months. Revenue grew from $2.25 million in 2012 to $3.85 million last year. Thanedar hopes to double employees and revenue over the next two years; within seven years, he hopes to employ 100 and have revenue of $20 million. — Anjana Schroeder

$5 MILLION TO $30 MILLION

Mango Languages Farmington Hills-based Mango Languages provides online language learning resources to libraries, schools, corporations, government agencies and individuals. Mango’s software can be accessed via computer or the company’s free mobile app, allowing customers to learn a language anywhere. Customers can sign up and choose from more than 50 languages

FINALISTS — from Latin American or Castilian Spanish to Urdu — that the software breaks down into easy-to-learn phrases. Founders Jason Teshuba, Mike Teshuba, Ryan Whalen and Mike Goulas launched Mango Languages in 2007 and have built a network of more than 500 teachers. The company recently launched Mango Premiere, which teaches language through movies. In 2012, the company posted revenue of $7 million. In 2013, that grew to $7.9 million. — Anjana Schroeder

SOCIAL ENTREPRENEUR

Noam Kimelman Fresh Corner Café L3C, a Detroit-based fresh food distributor and catering service, was formed in 2010 in response to the lack of access to high-quality, healthy food in the city. The company sells products to more than 25 party stores and other small-scale retailers to provide healthy, ready-to-go foods, such as salads that sell for $3.95 and sandwiches for $4.95. The most popular items are the chef salad with double smoked turkey and ranch dressing for $3.95 and the garlic jerk chicken sandwich for $4.95. Founder Noam Kimelman won the Michigan Social Entrepreneurship Challenge in 2013, an honor that brought awareness of her business along with $20,000. Fresh Corner’s revenue has nearly doubled, jumping from $94,000 in 2012 to $172,000 in 2013. — Anjana Schroeder

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Second Stage

Staffing company outsources payroll to better manage growth BY GARY ANGLEBRANDT

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2002, watched its revenue climb every year since the recession, from $7 million in 2010 to $16.5 million last year. The company this month will open its first satellite office, in Chesterfield Township, to be closer to manufacturing clients in that area. Problem: Managing growth and the payroll department. In 2010, the company had about 300 workers placed with clients to manage. Company leadership saw that as more workers were placed, the hairier things got in the payroll department. President Pete Davis estimated that for roughly Davis every 75 workers placed, Impact had to put another person on payroll duties, which include the tasks of checking attendance, workers’ compensation and disciplinary issues. At this point, he had three people working on payroll management and already the processes were becoming disorderly. As more employees became involved, more basic organizational issues popped up. “The complexities continued to mount. We were dedicating tremendous resources and effort to solve issues there and adding layers of

Band-Aids,” Davis said. The problem was bad enough that it caused manA look at problem-solving agement stress by growing just thinking companies about how it was going to take on new clients — normally something to cheer about. Solution: Davis took what he called an unconventional approach for a staffing firm — he began outsourcing his work. The decision came after the company realized it should listen to its own sales pitch. “The ‘a-ha’ moment was when we said, what are we telling our customers to do on a regular basis? Outsource to us. Do what your core business function is while we deal with recruiting,” Davis said. Impact hired a professional employer organization, or PEO, to take care of all payroll-related functions. A PEO also would be able to absorb much of the regulatory hassle that comes when employing people in other states, a nice service for a growing company to have. The work with the PEO began in 2011, and it freed up several hundred thousand dollars in staff costs. But more important to Davis, it removed a distraction

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that had staff members thinking not about scaling the business but about how to deal with greater paperwork. Impact now manages 800 placed workers and is on target to hit $30 million in revenue this year, Davis said. “We’re hitting this ramp now because we found those outsourcing solutions that don’t slow you down by doing it internally,” he said. Risks and considerations: While in retrospect it seems like an obvious enough move, the switch gave Impact some discomfort at the time. The point at which placed workers deal with their staffing firm most often is when it comes time to be paid. Losing control of how that occurs wasn’t a decision taken lightly. “When an employee called about a paycheck, we controlled the message and how that person was treated. Now they’re going to call a payroll company directly about certain issues like tax withholdings. How that person is treated is no longer something I’m in complete control of,” Davis said. Davis also was worried about the ability of a PEO to absorb hundreds of workers at once, and then to continually manage the churn of temporary workers — a business characteristic not exhibited by a PEO’s average customer. “You have no idea the fire hose that’s going to turn on,” Davis said when the PEO offered to do the payroll migration very quickly. Impact held a series of meetings to make clear how it wanted its people to be treated when calling about pay issues and to let the PEO know there would be many such calls to ease the transition. The outsourcing still needs maintenance from time to time. Impact had to hire someone internally to handle overflows of work that the PEO couldn’t manage. Last year, Impact switched to one that could handle Impact’s growing number of workers. Expert opinion: Gino Wickman, founder of EOS Worldwide LLC in Livonia, coaches second-stage companies to stay laser-focused on their core business and is a big believer in outsourcing. “That’s why small businesses are so strong: all these niche companies doing niche things better than other companies can do them,” he Wickman said. “The closer my clients get to their core, and outsourcing and stop doing things that aren’t core, they tend to be more creative, make more money and grow faster.” It’s up to every company to look at its present situation and goals to determine if the function is something it should outsource. But generally the signal to do it is “when things are starting to get complex or starting to take you away from your core,” Wickman said. “If you’re forced to keep it and it’s not core, you have to make it core by going out and finding the best talent.”


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Join the University of Michigan Ross School of Business Zell Lurie Institute of Entrepreneurship 10:30 a.m.-6 p.m. June 17 and 7:30 a.m.-2 p.m. June 18 for the Michigan Growth Capital Symposium. The event presents an opportunity for venture capitalists and angel investors to meet executives of early-stage and emerging-growth companies seeking $1 million to $20 million in funding. The event takes place at the Ann Arbor Marriott Ypsilanti at Eagle Crest, Ypsilanti Township. The keynote speaker is Kevin Conroy, CEO and president of Exact Sciences. Among other speakers are Ed Torres, managing director, Lilly Partners; Jack Miner, director of the Venture Center, University of Michigan; Russ Straate, associate director, Venture Center, University of Minnesota; Jeff Banker, CEO in residence, Spartan Innovations, Michigan State University; and Jed Taylor, assistant director, Technology Entrepreneur Center, University of Illinois. Tickets range from $195 to $425. Online registration is available through June 13; onsite registration opens at 10 a.m. June 17. For ticket information, call Kerry Velez at (734) 615-4419 or visit michigan-gcs.com.

ness Leadership Center. Targeting small companies with 50 or fewer employees. Walsh College, Troy. Free. Contact: Jan Hubbard, (248) 823-1392; email: jhubbard@walshcollege.edu; website: thewalshinstitute.com.

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Midyear Economic Forecast and State of the Industry Luncheon. 10:30 a.m.-2 p.m. Construction Association of Michigan, Home Builders Association of Southeastern Michigan. Focus on the status of Michigan’s economy. With L. Brooks Patterson, Oakland County executive, and W. Jay Wortley, director of the Office of Revenue and Tax Analysis, State of Michigan. Suburban Collection Showplace, Novi. $50. Contact: Mary Carabott, (248) 9721000; email: carabott@camonline.com; website: cam-online.com.

Retooling Global Operations for Strategic Advantage. 11:30 a.m.-1:20 p.m.Detroit Economic Club. With Jim Moffatt, chairman and CEO, Deloitte Consulting LLP; David Cole, chairman emeritus, Center for Automotive Research, chairman, AutoHarvest; and David Szczupak, executive vice president, global product organization, Whirlpool Corp. Cobo Center, Detroit. $45 DEC members, $55 guests of members, $75 nonmembers. 11:30 a.m. speaker reception open only to board, life and gold members. Contact: Detroit Economic Club, (313) 963-8547; email: info@econclub.org; website: econclub.org.

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THURSDAY JUNE 12 Strictly Business. 11 a.m.-1:30 p.m. JVS. Annual networking and awards

luncheon. With keynote speaker Mark Fields, COO, Ford Motor Co.; Jacques Panis, president, Shinola/Detroit LLC, 2014 JVS Business Leadership award winner; and Max Surnow, co-founder, Cooper Street Cookies, recipient of the 2014 JVS Rising Entrepreneur Award. The Henry, Dearborn. $150. Contact: Judy Strongman, (248) 2334213; email: jstrongman@jvsdet.org; website: jvsdet.org/strictlybiz.

Vice President Mike believes the first step in every client engagement is establishing trust through an absolute focus on understanding a client’s long-term financial goals and objectives. Representing the third generation in the family insurance and financial services business, Mike combines his lifelong immersion in the industry with his later experiences working on Wall Street to help launch a consulting practice that puts clients’ interests first and provides independent advice and customized consulting services. 535 Griswold Street, Suite 1600 • Detroit, MI 48226 • www.lovascogroup.com • 313.394.1700 A Member Firm of M Financial Group. Securities Offered Through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC. LoVasco Consulting Group is Independently Owned and Operated.

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JUNE 13 Detroit — Engage China Auto Industry. 2:30-9 p.m. Detroit Chinese Business Association. Seminar and networking with more than 40 executives of Chinese original equipment manufacturers and auto suppliers. With Yang Dong, vice chairman and general secretary, China Association of Automobile Manufacturers. Petruzzello’s Banquet and Conference Center, Troy. $48-$150. Contact: (248) 918-0391; email: info@dcba.com; website: dcba.com.

UPCOMING EVENTS Cybersecurity Breakfast: How Israeli Tech Companies Set Standard for Excellence. 8-9:30 a.m. June 17. Michigan Israel Business Bridge. With Rami Efrati, founder and CEO, Fermitas, and former head, civilian division, Israel National Cyber Bureau; and Sharon Nimirovski, CEO, White-Hat Ltd. Dearborn Inn, Dearborn. $15 members, $20 nonmembers. Contact: (248) 642-1701; email: info@michiganisrael.com; website: michiganisrael.com.

Become a Talented Trainer: Guide Your Employees, Temps and Contractors to Success. 9 a.m.-3:30 p.m. June 18. Michigan Chamber of Commerce. Gain practical skills and strategies that work. Walsh College-Novi Campus, Novi. $270 MCC members, $295 nonmembers. Contact: Tammy Smith, (517) 371-7670; email: tsmith@micham ber.com; website: michamber.com.

Community Investment Breakfast. 7:30-9:30 a.m. June 19. Southwest Detroit Business Association. With keynote speaker Carol Coletta, vice president, community and national initiatives, Knight Foundation; Dennis Archer, chairman and CEO, Dennis W. Archer PLLC and former mayor of Detroit; and master of ceremonies Guy Gordon, anchor, WDIV-Channel 4. MotorCity Casino Hotel, Detroit. $75. Contact: (313) 842-0986, ext. 26; email: events@southwestdetroit.com; website: southwestdetroit.com.

Birmingham. $25. Contact: Christa Moxon, (269) 685-7829; email: christa.moxon@thebusinessrt.org; thebusinessrt.org.

MICHAEL LOVASCO

A steel troweled, food-grade finish is found on the interior of this apple processing facility—reducing the risk of bacteria settling on surfaces within the building.

FRIDAY

Leadership Breakfast. 7-9 a.m. June 20. Business Roundtable. With Nick Nicolay, president and CEO, Kar’s Nuts. Birmingham Country Club,

ADVISOR SPOTLIGHT

Eliminate the need for drywall and extra finishes by using precast wall panels. A finished product on both sides. It’s ready to go immediately after installation.

CALENDAR GUIDELINES If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Events” in the red bar near the top of the page. Then, click “Submit Your Events” from the drop-down menu that will appear, and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event” button at the bottom of the page. That’s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.

KERKSTRA PRECAST www.kerkstra.com


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BUSINESS DIARY

PEOPLE FINANCE

Loyd

IN THE SPOTLIGHT

Sweeney

Beverley Loyd to senior business banker, Urban Partnership Bank, Detroit, from asset manager, managed asset group. Also, Kevin Sweeney to market director, from director for the Midwest market, Nonprofit Finance Fund, Detroit. Usha Chinoy to assistant manager, Lotus Bank, Novi, from head personal banker.

HOSPITALITY

Harvey Hohauser & Associates, Troy, a retained executive search firm, has named Todd Hohauser CEO. He had been president and COO and succeeds CEO and founder Harvey Hohauser, who is retiring but will remain active in some aspects of the business. Hohauser Todd Hohauser, 43, earned a bachelor’s degree in psychology from Western Michigan University, Kalamazoo, and a master’s in business management from Walsh College, Troy. try Club, Washington, D.C., Potomac Falls, Va.

ner, Maddin Hauser Roth & Heller PC, Southfield.

MANUFACTURING

Doychich

John Doychich to executive vice president, Daifuku Webb Holding Co., Farmington Hills, from senior vice president and CFO. Also, Tetsuya Hibi to senior vice president and CFO, from general manager of global business administration, Daifuku Co. Ltd., Osaka, Japan. Aline Daniel to director of strategic accounts, Sloan Valve Co., Detroit, from director of government sales.

Scott Stromer to executive

Karen Salomone

Thomas Hallin to partner, Rader, Fishman & Grauer PLLC,

from executive director of culinary operations, Sullivan University, Louisville, Ky. Donald Ponniah to general manager,

Chinoy

to executive director, Fish &

Loaves Community Food Pantry,

Bloomfield Hills, from of counsel, Price Heneveld LLP, Grand Rapids. Monica Moons to shareholder,

Doubletree by Hilton DearbornDetroit, Detroit, from president and general manager, Grand Traverse Resort Spa, Acme. Also, Sheryl Champine to director of sales and marketing, from area director of sales and marketing, Pillar Hotels & Resorts, Flint; and Guillermo Valencia to executive chef, from executive chef, Trump National Golf and Coun-

NONPROFITS

LAW

chef,

MotorCity Casino Hotel, Detroit,

Hallin

Couzens, Lansky, Fealk, Ellis, Roeder and Lazar PC,

Farmington Hills, from of counsel. George Contis to partner, Giarmarco, Mullins & Horton PC, Troy, from part-

Hibi

Salomone

Taylor, from nutrition program manager, Wayne Metropolitan Community Action Agency, Westland. Jarrod Holmes to director of field

service/COO, Great Lakes Field Service Council, Boy Scouts of America, Detroit, from director of development.

ACQUISITIONS & MERGERS Computing Source, Southfield, a digital evidence and legal support firm, acquired MuniDeals, Southfield, a service provider for municipal finance professionals. MuniDeals will retain its name and existing team but operate as a business unit of Computing Source and relocate within an existing or new Computing Source facility. Websites: munideals.com, computing source.com. Arrow Strategies LLC, Bingham Farms, a staffing firm specializing in information technology, engineering, health care and professional positions, acquired the controlling interest of Hire Talent LLC, Clinton Township, a recruiting company with a focus on permanent placement services in information technology and engineering. Websites: arrowstrate gies.com, hiretalentllc.com. Huron Capital Partners LLC, Detroit, acquired American Auto Action Group LLC, Charleston, S.C., a provider of dealer-to-dealer auction services, and announced the formation of an auto remarketing service platform. Websites: huroncapital.com, ameri canaag.com. DTE Energy Co., Detroit, exercised its option to purchase one of the two Pheasant Run wind parks from a subsidiary of NextEra Energy Resources LLC, Juno Beach, Fla. The 75-megawatt Pheasant Run II wind park in Huron County will be renamed the Brookfield Wind Park. A subsidiary of NextEra will continue to own and operate Pheasant Run I, the energy from which will continue to be purchased by DTE Energy. Website: dteenergy.com. C/D/H, a technology consulting firm with offices in Detroit and Grand Rapids, merged with the Coil Group Inc., Rochester, a mobile software

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firm. Websites: group.com.

cdh.com,

thecoil

CONTRACTS IPS Technology Services, Troy, won a yearlong contract renewal with Federal-Mogul Corp., Southfield, to supply SharePoint development, administration and support services. Website: ipstechnologyservices.com. RouteOne LLC, Farmington Hills, a Web-based credit application management system for dealers and finance sources, announced that 1st Community Federal Credit Union, San Angelo, Texas, is using RouteOne’s e-contracting platform via its new DiscountOne tool. Websites: routeone.com, 1cfcu.org.

EXPANSIONS Brembo North America Inc., Plymouth Township, manufacturer of braking systems for vehicles and part of Brembo SpA, Stezzano, Italy, expanded its manufacturing facility in Homer. The facility produces brake discs, calipers and corner modules for cars and commercial vehicles. Website: brembo.com. Bright Side Dental, Sterling Heights, opened an office at 28609 Hoover Road, Warren. Telephone: (586) 486-3802. Website: brightsidedental.com. Planet Fitness, Newington, N.H., opened a franchise at 345 S. Livernois Road, Rochester Hills. Telephone: (248) 923-2014. Website: planetfitness.com. Art Van Furniture Inc., Warren, opened a franchise store at 2090 M-32 Highway West, Gaylord. Telephone: (989) 448-2228. Website: artvan.com.

MOVES Four Seasons Garden Center & Custom Landscape Services, Oak Park, moved its design studio offices from 261 E. Maple Road to 460 N. Old Woodward Ave., Birmingham. Website: fourseasonsgardencenter.com.

NEW PRODUCTS Acromag Inc., Wixom, introduced its XCOM-6400 COM Express Module, which provides heat sink capabilities not available on traditional COM Express designs, and is designed for use in defense, aerospace and industrial applications. Website: www.acro mag.com. TurtleCell LLC, Ann Arbor, developed a protective case for the iPhone 5 and 5s with in-ear, retractable headphones built into the case. The TurtleCell case can be preordered at turtlecell.com.

NEW SERVICES South Eastern Michigan Bowling Centers Association, Clarkston, launched a new website, sembca.com. Domino’s Pizza Inc., Ann Arbor, is offering the Group Ordering Tool feature on its website to calculate an estimate of the number of pizzas needed to feed a specific amount of people. Website: dominos.com. Proquest LLC, Ann Arbor, added the Austin American Statesman, Austin, Texas, to the Proquest Historical Newspaper collection. The archive includes searchable, full-text coverage from the origin of the paper in 1871 as the Democratic Statesman. Website: proquest.com.

DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Use any Business Diary item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.


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Recycler: Newcomer promises to shred tech, byte by bit ■ From Page 3

At the top The company’s majority owner is W. Sidney Smith, the former mayor who founded real estate development company Smith Equities in 1968. Gina Yob is a minority shareholder, as is her cousin, 3S CEO Joe Yob, who has been in the industry since 1989 and has authored textbook chapters and white papers on the subject. Gina Yob is the daughter of Chuck Yob, a former Republican National Committee member, and sister of John Yob, founder of Grand Rapids-based GOP political consulting firm Strategic National Campaigning Management LLC. She was the finance director for Republican U.S. Rep. Bill Huizenga’s congressional campaign in 2011 and 2012; senior counsel for Lansing-based GOP political consulting firm The Sterling Corp.; and chief of staff for Lt. Gov. Brian Calley in 2008 and 2009 when he was a state representative.

Shred tech The company — which is trying to earn International Organization for Standardization 14001 and eStewards certifications — uses a recycling technology called Blubox that allows it to shred electronics into small, recyclable pieces. It also removes toxins like mercury in batteries and lead in solder. Things like copper, steel,

glass and aluminum are separated and then sold to smelters for reuse. During the Blubox shredding process, the pieces are cut completely flat so they can’t hold mercury in the curled corners that are often produced with other shredding processes. The company has a contract with the Land of Lincoln Goodwill in Illinois to process its electronics donations. It also provides recycling in the private and public sector. Land of Lincoln — which serves 33 counties in Illinois and four in Indiana — was recycling about 1 million pounds of electronics per year, Gina Yob said, adding that the 3S contract will allow it to recycle about 3 million pounds per year. According to data from the U.S. Environmental Protection Agency, there were 3.42 million tons of consumer electronics recycled in 2012, and 3.41 million in 2011. Last year, the 67 companies registered with the state’s Michigan Electronics Takeback Program, which was started in 2009, recycled more than 30 million pounds of e-waste, according to the Michigan Department of Environmental Quality. Samsung, Hewlett-Packard, LG Electronics, Best Buy and Dell were the top electronics recyclers, with each recycling more than 3 million pounds in 2013, according to the DEQ.

Job hazard “Recycling electronic waste is particularly challenging because

of the potential to create environmental and public health hazards in the process such as from mercury release and exposure,” said Bryce Feighner, acting chief of the DEQ’s Office of Waste Management and Radiological Protection. “The 3S system proposes to process these electronic wastes in an innovative way that eliminates or minimizes those hazards,” he said. “We are still evaluating the technical aspects of the system at this time. If in fact it does what it purports, it is a very exciting process. No doubt about it.” Nathan Zack, president of Warren-based Great Lakes Electronics Corp., which recycles electronics and also has locations in Sterling Heights, Pontiac and Melvindale, said there is a need for more electronics recycling companies as long as they have the right certifications like ISO 14001 or R2. R2 stands for Responsible Recycling Practices and is one of two EPA-accredited certification standards along with e-Stewards. “That’s really the main thing,” Zack said. “If they are not R2 (or eStewards-certified), they are not doing things properly. If they are able to adhere to it and get the certification, they are doing things the right way.” Jeff McKeen, general manager of the Southeast Oakland County Resource Recovery Authority, said SOCRRA recycles electronics

JOB FRONT SOFTWARE ENGINEER Software Engineer for Bosch Automotive Service Solutions LLC in Allen Park, MI. Duties: Lead the design & develop of software installation packages using Installshield & FLEXNET, incl’g serv’g as technical expert & report’g into a remote manager. Analyze customer rqmts, recommend & develop technical solutions, debug complex installation issues, & investigate new technologies. Liaise w/ customer tech & managerial representatives, incl’g lead’g customer meet’gs. Provide accurate time estimates for implement’g system features & assist w/ project plan’g activities. Lead installation test’g activities, incl’g creat’g test plans & resource schedul’g & ensur’g that correct product documentation is maintained. Req’s: Master in Comp Sci or Comp Eng’g; 2 yrs exp in software eng’g pos focused on installers or operat’g systems (or Bach Deg & 5 yrs of applicable work exp). Exp must include: develop’g Windows & UNIX installation packages for automotive diagnostic software tools using FLEXNET & Installshield w/ Installscript; full software devel lifecycle & work flow management w/ Microsoft Team System, incl’g report’g into a remote manager; development & usage of virtual environments for software installation test’g; & customer interaction for proj req’s gather’g, development & test’g. Exp can be acq’d concurrently. Mail resumes to: Sha-Ron Worthen, HR Bosch Automotive Service Solutions 28635 Mound Rd, Warren, MI 48092 Identify: Software Engineer Pos. EOE.

Call Us For Personalized Service: (313) 446-6068 CLOSING TIMES: Monday 3 p.m., one week prior to publication date. Please call us for holiday closing times. FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds Confidential Reply Boxes Available PAYMENT: All classified ads must be prepaid. Checks, money order or Crain’s credit approval accepted. Credit cards accepted.

See Crainsdetroit.com/Section/Classifieds for more classified advertisements

POSITIONS AVAILABLE

PEOPLESOFT DEVELOPER ITC Holdings Corp. in Novi, MI. is in need of a PeopleSoft Developer. Duties Include: analyze, plan, design & dev PeopleSoft apps, inc’l providing implementation, upgrade & prod’n support for Finan’l & Supply Chain modules. Full duties available at www.itctransco.com. Req’s: Mas Deg IT, Comp Sci, or Electrical, Electronic, or Comp Sys Eng’g. 3 yrs exp in PeopleSoft programming & analysis pos’n (or Bach Deg & 5 yrs exp). Exp must inc’l: integrating PeopleSoft HCM & finan’l processes w/Integration Broker & Approval Workflow Engine; creating & integrating Oracle databases for PeopleSoft apps, inc’l developing reports w/XML Publisher; customizing apps w/PeopleSoft Internet Architecture, inc’l nVision functionality; component Interface integration w/ Application Engine for supply chain inventory portals. Exp can be acq’d concurrently. Apply at www.itctransco.com EOE

HEAD OF GLOBAL PURCHASING Syncreon America Inc. is in need of Head of Global Purchasing in Auburn Hills, MI. Duties: consolidate & lead company’s purchasing & sourcing functions, incl’g assuming overall managerial resp for developing & deploying comprehensive purchasing strategies & performance. Full duties at www.syncreon.com. 30% travel, domestic & int’l. Req’s: Bach Deg in Business or foreign equiv. Will also accept equiv to Bach Deg through any suitable combination of ed, training, or exp; 5 yrs exp in sr purchasing mgmt pos in global logistics industry. Exp must inc’l: purchasing logistics products & services for air & sea freight distribution centers, final delivery, & returns; logistics supplier selection & mgmt, incl’g contractual negotiations & preparing RFQs; coordin’g freight-related processes w/ logistics operational & sales professionals; developing comprehensive global procurement strategies while managing quality & cost of purchased goods & services; training & implementing continuous improvement activities for purchasing. Exp can be acq’d concurrently. Send Resumes To: Ms. Ann Lipsitz 2851 High Meadow Circle, Ste 250 Auburn Hills, MI 48326 Ref. Head of Global Purchasing EOE

ant Ridge, Royal Oak and Troy — that have a combined population of 283,000 and total area of 75 square miles. “If they (3S) are going to put in a full-fledged recycling facility, that would be great for the area,” McKeen said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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REAL ESTATE

POSITIONS AVAILABLE

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with Vintage Tech LLC, a Romeoville, Ill.-based company with a 26,000-square-foot plant in Canton Township. However, they only do “some rudimentary recycling” of electronics there. SOCRRA has 12 member communities — Berkley, Beverly Hills, Birmingham, Clawson, Ferndale, Hazel Park, Huntington Woods, Lathrup Village, Oak Park, Pleas-

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Survey: Firms report higher health costs, adapt benefit plans ■ From Page 3

could have this year through more drastic cost-shifting changes in employee benefit plans. Overall in 2014, single employee costs for preferred provider organizations rose only 3.6 percent to $116 a month, or 23 percent of total premium costs. Single coverage through health maintenance organizations dropped 4 percent to $95 a month, or 21 percent of premium costs. But family monthly employee costs have increased 11 percent to $391 for PPO and 5 percent to $308 for HMO coverage, the survey found. As a percentage of premium, family PPO coverage is increasing to only 27 percent of premium this year from 26 percent in 2013, the survey found. HMO family coverage is down to 25 percent of premium from 27 percent in 2013. “With the labor market improving (and strong competition for workers), employers didn’t want to make too many changes” in their benefit plans, McLaughlan said. McLaughlan But for some employers, the lack of changes this year may have been a short-term decision tied to the federal government’s decision to delay the employer mandate penalties until 2015. “Employers who are impacted by the (mandate) could be looking at more significant changes in 2015 as the result of their cost to comply with the law,” McLaughlan said. Still, reflecting an interest in lowering costs, fewer employers this year offered PPO plans to employees. Eighty-six percent of employers are offering at least one PPO plan, down

from 89 percent in 2013. At the same time, the survey found that 42 percent of employers, up from 38 percent in 2013, are offering HMO plans, which generally are more restrictive in use of medical services and providers.

percent in 2014, compared with 81 percent in 2013 — 27 percent of employers are using outcomes-based wellness programs that tie financial incentives to health goals.

Old, new ways to cut costs

At Taylor-based Atlas Oil Co., Laila Powers, director of human resources, said the company’s outcomes-based wellness program with Priority Health has helped hold down costs to nearly no increase from last year. “Our health plan costs were flat, but the (Affordable Care Act fees) cost us $60,000 this year,” Powers said, adding: “We have had no increases the past three years and only a slight increase for our team members (employees).” Of Atlas’ 454 employees, Powers said, the 300 who have company health benefits now must meet five health criteria — including smoking, body weight, blood pressure and cholesterol levels — to receive lower copayments for services. “We have become more aggressive on wellness, and we have had good results with our team members,” Powers said. Powers said Atlas will begin using a telemedicine program that allows employees to call in for a virtual office visit and get a medical evaluation. The telemedicine call costs employees a $40 copayment. “Fifty percent of our team members are drivers,” Powers said. “They work 10 to 12 hours a day and often don’t have time to go in for a visit. This is more of a benefit than a cost savings, but it could reduce overall health costs if it prevents” a medical problem. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

Employers continued tried-andtrue cost reduction strategies. Those included moving employee product offerings to more high-deductible health plans, increasing the use of spousal surcharges, and wellness programs. Employers also embarked on new strategies to use telemedicine and health advocacy programs to contain costs. Leading the way were McGraw Wentworth’stop-performing employers — called “Trendbenders” for their aggressiveness in holding down health cost increases. This year, the 103 Trendbenders, which amounted to 23 percent of the survey’s 454 companies with 100 to 10,000 employees, reported an average increase of 2.5 percent or less in health costs the past two years. These top performers were more likely to use high-deductible health plans (45 percent, compared with 38 percent of all employers) and limitedprovider network HMO plans (47 percent compared with 42 percent). They also were higher users of health advocacy (17 percent to 14 percent), telemedicine (5 percent to 4 percent) and outcomes-based wellness programs (35 percent to 27 percent). For 2014, even with Obamacare’s added fees, McGraw Wentworth’s Trendbenders project a 1 percent decline in health care costs. While fewer employers this year are offering a wellness program — 78

‘More aggressive on wellness’

OTHER SURVEY RESULTS Market share

 Despite a continued dip in market share this year, Blue Cross Blue Shield of Michigan still holds a dominant 72 percent share of the market for preferred provider organizations. Those numbers are down from 76 percent in 2013 and 79 percent in 2011.  Health Alliance Plan of Michigan increased PPO market share to 17 percent this year from 13 percent in 2013. HealthPlus of Michigan increased to 7 percent from 4 percent. Priority Health held steady at 8 percent. Impact of health care reform

 89 percent of surveyed employers plan to continue to offer health benefits to full-time employees in 2015 and 2016, up from 84 percent in 2013.  The overwhelming majority of employers — 95 percent — said employee retention and recruiting was the primary reason to keep health benefit plans. Other reasons included company culture (70 percent), savings didn’t justify change (29 percent) and union concerns (26 percent).  The percentage of employers offering coverage to employees who work 30 or more hours a week increased to 74 percent this year from 59 percent in 2013. That appears to be in anticipation of a Jan. 1, 2015, requirement for companies with the equivalent of more than 50 full-time employees to offer health insurance to workers averaging more than 30 hours a week or pay a penalty. High-deductible health plans

 38 percent of employers this year are offering high-deductible health plans, up from 35 percent in 2013. The plans are typically less expensive than other plans and feature a tax-free health savings account or health reimbursement account with employer contributions. The plans are lower cost because they are usually designed with deductibles of $1,200 to $2,500. Other results

 38 percent of local employers — more than double the national trend of 16 percent — are using spousal surcharges (20 percent) to employee premiums or spousal force-outs (18 percent) for spouses who are eligible for coverage from other sources.  14 percent of employers offer health advocacy programs — phone assistance for employees with claims questions, coordination of care and navigating the health care system. An additional 18 percent are considering such programs for 2015.  4 percent of Southeast Michigan employers offer telemedicine as a care provider option, with 19 percent considering it for 2015.

Outlets: For developers of 3 malls, the race is on for retailers ■ From Page 1

port-area project — wouldn’t disclose estimated investment, each of the projects could drive about $100 million in investment, 75 or more retailers and up to 1,500 jobs, developers said. Those are the plans. But the developers all say they need a critical mass of signed lease deals before the planned projects can become reality. “The one thing the three of us will agree on is that the (market) will definitely support one,” said Thomas Guastello, owner and president of Center Management, a local developer on the Chesterfield Township site. “And we probably all agree it should be (our) site.”

Selling the region Last week, Guastello and partner Jeff Anderson hosted more than 20 national retailers for a site tour. Guastello and Anderson plan a 350,000-square-foot center with a projected completion date of April 2016. In addition to common major brands seen at many outlet malls, “we are courting some of the very high-end brands ... like Gucci, (Salvatore) Ferragamo and some other

COURTESY OF PARAGON OUTLET PARTNERS LLC

Paragon Outlet Partners LLC plans to put an outlet center in Canton Township at I-275 and Ford Road.

ones,” Guastello said. The developers also have a letter of intent from Countryside, Ill.based Cooper’s Hawk, a restaurant and winery, to bring a 12,000-squarefoot location to the property, he said. They reminded retailers of the 4.6 million people living in the region, and during the tour, Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau, highlighted, among other things, the large numbers of Canadian shoppers who come to shop in the region. The bureau has promoted Detroit-area retail in Southern On-

tario markets for the past three years. Guasetello and Anderson also took the retailers on a tour of the region “by land, sea and air.” They took them on a boat tour of the Detroit River and border crossing and drove them along the Hall Road/M-59 corridor, which “has become the Rodeo Drive of suburban shopping,” said Guastello, who owns Shelby Town Center on Hall Road. That development is across from Lakeside Mall, with more than 300,000 square feet of retail and restaurants.

And they chartered three helicopters for an aerial view of the housing stock and traffic patterns near their Chesterfield Township site, its proximity to Canadian traffic from both Detroit and the Blue Water Bridge in Port Huron — and provided aerial views of the Romulus and Canton Township sites competing for outlet center retail tenants. “They’re going to look at them all anyway, so you might as well be up front,” Anderson said. “We’re confident,” Guastello said, “with the feedback we’ve gotten, now that they’ve seen all three sites.” Retailers like Neiman Marcus, Nordstrom, Saks Fifth Avenue, Ralph Lauren, Louis Vuitton and Tiffany & Co. have other stores in these markets and know the area, Anderson said, which should increase their level of comfort in locating at a luxury outlet like the one planned in Chesterfield Township. “There’s only one set of retailers that go into outlet centers ... (they) are going to pick the best site and the one that gets developed first,” Anderson said. “We think we can go fast because we own the land.” But the developers behind pro-

posals in Romulus and Canton feel equally strongly about their sites, and Anderson said he believes the market could potentially support two additional centers, one on each side of town.

Airport area New England Development is under contract to purchase about 36 acres of vacant land at the northeast corner of Vining Road and I-94 for an undisclosed amount from Southfield-based Nemer Property Group, he said. Vice President Michael Barelli declined to say what the developer would invest in the 325,000-squarefoot project, which is set to open in 2016. But he said it isn’t planning to pursue tax incentives. “There’s been a ton of investment in infrastructure in the area, and the roads are in great shape, which helps,” Barelli said. The site is across from a major airport that serves 32 million passengers each year, on the major highway between Detroit and Chicago and will be the closest outlet center in Michigan to the Canadian border, the developer said. See Next Page


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New England is working with Kimley-Horn & Associates Inc. in Troy as civil engineer for the project and Strobl & Sharp PC in Bloomfield Hills as its land use attorney. It plans to request bids for a general contractor within six months, Barelli said. With only two outlet malls serving metro Detroit, Great Lakes Crossing Outlets in Auburn Hills and Tanger Outlets in Howell, “I think we all realize that Detroit needs another outlet center,” he said. “We believe the place for that is in the southwest part of the metro to serve Ann Arbor and downriver ... northwest Ohio, even.”

Ready-to-assemble in Canton The demographics of the Canton Township site “are clearly the strongest,” said Nicholas King, a principal in developer Paragon Outlet Partners. The site’s location of less than a mile from the only Michigan Ikea — a destination unto itself — was part of the attraction, he said. And its proximity to Detroit, Ann Arbor and Canadian traffic are other selling points of the 50 acres Paragon has under contract, King said. Paragon typically does its design and architecture in-house and is in the process of contracting a local engineering firm and legal counsel, King said. Paragon previewed the site and project at the International Council of Shopping Centers’ Global Retail Real Estate Convention in Las Vegas in May, he said. “We have a lot of tenant interest, and we anticipate it will be very successful,” King said. The Canton property, most of which has never been developed, is already zoned for general commercial, said Kristen Thomas, Canton Township’s economic development manager. The timing for the development would work well Thomas with the planned paving of Lotz Road, which runs along one side of the property, parallel to I-275, she said, adding that the township plans to work with its DDA to see if there is any available funding for the project. Regardless of which get developed, the outlet centers would be a boon for the local economy, not only for the jobs they’d create, but also from the ancillary uptick for local restaurant s, hotels and even tourist destinations. “We know from our hoteliers that a lot of people choose to make shopping a weekend destination,” said Renee Monforton, director of communications at the Detroit Metro Convention & Visitors Bureau. About 14 million people visit metro Detroit annually, according to the bureau’s 2013 visitor study, and of those, about 4 million have indicated that they shop when they’re in town, she said. “If we enhance the shopping options, we can assume that will move the needle even more on visitors,” Monforton said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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MEDC: Expedited incentive signoffs questioned ■ From Page 1

er transactions, but in a public setting, it can raise questions of transparency. Strategic Fund board members are notified via email of approved projects within 24 hours of the closing of the deals, and the board also receives quarterly reports on the projects approved. But, even though all approved incentives are made public through press releases issued through the Strategic Fund, the releases don’t say how they were approved. “Most people do not understand it,” said Rep. Jeff Farrington, R-Utica, chairman of the House Tax Policy Committee. “I think MEDC and the fund board already have issues with transparency and oversight, and this makes it even worse.” Farrington said he has not heard of problems arising from expedited approvals, but said he would like to see the use of delegated authority more transparent so everyone knows how state tax dollars are being handed out. “They are controlling very large purse strings with very little accountability,” he said.

The process Josh Hundt, director of business incentives for the MEDC, said Finney, Morante and Clinton individually have the ability to veto any proposed incentive. Finney said he doesn’t recall that happening, but if it does, the proposed incentive goes to the Strategic Fund board for consideration. All projects considered for incentives go through the same review process, according to the MEDC. MEDC staff members conduct a background review of the company and its key personnel and a legal review of the project. Individuals who sign off on the deal have to sign a form saying they do not have a conflict of interest with the project. If they do, they have to recuse themselves. Hundt said the MEDC staff, when selecting projects for approval, looks at how many highpaying jobs will be created, the level of private investment that will occur, how quickly the project can begin if given a state grant and if it will provide a net positive return to the state. The MEDC says delegated authority allows the state to move with speed, especially with lower dollar-value projects that Finney believes the board would approve. So rather than wait until the next monthly board meeting, a deal can be approved when it is ready, Hundt said. “I’ve never had concerns expressed about transparency,” Finney said. “The phone calls that I get are about us not moving fast enough.” There has been discussion about legislative changes to either stop or change delegated authority, but it has not been a high priority, he said. “We don’t see the process as broken, so we don’t have any plans for changes, but we would if it became necessary,” Finney said. “Continuous improvement is good and something we are al-

FAST TRACK WINNERS Since 2011, the Michigan Economic Development Corp. has approved 129 projects through an expedited sign-off process rather than approval by the Michigan Strategic Fund board. Below is a partial list of those projects. The full list appears at crainsdetroit.com/medcdata.

Michigan Community Revitalization Program grants

 Ellington LLC, an entity of developer Peter Cummings, $1 million to offset costs and site preparation for the Detroit Whole Foods project. 65 jobs and $14.9 million in investment were expected.  Hall Street Partners Inc., Grand Rapids, $310,000 toward renovation of a historic grocery store into a mixed-use development. 15 jobs, $1.4 million in investment.  Marquette Food Co-op, $615,000 to renovate two vacant buildings to expand operations, including a teaching kitchen and classroom. 30 jobs, $3.4 million in investment.  Michigan Historic Preservation Network, Lansing, $68,187 to renovate the historic Thelma Joyce Osteen Comfort Station. One job, up to $682,284 investment.  Rebuild Lebowsky LLC — Shiawassee Center, Owosso. $446,000 for the nonprofit Owosso Community Players to renovate the Joseph H. Lebowsky Theatre. Two jobs, $6.7 million in investment.  Woodward Theater LLC, Detroit, $750,000 to help developer George Stewart renovate the Garden Theater on Woodward Avenue. 84 jobs, $12.3 million in investment.  Woodward Willis LLC, Detroit, $745,000 for a new Midtown Detroitowned mixed-use building to house a Lawrence Technological University design center. 100 jobs, $6.4 million investment. Michigan Business Development Program grants

 AGS Automotive Systems. $900,000 to renovate an idled BorgWarner Inc. plant in Sterling Heights. 90 jobs, $21 million in investment.  GKN Driveline North America. $1 million to expand automotive engineering and testing services operations in Auburn Hills. 50 jobs, $5.1 million in investment.  Hark Orchids LP. $500,000 to establish a 30,000-square-foot lab and climatic chambers facility for Orchids in Kalamazoo. Company’s first facility outside Germany. 80 jobs, $5 million in investment.  HCL America. IT and software development company establishes a new facility in Jackson. 300 jobs, up to $3.35 million in investment.  Herbruck Poultry Ranch, Saranac. $500,000 to expand egg production and processing facilities. 50 jobs, $33 million investment.  ReNu Wireless USA. $900,000 to open a new communications remanufacturing operation in Roseville. 228 jobs, $5.3 million in investment. ways striving for.”

How it’s done elsewhere Surrounding states have varying ways of handling incentive approvals. In Ohio, all incentives are approved by a board in a public meeting. In Indiana, incentives totaling less than $3 million are approved by the management staff of the Indiana Economic Development Corp. The rest are approved by a board. In 2013, 261 projects received incentives, and less than a dozen were approved by the full board, said Rebecca Helmke, media relations and public affairs manager for the IEDC. It is key, with the projects approved outside of the public meetings, to ensure there is transparency, Finney said, but he believes there is no problem in that regard. He said the fact that all approved deals are made public via press releases is key to providing transparency. “I think the (delegated authority) policy is a good policy,” he said. “We’ve not had any complaints about the integrity of our process.” Sen. Mike Kowall, R-White Lake Township, chairman of the Senate Economic Development Committee, said he understands the need for quick turnaround, but also understands transparency concerns. “I’d probably prefer to have it go in front of a board, but at the same time, that’s what Mike (Finney) was hired for,” Kowall said. “If

that’s part of his job, then that’s part of his job.” He said delegated authority does allow the state to react more quickly than it could before. “That’s what it was designed for,” he said. With small Kowall businesses, opportunities to expand because of a new customer or to add a product line can come up and go away quickly, Kowall said. “If you don’t move in an expedited fashion, then you’re going to miss the window of opportunity,” he said. For example, Kowall said, a company may have the opportunity to take on a new customer, but doing so would require expanding its factory. Delegated authority can be quicker than waiting for a Strategic Fund board vote, Finney said. Finney said that’s true, but the MEDC does not use that as a selling point with companies. Michael LaFaive, director of fiscal policy for the Mackinac Center for Public Policy, said he doesn’t think it matters if two people or the full board approve projects. He thinks they will fail in the same way other state incentive programs he’s studied have done. He said tax incentives programs he has studied during the Granholm administration fell far

short of the job projections. “Taking money from many in the state and giving it to a few does not create net new jobs over time,” he said. “The evidence is clear.” But having only two people make the final decision does lead to questions of transparency, he said. “There will be fewer people looking over the shoulder of the state,” LaFaive said. “In the past, the state has promised there were safeguards in place, but still made awful decisions on how to invest our money,” he said. He cited the case of former felon Richard Short, who conned the MEDC into approving a $9.1 million incentive for a company he was said to be operating out of his mobile home in 2010. The incentive was never paid.

Making promises Not surprisingly, the companies that get the incentives like expedited approval. William Fournier, president of Mayser Polymer USA in Canton Township, said working with the state was quite easy and allowed the company to move forward with its $3.9 million expansion project. “It was a pretty simple process,” he said. In September 2012, the company was awarded a $200,000 performance-based grant through delegated authority to expand its operations to assemble its anti-pinch sensors, a safety feature that goes on most automated lift gates. Fournier promised to create 50 new jobs within two years on top of the 12 people he already employed. At the end of the first year, he was to have added at least 25 jobs to receive the first half of the money, but at that point he already had 59 full-time workers — just three shy of the target he had to hit the next year. “We will be definitely be there,” he said. Finney said this is indicative of the response the MEDC has been receiving. “Our early data say companies are overachieving,” he said. According to the MEDC, of the 22 business development program incentives that were approved with delegated authority in fiscal year 2012, 19 have met or exceeded their milestones related to the jobs they had to create in order to earn their incentive. In May 2012, AGS Automotive was awarded a $900,000 grant to expand its Sterling Heights facility, which makes automotive bumper system assemblies, and create 90 jobs. Lisa Boulton, general counsel with AGS, said she did not have exact numbers readily available, but said the company is far ahead of its job projections. Boulton said the company had a great experience dealing with the state as it was looking for help with the expansion project. “I don’t think I’ve ever experienced a situation where government has ever responded in such an expedited manner,” she said. “It was remarkable how efficiently it was handled.” Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautza oo


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CRAIN’S DETROIT BUSINESS

“ ” A conventional way to boost city I got a lot of ‘who the hell are you?’ at first, but they got it. Syed Mohiuddin

How one man’s vision persuaded national Islamic conference to come to Detroit

From the balcony of his apartment in downtown Detroit, Syed Mohiuddin saw that no one was down there and decided to do something. The result: 20,000 people will be downtown during the Islamic Society of North America’s national convention.

BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

T

he view from Syed Mohiuddin’s 15th-floor apartment balcony in downtown Detroit was idyllic, with the glint of the Detroit River, Hart Plaza, Campus Martius Park and cityscape all in view. But as he looked down on a July day in 2009, there was one thing missing: No one was walking around. The urge to help find a way to bring people downtown spurred Mohiuddin, a doctor now finishing his residency at DMC Sinai-Grace Hospital, to launch what became a four-year effort to bring the Islamic Society of North America’s national convention to Detroit. It paid off. ISNA is bringing its annual conference, the largest Muslim gathering in the U.S. — with 20,000 attendees and a projected $20 million in economic impact — to Detroit for the first time Aug. 29Sept. 1. That wouldn’t have happened if Mohiuddin, now 31, hadn’t refused to take “no” for an answer.

Tough sell Mohiuddin, then a Michigan State University medical student, picked up the phone and called Plainfield, Ind.-based ISNA one day to ask if the association would bring the convention to Detroit. The immediate answer was laughter. Not only was Mohiuddin young and unknown in the Muslim community, but Detroit groups had attempted and failed to attract the convention, Basharat Saleem, ISNA’s director of conventions and conferences, told him. The host city for ISNA’s national convention, its largest gathering of the year, needed to have a significant population of Muslim people from which the event could draw attendees, Saleem said. Detroit had that. But there were logistical factors when the city was being considered in the early 2000s for an event three to four years into the future. At that time, Cobo Center had issues, and Detroit didn’t have enough hotel rooms downtown to accommodate attendees. “That’s why our convention has predominantly been in Washington, D.C., or Chicago,” Saleem said. There were also safety concerns about Detroit that ISNA feared

ANTHONY BARCHOCK

would prevent people from attending, and the region lacked a wellmanaged local Muslim group with enough pull to help organize and recruit hundreds of volunteers and assist on marketing the event. Mohiuddin told Saleem: “Let me get back to you once I’ve addressed these issues.”

Push for a merger In between his medical studies, Mohiuddin, who already had earned a bachelor’s degree in economics from the University of Michigan and a master’s in medical sciences from Boston University, began volunteering with the Council of the Islamic Organizations of Michigan. He hoped, as a first step, to help figure out how it could become strong enough to serve as the local host of the convention. To get the council’s attention and bring new energy, Mohiuddin offered to connect the council with the Muslim Students Association chapters at Wayne State University, UM and MSU and Muslim high school groups. In exchange for the student groups bringing volunteers and attendees to its events, the council provided sponsorships for their events. Through the effort, Mohiuddin engaged 500-600 young people for the council. In 2010, Mohiuddin also began

attending the council’s board meetings to gain insight into its operations and meeting with the former and acting executive directors and supporters of another local group, the Islamic Shura Council of Michigan. He asked about the Shura Council’s value proposition, why there was a need for the organization to have formed in 2006 when the Council of the Islamic Organizations had been around since 1988, and what supporters envisioned for the Shura Council’s future. It was a brazen move, he admits, but after many months, Mohiuddin sent a letter to the chairman and vice chairman of both local Muslim councils, asking them to consider a merger. He knew the vice chairman of the Shura Council and thought he might be receptive. But the letter riled both groups as a whole, because they were competing for dollars and influence, Mohiuddin said. “I got a lot of ‘who the hell are you?’ at first, but they got it,” he said. “It made sense … and they were all tired of not seeing the outcomes they wanted.” The organizations had a common goal of wanting to make the Michigan Muslim community stronger. And there were gaps in how both went about it that the other filled, he said.

The Council of the Islamic Organizations invited Mohiuddin to join its board, and he helped persuade the two groups to merge in 2011. They created the Michigan Muslim Community Council and recruited Muzammil Ahmed, a partner and urologist at Royal Oakbased Comprehensive Medical Center PLLC, to chair it. Ahmed was well known in the Muslim community “and (could) make things happen with phone calls,” Mohiuddin said. Both councils knew Mohiuddin’s push for the merger was fueled by the desire to bring the ISNA convention to Detroit. “But at the end of the day, they knew ... it was good for both organizations and the community,” he said. The merged council hosted two local diversity events in 2011 and 2012, showing it could organize events, recruit volunteers and draw attendees. The events were aimed at building understanding among different segments of the Muslim community, including the Sunni and Shiite sects and the different racial and ethnic communities, including Arab-American, African-American and South Asian-American Muslims. About 800 people showed up the first year, Saleem said. MMCC, which is operating on a budget of about $150,000, accord-

ing to Mohiuddin, rolled out the red carpet for ISNA staff and speakers to the events, booking them into suites with downtown river views, leaving bags of madein-Michigan goodies in their hotel rooms, offering snacks and the opportunity to talk with Detroit leaders in the hospitality rooms at the DoubleTree by Hilton Hotel DetroitDearborn and the Islamic Center of America in Dearborn, one of the oldest and largest mosques in the country. During a winter visit from the ISNA team, the council also booked the Fountain Bistro at Campus Martius Park for s’mores and ice skating. The fact that the Shiite population in metro Detroit is more balanced with Sunni populations here than in other parts of world was also an attraction for ISNA, which wanted to engage the Shiite population, Mohiuddin said. Around the same time, the logistics of hosting an event in Detroit began improving. The $299 million renovation of Cobo Center was well underway, the Crowne Plaza Detroit Downtown Riverfront hotel reopened, the Detroit Marriott at the Renaissance Center’s $30 million renovation began to take shape, and shuttle service from Detroit Metropolitan Airport was launched. MMCC’s board members and other supporters in the local Muslim community began contacting ISNA to share their enthusiasm over the investment and rejuvenation taking place in the city, Mohiuddin said. He also began mailing the national office clips of every good piece of news being reported about investment and momentum in the city. Last year, ISNA made the decision to bring the national convention to Detroit this August. The logistical improvements, better security in the city, the stronger local Muslim council and interest from the Muslim community helped swing things in Detroit’s favor. And young people like Mohiuddin coming forward and showing interest, “really helped for us to further make up our minds to bring the event to Detroit,” ISNA’s Saleem said. In setting out to land the ISNA convention, Mohiuddin said, he had no idea it would take this long or that he would get so involved in the community. “But you do what it takes,” he said. Mohiuddin will leave Detroit for an associate position at McKinsey & Co. in Chicago in July, joining his wife, Atiya, a mechanical engineer who was recently promoted to a position at Smith Group JJR’s Chicago office. But there’s no question — he’ll be back in August for the ISNA convention. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch


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Grips: SuperStroke to move beyond putter grips ■ From Page 3

called Techniques, and later expanded into upscale custom putters in the $300 range. They bought the Tiger Shark golf club brand in 2000 from Japaneseowned Allied Holdings Inc. in California for $350,000, and for years marketed the clubs in the U.S., Asia and Europe. Dean Dingman, 47, said he bought the SuperStroke brand, then based in Wisconsin and advertising on infomercials, after getting into a squabble over trademark names for a grip. After talks to resolve the issue, the former owner expressed interest in buying Tiger Shark so that it would have a putter to sell with its grips, but eventually Dingman ended up buying SuperStroke. His plan was to exit the golf club manufacturing and sales business in five years and solely concentrate on grips. “We did it in three years,” he said. Tiger Shark was closed. The concept of the oversized grip intrigued Dingman as a golf product, and he thought SuperStroke could be tweaked into something that would interest touring pros and the buying public. “The original product was completely different other than the shape,” Dingman said. “We liked the technology, but the product wasn’t right. We just weren’t sold on the design, weight and feel of the grip they had.” PGA golfer K.J. Choi had won twice using the old SuperStroke, giving the concept some cachet among touring pros and the public. Using the relationships already built from Tiger Shark, and the budding interest in oversized putter grips, Dingman made the right choices in which pro golfers he paid to endorse his grips. One is 20-year-old phenom Jordan Spieth, the PGA Tour’s 2013 rookie of the year and winner of last year’s John Deere Classic. He began 2014 in impressive style by finishing tied for second at the iconic Masters Tournament in April using SuperStroke’s Flatso Ultra. The other is Jason Dufner, a 37year-old three-time PGA Tour winner who won the 2013 PGA Championship last August while using the SuperStroke grip. Dufner lost the 2011 PGA Championship in a playoff, and the attention on him and his equipment was heightened because the tournament is one of the PGA’s four majors. “The big jump was with Dufner,” Dingman said. “It gave us so much visibility. It put us on the map.” Most recently, Dufner finished second after losing in a playoff at the Crowne Plaza Invitational at Colonial on May 24, using a SuperStroke Slim 3.0 17-inch grip on his Scott Cameron Futura X Dual Balance putter. SuperStroke also got a boost last year when Phil Mickelson won the British Open while using the company’s grips. He’s not a paid endorser. A quarter of PGA touring pros in a given week’s tournament are using SuperStroke putter grips, and the company is airing commercials on the Golf Channel featuring Dufner and Spieth touting the product. “How quickly (SuperStroke has) been able to establish themselves on tour is unbelievable,” said Zak

JOHN SOBCZAK

PGATour.com equipment writer Jonathan Wall on the appeal of the SuperStroke: “Unlike a standard putter grip, the oversized version takes the hands off the equation and puts an emphasis on using bigger muscles to develop a repeatable stroke.”

Kozuchowski, managing editor of Dearborn-based GolfWRX.com, a golf equipment and news website affiliated with Golf Digest. SuperStroke has staffers on site at every tournament on all of the pro golf tours — the PGA, LPGA, the developmental Web.com Tour, the Champions Tour for pros 50 and older, and tours in Europe and Korea, Dingman said. “We have a guy on the PGA Tour; Monday through Wednesday he’s standing on the putting green, getting them product, letting them test it,” he said. “The relationships start on the putting green when they’re out playing their practice rounds.” Dingman struck gold with the putter grips as a business because regular golfers typically will own several putters, Kozuchowski said. “These golfers are willing to spend $15 or $25 to upgrade a putter. That’s a smart play by Dean to recognize that golfers are willing to spend on their putters,” he Kozuchowski said. SuperStroke also has industry interest: Carlsbad, Calif.-based golf club giant Callaway Golf Co. has a deal with Dingman to put the 15inch SuperStroke as the standard grip on its Tank Cruiser counterbalanced putters in its ultra-popular Odyssey line.

The technology SuperStroke grips are simply fatter rubber grips for putters, and they don’t taper. The patented design means there is less use of hand muscles in putting, which can translate into fewer strokes. “What makes it so popular? Unlike a standard putter grip, the oversized version takes the hands off the equation and puts an emphasis on using bigger muscles to develop a repeatable stroke,” wrote PGATour.com equipment writer Jonathan Wall in August. “There’s a reason why SuperStroke, one of the most popular oversized options on the PGA Tour, has between 23-35 players in the field each week using the grip.” The secret of the thick grip is that it doesn’t taper, Dingman said. “It takes the right hand out of it. All other grips taper,” he said. The colorful grips — they feature a prominent logo easily seen on TV — come in a variety of styles

and sizes. Like much golf equipment, the grips are manufactured in China, and SuperStroke this year opened a Beijing office. Thirty percent of the firm’s sales come from golf-mad Asia. Half of its sales are in the U.S. and 20 percent are in Europe, Dingman said. The Ferndale-based marketing agency Driven Solutions Inc. created SuperStroke’s logo and advertising campaign last year. “We knew we had to get the brand right, and the ‘Play Better Grips’ positioning helped them become the technological leader in the category,” said Driven COO and principal Kevin Woods. “There haven’t been many golf product newcomers with PGA player success, and SuperStroke is one of them.” Dingman, a Farmington Hills native, said he started his golf business in Warren, but moved it, for convenience, to Wixom in 2010 after he moved to Brighton.

What’s next SuperStroke is moving next into grips for drivers, woods, irons and wedges, Dingman said, and the plan is to introduce the new products at the annual PGA Merchandise Show in Orlando, Fla., next year. “The other 13 clubs, we’re not in that business yet,” he said. “We feel with our brand and technology we bring, we feel we can take some share.” Oversized grips work only on putters, so SuperStroke has spent the past 18 months working on what Dingman terms a premium rubber compound to, he said, give the grips “a material difference the pros will appreciate.” The expansion will necessitate adding inside sales and marketing staff, he said. The company has 11 employees in Wixom, another 25 sales reps in the field, and two in China to handle manufacturer contracts. “With this extra growth, we’re going to need more people,” Dingman said. SuperStroke also is in talks about a business relationship with Dave Stockton, the former touring pro and Ryder Cup captain who has become the PGA Tour’s $500an-hour putting guru, Dingman said. The move into grips for all clubs is a challenge to grab market share from Southern Pines, N.C.-based Golf Pride, which says about 80 percent of all professional golfers are

using the company’s grips on some or all of their clubs. Golf Pride, founded in Cleveland in 1949, is a division of Sumter, S.C.-based Eaton Corp., a $22 billion manufacturer of industrial and aerospace power products. “The overall golf business climate has been challenging for the last decade, so growing the game by adding new golfers has been a major priority in the industry for several years now,” said Brandon Sowell, global sales and marketing director for Eaton’s golf grip division, via email. “With that, we’ve focused much of our energy on educating players about the importance of annual regripping to save strokes and enhance their experience on the course. “In the putter grip category specifically, players’ preferences are very individualized — reflective of the many different ways players hold the club, their stances and postures — which all impact their grip preferences.”

A bright spot SuperStroke’s success comes as golf suffers economic malaise. The Jupiter, Fla.-based National Golf Foundation reported that total rounds played nationally were down 5 percent in 2013 compared to 2012. It also reported that 14 new U.S. golf courses opened last year while 157 closed, the eighth straight year closures have outpaced openings. A study of American and Japanese golf equipment sales released at the PGA Merchandise Show in January shows that putter sales among the U.S.’s 24 million golfers declined 4 percent last year to $173 million from about $180 million in 2012, according to Bloomberg. In a first-quarter earnings conference call, Dick’s Sporting Goods CEO Edward Stack pinned the company’s poor results on declining golf equipment sales. “We anticipated softness, but instead we saw significant decline. We underestimated how significant a decline this would be. We now expect this trend could continue for the balance of the year,” he said, adding that there’s a “glut” of wholesale and retail golf equipment inventory. Golf ranges between 10 percent and 25 percent of the retailer’s business each quarter, and Dick’s plans to reduce golf equipment floor space in its stores because of soft demand. Its inventory includes SuperStroke putter grips. Retailers are excited about SuperStroke, GolfWRX.com’s Kozuchowski said, because it’s something customers haven’t seen. And with an established name, expansion into grips for other clubs could also prove popular in terms of retail sales. “At least in the beginning, the interest will be high and the sales will be good,” he said. Either way, Kozuchowski said, he expects the oversized grips to continue to increase in popularity. “I don’t think large-size grips are a fad,” he said. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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RUMBLINGS Case comes to Detroit ready to invest S

teve Case is coming to Detroit. And he’s bringing investment money. The America Online founder is doing a four-city tour celebrating entrepreneurship and the startup culture. Case’s focus, since stepping down as chairman of the merged AOL and Time Warner Inc. in 2003, has been investing in real estate, technology and hospitality — as well as firms that “can change Case the world” — through his Revolution LLC. Recently, Revolution invested $30 million in Oakland, Calif.-based Revolution Foods, which it believes will revolutionize school lunches. Now Case wants to see what revolutions Detroit has to offer. On June 24, he will host a fireside chat with Dan Gilbert at Grand Circus Detroit LLC’s offices. Then he’ll head to the Madison Building for a pitch competition and happy hour. One lucky local startup will walk away with a $100,000 investment from Case. Case is also a benefactor of Detroit-based iRule LLC, which took home a $100,000 commitment from Case in April as part of the Google for Entrepreneurs Demo Day competition. See riseoftherest.com for details on the local events.

Detroit’s ‘Reboot’ story to travel to France Detroit’s story is also being told on the international creative stage. Detroit-based Lowe Campbell Ewald Chief Creative Officer Mark Simon, Detroit DJ and producer Carl Craig and Lowe + Partners Chief Creative Officer Jose Miguel Sokoloff will tell the story of “Detroit: Reboot City” at a June 20 session at the Cannes Lions International Festival of Creativity in France. They plan to talk about the “people, passion, ideas and thinking behind the creative companies helping to define the future of the city.” A video posted at detroitreboot.tumblr.com as part of the initiative features panoramic views of the city and glimpses of creative spaces ranging from the De-

June 9, 2014

CRAIN’S DETROIT BUSINESS

troit Institute of Music Education to Craig’s music studio. Reboot City even has its own playlist compilation including Detroit artists (also available at the tumblr site).

Growing cloud-security firm signs lease for bigger space Providing highly secure cloud computing services requires a growing number of employees — and more brick-and-mortar space — for Duo Security Inc. Duo signed a lease Thursday for larger office space in downtown Ann Arbor. It plans to make the move into 14,000 square feet at 123 N. Ashley St., spread over three floors, sometime in the fourth quarter. CEO Dug Song, who cofounded the company in 2009, said he has been hiring steadily and plans to be near 100 employees by year’s end. Duo Security provides Song two-factor authentication — which verifies the identity of an entity trying to access services in a computer or network — to more than 4,000 organizations worldwide. Song was a member of the 2012 class of Crain’s 40 Under 40. In 2000, he was one of five self-described geeks and hackers who co-founded Arbor Networks, a University of Michigan spinoff that was later sold to Tektronix Communications. Arbor Networks’ security software is used by more than 80 percent of the world’s Internet providers. Song co-founded the Tech Brewery, an Ann Arbor tech incubator, and is one of the organizers of a 30,000-squarefoot skate park, slated to open June 21, at Veterans Memorial Park in Ann Arbor.

TechTown hires Riser for entrepreneurship post Detroit-based TechTown has hired Paul Riser Jr. as managing director of technology-based entrepreneurship. He replaces Charlie Moret, who left the Wayne State University-affiliated incubator in April to become

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF MAY 31-JUNE 6

president and CEO of Invest Michigan, a new nonprofit that manages the $6.8 million Michigan Pre-Seed Capital Fund 2.0. Riser, a Detroit native and graduate of Cass Technical High School, has 17 years of experience in technology. He was a project manager for Sun Microsystems Inc. before founding his own consulting firm, Riser Riser Group LLC, in Northville in 2002. Most recently, he was chief technology officer at Innovative Health Technologies LLC, a Detroit-based biotech startup. He is also co-owner of Ferndale-based BLAC magazine (black life, arts and culture). Riser begins his new job June 16. Riser’s father, Paul Riser Sr., was a trombonist in the legendary Funk Brothers, studio musicians who played on many Motown hits of the ‘60s and ‘70s. He also wrote or arranged on such Motown hits as “My Girl,” “I Heard It Through the Grapevine” and “Stop in the Name of Love.”

Troy Rotary’s new president has field experience A name familiar to fans of the Detroit Lions and the Michigan State Spartans, Monte Clark, was sworn in last week as the new president of the Troy Rotary. Clark, who goes by his middle name of Bryan, is the son of the late Monte Clark, head coach of the Lions from 1977 to 1984. The younger Clark played quarterback from 1978 to 1981 at MSU and then spent two seasons Clark in the National Football League, with the San Francisco 49ers and Cincinnati Bengals. Clark didn’t play much his freshman year at MSU, but says a highlight — or possibly a lowlight — was getting yelled at by AllAmerican senior Kirk Gibson if his passes in pregame warm-ups were off target. Clark started much of his senior year, one highlight being passing for 318 yards and two touchdowns in a loss to the University of Michigan. The Rotary ceremony was held at the St. Nicholas Culture Center in Troy. These days, Bryan Clark is an insurance agent with the McLeod-Koski Agency Inc. of Bloomfield Hills.

Wayne State names biz school dean obert Forsythe, a former dean of the business school at the University of South Florida, was appointed dean of Wayne State University’s School of Business Administration, effective July 21. Forsythe, Forsythe 64, succeeds interim dean Margaret Williams, who was appointed to the position in 2011 when David Williams stepped down.

R

ON THE MOVE 䡲 The Detroit Pistons

named Jeff Bower, 53, as general manager. He was most recently head basketball coach at Marist College in New York and was previously in the National Basketball Association as a general manager and coach with the New Orleans Hornets. 䡲 Southfield-based JVS, which provides counseling, training and support services, named longtime COO Leah Rosenbaum as president and CEO. Rosenbaum, interim head of the nonprofit since October, succeeds Barbara Nurenberg, who retired last fall.

COMPANY NEWS 䡲 Dan Gilbert is buying

four more Detroit central business district properties, this time from the Downtown Development Authority, whose board approved selling the former garage site at 126 Monroe St. and buildings at 1322, 1326 and 1332 Broadway. The Broadway buildings — which may be redeveloped as lofts — are being sold for $500,000, and the Monroe Street site sale price is $1.5 million, according to DDA board documents. 䡲 General Motors Co. subsidiary Riverfront Holdings Inc. purchased three vacant buildings and a parking lot near the Detroit riverfront east of the Renaissance Center. Sale prices undisclosed. 䡲 Sterling Heights-based General Dynamics Land Systems said it expects to lay off 163 full-time employees, primarily engineers, after losing funding on one contract program and declining to bid on another. 䡲 Stockholm-based Autoliv Inc. agreed to pay $65 million to plaintiffs in a Detroit civil lawsuit over

global automotive supplier price-fixing. 䡲 Southfield-based construction manager Barton Malow Co. was named one of four companies hired to build a $622 million stadium for Major League Baseball’s Atlanta Braves. 䡲 A lawsuit against Novi-based Lotus Bank over racist emails by two executives will go to trial, Oakland County Circuit Court Judge Denise Langford Morris ruled. A trial date is to be set at a hearing this week. 䡲 Eyeglass World opened its fourth metro Detroit store, in Madison Heights, and said it plans to open seven more in the area before year’s end. 䡲 Denso International America Inc. acquired a majority stake in Pennsylvania vehicle diagnostics and telematics company Ease Simulation Inc. The Southfield-based subsidiary of Japan’s Denso Corp. acquired a 72.1 percent stake in Ease, which will retain its name and location. 䡲 Detroit-based Meridian Health Plan said it plans to withdraw from the Medicaid program in New Hampshire on June 30 to focus on growth in Michigan, Illinois and Iowa. 䡲 Detroit Rescue Mission Ministries took over operation of Lighthouse Outreach Center in Roseville. 䡲 Old National Bancorp, which owns 18 United Bank & Trust branches in four Michigan counties and is purchasing Ann Arborbased United Bancorp, said it is buying Lafayette, Ind.based savings and loan LSB Financial Corp. 䡲 Lawrence Technological University plans to close its Center for Nonprofit Management at month’s end after a decade of operation, a result of restructuring at the Southfield-based university. 䡲 Seelio Inc., an Ann Arbor social media company that enables college students to post their work in online portfolios, has been bought by Lenexa, Kan.-based PlattForm, a marketing and enrollment recruitment company serving colleges and universities. Terms were not announced.

OTHER NEWS 䡲 The Michigan Senate approved a $195 million state contribution to resolve Detroit’s bankruptcy, sending the legislation to Gov. Rick Snyder. A bill that would have prevented the Detroit Institute of Arts from seeking another millage was left out of the legislation passed by the Senate, and the Detroit City Council approved a resolution to move artwork threatened by the bankruptcy into a charitable trust. In

a related move, Detroitbased Skillman Foundation pledged $3.5 million to help offset health care cuts to city retirees. 䡲 A federal judge ruled the U.S. Coast Guard did not break the law by refusing to approve a bridge linking Detroit and Windsor — a project driven by Manuel Maroun, whose Detroit International Bridge Co. owns the Ambassador Bridge — because the builder lacked power to compel land rights to be turned over. 䡲 A federal grand jury in Detroit indicted former Takata Corp. executive Gikou Nakajima on a charge of participating in a conspiracy to fix the prices for seat belts, the U.S. Department of Justice said. 䡲 The Michigan Court of Claims granted a request from a group of charities, permanent charity poker rooms and gaming suppliers for an injunction blocking new charity poker rules that took effect in May. 䡲 The public is invited to provide feedback on six designs for the rebuilding of I-375 at an open house June 12 in Shed 5 at Eastern Market. The event is being hosted by the Detroit Downtown Development Authority, Michigan Department of Transportation and Detroit RiverFront Conservancy. 䡲 The University of Michigan’s Institute for Research on Labor, Employment and the Economy was awarded a grant of nearly $2.5 million, in partnership with Ohio State University and Purdue University, to help smalland medium-size companies affected by military spending cuts, AP reported. 䡲 The Michigan Senate voted to dedicate part of the state sales tax collected on gasoline to road funding, AP reported. The legislation would move $128 million a year from Michigan’s general fund to transportation.

OBITUARIES 䡲 Dean Becharas, owner

of Highland Park-based Becharas Brothers Coffee Co., died June 2. He was 79. 䡲 Don Davis, a Grammywinning music producer who became cofounder, chairman and CEO of Detroitbased Davis First Independence Bank, died June 5. He was 75. 䡲 Dominic Russo Sr., cofounder of Detroit-based Rocky Produce Inc. and Rocky Peanut Inc., died May 21. He was 82.


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Crain's Detroit Business, June 9, 2014  

Crain's Detroit Business is the premier source for business news in Southeast Michigan.

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